Chevron in Ecuador

The archive of the Clean Up Ecuador campaign website

Discovery Closed In $27B Enviro Suit Against Chevron

By Nick Malinowski, Law360
17 September 2010

An Ecuadorean judge overseeing a multibillion-dollar environmental suit accusing Texaco Petroleum Co. of polluting the Amazon rain forest has closed the evidentiary phase of the trial, even though Texaco parent Chevron Corp. hoped to present more information discovered through related litigation in U.S. courts.

Judge Leonardo Ordonez issued the order Friday morning, but a Chevron spokesman said the direction should be invalidated because the judge has been asked to recuse himself and local law precludes judges from making rulings while recusal motions are pending.

Spokesman James Craig said Chevron had asked Judge Ordonez to step aside because he refused to look into evidence that the court's technical adviser colluded with the plaintiffs' lawyers to reach the $27 billion damage assessment that currently hangs over the case.

The plaintiffs, many of whom are members of indigenous rain forest groups, claim that Chevron, which acquired Texaco in 2001, is liable for damage related to vast pollution in the Amazon. They allege Texaco dumped more than 18.5 billion gallons of toxic wastewater and 17 million gallons of crude oil and dug and filled more than 900 unlined waste pits in the region. The plaintiffs have described the impact as the largest oil-related environmental catastrophe in history.

An adviser to the court estimated it would cost $27 billion to clean up the mess, but Judge Ordonez asked the two sides to come up with their own estimates for a damage award after Chevron contested the finding.

The plaintiffs released their new assessment Friday, more than tripling the earlier disputed estimate, in large part because it also considers new damages for unjust enrichment and excess cancer deaths. The new report suggests damages ranging between $90 and $113 billion, including up to $70 billion for excess deaths associated with residence in the remote areas most affected by the pollution.

A spokeswoman for the plaintiffs said Judge Ordonez already has 64,000 testing samples before him, many of which show illegal levels of contamination in soil and water, and that Chevron is merely attempting to delay a judgment in the case by piling on more documents.

"We've thought there was more than enough evidence to convict Chevron since 2008," spokeswoman Karen Hinton said. "There is overwhelming evidence of extensive contamination through Texaco's intentional design, even at the sites it said it cleaned up."

Chevron continues to assert it should owe nothing.

The company has long held that Texaco fulfilled its cleanup responsibilities for its oil extraction activities long ago, and that any remaining pollution or effects from it are the responsibility of the state-run oil extraction company and the state of Ecuador, Craig said.

Craig said Chevron had evidence of fraud by the plaintiffs' lawyers that is currently being discovered in the U.S District Court for the Southern District of New York – much of which comes from outtakes of a documentary about the dispute that is sympathetic to the plaintiffs – that Judge Ordonez has refused to consider.

Hinton said Chevron is creating a "legal sideshow" to distract from the actual issues of the case, which include massive pollution that the plaintiffs argue Chevron is responsible for cleaning up.

"The evidence overwhelmingly shows they are guilty. So attacking the judges, our lawyers, the court itself is the only way they have to defend themselves ... This is nothing but theat[er]," Hinton said Friday.

Two Chevron lawyers, Rodrigo Perez Pallares and Ricardo Reis Veiga, were indicted by Ecuador's prosecutor general in 2008 for allegedly misleading the government into believing Texaco had completed the remediation.

The Ecuadorian judge preceding Judge Ordonez recused himself after Chevron published a video of him discussing the case with two supposed strangers – nonparties to the litigation – and stating that he would find Chevron liable for damages.

On Thursday, the Republic of Ecuador won the right to depose one of those strangers, Diego Fernando Borja Sanchez, in the U.S. District Court for the Northern District of California. Ecuador claims Sanchez was not an innocent third party but instead a long-time associate of Chevron on the company's payroll.

That deposition is technically a part of a related international arbitration claim Chevron has brought against Ecuador, one that has drawn scrutiny from judges in the U.S. Court of Appeals for the Second Circuit who have accused Chevron of forum shopping.

The plaintiffs in the underlying case have argued that the arbitration plea is an end-run around the environmental litigation that could prevent the enforcement of an Ecuadorean court judgment against Chevron, but Craig said it is merely an attempt to resolve the conflict in an unbiased jurisdiction.

Currently the Second Circuit is weighing a bid by the Ecuadorian plaintiffs to stay the arbitration proceeding. A ruling in the case being overseen by Judge Ordonez is expected in early 2011.

The case is Aguinda v. Texaco, case number unknown, in the Superior Court of the Justice of Nueva Loja.