Chevron in Ecuador

The archive of the Clean Up Ecuador campaign website

Chevron's Ecuadorean Foes Invoke Scalia on Appeal

By Adam Klasfeld, Courthouse News Service
7 July 2014

Ecuadoreans hoping to overturn a decision declaring their $9.5 billion environmental verdict against Chevron fraudulent argued that U.S. Supreme Court Justice Antonin Scalia would have endorsed how the oil giant's litigation was handled there, in a surprising 2nd Circuit brief.

"This litigation has lost its way," the 86-page brief by New York University law school professor Burt Neuborne opens.

Two of Neuborne's clients, Hugo Camacho and Javier Piaguaje, were part of an environmental class action lawsuit filed in 1993 on behalf of more than 30,000 residents of the Ecuadorean rainforest against Chevron's predecessor Texaco, which drilled in the jungle for decades.

Chevron had the case moved from New York where it was filed to Ecuador's rainforest city of Lago Agrio after acquiring Texaco in 2001. It was the trial court there that found the company liable for billions in damages 10 years later.

Shortly before that Ecuadorean verdict, Chevron "skillfully diverted" the issue of the litigation from their "legal duty to remediate the ravaged land, to a distasteful sideshow featuring unremitting assaults on the integrity of Steven Donziger, a lawyer for the Ecuadorian victims," Neuborne wrote.

Chevron returned to New York to accuse Donziger of leading a racketeering enterprise to extort the company.

Summarizing those claims, Chevron spokesman Justin Higgs wrote in a statement: "Donziger, his Ecuadorean legal team and other associates fabricated environmental evidence, pressured scientific experts to falsify reports, plotted to intimidate judges into handing down favorable rulings, bribed court-appointed experts, ghostwrote court reports and even drafted the final judgment."

U.S. District Judge Lewis Kaplan endorsed these allegations in a March ruling that found the Lago Agrio judgment had been "procured by corrupt means."

Donziger and his former Ecuadorean clients are appealing that ruling separately. They filed their briefs with the 2nd Circuit Wednesday and Tuesday respectively.

The Ecuadoreans announced that they would not let Kaplan's decision stand in the way of their attempts to collect the judgment in Canada, Brazil and Argentina.

Chevron vowed to use Kaplan's factual findings to convince courts in those countries to disregard the ruling.

Donziger, who is now represented by Washington-based lawyer Deepak Gupta, disputed those findings at length in his 120-page brief.

As expected, the brief take particular aim at Chevron's key witness, Ecuadorean Judge Alberto Guerra, who testified that he secretly wrote the original judgment against the oil giant in return for a cut of the award.

Guerra admitted that Chevron promised him more than $300,000, plus a car, a move to the United States, and the services of an immigration lawyer for him and his family, the brief notes.

Justifying such expenditures as Chevron's "private witness protection program" for Guerra, Kaplan wrote that "there are no saints" in the litigation.

Kaplan nevertheless "accepted as true virtually everything that Guerra said," Neuborne wrote in his brief.

Both briefs argue meanwhile that, even if Chevron's claims were true, the Lago Agrio court's award remains "untainted" because two rounds of Ecuador's appellate courts have affirmed it.

Under Ecuadorean law, an intermediate appeals court must review a trial court's judgment "de novo," a standard that would give it a complete re-examination of the evidence, the lawyers said.

Likening this review to a new trial, Gupta quipped in his brief: "Chevron is akin to a criminal defendant who has been given a retrial and has been convicted again but still complains of alleged irregularities in the first trial."

Neuborne asked the court whether Ecuador's appellate review provided a "separate and independent" basis to hold Chevron liable.

In an interview, Neuborne confirmed that he intentionally highlighted this as a key issue on appeal.

"The fact that Chevron wants to shell the lower court opinion and keep throwing artillery at it is all very interesting, and they can keep throwing artillery at it until the cows come home, but the legally relevant opinion is the intermediate appeals court opinion," Neuborne said over the phone.

In affirming the original judgment, Ecuador's Provincial Court of Justice of Sucumbíos made clear that it did not investigate Chevron's fraud allegations and looked only at the underlying evidence of contamination.

Chevron insisted, and Kaplan agreed, that this meant it never got the appellate review it deserved.

But Neuborne countered that there is nothing wrong with dividing claims of misconduct from the merits of a case, under either U.S. or Ecuadorean standards.

In fact, his brief states, the U.S. Supreme Court explicitly advised that approach in St. Mary's Honor Center v. Hicks, an employment discrimination case in which the employer allegedly committed perjury at trial.

In the majority opinion of that case, Justice Scalia opined: "Title VII is not a cause of action for perjury; we have other civil and criminal remedies for that."

Ecuador's judiciary adopted a similar reasoning, the brief states.

"If the bad things happened that you say happened in the trial court, deal with them, but deal with them somewhere else," Neuborne said, assuming the voice of an Ecuadorean appellate judge. "My job is to deal with them on the merits, not to discipline Steven Donziger."

Kaplan also asserted in his ruling that Ecuador's appellate court could not be trusted because it made its decision "only five weeks after the three-member panel was selected."

But the appellate briefs counter that this timeframe takes into account only when the panel was finalized.

They say that the lead author of Ecuador's appellate ruling was appointed 10 months before the decision, and two of his co-authors served on the panel for several months before being replaced for the final panel, the briefs state.

Kaplan's criticism here is also ironic because, in ruling for Chevron, he "issued a 586-page opinion with 1,800-plus footnotes less than a month after briefing was completed in this case," Gupta noted in his brief.

When reached by phone, Gupta agreed that the appellate court's decision would loom as a "central issue" on appeal.

"All this, the tit for tat, the accusations about what happened at the trial level, are not relevant because they attack the wrong target," Gupta said in an interview.

Two years ago, the 2nd Circuit dissolved an earlier version of Chevron's case and vacated what it called Kaplan's "radical" injunction blocking collection of the Ecuadorean judgment anywhere in the world.

The three-judge panel at the time worried that the case brought up "grave" concerns for international comity.

Echoing Ecuadorean President Rafael Correa's reaction to the ruling, Gupta called the New York decision an "unseemly display of American judicial imperialism," in his brief.

In the interview, Gupta added that the issue of Ecuador's appellate court system highlights "the problem of a New York judge trying to second-guess another country's legal system because this judge didn't understand how the legal system worked there."

His brief asks the 2nd Circuit to wipe out Kaplan's factual findings about what happened in Ecuador.

Chevron's spokesman Higgs commented that he is "confident" that Kaplan's ruling will be upheld.

Even if the 2nd Circuit does not disturb Kaplan's ruling, Neuborne remarked that his arguments about Ecuador's appellate court could help his clients try to collect the judgment elsewhere.

"It should, I think, give a shot in the arm for people who are enforcing this in other systems as well," he said. "I've already received telephone calls from several lawyers in other places asking me for copies of the brief."

These include lawyers working on "live enforcement proceedings," Neuborne added.