Chevron in Ecuador

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Donziger Appeal: Judge Kaplan Allowed Corrupt Witness Testimony, Violated International Law and Stretched RICO Past "Breaking Point"

Hinton Communications
Contact: Karen Hinton at +1.703.798.3109

New York, NY – U.S. Judge Lewis A. Kaplan stretched the RICO statute beyond its "breaking point," committed reversible error by accepting corrupt witness testimony, disregarded the overwhelming scientific evidence of Chevron's contamination in Ecuador, and unlawfully interfered with a final decision from another nation's Supreme Court when he imposed an injunction in favor of the oil company in a two-decade dispute with rainforest villagers over widespread oil contamination, according to a 120-page appeal filed by New York attorney Steven Donziger that asks the Second Circuit to vacate the judge's decision.

The brief, filed by lead appellate lawyer Deepak Gupta, charges that Chevron has used its "bottomless war chest" to shift "the focus from its own wrongdoing in the Amazon to trumped-up allegations of corruption and misconduct" centered on a strategy "to demonize" Donziger and his colleagues, as stated expressly in internal company emails. Donziger is a solo practitioner with an emphasis on human rights law who has advised the Amazon communities (known as Los Afectados, or the "affected ones") since the inception of the case in 1993, when it was first filed in the same U.S. federal court in New York where Judge Kaplan sits.

Chevron, which has vowed never to pay the $9.5 billion judgment even though it promised to do so in 2001 as a condition of the case being transferred from U.S. federal court to Ecuador, is abusing the civil justice system by "stringing its victims along across decades, courtrooms, and continents," said the brief, which is available here.

Attorneys for Donziger allege that Judge Kaplan made numerous errors when he imposed, in March of this year, an injunction purportedly barring Ecuadorian villagers from collecting on their judgment anywhere in the world – an injunction that both Donziger and the Ecuadorians say has no valid legal basis and violates clear precedent from the Second Circuit Court of Appeals as well as principles of international comity.

The judge – who repeatedly had disparaged the villagers from the bench, as these legal petitions (here and here) document – also barred Donziger from personally profiting from the case.

The villagers and Donziger have long disputed Judge Kaplan's legitimacy to rule on the matter, claiming that the RICO allegations are part of a Chevron campaign to retaliate against those who have exercised their First Amendment rights to hold the company accountable for decades of toxic dumping that has decimated several indigenous tribes. See here for a summary of the evidence in the Ecuador case and here for background on the many problems with Judge Kaplan's handling of the RICO matter.

"We believe this brief eviscerates Chevron's RICO case and proves that Judge Kaplan never even had the right to take up the matter, much less enter a toothless injunction that interferes with the decision of the Supreme Court of a foreign judicial system in the very country where Chevron insisted the trial be held," said Christopher Gowen, one of Donziger's trial lawyers.

"This appeal clearly demonstrate that Judge Kaplan distorted the law to issue a series of bizarre rulings to help Chevron in its abusive campaign to evade its obligation to clean up the ecological disaster it caused in Ecuador, where numerous people have died from cancer and thousands more face grave harm if there is no immediate action taken to avert a growing humanitarian crisis," he added.


Among the errors requiring that Judge Kaplan's decision and factual findings be vacated, according to the brief:

  • Disregard of Ecuador appellate court decisions: The brief contends that Chevron and Judge Kaplan made a critical error by attacking the Ecuador trial court judgment, when in reality the relevant decision was made by an appellate court after a de novo review that was in effect a retrial. "Chevron is akin to a criminal defendant who has been given a retrial and who has been convicted again, but still complains of irregularities in the first trial," said the brief.
  • Misuse of RICO to attack a foreign court: Judge Kaplan pushed the RICO statute "beyond the breaking point" by letting Chevron mount an unprecedented attack on a foreign judgment that has been affirmed unanimously by two separate appellate courts, including Ecuador's highest court. "A federal district court cannot use its authority as a fact finder to make pronouncements of another nation's laws that contravene the nation's highest court," said the brief, which also claimed that Chevron was trying to take "the radical step of transforming RICO into a right of global appellate review" not authorized by Congress.
  • Misuse of RICO to impose an unauthorized injunction: Judge Kaplan also violated RICO by allowing Chevron to use the statute to obtain an injunction rather than for money damages. Prior to the decision, no court in American history had used RICO to impose an injunction for a private party without first having a jury determine liability and damages as the statute plainly requires. (Chevron dropped its damages claims on the eve of trail to avoid a jury, enabling Judge Kaplan to conduct a bench trial and rule alone.)
  • Corrupt Witness Testimony: Judge Kaplan allowed Chevron to base the most critical part of its case – that the trial court judge was bribed by the plaintiffs -- on the testimony of Alberto Guerra, an Ecuadorian witness to whom the company has promised to pay more than $1 million in benefits even though the individual's last salary was only $500 per month. Guerra admitted on the stand that he had taken numerous bribes when he was a judge in Ecuador and conceded that he made several false statements so he could "sweeten" his financial deal with Chevron. Guerra also admitted rehearsing his testimony with Chevron's lawyers on 53 separate days. "If anyone here was guilty of bribery, it wasn't Steven Donziger," said the brief.
  • The court never had jurisdiction: Judge Kaplan allowed the case to proceed despite the fact Chevron failed to satisfy the basic elements of jurisdiction or standing under Article III of the Constitution, including injury, causation, and a remedy that redresses the supposed harm. Donziger's lawyers argue that Chevron's injury was caused by its own pollution, and not by anything Donziger did; that Chevron failed to prove the trial court judgment caused its injury, rather than its own pollution or the de novo review (equivalent to a retrial) from the appellate panel where there is no allegation of corruption; and that Chevron failed to show that Judge Kaplan's injunction can redress its claimed injuries, given that the Ecuadorians can still enforce their judgment in other jurisdictions and are doing so.
  • Violation of international comity. Judge Kaplan violated international comity by engaging in an "unseemly display of American judicial imperialism" by condemning Ecuador's entire judicial system as being incapable of producing decisions worthy of respect. This determination amounted to a clear violation of a mandate handed down in 2012 by the New York appellate court reversing Kaplan for issuing an injunction (without even holding an evidentiary hearing) that purported to block worldwide enforcement of the Ecuador judgment. Such a finding is causing "diplomatic friction" between Ecuador and the U.S. and "is intolerable in light of the history of this litigation" given that Chevron requested the matter be heard in Ecuador and promised U.S. courts to abide by any adverse judgment as a condition of the case being transferred, said the brief.
  • Estoppel: Because Chevron had repeatedly praised Ecuador's court system when it succeeded in transferring the case to Ecuador in 2001 (after nine years of litigation in the U.S.), the company is now barred from claiming Ecuador's courts are unworthy of deciding the dispute. Chevron's claims that Ecuador's courts have deteriorated are contradicted by the company's own evidence and State Department reports, the brief pointed out.

The brief also emphasized that Chevron failed to pursue other remedies available to it in Ecuador to attack the judgment on the basis of an alleged fraud, including a statute (called the Collusion Prosecution Act) explicitly created for that very purpose.

The Ecuadorians and Donziger have long emphasized that Judge Kaplan does not have the authority to block enforcement actions in foreign jurisdictions to seize Chevron assets to pay for the Ecuador judgment. Such actions are currently pending in Canada, Brazil, and Argentina. In November, Canada's Supreme Court will hear argument that could lead to a limited trial in 2015 related to the seizure of some of an estimated $15 billion of Chevron assets in that country, an amount that would cover the entirety of the award.

In a fact section prior to argument, Donziger's attorneys made Kaplan's bias an issue by pointing out some of his controversial comments. Before even holding an evidentiary hearing, the judge had called the case a "giant game" that was "akin to mud wrestling", said that Donziger's main objective was to "help fix the balance of payments deficit" of the U.S., and repeatedly referred to the Ecuadorians as the "so-called plaintiffs" rather than treating them as legitimate litigants. Donziger and the Ecuadorians asked Kaplan to recuse himself several times, but he refused.

In ruling in favor of Chevron, Judge Kaplan refused to consider any of the overwhelming scientific evidence of the company's contamination in Ecuador that courts there used as the basis for a finding of liability. He also refused to read the 220,000-page Ecuador trial record, nor would he consider evidence that Chevron tried to threaten judges and corrupt the trial process.

"The scale of Chevron's efforts to avoid compensating its victims is breathtaking," said Donziger's brief. "But nobody should lose sight of the one thing that Chevron has chosen not to litigate: the fact that Chevron dumped billions of gallons of toxic waste into a region roughly the size of Rhode Island."

Donziger has long asserted that Chevron falsified evidence and used bribery and intimidation with judges and witnesses in Ecuador, and that neither he nor his colleagues did anything out of the ordinary for lawyers fighting on behalf of politically powerless clients in a court system that historically favored the oil company. Prior to this case, Chevron never faced even a single adverse judgment during 25 years of operating in Ecuador even though it admitted to dumping billions of gallons of toxic water of production and abandoning more than 900 open-air pits filled with oil waste.

Donziger said he remains unbowed in the face of Chevron's attacks, which include near-constant surveillance of him and his family and doing battle with more than 60 law firms and 2,000 legal personnel hired by the oil giant to work on the case.

"To be clear, I categorically reject Chevron's allegations which Judge Kaplan adopted wholesale without considering contrary evidence," said Donziger. "Any pressure we applied to the court in Ecuador was completely appropriate and designed to ensure our clients received a fair trial in the face of Chevron's constant attempts to corrupt and sabotage the proceedings. The only bribe that took place came from Chevron's lawyers and it went to the company's star witness in Judge Kaplan's trial, Alberto Guerra."

Separately, a prominent law professor from New York University, Burt Neuborne, filed an appellate brief for two Ecuadorians who appeared before Judge Kaplan, Javier Piaguaje and Hugo Camacho. In urging the court to vacate Judge Kaplan's decision, that brief said "the litigation's current focus has been skillfully diverted from the central issue of Chevron's legal duty to remediate the ravaged land, to a distasteful sideshow featuring unremitting assaults on the integrity of Steven Donziger."

The brief for the Ecuadorians can be read here.

In addition to Gupta, Donziger was represented by Greg Beck and Jon Taylor from Gupta Beck; and Justin Marceau and John Campbell from the Sturm College of Law at the University of Denver. The team was assisted by law students from the University of Denver, Yale and Georgetown.