Chevron in Ecuador

The archive of the Clean Up Ecuador campaign website

Facing Bribery Charges, Chevron Trying To Mislead U.S. Supreme Court With Fake Facts and Flawed Arguments

Amazon Defense Coalition (ADC)
Contact: Karen Hinton at +1.703.798.3109

Washington, DC – Faced with undisputed proof that it illegally paid huge sums of money to bribe its star witness, Chevron is now trying to mislead the U.S. Supreme Court by using fabricated evidence and flawed legal arguments to evade paying the $12 billion Ecuador environmental judgment, according to a new legal filing by appellate lawyer Deepak Gupta and a new report issued by the affected communities.

In the filing before the Supreme Court, indigenous villagers from Ecuador's Amazon region and U.S. lawyer Steven Donziger are seeking review of a controversial trial court ruling obtained by Chevron that for the first time in the 249-year history of the U.S. tries to nullify a foreign court judgment for money damages. The filing urges the Court to resolve two key legal issues in the 24-year battle where thousands of the villagers suffer from cancer and other health impacts due to Chevron's decision to dump billions of gallons of toxic waste onto their ancestral lands.

Chevron does not dispute that it extensively polluted an area encompassing 1,500 sq. miles of Ecuador's rainforest – local inhabitants call the disaster the "Amazon Chernobyl" – but the company claims Ecuador's government is now legally responsible. Three layers of courts in Ecuador, where Chevron insisted the trial be held and had accepted jurisdiction, have rejected that defense and found the company liable for the pollution.

The lower court decision in the U.S., made by Judge Lewis A. Kaplan in favor of Chevron in a non-jury trial under the civil RICO (or "racketeering") law, threatens to create "judicial chaos" worldwide if allowed to stand, according to the filing. Kaplan's decision already has been opposed in separate legal filings by 19 international law scholars and 17 prominent human rights and environmental groups.

Gupta, who represents Donziger before the U.S. Supreme Court, took aim at Chevron's attempt to try block review of Kaplan's decision.

"Chevron does not deny that, before this case, no U.S. appellate court had ever found jurisdiction to allow a preemptive collateral attack on a foreign money judgment," Gupta wrote in the brief, submitted in the form of a Reply to Chevron's arguments. "Nor does Chevron deny that, were a court to permit such an attack – for the first time in American history – it would dismantle the settled international enforcement framework, damage foreign relations, and demand not just review but reversal."

In his opening brief on behalf of Donziger, Gupta had argued that allowing Kaplan's decision to stand "would unnecessarily provoke friction between legal systems, by encouraging pre-emptive challenges to foreign judgments, without actually resolving the dispute between the parties. For this reason, no U.S. court has ever allowed a pre-emptive collateral on a foreign money judgment.

"The ruling is as wrong as it is unprecedented," the opening petition argued.

The request for Supreme Court review comes at a time when Chevron's management is under increasing strain from the Ecuador judgment. Last week, at Chevron's annual meeting in the Texas oil town of Midland, several institutional shareholders backed resolutions challenging what they described as CEO John Watson's "material mishandling" of the litigation. Watson turned off the microphone when a shareholder asked him about the company's admission in the RICO matter that it paid $2 million to a key witness, Alberto Guerra, who later admitted he lied in the Kaplan proceeding.

Judge Kaplan's credibility also has come under serious questioning. The new 33-page report explains in detail how Kaplan and a federal appellate court that affirmed his decision – the latter with no independent analysis of the judge's findings – made serious mistakes in their rulings. Kaplan's proceeding has been termed a "mockery of justice" by the villagers and a "Dickensian farce" by prominent trial lawyer John Keker, who withdrew in protest.

(Here is a press release about the new report documenting Kaplan's numerous errors.)

In the request for U.S. Supreme Court review, Gupta explained that the Kaplan ruling was based largely on false testimony from Guerra. Chevron gave the former Ecuadorian judge $38,000 in cash out of a backpack, and a myriad of other benefits such as health insurance and payment of his income taxes, in exchange for his testimony. After being coached by Chevron lawyers for 53 days, Guerra testified before Kaplan that a bribe was paid to the Ecuador trial judge to rule against Chevron – although the witness later recanted key portions of his testimony. (See here and here for more background on Guerra's perjury.)

Separately, Guerra falsely testified before Kaplan that lawyers for the villagers "ghostwrote" the judgment against Chevron and gave it to the trial judge on a flash drive just before it was issued. However, a subsequent forensic examination of the trial judge's computer completely debunked the testimony by showing the trial judge created a Word document that became the judgment and saved it more than 400 times in the weeks leading up to its issuance.

The Second Circuit Court of Appeals, which oversees Kaplan, refused to consider the new forensic evidence or the admissions of Guerra before accepting the erroneous trial court findings of Kaplan, according to Gupta.

(For further background on Chevron's fabricated evidence and illegal witness payments to Guerra, see this blog by lawyer Aaron Page and this blog by a lawyer for Earth Rights International.)

Ecuador's courts affirmed the environmental judgment against Chevron based on voluminous scientific and testimonial evidence. As the evidence against it mounted, Chevron came back to the same U.S. court where the company had long ago opposed jurisdiction to seek to undermine Ecuador's courts. Kaplan, without any apparent legal authority, eventually ruled that any funds collected by the villagers from their judgment in any enforcement action around the world should be returned to Chevron – a proposition that courts in Canada and Brazil already have rejected.

Donziger's petition argued that Kaplan's order violates the sovereignty of other countries to issue their own court rulings, is unenforceable, and does not address any actual injury given that Chevron has not yet been forced to pay the Ecuador judgment. The petition argues that the proper venue for Chevron to present any defense to collection of the Ecuador judgment is in the enforcement actions, a position reinforced in the brief by the 19 international law scholars that also urged reversal of the Kaplan decision.

On the second legal point justifying Supreme Court review, Gupta argued that Chevron's use of the RICO statute against Donziger and his clients to pursue purely injunctive relief rather than money damages is illegal. Even Kaplan's own colleague on the federal bench, Jed Rakoff, agrees with Gupta's position on this point in his authoritative treatise on the RICO law. Also agreeing with Gupta is the U.S. Department of Justice and Chevron's own outside law firm, which argued in favor of Donziger's position in a different case.

Kaplan's ruling also warrants reversal because he allowed Chevron to avoid a jury of impartial fact finders where the company's problematic evidence almost certainly would have been rejected. The U.S. Constitution allows the defendant a jury trial in a civil case only when he or she is sued for money. By dropping its money damages claim, Chevron virtually guaranteed it would win the case given Kaplan's favoritism for Chevron and his refusal to consider the evidence of the company's environmental contamination in Ecuador, said Gupta. It also emerged that Kaplan held undisclosed investments in Chevron when Donziger and the villagers had motions pending for his recusal.

The flurry of recent activity in U.S. courts over the Ecuador judgment has limited legal relevance in that it cannot block lawsuits by the villagers to enforce their judgment against Chevron's assets in other countries. Chevron now faces enormous risk from the Ecuador judgment because of asset seizure actions in Canada and Brazil, where the company already has suffered significant courtroom setbacks.

In 2015, Canada's Supreme Court unanimously rejected Chevron's attempt to block the Ecuador enforcement action in that country. A trial to determine when Chevron must pay the Ecuador judgment with its Canadian assets, worth an estimated $25 billion, is expected to begin in Toronto next year. Interest on the judgment under Canadian law already has increased Chevron's liability from $9.5 billion to roughly $12 billion.

The Chevron RICO case against Donziger and the villagers does have significant implications for human rights groups and corporations in the United States. In recent years, the RICO statute – passed by Congress to target the mafia – has been co-opted by a number of corporations to try to intimidate their litigation adversaries in violation of the First Amendment, said Donziger. A Canadian forestry company, taking a page out of Chevron's playbook, recently used RICO against Greenpeace to try to force the organization into bankruptcy.

Donziger has blasted Chevron for "using obviously false evidence" to try to frame the lawyers who held the company accountable for its environmental crimes committed against indigenous groups and other residents in Ecuador's Amazon. "It is our view that Judge Kaplan and the Second Circuit owe the people of Ecuador an apology for their refusal to consider evidence that destroys Chevron's false narrative," said Donziger. "This is an ongoing stain on the American judiciary and it will not go away unless and until the Supreme Court acts."

Lauded in the environmental community and with speaking engagements at some of the world's leading law schools, Donziger has been the target of an expensive personal attack strategy involving six public relations firms paid by Chevron – including the one that executed the Swift Boat campaign against John Kerry in the 2004 presidential election. Chevron also admitted it paid $15 million to the corporate espionage firm Kroll to spy on Donziger and his colleagues. An internal Chevron email from 2009 admitted its long-term strategy was "to demonize Donziger" to distract attention from its own wrongdoing.

Relying largely on Chevron's own evidence, Ecuador's courts found that the company deliberately dumped billions of gallons of toxic oil waste into the ancestral waterways of indigenous groups, poisoning an area the size of Rhode Island and causing an outbreak of cancer that has killed or threatens to kill thousands of innocent civilians. Chevron had filed 14 affidavits praising Ecuador's courts when it successfully shifted the venue from U.S courts to the South American nation in 2001.

(Here is a summary of the evidence against Chevron from the Ecuador proceeding. For specific examples of Judge Kaplan's hostility toward the Ecuadorian villagers, see this court filing from 2013.)