Suing Chevron in Ecuador: Do the Ends Justify the Means?

by Doug Cassel

[Doug Cassel is Professor of Law at Notre Dame Law School]

In an environmental suit brought by lawyers for some residents of the Amazon, an Ecuadorian court last year issued an $18.2 billion judgment against Chevron. Readers who follow the case only casually may have the impression that this is a classic case of David vs. Goliath, and that Ecuadorian courts gave Goliath his come-uppance.

That impression is understandable. The plaintiffs’ lawyers and associated NGO’s wield an impressive PR operation. The banner headline of their web site tells readers:

Over three decades of oil drilling in Ecuador’s Amazon, Chevron dumped billions of gallons of toxic waste into waterways relied on by local inhabitants. The result: A humanitarian and public health crisis affecting thousands, which Chevron refuses to put right.

There are at least five problems with that headline:

  • Chevron never drilled a drop of oil in Ecuador. Its only connection is its purchase in 2001 of a Texaco subsidiary, TexPet, whose oil operations ended a decade earlier;
  • The only company drilling – and spilling – oil since 1992 has been the Ecuadorian State company, which plaintiffs promised not to sue;
  • The $18.2 billion was awarded, not as damages for past harm to health, but mainly to fund environmental remediation. Yet plaintiffs’ experts admitted to their lawyers that contamination is “just at the pits and stations and nothing has spread anywhere at all;”
  • The oil pits and stations have been or are being remediated. Whatever work remains to be done could not remotely approach even $1 billion, let alone $18 billion; and
  • Chevron has repeatedly stated that it is open to constructive dialogue to resolve the legal controversy and to benefit Amazonian residents, but it is not open to judicial extortion.

I learned all this only after the plaintiffs’ lawyers asked the Inter-American Commission on Human Rights this year to issue precautionary measures requesting Ecuador to fend off a “serious and urgent” threat to health and other human rights. The threat supposedly emanated from an award by an international arbitral tribunal, convened under the Ecuador-US Bilateral Investment Treaty, directing Ecuador to suspend enforcement of the $18.2 billion judgment, pending the tribunal’s review of Chevron’s contention (among others) that the judgment is “fraudulent.”

Chevron asked me to assist the company in filing an amicus brief before the Commission opposing the plaintiffs’ request. At first I was skeptical. A fraudulent judgment? Really?

But as I dug deeper, a troubling picture emerged. First, plaintiffs’ evidence for their claim of a “serious and urgent” threat to health looked pretty thin: they began by citing two reports issued by the Inter-American Commission in the mid-1990s — before TexPet completed remediation of its agreed share of the oil pits. (Until it ceased operations in 1992, TexPet had been a minority participant in a consortium with Ecuador’s State oil company.)

Plaintiffs similarly failed to persuade the Commission. The OAS body asked them to submit evidence, including medical certificates, of any current health impacts. Without such evidence, the Commission advised, it would close the case.

The plaintiffs responded by withdrawing their request. They explained that two more appellate rulings in support of their judgment (including one entered before the Commission’s request) now made the matter less urgent.

Meanwhile, together with James Crawford and lawyers who represent Chevron before the arbitral tribunal, I co-signed an amicus brief, and later a supplement, before the Commission. These submissions presented evidence – from plaintiffs’ lawyers’ emails and depositions, and from outtakes of a documentary film they commissioned (all obtained by Chevron under court order) — that some (not all) of plaintiffs’ lawyers had indeed perpetrated a fraud upon justice.

They met clandestinely with the judge on the case no fewer than seven times, in venues such as an abandoned warehouse. Their purpose was to persuade him to select their handpicked expert as the court’s own “independent” expert on damages. They and their consultants then secretly wrote the expert’s report (in English, a language he does not speak, and from which “his” report had to be translated). To buy his silence, they secretly paid him thousands of dollars from “our secret account.” They then publicly defended his “independent” report – until they were caught.

Plaintiffs’ lawyers now excuse their meetings on the ground that there are no rules on ex parte communications in Ecuador. But they knew their actions were wrong. They even developed a code language to conceal their misconduct:

Today the cook [the Judge] met with the waiter [the supposedly independent expert] to coordinate the menu [the plan for the allegedly neutral expert’s report] at the restaurant [the Court].

As their scheme began to unravel, one of them emailed:

Today Pablo and Luis [two of the lawyers] [told us] … that certainly ALL will be made public, … the effects are potentially devastating in Ecuador (apart from destroying the proceeding, all of us, your attorneys, might go to jail) …

Not satisfied with cooking the expert’s report, plaintiffs’ lawyers then cooked the judgment, too. As forensic experts have testified, significant passages in the “judgment” came verbatim from plaintiffs’ internal documents, never filed in the proceeding, and cite plaintiffs’ data, also not in the record. The judgment even incorporates plaintiffs’ errors, idiosyncratic reference citations, and distinctive punctuation styles.

The resulting concoction lacks credibility. For example, even after plaintiffs’ public health expert admitted that he “did not reach the conclusion that the healthcare needs of the population in the Oriente can be tied to any particular environmental damage,” the judgment ordered Chevron to pay $1.4 billion to fund public health programs – with not a word of budgetary justification.

As for the judge whose signature graces the judgment, Ecuador’s judicial council recently removed him from the bench for “inexcusable judicial error” in another case – in circumstances suggesting corruption.

In an open letter to the human rights community, I set forth these concerns at greater length. Plaintiffs’ lawyers now accuse me (and previously the arbitral tribunal members) of abandoning principle for lucre — without mentioning the millions in fees they stand to gain if the “judgment” stands (or the several-hundred-million dollar bonus the judgment awards to their NGO).

Most important, the credibility of the human rights movement is at stake. We cannot vindicate human rights by violating them. The ends — securing reparations — do not justify the means: sham judicial proceedings.

http://opiniojuris.org/2012/03/17/suing-chevron-in-ecuador/

15 Responses

  1. “Chevron asked me to assist the company in filing an amicus brief before the Commission opposing the plaintiffs’ request.”
    This part really needs to be highlighted at the top of your post.

  2. Anon,

    Excellent point.  Notice how Professor Cassel never actually says whether he was paid for his work or — concerned with the gross injustice being done to Chevron — he provided his time pro bono.  How about it, Professor Cassel?  Were you paid?

    I was tempted to take the post seriously, but these comments make it impossible:

    “The plaintiffs’ lawyers and associated NGO’s wield an impressive PR operation.” Yeah, they have a website!  And, of course, PR is completely unknown to Chevron.  I just hope the multi-billion-dollar oil company can find some way to make its voice heard. The silencing of multinational corporations is truly a global problem.

    “Plaintiffs’ lawyers now accuse me (and previously the arbitral tribunal members) of abandoning principle for lucre — without mentioning the millions in fees they stand to gain if the “judgment” stands (or the several-hundred-million dollar bonus the judgment awards to their NGO).” See above — and, of course, I’m sure that Chevron’s hundreds of lawyers are working on contingency and will get paid only if Chevron wins; they wouldn’t want to compound the gross injustice the Ecuadorians are working on Chevron by being paid by the hour, would they?  (And I can’t help but chuckle about the irony of Professor Cassel decrying being accused of trading principle for money… and then accusing the plaintiffs’ attorneys of trading principle for money.)

    “Chevron has repeatedly stated that it is open to constructive dialogue to resolve the legal controversy and to benefit Amazonian residents, but it is not open to judicial extortion.” Yes, because if history teaches us anything, it’s that good corporate citizens like multinational oil companies always take responsibility for their actions.  Dutch Shell, Exxon, and BP have certainly taught us that.

    Those damn Ecuadorians.  Don’t they understand that the billions of gallons of toxic waste was a gift from Chevron’s predecessor?  Why are they so ungrateful?

  3. Kevin,

    What is your response to the substance of Doug’s post and open letter?  Is procedural due process important to you even if the defendant is someone you otherwise find loathsome?  If I recall you represented Radovon Karadzic because you believed he deserved due process even though he committed war crimes and genocide. Here is what you said back in 2008 to justify your decision to represent Karadzic:  

    “[E]very defendant, even one accused of committing horrific international crimes, deserves a good defense.  The right to a fair trial is a basic human right, one enshrined in every important human-rights document of the modern era, from the Magna Carta to the ICCPR.  That right means nothing, however, if we are willing to overlook it simply because we are horrified at the crimes a particular defendant allegedly committed.”

    Do you also think that multinational corporations like Chevron deserve fundamental due process even though you find them loathsome? 

    If you read the letter, Doug clearly states that he billed his time for his work on the amicus brief but not for his time writing the eight-page open letter.

    Regardless, I can guarantee you that an international human rights lawyer like Doug Cassel is not going to be attracted by the meager financial rewards of writing one amicus brief before the Inter-American Commission if he did not believe that there were fundamental violations of due process that were at stake.  

    Roger Alford

  4. As I have pointed out numerous times, I did not receive a penny for working on Karadzic’s case.  I also did not say that Professor Cassel’s opinions should be disregarded if, in fact, he was paid for his work — I simply pointed out that he needs to disclose his financial arrangement, if any, with Chevron.  Especially as he accuses the plaintiffs’ attorneys as being ethically compromised by working on the case on contingency.

    Do you think it is justifiable to impugn attorneys’ motives because they are working on a case on contingency and stand to make a considerable amount of money if — and only if — they win?

    There is no need to respond to the substance of Professor Cassel’s post — especially as it does not contain even a single link to the material on which he relies.  I will, however, ask the plaintiffs’ attorneys if they would like to respond.

    The bottom line: Chevron made the choice to transfer the case from the U.S. to Ecuador, and it has to live with the consequences.  (And note that an Ecuadorian appellate court recently rejected the authority of the international arbitration panel.  No word yet on how the plaintiffs managed to procure that judgment through fraud.)

    PS. For the record, there is a fundamental difference between representing a criminal defendant accused of a crime and representing a corporation being sued in tort.  If Chevron is accused of a crime — as is about to be the case in Brazil — what I said about Karadzic would indeed apply in full.

  5. Kevin,

    Good.  It sounds like we agree.  Multinational corporations, no less than war criminals, deserve fundamental due process.  Lawyers and consulting academics on both sides of a case should not feel guilty for reasonable compensation for their hard work, whether paid up front or paid by contingency.  A consulting academic who speaks about a case should disclose whether he is working for pay or doing work pro bono, and Doug Cassel clearly disclosed in his March 1 open letter to the human rights community that he did some of his work for compensation and other work pro bono.  I’m glad we agree.

    Roger Alford

  6. Kevin: I don’t suppose there is any point to pursuing it and I won’t, but quite apart from any substantive point you make, I think the following is unnecessary as to tone. There is nothing you said that could not have been put in reasonable and courteous terms, including a strongly challenging moral view on these matters; I would imagine it would have a better chance of persuading those not already in agreement with you.  You might think you are engaging in vigorous intellectual debate; I think these kinds of comments make it rather less likely.  

    “Notice how Professor Cassel never actually says whether he was paid for his work or — concerned with the gross injustice being done to Chevron — he provided his time pro bono.  How about it, Professor Cassel?  Were you paid?
    I was tempted to take the post seriously, but these comments make it impossible.”

  7. Ken: I’m not going to belabor the point; we have already established that you object to the tone of blogging only when it involves someone with whom you disagree politically.  Ironically, though, my comment about being tempted was in no way sarcastic — I have great respect for Professor Cassel’s work on IHRL and have praised it numerous times on this blog.  So I was tempted to take the post seriously; it was not until he dusted off the old canards of slick NGO PR machines, greedy plaintiffs’ lawyers, and misunderstood multinationals that I changed my mind.

  8. Kevin: One place to start in the ethics of tone might be with the sarcasm of “we have already established.”  It would be difficult for me to read that as other than sarcasm and indeed an expression of contempt, since of course “we” have not established that at all.  Contempt usually connotes the other person’s views as being beneath notice, which I think is the fair implication of the “we” here.  Should I take this as an expression of contempt, or am I somehow mistaken?  

    I raise this because it would be far from obvious to me, and I believe to a casual reader or to Professor Cassel, that your original comments were other than sarcasm.  I’m sure that Professor Cassel and, indeed, all this blog’s readership, is pleased to learn there was no sarcasm intended. Some of us might be inclined to think that sarcasm was intended but with a lawyerly little ‘out’ to be able to walk it back if called on, but who am I to infer intentions?  

    So I certainly am pleased to learn this, and I imagine Roger too, having invited the guest post in the first place.  I’m sure that possible future guest posters have learned some valuable things about how Opinio Juris operates and its standards of civility and lively but reasoned disagreement.  But isn’t there some problem with tone if extracting this important piece of information requires an exchange as disagreeable as this one?

  9. Chevron is entitled to due process… in Ecuador. Chevron demanded the Ecuadorian court system decide this issue, and that process is still underway. Why is Chevron entitled to attempt heads I win, tails you lose ‘due process’ across multiple jurisdictions until it finds one where it succeeds? If they lose in the US, can they refile in, say, Brussels? 

    If the lawsuit had stayed in New York, the plaintiffs lost at trial and filed an appeal, and then they asked a court in Ecuador for a mulligan while the US appeal was still underway, they would be rightly derided as attempting a collateral attack on the judgment of their chosen forum. Why is it different when Chevron tries the same?

  10. Max – Why don’t you respond to the merits of the issue?  It appears undisputed (at least no one has disputed it so far) that Chevron has not done any drilling in Ecuador, all the drilling was done by the government oil company, and the plaintiffs are not suing and have promised not to sue the government oil company.  For me at least, that’s pretty much the end of the story.  

    Nor have I seen any reasoned dispute of Cassel’s description of the fraud perpetrated in Ecuador.  Just because Chevron wanted the suit to be heard in Ecuador does not mean it consented to a trial riddled with fraudulent evidence and bribes to the judge.  Do you or Heller have any reason to think that the trial was not fraudulent?  What is your reason for thinking so? Or do you think that’s just not important when there’s a chance to obtain billions for NGOs and tort lawyers from an American oil company?

  11. Douglas,

    Your facts are incorrect.  The drilling was done by Texaco, which Chevron purchased, during the time period in question — 1964-1992.  Chevron is liable for any final judgment issued against its predecessor.

  12. Douglas,

    You’re confusing two arguments. There’s one argument that the underlying trial was flawed or fraudulent. There’s another argument about where this issue should be resolved. You’re talking about the first. I’m talking about the second.

    I assume for purposes of argument the Ecuadorian judgment was fraudulently procured. So what? Allegations of judicial tampering are made all the time, and they are always dealt with in the normal course of appeals, not through collateral attacks in foreign jurisdictions. This is a problem to be resolved within Ecuador; if there’s any court we know should not resolve it, it’s the same federal court that Chevron successfully argued should not hear the case. 

    You didn’t address my hypothetical: what if the case had stayed in SDNY, the plaintiffs had lost, and then — while the appeal to the 2nd Circuit was still pending — the plaintiffs had re-filed the same case in Ecuador upon allegations the SDNY case was a sham. What would you have said then? You would have rightfully objected that the plaintiffs were not just forum shopping, but were doing it retroactively!

    We cannot have a system where a party can successfully move a case to a different jurisdiction and then, when they lose at the first level, complain the whole jurisdiction is a fraud. What evidence does Chevron have that the appellate courts are corrupt? Why is SDNY a better venue to rule on the Ecuadorian trial court’s conduct than the Ecuadorian appellate courts?

  13. Max, 

    It looks like Prof. Heller (indirectly) provided the answer to your question.  As the successor to Texaco, Chevron is surely aware that even a fair appellate process cannot keep a company out of bankruptcy when faced with a huge trial judgment.  (As a NY M&A lawyer, it is my opinion that Texaco was screwed royally by the trial court and the Texas appellate courts in that case.)  In any event, if this were purely a private case, your argument would have more force, but the claim that the Government of Ecuador is entangled in this case, which seems to have some merit, is the jurisdictional basis for the collateral attack here.

  14. As the successor to Texaco, Chevron is surely aware that even a fair appellate process cannot keep a company out of bankruptcy when faced with a huge trial judgment. That is simply wrong. Chevron did not post a bond in the Ecuadorian appeal and the result has been… nothing. No bankruptcy. Not a single payment. Does Chevron even have assets in Ecuador? I’ve not seen a clear answer on that, but the implication has been “no” given that they don’t drill there anymore. Enforcement in foreign jurisdictions is subject to a stay pending the appeal. The threat of enforcement pending the appeal has been a non-issue, despite repeated requests by Chevron for immediate relief like a worldwide TRO.

    Moving on, “government entanglement” is a conclusory argument that raises more questions than it answers. Do you believe that Iraqi detainees in Guantanamo should have separate collateral attacks in Iraqi courts, with Iraq having jurisdiction to punish companies like Blackwater and DynCorp that were involved in the allegedly wrongful detainment? 

    Down the same line, how do you square your implied argument that U.S. courts should intervene to protect Chevron worldwide with the Supreme Court’s Morrison and Goodyear v. Brown cases, and the likely result in the Alien Tort Statutes cases? It seems the Supreme Court has bent over backwards to avoid any involvement in claims arising in foreign jurisdiction, but your argument goes the opposite way, giving U.S. courts jurisdiction to hear collateral attacks on the same claims. Obviously, a court can’t have jurisdiction for a collateral attack on the fairness of a proceeding but not the underlying claim.

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