Chevron v. Donziger: A Dickensian Cheat Sheet
Twenty years of litigation. A $19 billion judgment. Sixty law firms and 2000 legal professionals — and that's just on one side. Chevron in Ecuador can plausibly claim to be the messiest case since Jarndyce sued Jarndyce. "This scarecrow of a suit," as Dickens said in Bleak House, "has become so complicated that no man alive knows what it means." Fortunately, The American Lawyer has been clearing the thicket of Chevron's Amazon case from the start. With a highly anticipated trial in the case beginning Tuesday, here's a field guide for those joining the expedition late.
What's this case all about?
In 1993, residents of the Amazon sued Texaco in the U.S. for dumping oil production waste directly into their environment. A decade later the case was dismissed under the doctrine of forum non conveniens. A similar suit was soon filed in Ecuador against Texaco's successor Chevron. On Valentine's Day 2011, the court in Lago Agrio held Chevron liable for damages that were finalized on Aug. 3, 2012, in the amount of $19,041,414,529. As the Ecuadorians race to collect on the judgment in Argentina, Brazil, and Canada, Chevron aims to discredit their judgment in international arbitration and — more publicly — in Manhattan federal court.
Who are the defendants in New York and what are they charged with?
Steven Donziger, an American Harvard Law School graduate who has been described by U.S. District Judge Lewis Kaplan as the field general or cabeza of the plaintiffs' litigation, is being sued for fraud and racketeering. His Ecuadorian colleagues have defaulted. (For our award-winning profile, please see Overexposed).
Two of Donziger's clients — a member of the Secoya tribe named Javier Piaguaje Payaguaje and a farmer from the Sacha region named Hugo Gerardo Camacho Naranjo — are defending against Chevron's charge of fraud. The other 45 Amazonians who hold the $19 billion judgment have defaulted.
Donziger has admitted that he directed his consultants to secretly ghostwrite the central damages report by a court expert, which he flogged as independent for years, but he denies that this amounted to fraud. Donziger completely denies Chevron's more recent allegation that the Ecuadorian parties ghostwrote large sections of the final Lago Agrio judgment. Among the keys to the trial will be the persuasiveness of Chevron's evidence on this point — and whether the Ecuadorians offer anything more than conspiracy theories to rebut it.
How long will the trial take?
Judge Kaplan hopes to end the bench trial by Thanksgiving. The parties are projecting a three-week case by Chevron, two weeks by the Donziger camp, and a few days at most of rebuttal, followed by closing statements and quite possibly a remedies hearing. Clearly the judge would like to move on to less controversial matters, like the Guantanamo Bay trials that he's calendared for the new year.
What does Chevron hope to get out of it?
In a nutshell: PR and an injunction. In the short run, Chevron would like to make the $19 billion judgment so smelly that courts in Argentina, Brazil, and Canada won't touch it. In the long run, Chevron would like to permanently enjoin enforcement by the Ecuadorians anywhere.
What do the defendants hope to get out of the trial?
In a nutshell: PR and an appeal. The Ecuadorian camp will seize every chance it gets to show that Chevron played dirty too, in the hope of establishing an unclean hands defense to injunctive relief. It had once hoped that embarrassing publicity would pressure Chevron into a settlement, but at this point that seems fanciful. There's no doubt that the Ecuadorians continue to pour effort into U.S. public relations, creating yet another spiffy website last week. But as with Chevron, their most important audience sits on the enforcing courts abroad.
Donziger et al. believe that they have no prayer at trial, and they are probably correct. Accordingly, their eyes will be fixed steadily on the U.S. Court of Appeals for the Second Circuit. Among their serious appellate arguments: that the court lacks jurisdiction over the Ecuadorians, that jurisdiction cannot arise out of a sanction, that fraud in New York cannot rest on third-party reliance, that applying RICO would violate the Morrison v. NAB rule on extraterritoriality, that RICO cannot support an injunction, and that any injunction would violate the Second Circuit's guidelines.
Who's who on the legal teams?
Chevron's massive lineup of outside counsel is helmed by a Gibson, Dunn & Crutcher team that includes Randy Mastro, Andrea Neuman, and William Thomson. Donzinger has been representing himself since John Keker of Keker & Van Nest fled the case in May, but he also signed up two new lawyers this month: Zoe Littlepage of Houston's Littlepage Booth and Richard Friedman of Seattle-based Friedman Rubin. The Ecuadorian defendants are represented by Julio Gomez of Gomez LLC. The Ecuadorian side is also represented in appellate and other matters by Patton Boggs' James Tyrrell Jr.
Will this really be the end?
Chevron is convinced that — between the remedies in this suit and the arbitration, and the public exposure that emanates from both — it will extinguish all chance of the $19 billion ever being collected.
But from a docket clerk's perspective, there will be loose ends aplenty. In addition to the final Second Circuit appeal, and enforcement hearings in three to five nations, Chevron will also await the arbitral awards on its contract and treaty claims (and its claim of damages for violating interim arbitral orders) — not to mention Judge Kaplan's call on its fraud counterclaim against Patton Boggs, which could start an entirely new round of discovery. Donziger will await a ruling on a New York state court claim that he breached his fiduciary duty toward the Huaorani indigenous people to protect their interests in the Lago Agrio judgment and, perhaps more worryingly, the discretion of prosecutors and bar authorities as to his criminal and ethical standing.
Jarndyce v. Jarndyce only came to an end when the legal bills had fully consumed the sum in controversy. Alas, even with spending by Chevron running into the hundreds of millions, there is enough fuel for this fire to burn another two decades.
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