By Karen Hinton
Prediction: Chevron will lose the historic Ecuador pollution case on both the law and the facts, despite what you may have read in articles by U.S. legal reporters about the 20-year plus lawsuit.
In fact, you may think the Ecuadorians have lost already. They haven’t.
Earlier this year, New York Judge Lewis Kaplan ruled the $9 billion Ecuador judgment against Chevron was fraudulent and not “collectible” anywhere in the world. In 2012, Judge Kaplan ruled it was not “enforceable” but the 2nd Circuit Court of Appeals quickly reversed him sending Chevron’s lawyer Randy Mastro backed to the command center at his law firm Gibson Dunn, where job number one is to protect multi-national companies taking advantage of weak judiciaries and governments in poverty-stricken areas often populated by indigenous group
A group of prestigious U.S. lawyers appealing Judge Kaplan’s ruling for the second time argue blocking “collection” of a foreign judgment violates international law and comity (legal reciprocity) as much as blocking “enforcement” and are betting the 2nd Circuit reverses again, based on that argument as well as a host of others concerning jurisdiction, the improper use of the RICO statute and, importantly, the fact that Ecuador’s appellate court conducted a de novo review of the judgment and upheld it, meaning the appellate court acted as if the case was being considered for the first time, without deference to the lower court’s ruling.
It appears the oil giant is impressed with the Ecuadorians’ arguments and is hedging its bet on victory, based on a footnote in Chevron’s recent appellate court brief.
Fearing defeat on the law, Gibson Dunn’s footnote 19 asked the 2nd Circuit to uphold Judge Kaplan’s “facts” even if the court can’t uphold his legal logic. You see, Chevron believes it needs an affirming statement on its “facts” to prevent the Ecuadorians from enforcing the $9 billion judgment in Canada, Brazil and Argentina, where legal proceedings are underway to seize company assets. (Chevron has few assets today in Ecuador.)
Whether such a statement will make a difference in another country’s court system is up for debate but the Ecuadorians and their attorneys expect they will be allowed to counter Chevron’s “facts” with their own set of facts — facts that were discounted, ignored or not allowed into evidence in Judge Kaplan’s courtroom.
So let’s compare facts.
Chevron’s Story: Lawyers for the Ecuadorians Wrote the Judgment
The abridged version of Chevron’s story goes like this: the lawyers for the Ecuadorians promised to pay the presiding judge in Ecuador $500,000 in exchange for writing the judgment.
The Big Problem(s) with that Story
What is Chevron’s proof that this illicit bargain took place? To guarantee Chevron its Pyrric victory in his trial, Judge Kaplan ignored several big holes in Chevron’s story, as did most legal reporters, including two who have gone on to write books about the case.
Big hole number 1: Where’s the body?
Chevron never found the “ghostwritten” judgment on any computers, emails, jump drives or in the sock drawers of any of the Ecuadorians’ attorneys even though the company had access to literally the entirety of their written and electronic files during the relevant time period.
Big hole number 2): Chevron’s own expert said the company’s “fingerprint” evidence of what it calls “ghostwriting” is “gobbledygook.”
Big hole number 3): Chevron’s one witness who claimed to know about the bribe is himself being paid over $1 million by Chevron in exchange for his ever-changing testimony. This witness, a former judge (Alberto Guerra), has admitted to taking bribes in 14 other cases in Ecuador over which he presided.
What Chevron Does Not Have
Even though Judge Kaplan allowed Chevron complete access to all of Steven Donziger’s written and electronic files, Chevron has not found a copy or draft of the Ecuadorian judgment on his hard-drive; nor have the 2,000 lawyers and legal assistants working on the case for Chevron found it in any of his emails.
Remember, Donziger is the lawyer Chevron claims had complete control over the “conspiracy” to “extort” the company. Also not found is any email exchange or reference to a meeting with the Ecuador judge or with his alleged associate Guerra (more about him later) during which the Ecuadorians’ lawyers supposedly struck their bribery deal.
Quite the contrary, internal emails between members of the Ecuadorians’ legal team, practically up to the moment the trial judgment in Ecuador was issued, demonstrate that: (1) they had no idea when the Ecuador trial court would issue a final decision; (2) they were concerned that their final submission to the court would not be finished in time; and (3) they believed that if they did not get their act together quickly and submit their final written arguments, the Ecuador judge might rule for Chevron.
The “Fingerprint” Evidence
Chevron (and Judge Kaplan) knew they couldn’t hang the entire fraud ruling on the testimony of the paid witness who had admitted to taking bribes, so they argued the Ecuadorians’ lawyers left “fingerprints” on the judgment that corroborate Guerra’s testimony.
Chevron claims various legal documents written by the Ecuadorian attorneys were not entered into the court record during the trial in Ecuador, yet language from them appears in the judgment. Chevron concludes that whoever wrote the documents wrote the ruling, not the Ecuador judge.
First, there’s nothing wrong with language originally written by lawyers in a court case appearing in a final ruling. That occurs often in courts everywhere, including the U.S. Judges constantly adopt language submitted by lawyers in their briefs and expert reports in their final decisions. In fact, Judge Kaplan adopted Chevron’s “facts” and arguments in his final decision. It would be suspect, though, if the language had never been entered into the record or given to a judge for him/her to consider.
But that’s not what happened.
Documents were introduced to the Ecuador court but for various reasons were not included in the Ecuadorian trial record: Excerpts from the so-called “Fusion Memo” represent the most substantially overlapping text that Chevron argues proves the Ecuadorians’ lawyers wrote the judgment. It’s a legal memo about a completely non-controversial topic: why Chevron was liable for Texaco’s contamination after the merger in 2001.
The issue of “successor liability” was publicly and frequently discussed in the Ecuadorian proceedings. For example, at a court-supervised inspection of a Chevron well site on June 12, 2008, the Texaco/Chevron merger was discussed and all of the exhibits to the Fusion Memo were submitted and added to the trial court record. It is very likely that the actual memo was submitted as well, but it is possible it was not stamped as part of the official court record. The Lago Agrio proceedings were chaotic. There are many other documented examples of Chevron’s submissions to the court not being made part of the official record. The fact that all of the memo’s exhibits were submitted and marked, but possibly not the memo itself, provides a perfectly plausible explanation for why language from this memo found itself into the trial judgment.
Here is a summary of emails among the Ecuadorians’ lawyers.
Chevron did not search the actual trial record in Ecuador so it has no way of knowing whether the Fusion Memo is actually in the record. Chevron has never claimed that it searched the physical trial record from the Lago Agrio proceedings. The only people who seem to have searched that trial record — the appellate court judges in Ecuador — found most of Chevron’s argument to be without merit and upheld the judgment against Chevron, rejecting the company’s fraud claims. The Ecuador Supreme Court also upheld the judgment, bringing the total number of eight appellate judges who have ruled against Chevron in Ecuador.
Chevron did an unreliable OCR review. An OCR (Optical Character Recognition) is a fancy way of describing an electronic scan of a document. Instead of reviewing the full original trial record, Chevron relied on what it claimed was electronic scans using the OCR method. The company claims the pages of the Ecuadorian trial record were first scanned as image files, then subject to an OCR review, which purportedly renders those image files text searchable.
The problem is that these image files — which were drawn from thousands of loose sheets of paper, some with handwriting scribbled on them, fastened together by rubber bands and stored in an Amazon courthouse — when submitted to OCR review, were scrambled, leaving most of the text un-recognizable. There were likely various reasons for this: the state of the papers (some of which were soiled), that some of the text was handwritten and difficult to read, and the presence of accents in the original Spanish.
Bottom line: Chevron had no way to know what was in or out of the Ecuador trial record. But that doesn’t change the fact that any document submitted to be part of the record, but not officially recorded, can still be used by the court in rendering a judgment.
Chevron’s limited document-by-document review also was unreliable: Chevron did a limited document-by-document review of the scanned image files and submitted that document review as “expert testimony.” There is no such thing. The limited set of documents that were reviewed — to prove that the overlapping text could not be found in the trial record — made up less than half of the Ecuadorian trial record.
Paid-for Witness Testimony: Enter Alberto Guerra from Stage Left
Chevron’s sole witness — the man who supposedly establishes the corrupt bargain between the Ecuadorians’ lawyers and the Ecuador judge — is Alberto Guerra. It stretches the imagination. and breaks the limits of justice, that anyone would rely on his testimony.
What Does Alberto Guerra (Hear) Say: It is important to be clear: Guerra admits that he was not present at any meeting when the lawyers allegedly bribed the Ecuador judge. Guerra testified the Ecuador judge, Nicolas Zambrano, told him that Pablo Fajardo (the lead lawyer for the Ecuadorians) had offered him (Judge Zambrano) money for the opportunity to write the judgment. (Judge Zambrano denied this accusation in sworn testimony.) This is called hearsay. And that is too kind; this is, at least, double hearsay. Hearsay evidence, of course, is not generally admissible in courts in the United States. This is another example of the “Kaplan exception” to the law taking hold in Chevron’s favor.
So why was Guerra involved at all since he wasn’t present at the alleged “bribery” meeting with Judge Zambrano. Guerra did not negotiate the alleged “bribery” fee. He was not asked to write the judgment. So why was Guerra even involved? According to Guerra, he was going to be paid (between $100k and $200k, he can’t remember which) by someone (he can’t remember who) to basically fix typos in the judgment. That makes a whole lot of sense, right? I mean, if you are going to defraud a multi-billion dollar unscrupulous oil giant, what you would really want to do is include as many untrustworthy and extraneous people as you can in the conspiracy.
How did Guerra come to testify: Guerra did not testify out of the goodness of his heart. Guerra is an admitted crook. He admits to paying and receiving 14 bribes, unrelated to the Chevron case, while working as a lawyer and a judge in Ecuador. He admits to soliciting payments from both Chevron and the Ecuadorians in this case.
And he has received obscene sums of money and benefits from Chevron in return for his testimony.
Guerra claims he fears for his safety, thus justifying his political asylum. How about fearing prison for admitting in his Chevron deposition he had accepted 14 bribes in previous court cases? An all-expense-paid trip to America with a get-out-of-jail card was motivation enough to testify consistent with Chevron’s narrative.
Strangely enough, Chevron’s lawyers, including Miami-based Andres Rivero, tape-recorded some of the meetings where they tried to corrupt Guerra with suitcases full of cash. In these tapes, Guerra does not express fear of persecution, but he does express a desire for money. At one point, he asked Chevron’s lawyers to “add a few zeroes” to their offer. Chevron’s lawyers were all too happy to oblige and, in an almost cartoonish way, gave Guerra tens of thousands of dollars of cash and an offer of political asylum for him and his family.
All-in, Guerra will receive upwards of a $1 million from Chevron, if not more. This includes: housing, a car, furniture, monthly income, and legal immigrations services for his family provided by none other than the esteemed Ira Kurzbam, the former director of the American Immigration Lawyers Association. This might be a tempting offer for anyone, but it is truly an awful inducement for someone who is an admitted liar.
Guerra changes his story three times as evidence proves previous versions are false: Under questioning from Chevron. First, he said the ghostwritten judgment was on his computer for him to edit. But he couldn’t find it. Then, he said it was on a jump-drive, but he couldn’t find the thumb-drive. Then, he said he edited the judgment on a laptop owned by one of the Ecuadorian attorneys. With each new story, he negotiated a higher fee from Chevron. He never was able to produce a copy of the judgment he said he edited on behalf of the Ecuadorians.
Guerra submits evidence to prove he isn’t lying this time: Guerra turned over to Chevron a daily planner, some shipping records and deposit slips to prove that, this time, he was not lying about anything.
Daily planner? This included a note about meeting with Zambrano nine months after the judge issued his final ruling. And Guerra claims he “lost” this planner the year he claims to have met with Donziger.
Shipping records? Neither Guerra nor Chevron offered any evidence authenticating records that supposedly showed Guerra delivered documents to the Ecuador judge. Guerra could have easily created the shipping records out of whole cloth. Chevron obviously had the resources to authenticate them from the shipping company, but chose not to.
Deposit slips? Again, Chevron submitted only copies of deposit slips showing payments into Guerra’s account allegedly by a secretary for the Ecuadorian plaintiffs, not the originals. A normal judge never would have accepted them without authentication. The handwriting on the deposit slips looks very much like Guerra’s handwriting in his daily planner. We believe Guerra created the deposit slips to jack up his payments from Chevron. In any event, the slips are so unreliable they never should have been accepted as evidence. Again, the “Kaplan exception” at work.
If Chevron wants to argue these “facts” in another court with unbiased judges — say in Canada, where the Ecuadorians are suing to seize Chevron’s assets — I say bring it on.
In a court where a fair hearing of all the evidence is allowed — which was not the case in Judge Kaplan’s courtroom — Chevron’s “facts” won’t be so convincing. I predict that in those courts and in the 2nd Circuit, both the law and the facts will remain on the side of the Ecuadorians.