Oct 15, 2014
Judges have the legal authority to stop trial lawyers from cashing in on lawsuits that rely on fraud to produce illegitimate judgments in foreign courts, Business Roundtable and top legal scholars argue in a friend-of-the-court brief filed in the U.S. Court of Appeals for the Second Circuit.
This high-profile case has significant implications for U.S. companies with global operations. Businesses fear the harmful impact on international trade and investment if plaintiffs are allowed use foreign courts to collect on fraudulent judgments like the $9 billion awarded by an Ecuadorian court against Chevron, BRT argues in its brief in Chevron Corp. v. Steven Donziger, et al.
Donziger is the New York trial lawyer found by a U.S. District Court judge to have mounted a multiyear legal scheme of "egregious fraud" against Chevron, claiming the San Ramon, California-based company is responsible for environmental damage in the Ecuadorian Amazon. (Texaco, acquired by Chevron in the 2001, operated in the Amazon in a consortium with the government-run PetroEcuador.)
The 497-page ruling by Judge Lewis Kaplan of the Southern District of New York upheld most of the arguments made by Chevron in its civil racketeering suit against Donziger and his fellow "Lago Agrio" litigants.
[He] and the Ecuadorian lawyers he led corrupted the Lago Agrio case. They submitted fraudulent evidence. They coerced one judge, first to use a court-appointed, supposedly impartial, “global expert” to make an overall damages assessment and, then, to appoint to that important role a man whom Donziger hand-picked and paid to “totally play ball” with the LAPs. They then paid a Colorado consulting firm secretly to write all or most of the global expert’s report, falsely presented the report as the work of the court-appointed and supposedly impartial expert, and told half-truths or worse to U.S. courts in attempts to prevent exposure of that and other wrongdoing. Ultimately, the LAP team wrote the Lago Agrio court’s Judgment themselves and promised $500,000 to the Ecuadorian judge to rule in their favor and sign their judgment. If ever there were a case warranting equitable relief with respect to a judgment procured by fraud, this is it.
Since Chevron has no assets in Ecuador, Donziger and his team have sought to use courts in other countries, e.g. Brazil, Argentina and Canada, to collect on their ill-gotten judgment. But because of the fraud, Donziger et al. should not be rewarded, Kaplan ruled. (According to his 6.3 percent contingency fee, Donziger stood to make $545 million from the anti-Chevron lawsuit.) Kaplan blocked them from collecting in the United States and ruled that any money that the trial lawyer/Ecuadorians collected abroad should be turned over to Chevron.
Donziger has appealed, claiming that Kaplan's ruling represents an attack on "comity," the principle that governments should generally respect the laws, executive actions and judicial decisions of other countries. The District Court decision also violates international law by intervening in the affairs of other countries, the appeal claims.
Five legal scholars led by Professor Roger Alford of the University of Notre Dame School of Law refute Donziger's arguments in BRT's amicus brief. Judge Kaplan crafted his decision with comity in mind, BRT argues, noting that the civil remedies he imposed applied solely to the United States: The court's order, the legal scholars write, "does not prevent foreign courts from adjudicating the question of the enforceability of Ecuador's judgment."
Nor is there any violation of international law:
The threshold prohibiting interventions is high, and typically requires either military force or other physically coercive measures that put pressure on a State to change its practices or policies. It has nothing to do with the actions by a domestic court regulating the conduct of private individuals within its jurisdiction.
Recognizing the high stakes in the Chevron litigation, other business groups have filed their own briefs in the case, defending Kaplan's decision in Chevron's RICO litigation against Donziger as legally sound, especially given the pervasive fraud committed by the New York lawyer and his Ecuadorian followers. The central argument? Foreign courts should not be manipulated to reward dishonest lawsuits against private enterprises. Upholding that principle is critical to the operation of international law and to the ability of companies to invest with confidence around the world.
More ...
- Roger Parloff of Fortune Magazine summarizes the briefs in "Women’s rights group weighs in for—Chevron?!?" Parloff is one of a handful of legal journalists who have ably followed the Chevron litigation. (See more Parloff articles here.)
- Paul M. Barrett of Bloomberg/Businessweek is another. His new book, "Law of the Jungle: The $19 Billion Legal Battle Over Oil in the Rain Foreign and the Lawyer Who'd Stop at Nothing to Win," is an immensely readable account of the convoluted, multidecade litigation. He by no means spares Chevron, but at the same time, reveals the full range of corruption in the Donziger litigation. Barrett also reports on one pro-Chevron amicus brief by a left-wing group, "Feminists Weigh In for Chevron in Racketeering-Oil Pollution Case."
- Michael D. Goldhaber of American Lawyer is the author of an e-book, "Crude Awakening: Chevron in Ecuador," which delves into Chevron's legal strategy. Goldhaber sheds light on how a prize-winning documentarian, Joe Berlinger, wound up being a pawn of the Donziger legal team, producing an anti-Chevron hit piece, "Crude." Outakes from the film became powerful tools in an unprecedented discovery process undertaken by Chevron and its law firm, Gibson Dunn & Crutcher.
All three authors have now been attacked by the legal/environmental/anti-business machine that Donziger used and in many cases funded. Read more at Parloff's "Chevron and Ecuador: 2 books and a smear campaign."