Wednesday, April 2, 2014

When lawyers conspire to defraud

There are some pretty amazing developments going on in a New York courtroom between Chevron and a group of very high-powered lawyers.  Briefly, they can be summarized as follows.

  1. A group of lawyers, mostly from the USA but including some locals and activists from Europe, sued Chevron in Ecuador as long ago as 1993 over alleged pollution of the environment in and around the Lago Agrio oil field in Ecuador.  They were aided in this after 2006 by the populist and environmentalist agenda of new President Rafael Correa.
  2. In 2011 an Ecuadorian court assessed damages of some $9 billion against Chevron.  Since then lawyers have taken the judgment before courts in a number of other nations, seeking to have its provisions enforced there and allow them to confiscate Chevron's assets in those countries in payment of the ruling.  Chevron has fought and is fighting all such attempts.
  3. Last month, in a New York court, U.S. District Judge Lewis Kaplan agreed with Chevron that the Ecuadorian ruling was fatally flawed.  He ruled that it was the product of 'egregious fraud' and was therefore 'unenforceable'.  His comments amounted to a searing indictment of the US lawyers concerned.  Here's an excerpt.
This case is extraordinary. The facts are many and sometimes complex. They include things that normally come only out of Hollywood — coded emails among [lead plantiffs' attorney Steven] Donziger and his colleagues describing their private interactions with and machinations directed at judges and a court appointed expert, their payments to a supposedly neutral expert out of a secret account, a lawyer who invited a film crew to innumerable private strategy meetings and even to ex parte meetings with judges, an Ecuadorian judge who claims to have written the multibillion dollar decision but who was so inexperienced and uncomfortable with civil cases that he had someone else (a former judge who had been removed from the bench) draft some civil decisions for him, an 18-year old typist who supposedly did Internet research in American, English, and French law for the same judge, who knew only Spanish, and much more.

It seems pretty clear from the evidence presented that the US lawyers and some international accomplices conspired to obtain the judgment against Chevron, in the expectation that the company would agree to settle for a substantial sum of money (certainly hundreds of millions, probably billions) rather than fight the case any further.  They would have siphoned off a large proportion of any settlement, of course.  Instead, to their dismay, Chevron fought back.

The decision also vindicates Chevron’s scorched-earth litigation tactics, which included a pledge by a Chevron executive to “fight this until Hell freezes over—and then we’ll fight it out on the ice.”

Nor have matters ended there.  The lawyers are still pursuing Chevron in courts in other countries, so Chevron appears to have decided to go on the offensive.

Chevron Corp., fresh from winning a judge’s ruling prohibiting attorney Steven Donziger from collecting on a  $9.5 billion environmental verdict against it in Ecuador, has won permission to sue the influential Washington law firm Patton Boggs for its role in the litigation.

U.S. District Judge Lewis Kaplan, in a ruling issued today, allowed Chevron to proceed with a counterclaim against Patton Boggs that it originally filed last May. In his two-page order, Kaplan dismissed Patton Boggs’ arguments that Chevron waited too long or that his court lacks so-called diversity jurisdiction because some of the defendant lawyers live outside the country.

. . .

In its counterclaim, Chevron accuses Patton Boggs of actively working to mislead courts and the public by, among other things, hiding the fact that Donziger’s consultants had written large parts of the report supporting the multibillion-dollar damage award. Patton Boggs made filings in U.S. and Ecuadorean courts that “mischaracterized” the relationship between the plaintiffs and the expert, who they were paying, Chevron says.

The suit also says Patton Boggs helped defraud Burford Group, a London litigation-finance outfit with close ties to some Patton Boggs partners, by inducing it to invest $5 million in the litigation without telling it it knew the plaintiff lawyers in Ecuador were concerned they could all “go to jail” because of their contacts with the court expert.

Chevron has pursued a scorched-earth campaign against Donziger and his allies, sparing no expense as it fights the verdict in Ecuador in U.S. and foreign courts as well as through international treaties.

. . .

If Kaplan’s ruling from earlier this month stands, Donziger won’t be able to collect a dime even if international collection efforts are successful. Chevron is also pursuing another financial backer, online poker magnate (and Harvard Law classmate of Donziger) Russell DeLeon, with lawsuits in Gibraltar.

There's more at the link.

As Kevin Williamson observed in the National Review:

I suppose it is chauvinistic of me to say, but the corruption of institutions in Ecuador does not surprise me that much — while the corruption on the U.S. end of the case is truly shocking. If this ends in anything less than prison time for the worst of the malefactors, justice will not have been served.

I'll be watching developments with great interest.  Kudos to Chevron for refusing to knuckle under to what appears to have been international blackmail on a gigantic scale.  I hope they 'go the distance' in dealing with the culprits - and I hope the culprits do a great deal of hard time as a result.


1 comment:

Anonymous said...

"When lawyers conspire to defraud" ... it is normally called a bar association, I believe. ;)