Opinion

Alison Frankel

Truth and justice are elusive in Chevron Ecuador case

By Alison Frankel
January 29, 2013

On Monday, Chevron filed a new motion for summary judgment in its fraud and racketeering case against the lawyers and expert witnesses who helped 47 Ecuadoreans from the Lago Agrio region of the rainforest obtain an $18 billion judgment against the oil company from an Ecuadorean court in 2011. The motion discloses what seems to be incredibly powerful evidence that the Ecuadorean judgment was illegitimate: A onetime presiding judge on the Ecuadorean case, Alberto Guerra, submitted a declaration asserting that he acted as the middleman in setting up a $500,000 bribe from plaintiffs’ lawyers to the Ecuadorean judge who entered the judgment against Chevron. Guerra claimed that the plaintiffs actually drafted the 2011 judgment and that he, as a behind-the-scenes ghostwriter, worked with plaintiffs’ lawyers to make it seem more like a court ruling. According to his declaration, filed before U.S. District Judge Lewis Kaplan of Manhattan, Guerra had previously received regular payments from the plaintiffs in the Chevron case to ghostwrite other rulings subsequently issued by the presiding judge. And, to boot, Guerra asserted that Chevron — unlike the plaintiffs — didn’t respond to his solicitation of bribes.

Chevron filed additional new evidence to back Guerra’s declaration, including draft versions of the 2011 judgment found on the former judge’s computer, mail and bank records showing his contacts with the plaintiffs and sworn statements by other witnesses supposedly involved in the bribery scheme. “Guerra’s testimony and corroborating evidence confirm what the extensive overlap between the (plaintiffs’) internal files and the judgment already prove: that the (plaintiffs) corrupted the Ecuadorean court and wrote the $18 billion judgment against Chevron,” wrote the oil company’s lawyers at Gibson, Dunn & Crutcher.

Guerra has some credibility issues, since, by his own admission, he was dismissed from the Ecuadorean court and has been in financial straits. His declaration disclosed a payment of $38,000 from Chevron to compensate him for his time and expenses, including the surrender of his computer, flash drives and cell phones. The Lago Agrio plaintiffs and their allies claimed that isn’t all the former judge received. In a statement, Ecuadorean plaintiffs’ lawyer Pablo Fajardo said that Guerra previously offered to sell his testimony to his clients but they refused to pay. “It always was obvious that Guerra wished to sell himself to the highest bidder, a fact which undermined his credibility and made him a profoundly unreliable witness,” Fajardo’s statement said. The Ecuadoreans also claim (without supporting evidence, from what I can tell) that Chevron is using Guerra’s testimony to cajole and intimidate other former judges in Ecuador.

These latest disclosures are profoundly disheartening, regardless of which side you believe in this case. If you trust Chevron and the documentary evidence, the plaintiffs bought an $18 billion judgment from Ecuadorean judges. If you believe the plaintiffs, former Ecuadorean jurists are for sale to Chevron. Either way, I’m increasingly skeptical that we’ll ever know what happened all those decades ago in Lago Agrio. This case has been under way, in various permutations, in courts in Ecuador and the United States since 1993. There are binary questions at its heart: Either Chevron predecessor Texaco did or did not contaminate the Lago Agrio region and impair the health of its residents. Chevron has been just as adamant in denying liability as the Ecuadoreans have in asserting it. Yet the longer the case progresses, the more elusive an answer seems to be.

Chevron’s bulldog lawyers at Gibson Dunn might disagree. They’d say that with enough time, they will eventually prove all of the misbehavior they suspect of the Ecuadorean plaintiffs and their lawyers. I’d counter that they’ve been going full bore for about three years, using some of the most ingenious and aggressive litigation tactics ever deployed in a civil case. Chevron also makes no secret of its long-running investigation within Ecuador of the Lago Agrio plaintiffs and lawyers. But for all of the resources the company has devoted to discrediting its foes, in court and out, Chevron only recently obtained evidence of Guerra’s supposed bribe-taking and ghostwriting — even though Guerra’s declaration asserts that he twice solicited a bribe from a Chevron lawyer in Ecuador. (The declaration does not reveal what, if anything, Chevron’s Ecuadorean counsel told the company about Guerra’s approaches.)

Time, moreover, may not be on Chevron’s side. The Ecuadoreans are pursuing attachment action in Canada and Brazil based on the $18 billion Ecuadorean judgment. (The oil company does not have assets in Ecuador.) Chevron wants Judge Kaplan in New York to rule that the Ecuadorean judgment is a fraud that should be nullified, but even the 2nd Circuit Court of Appeals, when it vacated a preliminary injunction barring the Ecuadorean plaintiffs from enforcing their judgment against Chevron, expressed concerns about international comity and the application of U.S. rulings in overseas courts. The circumstances are different now, especially with Chevron’s new evidence that the Ecuadorean judgment was illegitimately procured, but even if Kaplan grants the company’s summary judgment motion, the plaintiffs will likely press international courts to enforce the Ecuadorean judgment while appeals are under way in the United States. Meanwhile, Chevron is in a nasty court fight with a major shareholder, the New York State Common Retirement Fund, over whether to settle the Ecuadorean case. The New York pension fund argues that it’s too expensive and distracting for the company to continue litigating; Chevron responded with an ethics complaint in November against the fund’s administrator, New York Comptroller Thomas DiNapoli, whom the oil company accuses of accepting campaign contributions from supporters of the Ecuadorean plaintiffs.

I’ve been writing about litigation long enough that I don’t have any illusions about what it can achieve. Litigation doesn’t often produce binary answers. Most cases settle because truth lies between the positions espoused by opposing sides. And in most cases, that’s a just outcome. But I’m not sure a settlement of the Chevron litigation, with all we’ve come to know about the Ecuadorean case and all that remains to be known, would bring justice to either side. In this case, truth and justice are too intertwined, and I don’t believe that continuing to litigate will answer the ultimate question of whether Chevron is responsible for ongoing environmental catastrophe in Ecuador. The Chevron case, more than any other I know, stands as a paradigm not only of how hard two sides can fight but also of how little they can ultimately accomplish.

For more of my posts, please go to Thomson Reuters News & Insight

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