In Re Application Of Chevron Corporation
| Decision Date | 20 May 2010 |
| Docket Number | No. M-19-111.,M-19-111. |
| Citation | 709 F.Supp.2d 283 |
| Parties | In re APPLICATION OF CHEVRON CORPORATION, Petitioner.In re Application of Rodrigo Pérez Pallares and Richard Reis Veiga, Petitioners. |
| Court | U.S. District Court — Southern District of New York |
Randy M. Mastro, Scott A. Edelman, Andrea E. Neuman, Gibson Dunn & Crutcher LLP, for Petitioner Chevron Corporation.
Paul E. Dans, Jorge A. Mestre, Andre Rivero, Rivero Mestre & Castro, for Petitioner Rodrigo Pérez Pallares.
Peter J. Kahn, Beth A. Stewart, Williams & Connolly LLP, for Petitioner Ricardo Reis Veiga.
Ilaan M. Maazel, Jonathan S. Abady, O. Andrew F. Wilson, Emery Celli Brinckerhoff & Abady LLP, for Respondents Lago Agrio Plaintiffs.
Maura J. Wogan, Jeremy S. Goldman, Frankfurt Kurnit Klein & Selz, P.C., for Respondents Joseph A. Berlinger, Michael Bonfiglio, Third Eye Motion Picture Co., Inc., Crude Productions, LLC, and @radical.media.
These are applications pursuant to 28 U.S.C. § 1782 to issue subpoenas in connection with a multi-billion dollar Ecuadorian litigation against Chevron Corporation (“Chevron”), the threatened criminal prosecution in Ecuador of two of its attorneys, and an international arbitration. Specifically, Chevron and the attorneys seek to subpoena the “outtakes” of a documentary film entitled Crude, the making of which was solicited by the plaintiffs' lawyers and depicts events relating to the litigation. Respondents, the Ecuadorian plaintiffs and the documentary filmmaker, oppose the applications principally on the grounds that the discovery would undermine the Ecuadorian proceedings and that the material sought is protected by the journalists' privilege.
These applications arise in the context of three decades of oil exploration and extraction in Ecuador by Texaco, Inc. (“Texaco”), which became a wholly-owned subsidiary of Chevron in 2001. The following is a brief summary of Texaco's activities in Ecuador and the nine-year litigation that ensued in this District.1
In 1964, Texaco Petroleum Company (“TexPet”), a subsidiary of Texaco, began oil exploration and drilling in the Oriente region of eastern Ecuador. In the following year, TexPet started operating a petroleum concession for a consortium owned in equal shares by TexPet and Gulf Oil Corporation (the “Consortium”). The government of Ecuador (“GOE”) thereafter obtained Gulf Oil's interest through its state-owned oil company, Petroecuador, and became the majority stakeholder in the Consortium in 1976. TexPet operated a trans-Ecuadorian oil pipeline and the Consortium's drilling activities until 1990, when Petroecuador assumed those functions. Two years later, TexPet relinquished all of its interests in the Consortium, leaving it owned entirely by Petroecuador.2
In 1993, a group of residents of the Oriente region of Ecuador brought a class action suit in this Court against Texaco arising from TexPet's operations in the Consortium. The complaint in the action, captioned Aguinda v. Texaco, alleged that “between 1964 and 1992 Texaco's oil operation activities polluted the rain forests and rivers in Ecuador.” The plaintiffs sought billions of dollars in damages on a variety of theories, including negligence, strict liability, and equity to “redress contamination of the water supplies and environment.” 3
While the Aguinda litigation was pending, TexPet entered into a 1995 settlement agreement with the GOE and Petroecuador (the “Settlement”) whereby TexPet agreed to perform specified environmental remedial work in exchange for a release of claims by the GOE. The release, which covered TexPet, Texaco, and other related companies, encompassed “all the Government's and Petroecuador's claims against the Releasees for Environmental Impact from the Operations of the Consortium, except for those related to the obligations contracted” under the Settlement, which were to be “released as the Environmental Remedial Work is performed to the satisfaction of the Government and Petroecuador.” 4
Three years later, the GOE entered into an agreement with TexPet (the “Final Release”) according to which the GOE deemed the Settlement to have been “fully performed and concluded” and “proceede[ed] to release, absolve, and discharge” TexPet and related companies “from any liability and claims ... for items related to the obligations assumed by TexPet” in the Settlement.5
In the meantime, Texaco worked in earnest to transfer the Aguinda action from this district to the courts of Ecuador on the grounds of forum non conveniens and international comity. Texaco touted the ability of the Ecuadorian courts to “provide a fair and alternative forum” for the plaintiffs' claims.6 It argued also that the case did not belong in this district because the evidence and witnesses were predominantly in Ecuador. After nine years of litigation, this Court dismissed the case on forum non conveniens grounds in 2001.7 The Second Circuit affirmed the dismissal the following year.8
In 2003, following the dismissal of the Aguinda action, a group of Ecuadorians including “a substantial number of the Aguinda Plaintiffs” brought an action against ChevronTexaco 9 in Lago Agrio, Ecuador (the “Lago Agrio Litigation”). Plaintiffs asserted claims for, among other things, violations of an Ecuadorian environmental law enacted in 1999. The defendants contended that the law in effect impermissibly allowed plaintiffs to assert, as private attorneys-general, claims that belonged to the GOE but were released pursuant to the Settlement and Final Release.10 The GOE announced that it would receive ninety percent of any recovery.11
The Lago Agrio court ordered a “global” assessment of damages to be conducted by a team of expert witnesses led by Richard Stalin Cabrera Vega, who was required to “perform his work in an impartial matter” and to “maintain strict independence with regard to the parties.” 12 Dr. Carlos Beristain, who was appointed to Cabrera's team of expert witnesses, contributed to Cabrera's damages assessment for cancer deaths by meeting in “focus groups” with inhabitants of the region allegedly polluted by Chevron. As we shall see, Chevron maintains that Dr. Beristain failed to maintain “strict independence” with respect to counsel for the Lago Agrio plaintiffs.
The same year that the Lago Agrio Litigation was filed, the GOE filed a criminal complaint against two of Chevron's lawyers, petitioners Pallares and Veiga, and former GOE and Petroecuador officials, alleging that they had falsified public documents in connection with the Settlement and Final Release and had violated Ecuador's environmental laws.
In 2004, the Ecuadorian Prosecutor General began an investigation of the criminal charges. The District Prosecutor, however, found that “there [was] not sufficient evidence to pursue the case against ... Mr. Ricardo Reis Veiga and Mr. Rodrigo Pérez Pallares, representatives of TexPet.” 13 The Ecuadorian Deputy Attorney General nevertheless explained in an email to plaintiffs' counsel in the Lago Agrio Litigation that the criminal prosecutions were a potential “way to nullify or undermine the value of the” Settlement and Final Release, though “evidence of criminal liability established by the Comptroller [General's] Office was rejected by the prosecutor.” 14
In 2005, Steven Donziger, one of the lead counsel for the plaintiffs in the Lago Agrio Litigation, solicited award-winning producer and filmmaker Joseph Berlinger to create a documentary depicting the Lago Agrio Litigation from the perspective of his clients. Berlinger recounted that:
15
For the next three years, Berlinger shadowed the plaintiffs' lawyers and filmed “the events and people surrounding the trial,” 16 compiling six hundred hours of raw footage.
In 2006, while the Lago Agrio Litigation was pending, Rafael Vincente Correa Delgato was elected President of Ecuador on a platform of economic and social reform. President Correa, who describes himself as a “humanist,” a “Christian of the left,” and a proponent of twenty-first century socialism, 17 condemned Ecuador's oil contracts as “true entrapment for the country.” 18 He accused oil companies of failing to meet environmental regulations and sought to divert a portion of their revenue to fund social programs.19
A short time after President Correa took office, he issued a press release “urg[ing] the Office of the Prosecutor to permit the Prosecution of the Petroecuador officials who accepted the remediation carried out by Texaco.” 20 He thereafter appointed a new Prosecutor General, who decided that the criminal case against Pallares, Veiga, and former GOE officials should proceed.21
In 2009, Correa became the first Ecuadorian president in thirty years to be elected to a second term. He pledged that:
22
The year that President...
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