Chevron Corp.. v. Donziger, 11 Civ. 0691(LAK).
| Court | United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York |
| Citation | 768 F.Supp.2d 581 |
| Docket Number | No. 11 Civ. 0691(LAK).,11 Civ. 0691(LAK). |
| Parties | CHEVRON CORPORATION, Plaintiff,v.Steven DONZIGER et al., Defendants. |
| Decision Date | 07 March 2011 |
768 F.Supp.2d 581
CHEVRON CORPORATION, Plaintiff,
v.
Steven DONZIGER et al., Defendants.
No. 11 Civ. 0691(LAK).
United States District Court, S.D. New York.
March 7, 2011.
[768 F.Supp.2d 592]
Randy M. Mastro, Andrea E. Neuman, Scott A. Edelman, Kristen L. Hendricks, William E. Thompson, Gibson, Dunn & Crutcher, LLP, for Plaintiff.Julio C. Gomez, Julio C. Gomez, Attorney at Law LLC, for Defendants Hugo Gerardo Camacho Naranjo and Javier Piaguaje Payaguaje.Gordon Mehler, Law Offices of Gordon Mehler, P.L.L.C., for Defendants Stratus Consulting, Inc., Douglas Beltman, and Ann Maest.Steven R. Donziger Defendant Pro Se.John W. Keker (pro hac vice pending), Elliot R. Peters, Keker & Van Nest, LLP, for Defendant Donziger.
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¦Table of Contents¦
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I The Background 597
Texaco's Former Operations in Ecuador 597
The Beginning—the Aguinda Class Action in this Court 597
Texaco Settles All Pollution Claims With Ecuador 598
The Aguinda Plaintiffs and Lawyers Make A Deal With Ecuador 598
Ecuador's Environmental Management Act of 1999 599
The Lago Agrio Litigation—2003–2008 600
The Complaint 600
Donziger's Role 601
Early Stages 602
The Initial Criminal Investigation—An Attempt to Defeat
the Settlement 602
The Early Expert Inspections 602
Donziger Solicits Berlinger to Make Crude 603
The Global Assessment—The Cabrera Report 603
The Release of Crude Leads to U.S. Discovery Revealing Misconduct 604
The Release of Crude 604
Dr. Calmbacher Disavows Report the LAPs Filed Over His Name 605
The Cabrera Report Exposed 606
[768 F.Supp.2d 593]
Cabrera's Appointment 606
The LAPs Ghost–Wrote All or Much of Cabrera's Report 607
The “Cleansing” Operation 610
The LAPs' Use of Pressure Tactics and Political Influence in this 611
Case
Intimidation of the Ecuadorian Judges 611
The Plan to Pressure the Court With an “Army” 612
Killing the Judge? 613
Political Influence to Use the Criminal Process Against Former 614
TexPet Lawyers to Extort a Settlement
The Legal and Political Climate in Ecuador—Fair Trial Becomes
Impossible and the ROE, at the LAPs, Urgings, Seeks to Prosecute 616
Chevron Lawyers for Tactical Reasons
The Ecuadorian Judiciary 616
The 2004 Purge of the Supreme Court 617
President Correa's Influence Over the Judiciary 617
Donziger Admits Corrupt Nature of the Ecuadorian Judiciary 620
The Lago Agrio Judgment and the LAPs' Enforcement Plan 620
The Judgment 620
Appellate Remedies in Ecuador 621
The LAPs' Enforcement Plan 622
The UNCITRAL Arbitration 624
This Case 625
The Complaint 625
Parties 625
Claims 625
Proceedings to Date 626
II Legal Analysis and Additional Facts 626
A. Chevron Is Threatened With Immediate and Irreparable Injury 626
1. The Threatened Harm Would Be Irreparable 627
2. The Threatened Harm Is Imminent 629
The Availability of Appellate Remedies and a Possible Stay
3. in Ecuador Do Not Preclude a Finding of Threatened 631
Irreparable Injury
B. The Balance of Hardships Tips Decidedly Toward Chevron 631
C. Likelihood of Success on the Merits—The Substantive Claims 632
1. The Claim for a Declaration that the Judgment is Not 632
Entitled to Recognition or Enforcement
a. Standards Governing Recognition and Enforcement 632
Chevron Has Shown the Requisite Likelihood of Success
b. on its Claim that Ecuador Does Not Provide Impartial 633
Tribunals and Due Process
There Are At Least Serious Questions Going to the
c. Merits of the Claim that the Judgment Was Procured By 636
Fraud
d. This Is an Appropriate Case for Declaratory Relief 637
2. The Other Claims 638
D. Likelihood of Success on the Merits—Procedural Issues 639
1. Chevron Is Likely to Establish Personal Jurisdiction As to 639
the Two Foreign Defendants Who Have Not Waived the Defense
a. Service of Process 639
b. The Exercise of Jurisdiction over the LAP 640
Representatives
(1) Amenability to Service 640
(a) N.Y. CPLR § 301 640
(b) N.Y. CPLR § 302 642
(2) Due Process 643
(a) Minimum Contacts 644
(b) Reasonableness 644
c. The Other Defendants 645
2. Comity and Abstention 646
3. Donziger's Judicial Estoppel Argument Lacks Merit 648
4. Donziger Was Afforded an Adequate Opportunity to Respond 649
a. The Argument and Scheduling of the Motion 649
The Denial of the Adjournment and the Briefing
b. Schedule Were Consistent With Rule 65(a) and Due 650
Process
5. No Evidentiary Hearing Was Required 654
6. The LAP Representatives Waived Their Unclean Hands Defense 656
for this Motion
E. The Bond 656
III The Record on this Motion 657
A. The Filings 657
B. Analysis 658
IV Conclusion 660
[768 F.Supp.2d 594]
A provincial court in Ecuador has entered a multibillion dollar judgment against Chevron Corporation (“Chevron”) in an action brought by indigenous peoples in the Amazonian rain forest (the “Lago Agrio Plaintiffs” or “LAPs”).1 The gravamen of their case is alleged pollution of the rain forest in years ending in 1992 by Texaco, Inc. (“Texaco”), the stock of which Chevron acquired at the end of 2001.2
This claim originated in the United States. Three American lawyers began the original litigation in this Court many years ago.3 After the New York suit was dismissed in 2001 on forum non conveniens grounds, they brought a successor lawsuit on a different legal theory (the “Lago Agrio” case) in Ecuador. The judgment at issue here was entered in that case.
The LAPs' attorneys and other representatives have stated that they intend to seek to collect on that judgment in multiple jurisdictions around the world, including by ex parte attachments, asset seizures, and other means, as promptly as possible, starting before completion of the Ecuadorian appellate process. 4 The purpose of such multiplicitous and burdensome proceedings against a company like Chevron, which would be good for the money if the judgment ultimately stands up, is plain. By their own admissions, it is to exert pressure on Chevron by means of this litigation strategy to force a quick and richer settlement.
Chevron contends that the judgment is not enforceable outside Ecuador because (1) the Ecuadorian legal system does not provide impartial tribunals or procedures compatible with the requirements of due process of law, and (2) it was obtained by fraud led in major degree by a New York City lawyer, Steven Donziger, substantial parts of which were conducted in the United States. It brought this case for, among other relief, a declaration that the judgment is not entitled to recognition or enforcement. It now seeks a preliminary injunction principally to bar the enforcement of the judgment outside Ecuador pending the resolution of this case on the merits or, at least, the resolution of its prayer for a declaratory judgment.
[768 F.Supp.2d 595]
This is an extraordinary case. The amount involved is large. Chevron challenges the fairness and integrity of the judicial system of Ecuador and thus implicates considerations of international comity. There are issues concerning the reach of U.S. law and questions pertaining to the conduct of the New York lawyer and others. There are other concerns.
The Court is mindful of the seriousness of each of them 5 and does not act lightly. In the midst of the many “trees” in this vast record, however, sight should not be lost of the forest. Several points must be borne clearly in mind from the outset.
First, a great deal of the evidence of possible misconduct by Mr. Donziger and others, as well as important evidence regarding the unfairness and inadequacies of the Ecuadorian system and proceedings, consists of video recordings of the words of Donziger and others made by a New York documentary film maker, Joseph Berlinger, whom Donziger invited to film activities in relation to the Ecuadorian case and who ultimately released a documentary film about it called Crude. Still more comes from e-mails and other documents between and among Donziger and others working with him that were produced in related cases. Yet neither Donziger nor any of the other key actors has denied Chevron's allegations or attempted here to explain or justify under oath their recorded statements and written admissions. Thus, the record includes uncontradicted and unexplained statements by Donziger and some of his alleged co-conspirators including such highly pertinent comments as this:
“They're all [i.e., the Ecuadorian judges] corrupt! It's—it's their birthright to be corrupt.” 6
Nor was this an offhand remark or a new sentiment on Donziger's part. In a brief filed in this Court in 2000 in an effort to avoid a forum non conveniens dismissal of his earlier case, Donziger stated that Ecuador could not provide an adequate forum and that its judiciary was corrupt.7Second, the submissions made by Donziger and the two LAPs who have appeared by counsel (the “LAP Representatives”)—the rest have defaulted—are replete with complaints that there is no hurry here, that the judgment cannot now be enforced under Ecuadorian law, that Donziger should have been given more time to respond to the motion, that the argument of the motion should have been delayed, and the like. As will appear, none of these contentions has merit even considered in isolation. But the details of each of these points should not obscure this overriding fact.
When it heard the preliminary injunction motion, this Court noted that any urgency could be eliminated if the defendants agreed to a temporary order that they maintain the status quo—that is, that no effort would be made to enforce the judgment—for a period sufficient to permit submission of additional papers and deliberation by the Court.8 The LAP Representatives refused. 9 And while Donziger offered an extension of the temporary restraining order (“TRO”) as to himself alone, that offer was essentially illusory
[768 F.Supp.2d 596]
because the lack of comparable relief as to the LAPs and some of the other defendants...
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Chevron Corp. v. Donziger, No. 11 Civ. 0691 (LAK).
...premature. Moreover, as the appeal in this case later proceeded, that understanding proved incorrect. See Chevron Corp. v. Donziger, 768 F.Supp.2d 581, 621 (S.D.N.Y.2011). Further, the Patton Boggs Invictus Memo stated its understanding that “the standard of review is not de novo.” PX 2382 ......
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Chevron Corp. v. Donziger, No. 11 Civ. 0691(LAK).
...premature. Moreover, as the appeal in this case later proceeded, that understanding proved incorrect. See Chevron Corp. v. Donziger, 768 F.Supp.2d 581, 621 (S.D.N.Y.2011). Further, the Patton Boggs Invictus Memo stated its understanding that “the standard of review is not de novo.” PX 2382 ......
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Chevron Corp. v. Donziger, No. 11 Civ. 0691 (LAK).
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