In re Application of Chevron Corp..

• Decision Date: 10 November 2010
• Docket Number: No. 10 MC 00002 (LAK).,10 MC 00002 (LAK).
• Citation: 749 F.Supp.2d 141
• Parties: In re Application of CHEVRON CORPORATION, et al.,This Document Applies to All Cases.
• Court: U.S. District Court — Southern District of New York

749 F.Supp.2d 141

In re Application of CHEVRON CORPORATION, et al.,This Document Applies to All Cases.

No. 10 MC 00002 (LAK).

United States District Court, S.D. New York.

Nov. 10, 2010.

Randy M. Mastro, Scott A. Edelman, Kristen Hendricks, Andrew E. Neuman, William E. Thomson, Gibson Dunn & Crutcher LLP, for Chevron Corporation.Paul E. Dans, Jorge A. Mestre, Andrés Rivero, Rivero Mestre & Castro, for Rodrigo Pérez Pallares.Alan Vinegrad, Jason P. Criss, John Han, Covington & Burling LLP, for Ricardo Reis Veiga.Bruce S. Kaplan, Robert D. Kaplan, Ellen London, Friedman Kaplan Seiler & Adelman LLP, for Movant Steven R. Donziger.Ilann M. Maazel, Jonathan S. Abady, Adam Pulver, O. Andrew F. Wilson, Emery Celli Brinckerhoff & Abady LLP, for Lago Agrio Plaintiffs.

OPINION

(CORRECTED)

LEWIS A. KAPLAN, District Judge.

+-----------------+
                ¦Table of Contents¦
                +-----------------+
                

                Facts                                                                   144
                

         The Present Posture of the Ecuadorian Proceedings and the
                    I.   Urgency of this Matter                                         144
                         Crude  , Donziger's Central Role in the Events at Issue, and
                    II.  these Subpoenas                                                145
                    III. The U.S. Litigation Against Texaco and Chevron                 148
                

         A.   Texaco's Operations in Ecuador                            148
                         B.   The Aguinda Action                                        148
                

     IV. The Settlement and Release                                     149
                     V.  The Ecuadorian Litigation and Criminal Prosecutions            149
                

              The Lago Agrio Litigation, the Global Assessment and
                         A.   Other Evidence of Misconduct                              149
                         B.   The Initial Criminal Investigation                        153
                         C.   Donziger Solicits the Making of Crude                     154
                         D.   President Correa Takes Office                             154
                

     VI.  The UNCITRAL Arbitration                                      156
                     VII. The Nature of Donziger's Activities                           157
                

         A.   The March 30, 2006 Intimidation of the Judge              158
                         B.   The Plan to Pressure the Court With an “Army”             158
                         C.   Killing the Judge?                                        159
                

Discussion                                                              159
                

     I.  Judicial Code Section 1782                                     159
                

         A.   Statutory Requirements                                    160
                         B.   Discretionary Factors                                     160
                

     II. Deposition of Adverse Counsel                                  162
                

         A.   The Need to Depose Donziger                               162
                         B.   Donziger's Role                                           163
                         C.   Extent of Discovery Already Conducted                     164
                         D.   Risk of Encountering Privilege and Work–Product Issues    164
                

              1.  Basic Principles                                      164
                              2.  The Normal Means of Claiming Privilege                166
                              3.  Application to Donziger                               167
                

     III. The Proposed Modification of the Subpoenas                    169
                

Conclusion                                                              170
                

Chevron is the target of litigation brought in Ecuador by the so-called Lago Agrio plaintiffs ¹ in which the latter seek to recover $113 billion ² for alleged environmental pollution by Texaco, Inc. (“Texaco”), from Texaco's current owner, Chevron Corporation (“Chevron”). ³ Rodrigo Pérez Pallares and Ricardo Reis Veiga (the “Individual Petitioners”) are facing criminal charges there as a result of having signed a settlement of such claims on behalf of Texaco some years ago. The criminal charges at least in part are a result of an alliance between the Lago Agrio plaintiffs and the Ecuadorian government, which has both financial and political interests in the success of the lawsuit. Chevron and the Individual Petitioners are seeking to defend themselves by obtaining discovery in the United States under Section 1782 of the Judicial Code,⁴ which they believe will demonstrate that both the civil litigation and the criminal prosecution in Ecuador have been tainted by fraud and other misconduct by the Lago Agrio plaintiffs and improper collusion among them and the government of Ecuador (“GOE”).

At the heart of this matter is Steven R. Donziger, a member of the New York Bar but, much more importantly, the field general of the Lago Agrio plaintiffs' efforts in Ecuador—efforts that include lobbying, media and public relations, fund raising, and other activities. Chevron and the Individual Petitioners here subpoenaed Donziger to produce documents and to give testimony, as they maintain that Donziger is the prime actor, or among the prime actors, in the alleged fraud and misconduct. Donziger moved to quash the subpoenas. Most significantly, he argued in substance that his status as an attorney involved adversely to Chevron and the Individual Petitioners in the Ecuadorian litigation protects him from (1) being compelled to assert his claims of attorney-client privilege and work product protection on a document-by-document, communication-by-communication basis and thus depriving Chevron and the Individual Petitioners of a meaningful opportunity to challenge those claims and (2) giving evidence even as to obviously non-privileged matters.

It is common ground that one party to a litigation should not easily be permitted to take discovery of the lawyers on the other side. The possibilities for mischief and abuse are too great. In the quite unusual circumstances of this case, however, the need for the discovery, the plainly unprivileged nature of many of Donziger's activities, the evidence of possible fraud and misconduct by Donziger, and other considerations are sufficiently great to require that Donziger respond on the merits to the subpoenas. He must give discovery as to non-privileged matters. He must not be exempted from making specific claims of privilege or from defending those claims against any challenges. Accordingly, the Court denied the motions to quash and required compliance, saving to Donziger the ability to make specific claims of privilege for later adjudication by the Court. It did so in a summary order ⁵ with the promise of a fuller opinion to follow. This is that fuller opinion.

Facts

I. The Present Posture of the Ecuadorian Proceedings and the Urgency of this Matter

It is important to begin with a brief statement of the present posture of matters in Ecuador, which has two especially significant aspects.

First, the Ecuadorian court in which the civil case is pending appointed a supposedly neutral, independent Ecuadorian expert, Richard Stalin Cabrera Vega, to render a “global assessment” of the claim. Cabrera has recommended a multi-billion dollar award against Chevron. As will appear, however, there is substantial evidence that (1) Cabrera was appointed as a result of Lago Agrio plaintiffs' ex parte contacts with and pressure on the Ecuadorian courts, (2) at least part of his report was written by consultants retained by the Lago Agrio plaintiffs, and (3) the report was passed off as Cabrera's independent work. In short, there is evidence to support Chevron's claim that the “global assessment” is a fraud orchestrated by the Lago Agrio plaintiffs. There is evidence too that other expert evidence submitted to the Ecuadorian courts on behalf of those plaintiffs also was fraudulent. Chevron thus stands in jeopardy of a huge judgment that, if ultimately rendered, could be the result of a fraud practiced by the Lago Agrio plaintiffs.

Second, the Lago Agrio plaintiffs are attempting to procure the criminal prosecution of the Individual Petitioners. The reason they do so relates to the fact Texaco long ago entered into a settlement with the GOE, signed on its behalf by the Individual Petitioners, which may well have released the claims upon which the Lago Agrio plaintiffs sue. A criminal prosecution of the Individual Petitioners, especially a successful one, would overcome or at least help to overcome that obstacle—especially in a country in which, at least according to Donziger: “You can solve anything with politics as long as the judges are intelligent enough to understand the politics.... [T]hey don't have to be intelligent enough to understand the law, just as long as they understand the politics.” ⁶

Until recently, the Lago Agrio plaintiffs' efforts to instigate criminal charges against the Individual Petitioners were unsuccessful, as Ecuadorian prosecutors had rejected their claims. But the political climate in Ecuador has changed, and these plaintiffs have obtained the support of the Ecuadorian president. The president, after at least one meeting with plaintiffs' representatives, called for the prosecution of these and other individuals involved in the settlement. Cabrera's “global assessment” then was submitted to the prosecutor who, soon thereafter, reopened criminal proceedings against the Individual Petitioners, citing new evidence. A preliminary hearing—which will determine whether the Individual Petitioners must stand trial—is scheduled for November 10, 2010. The Individual Petitioners therefore have an urgent need quickly to obtain evidence of the allegedly fraudulent nature of the global assessment and of any misconduct by the Lago Agrio plaintiffs and the GOE with respect to the criminal prosecution.

As the foregoing demonstrates, the parties are engaged in a race—the Lago Agrio plaintiffs to bring the Ecuadorian proceedings to a close and Chevron and the Individual Petitioners to obtain evidence that they hope will demonstrate that the proceedings against them have been tainted. The Lago Agrio plain...