In re Application of Chevron Corp.. For An Order Pursuant To 28 U.S.C. Section 1782 To Conduct Discovery For Use In Foreign Proceedings (d.C. # 2–10–mc–00208)rodrigo Pérez Pallares And Ricardo Reis Veiga v. Jospeh C. Kohn

• Decision Date: 25 May 2011
• Docket Number: 11–1099.,Nos. 10–4699,s. 10–4699
• Citation: 650 F.3d 276
• Court: U.S. Court of Appeals — Third Circuit
• Parties: In re Application of CHEVRON CORPORATION for an Order Pursuant to 28 U.S.C. Section 1782 to Conduct Discovery for Use in Foreign Proceedings (D.C. # 2–10–mc–00208)Rodrigo Pérez Pallares and Ricardo Reis Veigav.Jospeh C. Kohn, Esquire and Kohn, Swift & Graf, P.C. (D.C. # 2–10–mc–00209) Ecuadorian Plaintiffs, Appellants in No. 10–4699In re Application of Chevron Corporation for an Order Pursuant to 28 U.S.C. Section 1782 to Conduct Discovery for Use in Foreign Proceedings (D.C. # 2–10–mc–00208)Rodrigo Pérez Pallares and Ricardo Reis Veigav.Joseph C. Kohn, Esquire and Kohn, Swift and Graf, P.C. (D.C. # 2–10–mc–00209)* Republic of Ecuador, Appellant in No. 11–1099* (Pursuant to Fed. R. App. P. 12(a)).

650 F.3d 276

In re Application of CHEVRON CORPORATION for an Order Pursuant to 28 U.S.C. Section 1782 to Conduct Discovery for Use in Foreign Proceedings (D.C. # 2–10–mc–00208)Rodrigo Pérez Pallares and Ricardo Reis Veiga

v.Jospeh C. Kohn, Esquire and Kohn, Swift & Graf, P.C. (D.C. # 2–10–mc–00209) Ecuadorian Plaintiffs, Appellants in No. 10–4699In re Application of Chevron Corporation for an Order Pursuant to 28 U.S.C. Section 1782 to Conduct Discovery for Use in Foreign Proceedings (D.C. # 2–10–mc–00208)Rodrigo Pérez Pallares and Ricardo Reis Veiga

v.Joseph C. Kohn, Esquire and Kohn, Swift and Graf, P.C. (D.C. # 2–10–mc–00209)* Republic of Ecuador, Appellant in No. 11–1099* (Pursuant to Fed. R. App. P. 12(a)).

Nos. 10–4699

11–1099.

United States Court of Appeals, Third Circuit.

Argued Feb. 22, 2011.Filed: May 25, 2011.

James E. Tyrell, Jr. (argued), Adlai J.J. Small, Joseph E. Hopkins, Jason W. Rockwell, Brendan M. Walsh, Patton Boggs, LLP, Newark, NJ, Attorneys for Appellants Ecuadorian Plaintiffs.Gene C. Schaerr (argued), Eric W. Bloom, Nicole Y. Silver, Gregory L. Ewing, Winston & Strawn LLP, Washington, DC, Jonathan F. Bloom, Stradley, Ronon, Stevens & Young, Philadelphia, PA, Attorneys for Appellant Republic of Ecuador.Arthur Makadon, Burt M. Rublin, Ballard Spahr LLP, Philadelphia, PA, Scott A. Edelman, Andrea E. Neuman, Gibson, Dunn & Crutcher LLP, Los Angeles, CA, Randy M. Mastro (argued), Gibson, Dunn & Crutcher LLP, New York, NY, Thomas H. Dupree, Jr., John F. Bash, Gibson, Dunn & Crutcher LLP, Washington, DC, Attorneys for Appellee Chevron Corporation.Andrés Rivero (argued), Jorge A. Mestre, Paul E. Dans, Catherine C. Grieve, Rivero Mestre LLP, Miami, FL, Frederick A. Tecce, McShea & Tecce, Philadelphia, PA, Attorneys for Appellee Rodrigo Pérez Pallares.Alan Vinegrad, Jason P. Criss (argued), Covington & Burling LLP, New York, NY, Enrique Armijo, Covington & Burling LLP, Washington, DC, Burt M. Rublin, Ballard Spahr LLP, Philadelphia, PA, Attorneys for Appellee Ricardo Reis Veiga.James J. Rohn, Patricia M. Hamill (argued), Matthew H. Haverstick, Conrad O'Brien PC, Philadelphia, PA, Attorneys for Appellees Kohn, Swift & Graf, P.C. and Joseph C. Kohn, Esquire.BEFORE: AMBRO, FISHER, and GREENBERG, Circuit Judges.

OPINION OF THE COURT

GREENBERG, Circuit Judge.

I. INTRODUCTION

This matter comes on before this Court on appeal from the District Court's December 20, 2010 order granting Chevron Corporation (Chevron), and two of its attorneys, Rodrigo Pérez Pallares and Ricardo Reis Veiga (collectively with Chevron “the Chevron applicants”), discovery from attorney Joseph C. Kohn and his law firm, Kohn, Swift & Graf, P.C. (KSG), pursuant to discovery applications that the Chevron applicants filed under 28 U.S.C. § 1782. Section 1782 provides that “[t]he district court of the district in which a person resides or is found may order him to give his testimony or statement or to produce a document or other thing for use in a proceeding in a foreign or international tribunal,” subject to the express limitation that “[a] person may not be compelled to give his testimony or statement or to produce a document or other thing in violation of any legally applicable privilege.” 28 U.S.C. § 1782(a).

The underlying foreign litigation giving rise to the section 1782 applications is an environmental class action in Lago Agrio, Ecuador (the Lago Agrio litigation), that the inhabitants of the Oriente region of eastern Ecuador (the Ecuadorian plaintiffs) brought alleging that Texaco Petroleum Company (TexPet), a subsidiary of Texaco, Inc. (Texaco), which merged with Chevron in 2001, contaminated the area and caused significant health problems for its residents. As we explain below, Kohn and KSG have been involved for many years on behalf of the Ecuadorian plaintiffs in the underlying litigation in both legal and financial capacities. The Chevron applicants sought section 1782 discovery for use in the Lago Agrio litigation itself, criminal proceedings arising from TexPet's Ecuadorian activities that have been instituted against Pérez and Veiga ¹ in Ecuador, and an arbitration that Chevron initiated against the Republic of Ecuador with the United Nations Commission on International Trade Law (UNCITRAL) pursuant to the United States–Ecuador Bilateral Investment Treaty (BIT).²

The Ecuadorian plaintiffs and the Republic of Ecuador (collectively “appellants”), both of whom intervened in the District Court in this case, contend that the Court erred in granting the Chevron applicants' section 1782 discovery applications and assert several challenges to the Court's rulings. The Ecuadorian plaintiffs' primary challenge is to the Court's conclusion that, “[t]o the extent that any privilege or immunity from disclosure would otherwise apply to some or all of the discovery sought by Chevron or individual applicants, [Pérez] and Veiga, any such privilege has been waived by public disclosure and does not apply to any documents related to the Lago Agrio Litigation[.]” In re Application of Chevron Corp., Nos. 10–MC–28 and 10–MC–209, 2010 WL 5173279, at *11 (E.D.Pa. Dec. 20, 2010). Specifically, the Ecuadorian plaintiffs contend that the Court misstated the law regarding waiver of the attorney-client privilege, causing it to omit fairness considerations in its analysis, and that consequently its ruling that the attorney-client privilege was waived for all documents in Kohn's file related to the Lago Agrio litigation primarily on the basis of the filming of the documentary Crude, which chronicled the Lago Agrio litigation, was too broad. They also argue “that the presence of strangers” during attorney meetings prevented the privilege from ever attaching to what otherwise might have been privileged information. Ecuadorian plaintiffs' br. at 23 n. 7. As will be seen, the “presence of strangers” during attorney meetings being filmed for Crude is the critical factor in the disposition of this appeal. The Republic of Ecuador challenges the District Court's conclusion that it “failed to establish its right to assert the community-of-interest privilege with respect to the documents and deposition testimony sought in this case.” In re Application of Chevron Corp., 2010 WL 5173279, at *11. We, however, will have no need to address that issue.

Inasmuch as we hold that the communications filmed for Crude and its outtakes were not covered by the attorney-client privilege when made due to the presence of the filmmakers at the time of the communications, we will reverse the District Court's orders because the public disclosure of non-privileged communications does not lead to a subject matter waiver of the attorney-client privilege for communications covered by the privilege. We, nevertheless, will remand the matter to the District Court so that it may consider the Chevron applicants' contention that certain communications in Kohn's file are discoverable pursuant to the crime-fraud exception to the attorney-client privilege.

II. FACTS AND PROCEDURAL HISTORY

This is our second encounter with a section 1782 discovery request relating to the Lago Agrio litigation, and because much of the background factual information in this case is the same as that we recounted in our earlier encounter in In re Chevron Corp., 633 F.3d 153 (3d Cir.2011), we only will outline that background information briefly before setting forth in more detail those facts essential to the resolution of this appeal.

The Ecuadorian plaintiffs initially brought a class action suit against Texaco in 1993 in the United States District Court for the Southern District of New York (the Aguinda case), claiming that pollution from oil exploration and extraction activities had harmed individuals inhabiting the Oriente region of Ecuador and damaged the natural ecosystem in the area. After years of litigation, the court dismissed the Aguinda case in 2002 on forum non conveniens grounds, based in part on Texaco's representations that the Ecuadorian judiciary was impartial and free from corruption and that the Ecuadorian courts could provide a fair and appropriate forum in which to resolve the dispute in the Aguinda case. See Aguinda v. Texaco, Inc., 303 F.3d 470, 474–80 (2d Cir.2002).

In 2003, after dismissal of the Aguinda case, the Ecuadorian plaintiffs instituted the Lago Agrio litigation against Chevron in Ecuador.³ On February 14, 2011, shortly before we heard oral argument on this appeal, the Lago Agrio Court issued a comprehensive opinion adjudicating the case and entering judgment in United States dollars against Chevron, calculating the compensatory damages at $8.646 billion. The breakdown of the damages award was as follows: $5.396 billion for soil remediation; $1.4 billion for health care costs; $800 million for deaths due to cancer; $600 million for groundwater remediation; $200 million for damage to the ecosystem; $150 million for drinking water remediation; and $100 million for damages to indigenous culture. The judgment also included a provision granting an equivalent $8.646 billion in punitive damages payable if Chevron did not issue a public apology within 15 days of entry of the judgment.⁴

Both Chevron and the Ecuadorian plaintiffs have signaled their intent to appeal from the judgment entered in the Lago Agrio litigation. It is our understanding that the Ecuadorian appellate court will exercise de novo review over both the Lago Agrio Court's findings of fact and conclusions of law. Moreover, the Ecuadorian plaintiffs' litigation team produced a memorandum in response to a Chevron section 1782 application in the Southern District of New York seeking discovery from Steven Donziger, the Ecuadorian plaintiffs' lead American attorney, stating that “during the pendency of that appeal, the judgment is not deemed enforceable under Ecuadorian law, and thus, would not appear to be enforceable anywhere else.” ⁵ Chevron Supp. App. II at 480. The Ecuadorian plaintiffs'...