Postscript to Disabling Corporate Sovereignty in a Transnational Lawsuit

Good Morning, Mr. Watson, your Board of Directors, and your stockholders. My name is Humberto Piaguaje, leader of the Secoya Nationality and Executive Coordinator of the Union of Communities Affected by Petroleum Operations of Texaco, today Chevron. I’m here once again, to talk about the world’s largest environmental tragedy that occurred between 1964 and 1992. As a result of your oil operations, there is a festering open sore that has yet to be cured, and no one wants to take responsibility for its mending and redress….  

Humberto Piaguaje, CVX Shareholder Meeting, May 28, 2015

With his characteristic composure, Humberto Piaguaje stood at the microphone addressing the CEO of the Chevron Corporation. The corporate auditorium was filled for Chevron’s 2015 Annual Meeting of Stockholders in San Ramon, California. In attendance were silver-headed shareholders, corporate dignitaries, a handful of journalists, and a couple-dozen stockholder activists. Over the past 14 years, Humberto or others among his co-plaintiffs had traveled from the Ecuadorian Amazon to Chevron’s corporate headquarters to voice disquiet within these otherwise highly orchestrated meetings.

Is it good? Is it a thing of beauty? Do you like hearing the cry of people and then turn a deaf ear when they demand justice for a dignified life in the present, for future generations of our people, and for the vibrant life of nature? Do you think its good to make money when the cost is paid with human lives, environmental damage, and without responding to the consequences you have caused?

Humberto exudes the wisdom of a highly perceptive indigenous leader. How to render, in his allotted three minutes, the vast chasm of experience between the 30,000 humble forest peoples he represents and John Watson, the CEO of a corporation whose shareholders’ common stock value crests above $200 billion dollars? How to register for those present a self-recognition of corporate distain?

Let me be clear—this is your responsibility—and not because I say so, but because a twenty-year legal process says so….

Humberto Piaguaje, CVX Shareholder Meeting, May 28, 2015

Seven years after the 2003 trial against Chevron in the Ecuadorian rainforest began, it came to an end. In February 2011, the Ecuadorian judge adjudicating the case in the provincial Amazonia court, Judge Nicholas Zambrano, rendered a precedent-setting $9 billion ruling against the Chevron Corporation for environmental contamination and its negative effects on human wellbeing. The $9 billion liability was (and still is) the largest recorded damages served a U.S. corporation by a foreign court.

Significantly, the lawsuit unfolded within the historically specific context of Ecuador’s Civil Law tradition. In contrast to Common Law with its familiar ‘adversarial judicial system’ in the United States, Civil Law is an ‘inquisitorial system’ of law. Among other things, in Ecuador this meant that the court itself—in addition to the opposing legal teams—was charged with investigating and understanding the issues at stake. Consequently, the litigation against Chevron was not, as one would anticipate in the U.S. legal system, a series of arguments before a judge, and often a jury, in a courtroom. Rather, the bulk of the seven-year trial consisted of five years of on-site judicial inspections of former Texaco oil-production sites during which the judge, opposing legal teams, associated scientific crews, local residents, and the press trekked through scrub forest to examine alleged contamination and its purported effects on human health.

During each judicial inspection and under the supervision of the judge, technical teams retrieved water and soil samples, local residents gave testimony of oil’s incursions into their lives, and legal teams advanced arguments to establish or absolve corporate liability. The judicial inspections thus served as the ground from which what would be argued as evidence—an array of sensory, geographic, geo-chemical, technical, narrative, demographic, epidemiological, contractual, and statutory matter—emerged and was admitted to the court. The over 50 multi-day onsite inspections of former Texaco oil installations and infrastructure opened controversy over science and legal doctrine—over the unstable chemistry of hydrocarbons and their fate; the limitations of toxicology; the indeterminacy of epidemiology; the problematic character of corporate geophysics and engineering practice; the unswerving testimony of local inhabitants; the pragmatics and theory of contract; the applicability of shifting Ecuadorian statute; and the recurrent surfacing of questions of liability and corporate law. The result was an over 200,000-page case file. This is the case-file upon which Judge Zambrano issued his ruling in February 2011—a ruling that the Sucumbios Court of Appeals upheld in January 3, 2012.[1]

However, far from bringing closure to the lawsuit, the Ecuadorian litigation and 2011 ruling only further entangled an already mind-throbbing legal-labyrinth.

You are the criminals—you came, you contaminated, you lost in the courts, and you ran from the law—just like any other thief. And now, after poisoning us for 30 years, destroying our homes, killing our people, YOU claim to be the victims?… Is it your corporate ethic to characterize the communities where you operate as delinquents, extortionists, and fraudsters, and prosecute them, when what we solely seek is social, environmental, and cultural justice?

Humberto Piaguaje, CVX Shareholder Meeting, May 28, 2015.

Toward the end of 2008, as the on-site judicial inspections of former Texaco instillations were winding down, it became evident that the corporation might potentially loose the legal battle in Ecuador. Mounting information garnered from the inspections was increasingly difficult to spin as non-incriminating. Although a defeat in Ecuador was hardly a foreclosed conclusion, the corporation redoubled its efforts to mount a legal counter-offensive in the United States.

Recognizing that the judicial inspections were unfolding less than favorably, Chevron cried corruption. Invoking a little-used U.S. federal statue (28 USC §1782) that allows a litigant in a legal proceeding outside the United States to apply to an American court to obtain evidence for use in foreign proceeding, Chevron sought to garner evidence that showed the judicial process in Ecuador was corrupt. The scale of this discovery campaign became breathtaking. Between 2009 and 2011, what had become Chevron’s army of lawyers submitted over 25 requests to obtain discovery from 30 different parties in more than a dozen federal courts across the country. The aim was to amass evidence that the corporation hoped would derail the Ecuadorian case and concurrently drain the plaintiffs’ financial resources by forcing them to simultaneously litigate multiple §1782 proceedings across the US. Of the 25 proceedings, two proved to be significant for Chevron.

Chevron filed its first §1782 in the U.S. District Court in lower Manhattan. Directed to Judge Kaplan, the discovery action sought the unused footage shot in the making of Crude: the Documentary—an astute documentary of the legal case in Ecuador during the mid-to-late 2000s. Filmmakers Joe Berlinger and Michael Bonfiglio sought to portray the complexity of the case. However, because the film largely shadowed the plaintiffs’ legal team—leaning heavily on English-speaking Steven Donziger—Chevron lawyers hoped that the outtakes would reveal potentially incriminating evidence of the working of the plaintiffs’ legal team.[2] One year later, Chevron filed a second §1782 discovery action in Judge Kaplan’s court, this time against Steven Donziger.

The sheer volume of material garnered through these two proceedings (not to mention the dozen others) is staggering. In the former, Chevron successfully received all 600-plus hours of outtakes for the documentary, Crude—that is, all the footage shadowing the plaintiffs’ lawyers that was left on the cutting room floor. In the latter, Judge Kaplan severed all client-attorney privileges, and handed to Chevron Donziger’s entire eighteen-year litigation file—encompassing every bit of correspondence that the plaintiffs’ legal team had about the case—and allowed Chevron to depose Donziger for fourteen days. As Judge Kaplan remarked: “The subpoenas called for the universe. And I said give them [Chevron] the universe.”[3] The universe amounted to hundreds of thousands of pages that included Donziger’s complete computer files, emails, strategizing notes, and personal diary since 1993.

As would be expected, slips and improprieties transpired during the seven-year trial in Ecuador. Improprieties, it should be noted, by both sides, just as they had during the 1900s decade of pretrial hearings in the US court. Improprieties, however, are not by definition illegalities. But Chevron encountered a fortuitous conjuncture. The central protagonist of both the film outtakes and the subpoenaed documents—Steven Donziger—is a strong personality. Donziger is obnoxious, endearing, irritating, and tactless, with a tendency toward hyperbole and irreverent, over-the-top humor, which provided Chevron the kindling for bigger “truths.” Strategically edited and taken out of context, Donzinger’s words when spliced with other circumstantial evidence served as the basis for Chevron’s razing allegations that the 2011 Ecuadorian ruling was obtained through corrupt means.

There is no fraud here. If [the Ecuadorian litigation were] a fraud, I wouldn’t be here, and I would be shamed for even speaking of this concern. But here I am, showing my face. I know how my people have suffered and are suffering different types of cancer, leukemia, and other sicknesses that affect human health. I’ve seen how we lost our rich biodiversity—this is what we are fighting for….

Humberto Piaguaje, CVX Shareholder Meeting, May 28, 2015

Two weeks before the 2011 adverse ruling against Chevron in Ecuador, Chevron filed its counter-claim in the New York district court under the Racketeer Influenced and Corrupt Organization (RICO) Statute of the Organized Crime Control Act of 1970. RICO actions—a legal framework designed to litigate racketeering in the U.S—provide for extended criminal penalties and a civil cause of action for acts performed as part of an ongoing criminal organization. Chevron claimed to be the victim of racketeering, fraud, and corruption perpetrated by: the Ecuadorians’ legal team (Steven Donziger being the first on the list), their scientific experts, financial supporters, indigenous and human rights advocates, and 48 indigenous rainforest.

Chevron’s claim alleged, first, that the Ecuadorian’s legal team (everyone else is co-conspirator) bribed Ecuadorian Judge Zambrano and conspire to have his judgment ghostwritten by an ex-judge, and second, that the Ecuadorian judicial system is so systematically inadequate that any judgment emanating from it is unworthy of recognition. The seven-week bench trial in November 2013 before Judge Kaplan painfully etched out and entrenched the contours of Chevron’s truth.

We know very well the political and economic power that Chevron has, just as we know the magnitude of environmental damage and death to human life caused by your company. [Whether it be the New York courtroom or here in your corporate headquarters] you can piece together a slick [story and] video full of lies, but that will not change anything.

Humberto Piaguaje, CVX Shareholder Meeting, May 28, 2015

Chevron hired the Washington-based legal firm, Gibson Dunn, to head its legal counter-strategy. And with reason. Gibson Dunn’s web page reads: “When your back is against the wall, THERE IS ALWAYS A WAY OUT. You are never cornered. You are never trapped. You are simply in a position where it is absolutely essential to think in new ways—and find the less obvious path to success. For more than 115 years, one law firm has achieved its greatest success when the challenges were the most formidable. From high stakes litigation to capital strategies to the protection of vital intellectual property, we are the partner you can rely on.”

Randy Mastro, a senior partner with Gibson Dunn, masterminded the Chevron counter-offensive legal strategy and served as its chief litigator. Having prosecuted a number of mafia cases in the U.S. Attorney’s Office early in his careers while allegedly dodging death threats,[4] Mastro is a notoriously merciless litigator. His reputation was only buttressed following the seven-week RICO. His questioning of Ecuadorian Judge Nicholas Zambrano is instructive.

Having authored the $9 billion judgment against Chevron, Judge Zambrano traveled to New York to testify that the ruling was not, contrary to the corporation’s allegations, the result of fraud, corruption, and bribery, and that he did indeed write it. Mastro, of course, sought to undermine Judge Zambrano’s credibility, and his principle tactic for doing so was giving Zambrano a “pop-quiz” on the judgment he purportedly wrote. Yet for anyone familiar with the Amazonian court, its procedures, or the ruling, Mastro’s questions were excruciating. In the courtroom, not only would it seem that Mastro intimidated Judge Zambrano and beguiled Judge Kaplan, but also that he was a deviously disingenuous litigator.[5]

Mastro’s deceptively simple questions—“What is the most carcinogenic element?”; “Who is the author of the conclusive study?”; “What does TPH stand for?”—give the impression that the trial in Ecuador and Judge Zambrano’s ruling were clear cut and straightforward. This could not be further from the case. In fact, Zambrano’s inability to answer Mastro’s questions (problems of translation aside) speaks to how marginal these points were to a very complex deliberation (Sawyer 2015). Zambrano’s 2011 ruling is an intricately argued 188-page single-spaced document.

If anything stands out as unique in the ruling, it is that science had no determinative capacity nor was it the final arbiter of truth. There is no ultimate carcinogen discovered. There is no single epidemiological study that determinatively proves. TPH (Total Petroleum Hydrocarbon—an English, not Spanish, acronym), while indicative of the ubiquitous presence of hydrocarbon wastes, never comes to be an indicative measure of toxicity. Rather, Zambrano’s ruling had to wade through the controversy over toxicity crude oil, the conflicting and indeterminate epidemiological metrics for calculating health effects, and the debates over the function and fate of distinct hydrocarbon compounds, all in line with Ecuadorian statutes and legal philosophy.

In Mastro’s hands, however, the pop-quiz made a mockery of Judge Nicolas Zambrano and Ecuador’s judicial system. With negligible preparation in Common Law courtroom procedures, Zambrano was visibly unnerved: how dare a lawyer speak to him, a judge, the way Mastro did? Not only was Mastro’s questioning intimidating, but the wording of questions was so convoluted, laced with dependent clauses and embedded rhetorical questions, that it proved challenging for the translator to render clearly, resulting in a lack of linguistic precision that caused Zambrano true consternation. He appeared disoriented, stunned like a deer caught in headlights. Zambrano failed Mastro’s test miserably. And his failure indicated, not only that he did not master the text he claimed to have authored, but also that the Ecuadorian judiciary was a travesty and farce. The true author, Chevron claimed, was Alberto Guerra, a repentant bribe-taking ex-judge, who along with his family has been brought to the US under what can only be called Chevron’s private protection program. Guerra was Chevron’s key witness. Slickly polished over the course of more than 50 legal-prep sessions with Gibson Dunn lawyers, Guerra, the beneficiary of hundreds of thousands of Chevron dollars,[6] wove a tale of intrigue of how he came to pen the 2011 Ecuadorian ruling against Chevron. Judge Kaplan was seduced. In March 2014, he ruled that the 2011 Ecuadorian ruling against Chevron was procured through fraud and thus was illegitimate and could not be enforced in the United States.

Chevron’s impressive legal tactics for mounting and litigating the RICO case—funded, according to The American Lawyer, to the tune of over half a billion ($500 million) dollars—further entrenched a relatively novel corporate legal strategy: the civil RICO claim filed by the disgruntled corporate litigant as a collateral attack of a foreign judgment. Through a commanding legal presence (hiring 60 law firms and 2,000 lawyers), numerous onerous discovery proceedings scouring for evidence of potential wrongdoing by anyone connected to the lawsuit, successful motions to limit defendants’ discovery, and heavy-handed interim rulings, Chevron created a “truth,” one that Judge Kaplan similarly espoused. The effect of Kaplan’s 2014 ruling was to turn the second largest oil corporation in the United States into a “victim”[7] and simultaneously to leave the compromised nature of Chevron’s “truth,” especially once adopted by a district court judge, seemingly conclusive and incontestable. The making of that corporate-legal truth is ripe for further examining. It calls for thicker ethnographic analysis of how juridical enactments, seemingly-endless corporate capacity, and sovereignty are founded in and bound together through questions of jurisdiction.

Of all people, you cannot speak of fraud. New evidence shows that the only fraud that has occurred is the result of your own work.

Humberto Piaguaje, CVX Shareholder Meeting, May 28, 2015.

One year later, Judge Kaplan’s 2014 judgment appears on shakier ground. Presently his ruling delegitimizing the 2011 Ecuadorian ruling is under appeal in the 2^nd Circuit Court of Appeals. The April 2015 appellate hearing was a significantly less sympathetic forum to Chevron’s positions than Kaplan’s courtroom. If the appellate judges’ intense questioning of Chevron’s lawyers and the discerning, even shrewd, arguments posed by the lawyers representing the Ecuadorians and their experts are any indication, Kaplan’s ruling will hardly be taken at face value. At one particularly tense moment, Judge Wesley raised his voice to a crescendo reprimanding Chevron’s lawyer Gibson Dunn’s Theodore Olson, the former Solicitor General of the United States in the George W. Bush administration who argued and won Bush v. Gore before the U.S. Supreme Court. Olson stumbled from the rebuke and never quite regaining his footing.

Of particular concern to the appellate panel was the relationship between Zambrano’s 2011 ruling, Kaplan’s 2014 ruling, and a separate, although related, proceedings that Chevron initiated in the Permanent Court of Arbitration in The Hague in 2009 against the Republic of Ecuador. The ongoing arbitration hearings are also investigating Chevron’s fraud allegations. Although closed and private, the Court of Arbitration proceedings recently produced incriminating evidence that was leaked to the press, and subsequently became public. Apparently at Chevron’s behest the arbitration panel ordered that forensic investigations be made of the two computers that Judge Zambrano allegedly used to write the 2011 ruling. Counter to Chevron’s conviction that the investigations would further expose fraud and ghostwriting of the final Ecuadorian judgment, the forensic evidence revealed the opposite: that Judge Zambrano and his assistant did write the ruling over a five-month period (editing it many hundreds of times) and that metadata indicates that none of the text within the ruling had been acquired from an external source, be it an email, an email attachment, or a thumb drive document.[8]

Although the judges at the U.S. Court of Appeals are not obliged to accept the forensic evidence into the appellate court record, it was apparent during the April 2015 hearing that they had read the forensic reports. Judge Wesley, in particular, sternly challenged Chevron for its strategy of initiating legal action in multiple forums that very well might result in contradictory rulings regarding the validity and enforceability of the 2011 Ecuadorian ruling. Ironically, the international arbitration—which the Ecuadorians and their lawyers had railed against as a private, elitist, and exclusionary investment resolution legal system—appears to be underscoring the inadequacies of Judge Kaplan’s 2014 opinion and rectitude of Judge Zambrano’s 2011 ruling finding Chevron for $9 billion dollars in remediation relief.

Today we are more united than ever, with growing global support. We will pursue you to the ends of the earth if needed to prosecute you and seize your assets. We will not stop until we have achieve justice—until you, Mr. Watson, provide the remedy that you owe us.

Humberto Piaguaje, CVX Shareholder Meeting, May 28, 2015

Suzana Sawyer is an associate professor of anthropology at University of California, Davis. Her research focuses on conflicts over land rights and petroleum resources in the Ecuadorian Amazon.

Notes

[1] In November 2013, (during the seven week of the trial in Chevron’s counter lawsuit in NY) Ecuador’s National Court of Justice—the country’s highest non-constitutional court—upheld the appellate court’s decision.

[2] Federal law 28 U.S.C. §1782 allows parties in foreign legal actions to engage in discovery actions in the United States in order to aid foreign proceedings.

[3] ECF No. 287-5. Hearing Transcript 11/22/2010, at 13:10-14.

[4] See http://www.crainsnewyork.com/article/20130505/POLITICS/305059982/randy-mastro-the-maestro-of-mischief#

[5] The Legal 500—US Edition (another trade journal) featured him “among the ‘Leading Trial Lawyers’ in the country, with corporate counsel characterizing him as… ‘flawless,’ ‘captivating,’… and a ‘Litigation Star’ who “always brings a fresh perspective and will fight you to the end.’” [website—randy maestro]

[6] During the trial it emerged that Guerra received from Chevron: $10,000 monthly stipend, $2,000 monthly housing allowance, health insurance, car insurance, relocation fees, legal fees, and an over-$50,000 lump sum for his hard drive and phone, plus more. (Steven Appellate filing p. 55.

[7] 11 Civ. 0691 [LAK], Document 1874, pp. 3, 309, 343, 352, 258, 364, 378, 380.

[8] Furthermore, Amazon Watch acquired videos via the post from a Chevron whistle-blower that document how teams of soil scientists and technicians working for the corporation were systematically covering up soils laced in crude oil and repeatedly frustrated in their search for uncontaminated samples.