holding that private injunctive relief is available in civil federal RICO actionsSummary of this case from Absolute Activist Value Master Fund Ltd. v. Devine
No. 11 Civ. 0691(LAK).
Randy M. Mastro, Andrea E. Neuman, Reed M. Brodsky, William E. Thompson, Anne Champion, Gibson, Dunn & Crutcher, LLP, for Plaintiff. G. Robert Blakey, William J. and Dorothy K. O'Neill, Professor Emeritus, Notre Dame Law School, Amicus Curiae.
Randy M. Mastro, Andrea E. Neuman, Reed M. Brodsky, William E. Thompson, Anne Champion, Gibson, Dunn & Crutcher, LLP, for Plaintiff. G. Robert Blakey, William J. and Dorothy K. O'Neill, Professor Emeritus, Notre Dame Law School, Amicus Curiae.
Richard H. Friedman, Friedman & Rubin, Zoe Littlepage, Rainey C. Booth, Littlepage Booth, Steven Donziger, for Defendant Steven Donziger and Steven R. Donziger & Associates LLP.
Julio C. Gomez, Julio C. Gomez, Attorney at Law LLC for Defendants Hugo Gerardo Camacho Naranjo and Javier Piaguaje Payaguaje.
LEWIS A. KAPLAN, District Judge.
[1-105] Editor Note: The paragraphs related to headnotes 1–105 are found on the supplemental pieces of this opinion on Westlaw. Part 1 is 2014 WL 815553; Part 2 is 2014 WL 815613; Part 3 is 2014 WL 815715; Part 4 is 2014 WL 815869 [Headnotes 1–2]; Part 5 is 2014 WL 815923 [Headnotes 3–51]; Part 6 is 2014 WL 815961 [Headnotes 52–87]; Part 7 is 2014 WL 816086 [Headnotes 88–105]
Table of Contents
Texaco's Operations in Ecuador
The Principal Plaintiffs' Lawyers in Aguinda
Key Events During Aguinda
Forum Non Conveniens—The Aguinda Plaintiffs Attack Ecuadorian Courts as Corrupt While Texaco Defends Them
The Start of the LAPs' Alliance With the ROE—The LAPs Agree Not to Sue PetroEcuador or the ROE
The Aguinda Plaintiffs Seek to Recuse, and Attack, Judge Rakoff
The Environmental Management Act is Passed in Ecuador
Texaco Merges with a Chevron Subsidiary and Survives the Merger
The Lago Agrio Litigation Begins
Donziger's Attitudes and Beliefs About the Ecuadorian Courts and the Conduct of Lawyers in Ecuador
The Ecuadorian Judges
The LAPs' Team
The American Lawyers
The ADF, Selva Viva, and Luis Yanza
The Ecuadorian Lawyers
The Beginnings of Donziger's Pressure Campaign
Donziger's Public Relations Team and NGO Allies
The Public Relations and Lobbying Team
The Pressure Begins—The LAPs' First Scientist and the $6 Billion “Drive By” Damages Estimate
Donziger Touts Russell's “SWAG” and Other Misleading Descriptions of Conditions in the Orienté to Put Pressure on Chevron
False and Misleading Representations to Incite Governmental Action Against Chevron
Donziger's Attempt to Justify His Continued Use of Russell's Disavowed Estimate is Unpersuasive
The First Phase of the Lago Agrio Case—The Judicial Inspections
The LAPs' Judicial Inspection Experts
The Calmbacher Episode
The LAP Lawyers Halt Testing for BTEX and GRO Because it Is Yielding Unhelpful Results
Sacha–53 and the “Independent” Monitors—Donziger, in His Words, Goes Over to the “Dark Side” and Makes a “Bargain With the Devil”
The Termination of the LAPs' Remaining Judicial Inspections and the Genesis of the Global Assessment
The LAPs Coerce the Judge to Cancel the LAPs' Remaining Judicial Inspections
Donziger Chooses Cabrera to be the Global Expert
The Second Phase of the Lago Agrio Case—The Cabrera “Global Expert” Report
The LAPs Secretly Plan the Cabrera Report—The March 3 and 4, 2007 Meetings
Donziger, Fajardo, and Yanza Put Together an “Army,” Cabrera is Sworn in, and the LAP Team Prepares His Work Plan
The Field Work
The LAP Team Pays Cabrera to Ensure that He Would “Totally Play Ball”
The LAP Team Provides Cabrera with Administrative “Support” and Controls his Field Work
Donziger Attempts to Deceive Judge Sand About Cabrera's Independence
Stratus Secretly Writes Most of the Report
Stratus Criticizes its Own Report to Enhance the False Image of Cabrera's Independence
The Pressure Campaign Continues—The LAP Team Turns Up the Heat By Pressing for Indictment of Former Texaco Lawyers
The Third Phase of the Lago Agrio Case—2009–2010 Evidence of the Cabrera Fraud Begins to Come Out, Kohn Leaves the Case, New Financing Is Found, and the Case Proceeds in Lago Agrio
Donziger's Assumption that What Happens in Ecuador, Stays in Ecuador
The Release of Crude
The Section 1782 Proceedings
The Section 1782 Action Against Stratus—Denver Counsel Withdraw and Donziger and Fajardo Seek to Obstruct Justice Before the Federal Court
Donziger Retains U.S. Counsel to Represent the LAPs in Denver
Beltman Discloses the Truth to Shinder—Denver Counsel Withdraw
Fajardo Submits a Misleading Affidavit in Denver and Elsewhere
The New York 1782 Proceedings—Berlinger and Donziger
The LAP Team Sought to Deceive This Court in the Berlinger 1782 Proceeding
Donziger Deceives Kohn, Refuses His Demand for an Investigation of the Facts With Respect to Cabrera, and Precipitates a Final Break
Donziger Misrepresented to and Concealed From Kohn Important Information Regarding Cabrera and Stratus
Donziger Deceives Kohn About the “Secret” Account
Donziger Refuses to Cooperate With Kohn's Demand for an Investigation Independent of Donziger
Kohn Cuts Off Funding
Defendants' Response to Kohn's Testimony
The Search for New Funding—Patton Boggs, the Invictus Strategy, and Burford
Patton Boggs Is Retained, Develops the Enforcement Strategy, and Obtains Funding from Burford
The Invictus Strategy
Fajardo Obtains a Broader Power of Attorney, and Donziger and Fajardo Enter Into Their First Written Retention Agreements with the LAPs
Burford Terminates the Funding Agreement
Donziger and Patton Boggs Try to Fix the Cabrera Problem—the Cleansing Experts
Chevron's Ghostwriting and Bribery Claims
The LAPs Wrote the Judgment
Zambrano Was Not the Author
Zambrano Was Unfamiliar With Key Aspects of the Judgment He Signed
Zambrano's Account of the Preparation of the Judgment Was Self Contradictory and Implausible
Zambrano's Testimony as to the Computer on Which He Claimed the Judgment Was Entered Was Inconsistent With the Evidence
Zambrano's Self Interest
Evidence that the LAPs Wrote the Judgment
The LAPs' “Fingerprints” Are All Over the Judgment
The Fusion Memo, the Draft Alegato, the Index Summaries, the Clapp Report and the Fajardo Trust Email
The Moodie Memo
Selva Viva Database
Defendants' Failure to Provide any Explanation for the Overlap
Evidence that the LAPs Began Preparing the Judgment as Early as 2009
Ultimate Findings on this Point—The LAPs Wrote the Judgment
How it All Began Guerra Ghostwrote Orders for Zambrano and the LAPs Paid Him
The Guerra–Zambrano–Donziger Conflict
Preliminary Observations on Credibility
Guerra's Ghostwriting for Zambrano
The Guerra–Zambrano Ghostwriting Deal—Unrelated Civil Cases
Zambrano's First Tenure Presiding Over the Lago Agrio Case
Guerra Reaches out to Chevron
Following Chevron's Rejection, Guerra Makes a Deal With the LAPs
Guerra Drafted Zambrano's Orders in the Chevron Case
The LAP Team Paid Guerra for His Ghostwriting Services
Ultimate Findings on This Point—Guerra Was Zambrano's Paid Ghostwriter in Civil Cases and Was Paid By Donziger and the LAPs To Write Some of Zambrano's Orders in the Chevron Case
The Story Ends: The LAPs Bribed Zambrano to Allow Them to Write the Judgment and Issue It Under His Name
Zambrano's Second Tenure Presiding Over the Lago Agrio Chevron Case The Accounts of the Three Witnesses at Trial
Assessing Guerra's Account
Chevron's Circumstantial Evidence Pertinent to the Alleged Bribery
Other Circumstantial Evidence—The Fajardo December 2010–January 2011 Emails
The Defendants' Evidence
Donziger's Testimony, Even If True, Would Not Negate the Alleged Bribe
Donziger's Approval Was Necessary for the Alleged Deal With Zambrano
Donziger Controlled the LAP Team
Donziger's Approval Was Necessary, and Given, for the 2009 Ghostwriting Deal with Guerra
Ultimate Findings on this Point—Fajardo, with Donziger's Approval, Promised Zambrano $500,000 of the Judgment Proceeds to Decide the Case for the LAPs and Sign a Judgment They Prepared
The First Level Appeal
The LAPs Contend that Chevron Set Up its Ghostwriting Claim
The Appellate Panel Affirms the Judgment
The Appellate Clarification Order
The National Court of Justice Affirms the Judgment in All But One Respect
The Pressure Campaign Continues
The Invictus Strategy Deployed—Attempts to Enforce the Lago Agrio Judgment
The Purpose of All of These Efforts
Prior Proceedings in this Litigation
The Amended Complaint
Discovery and Motion Practice
Discovery and Discovery Sanctions
The Partial Summary Judgment Motions
Attempts to Recuse the Judge or Require Reassignment of the Case 302 The Trial
Discussion and Additional Findings
This Court Has Subject Matter Jurisdiction
This Case Is Not Moot
This Court Had Subject Matter Jurisdiction When the Action Was Brought
The Court Would Have Subject Matter Jurisdiction Even on Defendants' Erroneous Premise
The Non–Statutory Claims for Equitable Relief With Respect to the Judgment
Equitable Relief With Respect to Fraudulent Judgments Generally
Fraud on the Court—Corruption and Coercion of Judges and Judicial Official
The Bribery of Zambrano
The Coercion of Judge Yánez
The Corruption of Cabrera
Fraud—Ghostwriting and Deception
The LAPs' Ghostwriting of All or Part of the Judgment and Zambrano's Adoption of Their Product Was Fraud Warranting Equitable Relief Even Absent Bribery
The Deception of the Lago Agrio Court By The Misrepresentations that Cabrera Was Independent and Impartial and By the Passing Off of the Ghostwritten Report as His Work Was Fraud Warranting Equitable Relief Even Absent Bribery
The Other Requirements for Relief Have Been Satisfied
The RICO Statute Applies Here
RICO Applies to Prohibited Conduct Regardless of Whether a Defendant Is a Member of Organized Crime
Equitable Relief Is Available in Private RICO Actions
The Section 1962(c) Claim
The Elements of a Section 1962(c) Violation
Donziger Conducted and Participated in the Conduct of the Affairs of the Enterprise
The Predicate Acts
The Elements of Extortion and Their Application Here
Much of Donziger's Conduct Was Not Protected
Donziger's Entitlement Argument Is Without Merit
Donziger's Conduct is Not Protected Petitioning Activity
Donziger's Extortionate Conduct
Donziger's Misconduct in the Litigation
Donziger Made Representations He Knew Were Materially False in Order to Exert Pressure on Chevron
Donziger Repeatedly Used Damages Estimate s He Knew Were False or the Truth of Which He Doubted
Donziger Sought to Pressure Chevron by Causing Third Parties to Act on His Misrepresentations
Donziger Pressed the Republic of Ecuador to File Criminal Charges Against Chevron Attorneys in Order to Pressure Chevron into Settlement
Application of the Hobbs Act to This Conduct Is Consistent With Morrison
The Elements of Wire Fraud
Obstruction of Justice and Witness Tampering
Obstruction of Justice
The Elements of Obstruction of Justice
Donziger Obstructed Justice
The Elements of Witness Tampering
Donziger Tampered with the Testimony of Mark Quarles
Violation of the Travel Act Through Furtherance of Violation of the Foreign Corrupt Practices Act
Donziger Was a “Domestic Concern”
Donziger Used Instrumentalities of Interstate Commerce in Furtherance of the Payments
Donziger's Use of the Wires Was Corrupt and Intended to Influence Official Action
The Offers, Promises, and Payments to Cabrera Were of Value
Donziger Facilitated the Payments Knowing They Would Be Given to Cabrera, a Foreign Official
The Payments Were for a Business Purpose
There Is A Related, Continuous and Domestic Pattern
Chevron Was Injured by the Pattern of Racketeering Activity and, Absent Equitable Relief, Will Continue to be Injured
Donziger Conspired to Conduct the Affairs of the Enterprise Through a Pattern of Racketeering Activity in Violation of Section 1962(d)
Chevron's Other State Law Claims
Neither the Judgment Nor the Appellate Decisions in Ecuador Foreclose Liability
The Ecuadorian Decisions and Rulings Are Not Admissible for the Truth of the Matters Asserted Therein
The Appellate Decisions in Ecuador Do Not Break the Chain of Causation
The Intermediate Decision
National Court of Justice
In Any Case, the Ecuadorian Decisions May Not Be Afforded Comity or Other Recognition Because They Were Rendered In a Judicial System That Does Not Provide Impartial Tribunals or Procedures Compatible with Due Process in Cases of this Nature
The 2004 and 2005 Judicial Purges
The Election of President Correa
The 2011 Judicial “Reorganization”
U.S. Department of State Reports
Donziger and His Colleagues Admitted the Weakness, Politicization, and Corrupt Nature of the Ecuadorian Judiciary
President Correa's Influence in the Lago Agrio Litigation
This Court Has Personal Jurisdiction Over the LAP Representatives
The Personal Jurisdiction Defense Has Been Stricken
In Any Case, This Court Would Have Personal Jurisdiction At Least Under N.Y. CPLR 302(a)(1)
Section 302—Specific Jurisdiction
“Arising Out of”
The LAP Representatives Transacted Business in New York
The Claims in This Suit Arise Out of the Transaction of Business in New York
The Other Affirmative Defenses
The Judicial Estoppel Defense is Without Merit
Defendants Have Abandoned All Other Pleaded Affirmative Defenses, Which in Any Case Lacked Merit
Chevron Has No Adequate Remedy at Law and is Threatened With Irreparable Injury
Further Proceedings in Ecuador, If Any Even Theoretically Were Available, Would Offer No Adequate Remedy
Defense of Multiple Enforcement Actions Would Not Provide An Adequate Remedy at Law
Money Damages Are Not, and Could Not Have Been, an Adequate Remedy
Chevron Is Entitled to Equitable Relief Preventing These Three Defendants From Benefitting From the Fraud on the Court and Donziger From Profiting From the RICO Violations
Other Equitable Relief to Prevent These Defendants From Benefitting from the Fraud
Injunction Against Enforcement in the United States
This Relief Is Consistent with Naranjo
Appendices (in separately bound volume)
Steven Donziger, a New York City lawyer, led a group of American and Ecuadorian lawyers who brought an action in Ecuador (the “Lago Agrio” case) in the names of 47 plaintiffs (the “Lago Agrio Plaintiffs” or “LAPs”), on behalf of thousands of indigenous peoples of the Orienté region of Ecuador, against Chevron Corporation (“Chevron”). They claimed that Chevron was responsible for extensive environmental damage caused by oil activities of Texaco, Inc. (“Texaco”), that ended more than twenty years ago and long before Chevron acquired Texaco's stock.
After years of pressuring Chevron to settle by a variety of both legitimate and illegitimate means, Donziger and his clients obtained a multibillion dollar judgment (the “Judgment”) in the Ecuadorian courts and now seek to enforce it around the world. Chevron then brought this action, contending among other things that the Judgment was procured by fraud. Following a full trial, it now seeks equitable relief against Donziger and the two of his Ecuadorian clients who defended this case in order to prevent any of them from profiting from the alleged fraud or from seeking to enforce the Judgment in the United States.
This case is extraordinary. The facts are many and sometimes complex. They include things that normally come only out of Hollywood—coded emails among Donziger and his colleagues describing their private interactions with and machinations directed at judges and a court appointed expert, their payments to a supposedly neutral expert out of a secret account, a lawyer who invited a film crew to innumerable private strategy meetings and even to ex parte meetings with judges, an Ecuadorian judge who claims to have written the multibillion dollar decision but who was so inexperienced and uncomfortable with civil cases that he had someone else (a former judge who had been removed from the bench) draft some civil decisions for him, an 18–year old typist who supposedly did Internet research in American, English, and French law for the same judge, who knew only Spanish, and much more. The evidence is voluminous. The transnational elements of the case make it sensitive and challenging. Nevertheless, the Court has had the benefit of a lengthy trial. It has heard 31 witnesses in person and considered deposition and/or other sworn or, in one instance, stipulated testimony of 37 others. It has considered thousands of exhibits. It has made its findings, which of necessity are lengthy and detailed.
Upon consideration of all of the evidence, including the credibility of the witnesses—though several of the most important declined to testify—the Court finds that Donziger began his involvement in this controversy with a desire to improve conditions in the area in which his Ecuadorian clients live. To be sure, he sought also to do well for himself while doing good for others, but there was nothing wrong with that. In the end, however, he and the Ecuadorian lawyers he led corrupted the Lago Agrio case. They submitted fraudulent evidence. They coerced one judge, first to use a court-appointed, supposedly impartial, “global expert” to make an overall damages assessment and, then, to appoint to that important role a man whom Donziger hand-picked and paid to “totally play ball” with the LAPs. They then paid a Colorado consulting firm secretly to write all or most of the global expert's report, falsely presented the report as the work of the court-appointed and supposedly impartial expert, and told half-truths or worse to U.S. courts in attempts to prevent exposure of that and other wrongdoing. Ultimately, the LAP team wrote the Lago Agrio court's Judgment themselves and promised $500,000 to the Ecuadorian judge to rule in their favor and sign their judgment. If ever there were a case warranting equitable relief with respect to a judgment procured by fraud, this is it.
The defendants seek to avoid responsibility for their actions by emphasizing that the Lago Agrio case took place in Ecuador and by invoking the principle of comity. But that warrants no different conclusion.
Comity and respect for other nations are important. But comity does not command blind acquiescence in injustice, least of all acquiescence within the bounds of our own nation. Courts of equity long have granted relief against fraudulent judgments entered in other states and, though less frequently, other countries. Moreover, the United States has important interests here. The misconduct at issue was planned, supervised, financed and executed in important (but not all) respects by Americans in the United States in order to extract money from a U.S. victim.
That said, considerations of comity and the avoidance of any misunderstanding have shaped the relief sought here. Chevron no longer seeks, and this Court does not grant, an injunction barring enforcement of the Lago Agrio Judgment anywhere in the world. What this Court does do is to prevent Donziger and the two LAP Representatives, who are subject to this Court's personal jurisdiction, from profiting in any way from the egregious fraud that occurred here. That is quite a different matter. Indeed, the LAP Representatives' lawyer recently conceded before the Second Circuit that the defendants “would not have a problem” with “the alternative relief that [Chevron] would be seeking, such as enjoining the person who paid the bribe from benefitting from it,” assuming that the judge was bribed.
Defendants thus have acknowledged the propriety of equitable relief to prevent individuals subject to the Court's jurisdiction from benefitting from misdeeds for which they are responsible. And while the Court does enjoin enforcement of the Judgment by these defendants in the United States, that limited injunction raises no issues of comity or international relations. It is the prerogative of American courts to determine whether foreign judgments may be enforced in this country.
Tr., Sept. 26, 2013, at 25:3–15, Naranjo v. Chevron Corp., No. 13–772–cv (2d Cir.) [DI 1496–2].
Donziger is intelligent, resourceful, and a master of public and media relations. An extensive public relations and media campaign has been part of his strategy from early days, and it continues. Among its objectives has been to shift the focus from the fraud on Chevron and the Lago Agrio court to the environmental harm that Donziger and the LAPs claim was done in the Orienté. Indeed, that was a principal focus of defendants' case at trial and of their post-trial briefing. But one should not be distracted from the issues actually presented in this case.
The Court assumes that there is pollution in the Orienté. On that assumption, Texaco and perhaps even Chevron—though it never drilled for oil in Ecuador—might bear some responsibility. In any case, improvement of conditions for the residents of the Orienté appears to be both desirable and overdue. But the defendants' effort to change the subject to the Orienté, understandable as it is as a tactic, misses the point of this case.
The issue here is not what happened in the Orienté more than twenty years ago and who, if anyone, now is responsible for any wrongs then done. It instead is whether a court decision was procured by corrupt means, regardless of whether the cause was just. An innocent defendant is no more entitled to submit false evidence, to coopt and pay off a court-appointed expert, or to coerce or bribe a judge or jury than a guilty one. So even if Donziger and his clients had a just cause—and the Court expresses no opinion on that—they were not entitled to corrupt the process to achieve their goal.
Justice is not served by inflicting injustice. The ends do not justify the means. There is no “Robin Hood” defense to illegal and wrongful conduct. And the defendants' “this-is-the-way-it-is-done-in-Ecuador” excuses—actually a remarkable insult to the people of Ecuador—do not help them. The wrongful actions of Donziger and his Ecuadorian legal team would be offensive to the laws of any nation that aspires to the rule of law, including Ecuador—and they knew it. Indeed, one Ecuadorian legal team member, in a moment of panicky candor, admitted that if documents exposing just part of what they had done were to come to light, “apart from destroying the proceeding, all of us, your attorneys, might go to jail.”
PX 1279 (Mar. 30, 2010 Email from J. Prieto to S. Donziger, P. Fajardo, L. Yanza, and J. Sáenz).
I. The Background
The events at issue in this case took place in law offices in New York, Philadelphia, and elsewhere in the United States, a consulting firm in Colorado, a public relations firm in Washington, the Orienté, courthouses in Ecuador and all over the United States, the offices of a New York documentary film maker, news media throughout the world, and government offices in Ecuador and the United States, and other places. They involved an array of lawyers, financial backers, scientists, judges, celebrities, media consultants, non-governmental organizations, politicians, and law school interns. But despite the case's complex history, reach and its large cast of players, the events ultimately center on one man—Steven Donziger—and his team of Ecuadorian lawyers and U.S. and European backers.
We begin with the backdrop against which these events took place.
A. Texaco's Operations in Ecuador
In 1964, the Republic of Ecuador (“ROE”) granted to a Gulf Oil subsidiary and to TexPet, an indirect subsidiary of Texaco, a concession to explore for and produce oil in the Orienté.
PX 210 (Napo Joint Operating Agreement); PX 3000 (Reis Veiga Direct) ¶ 14.
PX 211 (Agreement among the ROE, TexPet, and Gulf Oil); PX 3000 (Reis Veiga Direct) ¶ 14.
PX 212 (Agreement among the ROE, Ecuadorian Government Petroleum Corporation, and Gulf Oil); PX 3000 (Reis Veiga Direct) ¶ 14.
TexPet operated for the Consortium until June 1992, when the Concession expired. TexPet's 37.5 percent interest reverted to PetroEcuador, and TexPet began the process of winding down its operations.
In connection with the termination of TexPet's Ecuadorian operations, TexPet and Texaco in 1993 entered into a Memorandum of Understanding with the ROE that provided that TexPet would be released from any potential claim for environmental harm once TexPet performed an agreed-upon remediation in the area in which it had operated.
PX 3000 (Reis Veiga Direct) ¶ 19.
PX 222 (Dec. 14, 1994 MOU among the ROE, PetroEcuador, and TexPet), at 3; PX 3000 (Reis Veiga Direct) ¶ 29.
PX 3000 (Reis Veiga Direct) ¶ 26; PX 247 (Certificate # 052–RAT–98).
PX 223 (March 1995 Contract among TexPet, ROE, and PetroEcuador); PX 3000 (Reis Veiga Direct) ¶ 30.
The final acta—the 52nd Certificate—was issued in September 1998 and stated that TexPet had complied with its obligations under the Settlement Agreement. The final release was signed on September 30, 1998.
PX 3000 (Reis Veiga Direct) ¶ 33; see also e.g., PX 224, PX 225, PX 226, PX 237, PX 238, PX 240, PX 242, PX 243, and PX 245 ( actas ).
PX 246 ( Acta Final by and between the Government of the ROE, PetroEcuador, Petroproduccion, and Texaco Petroleum Company).
While TexPet was winding down its operations in Ecuador, a group of Ecuadorian plaintiffs brought a class action against Texaco in the Southern District of New York (“ Aguinda ”)
Aguinda v. Texaco, Inc., No. 93 Civ. 7527(JSR) (filed Nov. 3, 1993) (hereinafter “ Aguinda ”); see also Republic of Ecuador v. ChevronTexaco Corp., 376 F.Supp.2d 334, 341 (S.D.N.Y.2005).
The Court takes judicial notice of its own records. Fed.R.Evid. 201(b); I. & I. Holding Corp. v. Greenberg, 151 F.2d 570, 572 (2d Cir.1945).
The defendants include not only Steven Donziger, but his law firm, variously referred to as the Law Offices of Steven Donziger and Steven R. Donziger & Associates, PLLC. The sole proprietorship is not a legal entity and is indistinguishable from Donziger personally for all legal purposes. E.g., Holland v. Fahnestock & Co., 210 F.R.D. 487, 500 (S.D.N.Y.2002); Anti–Hydro Co. v. Castiglia, 92 A.D.2d 741, 461 N.Y.S.2d 87 (1983). It is undisputed that Donziger's professional company, Steven R. Donziger & Associates, PLLC, is liable to the same extent as Donziger because Donziger was its agent and acted within the scope of his employment by it. See In re Klenk, 204 A.D.2d 640, 612 N.Y.S.2d 220, 220 (1994) (“The attorney['s] fraudulent scheme occurred while he was a partner acting in the ordinary course of business of each law firm and therefore each law firm is liable for the attorney['s] misconduct to the same extent as he is.”). Accordingly, references to Donziger (unless otherwise stated) include the sole proprietorship and the professional company for ease of expression except if otherwise specifically stated.
1. The Principal Plaintiffs' Lawyers in Aguinda
a. Cristobal Bonifaz
Cristobal Bonifaz, grandson of a former Ecuadorian president, practiced law in Amherst, Massachusetts in the early 1990s. His son attended law school with Steven Donziger.
In 1993, Bonifaz accepted an invitation to travel to Ecuador to meet with residents of the Orienté concerning complaints about pollution in the region and the possibility of a lawsuit.
Bonifaz Dec. 30, 2010 Dep. Tr. at 37:19–22.
DX 1750 (Donziger Direct) ¶ 20.
PX 631 (June 27, 1993 Retention Agreement Between Bonifaz, Kohn, and plaintiffs in the Aguinda Litigation).
b. Steven Donziger
Donziger's interest in Latin America began when he worked as a journalist for the United Press International in Nicaragua from 1984 to 1987
DX 1750 (Donziger Direct) ¶ 2.
Id. ¶¶ 2–5.
Id. ¶ 2.
After his return from Nicaragua, Donziger
Unless otherwise stated, “Donziger” hereafter refers collectively not only to Donziger himself, but also to defendants The Law Offices of Steven R. Donziger and Donziger & Associates PLLC. As noted, the first is a sole proprietorship indistinguishable as a legal matter from Donziger. The second is responsible for Donziger's personal actions because everything he did was done as its agent and within the scope of his authority.
Id. ¶ 1.
Id. ¶ 3.
Id. ¶ 21.
Id. ¶¶ 22, 25.
Although Donziger's name appears on the Aguinda complaint, he was not a lead lawyer when it began. Nevertheless, he did much of the groundwork in Ecuador, took a “handful of trips” to the area from 1993 to 2002 “to meet with clients in the Amazon rainforest, to attend meetings of local community groups ..., and to take care of lawsuit-related issues.”
Id. ¶ 29.
c. Joseph Kohn
Bonifaz knew that he needed an experienced trial lawyer to assist him. He needed money as well. He therefore got in touch with Joseph Kohn, a Philadelphia attorney and partner at Kohn, Swift & Graf, P.C. (the “Kohn firm” or “Kohn”).
PX 2442 (Dec. 30, 2008 Email from K. Hinton to S. Cohen and H. Glaser attaching Dec. 30, 2008 Bloomberg article), at 10.
PX 5600 (Kohn Direct) ¶ 1; see also PX 2350 (Dec. 21, 1994 Ltr. from Bonifaz to Kohn reflecting fee sharing agreement in Aguinda and Ashanga v. Texaco ); PX 631 (June 27, 1993 Retention Agreement Between Bonifaz, Kohn, and plaintiffs in the Aguinda Litigation).
PX 2350 (Dec. 21, 1994 Ltr. from Bonifaz to Kohn reflecting fee sharing agreement in Aguinda and Ashanga v. Texaco ), at 1.
PX 2350 (Dec. 21, 1994 Ltr. from Bonifaz to Kohn reflecting fee sharing agreement in Aguinda and Ashanga v. Texaco, another case brought on behalf of residents of Peru), at 2–3.
2. Key Events During Aguinda
The details of Aguinda are largely unimportant at this stage but several points are significant.
a. Forum Non Conveniens—The Aguinda Plaintiffs Attack Ecuadorian Courts as Corrupt While Texaco Defends Them
Texaco sought dismissal of Aguinda on the grounds inter alia of forum non conveniens and the failure to join the ROE and PetroEcuador, which it argued were indispensable because (1) the requested equitable relief within Ecuador could not otherwise be ordered, and (2) PetroEcuador's own actions would be at issue in the case.
The Aguinda plaintiffs argued that New York was the appropriate forum because Texaco was headquartered here. They contended also that the case could not be brought in Ecuador because Ecuador did not permit class actions or pretrial discovery.
Mot. to Dismiss, Aguinda v. Texaco, Inc., No. 93 Civ. 7527(JSR) (S.D.N.Y. filed Dec. 28, 1993) [DI 10], at 3.
Pls.' Mem. of Law in Opp. to Defs.' Mot. to Dismiss, Aguinda v. Texaco, Inc., No. 93 Civ. 7527(JSR) (S.D.N.Y. filed Mar. 10, 1994) [DI 23], at 3 n. 2.
On November 12, 1996, Judge Rakoff—to whom that case was assigned—dismissed the complaint on the grounds of forum non conveniens and international comity and because PetroEcuador and the ROE had not been joined as plaintiffs.
Aquinda v. Texaco, Inc., 175 F.R.D. 50, 51 (S.D.N.Y.1997).
In 1998, the Court of Appeals reversed the dismissal of Aguinda on the ground that the district court had failed to obtain a commitment by Texaco to submit to the jurisdiction of the Ecuadorian courts.
Jota, 157 F.3d at 159.
Following remand, Texaco provided the missing commitment and then renewed its motion to dismiss on forum non conveniens grounds. As part of its argument that the case belonged in Ecuador and not the United States—and, as will be seen, a great irony—Texaco argued that Ecuador would be an adequate alternative forum because it had an independent judiciary that provided fair trials.
E.g., Texaco Inc.'s Supp. Mem. of Law passim, Aguinda v. Texaco, Inc., No. 93 Civ. 7527(JSR) (S.D.N.Y. filed Mar. 10, 2000) [DI 147].
As will appear, there is no necessary inconsistency between seeking a forum non conveniens dismissal in order to proceed in a foreign country and later attacking a judgment rendered in that foreign country as fraudulent or on other permissible grounds. The standards governing the availability of an alternate forum for forum non conveniens analysis and for a collateral attack on a foreign judgment are quite different. See infra Discussion § IX.A.
E.g., Pls.' Reply Mem. of law passim, Aguinda v. Texaco, Inc., No. 93 Civ. 7527(JSR) (S.D.N.Y. filed Apr. 24, 2000) [DI 151].
Judge Rakoff granted the motion and was affirmed on appeal.
b. The Start of the LAPs' Alliance With the ROE—The LAPs Agree Not to Sue PetroEcuador or the ROE
A second point to be made about Aguinda is that it provided the impetus for an arrangement whereby the LAPs in substance granted PetroEcuador and the ROE immunity from suit in exchange for assistance in Aguinda, an alliance that has strengthened over time.
The Aguinda plaintiffs were concerned by Texaco's argument that the ROE was an indispensable party in view of the complaint's prayer for an equitable decree requiring environmental remediation in Ecuadorian territory. They obtained the ROE's agreement to seek to intervene in the case and to advise this Court that it consented to the “execution in its territory of any environmental cleanup measures that the [Southern District] Court may order [Texaco] to perform.”
But there was a quid pro quo. The Aguinda plaintiffs gave the ROE and PetroEcuador a judgment reduction agreement to protect them against any award of contribution that Texaco might obtain against them.
PX 684 (Waiver of Rights Between C. Bonifaz and J. Kohn in Aguinda v. Texaco, No. 93 Civ. 7527 (S.D.N.Y.)), at 1–2.
Bonifaz later testified that “this idea of an agreement not to sue arose following statements by Judge Rakoff ... that if the Government of Ecuador intervened in the Aguinda litigation, that Texaco might bring counterclaims against it.” Bonifaz Mar. 1, 2011 Dep. Tr. at 14:16–22. Bonifaz said that, at his suggestion, the ROE had agreed to intervene in the Aguinda case, but that it wanted an assurance from Bonifaz that it would not be sued if it did so. According to Bonifaz, “the Procurador [Attorney General] ... said that he will be happy to do whatever we wanted with respect to the case. Then, following that conversation, whatever it was, I talked to a woman at his office ... in which she said ‘Well, the Procurador wants this document signed by you guys that you're not going to sue Ecuador,’ because Judge Rakoff raised the issue in court that ‘If you guys do that, you're going to get sued.’ So they freaked out, and so then they wanted this document signed.” Bonifaz Mar. 1, 2011 Dep. Tr. at 16:8–21. (Defendants' objection to this testimony is overruled. The evidence is relevant to the development of the relationship among the ROE and the defendants, which goes among other things to the likelihood that influence improperly was brought to bear on the Lago Agrio court. The statements attributed to the ROE officials are not hearsay because they are not received for the truth of the statements but to explain why the Aguinda plaintiffs, most of whom are LAPs, waived claims against the ROE and PetroEcuador.)
c. The Aguinda Plaintiffs Seek to Recuse, and Attack, Judge Rakoff
Aguinda was marked also by a challenge to Judge Rakoff's impartiality and an attack on his integrity.
After the reversal of Judge Rakoff's initial forum non conveniens dismissal, the plaintiffs moved to recuse him, claiming that his attendance at a seminar on environmental issues created an appearance of partiality because Texaco had contributed general funding to the organization that sponsored the seminar.
Judge Rakoff denied the motion. The Second Circuit then denied the Aquinda plaintiffs' mandamus petition, holding that no reasonable person knowledgeable of the facts would doubt Judge Rakoff's impartiality.
In re Aguinda, 241 F.3d 194, 198 (2d Cir.2001).
Id. at 198, 206.
PX 10A (Mar. 30, 2006 Crude Clip).
As will appear, these events foreshadowed what became a pattern by the LAP team of seeking to intimidate and threaten judges by pressure tactics including ad hominem attacks.
See infra § Facts II.A, IV.F.1.
d. The Environmental Management Act is Passed in Ecuador
The pendency of Texaco's dismissal motion and then the risk that the Court of Appeals would affirm Judge Rakoff's initial forum non conveniens dismissal prompted other actions by the Aguinda plaintiffs' lawyers. As Bonifaz later suggested, “his team” had “worked with Ecuadorian legislators to draft a law similar to U.S. superfund law,” in preparation “for a possible move from U.S. courts.”
DI 29–10 (Hendricks Decl. 1), Ex. 83, at 2.
which among other things created a private right of action for damages for the cost of remediation of environmental harms generally, as distinct from personal injuries or property damages to specific plaintiffs.
Act 99–37, Registro Oficial No. 245, July 30, 1999.
Id.; PX 2382 (Invictus Memo), at 29 (“Art. 43. Natural or legal persons or human groups, linked by a common interest and directly affected by the harmful action or omission, may file with the judge of competent jurisdiction actions for monetary damages and for deterioration caused to health or the environment, including biodiversity and its constituent elements.”) (citing EMA).
As noted, the issue whether Ecuador permitted class actions was hotly disputed in Aguinda.
e. Texaco Merges with a Chevron Subsidiary and Survives the Merger
The final event of note that occurred during Aguinda was the merger of a wholly owned subsidiary of Chevron with and into Texaco, with Texaco emerging as the surviving entity. Chevron thereby became the indirect owner of all of Texaco's common stock. Chevron, however, did not acquire any of Texaco's assets or assume any of its liabilities by operation of the merger.
Chevron Corp. v. Donziger, 886 F.Supp.2d 235, 243 & nn. 23–25 (S.D.N.Y.2012).
II. The Lago Agrio Litigation Begins
In May 2003, about one year after the Second Circuit affirmed the dismissal of Aguinda, the LAPs sued Chevron (but not Texaco) for damages and for remediation of environmental harm said to have been caused by Texaco.
The case was brought for the benefit of some 30,000 indigenous residents of the Concession area. Significantly, however, the complaint asked that any funds awarded to perform the requested remediation, plus an additional ten percent, be delivered to the Frente de la Defensa de la Amazonia (the “ADF”) for use in performing any remediation ordered by the court.
Id. The EMA is cited in the complaint as creating a right on the part of natural persons and others to sue “for damage and loss and for health and environmental deterioration, including biodiversity.” Id. at 29, 32.
Thus, the LAPs sought to have the ADF placed in complete control of any and all sums recovered. As will appear, this is significant because Donziger and some of his Ecuadorian associates controlled and still control the ADF.
Id. at 29–31; PX 5600 (Kohn Direct) ¶ 4.
The case initially was assigned to Judge Alberto Guerra Bastidas (“Guerra”), who then was the president of the Lago Agrio court
and who became an important witness at trial. Before turning to the events of the Lago Agrio proceedings, however, three subjects are important to an understanding of what transpired later: (1) Donziger's attitudes and beliefs concerning the Ecuadorian courts, (2) the many Ecuadorian judges who were assigned to the case for varying periods during the years of its existence, and (3) a brief description of the plaintiffs, their lawyers, and the structure of the LAPs' team. As someone once said, “you can't tell the players without a scorecard.”
PX 4300X (Callejas Direct) ¶ 24.
A. Donziger's Attitudes and Beliefs About the Ecuadorian Courts and the Conduct of Lawyers in Ecuador
Donziger's attitudes and beliefs about the capability, fairness, and integrity of the Ecuadorian legal system are no secret. During Aguinda, he argued strenuously that Ecuador was not an adequate forum because the Ecuadorian judiciary was weak and corrupt and did not provide impartial tribunals.
E.g., Plaintiffs' Reply Mem. of Law, passim, Aguinda v. Texaco, Inc., No. 93 Civ. 7527(JSR) (S.D.N.Y. filed Apr. 24, 2000) [DI 151].
As will appear, these statements made on camera were recorded by a documentary film maker whom Donziger recruited to make a film about the Lago Agrio case and for which he procured millions in financing from a friend. The film was released with the title Crude.
In these film clips, Donziger frequently sought to justify improper or questionable actions with respect to the Ecuadorian litigation by contending that such behavior was necessary in under the circumstances. But there is no credible evidence to support Donziger's claims of necessity or justification, which often hinged on unsubstantiated suppositions of misconduct by Chevron. The Court finds that Donziger's attempts of self justification best are understood as attempts to make himself look good notwithstanding his conduct. Those attempts are not credible given the entire record of this case and the Court's assessment of Donziger.
• “They're all [ i.e., the Ecuadorian judges] corrupt! It's—it's their birthright to be corrupt.”
PX 9A (Mar. 30, 2006 Crude Clip).
• “These judges are really not very bright—it is like a vocational job to them, they deal with resolving disputes at a very basic level[;] there is little or no intellectual component to the law.”
PX 179 (Donziger Notebook).
• “Uh, in a year from now, we're not comin' down here anymore. The case is over. All we're doin' is writing reports and preparing for final submissions of papers. And, really mobilizing the country, politically, so that no judge can rule against us and feel like he can get away with it in terms of his career.”
PX 3A (Mar. 9, 2006 Crude Clip), at CRS–032–00–CLIP–01.
• “[T]his is not a legal case, this is a political battle that's being played out through a legal case and all the evidence is in. * * * So, what we need to do is get the politics in order in a country that doesn't favor people from the rainforest.”
PX 11A (Apr. 3, 2006 Crude Clip), at CRS060–00–CLIP–04.
• “It's incredible that a judge can—you can just walk in his office, with all the media, and it's obvious what we're doing, and he doesn't have the power to say, ‘get the fuck out of my office,’ like at least to the press. I mean, I've never seen such utter weakness. It's the same kind of weakness that leads to corruption. * * * These people [ i.e., the judges] have no power. * * * They don't think they can do anything.”
PX 7A (Mar. 30, 2006 Crude Clip), at CRS–053–02–CLIP–04.
• “You know, what ... just happened with this judge, um, is sort of sad to me because it represents the fact that the judicial system here is so utterly weak—like the only way you can secure a fair trial is if you do things like that, like go in and confront the judge with media around, and fight and yell and scream and make a scene, and, you know, that would never happen in the United States. That would never happen in any judicial system that had integrity. And it's that very weakness that, you know, let people do that. That is also—lets people corrupt the process.”
PX 8A (Mar. 30, 2006 Crude Clip).
• [To a colleague] “Please prepare a detailed plan with the necessary steps to attack the judge through legal, institutional channels and through any other channel you can think of. Send it to me today.”
PX 779 (June 14, 2006 Email from S. Donziger to A. Ponce re “Need plan”).
• “[I]t's a problem of institutional weakness in the judiciary, generally, and of this court, in particular. We have concluded that we need to do more, politically, to control the court, to pressure the court. We believe they make decisions based on who they fear the most, not based on what the laws should dictate. * * * [I]t's a critically important moment, because we want to send a message to the court that, ‘don't fuck with us anymore—not now, and not—not later, and never.’ ”
PX 67A (June 6, 2007 Crude Clip), at CRS–350–04–CLIP–01.
• “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.”
PX 81A (Undated Crude Clip), at CRS–129–00–CLIP–02.
Though Donziger's statements are remarkably disrespectful to the judicial system he now so vehemently defends, it will be seen that they are not unlike President Correa's views of the Ecuadorian judiciary. The Crude outtakes depicted also Donziger's beliefs on the role of lawyers and evidence in litigation
• “I once worked for a lawyer who said something I've never forgotten. He said, ‘Facts do not exist. Facts are created.’ And ever since that day, I realized how the law works.”
PX 47A (Mar. 4, 2007 Crude Clip), at CRS 198–00–CLIP–07.
• “Science has to serve the law practice; the law practice doesn't serve science.”
PX 24A (Jan. 16, 2007 Crude Clip), at CRS 158–02–CLIP 9.
• “[A]ll this bullshit about the law and facts but in the end of the day it is about brute force ...”
PX 77A (June 13, 2007 Crude Clip), at CRS 361–11.
• “[A]t the end of the day, this [ i.e., the lack of evidence on a key point] is all for the Court just a bunch of smoke and mirrors and bullshit. It really is.”
PX 43A (Mar. 4, 2007 Crude Clip), at CRS–195–05–CLIP–01.
In considering these and other statements, not to mention Donziger's conduct, it is relevant to note that Donziger is a member of the New York Bar. His conduct, whether in the United States or in Ecuador, was subject in every respect to the New York rules governing the conduct of lawyers.
.N.Y. Rules of Prof'l Conduct, Rule 8.5(a) (effective Apr. 1, 2009); N.Y. Code of Prof'l Resp.,DR 1–105 (repealed effective Apr. 1, 2009).
Finally, it is relevant to note that Donziger and his Ecuadorian associates assumed that it would be impossible to obtain evidence of their actions. This 2007 exchange with Atossa Soltani, the head of Amazon Watch, a non-governmental organization (“NGO”) supporter of Donziger and the LAPs, during a videotaped conversation about arguably questionable planned activities in Ecuador, is revealing
“SOLTANI: Do you guys know if anybody can, uh, subpoena these videos? That is a—how do you [unintelligible]
“DONZIGER: We don't have the power of subpoena in Ecuador.”
PX 68A (June 6, 2007 Crude Clip), at CRS–35–04–CLIP–02.
B. The Ecuadorian Judges
A total of six judges presided over the Lago Agrio Chevron case from the time it was filed in 2003 until the Judgment was issued in February 2011.
In general, the president of the Provincial Court of Nueva Loja—an election for which, it appears, was held every two years—was to preside over the case. When a new president was selected, the case would be transferred either to the newly-elected president, who would keep the case for two years or to another judge in the court, who would keep it for four months.
PX 2522 (List of Judges on the Lago Agrio Chevron Case).
But the fact that six judges—two of whom presided over the case more than once—presided over the Lago Agrio case in the eight years it was pending reveals that the assignment system did not always work exactly as expected.
Tr. (Zambrano) 1715:21–23; see also PX 4300X (Callejas Direct) ¶ 20.
When the Lago Agrio case was filed in May 2003, Alberto Guerra was the president of the court and so the case was assigned to him.
PX 4800 (Guerra Direct) ¶ 4.
Id.; PX 2522 (List of Judges on the Lago Agrio Chevron Case).
PX 2522 (List of Judges on the Lago Agrio Chevron Case).
Id.; PX 348 (Oct. 3, 2007 Lago Agrio Court Order).
In August 2008, Judge Juan Nuñez became president and the Lago Agrio case was transferred to him.
PX 2522 (List of Judges on the Lago Agrio Chevron Case).
PX 4800 (Guerra Direct) ¶ 21; PX 4300X (Callejas Direct) ¶ 20.
Tr. (Zambrano) 1715:1–5; PX 2522 (List of Judges on the Lago Agrio Case).
PX 4124 (July 30, 2008 Personnel Action Appointing N. Zambrano as Second Judge of the Superior Court of Nueva Loja); Tr. (Zambrano) 1629:19–1630:7.
Tr. (Zambrano) 1716:13–16.
Id. 1904:22–1905:2; DX 1561 (Oct. 1, 2010 Order).
Judge Zambrano took over again in October 2010
PX 2522 (List of Judges on the Lago Agrio Case).
C. The LAPs' Team
1. The American Lawyers
The lawyers for the Aguinda plaintiffs had laid groundwork for suing in Ecuador if the New York case were dismissed by working toward the enactment in Ecuador of the EMA. At the outset of the Ecuadorian case, the same three American lawyers—Bonifaz, Kohn, and Donziger—played the key roles, using Ecuadorian counsel, the first of whom was Dr. Alberto Wray, to appear of record. By the time the Lago Agrio case began, however, the respective roles of the American lawyers had changed.
Kohn, who had a lead role in the United States in Aguinda, had no ties to Ecuador and did not speak Spanish.
PX 5600 (Kohn Direct) ¶ 10.
Between May 2003 and November 2009, the Kohn firm “was the primary funder of the litigation and related U.S. public relations and other activities. During those nearly seven years, the firm paid over $6 million in litigation expenses. This included ... $1.1 million that [the Kohn firm] provided to Mr. Donziger for legal services and expenses, $1.1 million that [the Kohn firm] paid to U.S. consultants, and $2.2 million that [the firm] transferred by wire from bank accounts in the United States to bank accounts in Ecuador.” PX 5600 (Kohn Direct) ¶ 9; see also Donziger Nov. 29, 2010 Dep. Tr. at 205:10–206:4. These payments included a monthly stipend that the Kohn firm paid to Donziger. See Donziger Jan. 19, 2011 Dep. Tr. at 3547:23–3548:22.
PX 5600 (Kohn Direct) ¶ 10.
Bonifaz's role also changed. While he was involved in selecting and briefing the lead Ecuadorian counsel,
Bonifaz Dec. 30, 2010 Dep. Tr. at 32:16–33:4.
Id. at 20:21–22; see also PX 761 (Feb. 10, 2006 Assembly Resolution Terminating C. Bonifaz).
Although Bonifaz still was involved when the Ecuadorian lawsuit began, he no longer was in charge. Donziger had taken over. In 2006, Donziger wrote that he had been the “lead counsel on the [Lago Agrio] lawsuit for the last three years,”
PX 806R (Donziger Book Proposal), at 5.
“at the epicenter of the legal, political, and media activity surrounding the case both in Ecuador and in the U.S. I have close ties with almost all of the important characters in the story, including Amazon indigenous leaders, high-ranking Ecuadorian government officials, the world's leading scientists who deal with oil remediation, environmental activists, and many of Chevron's key players.”
Id. at 3 (“I am the person primarily responsible for putting this team together and supervising it.”).
Id. at 21.
Id. at 3.
There is no substantial doubt that Donziger was in charge of the important aspects of the Ecuadorian case. He referred to the Ecuadorian lawyers as his “local counsel.”
Donziger July 19, 2011 Dep. Tr. at 4764:19–23 (“Q. When you say ‘local counsel,’ do you mean Pablo Fajardo, Saenz, and Prieto? A. Yes.”); Tr. (Donziger) 2477:1–6; PX 7682 (Jan. 28, 2010 Draft Ltr. from S. Donziger to J. Tyrrell) (“It likely will involve regular travel to Ecuador as well to work with local counsel.”); Tr. (Donziger) 2470:4–10 (“Q. Isn't it a fact, Mr. Donziger, that you would give directions to local counsel in Ecuador on what to do with the litigation? A. On occasion I would express my opinion as to what they should do, and I would do it in forceful terms.”).
From the time the case was filed in Lago Agrio until at least quite recently, and perhaps even until today, Donziger has supervised the Ecuadorian legal team, set deadlines, was involved in setting the lawyers' salaries,
DX 1306 (Donziger Notebook), at 23 (“Pablo ... [s]till introduces me as the ‘cabeza’ of the lawsuit which I don't like but that is fixable.”).
Chevron offered selected portions of Donziger's personal notebook as a series of individual exhibits but the defendants offered all of it as DX 1306. The portions offered by Chevron all were admissible, even over any hearsay objection, because Donziger's statements in the notebook are nonhearsay when offered by his opposing party, Chevron. Fed.R.Evid. 801(d)(1). The situation is quite different when the entire notebook was offered by the defendants. To the extent it was offered for the truth of the statements, it was hearsay. No hearsay exception was established. Nor did defendants establish that the entire notebook was admissible under the rule of completeness, Fed.R.Evid. 106, which in any case would not have overcome any hearsay objection, infra Discussion § VII.C, or that any specific part was admissible for a nonhearsay purpose. Accordingly, DX 1306, except for those portions specifically relied upon in this opinion, which are admissible for the truth of the matters asserted under FED. R. EVID. 801(d)(1), is inadmissible and stricken.
reviewed their court filings, directed the legal strategy, and coordinated the work between the lawyers in Ecuador and the scientists, experts, lawyers, litigation funders, politicians, and media consultants throughout the world.
Donziger Dep. July 19, 2011 Dep. Tr., at 4912:19–22 (“I think [Yanza's] salary was set by mutual consent between Mr. Kohn and myself on the one hand, and Mr. Yanza on the other, when Mr. Kohn was involved in the case”), id. at 4913:10–15 (“Q. Who determined whether or not Mr. Yanza received a bonus? A. I think, again, it was done by mutual consent between Mr. Yanza and myself after Mr. Kohn withdrew from the case.”); PX 2396R (Donziger's Responses and Objections to Chevron Corps.' First Set of Requests for Admission), at 21 (“REQUEST FOR ADMISSION NO. 3:Admit that YOU were involved in setting Pablo Fajardo Mendoza's bonuses for his work concerning the LAGO AGRIO LITIGATION. RESPONSE TO REQUEST FOR ADMISSION NO. 3: ... Donziger admits that he was aware of, and at times participated in, discussion concerning Pablo Fajardo Mendoza's compensation.”); id. at 22 (“REQUEST FOR ADMISSION NO. 5: Admit that YOU were involved in setting Pablo Fajardo Mendoza's bonuses for his work concerning the LAGO AGRIO LITIGATION. RESPONSE TO REQUEST FOR ADMISSION NO. 5: ... Donziger admits that he was aware of, and at times participated in, discussion concerning Pablo Fajardo Mendoza's compensation.”); id. at 23 (“REQUEST FOR ADMISSION NO. 7: Admit that YOU were involved in setting Luis Yanza's monthly salary for his work concerning the LAGO AGRIO LITIGATION. RESPONSE TO REQUEST FOR ADMISSION NO. 7: ... Donziger admits that he was aware of, and at times participated in, discussion concerning Luis Yanza's compensation.”); id. at 24–25 (same for Juan Pablo Sáenz); id. at 26 (same for Julio Prieto); id. at 23–24 (“REQUEST FOR ADMISSION NO. 9: Admit that YOU were involved in setting Luis Yanza's bonuses for work concerning the LAGO AGRIO LITIGATION. RESPONSE TO REQUEST FOR ADMISSION NO. 9: ... Donziger admits that he was aware of, and at times participated in, discussion concerning Luis Yanza's compensation.”); id. at 25–27 (same for Juan Pablo Sáenz.); id. at 26 (same for Julio Prieto).
E.g., PX 8057 (Mar. 7, 2010 Email from S. Donziger to L. Yanza, J. Sáenz, J. Prieto, L. Garr, and A. Page), at 5 (“Friends, Today is Sunday but it's urgent that we resolve the following by Monday: 1) The local motion with the court—we need a draft right away with the translation so we can review it here before submitting it in Lago Agrio. The sooner it can be submitted the better; rush if possible friends.... Please friends, we are in a difficult situation; I am asking you to work today.”); PX 1065 (Sept. 11, 2008 Email from S. Donziger to J. Sáenz) (“ ‘No’ is not a sufficient answer. If you have too much work, find somebody else to do it and pay them. I need this tonite—no bullshit, and trust me, it will help our clients more than what you are currently doing, as important as what you are doing is.”); PX 1038 (June 6, 2008 Email from S. Donziger to J. Sáenz, P. Fajardo, J. Prieto, L. Yanza, R. Garcia) (“Juampa Get this done and don't fuck up please.”); PX 2376 (Apr. 19. 2007 Email from S. Donziger to M. Regalado and M. Garcés) (“Friends: I am very, very disappointed that you had already left when I called at 5:20. I'm applying new rules for office communication.... We're paying too much to put up with this type of thing. I send a corrected press release and instead of answering me, you left.”); PX 687 (Nov. 19, 2003 Memorandum from Donziger to Team Entitled “Strategic Planning Memo/Ecuador Case”); PX 7670 (Jan. 21, 2008 Email from S. Donziger to J. Prieto, J. Sáenz, L. De Heredia, P. Fajardo, A. Ponce) (“Julio, Juampa, and Pablo, and Alejandro: Please ask Lupita to give you the legal document that I gave her on Friday. It is urgent that you take care of it.”); PX 7582 (July 22, 2010 Email from S. Donziger to P. Fajardo) (“Can you send me the summary that I recently asked for? thanks.”); PX 7465 (Sept. 20, 2010 Email from S. Donziger to J. Sanez, P. Fajardo, J. Prieto, L Yanza, V. Barham) (“Friends, Let's talk tonight. Let's not do anything rash please. Let's analyze it first as a group.”); PX 3040 (Apr. 3, 2008 Email from S. Donziger to P. Fajardo, L. Yanza, M. Garces. M. Guadalupe de Heredia, J. Sáenz, J. Prieto) (“PERSONALIZE THE REIS [VEIGA] MATTER BECAUSE USING HIM IS A WEAKNESS OF CHEVRON. PLEASE TAKE ADVANTAGE”).
This of course is not to say that Donziger never consulted his Ecuadorian colleagues, both lawyers and others, and that he did not take account of their views. But It was Donziger who made the important final decisions, giving such weight to any views expressed by others as he thought appropriate.
Although Mr. Kohn provided the money through 2009, Donziger largely controlled how and when it was spent. Many of the payments Kohn made to the plaintiffs' team in Ecuador, scientists, consultants, PR strategists, and experts first flowed through Donziger and were subject to his approval. Indeed, Donziger sometimes paid the Ecuadorian legal team from his personal account, for which he later was reimbursed by Kohn. See, e.g., Donziger July 19, 2011 Dep. Tr. at 4925:5–14, 4927:2–4928:2. And while Kohn ultimately bore the cost of the salaries and bonuses of Ecuadorian lawyers and agents during his time on the case, Donziger was involved in setting the amount of each. E.g., id. at 4912:18–22 (Q: Who set Mr. Yanza's salary? A: I think it was set by mutual consent between Mr. Kohn and myself on the one hand and Mr. Yanza on the other, while Mr. Kohn was involved in the case.); id. at 4913:15–23 (“Q. Did Mr. Yanza receive any bonuses while Mr. Kohn was funding the litigation? A. I believe he did, yes. Q. Did Kohn agree to those bonuses? A. He paid them, so yeah, he agreed to them.”). Donziger testified also that he even purchased a home for Yanza. Id. at 4917:3–10. While Donziger paid for the home from his personal checking account, he was reimbursed for the payment by Kohn. Id. at 4918:12–18; see also PX 968 (Feb. 8, 2008 Email from S. Donziger to J. Kohn and K. Wilson) (“Please send your deposit of 20,000 to the following account”).
The main exception to this general conclusion for the period 2003–09, during which Kohn was the principal financial backer, was that Donziger on occasion sought Kohn's acquiescence with respect to activities that required additional funds.
Donziger and the other defendants disputed this, at least for the period early 2012 to date, both on a sanctions motion and at trial. The Court previously rejected their argument on the sanctions motion and now rejects it again after trial.
Infra Facts § VII.D.
In 2010, a new source of funding, Burford Capital, invested millions of dollars in the case, at which point the law firm of Patton Boggs was given some authority, along with Donziger, over the expenditure of the money. Infra Facts § VII.E.1.
2. The ADF, Selva Viva, and Luis Yanza
Luis Yanza is Donziger's closest friend in Ecuador.
PX 6872 (May 23, 2006 Ltr. from S. Donziger to D. Kuhn), at 7 (“[m]y closest friend in Ecuador and the coordinator of the case for the affected communities [is] Luis Yanza”).
He has been paid throughout from funds raised to finance the case. Donziger even purchased a residence for him out of personal funds, though this expense ultimately was reimbursed to Donziger by the Kohn firm.
Donziger July 19, 2011 Dep. Tr. at 4912:11–21, 4914:4–24, 4917:3–10, 4918:12–18; see also PX 968 (Feb. 8, 2008 Email from S. Donziger to J. Kohn and K. Wilson) (“Please send your deposit of 20,000 to the following account.”).
Yanza has been involved in some of the legal team's biggest strategic decisions, including, according to Donziger, the decision to replace the first Ecuadorian lead lawyer, Alberto Wray.
He was copied on nearly every important email sent among the Ecuadorian lawyers and Donziger, and has been the liaison between the lawyers and their clients. He serves also as a major point of contact between the LAP team and various Ecuadorian government officials including President Correa.
Donziger Dec. 23, 2010 Dep. Tr. at 1763:18–23.
See infra Facts § VI.
Donziger and Yanza formed two entities that figure in the events that followed.
The first was the ADF, which was formed in 1993, shortly after the Aguinda complaint was filed, to support the case.
DX 1900 (H. Piaguaje Direct) ¶ 22; Tr. (Kohn) 1493:10–19.
Id.; PX 5600 (Kohn Direct) ¶ 3 (Yanza was the representative of the ADF with respect to the Lago Agrio case from the outset); id. ¶ 17 (Yanza was the head of the ADF).
The second was Selva Viva CIA, Ltda. (“Selva Viva”), “an entity created under ... the corporate law of Ecuador that served as a funding vehicle [in the Lago Agrio] case ... to pay people in Ecuador who worked on the case.”
Tr. (Donziger) 2635:5–9; Donziger Dec. 23, 2010 Dep. Tr. at 1817:12–17 (“Q. Selva Viva was an Ecuadorian corporation created and run by the representative of the plaintiffs; is that right? A. It was created by Yanza as a mechanism to administer the case funds.”); PX 6906 (record of incorporation of Selva Viva, its entry into the Register of Companies, and the designation of Donziger as president); PX 897 (Aug. 14, 2007 Email from S. Donziger to K. Wilson, J. Kohn, and K. Kenny re: “critical money transfer”) (“The Frente [ADF] created Selva Viva simply as a pass thru mechanism to administer funds for the litigation; the Frente [ADF] controls Selva Viva.”).
E.g., Donziger July 19, 2011 Dep. Tr. at 4844:22–4845:14; PX 897 (Aug. 14, 2007 Email from S. Donziger to K. Wilson, J. Kohn, and K. Kenny re: “Critical money transfer”) (“Luis Yanza ... runs the Selva Viva account.”).
For many years, when the Ecuadorian team needed money, Yanza contacted Donziger and Donziger in turn requested the funds from Kohn. The Kohn firm then wired the money either directly to Selva Viva or to Donziger, who then passed it on to Selva Viva. It is undisputed that the ADF, which is controlled by Yanza and Donziger, controls Selva Viva.
PX 897 (Aug. 14, 2007 Email from S. Donziger to K. Wilson, J. Kohn, and K. Kenny re: “critical money transfer”) (“The Frente [ADF] created Selva Viva simply as a pass thru mechanism to administer funds for the litigation; the Frente [ADF] controls Selva Viva.”); see also Donziger Dec. 23, 2010 Dep. Tr. at 1817:12–18 (“Q. Selva Viva was an Ecuadorian corporation created and run by the representative of the plaintiffs; is that right? A. It was created by Yanza as a mechanism to administer the case funds.”).
The ADF, Yanza, and Selva Viva all are defaulted defendants in this case.
3. The Ecuadorian Lawyers
When the Lago Agrio litigation commenced, the American lawyers—who were not licensed to practice law in Ecuador—hired Ecuadorian attorneys to represent the LAPs in court. The composition and leadership of the Ecuadorian legal team changed through the years—although, as will become evident, it always has been managed and overseen by Donziger.
Pablo Estenio Fajardo Mendoza (“Fajardo”) graduated from law school in 2000 and, for a time, worked for the ADF helping residents of the Orienté bring claims against oil companies.
PX 6872 (May 23, 2006 Ltr. from S. Donziger to D. Kuhn), at 7.
Tr. (Donziger) 2474:16–20, 2475:17–2476:6; PX 6872 (May 23, 2006 Ltr. from S. Donziger to D. Kuhn), at 9 (“As we surveyed our options, we decided that Fajardo was the best bet to replace Pareja even though he had never run a trial in his life and (as the graduate of an extension school) was not considered a ‘real’ lawyer by Chevron's legal team.”).
PX 323 (Special and Judicial Power of Attorney on Behalf of Pablo Estenio Fajardo Mendoza).
From then on, Fajardo has been the procurador común—lead counsel before the courts in Ecuador—for the LAPs.
And, as will be seen, Fajardo has represented the plaintiffs in court, filed briefs on their behalf, signed retention agreements with investment firms, and given interviews with the international press as their representative.
E.g., DX 1500 (Hinton Direct) ¶ 34 (“Pablo Fajardo won the CNN Hero Award....”).
E.g., PX 1107 (Feb. 24, 2009 Email from P. Fajardo to S. Donziger and L. Yanza) (“I'm in Oregon [and].... I'm supposed to give the opening address at a super important conference in the environmental world....”); PX 5600 (Kohn Direct) ¶ 18 (“In 2006, Mr. Donziger, Mr. Fajardo, Mr. Yanza, and Mr. Ponce met me in my offices to discuss the case.”); Donziger Jan. 14, 2011 Dep. Tr. at 2795:11–20 (“Q. Where were you and Mr. Fajardo meeting? A. It was in my apartment. Q. In New York? A. Yes. Q. What was the purpose of Mr. Fajardo's visit to New York in May of 2010? A. To deal with various issues relating to the Lago case.”).
Fajardo is a defendant in this case and, as is discussed below, appeared pro se in its early days.
DI 128 (Feb. 23, 2011 Ltr. from P. Fajardo to Court).
DI 469 (Certificate of Default as to Fajardo, Yanza, the ADF, Selva Viva, and the 45 defaulting Lago Agrio Plaintiffs).
A number of other Ecuadorian lawyers has been involved in the Lago Agrio case on behalf of the LAPs. The most significant have been Alejandro Ponce Villacis (“Ponce”), Juan Pablo Sáenz, and Julio Prieto.
Yanza recruited Ponce, a lawyer based in Quito, shortly after the Lago Agrio case was filed to “provide advice on the strategy as well as draft pleadings” and consult on matters of Ecuadorian law.
DX 1601 (Ponce Direct) ¶ 9.
Id. ¶ 12.
Id. ¶ 9.
Juan Pablo Sáenz and Julio Prieto report to Donziger and Fajardo, who often have called upon them to research and answer questions of Ecuadorian law,
E.g., PX 7735 (Apr. 10, 2007 Email From S. Donziger to J. Sáenz and A. Ponce) (“Need some manner to make theory of unjust enrichment part of damages claim. Any ideas of how under Ecuadorian law?”); PX 2493 (Aug. 26 2008 Memorandum from G. Erion and J. Sáenz) (“Re: Chevron's Liability for Texaco in Fact and Law.”).
PX 8057 (Mar. 7, 2010 Email from P. Fajardo to S. Donziger copying others) (“Juampa [Sáenz] is translating the Callejas statement.”)
PX 8057 (Mar. 7, 2010 Email from J. Prieto) (“I can start on the motion [to be submitted in Denver]”); PX 7580 (Nov. 7, 2006 Email from S. Donziger to J. Sáenz, L. Schrero, and J. Prieto); PX 7468 (Nov. 11, 2010 Email from J. Sáenz to P. Fajardo and S. Donziger) (“Friends, here's the most recent draft of the Alegato. It still needs some work.”); PX 435 (Nov. 15, 2007 Email from J. Sáenz to P. Fajardo, J. Prieto, S. Donziger, and A. Anchundia) (“Colleagues, here's the first version of the famous merger memo, for your review and comments. At the last minute I thought it would be a good idea to add something about piercing the corporate veil, which is still missing.”).
4. The Assembly
In 2001, a grass roots organization called the Asamblea was formed in the Orienté.
Humberto Piaguaje, the current leader, explained that associations were formed in each oil field. Each association designated delegates to participate in a larger council, and leaders of each indigenous group and one representative of settlers in each province formed an executive committee.
DX 1900 (H. Piaguaje Direct) ¶ 26; Tr. (Donziger) 2635:11–22 (“The asamblea, I would describe it as a grassroots organization that was created by the affected communities that exist in the Napo concession area, that is where Texaco used to operate. There is about 80 different communities, some indigenous, some farmer communities, that consider themselves to be the class of people that would benefit from any cleanup of the environmental damage. And they organized an assembly in recent years to meet on a regular basis and to monitor the lawsuit and to work with the lawyers to make their views known about how they thought the lawsuit should be litigated, or whatever issues that they wanted to express themselves about they would.”).
DX 1900 (H. Piaguaje Direct) ¶ 36.
Id. ¶ 37.
Id. ¶ 38.
Although the Asamblea “existed informally as a de-facto organization” since 2001, it changed its name in 2012 to the Union of the Assembly of those Affected by Texaco (“UDAPT” or the “Assembly”).
Id. ¶ 26.
The ADF is referred to also as the “Amazon Defense Coalition.” See, e.g., DX 1600 (Moncayo Direct) ¶ 6.
Donziger's assumption of control over the litigation resulted in a fundamental change in approach. The new approach is a lens through which virtually everything that happened after the Lago Agrio case began in 2003 must be viewed.
Donziger believed that the court of public opinion was as important as any other.
Charles Calmbacher, one of the first experts Donziger hired to assist in the Lago Agrio litigation, testified that “a big concern of Donziger's was our public appearance. He was convinced that he could win the case in the court of public opinion.... He felt, you know, if we showed any contamination, he could basically bring that out as, you know, something horrible to the people and to the Amazon and get public opinion on his side.” Calmbacher Dep. Tr. at 26:1–14.
PX 687 (Nov. 19, 2003 Memorandum from Donziger to Team re: “Strategic Planning Memo/Ecuador Case”), at 1.
The importance of Donziger's media and public relations strategy is evident from the manner in which Donziger spent the millions of dollars that were obtained from investors.
He outlined the campaign in a memorandum he wrote to his team in late 2003. He explained that the team would initiate and/or utilize celebrities; non-governmental organization “pressure;” the “Ecuador government—executive, and Congress;” national, international, and Ecuadorian press; a “divestment campaign” in which the team would seek to convince institutional investors to sell Chevron stock, and even a criminal case in Ecuador in its effort to obtain money from Chevron.
While the financial records are incomplete and do not permit a full and accurate accounting, PX 4900R (Dahlberg Direct) ¶¶ 8, 31–32, Donziger spent, or had primary control over spending by others from whom he raised money, at least several million dollars to make the documentary film Crude, to hire public relations personnel and lobbyists, to pay a former presidential speech writer to ghostwrite op-ed pieces for signature by others, and to fund ostensibly independent NGOs that publicly supported the LAPs in various ways. Id. ¶¶ 7, 89–112; see also PX 607 (Invoices from S. Donziger to Kohn, Swift & Graf), at 58 (June 10, 2010 Invoice reflecting $7,500 fee for Paul Orzulak, West Wing Writers). The public relations personnel and lobbying firms he hired included Karen Hinton, Ken Sunshine, Paul Orzulak, Kerry Kennedy, Lou Dematteis, Mark Fabiani, Christopher Lehane, Ben Barnes Group, and Downey McGrath Group. PX 4900R (Dahlberg Direct) ¶¶ 89, 107. Among the NGOs with which he worked closely, and for which he raised substantial funds, were Amazon Watch, the ADF, the Rainforest Action Network, and Selva Viva. Id. ¶¶ 101–06.
E.g., PX 1146 (July 2, 2009 Memorandum from “SRD” to “Kohn Team” re: “Activity Going Forward”), at 1 (“The space is occupied by players in the worlds of law, science, environmental activism, politics, the press, lobbying, diplomacy, celebrity, shareholders, financial analysts, regulatory agencies, and many others in Ecuador—including high-level officials in Ecuador's government.... We ... see this as not just a legal case, but a political-style campaign driven by a legal case. The battle takes place on a daily basis, 24/7 per day, with no breaks for the normal rhythms of the typical legal practice.”).
In fact, many of Donziger's former co-counsel on the case expressed grave concerns over his “obsession with public relations.” PX 1406 (Aug. 9, 2010 Ltr. from J. Kohn to P. Fajardo, L. Yanza, H. Piaguaje, E. Chavez, H. Payaguaje, E. Criollo), at 4; see also PX 1157 (Sept. 5, 2009 Email from N. Glazer to S. Donziger) (“We have a team of experienced attorneys who want to be fully integrated into and engaged with the matter.... And we ... learn of case developments not from co-counsel but from press releases.... I feel ... that it is extremely unprofessional, and that too much emphasis is placed on PR and not enough on other aspects.”).
Just as important as the pressure campaign directed at Chevron was an analogous campaign directed at the Ecuadorian courts. As we have seen already, Donziger viewed the Ecuadorian courts as corrupt, weak and responsive to pressure—as institutions that, at best, “make decisions based on who they fear the most, not based on what the laws should dictate.”
In a particularly revealing comment, made in his personal notebook, he wrote that “ the only way the court will respect us is if they fear us—and that the only way they will fear us is if they think we have ... control over their careers, their jobs, their reputations—that is to say, their ability to earn a livelihood.”
Supra Facts § II.A.
PX 184 (Donziger Notebook), at 2 of 5 (emphasis added).
As we shall see, he and his associates directly coerced at least one judge and mobilized demonstrations to intimidate others. And the object always included ratcheting the pressure up on Chevron in order to extract money from it.
PX 77A (Undated Crude Clip).
This focus on the media had at least one unintended effect. Hoping to promote the LAPs' cause in the court of public opinion, Donziger in 2005 recruited a film maker to follow him and his team around in Ecuador and the United States, filming scenes for use in documentary. That film eventually become the documentary Crude, which prompted extensive U.S. discovery efforts by Chevron that led to the disclosure of outtakes from the film. Many of Donziger's statements on camera made to the Crude film makers, some of which are quite revealing, are in evidence in this case.
B. Donziger's Public Relations Team and NGO Allies
1. The Public Relations and Lobbying Team
As Donziger viewed (and views) his efforts to force Chevron into settlement as “a political-style campaign driven by a legal case,”
it is not surprising that he spent a significant part of the resources he raised for the Lago Agrio case on these efforts, and hired several public relations professionals and lobbyists with extensive political experience to work on the LAPs' behalf. He involved also, and at times financially contributed to, NGOs to support his efforts. These individuals and organizations often were mere mouthpieces, however. Donziger at all times controlled the content and timing of the LAPs' public relations.
PX 1146 (July 2, 2009 Memorandum from “SRD” to “Kohn Team” re “Activity Going Forward”), at 1.
Until quite recently, Karen Hinton was the public face of the litigation's public relations efforts. She was the “United States press coordinator” and handled media relations efforts from May 2008 to March 2013.
DX 1500 (Hinton Direct) ¶¶ 2, 4. In 2009, Donziger described Hinton to one of the case's investors as follows: “Former aid[e] to Andrew Cuomo (Clinton cabinet member and currently [Attorney General] of New York). Responsible for 60 Minutes, Wash Post, Bloomberg, AP, Wall Street Journal, and interest by Andrew Cuomo in investigating Chevron for misleading shareholders.” PX 1123 (Apr. 14, 2009 Memorandum from S. Donziger to R. DeLeon re “Estimated 15–month budget, Ecuador case”), at 1–2.
DX 1500 (Hinton Direct) ¶ 4; Tr. (Hinton) 2180:22–2181:2.
As Hinton understood it at the time of her retention, the objective of her communications efforts was to “facilitate the stated goal of pushing ChevronTexaco to settle the lawsuit in the near future.”
Tr. (Hinton) 2169:14–15.
PX 1034 (Apr. 28, 2008 Email from K. Hinton to S. Donziger re “Proposal from Hinton Communications”), at 3.
E.g., PX 6817 (Mar. 11, 2009 Email Chain Between K. Hinton and S. Donziger) (Donziger tells Hinton: “do not change headlines ever without telling me .... in the future blind copy me on those emails to quito ... I need to know what is going on for purposes of managing my own staff there and knowing what journalists there have been sent ... I think I asked you that before”); PX 1133 (May 5, 2009 Email from K. Hinton to S. Donziger) (“There are people in this world—other than yourself—who know how to get things done. I know that's hard for you to believe, given your own incredible fascination with yourself.”); PX 6814 (Dec. 3, 2009 Email chain Between K. Hinton and S. Donziger) (Donziger: “when I send a final copy of a press release for posting, the issue of the headline is settled. never change it at that point. tks.” Hinton: “I said I misunderstood. Why do u always feel the need to rub a mistake in extra hard ... To make sure your authority is respected and acknowledged? It is. Ok!”).
Chris Lehane likewise worked to develop the LAPs' media and public relations strategy as an “advisor” to Donziger
Donziger June 28, 2013 Dep. Tr. at 845:21–23.
After first discussing Donziger's objectives with him, Lehane proposed to Donziger a strategy to target shareholders, Congress, and “high level media” in order to “inflict[ ] real economic pain on the company” and “bring[ ] Chevron Texaco to the negotiation table.”
PX 728 (Apr. 27, 2005 Email from C. Lehane to S. Donziger and J. Kohn attaching Ecuadorian Issues Outline), at 4.
Id. at 1 (emphasis omitted).
PX 734 (Oct. 1, 2005 Email from S. Donziger to J. Kohn re “Lehane's first press plan”), at 2; see also PX 694 (Aug. 16, 2004 Email from C. Lehane to S. Donziger re: “Issues Outline Document”), at 2 (“We must create an ongoing storyline that ChevronTexaco faces hidden purposely concealed economic exposure because of its unresolved role in the Ecuador ... project. Ultimate success will depend on our ability to organize and focus our efforts on impacting the company's bottom line.”).
June 28, 2013 Donziger Dep. Tr. at 845:24–846:4; see also PX 560 (Feb. 2011 Advisory Agreement between LAPs, CSL Strategies, and Mark Fabiani LLC).
2. Amazon Watch
Another central player in Donziger's publicity campaign was Amazon Watch, an NGO that declares a dedication to protecting the rainforest and the indigenous groups that inhabit it.
Amazon Watch and various of its staff—including Atossa Soltani, its founder and executive director, and Mitchell Anderson, a “field consultant”—worked with Donziger and others on the LAP team to support and publicize the lawsuit and to pressure Chevron. To that end, the organization collaborated with the LAPs to lobby regulatory agencies and elected officials,
See PX 571 (2005 Amazon Watch Annual Report), at 5.
PX 7426 (Feb. 9, 2008 Email from S. Donziger to M. Anderson, P. Paz y Mino, and K. Koenig re: “For Pat Doherty”); PX 754 (Jan. 30, 2006 Amazon Watch Ltr. from A. Soltani and S. Aird to C. Cox).
PX 7542 (May 25, 2009 Amazon Watch Letter to Shareholders), at 2.
See, e.g., PX 483R (Mar. 6, 2007 Amazon Watch press release) at 2 (“[An] independent damage assessment, by the U.S. firm Global Environmental Operations, estimates clean-up to cost at least $6.14 billion.”); PX 472R (Apr. 26, 2006 Amazon Watch press release), at 1 (“Two rainforest leaders sparked a dramatic showdown with Chevron CEO David O'Reilly today over the oil major's devastating $6 billion toxic contamination of their ancestral lands....”).
Although Amazon Watch's public materials did not bear Donziger's name, Donziger himself drafted many Amazon Watch materials related to the Lago Agrio litigation.
See, e.g., June 28, 2013 Donziger Dep. Tr. at 834:2–5 (acknowledging that “[o]n occasions [Donziger] wrote press releases that [Amazon Watch] put out”); Jan. 18, 2011 Donziger Dep. Tr. at 3177:10–13; 3178:10–20 (Q: “You drafted the [SEC] complaint letters for Amazon Watch to send; did you not?” A: “I believe at times I did.”).
See, e.g., PX 1214 (Jan. 27, 2010 Email from S. Donziger to S. Tegel, A. Soltani, K. Koenig, and M. Anderson re: “another thought”), at 1 (“Suggestions are welcome for any press release we do; final editing authority is something we would never grant to any outsider—especially somebody not in a position to understand the art and feel of this campaign and its daily developments.”); PX 808 (Nov. 9, 2006 Email from S. Donziger to J. Ciplet and A. Soltani re: “suggestion”), at 1 (“I also know the press releases on the Ecuador campaign are not a terrible work burden to AW because I am writing most of them.”); PX 906 (Aug. 24, 2007 Email from S. Donziger to S. Tegel, M. Anderson, A. Soltani, and K. Koenig re: “follow up on press releases”), at 1 (“[W]e are never going to outsource our editing responsibility to anybody else or any NGO....”).
See, e.g., PX 996 (Mar. 17, 2008 Email from S. Donziger, M. Anderson, S. Tegel, P. Paz y Mino, and A. Soltani re: “Edited SEC letter/final”), at 1 (“The final SEC letter is attached with all of AW's edits sent to me on Friday plus some additional edits of my own.... I think this letter will really put some heat on them. To submit this, this is what you need to do....”).
Despite Donziger's authorship, the materials bore no outward indication of his involvement—documents drafted in whole or in substantial part by Donziger were sent on Amazon Watch letterhead and signed by Amazon Watch personnel.
See, e.g., PX 7426 (Feb. 9, 2008 Email from S. Donziger to M. Anderson re: “For Pat Doherty”), at 1 (“Mitch, Attached is the memo you requested. I put it in your name.”).
In addition, in April 2005 Amazon Watch used funding from the LAPs
Donziger June 28, 2013 Dep. Tr. at 841:19–22.
PX 571 (2005 Amazon Watch Annual Report), at 8; Tr. (Hinton) 2180:1–24.
Hinton, Lehane, Soltani, and others at Amazon Watch became important figures in Donziger's pressure campaign against Chevron, and their names appear throughout this case. Among the campaign's first real tasks, however, was the use of a flawed $6 billion figure to attempt to convince Chevron that it was facing multibillion dollar exposure in Ecuador and that the time had come to settle. C. The Pressure Begins—The LAPs' First Scientist and the $6 Billion “Drive By” Damages Estimate
Soon after the complaint was filed in Lago Agrio in 2003, Donziger hired David Russell, an environmental engineer,
PX 3200 (Russell Direct) ¶ 1. Prior to his involvement with the Lago Agrio case, Russell worked on projects involving remediation and strategic planning related to oil operations in the United States and Latin America. Id. ¶ 2.
E.g., Tr. (Russell) 388:14–18 (“I believe ... that Mr. Donziger was intending to use this cost estimate to get Chevron's attention and to attempt to get them to settle the case.”).
In the fall of 2003, at Donziger's direction, Russell went to the Orienté to work on his damages estimate.
PX 3200 (Russell Direct) ¶ 5; see also DX 1750 (Donziger Direct) ¶ 111; Tr. (Russell) 300:8–10.
First, Russell visited only about 45 of the hundreds of oil pits in the region, and based his calculations on an extrapolation of what he observed at those sites.
Tr. (Russell) 304:9–12.
PX 3200 (Russell Direct) ¶ 5. Donziger testified, however, that Russell was “provided with and reviewed a considerable amount of data, including historical records and maps.” DX 1750 (Donziger Direct) ¶ 111.
Tr. (Russell) 309:4–8; PX 3200 (Russell Direct) ¶ 5.
Second, Russell testified, and the Court finds, that Donziger instructed him to make certain assumptions in calculating costs.
DX 1750 (Donziger Direct) ¶ 111; PX 3200 (Russell Direct) ¶ 9.
PX 3200 (Russell Direct) ¶ 6; see also DX 1750 (Donziger Direct) ¶ 111.
Third, as the report itself made clear, Russell's “cost projections [w]ere very rough.”
PX 2414 (Russell Damages Estimate), at 2.
And he informed Donziger and other members of the LAP team as early as December 2004 that his estimates were “best guesses based upon a week of looking at the sites, without any scientific data,” and encouraged the team not to “rush to judgment” based on a “guesstimate.”
Tr. (Russell) 339:4–7.
He was entirely candid at trial on the consequences of this lack of data—the quantities he used in generating the $6 billion figure were, he said, were “SWAG,” an acronym for a “scientific wild ass guess.”
PX 3201 (Dec. 12, 2004 Email chain including D. Russell, C. Bonifaz, A. Wray, S. Donziger, and M. Pareja).
Tr. (Russell) 339:10–11.
Russell's $6 billion SWAG figure quickly became a key weapon in Donziger's effort to exert pressure on Chevron and convince the company—and the world—that the damages in the Orienté were substantial and the threat of an enormous judgment against it was real. As we shall see, Donziger and his public relations operation avidly used Russell's $6 billion figure in the media to generate leverage despite the fact that they knew that it could not withstand serious analysis.
David Russell left the LAP team in early 2005 because, among other reasons, the LAP team owed him money and refused to pay it.
PX 3200 (Russell Direct) ¶ 38.
Id. ¶ 14.
Id. ¶¶ 12–13, 20; see generally PX 766 (Feb. 13, 2006 Email chain including D. Russell, L. Salazar–Lopez, and S. Donziger re: “Cease and Desist!”); PX 764 (Feb. 14, 2006 Ltr. from D. Russell to S. Donziger re “Cease and Desist”), at 1–2; PX 766 (Feb. 16, 2006 Email from L. Salazar–Lopez to D. Russell re: “Cease and Desist!”) (stating that Amazon Watch “respect[s] your request and have decided to take [the] report off of [the Amazon Watch] website”); PX 466R (Mar. 17, 2006 ChevronToxico press release), at 2; PX 467R (Mar. 22, 2006 Amazon Defense Coalition press release), at 1 (“Chevron is resorting to increasingly desperate measures to cover its tracks in the landmark environmental trial in Ecuador in which the oil giant faces a $6 billion clean-up tab.”); PX 472R (Apr. 26, 2006 Amazon Watch press release), at 1 (“Two rainforest leaders sparked a dramatic showdown with Chevron CEO David O'Reilly today over the oil major's devastating $6 billion toxic contamination of their ancestral lands....”); PX 480R (Oct. 30, 2006 Amazon Watch press release), at 1–3 (referring to “landmark $6 billion pollution trial” and remediation cost estimates of “at least $6 billion”); PX 18A (Undated Crude Clip), at CRS–138–02–CLIP–02; PX 788 (Aug. 15, 2006 Email from S. Donziger to D. Russell re “I asked you once ...”) (“No problem, I will contact the Frente to have that removed....”); PX 476R (Aug. 25, 2006 Amazon Watch press release), at 1 (“Clean-up is estimated at $6.1 billion.”); PX 494R (Aug. 30, 2007 Amazon Defense Coalition press release), at 3 (“Global Environmental Services, an Atlanta-based company that assessed the damage, called the area the ‘Rainforest Chernobyl’ and estimated clean-up would cost at least $6 billion.”).
E. False and Misleading Representations to Incite Governmental Action Against Chevron
The press was not the only intended audience for Russell's disavowed $6 billion figure and other false and misleading comparisons. Donziger and his public relations team employed both in efforts to instigate action and put pressure on Chevron from federal and state officials and agencies. One aim was to create the perception that the litigation threatened serious harm to the company, was material to Chevron's bottom line, and would result in a lower share price and lower profits for Chevron shareholders. In Lehane's words, “the Ecuadorian Amazon ChevronTexaco project can be reduced, in the end, to a single strategic imperative: ‘Bringing ChevronTexaco to the negotiation table by inflicting real economic pain on the company.’ ”
PX 728 (Apr. 27, 2005 Email from C. Lehane to S. Donziger and J. Kohn attaching Ecuadorian Issues Outline) (emphasis omitted).
To that end, Donziger in late 2005 drafted a letter
that ultimately was sent by Amazon Watch to the Securities and Exchange Commission (“SEC”). The letter “request[ed] that [it] open an investigation into the Chevron Corporation (CVX) for violating SEC regulations governing disclosure obligations....”
PX 736 (Nov. 1, 2005 Email from S. Donziger to C. Lehane and J. Kohn re: “SEC ltr/other”).
PX 754 (Jan. 30, 2006 Amazon Watch Ltr. from A. Soltani and S. Aird to C. Cox).
PX 3200 (Russell Direct) ¶ 14 (“I told Donziger on several occasions from late 2004 through early 2005 that my initial cost estimate was wildly inaccurate and that it should not be used.”).
PX 754 (Jan. 30, 2006 Amazon Watch Ltr. from A. Soltani and S. Aird to C. Cox).
In 2007, Bill Powers, a member of the LAPs' technical team, investigated the claim that the contamination in the Orienté was 30 times larger than the contamination caused by the Exxon Valdez. He concluded that it was vastly exaggerated and so informed Donziger and Soltani of Amazon Watch. PX 861 (May 24, 2007 Email from A. Soltani to S. Donziger re: “exxon valdez 30x”); PX 862 (May 24, 2007 Email from B. Powers to S. Donziger, A. Soltani, S. Tegel, K. Koenig and J. Ciplet re: “FOE is on our team RE: exxon valdez 30x”). Soltani responded that Amazon Watch—which had featured the Exxon Valdez comparison in press releases—needed to “save face” and remove the references to the spill. PX 861 (May 24, 2007 Email from A. Soltani to S. Donziger re “exxon valdez 30x”). But Donziger insisted that they stick to the claim. He warned that there would be “HUGE implications for the legal case” if they disavowed the comparison to Exxon Valdez, and told Amazon Watch that it “[w]ould terribly prejudice the people it is trying to help if it makes this change.” PX 860 (May 24, 2007 Email from S. Donziger to S. Tegel re: “private”). Despite Soltani's reservations, ChevronToxico continued to tout the claim. See, e.g., PX 492R (July 4, 2007 Amazon Watch press release), at 2; PX 2309R (Aug. 28, 2009 Amazon Defense Coalition Press Release), at 2; PX 503 (May 21, 2008 Amazon Defense Coalition press release), at 2 (“30 times more pure crude than in the Exxon Valdez disaster”); PX 510 (Sept. 16, 2008 Amazon Defense Coalition press release), at 2 (“The Ecuadorians have accused Texaco ... of committing the worst oil-related disaster on the planet on their ancestral lands—one at least 30 times worse than the Exxon Valdez spill.”); PX 513R (Oct. 15, 2008 ChevronToxico press release), at 2 (“All told, the amount of oil dumped in Ecuador by Texaco is at least thirty times greater than the amount spilled during the Exxon Valdez disaster, according to the plaintiffs in the civil suit.”).
PX 754 (Jan. 30, 2006 Amazon Watch Ltr. from A. Soltani and S. Aird to C. Cox).
PX 1130R (Apr. 28, 2009 S. Donziger Testimony before Tom Lantos Human Rights Comm'n, Hr'g on Ecuador, Nigeria, West Papua: Indigenous Communities, Environmental Degradation, and International Human Rights Standards), at 60.
Douglas Beltman, another scientist then working for the LAPs, also challenged the accuracy of the Exxon Valdez claim. He asked Donziger: “do you know where the 30 times number comes from?” PX 1110 (Mar. 1, 2009 Email from D. Beltman to S. Donziger re “Pls answer questions”), at 1. Donziger replied: “ My own calculations. If that doesn't suffice then kiss my butt.” Id. (emphasis added).
Shortly thereafter, Donziger recited the Exxon Valdez comparison in his testimony and continued to use the statistic in press releases and blog posts throughout 2009 and 2010. PX 522R (Apr. 27, 2009 Amazon Defense Coalition press release), at 2; PX 527R (Oct. 22, 2009 Amazon Defense Coalition press release), at 2 (“Experts for the plaintiffs have concluded the disaster is at least 30 times larger than the Exxon Valdez spill....”); PX 529R (Dec. 30, 2009 Amazon Defense Coalition press release), at 2 (“Experts consider the disaster at least 30 times worse than the damage caused by the Exxon Valdez.”); PX 533R ( The Chevron Pit Blog Entry), at 3 (“Experts have concluded that the Chevron [sic] discharged at least 345 million gallons of pure crude oil directly into the rainforest ecosystem ... and approximately 11 million gallons of pure crude was spilled during the Exxon Valdez disaster.”).
The day after the SEC letter was sent, Donziger wrote to Soltani of Amazon Watch: “[n]ow that the SEC ltr is filed, it is key we come up with a coherent strategy to build pressure for the April shareholder's [sic] meeting.”
Donziger called on Amazon Watch and others—including Chevron shareholders (whom Amazon Watch was to address at an upcoming shareholder meeting)—to send letters to the SEC calling for investigation into Chevron's conduct in Ecuador.
PX 756 (Jan. 31, 2006 Email from S. Donziger to A. Soltani and J. Ciplet re: “Plan for SEC follow up”).
He insisted that Amazon Watch could “get a lot of legs out of this if it is exploited with a little follow-up” and emphasized that the “key ... to [the] strategy ... is to keep this alive and active so it is hanging over their heads as long as possible, and so it can be used to get other shareholders to write their own letters.”
PX 759 (Feb. 1, 2006 Email to A. Soltani, S. Aird, J. Ciplet, L. Salazar Lopez, and S. Tegel re: “imp follow up with SEC”).
By the end of February 2006, Russell had sent his first cease and desist emails to Donziger and Amazon Watch.
Donziger emailed Soltani to suggest that they send “the SEC letter in ASAP, making [the] slight change that another report will be coming with a multi-billion damage figure, without disavowing or mentioning Russell's report.”
PX 764 (Feb. 14, 2006 Ltr. from D. Russell to S. Donziger re “Cease and Desist”), at 1.
PX 768 (Feb. 23, 2006 Email from S. Donziger to A. Soltani, L. Salazar–Lopez, S. Tegel, J. Ciplet re: “important—SEC ltr”).
Donziger's efforts to incite an SEC investigation did not amount to much. After meeting with an SEC investigator, he wrote to his team that the investigator thought that “the probability of a negative judgment [in the Lago Agrio litigation] was so attenuated that they [SEC staff] did not think it [ i.e., the possible $6 billion exposure] was material yet.”
But while Donziger admitted that he “sort of fe[lt] [that the investigation he sought was] bogus,” he insisted that he would “keep feeding them [the SEC] stuff” as long as the SEC was willing to continue talking with them.
PX 781 (July 12, 2006 Email from S. Donziger to A. Page and D. Fisher re: “SEC investigation/Chevron”).
Amazon Watch wrote to SEC Chairman Cox again in March 2008 to request “that the SEC impose sanctions on Chevron ... for violations of its disclosure obligations” with respect to its liability in the Lago Agrio litigation. In that letter, Amazon Watch stated that the case was “[c]oming to a [c]lose” and touted “the appointment of an independent special master to assess culpability and ascertain the monetary value of the damages caused.” See PX 497R (Mar. 18, 2008 Ltr. from A. Soltani to C. Cox), at 2. The letter stated also that Chevron's liability “appears to have increased substantially” such that the “materiality threshold as understood by SEC guidance is reached.” Id. at 5. Donziger largely drafted this letter for Amazon Watch as well. See PX 996 (Mar. 17, 2008 Email from S. Donziger, M. Anderson, S. Tegel, P. Paz y Mino, and A. Soltani re: “Edited SEC letter/final”), at 1 (“The final SEC letter is attached....”).
Donziger attempted at trial to justify his continued use of Russell's disavowed estimate by explaining that he believed in its validity and, indeed, thought at the time that the actual remediation figure was much higher than $6 billion. He testified that he had a “more detailed cost assessment from [the] Ecuadorian technical team” that had calculated the remediation cost to be over $15 billion as well as estimates by a “junior lawyer” that the “remediation proposal [would] come in at about $20 billion.”
That these estimates were so much higher than $6 billion, Donziger claimed, satisfied him that it was acceptable to continue using Russell's cost estimate notwithstanding the fact that Russell demanded repeatedly that he stop doing so. But Donziger's claim is far fetched and the Court finds that Donziger in fact never believed it. The only estimates of which there was any evidence were prepared under Donziger's direction by junior lawyers who worked for him.
DX 1750 (Donziger Direct) ¶ 118.
They were prepared by Donziger's associate, Aaron Marr Page, and his wife, Daria Fisher, and were to be submitted under the name of Fausto Peñafiel. DX 731 (Apr. 14, 2006 Email from A. Maest), at 4 (“Fausto can be the author of this if you'd like to submit it?”); DX 731 (Apr. 16, 2006 Email from S. Donziger to A. Page and D. Fisher re: “excellent work on remediation/questions”); PX 8014 (Edits by S. Donziger, “The Cost of Remediating the Former Texaco Concession: An Order of Magnitude Estimate,” signed by Fausto Miguel Peñafiel Villareal). Mr. Peñafiel, one of the LAPs' party-nominated experts, introduced Donziger to Fernando Reyes, whose involvement in the case will be explained below. See Reyes Dep. Tr. at 17:2–17. Page and Fisher are lawyers, not scientists. They worked on the estimates under Donziger's direction. PX 8014 (Edits by S. Donziger, “The Cost of Remediating the Former Texaco Concession: An Order of Magnitude Estimate,” signed by Fausto Miguel Peñafiel Villareal), at 3 (“Daria, a suggesti[o]n: [I] would put this at end in a footnote or leave out altogether; texaco will see this and slam you ... Remember that this is not science, this is an active litigation and this needs to be written to protect fausto and this part leaves him exposed. Always think how they will come back at us.”). Their sole objective—in Page's words—was “to exceed the $6 billion figure, while still passing the laugh test.” DX 731 (Apr. 15, 2006 Email from D. Fisher to S. Donziger and A. Page, re: “excellent work on remediation/questions”), at 3.
PX 3240 (Apr. 20, 2006 Email from A. Page to S. Donziger re: “DOJ ltr”).
DX 731 (Apr. 16, 2006 Email from S. Donziger to A. Page and D. Fisher re: “excellent work on remediation/questions”), at 1 (“[W]ill releasing this now help with the SEC ... ?”).
We have touched here only on part of Donziger's earliest efforts beyond the litigation itself, which have continued unabated for years since. We shall touch on other examples later. But we turn now to the Lago Agrio case itself, which already had begun. IV. The First Phase of the Lago Agrio Case—The Judicial Inspections A. The Process
Judge Guerra opened the evidentiary phase of the Lago Agrio litigation on October 21, 2003.
PX 4300X (Callejas Direct) ¶¶ 25, 26.
“Under Ecuadorian civil procedure, the parties must submit all of their evidentiary requests in a defined period; in the case of summary verbal proceedings, that period is six days. While all of the evidence does not have to be provided within that time frame, all requests for then-existent documents, witness testimony, expert assessments, judicial inspections of a place or thing, and other proof must be requested by both parties by the statutory deadline.... My legal team and I submitted a number of evidentiary requests on Chevron's behalf during the initial six-day evidentiary period, as did the lawyers for the Lago Agrio Plaintiffs. Although there were numerous requests for documents and for witness testimony from both sides, the bulk of the requests were for judicial inspections of a total of 122 sites, including well sites and production stations, in the former Concession area and nearby oilfields.”
Id. ¶¶ 28–29.
PX 317 (Oct. 29, 2003 Lago Agrio Court Order).
Each side identified a technical expert to negotiate the procedures that would govern the judicial inspection process. Sara McMillen, Chevron's lead scientist on the Lago Agrio case,
PX 3300 (McMillen Direct) ¶ 2.
PX 4300X (Callejas Direct) ¶ 31; PX 3300 (McMillen Direct) ¶ 14.
PX 4300X (Callejas Direct) ¶ 31.
“For most of the judicial inspections, experts were nominated by each side. At each judicial inspection site, these nominated experts took samples under the supervision of the judge at that site, sent their samples to a laboratory for testing and analysis, and then each submitted a written report of his or her findings and conclusions to the Ecuadorian Court. The Ecuadorian court also appointed a third set of experts, known as the Settling Experts, who were to resolve any disputes between each sides' experts reports and findings. The Settling Experts attended the judicial inspections.”
It is relevant to note that the Lago Agrio court formally appointed the party-nominated experts, but each nominating party paid or provided the funds to pay the experts it nominated. The parties were to share any compensation and expenses of settling experts, each side to submit its half to the court, which then would pay it to the settling expert.
PX 3300 (McMillen Direct) ¶ 11.
PX 4300X (Callejas Direct) ¶ 33.
At each judicial inspection, the party that requested the inspection was to present any arguments it had concerning the site. The opposing party would rebut.
Each side was to have the right also to request that the court include relevant documentation or other evidence in the record. Following each side's oral presentation, the court itself inspected the site, “registering comments and observations and allowing the parties and the experts to identify the areas where they intended to take samples.”
The court's secretary was to transcribe the proceedings at the inspection sites, and the transcript of the proceedings—including a list of all the documents presented at the inspection—was to be finalized and signed by the parties.
The finalized document was called an acta, and was to be made part of the official court record. The documents within the record, which of course included many papers in addition to the actas, were grouped into cuerpos, or books, each of which contained about 100 pages of material.
Tr. (Zambrano) 1720:3–5.
Following the inspections, each party's experts were to submit their reports, to which the opposing party's expert would have an opportunity to respond.
PX 4300X (Callejas Direct) ¶ 34.
Id. ¶ 33.
The first judicial inspection took place on August 18, 2004.
Id. ¶ 31.
B. The LAPs' Judicial Inspection Experts
Russell was in charge of choosing the plaintiffs' experts.
He “created budgets for the scientific investigation, purchased equipment, hired, trained, managed, and paid members of the Ecuadorian plaintiffs' field team, and hired and interfaced with the plaintiffs' outside laboratories.”
Russell himself could not serve as an expert because he did not speak Spanish. PX 3200 (Russell Direct) ¶ 7.
Id. ¶ 24.
C. The Calmbacher Episode
The first judicial inspection expert that Russell and Donziger hired, in the summer of 2004, was Dr. Charles Calmbacher, an industrial hygienist who previously had worked with Russell on other projects.
PX 3200 (Russell Direct) ¶ 26; Calmbacher Dep. Tr. at 13:23–14:1,18:10–14.
PX 3200 (Russell Direct) ¶ 26. These sites were Sacha–6, Sacha–21, Sacha–94, and Shushufindi–48.
Calmbacher Dep. Tr. at 49:17–20
Calmbacher became ill on his last trip and returned to the United States before he completed his reports.
Id. at 61:9–16.
Id. at 61:19–23.
Even after he was fired, however, Calmbacher insisted to Donziger that he would still be the one to “write the Perito [expert] reports” because he needed to “comply with [his] obligation to the court and to maintain [his] professional integrity with the Ecuadorian court.”
DX 1750 (Donziger Direct) ¶ 110; PX 2417 (Oct. 24, 2004 Email from C. Calmbacher to S. Donziger and D. Russell).
PX 2417 (Oct. 24, 2004 Email from C. Calmbacher to S. Donziger and D. Russell).
“It also has been stressed to me that it is highly unusual for a perito [expert] to allow others to contribute to the writing of a report. Comments or review is acceptable, but the perito's opinion and findings are final. I therefore have and feel no obligation to allow your team of textile engineers and associated cron[i]es to review or edit my reports. I am assured, as perito of the court, that I am completely within my rights to write and submit my report independent of whose who have nominated me for appointment as perito. My sole obligation is to tell the truth, as I see it, to the court, no matter the consequences for either party.”
Calmbacher finished two of the reports and sent them to the LAP lawyers in Ecuador.
Calmbacher Dep. Tr. at 62:5–10; PX 2417 (Oct. 24, 2004 Email from C. Calmbacher to S. Donziger and D. Russell).
Calmbacher Dep. Tr. at 62:5–10.
Id. at 62:5–18.
Calmbacher testified that:
“[w]hat happened after that ... was they asked me to initial some [blank] papers on the corner so [the report] could be printed on that because it had to be initialed. I said, no, I don't think so. David [Russell] implored ... me to do that, that it was honest, it was fair, it was okay. So I did it. I think it was about 30 pages. And I FedEx'd it down ... I overnighted it. That was the last I've heard on the project.
I have not been contacted or anything else.”
Id. at 62:18–63:8. Evidence presented at trial suggests that it was more than Russell's imploring that convinced Calmbacher to initial the documents. Donziger was threatening not to pay Calmbacher for the work he performed if he did not sign. Russell sent an email to Donziger on March 1, 2005 that he had “communicated [Donziger's] threat to Calmbacher,” and that Russell had “also advised him that it was in his interest to comply by signing the documents and sending them to [Donziger].” PX 721 (Mar. 1, 2005 Email from D. Russell to S. Donziger).
On February 14 and March 8, 2005, respectively, the LAP team submitted to the Lago Agrio court what purported to be the reports of their nominated expert for the judicial inspections of the Shushufindi 48 and Sacha 94 sites.
PX 249 (Judicial Inspection Report for Sacha Well 93); PX 250 (Judicial Inspection Report of the Shushufindi 48 Well).
PX 249 (Judicial Inspection Report for Sacha Well 93), at 32.
Calmbacher Dep. Tr. at 113:1–25, 114:22–116:18, 117:2–20.
Id. at 115:15–19.
Id. at 115:20–24.
There clearly have been tensions between Calmbacher and Donziger. The reasons for those tensions, and for the ultimate split between the two, are not clear, and their accounts differ. Donziger contends that he fired Calmbacher because he missed deadlines for his two reports and displayed “other [unspecified] unprofessional conduct.”
Calmbacher admits that Donziger was frustrated that his reports were late, but contends also that he at times disagreed with members of the LAPs' team on the format of the reports and that he voiced his concerns to the LAP team and “probably ruffled feathers.”
DX 1750 (Donziger Direct) ¶ 110.
Nevertheless, the Court sees no sufficient basis to conclude that any ill feeling that Calmbacher may have harbored colored his testimony with respect to reports filed in his name on the Shushufindi 48 and Sacha 94 sites. It credits Dr. Calmbacher's testimony that those reports were not the reports he wrote and did not reflect his views. This means that someone on the LAP Ecuadorian legal team revised his draft reports, printed them on the blank pages that Dr. Calmbacher initialed, and filed them with knowledge of the falsity.
Calmbacher Dep. Tr. at 85:19–25.
The judicial inspections continued despite Dr. Calmbacher's departure, and the LAP team hired other experts to take his place. But their troubles in this sphere did not end.
D. The LAP Lawyers Halt Testing for BTEX and GRO Because it Is Yielding Unhelpful Results
As noted previously, among the problems that faced the LAP team in the Lago Agrio case is that PetroEcuador had operated in the Concession area from 1992, when TexPet left Ecuador, forward and, in addition, had been a member of the Consortium earlier. The LAPs already had entered into an agreement with the ROE and PetroEcuador pursuant to which they were obliged to reduce the amount of any judgment they might obtain against Texaco by the amount of any contribution judgment that Texaco might obtain against the ROE and PetroEcuador. Moreover, the prospect of proof that PetroEcuador, an ROE owned entity, was responsible for substantial pollution in the Orienté would not have been viewed favorably by the ROE. The LAPs therefore had an interest in obtaining a judgment that Chevron was entirely responsible for any and all pollution liability and remediation responsibility.
In late 2004, Russell met in New York with Donziger, Bonifaz, Wray, and perhaps others to discuss the LAPs' strategy for the remaining judicial inspections.
Russell reported that “the fact that [they were] finding BTEX, which is benzene, toluene, ethylbenzene, and xylene; and GRO, which is gasoline range organics,” in the samples they were testing from the Concession area was “much more indicative of contamination from PetroEcuador rather than Texaco because these compounds are volatile and degrade quickly in hot, wet, warm environment such as in the jungle.”
DX 1750 (Donziger Direct) ¶ 113; Tr. (Russell) 394:6–19.
Tr. (Russell) 394:22–395:2.
Tr. (Russell) 407:17–19 (“We found BTEX and GRO, and that was indicative of recent contamination rather than contamination which would have been ten or perhaps 20 years old from Texaco.”).
According to Russell, whom the Court found to be a credible witness, the “senior lawyers”—Donziger, Bonifaz and Wray—requested that the LAP team stop testing for BTEX and GRO because testing for these compounds “would be counterproductive to the case because it argues for more recent contamination and that implies PetroEcuador rather than Texaco.”
PX 705 (Nov. 4, 2004 Email from D. Russell to E. Camino, S. Donziger, M. Pareja, and A. Wray); see also Tr. (Russell) 407:21–408:9.
Tr. (Russell) 408:7–9. Donziger testified that “the conclusion of the conversation [in Manhattan] was that if we were looking for a sample analysis that would more precisely evidence the scope of Texaco's contamination, testing for total TPH was the more appropriate test to use.... Accordingly, we adopted a focus on sampling for TPH rather than BTEX or GRO, although we kept a balanced portfolio of chemical analyses.” DX 1750 (Donziger Direct) ¶ 114.
The Court does not credit this testimony. It is contrary to Russell's testimony on this technical point, a point on which his testimony was not challenged. Donziger, for reasons discussed below, is not a credible witness. Wray and Bonifaz both were deposed, but the deposition testimony of these two witnesses that was submitted at trial is silent about this meeting.
Tr. (Russell) 408:22–409:2.
As mentioned, the court appointed several “settling experts” at the beginning of the judicial inspection process, whose job it was to resolve any conflicts between the parties' nominated inspection experts' reports. “The decision to request a settling report was solely in the Court's discretion,” and it ordered only one such report before the LAPs' judicial inspections were terminated—that of the Sacha–53 well site.
PX 4300X (Callejas Direct) ¶ 39.
The Sacha–53 site was important for the LAPs because, as Donziger explained to his colleagues in a contemporaneous email, it was a “Texaco ‘remediated site’ ”— i.e., a site that Texaco had remediated pursuant to its agreement with the ROE as a prerequisite to obtaining the release discussed previously—“so [, in Donziger's words, it would provide] the first definitive scientific proof in the case to put the lie to their claim they remediated.”
But Donziger soon learned that the settling experts' conclusions with respect to Sacha–53 would not be favorable to the LAPs. So Donziger sought to provide an outwardly credible criticism of the anticipated settling expert report in order to undermine its conclusions.
PX 708 (Nov. 11, 2004 Email from S. Donziger to C. Bonifaz, J. Kohn, J. Bonifaz, A Wray, and M. Pallares).
In late 2005, Donziger met Ramiro Fernando Reyes Cisneros (“Reyes”), a petroleum and environmental engineer in Ecuador,
DI 658–18 (Reyes Decl.) ¶ 3. The Reyes declaration is an exhibit to Reyes' deposition, where he attested to its accuracy. The declaration was designated by the plaintiff and received in evidence. Defendants had the opportunity to cross-examine him concerning the declaration at the deposition. It therefore is properly before the Court.
Id. ¶ 10.
Id. The fact of the meeting is corroborated by Reyes' notes from the meeting, PX 739 (Reyes annotations regarding Nov. 17, 2005 meeting), and Donziger's own notebook, PX 174 (Donziger Notebook), at 1; see also Reyes Dep. Tr. at 18:15–22.
Donziger and Peñafiel outlined the judicial inspection and settling expert process for Reyes and Pinto and told them that “[t]he settling experts were going to issue a report on the judicial inspection of Sacha 53.”
DI 658–18 (Reyes Decl.) ¶ 11.
Reyes Dep. Tr. at 21:10–16.
He informed Pinto and Reyes that the LAP team would pay them for that work. His “initial wish was ... to have the association's monitorship be oriented to show that the results that were being obtained were favorable ... to the plaintiffs.”
Id. at 19:2–9.
Id. at 55:6–10, 20–22.
On November 18, 2006, Donziger reached a secret understanding with Pinto and Reyes pursuant to which he would pay them to “monitor” the settling expert report on Sacha–53. Donziger wrote about the meeting in his notebook:
“Deal with Gustavo Pinto— feel like I have gone over to the dark side. First meeting like that I was not eaten alive. Made modest offer, plus bonus. Agreed to keep it between us, no written agreement. Independent monitoring.”
PX 174 (Donziger Notebook), at 1(emphasis added).
Donziger Dec. 29, 2010 Dep. Tr. at 2105:19–2106:17.
Id. at 2108:18–2019:9; Donziger Jan. 29, 2011 Dep. Tr. at 3846:6–17.
Donziger Jan. 29, 2011 Dep. Tr. at 3847:19–25.
Donziger Dec. 29, 2010 Dep. Tr. at 2109:24–2110:4, 2110:11–14, 2110:20–2111:13.
A week later, the same four men met again and finalized the deal. They agreed that Pinto and Reyes would lead the “independent monitorship” and would be paid a fee plus a potential bonus if the plaintiffs won the case.
“There never existed a formal contract between CIGMYP, Pinto, [Reyes], Donziger, or Peñafiel, and all the participants in the meeting agreed that payment by plaintiffs to CIGMYP, to Pinto and to [Reyes] for this monitorship would remain secret.”
Id.; Reyes Dep. Tr. at 28:7–16. Reyes's journal entry from that day states “Letter stating Thursday 17 CIGMYP Board resolved to set up a scientific-technical monitorship (of) remediation process of Texaco case. Invite them to a work meeting. Acknowledging his appointment as settling expert, we express support of developments within bounds of professional ethics and technical results.” DI 658–18 (Reyes Decl.) ¶ 12.
Secrecy was essential because Donziger and the LAP team knew that an appearance of independence and neutrality was essential in order for the expected efforts of Pinto and Reyes to be taken seriously by Chevron and the court.
DI 658–18 (Reyes Decl.) ¶ 12.
Id. ¶ 15.
In fact, the agreement was for Reyes and Pinto to work covertly for the LAP team and to keep their relationship with the LAPs secret from the judge.
Supra notes 260–61.
“Talked to Gustavo this morning about the [settling expert] report. I keep thinking we pay them so little, and they know the court's peritos [experts] make so much, why will they want to keep doing this for us? This was my one bargain with the devil, but we can't win with the devil b/c they can always pay more. Really frustrating, feel really boxed in.”
PX 177 (Donziger Notebook) (emphasis added).
Nonetheless, the deal and, as Donziger recorded, the secret payment were made. He wrote in his notebook: “50 k came today—meet on roof to plan payment [to] [Pinto]. Luis [Yanza] has his doubts; I explained we are not paying for time, but for value. Juan came later to collect the [money].”
PX 175 (Donziger Notebook).
Donziger Dec. 29, 2010 Dep. Tr. at 2120:2–11, 2120:25–2111:12.
Pinto and Reyes met with the settling experts a week after they made the deal with Donziger.
They “discussed the expert report on the inspection of Sacha 53, which the [settling experts] had been working on, and ... asked when the[ ] [settling experts] could provide the monitors a draft of the report. They never did, at least not to [Reyes]. The meeting ... was basically to review the technical aspects of the report the settling experts were preparing on Sacha 53.”
DI 658–18 (Reyes Decl.) ¶ 13.
Although Reyes and Pinto never received an advance draft of the report, they knew from these discussions what the report would conclude. And they conveyed that information to Donziger and the LAP team.
Id.; see also PX 741 (Reyes annotation regarding the Nov. 29, 2005 meeting).
In order for their “monitorship” to have the desired effect, Reyes and Pinto had to be appointed by the court. They therefore wrote a letter to Judge Germán Yánez, then the judge presiding over the Chevron case, detailing their credentials and their proposed role.
DI 658–18 (Reyes Decl.) ¶ 14; PX 746 (Jan. 20, 2006 Ltr. from G. Pinto to Judge Yánez).
See PX 746 (Jan. 20, 2006 Ltr. from G. Pinto to Judge Yánez).
Judge Yánez did not respond to the letter, so Pinto and Reyes went to meet with him in his office.
DI 658–18 (Reyes Decl.) ¶ 17.
When they met with the judge, they explained the need for the monitorship and expressed their desire to become involved in the case. But the judge “did not express any interest in what [they] were telling him about the case.”
Donziger Jan. 29, 2011 Dep. Tr. at 3849:25–3850:8.
DI 658–18 (Reyes Decl.) ¶ 17.
To jump slightly ahead for a moment, the settling experts' report was published in February 2006.
It concluded—consistent with the fears that led Donziger to the “independent monitorship” scheme—that Texaco had fully remediated the Sacha–53 site. Donziger characterized the report as “disastrous” for the LAPs' team.
PX 1530 (Jan. 17, 2006 Ltr. from G. Pinto and F. Reyes to Lago Agrio court) (referring to “[t]he Report [which] was prepared by the Settling Experts Mr. Galo Albán, Eng., Dr. Luis Albuja, Mr. Gerardo Barros, Eng., Mr. Jorge Jurado, Eng., Mr. Johnny Zambrano, Eng., and is dated Feb. 1, 2006.”).
He instructed Reyes and Pinto to prepare a report that “established that the findings of the settling experts' report on Sacha 53 were wrong, that they lacked objectivity and were biased toward Chevron, and therefore the report should be discounted.”
DX 1306 (Donziger Notebook), at 71 of 87.
The report that Pinto and Reyes drafted, however, did not reach those conclusions. Instead, they concluded that, while the settling experts had “failed to strictly follow their judicial mandate” and that some of the data submitted by both parties had deficiencies, “the report contained enough information for the Court to make its own ruling.”
DI 658–18 (Reyes Decl.) ¶ 20; Reyes Dep. Tr. at 51:2–11.
DI 658–18 (Reyes Decl.) ¶ 20; PX 1530 (Feb. 1, 2006 Draft of Reyes and Pinto Report).
DI 658–18 (Reyes Decl.) ¶ 20; Reyes Dep. Tr. at 53:19–54–7; PX 191 (Donziger Notebook).
The Reyes–Pinto arrangement suggests that Donziger and his team were worried that the evidence would not support their claim, at least to the extent they had hoped. The one settling expert report that was in the process of completion concerned a site they expected would expose what Donziger characterized as Texaco's “lie,” but he learned it would reach the opposite conclusion. When the likelihood that the report would reach that opposite conclusion became known, Donziger—in his own words—went over “to the dark side”
by recruiting and paying new experts to pose as “independent monitors” and to criticize the settling experts' conclusions to the court without disclosing that the LAPs were paying them. Moreover, it must be noted that Donziger did not address—much less offer any innocent explanation of—these events, either in his written direct testimony or on the witness stand.
PX 174 (Donziger Notebook), at 1.
In the end, Donziger's arrangement with Reyes and Pinto—his first “bargain with the devil”
—ultimately did not work out for him. The judge was not interested and the report Reyes and Pinto wrote did not meet Donziger's expectations. But it was not his last such bargain. By this time the LAPs were up to something new, which, if it succeeded, would reduce the risk of unwanted results from the many uncompleted judicial inspections.
PX 177 (Donziger Notebook).
F. The Termination of the LAPs' Remaining Judicial Inspections and the Genesis of the Global Assessment
Extensive evidence demonstrates that Donziger and the rest of his team concluded that Dr. Wray had made a terrible mistake in committing to judicial inspections of so many sites.
E.g., PX 176 (Donziger Notebook), at 2 (“This goes back to Alberto's errors: ... asking for too many inspections rather than controlling the process”); PX 195 (Donziger Notebook), at 2 (“The problem is that Wray made some dumb-fuck agreement with Callejas at the first inspection where they agreed the perito for the [global expert] would come from somebody who had actuado en [acted in] the trial.”).
Moreover, as the unfolding Sacha–53 crisis demonstrated, they were risky—the party-nominated experts could disagree, and the settling experts might agree with Chevron. For these reasons, the LAPs on January 27, 2006—shortly before the publication of the Sacha–53 settling expert report—moved to eliminate 26 of the remaining judicial inspections that the LAPs had requested, ostensibly because they were unnecessary.
E.g., Tr. (Ponce) 2317:15–2318:8 (recommending LAPs seek to terminate inspections because they were costly and the evidence was very favorable without the remaining inspections) (The Court credits Ponce's testimony as to cost. As the accuracy of his opinion concerning the results of the inspections conducted thus far is not material here, the Court makes no finding on that point either way); DX 1601 (Ponce Direct) ¶ 16 (same); PX 184 (Donziger Notebook), at 3 of 5.
PX 4300X (Callejas Direct) ¶ 40; PX 328 (July 21, 2006 Motion, quoting plaintiffs' Jan. 27, 2006 motion), at 3–4.
PX 4300X (Callejas Direct) ¶ 41.
The LAPs responded by filing several motions challenging the court's decision, initiated a press campaign that questioned the judge's handling of the case and accusing him of bias in favor of Chevron, and began to organize several demonstrations outside the courthouse to protest his rulings.
“need a massive protest on the court, and only after that should we talk to the judge about what he needs to do. The judge needs to fear us for this to move how it needs to move, and right now there is no fear, no price to pay for not making these key decisions.”
So the issue of reducing the LAPs' judicial inspections continued to percolate through the spring of 2006. Moreover, a new ingredient entered the LAPs' internal discussions of the issue—the idea not only of dropping all of the remaining LAP judicial inspections, but of substituting a single, supposedly impartial, global expert.
PX 182 (Donziger Notebook), at 2 of 3.
The idea of a global expert did not immediately persuade Donziger. On May 31, 2006, he wrote in his notebook:
“Yesterday we had a 5–hour [meeting] and it was extremely intense and frustrating. Went through options on Global [Expert]—had Plans A through E, and I realized how difficult this aspect of the case is going to be. Bottom line problem is we will have no control over the [expert], who will be appointed by the judge. Pablo and our legal team keep insisting that the solution is for the judge to appoint someone who is favorable to us, but I don't trust this approach so far.”
In other words, he was concerned that he perhaps could not control a single global expert. He worried that such an expert would not be “willing to do work that holds oil companies accountable. ... Which gets back to my point that we need a foreigner as the expert for the global. No Ec[uadorian] is going to come through and hold them accountable for billions—it is just not going to happen.... Without that insurance, I just don't see how we can go forward with the global [expert].”
PX 181 (Donziger Notebook), at 1 (emphasis added).
PX 182 (Donziger Notebook), at 2 of 3 (emphasis added).
1. The LAPs Coerce the Judge to Cancel the LAPs' Remaining Judicial Inspections
The LAP team, in Donziger's words, often “talk[ed] to the judge about what he needs to do” in private.
PX 169R (Donziger Notebook), at 28.
In July 2006, the LAPs filed another motion, this time seeking to relinquish all of their remaining inspections, not just the 26 they in January had sought to eliminate.
PX 328 (July 21, 2006 Motion). The motion, filed by Fajardo, explained inter alia that further judicial inspections were unnecessary because, it claimed, the evidence of contamination was clear and abundant.
“Our issues first and foremost are whether the judge will accept the renuncia of the inspections. If this happens—and Pablo thinks it will, but I and Aaron [Marr Page] think he is overoptimistic—then we have to face the prospect of more of the wasteful, time-consuming, and expensive inspections. [sic] If it doesn't happen, then we are in all-out war with the judge to get him removed.”
PX 184 (Donziger Notebook), at 3.
Donziger and the LAP team knew that Judge Yánez was in a weakened state. He recently had been accused of “trading jobs for sex in the court”
PX 785 (July 26, 2006 Email from S. Donziger to J. Kohn).
“there is the feeling in the court that we are behind the [sexual harassment] complaint[ ] against Yánez ..., which we are not, even though we have much to complain about, which is sort of ironic. I [ i.e., Donziger] asked if this theory in the court hurt or helped us, and both Pablo and Luis said it helped us. At which pt I launched into my familiar lecture about how the only way the court will respect us is if they fear us—and that the only way they will fear us is if they think we have ... control over their careers, their jobs, their reputations—that is to say, their ability to earn a livelihood.”
PX 184 (Donziger Notebook), at 2 (emphasis added).
Donziger explained in an email to Kohn that Fajardo then met with the judge, who “said he is going to accept our request to withdraw the rest of the inspections save the four we still want to do.... The judge also ... wants to forestall the filing of a complaint against him by us, which we have prepared but not yet filed.”
PX 185 (Donziger Notebook), at 2. Donziger testified that he “never threatened Judge Yánez or any other judge that we would file a complaint against that judge if he did not rule in our favor.” DX 1750 (Donziger Direct) ¶ 122.
This testimony is inconsistent with Donziger's contemporaneous writings in his notebook and his July 26, 2006 email to Kohn. Moreover, while Donziger testified that he never threatened the judge, he did not say that no one else on his team did or that he did not authorize or approve such threats. The Court finds that Donziger knowingly was complicit both in the preparation of a misconduct complaint against Judge Yánez and in threatening the judge with the filing of the complaint unless the judge did what the LAPs' wished him to do. It was part of Donziger's strategy to instill fear in that judge by convincing him that “we [the LAPs] ha[d] ... control over [his] career[ ], [his] job[ ], [his] reputation[ ]—that is to say, [his] ability to earn a livelihood.” PX 184 (Donziger Notebook), at 2.
PX 785 (July 26, 2006 Email from S. Donziger to J. Kohn).
Faced with this coercion,
A defense expert on Ecuadorian law testified, and the Court holds, that threatening a judge to get him to appoint Cabrera or another court officer would be a crime under Ecuadorian law. DI 1400–4 (Albán Dep.), Ex. D at 48:1–12.
After Judge Yánez issued the order, Donziger on September 13, 2006, wrote that the judge “told Luis [Yanza] that we needed to back him now as he fights for survival on the court. So instead of a strong judge who sees the validity of the case, we now might have a weak judge who wants to rule correctly [ i.e., for the LAPs] for all the wrong, personal reasons. Need to get going on the inspections (looking for [expert] ) and [global expert].”
PX 184 (Donziger Notebook), at 2.
PX 185 (Donziger Notebook).
This last statement—that Donziger recognized his “[n]eed to get going on the inspections (looking for [expert] ) and [global expert]”—demonstrates that his earlier misgivings about a global expert had been overcome and that Donziger was looking for an expert to appoint to that pivotal role. The explanation for this change of heart is plain. Donziger's “[b]ottom line problem [about pursuing a global expert idea had been that] we will have no control over the [expert], who will be appointed by the judge.”
PX 181 (Donziger Notebook).
among them the fear that the LAPs would file their judicial misconduct complaint against him at a time when he least could withstand it. Donziger therefore expected to be able to select and to control the global expert. That is exactly what then took place.
PX 185 (Donziger Notebook), at 2.
2. Donziger Chooses Cabrera to be the Global Expert
With these pieces in place, Donziger and the LAP team moved on to finding a compliant global expert. The idea was that the global expert—just like the “monitoring” experts, Reyes and Pinto, who ultimately had not been appointed—in fact would work for the LAPs but would appear to be independent and neutral. This required Donziger to find someone who, in Donziger's own words, would “totally play ball with” him.
PX 191 (Donziger Notebook), at 4.
Donziger began quietly vetting candidates to fill the post.
E.g., PX 2426 (Sept. 19, 2006 Email from S. Donziger to C. MacNeil Mitchell, R. Herrera, and E. Bloom) (“Here is the info on the possible experts from Ecuador.”).
Id.; see Donziger Dec. 29, 2010 Dep. Tr. at 2130:18–23.
“[ ] Donziger, [ ] Fajardo, and [ ] Yanza together ... explained to [Reyes] that having a single expert to carry out a global assessment was important to the plaintiffs because they acknowledged that the judicial inspection process had not yielded data to support their claims of contamination. They also said they believed it would be easier to manage a single expert than many.”
DI 658–18 (Reyes Decl.) ¶ 22.
Donziger met with Reyes in December 2006 “to do a hard vet.”
Before settling on Reyes as the global expert, Donziger was determined to ensure that Reyes would “ totally play ball with us and let us take the lead while projecting the image that he is working for the court.”
PX 191 (Donziger Notebook).
He needed also to persuade Reyes to take the assignment. So Donziger told Reyes “that if he did this he likely would never work in the oil industry again in Ecuador, at least for an American company, but that he could be a national hero and have a job the rest of his life being involved in the clean-up.”
Id. (emphasis added).
Id. (emphasis added).
DI 658–18 (Reyes Decl.) ¶ 25. Reyes responded that in his book he had “advocated for joint responsibility between the Ecuadoran government and Texaco environmental impacts, which could be used against” him, but Donziger “dismissed these concerns and said none of them would prevent [Reyes] from serving as an expert.” Id. ¶ 26.
Donziger's statement to Reyes that he would “have a job the rest of his life being involved in the clean-up” warrants emphasis. The Lago Agrio complaint identified the ADF, which is controlled by Donziger and Yanza, as the entity to which the LAPs wanted any recovery money paid.
Thus, in promising Reyes that he would “have a job the rest of his life being involved in the clean-up” if he took the assignment and gave the LAPs what they wanted, Donziger promised something that he expected to be able to deliver—long-term, remunerative employment paid for by the ADF.
PX 316 (Lago Agrio Complaint), at 31.
While Donziger was vetting Reyes, Fajardo and Yanza met with Judge Yánez to get him to appoint Reyes as the global expert. But Judge Yánez was troubled because he felt “bound by an agreement Wray made with Callejas [Chevron's local counsel] in the first inspection to use [experts] already appointed by the court.”
This would have excluded Reyes. In consequence, the LAP team believed that the choice would be between José Echeverria and Richard Cabrera Stalin Vega (“Cabrera”), both of whom previously had been designated as settling experts.
PX 194 (Donziger Notebook), at 1; PX 195 (Donziger Notebook) (“The problem is that Wray made some dumb-fuck agreement with Callejas at the first inspection where they agreed the [expert] for the [global inspection] would come from somebody who had actuado en the trial.”).
PX 195 (Donziger Notebook).
“Richard [Cabrera] served in the last inspection, and he was found by Fernando Reyes, who has turned out to be a good friend of the case. Richard showed some surprising independence, telling the judge quietly that Texaco's sampling was bullshit. The question is, do we push for Reyes himself or Richard? At first, I thought the idea Reyes would not be the [expert] was a case killer. I simply am loathe to spend much more money on the case not knowing if we can get a damage claim before the court, which essentially would prevent us from winning the case before a decision can even be made. I trust Reyes; I don't know Richard even though he looks promising. So I met Richard with Reyes on Sat afternoon in the Hotel Quito, one of my endless series of meetings. He is a humble man, not very sophisticated, but he seemed smart and under-stated—maybe the perfect foil for Chevron, but there is no way to know for sure so there is risk. Reyes thin[k]s we should go with Richard, and we can help him.”
Id.; see also DI 658–18 (Reyes Decl.) ¶ 31 (“Donziger asked me to introduce him to Cabrera, and I arranged a meeting which took place on Feb. 9 or 10, 2007, at Hotel Quito....”).
DI 658–18 (Reyes Decl.) ¶¶ 33–34.
On February 27, 2007, Donziger, Yanza, and Fajardo met with Cabrera and Reyes to do another “hard vet” of Cabrera and to give him the “hard sell.” Just as he had done with Reyes, Donziger, again in his own words, “did the build up about the importance of the case, what it means for history, how we can do something that we will always be remembered for, what it would mean for the country and world, etc.”
PX 197 (Donziger Notebook), at 2.
But that, the Court finds, is not all he said. The quoted entry from his notebook summarized “the build up” he gave Cabrera in terms almost identical to the summary he wrote of his “build up” to Reyes. It is logical to infer, and the Court finds, that Donziger made the same implicit promise of lifetime work on the remediation to Cabrera that he had made previously to Reyes. In any case, Cabrera agreed to the plan.
Meanwhile, the LAP team continued to meet ex parte with Judge Yánez
E.g., PX 200 (Donziger Notebook) (“On Friday night, Pablo and Luis met with the judge near the airport in his barrio in a restaurant. I was supposed to be there, but I couldn't find it[.] I was really pissed off at the news they reported—that the judge still did not want to rule, he needed protection, that a magistrate from the Supreme Ct was coming on Thursday to check him out given the denuncias, etc. The different pieces of the strategy to get us home have to work in concert, and the one element out of sync at the moment is the fact we don't have the order to begin the [global inspection]. This is the one thing left; if we can get thru this, we should be home free.”).
PX 197 (Donziger Notebook). And they were certain well before that that Judge Yánez would grant their request to appoint a single global expert. In an email on January 9, 2007 to the LAPs' legal team, Fajardo described a meeting he had had with the judge, to whom he referred as “the Big Boss.” “I had a short meeting today with the Big Boss (you know who I'm talking about); we discussed the start of the Global Assessment. The idea is to perform a symbolic act at a well or station in Lago Agrio for the start of the Global Assessment. The Expert will be sworn in at that act, and the judge will set the deadline for the Expert to deliver his report to the Court.” PX 821 (Jan. 9, 2007 Email from P. Fajardo to S. Donziger and others).
But Donziger and the LAP team were so sure of Cabrera's appointment that they proceeded on the basis that Cabrera would be appointed even before the appointment was announced and Cabrera sworn in. V. The Second Phase of the Lago Agrio Case—The Cabrera “Global Expert” Report A. The LAPs Secretly Plan the Cabrera Report—The March 3 and 4, 2007 Meetings
PX 335 (Mar. 19, 2007 Lago Agrio Court Order), at 2.
Donziger, Fajardo, and Yanza called the entire LAP team together for a meeting on March 3, 2007.
DI 658–18 (Reyes Decl.) ¶ 34. Ann Maest testified that she met Cabrera for the first time in March 2006. Maest Dep. Tr. at 68:12–17; see also PX 636 (Screenshot from Crude Clip of Mar. 3, 2007 Meeting including Cabrera, Yanza, and Fajardo). She clearly was mistaken as to the year.
PX 201 (Donziger Notebook) (“March 7, 2007 ... Sat had all-day Tech meeting in the office ... Richard and Fernando there, as was Ann, Dick, and Champ.”).
Maest Dep. Tr. at 42:17–34; see also PX 633 (Mar. 5, 2010 Email from S. Donziger to E. Englert, M. Hoke, and J. McDermott) (“E-tech is a scientific consulting entity we worked with before we hired Stratus. When Stratus came in the summer of 2007, we stopped working with E-tech.”).
The purpose of the meeting, as will appear in more detail, was to plan the global expert report. So sure were Donziger and Fajardo of Cabrera's appointment that the supposedly independent and impartial Cabrera, as well as Fernando Reyes, were present.
Maest Dep. Tr. at 50:5–7.
Donziger explained the importance of the meeting to the Crude camera even before the meeting began:
“Today is ... a very important day ‘cause we're meeting with ... our team of Ecuadorian technical people and our American consultants ... to figure out how to ... pull all that information together for the final report we're gonna submit to the court, that is gonna ask for damages that'll very likely be in the multiple billions of dollars.”
PX 33A[S] (Mar. 3, 2007 Crude Clip), at CRS–187–01–01 (emphasis added).
As will appear, Mr. Donziger had obtained the financing for the film maker and had influence over the content of the film. Infra Facts § VII.B. It thus is not too surprising that he spoke as candidly as he often did when the camera was rolling.
Parts of the meeting were recorded by the film makers. Yanza began by introducing the participants and setting out the general agenda.
PX 35A (Mar. 3, 2007 Crude Clip), at CRS–187–01–02.
Fajardo set forth the plan for the final phase of the evidentiary period, explaining that, while Cabrera was likely to be appointed the global expert, “the work isn't going to be the expert[']s. All of us bear the burden.”
PX 39A (Mar. 3, 2007 Crude Clip), at CRS–191–00–CLIP–03.
PX 42A (Mar. 3, 2007 Crude Clip), at CRS–193–00–CLIP–01.
Reyes—who had been Mr. Donziger's first choice for appointment as global expert—testified that:
“At the meeting, Mr. Fajardo, Mr. Yanza and Mr. Donziger dropped any pretense that Mr. Cabrera would act independently in writing an expert report that would be technically sound and executed according to professional standards. On the contrary, it was obvious that the plaintiffs had already predetermined the findings of the global assessment, that they themselves would write a report that would support their claim for billions of dollars against Chevron and would simply put Mr. Cabrera's name on it. The purpose of the meeting was to establish all the conditions for controlling and managing the expert's work, in secret, in accordance to the plaintiffs' interests.”
DI 658–18 (Reyes Decl.) ¶ 35.
The next day, Donziger met over lunch with some of his American experts to discuss the work plan.
The meeting, parts of which also were taped, confirmed that Donziger and the LAPs would go far to control the process and conceal their involvement from Chevron and the court. At one point, one of the experts commented, “I know we have to be totally transparent with Chevron, and show them what we're doing,” to which Donziger responded “[n]o, no .... they will find out ... [but] not in the moment....”
PX 43A (Mar. 4, 2007 Crude Clip), at CRS–195–05–CLIP–01; PX 201 (Donziger Notebook), at 1 of 2 (“On Sunday lunch, went to Mosaico (the four gringos, including me), and spent four hours there talking things through.”).
Maest replied, “Yeah, we don't have to give them our plan.... I don't think, do we?” and Donziger answered “[w]ell, it's a little unclear.... No one's ever done this before.... This is so crazy.... Our goal is that [Chevron] do[es]n't know shit ... and that's why they're so panicked by this.”
PX 46A (Mar. 4, 2007 Crude Clip), at CRS197–00–CLIP 3.
Id. (emphasis added).
The group discussed also the existing data. When Maest noted that “right now all the reports are saying it's just at the pits and the stations and nothing has spread anywhere at all,” Donziger replied, “That's not true. The reports are saying the ground water is contaminated because we've taken samples from ground water.”
PX 43A (Mar. 4, 2007 Crude Clip), at CRS–195–95–CLIP–01.
“Yeah, but, that is evidence.... Hold on a second, you know, this is Ecuador, okay ... You can say whatever you want and at the end of the day, there's a thousand people around the courthouse, you're going to get what you want. Sorry, but it's true .... Okay. Therefore, if we take our existing evidence on groundwater contamination which admittedly is right below the source.... And wanted to extrapolate based on nothing other than, our, um, theory that it is, they all, we average out to going 300 meters in a radius, depending on the ... gradient. We can do it. We can do it. And we can get money for it.... And if we had no more money to do more work, we would do that. You know what I'm saying? ... And it wouldn't really matter that much.... Because at the end of the day, this is all for the Court just a bunch of smoke and mirrors and bullshit. It really is. We have enough, to get money, to win.”
Id. (emphasis added). The Court makes no finding as to whether the groundwater contamination was widespread or existed “just right under the pits.” As noted, the existence or absence of contamination in the Orienté was not at issue in this trial.
Following the March 3–4 meetings, the LAPs wrote the work plan that supposedly was to be done by Cabrera. On March 21, 2007, Fajardo sent the initial draft to Donziger for his approval.
It laid out all of the required tasks including such things as the selection of sites to be studied, field work, drafting of the report, and its submission to the court. It assigned responsibility for each item, in most cases to members of the LAP team or their hired consultants. Cabrera was allotted responsibility for relatively little. The drafting of the report was assigned to “[t]he Expert with the support team,” the latter being a reference to the LAP personnel. Review of the initial draft of the report was to be done by the “Legal team,” meaning the LAP lawyers. And following the final item on the list, submission to the court, the LAPs wrote, “Everyone silent,” the point of course being that no one was to disclose the control over and overwhelming participation in the process by the LAP team. Indeed, Donziger admitted on cross-examination that he instructed all those associated with the preparation of the Cabrera Report to keep their work highly confidential.
PX 843 (Mar. 21, 2007 Email from P. Fajardo to S. Donziger and L. Yanza) (attaching draft of work plan).
Tr. (Donziger) 2558:16–20.
Donziger at trial denied any knowledge of the fact that the March 21, 2007 work plan said “everyone silent” following the entry for submission of the report to the court. Id. 2558:21–2559:1. That denial is patently incredible, however, as the work plan was submitted to Donziger, who led the entire effort.
Before Cabrera officially was sworn in, however, the LAP team faced another possible hitch in its plan. Fajardo learned that Judge Yánez was considering appointing two global experts—one for Chevron and one for the LAPs. The LAP team was very concerned—they had worked hard to have the judge appoint the expert they had vetted and chosen and who would “totally play ball” with them. Fajardo reported Judge Yánez's plan to Donziger and others in an email titled “Code Orange.” He wrote: “What is new is that in view of the other restaurant's challenge, the cook has the idea of putting in another waiter, to be on the other side. This is troublesome. I suggest we activate alarms, contacts, strategies, pressures in order to avoid this happening. It is necessary to do it urgently.”
PX 845 (Mar. 26, 2007 Email from P. Fajardo to S. Donziger and others).
Donziger Jan. 29, 2011 Dep. Tr. at 3817:13–23.
Tr. (Donziger) 2549:10–2550:12.
Not surprisingly in light of the position in which Donziger, Fajardo, and others had put Judge Yánez, the “messenger”—most likely Fajardo—caused Judge Yánez to drop the idea of appointing two experts. And they took additional steps to control his activities.
On April 17, 2007, Luis Yanza wrote to Donziger: “We have met with Richard [Cabrera] and everything is under control. We gave him some money in advance.”
PX 850 (Apr. 17, 2007 Email from L. Yanza to S. Donziger).
Shortly thereafter, the LAP team set up a new, “secret” bank account through which they surreptitiously could pay the supposedly independent expert.
PX 871 (June 12, 2007 Email string between L. Yanza and S. Donziger).
PX 913 (Sept. 12, 2007 Email from L. Yanza to S. Donziger and P. Fajardo).
Tr. (Donziger) 2550:13–19. As will be seen, the LAP team also used the term “huao” in correspondence to refer to Cabrera.
Having secured Cabrera's selection and his agreement to cooperate with them, the LAP lawyers likely believed that they had paved their path to victory. But their problems were not over.
B. Donziger, Fajardo, and Yanza Put Together an “Army,” Cabrera is Sworn in, and the LAP Team Prepares His Work Plan
Cabrera was selected in April 2007, but he had not been sworn in by June. The field work had not yet begun. Donziger and his colleagues feared their plan was in danger.
Donziger and Fajardo visited Judge Yánez on June 4, 2007, to inquire why the swearing in was taking so long and to encourage him to allow the expert to get to work in the field. Remarkably, the audio of this ex parte meeting with the judge was recorded by the Crude camera crew.
The images indicate that the recording was done from the hallway outside the judge's chambers. PX 61 (June 4, 2007 Crude Clip).
Very early in the meeting, Donziger said to the judge: “Let's speak frankly. What do we do to start” the process with Cabrera?
The judge replied that it “is already about to start,” but that Chevron had filed “two books” of “suggestions” and issues regarding the process by which Cabrera's field work was to be carried out, and the judge needed to rule on them.
PX 61A (June 4, 2007 Crude Clip), at CRS354–02–CLIP–05.
There must be “parameters so that he can—this is going to be done right, isn't it? And the situation can't be made too creative. Yes, because, I know that tomorrow you'll leave but I'll still be here, right?”
Donziger assured Judge Yánez that he, Donziger, would not “desert” the judge, and stressed that the judge could not let Chevron's complaints about the expert or threats to appeal Judge Yánez's ruling delay the swearing in any further.
Donziger and Fajardo left the meeting frustrated with the delay and worried that Judge Yánez was slipping away from their control. They discussed the need to pressure the judge to swear in Cabrera and get the process going. Donziger said: “To me, this is already a matter of combat ... I think we actually have to put an army together....”
PX 63A (June 4, 2007 Crude Clip), at CRS346–00–CLIP–02.
Id. (emphasis added).
The next day, Donziger met with Yanza and Atossa Soltani of Amazon Watch and explained the situation:
“I think that, analyzing the outlook of this case, we are losing strength with the court. Uhm, this case has pretty much been asleep for five months. It's weird. I mean, we got—we were getting, like, everything, for a while, that we wanted. You know, we got the cancellation of the inspections. You know, we we're getting the peritaje global, the final phase. But then, like, suddenly everything was in place and he won't swear in the perito, which is needed to start the hundred and-twenty day period. It's been, like, weeks and weeks and weeks of delays. You know, after sort of analyzing the situation, we believe that the judge is trying to stall the case until the end of the year, until the new guy comes in ... So, you know—but it goes way beyond the problem of any individual judge, ‘cause it's possible the next person could come in and ... and not want to deal with it and do the same. You know, it's a problem of institutional weakness in the judiciary, generally, and of this court, in particular. We have concluded that we need to do more, politically, to control the court, to pressure the court. We believe they make decisions based on who they fear the most, not based on what the laws should dictate. So, what we want to do is take over the court with a massive protest that we haven't done since the first day of the trial, back in October of 2003.”
He added that the protest would occur during the last week in June and emphasized that “it's a critically important moment, because we want to send a message to the court that, ‘don't fuck with us anymore—not now, and not—not later, and never.... [N]o one fears us right now. And, until they fear us, we're not gonna win this case. I'm convinced.”
PX 67A (June 6, 2007 Crude clip), at CRS–350–04–CLIP–01 (emphasis added).
Indeed, on June 13, 2007, he suggested that Fajardo and Yanza “inform the judge now that we're going to have the big march and maybe ask for his recusal during that march so that he'll get scared now.”
Id. (emphasis added).
PX 872 (June 13, 2007 Email from S. Donziger to P. Fajardo and L. Yanza) (emphasis added).
As it turned out, the June 4 visit to Judge Yánez by Donziger and Fajardo quickly had its desired effect, and Donziger's fears as to whether Cabrera would be sworn in and thus authorized to begin his work as global expert proved short-lived. Cabrera was sworn in on June 13, 2007.
PX 342 (Cabrera Certificate of Swearing In).
Donziger obviously was unaware when he wrote his own June 13 email (PX 872) that Cabrera had been or would be sworn in on that day. It is unclear whether the threat he had suggested to Fajardo and Yanza was made before the swearing in took place.
PX 342 (Cabrera Certificate of Swearing In), at 3.
Roughly two weeks later, Cabrera submitted what purported to be his work plan to the court.
PX 277R (Cabrera Work Plan).
Donziger Jan. 31, 2011 Dep. Tr. at 4132:11–18 (“Q. Now, in the spring of 2007 it was the plaintiffs' team that drafted Mr. Cabrera's work plan, correct? A. We drafted a work plan that we gave to him. Q. That he then adopted, correct, sir? A. I believe he used most of it, if not all of it.”).
PX 277R (Cabrera Work Plan), at 11.
Donziger Jan. 31, 2011 Dep. Tr. at 4132:20–22.
C. The Field Work
Shortly before Cabrera was sworn in, Donziger and Fajardo had discussed the need to “scale up” the “battle” once that occurred by “organiz[ing] pressure demonstrations at the court and [providing] vigilance” to “protect” the expert.
PX 67A (June 6, 2007 Crude Clip), at CRS–350–04–CLIP–01 (emphasis added).
On June 26, 2007, Donziger emailed the producer and cameraman of the Crude documentary to fill them in on the plan. He wrote that “Richard [Cabrera] the new expert [would be] tak[ing] sampling [during the following week] for the first time in Lago, and a ton of people will be there to protect him from the Chevron lawyers....”
He suggested that the crew “film us getting ready for the big march. The march will be the biggest in the history of the [ADF] ... [yo]u can capture the main characters (me, Pablo, Luis) early in the morning Tuesday greeting the communities as they travel to lago from the hinterlands....”
PX 875 (June 26, 2007 Email chain between S. Donziger, M. Bonfiglio, and J. Berlinger).
And he noted that “[t]he other thing that would be good to capture is our private ‘army’ which has been very effective. Yesterday they followed a Texaco lawyer into the judge's chambers and had a confrontation. This is a critical part of our strategy that is allowing the case to go forward ...”
The demonstration occurred on July 3, 2007, and culminated with a speech by Yanza.
PX 78 (July 3, 2007 Crude Clip), at CRS405; PX 79A (July 3, 2007 Crude clip).
PX 3300 (McMillen Direct) ¶ 27.
Chevron was skeptical of Cabrera from the day he was named. It thought him unqualified and that he lacked relevant experience, and it voiced its concerns to the court.
Chevron's lawyers became even more suspicious when Cabrera took samples at various sites because they observed what seemed to them to be collaboration and familiarity between Cabrera—the supposedly independent global expert—and the LAP team.
PX 4300X (Callejas Direct) ¶ 48.
PX 3300 (McMillen Direct) ¶¶ 27–28.
Thus, “[t]hroughout Mr. Cabrera's proposed appointment, swearing in, field work and the ultimate submission of his reports, Chevron repeatedly petitioned the Court to address its concerns over Cabrera's lack of impartiality and independence and his suspected collusion with the Lago Agrio Plaintiffs' representatives.”
PX 4300X (Callejas Direct) ¶ 49.
Id. ¶ 52.
It merely reminded Cabrera “that he is an auxiliary to the Court for purposes of providing to the process and to the Court scientific elements for determining the truth” and asserted that “[t]he transparency of the expert's work will be ensured.”
PX 348 (Oct. 3, 2007 Lago Agrio Court Order).
Chevron had reason to be suspicious of Cabrera's field work, which was anything but transparent. Among other things, Donziger later admitted that the LAP team “had [also] been involved in Mr. Cabrera's site selection” and his “sampling protocols.”
Donziger Dec. 29, 2010 Dep. Tr. at 2203:4–6; 2203:11–17; Tr. (Donziger) 2457:22–2548:4.
Tr. (Donziger) 2548:9–17; Donziger Jan. 29, 2011 Dep. Tr. at 3726:23–3727:4.
1. The LAP Team Pays Cabrera to Ensure that He Would “Totally Play Ball”
The LAP team paid Cabrera. Some of the payments they made to him were official, court-approved payments made through the court process, which worked like this: on several occasions, Cabrera filed a letter with the court, requesting payment for work he performed or was about to perform.
The court approved the amount, and ordered the LAPs, who had requested the global expert, to pay it. The LAP team then wrote Cabrera a check for that amount, which was filed with the court and then given to Cabrera.
PX 4300X (Callejas Direct) ¶¶ 50–57. This process was consistent with Articles 9 and 14 of Ecuador's Rules Governing the Activities and Fee Schedule of Experts in the Civil, Criminal and Similar Areas of the Judiciary. See DI 1413–9, at 21.
For example, on June 25, 2007, Cabrera filed a request with the court for $59,349 “[t]o complete the work I am to perform within the deadline Your honor has set....” PX 277 (June 25, 2007 Ltr. from R. Cabrera to Lago Agrio court). The following day, the Lago Agrio court approved the payment. PX 344 (June 28, 2007 Court Approved Payment of $59,349 from LAPs to Cabrera), at 2 of 5. Two days later, the LAPs paid Cabrera $59,349. Id. at 1.
On October 15, 2007, Cabrera wrote to the court asking it to order the LAPs to pay him $97,000. PX 350 (Oct. 15, 2007 Ltr. from R. Cabrera to Lago Agrio court). The court ordered the LAPs to pay Cabrera $97,000 a week later. PX 354 (Oct. 22, 2007 Lago Agrio Court Order). The LAPs paid Cabrera the $97,000 in at least three installments. PX 356 (Nov. 22, 2007 Court Approved Payment of $30,000 from LAPs to Cabrera); PX 361 (Jan. 24, 2009 Court Approved Payment of $25,000 from LAPs to Cabrera); PX 367 (May 10, 2008 Court Approved Payment of $33,000 from LAPs to Cabrera).
But the court-approved payments were not the only ones the LAPs made to Cabrera. They paid him also outside the court process. And they began paying him even before he had begun to perform his duties.
After Cabrera was named as the global expert but before he was officially sworn in, the LAPs agreed to set up a new, “secret” bank account through which they surreptitiously would pay Cabrera.
Yanza and Donziger began the process of opening the secret account in June 2007. Yanza informed Donziger that “[t]o open the account we need at least 2 thousand dollars. Due to the urgency, I suggest that amount (or more, 5 or 10 thousand) be sent to my personal account and I will transfer it to the new secret account.”
PX 871 (June 12, 2007 Email string between L. Yanza and S. Donziger); PX 913 (Sept. 12, 2007 Email from L. Yanza to S. Donziger and P. Fajardo).
PX 871 (June 12, 2007 Email string between L. Yanza and S. Donziger).
Yanza assured Donziger that “the first transfer is just to open the other account. Once we have the other account I'll immediately transfer all the money to that account and we start operating with that account.”
Id. He considered opening the account in the name of either “Lupe” or “Donald,” referring to Lupeta de Heraldaia and Donald Moncayo, both of whom work for the LAPs through Selva Viva. Woods Sept. 14, 2011 Dep. Tr. at 439:10–440:23; Tr. (Moncayo) 2058:23–24.
The LAP team ultimately decided to repurpose a preexisting account the ADF held at Banco Pichincha to serve as the secret account.
PX 578 (Banco Pichincha Account Statement for ADF) (account number 3921429800); PX 912 (Sept. 12 2007 Email from L. Yanza to P. Fajardo re: “Secret account”) (identifying secret account as account number 3921429800).
PX 578 (Banco Pichincha Account Statement for ADF), at 6–7; PX 618 (Wire Transfers), at 4–5; PX 897 (Aug. 14, 2007 Email from S. Donziger to K. Wilson and J. Kohn re “Critical money transfer”) (“Pls transfer 50,000 to the following account in Ecuador.”).
For example, on August 9, 2007, Yanza sent Donziger an email in which he included the account information for the secret account and wrote that “[Kohn] ha[s] to deposit 50k [into the secret account] so we can pay the advances to the consultants so they will start their work as soon as possible. I hope it is deposited by Wednesday at the latest. I'll be in touch that day to arrange all of this with Huao.”
PX 578 (Banco Pichincha Account Statement for ADF), at 6; PX 590 (Aug. 17, 2007 Transfer Receipt) (showing transfer of $33,000 to Cabrera); PX 591 (Aug. 17, 2007 Ltr. from J. Fajardo to Banco Pichincha Manager); PX 593 (Banco Pichincha Record of Cash Transactions for the ADF).
PX 894 (Aug. 9, 2007 Email from L. Yanza to S. Donziger re: “bank information urgent”).
PX 2427 (Oct. 26, 2007 Email from K. Wilson to S. Donziger) (reflecting payment of $50,000 to Frente de la Amazonia Aug. 15, 2007).
PX 578 (ADF Account Statement), at 6; PX 590 (Aug. 17, 2007 Transfer Receipt); PX 591 (Aug. 17, 2007 Ltr. from J. Fajardo to Banco Pichincha Manager); PX 593 (Banco Pichincha Record of Cash Transactions for the ADF).
PX 912 (Sept. 12, 2007 Email from L. Yanza to S. Donziger).
PX 917 (Sept. 17, 2007 Email from L. Yanza to S. Donziger).
PX 578 (ADF Account Statement), at 6.
PX 967 (Feb. 8, 2008 Email from L. Yanza to S. Donziger).
PX 968 (Feb. 8, 2008 Email from S. Donziger to J. Kohn and K. Wilson).
PX 578 (ADF Account Statement), at 7; PX 618 (Banco Pichincha Account Statement for ADF).
Defendants have contended that the secret payments they made to Cabrera were “advanced funds to cover expenses incurred for work performed so that his work would not stop.”
PX 2411 (Donziger Defs.' Second Supplemental Responses to Chevron's Interrogatories), at 34.
Tr. (Donziger) 2550:20–25.
Tr. (Donziger) 2551:16–20.
In fact, experts are prohibited under Ecuadorian law from “requir[ing] or receiv[ing] anything of value, whether directly or indirectly, from the parties in the case ... since their fees must be established in advance by the competent judge.”
The attempt to justify their payments to Cabrera outside the court process—that is, without an application by Cabrera to the court followed by court approval followed by payment—as necessary “to keep the process going” is not persuasive. While such advances might have been both understandable, if irregular, had they been made openly and in response to proven delays by the court in acting on payment requests, there is no persuasive evidence of either. Defendants' expert, moreover, testified that secret payments to Cabrera without the knowledge of the court to alter the result of the expert's report would have been crimes under Ecuadorian law.
DI 1413–9 (Art. 15 of Rules Governing the Activities and Fee Schedule of Experts in Civil, Criminal and Similar Areas of the Judiciary), at 21.
Indeed, the Ecuadorian Criminal Code provides that “[a]nyone who bribes a[n] ... expert ... or who knowingly uses false ... experts in a court proceeding ... will be punished as guilty of false testimony or perjury.”
DI 1413–12 (Albán Dep. Tr.), at 31:25–32:2, 54:7–23.
DI 1413–4 (ECUADOR CRIM. CODE Art. 359), at 48–49.
All of the circumstances—including the fact that a court-approved payment process existed but that the LAP team secretly paid Cabrera outside of that process, used a secret account to do so, worried in emails about whether any of the money should go through Yanza's personal account even temporarily, and used code names as they did it—indicate that the secret payments were illegal or at least improper,
that the LAP team knew that, and that they attempted to conceal their payments. Whatever else these payments may have included, if anything, at least part of them were made as part of even more extensive efforts to ensure that Cabrera “would totally play ball with” the LAPs and with other U.S. consultants whom the LAPs had hired to draft the report Cabrera would file under his name.
The fact that at least some of the money the LAPs paid Cabrera changed hands before Cabrera took the oath of office in June 2007 is not significant. They knew that he was to act in an official capacity before any of the payments were made. The money was intended to influence his official actions once he was sworn in. In those circumstances, the payments were wrongful. See, e.g., 18 U.S.C. § 201 (the prohibition against bribing a public official extends to a “person who has been selected to be a public official,” defined as “any person who has been nominated or appointed to be a public official, or has been officially informed that such person will be so nominated or appointed”); 18 U.S.C. § 201 (the prohibition against government officials receiving compensation for representational services extends to agreements to receive or acceptance of compensation before the term of employment begins); Crandon v. United States, 494 U.S. 152, 163, 110 S.Ct. 997, 108 L.Ed.2d 132 (1990) (discussing the inclusion in Sections 201 and 203 of pre-employment compensation or bribes); N.Y. Penal Law §§ 10.00(15), 200.10, 200.11, 200.12, 200.15 (proscribing the receipt of bribes by public servants, defined to include those who have “been elected or designated to become a public servant”); see also United States v. Stein, 541 F.3d 130, 153 (2d Cir.2008) (“Although defendants' Sixth Amendment rights attached only upon indictment, the district court properly considered pre-indictment state action that affected defendants post-indictment. When the government acts prior to indictment so as to impair the suspect's relationship with counsel post-indictment, the pre-indictment actions ripen into cognizable Sixth Amendment deprivations upon indictment.”); United States v. Solow, 138 F.Supp. 812, 813–16 (S.D.N.Y.1956) (Weinfeld, J.) (destruction prior to service of subpoena of evidence material to known investigation constitutes obstruction of justice).
2. The LAP Team Provides Cabrera with Administrative “Support” and Controls his Field Work
The LAPs provided Cabrera more than payments from the secret account. Three days before Cabrera began his field work, Fajardo sent an email to Donziger and Yanza, informing them that Cabrera that morning had called him “about a little mistake in the contract, [and] he seemed a bit upset....”
PX 877 (July 1, 2007 Email from P. Fajardo to L. Yanza and S. Donziger re: “WORRIED”).
“to offer some Support, which ... should be the following:
1. That we help him get an office, if he hasn't yet, we shouldn't let him go through that hassle, it is our obligation to help him. Leaving him alone would be irresponsible of us, we could give him someone to help him, he'll feel better.
2. I recommend that Julio [Prieto]'s girlfriend be his assistant, I think she's a really bright girl, and since she's Julio's girlfriend, there would be no problems, she knows something about law and could help him in many aspects, plus we'd have this situation more or less controlled ....
3. Even though it's not our obligation, but I think it's our duty to help him get insurance. We must understand that he has no structure and we do. I think that he now needs to get to the heart of his work....”
Id. (emphasis added).
Donziger and Fajardo believed that supporting Cabrera in every way was necessary to maintaining the “control” over him upon which Donziger insisted. So they entered into a contract with Cabrera, provided him with a secretary (Prieto's girlfriend), obtained life insurance for him,
and provided other support. To ensure that Cabrera continued to cooperate with them, they needed to make clear that they supported him. And their “support” was not limited only to administrative matters. They also supported and controlled his work in the field.
Id.; PX 881 (July 11, 2007 Email from J. Prieto to P. Fajardo and S. Donziger re: “insurance for the wao”).
Shortly after Cabrera began his inspections, he filed a letter with the Lago Agrio court in which he complained that Chevron's representatives had interfered with his first inspection at the sampling site and were “insulting [Cabrera], trying to affect [his] reputation, dignity, and impartiality.”
He wrote that, in the future, “[i]f upon arriving at a site or well that [he] need[ed] to sample [he] f[ou]nd alterations ... [he] reserve[d] the right to replace that and all tampered sites with other sites that have not been altered, without the new sites having to be on the list that was provided in the work plan.”
PX 279 (July 12, 2007 Ltr. from R. Cabrera to Lago Agrio court), at 2. This exhibit was not offered or received for the truth of Cabrera's statements.
Read in concert with the LAP team's internal correspondence, Cabrera's letter to the court—in which he “reserve[d] the right” to visit new sites and collect new data—was meant to lay the groundwork for the LAP team's maintenance of control over Cabrera's field work. Indeed, on July 17, 2007, Donziger sent an email to Yanza and Fajardo, the subject of which was “Ideas for meeting with Richard [Cabrera].”
PX 883 (July 17, 2007 Email from S. Donziger to L. Yanza and P. Fajardo).
“These are the [l]atest ideas:
1) That we think that Richard should suspend his work in the field and we should not pay the team until after the recess. We just need to tell the team and Texaco that he's going to start all over after the recess so there is nothing strange, everything appears normal.
2) When I get there, we'll re analyze the work and budget with Richard. And we'll adjust with a much smaller team. My tendency is to stop Richard from working much more in the field ... or, if he continues doing it, he should continue under the most strict control with an extremely limited number of samples ... And we'll change the focus of the data at our offices.
3) It is key to have deadlines to receive drafts from all the consultants, such as the biologists, the water man, and so on. Personally, I don't want to wait for the ‘final’ product to determine if the work is useful or not, or we will be screwed because they will ask for even more money to make the changes if we are not properly informed of everything during the process.”
Id. (emphasis added)
Donziger's email underscores the fact that the LAP team had chosen the sites which Cabrera was to visit and, when the team's funds began to run low, sought to limit the number of sites even further. All the while, the LAPs knew that—for the samples he did collect—they could simply “change the focus of the data at [their] offices.”
The “team” to which Donziger referred included Stratus and other consultants and scientists who were hired to perform technical work supposedly to have been done by Cabrera.
See, e.g., PX 2481 (July 19, 2007 Email from S. Donziger to L. Yanza and P. Fajardo re: “Very important”) (“If we use the American consultants here, it is [sic] necessary for Huales to pay directly or can Kohn pay them? It might be a problem. Another option is for the locals to adopt the work they do and are paid here, and the locals there.”).
See, e.g., PX 632 (July 18, 2007 Retention Agreement between J. Kohn and UBR); PX 2430 (July 24, 2007 Statement Reflecting $5,000 payment from J. Kohn to UBR).
PX 310 (Cabrera Report), at 4347 of 6124; Donziger Jan. 8, 2011 Dep. Tr. at 2537:12–17 (“Q. Now, the work that Uhl Baron did for yourself and Mr. Kohn ultimately became Annex O–R of the Cabrera Report, correct? A. I believe so, either verbatim or something very similar.”).
PX 310A (Cabrera Report), at 6085 of 6124.
The authorship of the Cabrera Report and its appendices will be discussed more fully below. The importance of Donziger's July 17, 2007 email for present purposes is that it shows that the LAP team worried about how they could continue to pay the team of U.S. environmental consultants they had assembled and hired to perform Cabrera's work for him. And the team worried also about maintaining control over the sites Cabrera inspected, the samples he took, and the data the samples produced. So five days after Cabrera sent the letter to the court stating that he reserved the right to visit new sites and collect new data,
Donziger informed Fajardo that Cabrera should collect an extremely limited number of samples and that (1) the focus of the data could be “change[d] ... at [the LAPs'] offices” and (2) the data ultimately would be analyzed and summarized by the consultants the LAPs were paying to prepare Cabrera's report.
PX 279 (July 12, 2007 Ltr. from R. Cabrera to Lago Agrio Court), at 2.
This two-pronged attack enabled the LAP team to get what it wanted—fewer testing sites, lower costs, and control over the samples and results they elicited—while allowing Cabrera to blame the need for changes to his work plan on Chevron.
PX 883 (July 17, 2007 Email from S. Donziger to L. Yanza and P. Fajardo).
Donziger noted also in his July 17, 2007 email to Fajardo that the LAPs' hired consultants needed to be required to submit their drafts to the LAP team early on. Donziger wanted control over the consultants' reports from their inception. He did not want to risk waiting until their work was “final” and ready to be included in the report to discover that it ultimately was not “useful” to the LAPs.
D. Donziger Attempts to Deceive Judge Sand About Cabrera's Independence
During this period, a case entitled Republic of Ecuador v. ChevronTexaco Corp.
was pending in this Court before Honorable Leonard B. Sand. The details of that case are not particularly germane here. One, however, is significant because it provides further evidence of Donziger's (1) awareness that the LAPs' control over Cabrera and their extensive participation in the activities with which he was charged, as a supposedly independent expert, were wrongful, and (2) determination to maintain the false appearance that Cabrera was independent when he most certainly was not.
No. 04 Civ. 8378(LBS).
Chevron Corporation briefly changed its name to Chevron Texaco before rechanging it to Chevron. See Chevron Corp. Annual Report 2000 (Form 10–K) (Mar. 28, 2001), available at http:// www. sec. gov/ Archives/ edgar/ data/ 93410/ 0000093410 01000015/ 0000093410– 01– 000015. txt; ChevronTexaco Corp. Annual Report 2001 (Form 10–K) (Mar. 27, 2002), available at http:// www. sec. gov/ Archives/ edgar/ data/ 93410/ 0000950149 02000568/ f 80065 e 10– k 405. htm; Chevron Corp., Annual Report 2005 (Form 10–K) (Mar. 1, 2006), available at http:// www. sec. gov/ Archives/ edgar/ data/ 93410/ 0000950149 06000076/ f 16935 e 10 vk. htm. the Court takes judicial notice of the fact that Chevron, following the acquisition of the shares of Texaco, was renamed Chevron–Texaco Corporation and then later changed its name back to Chevron Corporation. Roth v. Jennings, 489 F.3d 499, 509 (2d Cir.2007) (explaining that courts may take judicial notice of “documents filed with the SEC ... ‘to determine what the documents stated’ ”).
In mid-September 2007, the ROE and PetroEcuador were due to submit supplemental papers in support of a motion to dismiss Chevron's counterclaims and to renew their own motion for summary judgment. Donziger had been given by the ROE's lawyers a draft of a declaration proposed for signature by Mark Quarles and submission to Judge Sand. Quarles was one of the outside consultants hired by the LAPs to, among other things, work on the global expert report supposedly done by Cabrera. Paragraph 5 subpart 3 of the draft read as follows:
“3. In the event Chevron or the Plaintiffs had been allowed to participate in developing Cabrera's sampling strategy and selection of sites/methods, a degree of biasness [sic] would have been introduced into the sampling plan. Given that Chevron and the Plaintiff were not involved in the workplan preparation, Cabrera's plan should represent no bias.”
PX 915 (Sept. 16, 2007 Email from S. Donziger to M. Quarles re: Quarles Affidavit), at 6 of 9.
On the evening of September 16, 2007, Donziger emailed the draft declaration to Quarles with Donziger's comments and requested Quarles to revise the declaration accordingly.
“3. [I would delete para in favor of the following language, if true: Mr. Cabrera has at all times acted independently from both the plaintiffs and the defendant. At no time has Mr. Cabrera entertained suggestions or even met with plaintiffs or their representatives regarding his current work plan.
[In the event Chevron or the Plaintiffs had been allowed to participate in developing Cabrera's sampling strategy and selection of sites/methods, a degree of biasness would have been introduced into the sampling plan. Given that Chevron and the Plaintiff were not involved in the workplan preparation, Cabrera's plan should represent no bias.—would delete para]”
Id. at 5–6 of 9 (emphasis in original).
The foregoing demonstrates that Donziger did not want Quarles to say that participation by either side in Cabrera's sampling strategy or site or method selection would have introduced bias into the process. So he suggested to Quarles that he assert, “if true,” that Cabrera neither had entertained suggestions from nor even met with the LAPs regarding his work plan. But Donziger by this time knew that the statements he proposed that Quarles make in his declaration would have been false. Among other things, Donziger had been at the March 3, 2007 meeting with Cabrera and others at which the LAPs laid out the plan they had prepared. Donziger knew also that the LAPs controlled Cabrera's site selections and that Cabrera in all other respects was “totally playing ball” with the LAPs. His inclusion of the words “if true” were nothing more than a misguided attempt to cover himself, should the blatant inaccuracy of the declaration itself ever be discovered, by permitting him to assert that he had relied on Quarles and that the falsity of the declaration had not been Donziger's fault.
The subparagraph that Donziger wanted changed was altered before the Quarles declaration was filed on the following day, September 17, 2007. The final version (which, with renumbering of certain paragraphs, appeared as subparagraph 1 of paragraph 7) was this:
“1. Mr. Cabrera and his team have acted independently from both the plaintiffs and the defendant at the three (3) Phase II inspections that were witnessed on September 6–7, 2007. In fact, armed guards were present to accompany Cabrera and his team and to prevent plaintiff and defendant personnel from interfering with the execution of the sampling plan.”
Thus, Quarles was not prepared to go as far as Donziger wished, either because he knew that Donziger's assertions were false or because he knew that he lacked personal knowledge sufficient to justify him in saying what Donziger proposed.
PX 918, at 3–4 (emphasis in original); Republic of Ecuador v. ChevronTexaco Corp., No. 04 Civ. 8378(LBS) (S.D.N.Y. filed Sept. 17, 2007) [DI 225], at 3–4 of 6.
In any case, the Quarles declaration as filed was intended by Donziger to convey the idea that Cabrera was working independently of the plaintiffs. It did so to some extent, though not to the degree Donziger wished. Even its limited message was inaccurate, and Donziger knew it. In fact, Quarles testified that if he had known that the LAPs had drafted Cabrera's work plan and that Cabrera had worked directly with the plaintiffs, he would not have signed even the modified declaration.
Quarles Sept. 1, 2010 Dep. Tr. at 115:20–116:04, 118:20–25, 121:21–122:05.
E. Stratus Secretly Writes Most of the Report
Ann Maest was a significant figure in the ensuing events. She first met Donziger and the LAP team in 2006, and eventually suggested that Donziger speak to Stratus' leadership to discuss retaining the firm in connection with the Cabrera Report.
Donziger then met with Stratus' president, Josh Lipton, Maest, Stratus' executive vice president and chief financial officer Douglas Beltman, and other Stratus personnel in Boulder, Colorado in April 2007.
PX 848 (Apr. 10, 2007 Email from S. Donziger to J. Lipton and A. Maest) (“Josh—Ann Maest suggested I write to reconnect about the Ecuador case against Chevron.... The case is winding down fast, and we need to prepare a damages assessment.... I am interested in a ‘global’ discussion of how Stratus might be able to take on some or all of this.”). Donziger wrote in his notebook on April 12, 2007 “Need to see Stratus in Denver to get help, but worried about the money.... Maest was down. Unclear if we can pull it all together in the time frame allotted.” PX 204 (Donziger Notebook); see also PX 5200 (Lipton Direct) ¶ 13 (“On April 10, 2007 Donziger contacted me via email at Dr. Maest's suggestion and described his need for technical assistance on a damages assessment.”).
PX 5200 (Lipton Direct) ¶ 15 (“I met with Donziger on April 26, 2007 at Stratus's office in Boulder, Colorado.”); PX 851 (Apr. 23, 2007 Email from S. Donziger to J. Lipton and A. Maest re: Meeting Thursday); PX 2466 (Apr. 22, 2007 Memorandum from S. Donziger to J. Lipton re: Overall Ecuador Work Plan); PX 59A (Apr. 26, 2007 Crude Clip), at CRS–269–01–04 (April 2007 meeting with Stratus).
PX 5200 (Lipton Direct) ¶ 15.
He said that he needed Stratus' help preparing the damages claim and explained that, while the LAP team had already done some testing in the field and had produced a tentative remediation plan, it was “spotty” and needed “to be significantly beefed up.”
PX 59A (Apr. 26, 2007 Crude Clip), at CRS–269–01–04 (April 2007 meeting with Stratus).
Stratus entered into a retention agreement with Kohn on August 20, 2007.
PX 633 (Mar. 5, 2010 Email from S. Donziger to E. Englert and M. Hoke), at 2–10.
Id. at 8.
PX 5200 (Lipton Direct) ¶ 19.
Throughout the rest of 2007 and early 2008, Beltman, Maest, and others at Stratus consulted with Donziger and worked on preparing the damages assessment.
Donziger and Stratus personnel exchanged hundreds of emails regarding draft outlines of the Cabrera Report as well as schedules for the drafting, review, analysis, translation, and completion of the annexes.
See, e.g., PX 942 (Dec. 10, 2007 A. Maest handwritten notes re: “Call with Steven and Doug re Damages Assessment”); PX 945 (Dec. 20, 2007 A. Maest handwritten notes re “Ecuador GW Sampling”); PX 951 (Dec. 27, 2008 A. Maest handwritten notes re “Call with Steven and Doug–Ecuador”); PX 954 (Jan. 9, 2008 A. Maest handwritten notes re “Needed for Trip”); PX 956 (Jan. 15, 2008 A. Maest handwritten notes re “Meeting in Quito”); see also PX 957 (Jan. 16, 2008 Memorandum “Potential tasks for Stratus Consulting”).
E.g., PX 985 (Mar. 5, 2008 Email from D. Beltman to S. Donziger re: “Annex tracking table”) (attaching table tracking author, language, and status of review of each annex); PX 1521 (chart tracking translation of annexes); PX 8026 (Feb. 20, 2008 Email from D. Beltman to A. Maest, J. Peers, and S. Donziger re: “annex on TexPet cleanup”); PX 8027 Mar. 10, 2008 Email from D. Beltman to S. Donziger and A. Maest re: “Another annex: ecological risks”); PX 8028 (Mar. 5, 2008 Email from D. Beltman to S. Donziger re: “Draft annex on historical data”) (“For your review. English and Spanish versions.”); PX 8029 (Mar. 4, 2008 Email from D. Beltman to S. Donziger re: “extrapolation annex without maps”); PX 8030 (Mar. 13, 2008 Email from D. Beltman to S. Donziger and A. Maest re: “Lost ecosystem value”) (“Steven: Attached is the Spanish version of our annex on the value of the rainforest lost at wells and stations.”).
See id.; PX 985 (Mar. 5, 2008 Email from D. Beltman to S. Donziger re: Annex tracking table) (attaching table tracking author, language, and status of review of each annex, including column for “SD review”).
E.g., PX 936 (Nov. 17, 2007 Email from S. Donziger to D. Beltman re: “Unjust Enrichment”) (“pls read our submission carefully and make sure you don't say or even suggest anything that backs away from the figures. Remember, we said in the submission that the unjust enrichment would be on the order of billions of dollars (for everything, not just dumping).”).
Based on data given to them by Donziger and the LAP team, their visits to Ecuador, and their own analyses, Beltman, Maest and their team at Stratus wrote the bulk of the Cabrera Report. As Donziger later admitted, much later, after Stratus had come clean about its involvement, it was “the general idea” “that Stratus would draft the report in a form that it could be submitted directly to the Ecuadorian court by Mr. Cabrera.”
Donziger Dec. 29, 2010 Dep. Tr. at 2253:5–11.
PX 962 (Jan. 24, 2008 Email from D. Beltman to S. Donziger and A. Maest) (attaching draft outline, named “Outline.v1.doc,” for the report); see also PX 2433 (Feb. 8, 2008 Email from D. Beltman to S. Donziger, A. Maest, and others) (attaching updated draft outline “based on what we talked about last Friday”).
PX 1648 (Feb. 22, 2008 Email from D. Beltman to Stratus employees re: “CONFIDENTIAL—Ecuador Project Update”) (“Greetings from Ecuador”).
“The project is at a key point right now. We have to write, over the next 2 to 3 weeks, probably the single most important technical document for the case. The document will pull together all of the work over the last 15 or so years on the case and make recommendations for the court to consider in making its judgment. We (the case attorneys, the case team in Quito, and Stratus) have put together a very ambitious outline for this report. The people in the Quito office are working on some parts, and we're working on others.”
The report to which he referred, of course, was the one that Cabrera would submit to the Lago Agrio court. At Donziger's direction, Stratus wrote its portions in the first person as though they were written by Cabrera.
Donziger Dec. 29, 2010 Dep. Tr. at 2253:5–11.
PX 978 (Feb. 27, 2008 Email from D. Beltman to S. Donziger re: “Start on report text; human tox annex”).
E.g., PX 985 (Mar. 5, 2008 Email from D. Beltman to S. Donziger re: “Annex tracking table”).
E.g., PX 1649 (Mar. 1, 2008 Email from D. Beltman to M. Carney re: “eco risk annex”) (“Hey Mike: Great job on the ecorisk annex. The link below has some edits and comments. We are well on our way, but it's going to take a bit more work.”); PX 981 (Mar. 4, 2008 Email from A. Maest to J. Peers re: “Yet another updated perito db”).
E.g., PX 2468 (Mar. 4, 2008 Email from J. Sáenz to D. Beltman); PX 1014 (Mar. 27, 2008 Email from J. Peers to L. Villacreces, P. Fajardo, and J. Prieto re: “corrected figures—Exhibit Ecological Impact”).
PX 1050 (July 28, 2008 Email from D. Beltman to B. Lazar re: “english translations”); PX 2436 (Mar. 10 2008 Email From D. Beltman to A. Maest and J. Peers re: “Report help”) (“Unfortunately, I've been too busy on annex stuff to work much on [the report], and it has to go to the court in 2 weeks and get translated.... My goal is to have the entire report drafted by COB Tuesday. Based on how things are going, our current translators will take more than a week to turn it around, which puts us at next week Tuesday, if we're lucky.”); PX 980 (Feb. 29, 2008 Email from D. Beltman toinfo@ translating spanish. com and A. Maest re: “Ecuador project”) (attaching two annexes for translation); PX 994 (Mar. 12, 2008 Email frominfo@ translating spanish. com to D. Beltman and A. Maest); PX 2437 (Mar. 12, 2008 Email from D. Beltman toinfo@ translating spanish. com re: “Big Report”).
Beltman, Maest, and others at Stratus continued to provide comments on and material for the Summary Report and the annexes to Donziger and the LAP team up to March 30, 2008, two days before it was to be filed.
See PX 1003 (Mar. 19, 2008 Email from B. Lazar to D. Beltman re: “eco loss”); PX 1005 (Mar. 20, 2008 Email from L. Gamboa to D. Beltman re: “Infomacion”); PX 1007 (Mar. 20, 2008 mail from L. Gamboa to D. Beltman re: “A modest change”); PX 1008 (Mar. 21, 2008 Email from A. Maest to J. Peers and D. Beltman re: “Most recent versions of report and three annexes”); PX 1011 (Mar 22, 2008 Email from B. Powers to D. Beltman, S. Donziger, and A. Maest re: “Status?”); PX 1653 (Mar. 22, 2008 Email from D. Beltman to J. Peers, M. Carney, and A. Maest re: “TPH figures in pits, out of pits”); PX 1013 (Mar. 25, 2008 Email from D. Beltman to J. Sáenz and S. Donziger re: “new pieces”).
PX 1018 (Mar. 30, 2008 Email from S. Donziger to D. Beltman re “what do u think of this?”). The next day, Donziger emailed the chart to criscadena@ hotmail. com. PX 1020 (Mar. 31, 2008 Email from S. Donziger to ciscadena@ hotmail. com re: “chart”).
PX 1018 (Mar. 30, 2008 Email from S. Donziger to D. Beltman re: “what do u think of this?”).
The last draft of the Cabrera Report was saved on the morning of March 30, 2008.
Beltman, who was in Ecuador at the time, later recalled seeing the Report and annexes “boxed and packed up in the offices of the plaintiffs' lawyers in Ecuador ... the day before the report was filed.”
PX 1017 (Apr. 1, 2008 Email from gringograndote@ gmail. com to S. Donziger re: “Informe Final”); PX 4100 (Lynch Direct) ¶¶ 8, 15.
Tr. (Shinder) 1294:25–1295:9.
Tr. (Donziger) 2554:16–22; PX 1017 (Apr. 1, 2008 Email from gringograndote@ gmail. com to S. Donziger re: “Informe Final”).
Later that day, Cabrera—accompanied by the LAPs, their supporters, and members of the press
PX 4300X (Callejas Direct) ¶ 56.
PX 310A (Cabrera Report).
Id. at 7.
Id. at 1.
We now know, and Donziger eventually admitted,
that the Cabrera Report was not written by Cabrera. It was written almost entirely by Stratus and others working at the direction of Stratus and Donziger. Indeed, all of the damage amounts in the Cabrera Report came verbatim from Stratus' drafts.
Donziger Jan. 8, 2011 Dep. Tr. at 2433:8–14 (Cabrera “adopted pretty much verbatim what had been provided to him” by Stratus).
PX 1019 (Mar. 31, 2008 Email from S. Donziger tocriscadena @ hotmail. com) (“Table of Calculated Damages/Main Report”); Donziger Jan. 8, 2011 Dep. Tr. at 2507:24–2508:7 (“Q. That was the damage table that was going to ... appear in the Cabrera report, correct? A. I believe so. Q. And that is something that you are working on drafting as of March 30th of 2008, correct? Q. I believe so, yes.”); see also PX 976 (Feb. 26, 2008 Email from D. Beltman to M. Carney, T. Hodgson, J. Peers, A. Maest, P. Sowell, E. English, D. Mills, C. Rodgers and copying L. Cross re: “Ecuador annex schedule”) (discussing work plan to complete Report and attaching chart listing who was responsible for each annex and to whom each should be attributed).
PX 976 (Feb. 26, 2008 Email from D. Beltman to M. Carney, T. Jodgson, J. Peers, A. Maest, P. Sowell, E. English, D. Mills, C. Rodgers and copying L. Cross re: “Ecuador annex schedule”) (attaching chart listing who was responsible for each annex and to whom each should be attributed).
Immediately after the Cabrera Report was filed, Donziger, Fajardo, and their team began trumpeting it to the press as the work of an independent, court-appointed expert who had conducted his work with the assistance of an independent team of scientists. The ADF issued a press release on April 2—which Donziger had prepared before the Cabrera Report was filed—titled “Court Expert Smacks Chevron with Up To $16 billion in Damages for Polluting Indigenous Lands in Amazon.”
Another release stated that “an independent expert has proposed that Chevron pay a minimum of $7 billion and up to $16 billion.... Cabrera, the court appointee who is a respected geologist and environmental consultant, was assisted by a team of technical specialists.”
Compare PX 1023 (Apr. 1, 2008 Email from S. Donziger to J. Kohn re: “DRAFT ONLY—DO NOT SHOW TO ANYBODY”), with PX 498R, 499R (Apr. 2, 2008 Press Release).
PX 498R (Apr. 2, 2008 Press Release) (emphasis added).
PX 501 (Apr. 14, 2008 Press Release).
Two weeks after the report was filed, Fajardo gave a press conference, with Donziger at his side, in which he stated that “what scares Chevron the most, is that this independent, court-appointed expert, who doesn't ... respond to either side of the case has determined that to repair this damage it will be between seven billion and sixteen billion dollars.”
PX 2237A ( Crude Clip), at CRS 481 (emphasis added).
PX 502 (Apr. 16, 2008 Press Release).
F. Stratus Criticizes its Own Report to Enhance the False Image of Cabrera's Independence
Stratus' work was not complete the day the Cabrera Report was filed. Donziger and his team knew that Chevron would respond to the Report and that they would need to defend it. So the day after it was filed, Beltman emailed Donziger with a list of items that Stratus would be working on moving forward. Among the items he listed was to “lin[e] up some experts to review and defend the report,” to “prepare [the plaintiffs'] comments on Cabrera report to submit to the court,” and to “write report on Cabrera's report as response to Chevron's anticipated report on Cabrera's report.”
PX 1030 (Apr. 2, 2008 Email from D. Beltman to S. Donziger and A. Maest re: “List of items for moving forward”).
See, e.g., PX 1040 (June 10, 2008 A. Maest Handwritten notes re: “Ecuador Meeting”); PX 1664 (Aug. 10, 2008 Email from D. Beltman to J. Peers, A. Maest, D. Mills, D. Chapman, and J. Lipton re: “Status of Cabrera comment work”).
The goal for the LAP team's response was to create the impression that it was dissatisfied with the Report and that Cabrera had not gone far enough in assessing damages—notwithstanding the fact that the LAP team, including Stratus, itself had written it. Fajardo wrote to the team the day after the Report was filed:
“Several international agencies have called me. I have told them the following, among other things:
a. According to my cursory reading of the report: I think it is a good report, but it is incomplete. For example, the cost of groundwater clean up is not economically quantified. It does not determine what Texaco should pay for the [e]ffect on the culture of the indigenous peoples, it includes an item for recovery, but there is no item for sanctions. It does not include an estimate of the financial damage caused to the economy of rural residents, and it does not say what should be done so rural residents can recover a decent life.
b. For these reasons, the plaintiffs are waiting for the judge to give us the report, we will analyze it in depth, and we will ask the Expert to complete this report, which does not meet our expectations ...
c. The report is a step toward justice, but we are not happy because of what's missing.
.... I think it is good to maintain a uniform line, PLEASE, WE ARE NOT HAPPY ...”
PX 1028 (Apr. 2, 2008 Email from P. Fajardo to LAP team re: “GOSSIP AND SUGGESTIONS”).
On September 15, 2008, Chevron responded to the Cabrera Report. It challenged its findings, asked that the court strike the Report in its entirety and sought a hearing on errors the Report allegedly contained.
PX 311 (Chevron Sept. 15, 2008 Motion); PX 4300X (Callejas Direct) ¶ 57.
The LAPs filed their comments—which had been written by Stratus and other members of the LAP team—on September 16, 2008, the day after Chevron's response was filed.
PX 311 (Chevron Sept. 15, 2008 Motion).
PX 312 (LAPs' Comments on Cabrera Report), at 17.
Id. at 2.
This appearance of dissatisfaction with the Cabrera Report was important because it supported the false pretense that Cabrera had acted independently. It also provided a basis upon which Cabrera later could admit errors in his initial report and increase his damages assessment. Indeed, the LAP team already was preparing Cabrera's supplemental filings.
On October 7, 2008, Cabrera wrote to the Court:
“President, I am an honest man with nothing to hide, and my conduct as an expert in this case has been as professional, impartial and objective as possible, as can be seen from my expert report. The fact that neither of the two parties is fully satisfied with my report is clear evidence of my impartiality. I am therefore perfectly willing to appear before the Superior Court of Justice and answer questions or provide whatever is necessary to remove any doubts on the work carried out with a multidisciplinary and honest team.... I was appointed as expert by the President of the Superior Court of Justice of Nueva Loja; I do not take orders from either of the parties to the lawsuit.... This means, President, that I am not, nor will I be, subject to the views or whims of either of the parties; I act in accordance with rulings by the judge, with the law and with my principles.”
This of course was blatantly false and misleading. Moreover, the assertion that “neither of the two parties is fully satisfied with” the Report corroborates the conclusion that the response to the report that Stratus wrote on the LAPs' behalf—that is, Stratus' criticism of its own work product that had been submitted over Cabrera's name—was intended to feed the false impression that Cabrera had been independent. That was a key part of Donziger's strategy.
PX 299 (Oct. 8, 2008 Ltr. from R. Cabrera to Lago Agrio court), at 7–8.
In November 2008, Cabrera submitted a supplemental report, in which he purportedly responded to the comments and questions submitted by the LAPs. The supplemental report acknowledged certain omissions and added another $11 billion to the initial damages assessment in the Cabrera Report.
PX 4300X (Callejas Direct) ¶ 59.
PX 1075 (Oct. 27, 2008 Email chain between D. Beltman, A. Maest, and J. Peers re: “Ecuador, Doug-you should read this”) (“We received a request from Tania for an update on where we are in responding to a set of the questions to the [Expert] assigned to us”); PX 1668 (Oct. 29, 2008 Email from D. Beltman to J. Peers and A. Maest re: “Plan for rough estimate of groundwater damages”); PX 1078 (Oct. 31, 2008 Email from A. Maest to D. Beltman and J. Peers re: “Reinjection and gas capture questions”); PX 1080 (Nov. 6, 2008 Email from D. Beltman to S. Donziger re: “Clapp”).
Cabrera in February 2009 issued also a response to Chevron's petition. He wrote:
“Your Honor, I don't know how long I will have to keep responding to the same requests from the parties.... [M]y opinion and my clarifications are clear; they are based on field and bibliographic research, statistical analyses, laboratory analyses, and scientific commentaries which are serious, objective, and deeply impartial.... The entire expert investigation procedure was completed by me personally.”
PX 303 (Feb. 5, 2009 Ltr. from R. Cabrera to Lago Agrio court), at 1–2 (emphasis added).
There is another sidelight to the tale of the Cabrera Report.
In the course of preparing the Cabrera Report and ensuing documents, Stratus, Donziger, and the LAP team dealt not only with new material prepared by Stratus, but with material that the LAPs already had in hand from other experts they had employed. They divided some of the available material among the Cabrera Report itself, the response that Stratus prepared for Cabrera to make to the comments on the Cabrera Report submitted on behalf of the LAPs, and perhaps other documents. With so many cooks in the kitchen, there was bound to be confusion, and at least one now obvious mistake was made.
Donziger and Stratus hired Richard Clapp to prepare two reports. PX 1080 (Nov. 6, 2008 Email from D. Beltman to S. Donziger re: “Clapp”) (“[Clapp] has done two reports that I know of. A long while back, he wrote up a summary of the toxic effects of the chemicals in crude oil and drilling fluids, and it was incorporated into the expert report as an annex pretty much as is.”). One of Clapp's reports was submitted “pretty much as is” as an annex to the Cabrera Report, although it was attributed to someone else. Id. Beltman explained to Donziger that Clapp had written also another piece, which Stratus had sent to the LAP team in Ecuador, “but it did not appear in the [LAPs'] comments on the Cabrera report, which means it will probably appear in the expert's response to the comments.” Id. Beltman and Donziger were adamant, however, that Clapp's authorship of both reports remain secret. Id. (“I don't think we should hand out either one as Clapp's thereby distributing proof.”). Clapp informed Beltman and Donziger at one point that he was planning to use his initial report in a piece Donziger asked him to write. PX 1082 (Nov. 18, 2008 Email from R. Clapp to D. Beltman re: “Ecuador trip report and health summary”). Beltman immediately wrote to Donziger: “We have to talk to Clapp about that [report] and how we have to limit its distribution. It CANNOT go into the Congressional Record as being authored by him. You want to talk to him, or me?” Id. The fact that Clapp had written the annex was not revealed until years later, in discovery actions filed in the United States.
In the last analysis, the facts concerning the Cabrera Report are crystal clear. The remaining LAP judicial inspections were cancelled, the global expert proposal adopted, and Cabrera appointed in consequence of the coercion of and pressure placed upon Judge Yánez. As Donziger admitted in a Crude outtake, Judge Yánez “never would have done [that] had we not really pushed him.”
PX 2478A (June 13, 2007 Crude Clip).
Cabrera was not even remotely independent. He was recruited by Donziger. He was paid under the table out of a secret account above and beyond the legitimate court-approved payments. He was promised work on the remediation for life if the LAPs won. The LAPs gave him an office and life insurance, as well as a secretary who was a girlfriend of one of the LAP team members. Stratus and, to some extent others, wrote the overwhelming bulk of his report and his responses to Chevron's objections, as well as to the deceitful comments Stratus had written on its own report. And, in accordance with Donziger's plan to ratchet up the pressure on Chevron with a supposedly independent recommendation that Chevron be hit with a multibillion dollar judgment, he repeatedly lied to the court concerning his independence and his supposed authorship of the report.
G. Donziger's Explanation
The foregoing facts were not seriously disputed at trial. None of Fajardo, Yanza, nor Cabrera—all of whom were centrally involved—submitted to a deposition or testified at trial. Donziger, however, over time has attempted to avoid responsibility in a variety of ways including denial followed by various explanations, justifications and evasions in efforts to portray these events in a benign light. None has merit.
As will be seen, Donziger initially attempted to keep his and his confederates' role in the Cabrera episode and Report secret—even from some of his co-counsel—and vehemently denied any accusation that the LAPs had been involved in drafting the Cabrera Report. By late 2010, however, the truth of the Report's authorship had been revealed to such a degree that Donziger no longer could deny it. So he began to offer a new explanation: Stratus wrote the bulk of the report, he acknowledged, but that was acceptable under Ecuadorian law. He testified at trial: “Although I often have been confused about the issues involved,
I now believe the process used to create the executive summary of the Cabrera report was fundamentally consistent with Ecuador law, custom and practice as it was occurring in the Aguinda case. Certainly, I never understood that any actions I took or of which I was aware at the time were impermissible in Ecuador.”
The Court does not credit this claim of confusion. Donziger was the architect of all that occurred with respect to the Cabrera Report and is intimately familiar with all the details.
DX 1750 (Donziger Direct) ¶ 91.
Donziger's belated admission and explanation is incomplete and unpersuasive. It does not square with the facts. He does not explain why, for example, he went to such great lengths to keep the firm's involvement secret if he believed Stratus' drafting of the Cabrera Report was permissible. Nor does he (nor can he) square his statement that the “process used to create” the report was consistent with Ecuadorian law, custom and practice with the fact that the Lago Agrio court on multiple occasions instructed Cabrera to conduct his work impartially and independently of the parties.
On October 3, 2007, for example the court issued an order which stated that Cabrera “is hereby reminded that he is an auxiliary to the Court for purposes of providing to the process and to the Court scientific elements for determining the truth.... The Expert is responsible for the opinions, for the conclusions made by the professionals making up his team and assisting with the preparation of the report.” PX 348 (Oct. 3, 2007 Lago Agrio Court Order), at 2. And on October 22, 2007, the court issued an order stating that “Richard Cabrera[ ] is informed that he must personally prepare and work on the expert report, taking into account the scientific, technical, and legal standards of both a universal nature and those in effect here.” PX 352 (Oct. 22, 2007 Lago Agrio court Order), at 6–7.
Nor is Donziger's explanation consistent with the fact that Cabrera himself—most likely at the direction of the LAP team—wrote to the court several times to deny any coordination with the LAPs. On July 23, 2007, in response to objections by Chevron, Cabrera wrote to the court: “I should clarify that I do not have any relation or agreements with the plaintiff, and it seems to me to be an insult against me that I should be linked with the attorneys of the plaintiffs.”
In October of that year, he wrote again: “I have performed my work with absolute impartiality, honesty, transparency and professionalism. I reject the descriptions or attacks that have been leveled against me alleging that I am biased toward one of the parties, and I also reject the unfounded accusations that I am performing my work surreptitiously. That is completely untrue.”
PX 281 (July 23, 2007 Ltr. from R. Cabrera to Lago Agrio court).
PX 283 (Oct. 11, 2007 Ltr. from R. Cabrera to Lago Agrio court); see also PX 286 (Oct. 30, 2007 Ltr. from R. Cabrera to Lago Agrio court) (“I have fully and faithfully complied with the instructions you gave in each order and at the meetings that were held during the sample collection process.”).
PX 287 (Oct. 31, 2007 Ltr. from R. Cabrera to Lago Agrio court).
Indeed, the LAPs' lawyers themselves, in responding to Chevron's objections in Ecuador concerning Cabrera's independence, wrote that the objections were “based completely on the baseless concept of a ‘conspiracy’ of which there is no evidence, for this reason the [objection] is completely unfounded and must be rejected as well as sanctioned given that it was lodged for the sole purpose of damaging the Lago Agrio Plaintiffs' case and tarnishing the good name of the distinguished Superior Court of Nueva Loja.”
PX 354 (Oct. 29, 2007 Motion).
One of defendants' Ecuadorian law experts testified as follows: “Q. So if I understood you, if Cabrera received information from a U.S. firm called Stratus and the plaintiffs submitted it and he adopted it, his obligation was to say in his report ‘This information came from Stratus'? [colloquy omitted] A.... I'm being asked for an opinion that were not the subject of my [written] opinion. But nonetheless, I reaffirm if the Court-appointed expert were to incorporate information that is not his and did not expressly acknowledge that, the—the expert would be lying. And if that is proved, he would be subject to a criminal—criminal proceedings for providing false testimony.” DI 1413–12 (Albán Dep. Tr.), at 66:14–67:3. Further: “Q. For example, when the expert passes off someone else's work as his own without attributing it to the person who submitted it? [objection omitted]. A. I answered previously that the expert's silence on the true source or origin of that information would constitute false testimony.” Id. at 107:9–16.
The same expert testified that the passing off of Cabrera's ghostwritten work plan was inappropriate, DI 1400–4 (Albán Dep. Tr.), at 112:8–17, and that Cabrera's attendance at the March 3, 2007 meeting and the discussion about ghostwriting his report and keeping that information from Chevron was “irregular, arbitrary and illegal.” Id. at 126:1–16.
The Court rejects Donziger's excuses entirely. He knew at all times that his actions were wrongful and illegal.
VI. The Pressure Campaign Continues—The LAP Team Turns Up the Heat By Pressing for Indictment of Former Texaco Lawyers.
While all this was going on, political events in Ecuador took place that came to have major implications for the Lago Agrio case. The background begins with the fact that the LAPs had been concerned from the very outset of the Lago Agrio case with the possibility that the release signed by the ROE in its final agreement with Texaco would wipe out or prejudice the LAPs' claim. So in 2003, the LAPs began pressing for a criminal prosecution of Texaco lawyers based on alleged fraud in connection with the release and the conclusion of the Texaco–ROE relationship. Their purpose was plain—to force Chevron to settle the lawsuit. As Donziger wrote in his personal notebook on October 4, 2005:
“Idea to pressure the company, get major press in U.S. ... and compel the Ec govt to act against the company legally to nullify the remediation contract.”
PX 170 (Donziger Notebook).
“[t]he key issue is criminal case. Can we get that going? What does it mean? I really want to consolidate control with contract before going down a road that I think could force them to the table for a possible settlement.”
PX 172 (Donziger Notebook) (emphasis added).
The LAPs initially did not have much success. The Prosecutor General in 2006 issued a report requesting the dismissal of the charges of falsification of documents, stating that he had found no evidence to support them.
PX 252 (Order by Dr. Cecilia Armas Erazo de Tobar in Preliminary Criminal Investigation).
PX 256 (Submission by Dr. M. Vega Carrera in Preliminary Criminal Investigation No. 25–2004); PX 259 (Filing by W. Pesantez in Cause No. 25–2004); PX 26 1 (Prosecutor General's Ratification of Dismissal of Criminal Action).
PX 3000 (Reis Veiga Direct) ¶ 77; PX 258 (Filing by J. German in Preliminary Criminal Investigation No. 146–2003).
The court's action coincided with a political development in Ecuador—the 2006 election of Rafael Correa as president. President Correa's influence over the judiciary is described elsewhere. For present purposes, however, Donziger explained the fundamental change that the election had worked. The LAPs had “gone basically from a situation where we couldn't get in the door to meet many of these people in these positions [in the government] to one where they're actually asking us to come and asking what they can do ....”
PX 16A (Dec. 6, 2006 Crude Clip), at CRS 138–01.
Id.; see also PX 192 (Donziger Notebook) (“Met interim [Attorney General] with Luis [Yanza], APV [Ponce], Raul. ‘The door is always open’ he said to Luis—a far cry from the days of the protests, fighting our way into the halls of power. Think of what has happened in ten years—how we have gone from fighting on the outside of power, to being on the inside.”).
In March 2007, President Correa met with Yanza, Ponce, and others and offered “all the endorsement of the National Government to the Assembly of Affected by the oil company Texaco.”
PX 484R (Mar. 20, 2007 ROE Press Release), at 1 of 3.
“THE PREZ WAS VERY UPSET AT TEXACO. HE ASKED THE ATTORNEY GENERAL TO DO EVERYTHING NECESSARY TO WIN THE TRIAL AND THE ARBITRATION IN THE U.S.... THIS SATURDAY HE WILL REPORT ON THE MATTER ON NATIONAL TELEVISION, OFFICIALLY NOW. AT THAT TIME HE WILL CLARIFY SEVERAL POINTS IN ORDER NOT TO HURT U.S. IN THE TRIAL.”
PX 844 (Mar. 21, 2007 Email from M. Eugenia Yepez Relegado to S. Donziger re: “report”) (emphasis in original); see Tr. (Ponce) 2303:20–2304:2.
Id. (capitals in original, other emphasis added).
PX 54A (Mar. 29, 2007 Crude Clip), at CRS–221–02–CLIP–01.
A month later, President Correa boarded a helicopter with Yanza, Fajardo, and others and toured the Lago Agrio oil fields.
PX 487R (Apr. 25, 2007 ROE Press Release).
Donziger, who was in Colorado meeting with Stratus, noticed that President Correa had not mentioned the Texaco lawyers in his statement and reflected that it might be the right moment “to ask for the head of Pérez–Pallares [a Texaco lawyer who had been involved in Texaco's agreements with the ROE]—given what the President said.”
PX 489R (Apr. 26, 2007 ROE Press Release).
PX 58A (Apr. 26, 2007 Crude Clip), at CRS–268–000–CLIP–01.
President Correa took to the radio on April 28, 2007, denouncing the “homeland-selling” lawyers defending Chevron–Texaco, “who for a few dollars are capable of selling souls, homeland, family, etc,” and calling for criminal prosecution of anyone who had signed the “shameless” Final Release.
PX 853 (Apr. 28, 2007 Transcript of Correa Radio Address).
Fajardo met with President Correa again in June 2007. He reported that the president had informed him that “the current ... Prosecutor General ... is ... a little nervous. Because, since the political forces of the National Congress have changed ... he is afraid of being removed.... So, the President thinks that if we put in a little effort at the Public Prosecutors' office, the Attorney General will yield, and will re-open that investigation into the fraud of ... the contract between Texaco and the Ecuadorian Government.”
PX 75A (June 8, 2007 Crude Clip), at CRS376–03–CLIP–01.
Notwithstanding the pressure from the LAPs and President Correa, the Prosecutor General refused to re-open the case. But his refusal cost him dearly. He immediately was removed from office and replaced by Dr. Washington Pesántez—President Correa's college roommate and the district prosecutor who previously had recommended the dismissal of the criminal charges twice before.
PX 358 (Nov. 29, 2007 Official Register of the Government of Ecuador: Mandate No. 1 of the Constituent Assembly), at 3; PX 259 (Mar. 13, 2007 Filing by W. Pesantez in Cause No. 25–2004), at 10; PX 261 (Prosecutor General's Ratification of Dismissal of Criminal Action), at 12; PX 300 (Reis Veiga Direct) ¶ 96.
Fajardo reported to Donziger on March 11, 2008: “I have an appointment with the Prosecutor tomorrow morning, we are insisting that he reopen the criminal investigation against Texaco for the remediation.”
PX 992 (Mar. 11, 2008 Email from P. Fajardo to S. Donziger).
And a few weeks after that, Fajardo wrote to Donziger and members the Ecuadorian LAP team: “We received an email from Esperanza [M]artinez, Alberto Acosta's advisor .... [i]t says ‘on March 25, 2008, the investigation was reopened, with the objective of gathering new and sufficient information, if applicable, filing a criminal action.’.... This is urgent ... let's get in all possible evidence.... If things work out, our buddy Ricardo could go to jail....”
PX 1033 (Apr. 23, 2008 Email string between S. Donziger, P. Fajardo, A. Ponce, J. Sáenz, J. Prieto, and L. Yanza re: “URGENTE”).
While the LAPs were the driving force behind the criminal case, Donziger instructed his team to deny any involvement in it—and to tell the ROE officials to do the same. He wrote to the LAP team in August 2008: “We [must] explain to all the ministers and to Correa that they shouldn't say ANYTHING publicly about the case except that the government has nothing to do with it. That is key.”
PX 1058 (Aug. 11, 2008 Email from S. Donziger to LAP team re: “Problem”) (emphasis in original).
“The party line when the media or anyone else asks about the Prosecutor's case should be: ‘The criminal case against Chevron's lawyers and against public officials is not our battle. We are totally focused on winning the civil case, which has nothing to do with what the Prosecutor does....' DON'T GET IN THE BATTLE—THIS IS VERY IMPORTANT IF WE SAY THAT WE AGREE WITH THE PROSECUTOR'S OFFICE, IT COULD BE USED TO UNDERMINE THE INTERESTS OF OUR CLIENTS IN THE US.”
PX 1069 (Sept. 19, 2008 Email from S. Donziger to P. Fajardo and others re: “important suggestions about the media”) (emphasis in original).
Donziger perhaps sought to keep the team's involvement secret for an additional reason as well—he realized it could harm him personally. He later wrote to his team in a different context that “[i]n the US, threatening to file a criminal case to get an advantage in a civil case is considered a violation of ethical rules of the profession.”
PX 8058 (Jul. 18, 2010 Email from S. Donziger to J. Sáenz, J. Prieto, and P. Fajardo).
Over the ensuing years, President Correa's support for the LAP team grew more vocal. And while we jump ahead of developments in the lawsuit itself, it is useful to complete the tale of the attempted criminal prosecution of Texaco lawyers before returning to the civil litigation.
On July 4, 2009, President Correa stated in his weekly presidential radio address that he “really loathe[d] the multinationals.... Chevron–Texaco would never dare do in the United States what it did in Ecuador.”
PX 1149 (July 4, 2009 Transcript of President Correa's Weekly Radio Program).
PX 2494 (Sept. 12, 2009 Reuters Article).
On April 29, 2010, the Prosecutor General's office issued an opinion formally accusing Reis Veiga and Pérez–Pallares of the crime of falsedad ideologica.
PX 272 (Prosecutor's Office Opinion in connection with Instruccion Fiscal No. 09–2008–DRR).
Id. at 95.
PX 407 (June 1, 2011 Opinion of National Court of Justice, First Criminal Division).
It is more likely than not that this occurred because the pendency of the criminal charges had become disadvantageous to Donziger and the LAPs in U.S. litigation because it was a factor in the success of Chevron and the former Texaco lawyers in obtaining discovery here that the LAPs wished to prevent. See, e.g., Chevron Corp. v. Donziger, 11 Civ. 0691(LAK), 2013 WL 646399, at *9–10 (S.D.N.Y. Feb. 21, 2013) (describing circumstances).
President Correa's alliance with the LAPs and animosity toward Chevron did not go away with the dismissal of the criminal charges. He since has publicly attacked Chevron in multiple press releases, television and radio broadcasts, speeches, and presentations throughout the world.
E.g., PX 7511 (Aug. 17, 2013 Agence France–Presse Article ); PX 7516 (Sept. 14, 2013 Tr. of Pres. Correa Statement); PX 7518 (Sept. 16, 2013 El Telegrafo Article); PX 7519 (Sept. 17, 2013 El Telégrafo Article); PX 7520 (Sept. 21, 2013 Tr. of Pres. Correa Statement); PX 7526 (Sept. 28, 2013 Tr. of Pres. Correa Statement).
PX 853 (Apr. 28, 2007 Tr. of Pres. Correa's Weekly Radio Program).
PX 7511 (Aug. 17, 2013 Agence France–Presse Article).
PX 2503 (Feb. 19, 2011 Ultimahora Article).
VII. The Third Phase of the Lago Agrio Case—2009–2010: Evidence of the Cabrera Fraud Begins to Come Out, Kohn Leaves the Case, New Financing Is Found, and the Case Proceeds in Lago Agrio
Up to this point, this opinion has proceeded more or less chronologically. In 2009, however, important sequences of events, each with its own relevant chronology, began taking place. In order better to explain the facts, this section addresses the important sequences, each in its own chronological order. But it is important to bear in mind that everything that went on during this period—in Ecuador, the United States, and elsewhere—was interrelated.
A. Donziger's Assumption that What Happens in Ecuador, Stays in Ecuador
Relatively early in the Lago Agrio case, Donziger made a critical assumption. He assumed that Chevron never would be able to obtain evidence of what transpired in Ecuador. Evidence that he thought so appears in a June 2006 exchange he had with Atossa Soltani, head of Amazon Watch, that was recorded by the Crude film makers.
On that occasion, Donziger and Yanza—with the cameras recording every word—related to Soltani their plans for creating what they called a private army, ostensibly to protect the court against corruption, a euphemism for surrounding the court with LAP supporters to pressure it to do what they wished. For present purposes, however the important part of the conversation was this exchange between Soltani and Donziger:
“SOLTANI: Do you guys know if anybody can, uh, subpoena these videos? That is a—how do you [unintelligible]
DONZIGER: We don't have the power of subpoena in Ecuador.
SOLTANI: What about U.S.? These guys ... [referring to the film makers]
DONZIGER: An army—it's not an armed army—it's a group of people to watch over the court ...
SOLTANI: I just want you to know—I just want you to know that it's—it's illegal to conspire to break the law.”
Following a round of laughter, Donziger responded that “[n]o law's been conspired to be broken.”
PX 68A (June 6, 2007 Crude Clip), at CRS–350–04–CLIP–02.
Donziger's belief that Chevron would not be able to obtain discovery from Ecuador has proved true to a large extent. Indeed, defendants repeatedly have refused to produce documents from Ecuador, claiming that Ecuadorian law prevents them from doing so. And this in serious respects has impeded Chevron's efforts to litigate its case. But the assumption that what happens in Ecuador, stays in Ecuador fails to the extent that one hires an American film crew to capture many of his litigation-related moves over the course of three years in Ecuador and the United States. And it did not account for the fact that certain of the important players in this case—most notably the Crude film makers, Stratus, and Donziger himself—were U.S. residents and therefore subject to U.S. rules of discovery.
Beginning in 2009, Chevron began obtaining subpoenas under 28 U.S.C. § 1782 to require production of documents and testimony from persons in the United States who had relevant evidence. Thus, while defendants did not produce meaningful discovery from Ecuador, Chevron obtained some evidence of what transpired there.
B. The Release of Crude
The documentary film called Crude was made because Donziger in 2005 recruited film maker Joe Berlinger to portray the LAPs' case against Chevron.
The film featured Donziger quite prominently. Donziger provided Berlinger, cameraman Mike Bonfiglio, and other crew members expansive access to himself, his team and some of its activities for nearly the next three years.
Berlinger testified in a related proceeding that “During the summer of 2005, a charismatic American environmental lawyer named Steven Donziger knocked on my Manhattan office door. He was running a class-action lawsuit on behalf of 30,000 Ecuadorian inhabitants of the Amazon rainforest and was looking for a filmmaker to tell his clients' story.” Chevron Corp. v. Berlinger, 629 F.3d 297, 302–03 (2d Cir.2011) (quoting In re Application of Chevron Corp., 709 F.Supp.2d 283, 287 (S.D.N.Y.2010)) (emphasis omitted).
The video was shot in Ecuador and in the United States during the period approximately January 2006 through September 2008. PX 1 ( Crude Annotated Tape Log).
Tr. (Donziger) 2567:22–25.
The Crude team's independence from Donziger and the LAPs' lawyers—to the extent there was any at all—was limited.
Donziger often instructed Bonfiglio and Berlinger to stop filming when he did not like what was being said. E.g., PX 46A (Mar. 4, 2007 Crude Clip), at CRS 197–00–CLIP 3. In the months leading up to Crude's release in January 2009, Donziger and Fajardo were in close contact with Berlinger and Bonfiglio—to discuss budgeting, to coordinate press strategy, and to ensure that the film makers and the LAP team were putting forth the same message. Donziger wrote to Bonfiglio that “there will be certain questions asked of us that you might want to advise us on how to position—such as funding sources, questions of bias, etc. [W]e need to show independence from each other but we should be on the same page as to how that will play out.” PX 1090 (Dec. 23, 2008 Email from S. Donziger to M. Bonfiglio).
PX 203 (Donziger Notebook).
PX 4900 (Dahlberg Direct) ¶ 97.
Nonetheless, just as they had done with Cabrera, Donziger and his team attempted to create the appearance that the film was independent, while they controlled or influenced its content from behind the scenes. Ironically, this ultimately contributed to the “outing” of their true role with respect to Cabrera.
In December 2008—one month before Crude first was exhibited—Donziger received a director's cut of the film.
One scene showed Dr. Carlos Beristain—a member of Cabrera's supposedly neutral staff—working directly with the LAPs and their lawyers, including Donziger. Donziger requested that Berlinger delete the Beristain images and other material.
Donziger Dec. 22, 2010 Dep. Tr. at 1569:16–19; PX 2465 (Dec. 13, 2008 Email from S. Donziger to A. Woods re: “tell me what u think of this”). Donziger testified that he sent this list also to Berlinger. Donziger Dec. 22, 2010 Dep. Tr. at 1570:21–1571:5.
Fajardo made the same request to Bonfiglio, emphasizing that if the scene with Beristain were left in the film, “the entire case will simply fall apart on us.... Those two guys [Beristain and Adolfo Maldonado, another supposed neutral] must not appear in the documentary at all! Please, remove them from it. It really isn't much, but it can complicate the entire case for us.”
Donziger Dec. 22, 2010 Dep. Tr. at 1571:6–1572:2. The list included also a note that the film's “scene of me [Donziger] telling Trudie [Styler] to only use Texaco is gratuitous and not necessary.” PX 2465 (Dec. 13, 2008 Email from S. Donziger to A. Woods re: “tell me what u think of this”).
PX 1091 (Dec. 25, 2008 Email from P. Fajardo to M. Bonfiglio).
Berlinger and Bonfiglio initially did not comply, and the film—with the Beristain scene—was shown at a film festival.
PX 1097 (Jan. 22, 2009 Email from P. Fajardo to M. Bonfiglio).
PX 1097 (Jan. 22, 2009 Email from J. Berlinger to M. Bonfiglio and A. Spiegel).
The deleted images seemed to Chevron to confirm its suspicion that Cabrera had been neither neutral nor independent. Parenthetically, the attempt to have them removed evidenced the Donziger and Fajardo's awareness that their relationship with Cabrera and his staff had been improper and, indeed, could prove fatal to the Lago Agrio case. As Fajardo wrote, “we could lose everything.”
C. The Section 1782 Proceedings
1. The Section 1782 Action Against Stratus—Denver Counsel Withdraw and Donziger and Fajardo Seek to Obstruct Justice Before the Federal Court
In December 2009, Chevron brought a Section 1782 proceeding against Stratus and related individuals in the District of Colorado.
It argued that discovery was appropriate because similarities between the Cabrera Report and documents published by people working with Stratus, as well as documents produced by Stratus in a mediation proceeding, suggested that Stratus had written all or at least part of the Cabrera Report.
Chevron v. Stratus Consulting, Inc., No. 10 Civ. 00047 (D.Colo.).
Id., DI 2 (Chevron Corp. Mem. in Support of § 1782 App lication), at 8 & n. 7.
Realizing that disclosure of Stratus' documents would reveal the LAP team's relationship with Cabrera, the LAPs' lawyers immediately sought to (1) prevent Chevron from obtaining discovery from Stratus, and (2) minimize the effects of any discovery that it might obtain.
a. Donziger Retains U.S. Counsel to Represent the LAPs in Denver
Shortly after Chevron filed the Colorado Section 1782 action against Stratus, Donziger retained attorneys John McDermott of Denver firm Brownstein Hyatt Faber Schreck, LLP, and Jeffrey Shinder of the New York City-based Constantine Cannon firm as counsel for the LAPs to oppose the Section 1782 petition.
PX 1213 (Jan. 23, 2010 Email from S. Donziger to J. Shinder); PX 2356 (Feb. 26, 2010 Email from E. Engelhart to S. Donziger re: “Chevron petition”) (attaching draft engagement letter); Donziger Dec. 29, 2010 Dep. Tr. at 2353:17–2354:21, 2381:15–18.
Tr. (Shinder) 1262:2–9; PX 7608 (Jan. 19, 2010 Email from S. Donziger to J. McDermott), at 14; PX 1241 (Mar. 5, 2010 Email from S. Donziger to J. Shinder), at 2 of 4 (“selection of Cabrera was made independently by the court,” “Cabrera conducted dozens of independent site inspections and lab analyses”).
“the purported independence of the expert [Cabrera] was important in our [ i.e., his and Donziger's] conversations. It was of obvious significance. It was of significance to me in evaluating the possibility of being enforcement counsel that the process had integrity and it was the kind of process that would withstand scrutiny should we take that judgment and try to enforce it in an American court, and that the expert was supposedly independent and had done a review of the evidence that had procedural integrity was consequential and something we discussed.”
So, before agreeing to represent the LAPs, Shinder wanted to know if anything Chevron had alleged in its Section 1782 application was true. He met with Donziger in New York City in January 2010 to discuss the proceeding and his potential retention.
Tr. (Shinder) 1262:14–23.
Shinder observed that Donziger was “worried, borderline sort of panicked over” the 1782 proceeding.
“[‘]Steven, what am I going to find?[’] I need access to the facts. [Donziger] denied [Chevron's] allegations. And the facts as he portrayed them to me were that Chevron was trumping up this allegation that Stratus had essentially ghostwritten the Cabrera report by sort of drawing improper inferences from materials that had been properly submitted to Mr. Cabrera through the process in Ecuador, that Cabrera had independently taken in those materials, and independently chose to incorporate them into his report.... I had been told that there was no, quote unquote, relationship between Stratus and Mr. Cabrera. That to the extent there were any similarities between the Cabrera report and work that Stratus had done, that that was the result of Mr. Cabrera's independent judgment....”
A few weeks after their New York meeting, Donziger sent Shinder a list of “responses to allegations that Chevron was making against the Lago Agrio plaintiffs and in, particular, Cabrera and his report.”
Id. 1275:5–7; PX 1224 (Feb. 9, 2010 Email from S. Donziger to J. Shinder re: “interested in your thoughts”).
PX 1224 (Feb. 9, 2010 Email from S. Donziger to J. Shinder re: “interested in your thoughts”).
“Fact: The Amazon Defense Coalition (ADC) [ i.e., the ADF] has never made any payments to Dr. Cabrera, or any other court official, beyond what has been required by court under Ecuadorian procedural rules to satisfy the costs of the trial....
Fact: The Cabrera report is an independent review and assessment of the voluminous evidence in the case. Some small analyses provided by the parties through regular court procedures were adopted by Cabrera after his own independent assessment determined they were technically sound and consistent with the evidence. This process is entirely proper, routine, and consistent with the practice of judges and experts in the United States and other countries....
Fact: Representatives of the ADC never conducted Dr. Cabrera's field work or prepared samples for him. During the course of Dr. Cabrera's site assessments both sides were allowed to observe his work and suggest places for his team to sample for evidence of contamination....”
These assertions were false or misleading. The LAPs did pay Cabrera outside the court process via the ADF secret account.
Cabrera was not independent. And the LAP team, through Stratus, performed all or much of “his” work. But Shinder did not know any of that at the time. He relied on Donziger's representations that Cabrera had been independent and neutral. He did, however, ask Donziger about the “small analyses” that apparently had been provided to Cabrera by the parties.
Amazon Defense Coalition seems to have been used interchangeably with Amazon Defense Front in references to the Frente de la Defensa de la Amazonia. E.g., PX 2389R (Hugo Camacho Naranjo's Objections and Responses to Chevron Corps' First Set of Requests for Prod. of Documents) ¶ 31; PX 700 Defin. 5; PX 1504 (included papers).
Donziger told him that the LAPs had provided to Cabrera “approximately 3,000–plus pages of documents ... [c]onsistent with the process that had been set up, that the court had approved, both parties had an opportunity to submit materials to Cabrera, and the plaintiffs had properly availed themselves of that opportunity and sent 3,000–plus pages to Cabrera.”
Tr. (Shinder) 1276:2–11.
Tr. (Shinder) 1276:4–10; see also PX 1244 (Mar. 8, 2010 Email from S. Donziger to J. Shinder and L. Minnetto) (“With respect to the Stratus documents ... we have determined that a package of material (approx. 3,000 pages) was submitted by local counsel to the court in early 2008 in response to a court order asking both parties to turn over any materials they thought might assist Cabrera in carrying out his mandate. While we do not know (yet) precisely what documents may have been submitted, all documents would only have been submitted directly to Cabrera to assist him in preparation of his report....”).
Tr. (Shinder) 1276:12–15.
b. Beltman Discloses the Truth to Shinder—Denver Counsel Withdraw
Nonetheless, relying on Donziger's representations about Cabrera's independence and the propriety of the Report, Shinder entered into a retention agreement with Donziger and the LAPs and set to work.
PX 1255 (Mar. 15, 2010 Email from A. Woods to L. Minnetto, J. Shinder, and S. Donziger) (attaching retention agreement).
Tr. (Shinder) 1285:12–22.
“need[ed] every minute of the two hours to interview him. I had sort of accumulated some sense during the day, although it was incomplete, and certainly paled in comparison with what I heard from Mr. Beltman, that Stratus's involvement in the Cabrera report was much deeper and much more problematic than had been characterized to me. I approached the interview in a way, I wanted to maintain a kind of collegial, conversational tone so Mr. Beltman and I could develop a good rapport, which I think was achieved. I asked him a lot of detailed follow-ups, contextual follow-ups on things, a lot of questions about his time in Ecuador, how he met Mr. Cabrera, Stratus's work in terms of what they were doing on the case. And over time and the climax, if you will, it was about an hour and 45 minutes in, it became a very forthcoming interview, and about an hour and 45 minutes in he essentially, quite explicitly ... admitted to having written significant portions of the Cabrera report.”
And once “the truth came out ... there were additional ... lurid details that [Beltman] admitted to, such as Stratus had essentially ... ghostwritten the Cabrera report, then Stratus acting as experts for the plaintiffs wrote comments to their own work, and then wrote the Cabrera report's responses to their own comments.”
Id. 1288:6–1292:7 (emphasis added).
The testimony of Shinder, Donziger, Stratus attorney Martin Beier, and Beltman conflicted as to whether Donziger was present during this meeting. See DX 1750 (Donziger Direct) ¶ 104 (not present); Donziger Jan. 29, 2011 Dep. Tr. at 3639:4–8 (same); Beier Dep. Tr. at 83:1–4 (meeting included Beltman, Beier, Shinder, Page); id. at 90:7–11 (meeting included “Jeff Shinder, Doug Beltman, Aaron Marr Page, Joe Silver. At the very beginning, possibly before the meeting formally convened, Steven Donziger was there. But he left and was not present during the interview”); Beltman Oct. 6, 2010 Dep. Tr. at 383:20–21 (Donziger present).
The Court finds that he was not.
The following day, Shinder spoke with his firm's ethics counsel and one of the managing partners. They “agreed that the firm could not continue to represent Mr. Donziger and the Lago Agrio plaintiffs.”
Tr. (Shinder) 1298:1–4.
He told Donziger that he “thought that to the extent there was an underlying case to be made regarding the environmental damage in Ecuador, that the conduct that I learned had irretrievably wounded it, that it could not rely on the Cabrera report since it was not independent, and I was not his lawyer anymore, so I wasn't going to counsel him on what, if anything, to do to try to fix the situation, but it bothered me, and it still bothers me, that we'll never know whether or not there was a case to be made against Chevron.”
Id. 1298:21–1299:4; PX 1262 (Mar. 19, 2010 Email from J. Shinder to S. Donziger re: “Constantine Cannon Withdrawal”).
The Brownstein firm withdrew as well. After Shinder's withdrawal, John McDermott of the Brownstein firm asked to speak with him. Donziger gave Shinder permission to speak to McDermott and told Shinder he could be fully forthcoming about reasons for his withdrawal. PX 1264 (Mar. 19, 2010 Email chain Between J. Shinder and S. Donziger); Tr. (Shinder) 1301:15–25. Shinder spoke with McDermott two or three days later, and informed him of what Shinder had learned during his interview with Beltman. Id. at 1302:10–1303:1. On March 21, 2010, the Brownstein law firm withdrew as well. PX 1269 (Mar. 21, 2010 Email from J. McDermott to S. Donziger re: “ Chevron v. Stratus ”). McDermott wrote to Donziger: “Based upon what we have learned regarding Stratus and Cabrera, including the troubling information we gathered in our call with you and Andrew [Woods] and conversations with Jeff Shinder, and our as yet unresolved questions regarding Ecuadorian laws of privilege or confidentiality of materials submitted to the court, we are in an untenable position.” Id.
Donziger fully understood the significance of Beltman's revelations given the falsehoods Donziger and his LAP team repeatedly had told about Cabrera and his report. The very next day he wrote a second of his infrequent memos to “file” that purported to describe the recent withdrawals of counsel.
PX 1270 (Mar. 22, 2010 S. Donziger memo to file re: “Denver action/ethical issues”).
He wrote that “[w]hile Shinder noted that it was not unusual for court experts to adopt factual findings of the parties, he thought Beltman described a much broader role where Stratus was preparing materials in conjunction with local Ecuadorian counsel to be used and/or adopted by Cabrera in his report.” The memo went on to state that Shinder had “made these conclusions without being aware of various court orders in Ecuador asking for the parties to turn over materials to Cabrera to assist him in the preparation of his report, or being aware generally that the parties in the Ecuador litigation ... generally work very closely with the parties.” Id. It claimed also that Donziger was “unclear whether the facts a[s] described by Beltman would be considered acceptable or improper by an Ecuadorian court .... [and] whether the role of Stratus was consistent with Ecuadorian rules and procedures, per representations by local counsel.” Id. In fact, however, there were no such uncertainties in Donziger's mind. He had chosen Cabrera for the global expert position because Cabrera would cooperate with the LAPs. He and Fajardo procured his appointment by coercing Judge Yánez. They had caused Stratus to write all or most of his report and then falsely passed that report off—both to the court and to the world press—as the independent work of a neutral, court-selected expert. The Court finds that he had no illusions about the impropriety of what he and his colleagues had done.
“The traditional Ecuadorian law perspective (which will be asserted by Chevron) would hold that the level of collaboration between one party and the expert is problematic and improper in that all court-appointed experts in Ecuador should be independent. By working so closely with our local counsel and Stratus, Cabrera violated his duties to the court. Under this perspective, treating Cabrera like a U.S.-style expert as we did [and even that is questionable] will be seen as a violation of local court rules. Whether the court will see these facts as no big deal, improper, some sort of procedural defect that can be corrected, or (as the [Chevron] lawyers will surely assert) a fraud is uncertain. Our side believes we can weather the storm with good advocacy in both the court and the media, in Ecuador and in the U.S. However, it was not lost on us that our local counsel seemed concerned about how the information would land in Ecuador and what impact it would have on the case, and to them personally. They fully expect that Chevron would refer the information to the national prosecutor for action.”
PX 1291 (Donziger Memo to “Fellow Counsel”).
“that given the customs and practices of the Aguinda case, nothing improper happened. The information in the Cabrera report is sound, and is consistent with the high quality of work that Stratus has done as a world class environmental consultancy. As you know, all of the court appointed experts in the judicial inspections have been working closely with the parties in one form or another for several years with full knowledge of the court, and Cabrera was no different. Chevron's experts, including U.S. citizens appointed by the judge at Chevron's request were working with Chevron's counsel. Even though Cabrera was not an expert put forth by the parties, given that the plaintiffs unilaterally sought the global expert report and are paying him, that Chevron boycotted the process, and that the court ordered the parties to turn over materials to Cabrera and otherwise assist him then the role of local counsel and Stratus was well within our rights and custom under the rules and practices of the Aguinda case as they had evolved since its inception almost seven years ago.”
And this indeed was essentially the position that Donziger took at trial, where he argued that his belief in the second “perspective” justified the LAP team's actions with respect to Cabrera. He contended also that, while he was unsure at the time, he now believes “the process used to create the executive summary of the Cabrera report was fundamentally consistent with Ecuador law....”
DX 1750 (Donziger Direct) ¶ 91.
Donziger's attempt to cover himself in his memo by reference to “another perspective,” and his comparable position at this trial, are fabrications and unpersuasive even in their own terms. They are fabrications because he received no alternative perspective from local counsel, identified or otherwise.
They are fabrications because no “customs and practices of the Aguinda case,” even if there had been any comparable practices, could have justified what was done with Cabrera. If similar things were done with comparable experts, they all were wrongful; their acceptability did not improve with the volume of misconduct. They are fabrications because there were no comparable practices. Yes, lawyers work with their own experts, both here and probably in Ecuador. That is accepted because everyone knows that party-nominated experts are selected and paid by their clients. That built-in bias is above board and considered in evaluating the testimony of party-paid experts.
Fajardo understood that the collusion between the LAP team and Stratus on the one hand and Cabrera on the other, not to mention the manner in which Cabrera was appointed and paid, was improper. As we have seen, he implored Bonfiglio and Berlinger to remove the images of Beristain and Maldonado from Crude precisely because the presence of those images could lead to discovery of what really had happened. And he was under no illusion that there was any benign explanation for that. He told Bonfiglio that if the images of Beristain and Maldonado were left in the film, “the entire case will simply fall apart on us.... Those two guys [Beristain and Adolfo Maldonado, another supposed neutral] must not appear in the documentary at all!” PX 1091 (Dec. 25, 2008 Email from P. Fajardo to M. Bonfiglio). He explained that the images were “so serious that we could lose everything....” PX 1097 (Jan. 22, 2009 Email from P. Fajardo to M. Bonfiglio).
As we will see momentarily, Prieto and other lawyers in the LAPs' Ecuador office were even more aware of the improprieties that had been committed.
But Cabrera was a court-appointed expert, sworn to be independent and impartial. And Donziger fully understood that Cabrera was neither independent nor impartial—Donziger was personally responsible for making sure that he was neither and for having him paid under the table, above and beyond the open, court-approved payments. Moreover, it was Donziger who decided to ghostwrite the Cabrera Report using his own paid consultants and to hide and misrepresent the facts concerning the Cabrera–Stratus–LAP relationship.
There is only one respect in which Cabrera was even arguably comparable to a party-nominated expert in either country. Although he was court-appointed, the LAPs were responsible for providing the Court with funds to pay him through an open process described above. The secret payments, however, were improper.
In sum, Donziger knew at every step that what he and the LAP team did with Cabrera was wrong, deceptive, and illegal.
c. Fajardo Submits a Misleading Affidavit in Denver and Elsewhere
The District of Colorado granted Chevron's Section 1782 application for the issuance of a subpoena on March 4, 2010.
Chevron v. Stratus Consulting, Inc., No. 10 Civ. 00047 (D.Colo.), DI 22.
PX 1279 (Mar. 30, 2010 Email from J. Prieto to S. Donziger, P. Fajardo, L. Yanza, and J. Sáenz).
“Today Pablo [Fajardo] and Luis [Yanza] were kind enough to tell us what was going on in Denver, and the fact that certainly ALL will be made public, including correspondence.... Apparently this is normal in the U.S. and there is no risk there, but the problem, my friend, is that the effects are potentially devastating in Ecuador (apart from destroying the proceeding, all of us, your attorneys, might go to jail), and we are not willing to minimize our concern and to sit to wait for whatever happens. For us it is NOT acceptable for the correspondence, the e-mails, between Stratus and Juanpa [Sáenz] and myself to be divulged.”
Thus, Prieto recognized that the disclosure of Stratus' documents would reveal what actually had gone on between Cabrera and the LAPs, that this disclosure would “destroy[ ] the [Lago Agrio] proceeding,” and that “all of us, your attorneys, might go to jail.” Nor was he alone in this view—Brian Parker, then an intern at the Selva Viva office, was told by other lawyers working on the case that the Cabrera Report “would be worth zilch” and that Donziger “might get in trouble or lose his license.”
Id. (emphasis added).
Parker Dep. Tr. at 136:1–5.
Donziger much later tried to put a very different spin on Prieto's “go-to-jail” email. We conclude below that his attempt was untruthful. Infra Facts § XI.A.3.b.iii.
Prieto had reason to worry. Less than a month after the District of Colorado granted Chevron's Section 1782 application against Stratus, Chevron filed a 1782 application against Berlinger (the “ Crude 1782”), seeking the issuance of subpoenas for the outtakes from the Crude film.
More will be said on the Crude 1782 below. For present purposes it is important to note only that, even with production from Stratus imminent, this filing created the added possibility that Chevron would obtain footage of Cabrera and members of his team working directly with members of the LAP team.
In re Chevron Corp., 10 MC 1(LAK) (S.D.N.Y.), DI 1 (filed Apr. 9, 2010).
The LAP team quickly developed a plan to “cleanse” the Cabrera Report in Ecuador—that is, to provide an alternative evidentiary basis for the Lago Agrio case against the possibility that the Cabrera Report would be stricken or discredited or be relied upon as evidence of fraud in a foreign court where the LAPs would seek enforcement of any favorable judgment. The idea was to have a new expert or experts repackage, or cleanse, the Cabrera Report. But the LAPs needed to delay the Section 1782 proceeding in Denver as long as possible in order to do that. So, a month after the District of Colorado granted Chevron's Section 1782 petition, the LAPs filed a motion for a protective order with respect to the subpoena. They claimed that the subpoenaed documents and testimony were protected from disclosure by the attorney-client privilege and work product protection.
Chevron v. Stratus Consulting, Inc., No. 10 Civ. 00047 (D.Colo.), DI 68.
Id. DI 99 (filed May 5, 2010).
The Fajardo Declaration purported to explain to the Denver court what had happened with the Cabrera Report and that it was acceptable under Ecuadorian law. The LAPs' American lawyers debated what the affidavit should reveal and whether Fajardo should be the one to sign it. When a lawyer from Patton Boggs—a firm that had been brought on by the LAPs in early 2010 and the involvement of which will be discussed more fully below—circulated a draft of the affidavit to Donziger and other lawyers on May 3, 2010, one lawyer from Emery Celli Brinckerhoff & Abady, LLC, which also represented the LAPs, responded:
“I don't quite get the purpose of this affidavit. Pablo mentions one document submission [to Cabrera] but not the other. If he's submitting an affidavit about what happened, why omit the most important part? It seems misleading at best. I just don't see how he can sign an aff. that documents his submissions to Cabrera without mentioning that he sent documents that originated from Stratus which is the one thing the judge is going to want to know.... [And] I wouldn't emphasize too much that Cabrera was independent and court-appointed. Once [Fajardo] says that in an American court, we'll never be able to back off from it.”
PX 1319 (May 3, 2010 Email from I. Maazel to others) (emphasis added).
Another LAP American lawyer expressed his concern that Fajardo might “be subject to deposition[.] This is why we struggled with who would sign the declaration. If Steve [Donziger] signs, he will most certainly be deposed. Same for any other counsel in the US. We figured that with [Fajardo], they likely would not slow down the process by deposing him.”
PX 1316 (May 3, 2010 Email from E. Westenberger to others).
The Fajardo Declaration that ultimately was filed gave an anodyne description of the process by which the judicial inspections had been terminated, the global expert proposal adopted, and Cabrera in particular selected. It stated that “[i]n addition to the information collected from the vast amount of field inspections he performed, Mr. Cabrera was also free to consider materials submitted to him by the parties. Both plaintiffs and Chevron were asked to supply Mr. Cabrera with documents.”
It stated also that “to the extent that Mr. Cabrera put into his report any of the information that [Fajardo] supplied to him, it would be viewable by Chevron or any other member of the public that reviewed Mr. Cabrera's Report.”
PX 1326 (Fajardo Decl.) ¶ 16.
Id. ¶ 19.
The Fajardo Declaration was highly misleading. It failed to mention that Fajardo, with Donziger's approval, had threatened the judge with a misconduct complaint unless the judge agreed to their demands to cancel the LAPs' remaining judicial inspections. And while it acknowledged that the LAPs had “delivered materials to Mr. Cabrera,”
it did not mention the March 3, 2007 meeting at which the LAPs laid out the plan for Cabrera's Report and indicated, in Cabrera's presence, that the work would be done by them. Nor did it reveal that Stratus and the LAPs' counsel in fact had written most of the Cabrera Report. In other words, it omitted what the Emery Celli lawyer said was “the most important part”—that Fajardo “sent documents that originated from Stratus.”
Id. ¶ 18.
PX 1319 (May 3, 2010 Email from I. Maazel to S. Donziger, E. Westenberger, A. Wilson, E. Yennock, J. Abady, E. Daleo, and J. Rockwell re: “Draft Affidavit”).
PX 883 (July 17, 2007 Email from S. Donziger to L. Yanza and P. Fajardo).
Notwithstanding the Fajardo Declaration, the District of Colorado denied the LAPs' motion for a protective order and ordered Stratus to turn over its documents.
Following the ruling, however, the LAP team—including Donziger—brainstormed ways to delay further the production of Stratus' documents and, realizing that production was inevitable, to mitigate its effects. One of the LAPs' American lawyers sent an email to the LAP team emphasizing that “Stratus will be under a court order to produce all materials it gave Cabrera. Stratus will not risk a contempt motion, it will comply. Unless we want the Stratus/Cabrera revelation to come out in CO, which seems like the worst possible place, we need to make our submission in Ecuador and fast.”
Another lawyer responded, “[w]hat about the following? Appeal; move for stay; if we win with [the District of Colorado] great; if we lose, we produce whatever we want (narrow read); [Gibson Dunn] complains and then we move for clarification. If we lose again, we think about another appeal.”
PX 1363 (May 27, 2010 Email chain Between S. Donziger and Patton Boggs Attorneys re: “Mini-revelation”).
The “submission in Ecuador” to which the lawyer referred was a petition the American legal team had been drafting and planned to file—in Fajardo's name—in the Lago Agrio court (the “Fajardo Petition”).
PX 384 (Fajardo Petition).
PX 1382 (June 20, 2010 Email from S. Donziger to U.S. lawyers re: “important update on Ecuador submission”), at 2–3.
PX 384 (Fajardo Petition).
PX 1371 (June 14, 2010 Email from J. Abady to U.S. lawyers re: “Current Thinking on Ecuadorian Submission”).
PX 384 (Fajardo Petition), at 6–7.
It thus went farther than the Fajardo Declaration filed in Denver. But that too was deceptive. There was no disclosure of the fact that Cabrera was handpicked by Donziger because he would cooperate with the LAPs, that the report was planned and written by the LAPs and Stratus, and that Cabrera “play [ed] ball” by simply affixing his name to it, acting all the while under the false pretense—fostered by the LAPs—that the report was Cabrera's independent work.
Nonetheless, the LAPs later told U.S. courts that, in filing the Fajardo Petition, they had “fully disclosed” their relationship with Cabrera. The LAPs filed the Petition twice in this Court and once in the Second Circuit.
PX 2514 (filing in Second Circuit); PX 2515 (filing in 10–MC–00001); PX 2516 (filing in 10–MC–00002).
2. The New York 1782 Proceedings—Berlinger and Donziger
Following the start of the Stratus 1782 proceeding, Chevron brought two more Section 1782 actions in New York.
The first was against Berlinger. It sought, among other things, production of the out takes—the video shot in connection with the making of Crude that was not included in the film.
The other Section 1782 proceeding brought in New York was against Donziger. It sought to compel production of documentary evidence and testimony. Although Donziger and the LAPs resisted fiercely, this Court ordered the requested discovery, and the Court of Appeals affirmed.
3. The LAP Team Sought to Deceive This Court in the Berlinger 1782 Proceeding
The LAPs filed the misleading Fajardo Declaration in fifteen Section 1782 proceedings in courts across the United States, including this one.
See PX 1326–1340, 2479 (Fajardo Decls.).
As noted, Chevron filed the Crude 1782 petition on April 9, 2010. Five days later, Donziger prepared his draft letter to “fellow counsel,” in which he admitted that the LAP team's contacts with Cabrera violated the “traditional Ecuadorian law perspective.”
PX 1291 (Donziger Draft Letter to “Fellow Counsel”).
On April 23, 2010, the LAP team filed its opposition to the Crude 1782, describing the Beristain meeting with Donziger as an “innocuous meeting, which is of no relevance to anything....”
This, of course, was untrue. As discussed, Fajardo had emailed Berlinger and Bonfiglio shortly after the film first was exhibited, explaining that the presence of the images of Beristain and Maldonado were “so serious that we can lose everything”
In re Chevron Corp., 10 MC 00001(LAK), DI 24 (filed May 13, 2010), at 8.
PX 2454 (Aug. 3, 2010 Email between S. Donziger and J. Berlinger re: “GRACIAS”).
But at a hearing on April 30, 2010, counsel for the LAPs repeated this falsehood. He told the Court that Chevron's application for production of the out takes was “frivolous” because the meeting with Beristain was “unimportant,” akin to a group of New York lawyers attending a party together.
PX 1090 (Dec. 25, 2008 Email from P. Fajardo to M. Bonfiglio).
In re Chevron Corp., 10 MC 00001(LAK) (S.D.N.Y. Apr. 30, 2010), Hr'g Tr. 39:16–20; 40:20–23.
Notwithstanding the LAPs' misrepresentations, the Court granted Chevron's application for discovery from Berlinger on May 6, 2010 and was affirmed on appeal. Berlinger produced 600 hours of raw footage to Chevron. The out takes included footage of the LAP team's March 3 meeting with Cabrera, scenes of the LAPs' representatives—including Donziger—meeting ex parte with Ecuadorian judges
and lengthy statements by Donziger in which he expressed his highly critical view of the Ecuadorian judicial system. Some of these scenes have been discussed already and some will be mentioned below. It is important to note here, however, that the revelation of these scenes came at around the same time Stratus began producing documents to Chevron. Donziger and his co-counsel knew by then that they could no longer deny what had happened with Cabrera, and they knew they had to figure out a way to salvage their case.
See PX 1 ( Crude Annotated Tape Log).
But before we get to that, there is another story that must be told. The full extent of the LAPs' contacts with Cabrera threatened to surface even before the Section 1782 applications were filed. And Chevron's allegations were causing serious strife within the LAP team between those who always were aware of the truth underlying the Cabrera Report (Donziger, Fajardo, Yanza, and others) and those who intentionally were kept in the dark, most significantly, Joseph Kohn.
D. Donziger Deceives Kohn, Refuses His Demand for an Investigation of the Facts With Respect to Cabrera, and Precipitates a Final Break
As far as Donziger was concerned, Kohn's role in the Lago Agrio case was to pay for it. Kohn largely acquiesced for years; he was not involved in the day-to-day decisions and actions and relied on Donziger to keep him apprised of important events. Donziger, however, was selective with what he told Kohn and when he told him, and he actively misled him in important respects. This led to a break in relations and is important for several reasons.
First, Donziger misled Kohn, his financial backer and supposed co-counsel, concerning the Cabrera Report and related matters. This demonstrates his full awareness that what transpired between and among Donziger, the LAP Ecuadorian lawyers, Cabrera and Stratus had been highly improper. It is further evidence that Donziger's claim that he believed otherwise is untrue.
Second, the manner in which Donziger dealt with Kohn further confirms that Donziger was in entire control of the Lago Agrio case and all related activities.
Third, the break in relations between Donziger and Kohn resulted in the loss of Donziger's principal financial backer and led to the search for another. That search in turn quite possibly resulted in still further deception of a financing source and led to the appearance on the scene of Patton Boggs LLP.
1. Donziger Misrepresented to and Concealed From Kohn Important Information Regarding Cabrera and Stratus
As discussed previously, Donziger and Kohn formally retained Stratus in the spring of 2007.
Kohn, in accordance with the Stratus contract, understood “that materials prepared by Stratus on behalf of the Ecuadoran plaintiffs would be ‘for submittal to the court,’ on the record, and that the global damages expert would then review and consider whether to accept, or reject, or rely upon in some way any or all of Stratus's findings in his own report.”
PX 5600 (Kohn Direct) ¶ 29; PX 633 (Aug. 20, 2007 Stratus Contract), at 1–9.
But he was kept in the dark about most of what was important regarding Cabrera—the LAPs' role in selecting him, securing his appointment, and ensuring that he would cooperate with them—and about Stratus' true role.
PX 5600 (Kohn Direct) ¶ 29 (quoting PX 633 (Aug. 20, 2007 Stratus Contract)).
Kohn and Donziger did agree in the spring of 2006 that “it would be best to limit or end the judicial inspections and move onto the second evidence-gathering phase of the litigation: the global damages expert report and final submissions.”
But Donziger did not tell Kohn that Donziger and “his Ecuadoran co-counsel vetted candidates to be the global damages expert prior to the court ordering the end of judicial inspections and the beginning of the court expert phase of trial. [Kohn] was not aware that Fernando Reyes was one of the candidates Mr. Donziger and his Ecuadoran co-counsel vetted. [He] was not aware that Fernando Reyes suggested to Mr. Donziger that he choose Mr. Cabrera to be the court expert.”
Id. ¶ 27.
Id. ¶ 73.
Nor did Donziger inform Kohn that Donziger, the Ecuadorian LAP lawyers, and their U.S. technical consultants met with Cabrera on March 3, 2007 to plan out Cabrera's “work.”
Id. ¶ 74.
Indeed, Kohn believed—based on statements by Donziger—that “at all times, the Ecuadoran plaintiffs' consultants' materials were being submitted publicly to the Ecuadoran court through a proper, legal process consistent with Ecuadoran law.”
Id. ¶ 31 (Kohn “did not review drafts of Stratus' work being submitted in Ecuador. [He did] not recall reviewing any draft documents beginning with ‘I, Richard Cabrera.’ [He] was not involved in any discussions about Stratus's work being attributed to Mr. Cabrera or otherwise being used in a non-transparent manner.”).
Kohn did learn that, “[e]ven before the Cabrera Report was filed in 2008, Chevron representatives began suggesting that Mr. Cabrera was not an independent expert. [Kohn] raised these allegations with Mr. Donziger on several occasions. [But] Mr. Donziger consistently denied [that] there was anything improper in connection with Mr. Cabrera, or that there was any basis for Chevron's allegations that Mr. Cabrera was not independent.”
Id. ¶ 50.
After the Cabrera Report was filed, Donziger continued to deceive Kohn regarding Stratus' role and the propriety of the LAP team's collaboration with Cabrera. In the days following the issuance of the Report, Donziger sent to Kohn several press releases, some in draft form, all of which referred to Cabrera as an “independent” expert.”
And while Kohn was aware that Cabrera filed a second, supplemental report that increased his damages estimate by $11 billion, Donziger did not disclose to Kohn that Stratus had written the supplemental report.
PX 1023 (Apr. 1, 2008 Email from S. Donziger to J. Kohn); PX 1032 (Apr. 4, 2008 Email from S. Donziger to J. Kohn).
PX 5600 (Kohn Direct) ¶ 33.
2. Donziger Deceives Kohn About the “Secret” Account
While he was misleading Kohn about the Cabrera operation, Donziger and other members of the LAP team continued to pump him for money. “[B]etween June 2005 and November 2009, KSG [the Kohn firm] made approximately 51 separate wire transfers from [its] U.S. bank account to [Selva Viva's primary account at] Banco Pichincha ... in amounts ranging from $10,000 to $100,000.”
Id. ¶ 37.
Id. ¶ 38; PX 897, 917, 965, 968, 984 (Emails to Kohn Referring to Second Selva Viva Account).
When Kohn's assistant asked Donziger why he wanted the money transferred to a new account, Donziger explained that it was because the payments involved “separate case-related piece[s] of work that [are] being run by the Frente [ i.e., the ADF].... This separate account will be used for [the] same purpose under the same control of the Frente and Yanza, and will be accounted for the same way with receipts.”
PX 5600 (Kohn Direct) ¶ 38.
PX 897 (Aug. 14, 2007 Email from S. Donziger to J. Kohn, K. Wilson, K. Kenny re: “Critical money transfer”).
Kohn testified that he understood that the “second account was simply an administrative or ministerial matter, no different from any business or firm having more than one bank account.” PX 5600 (Kohn Direct) ¶ 39.
We now know that this second account had a special purpose. It was the “secret” account the LAPs set up in order surreptitiously to pay Cabrera outside the court process.
The record is silent as to what other covert purposes, if any, it served.
Thus, “[i]n accordance with ... instructions from Mr. Donziger, [Kohn] wire transferred $120,000 total from its U.S. bank account to this second account in Ecuador on August 15, 2007 ($50,000), September 17, 2007 ($50,000), and February 12, 2008 ($20,000).”
PX 5600 (Kohn Direct) ¶ 30.
Id. ¶ 38.
See supra Facts § V.C.1.
3. Donziger Refuses to Cooperate With Kohn's Demand for an Investigation Independent of Donziger
By late 2008, Kohn was worried about the likelihood of obtaining a judgment in the plaintiffs' favor and of enforcing such a judgment if it were obtained. Chevron's allegations concerning the Cabrera Report were surfacing.
PX 5600 (Kohn Direct) ¶¶ 20, 50.
Infra Discussion § IX.B.2.
PX 5600 (Kohn Direct) ¶ 20.
Donziger “rebuffed these efforts.”
He “refused to provide [Kohn] with copies of his files, including all the court filings [Kohn] had requested; he cancelled or postponed meetings at the last minute; and generally he refused to substantively engage with [the Kohn firm].”
He repeatedly attempted to “prevent [Kohn lawyers] from meeting with members of the Ecuadoran legal team by first delaying or rescheduling meetings, and then ultimately stating [that Kohn lawyers] were not allowed to speak directly with the Ecuadoran legal team.”
Id. ¶ 54.
When Kohn in early 2009 suggested a meeting with the Ecuadorian legal team to discuss the final brief the LAPs would submit to the Lago Agrio court, Donziger “kept putting it off and even became irate when a lawyer in [the Kohn] firm ... communicated with Mr. Sáenz directly.”
Id. ¶ 55.
PX 1185 (Nov. 13, 2009 Email from J. Sáenz to L. Yanza, P. Fajardo, and J. Kohn).
“It is critical that you understand the larger context of how this effort is being managed and thereby understand how [the Kohn firm] can best add value. The legal and political ‘space’ around this case in both Ecuador and the U.S. has been intricately constructed over the last several years by those involved on a fulltime basis. The process is managed by myself, Pablo Fajardo, and Luis Yanza. All of us work on this on a full-time basis and we speak among ourselves frequently. We also manage [t]he client relationships and in my case I have raised significant funds for both the case in chief and ancillary activities. All activities from [the Kohn firm] must be coordinated through this process, which in practice means coordinated through me.
* * *
Given this context, the ‘value added’ of the [Kohn] team needs to be focused on discrete tasks within the existing structure, not overall management of this complex, delicate, intricate and multi-cultural process. The learning curve at this point is way too great to even start down that road.... That said, your input and thoughts are valued and I have no doubt your contributions can be immense if you are willing to work within this structure and complete tasks (such as legal research, draft reports) by specific deadlines and be real about what you can and cannot do. But be clear: I am not going to consult with each of you on each and every aspect of this effort, unless you want to come work out of my office on a fulltime basis, which I am sure you would rather not do ....”
PX 1146 (July 2, 2009 Memo from S. Donziger to Kohn team re: “Activity Going Forward”) (emphasis added).
Kohn and other lawyers at his firm repeatedly expressed their frustration among themselves and to Donziger at his refusal to provide them with information about what was going on in Ecuador, or to allow them to be meaningful participants in the decision-making process. This frustration eventually led to Kohn's withdrawal from the case. But there was another event in particular that precipitated the withdrawal.
Kohn was becoming aware of Chevron's allegations concerning the LAPs' contacts with Cabrera.
Fearing that their case was in jeopardy, Kohn proposed to Donziger that they retain an American lawyer to conduct an investigation, on behalf of the LAPs but independent of Donziger and the LAPs' Ecuadorian team, into “Chevron's allegations of misconduct by the Ecuadoran plaintiffs' team,” including the Cabrera Report.
PX 5600 (Kohn Direct) ¶¶ 50–52. Kohn testified that he participated in two mediation sessions with Donziger and attorneys for Chevron in late 2007 and early 2009. At both of those sessions, Chevron's attorneys “asserted that the Ecuadoran plaintiffs' team had improper contacts with Mr. Cabrera.” Id. ¶ 52.
Id. ¶ 22.
to “make inquiries into what knowledge members of the [LAP] legal team ... may have of improprieties involving the judge and/or government or ruling party officials, as well as with respect to allegations leveled by Chevron Corporation, the defendant in that litigation, of improper contacts between members of Aguinda legal team and various Ecuadorian judges, court-appointed experts, or government officials.”
Id.; PX 1155 (draft retention agreement with K. Trujillo).
PX 1155 (draft retention agreement with K. Trujillo).
Kohn testified that Donziger initially appeared receptive to the idea of hiring an independent investigator and that he, Donziger, and Trujillo participated in at least one conference call to discuss Trujillo's possible engagement.
PX 5600 (Kohn Direct) ¶ 22.
Id.; PX 1156 (Sept. 4, 2009 Email from S. Donziger to J. Kohn re: “idea to retain a lawyer”).
“I talked to Pablo and Luis about your idea of hiring the former prosecutor for the purposes you described. There is a consensus such a move would be adverse to the client's interests and unwise for a host of reasons. Neither I, nor the legal team in Quito, will cooperate with such an investigation nor continue working with a firm that insists on doing such an investigation. I can explain details when we talk. If you go forward with retaining somebody for this purpose, please notify me immediately so I can notify the clients.”
PX 1156 (Sept. 4, 2009 Email from S. Donziger to J. Kohn re: “idea to retain a lawyer”) (emphasis added).
PX 5600 (Kohn Direct) ¶ 22.
Squabbles occur among co-counsel for all sorts of reasons and that they rarely are subjects of interest or concern to courts. This one, however, was different. Donziger blocked Kohn's efforts to become more involved, and especially blocked the suggestion that a lawyer independent of Donziger and the LAP Ecuadorian lawyers look into what really had happened with Cabrera and other alleged improprieties, in order to conceal to the extent possible the truth about what had taken place. The Court finds these events probative of Donziger's consciousness of guilt.
4. Kohn Cuts Off Funding
Two months after Donziger rejected Kohn's proposal for the Trujillo investigation, Kohn informed Donziger that he no longer would pay Donziger's monthly expenses for his work on the Lago Agrio case.
PX 1181 (Nov. 9, 2009 Email Chain Between J. Kohn and S. Donziger).
Donziger and Kohn had a fee sharing arrangement, and Kohn was under no obligation to pay Donziger's expenses. Id.
Donziger wrote: “As a general matter, your firm's primary obligation is to finance the case; my firm's primary obligation is to run the case on a day to day basis, maintain relations with the clients, handle press and political aspects in both Ecuador and the U.S., and make sure we are set up for an enforcement action and financing going forward. In other words, I am doing a substantial portion of the actual work. If you break it down by time and value, I think I am doing the overwhelming amount of work on this case. I am not going to keep doing a substantial portion of the work AND take over your responsibility for financing while maintaining our same equity arrangement.” Id.
“requested you to adjust your requested monthly figure several times since the work in Ecuador was reduced and more time was spent here ... you did not. Since then you have continued to send us expenses for all travel, meals, staff and anything else without any thought. In terms of the legal work on the case, you have consistently tried to exclude us from discussions, meetings etc, including preventing meetings with the lawyers in Ecuador we have been requesting for many months.”
But Donziger repeatedly declined to respond to Kohn's offer. Kohn wrote: “I conclude you are not interested in doing so because you perceive them as our friends who you could not control, or would not simply take orders from you.”
On November 10, 2009, Kohn wrote to Fajardo and Yanza regarding the possibility of further settlement negotiations with Chevron.
PX 1184 (Nov. 10, 2009 Ltr. from J. Kohn to L. Yanza and P. Fajardo).
PX 5600 (Kohn Direct) ¶ 60 (citing PX 1187 (Nov. 19, 2009 Ltr. from J. Kohn to L. Yanza and P. Fajardo)).
Tr. (Kohn) 1463:18–1464:18.
Kohn responded on November 19, 2009, that “[t]he working relationship between [him] and ... Steven ha[d] steadily deteriorated over the past years” and that Kohn had “paid all necessary litigation expenses, as well as many wasteful and unnecessary expenses incurred due to Steven's extravagance and decisions.”
PX 1187 (Nov. 19, 2009 Ltr. from J. Kohn to L. Yanza and P. Fajardo).
“[B]y far, the largest single component of the ‘budget’ is Steven's demand for fees and expenses, and there, in my opinion, lies the root of the current problem, and the reason why this current crisis arises.... At the same time as we have spent enormous sums of money on the case, Steven has denied us access to documents, information and the legal team, despite our repeated requests. He has made it impossible for us to effectively discharge our duty as attorneys and has interfered with the attorney-client relationship.”
Kohn concluded by stating that “unless or until such agreements are reached, [Kohn] considers that due to Steven's influence and interference, there is no longer an attorney-client relationship with our firm and we will withdraw from any further representation related to the case and notify the vendors and other appropriate entities of that fact.”
Several months later, Kohn spoke with Jeffrey Shinder by telephone. Shinder explained to Kohn that he had withdrawn from representing the LAPs in the Denver Section 1782 proceeding against Stratus and his reasons for doing so.
PX 5600 (Kohn Direct) ¶ 63.
Id. ¶ 64.
Kohn replied that he had spoken with Shinder about the LAPs' contacts with Cabrera and that he “would not discuss anything with [Donziger] unless he—and anyone of the Ecuadoran team that had contact with Mr. Cabrera—‘came clean’ about what happened with Mr. Cabrera.”
Donziger admitted to Kohn that “someone on the Ecuadoran team ‘may’ have provided ‘some’ documentation to Mr. Cabrera, and if it came out, it could be embarrassing for the Ecuadoran plaintiffs' team.”
On April 13, 2010, Kohn wrote to Fajardo and Sáenz, informing them that he had become aware of “very disturbing recent events related to the case taking place in the U.S.”
PX 1290 (Apr. 13, 2010 Ltr. from J. Kohn to P. Fajardo, J. Sáenz, and L. Yanza).
“Steven ... hired other firms to deal with the depositions of Stratus. He informed me last week, without providing any details or facts, that the information Stratus may provide will be damaging to the case and highly embarrassing. We have no knowledge of what he is talking about except what Steven has now reluctantly told us: that it involves communications with Cabrer[ ]a, something that surprised us and that we find quite disturbing if true. This conduct—the contacts with Cabrer[ ]a (if they took place), and the failure to properly oppose or prepare for these depositions, has and will cause severe damage to the case.”
Id. at 2.
Later in April 2010—and after the Colorado district court had granted Chevron's Section 1782 application with respect to the Stratus documents, but before any documents had been produced—Kohn met in Philadelphia with Fajardo, Yanza, and Humberto Piaguaje at the Ecuadorians' request.
PX 5600 (Kohn Direct) ¶ 66.
A few days later, on May 3, 2010, Kohn received an unsolicited email from Fajardo, in which he clarified that he “did not mention [one] detail” regarding “the information [the LAPs] shared regarding the process in Ecuador.”
Fajardo wrote that “[b]ased on the same order of the judge, by which we submitted information to Expert Cabrera, we proceeded to submit a packet of information, mainly the input of Stratus, around the middle of March 2008.”
PX 1312 (May 3, 2010 Email from P. Fajardo to J. Kohn).
Chevron Corp. v. Stratus Consulting, Inc., 10 Civ. 0047, DI 99 (D.Colo. filed May 5, 2010).
On July 29, 2010, Kohn received a letter from representatives of the LAPs purporting to terminate their attorney-client relationship with the Kohn firm.
PX 5600 (Kohn Direct) ¶ 68.
After evidence of the Cabrera fraud and other events began to emerge from Section 1782 proceedings, Kohn “disavowed any financial interest in the Ecuadoran judgment.”
Kohn testified at trial: “I relied on Mr. Donziger to tell me the truth about what was going on in the Ecuadoran litigation ... and I now know that Mr. Donziger did not tell me the truth. It is now clear to me that Mr. Donziger deceived and defrauded me, and that, as a result, we continued to pay millions of dollars to that litigation that we never would have paid had we known the truth.”
Id. ¶ 25.
Id. ¶ 81.
5. Defendants' Response to Kohn's Testimony
Donziger for the most part failed to respond to Kohn's testimony. He did not offer any explanation for why he had not provided Kohn with accurate information concerning Cabrera, Stratus, himself, and the Ecuadorian LAP lawyers. His questions to Kohn at trial suggested that Kohn could and should have taken steps to obtain information concerning Ecuadorian law from sources other than Donziger, such as hiring an Ecuadorian law expert to investigate the Cabrera Report.
Tr. (Kohn) 1448:19–21.
That of course is understandable in view of the fact that litigation by Kohn to recover the money he advanced to Donziger is quite possible.
And it is not this Court's function to decide the merits of any such claim here. But it is its duty to find the facts to the extent they are material to this case. And it finds that Donziger's arguments, to the extent they are material here, are not persuasive.
Kohn testified that he has “preserved through tolling agreements [his] firm's right to pursue litigation to recover amounts paid [to Donziger and Stratus] in connection with the Ecuadoran litigation.” PX 5600 (Kohn Direct) ¶ 25.
Kohn had proposed hiring such an expert in 2009, Kenneth Trujillo, but Donziger and the Ecuadorian lawyers were unwilling to allow him to conduct a meaningful investigation.
Moreover, whether or not Kohn sought independently to verify the limited information he received from Donziger does not change the fact that Donziger misrepresented to him vital facts about the case in Ecuador. And when Kohn did try to find out what had gone on, Donziger prevented him from doing so because, the Court finds, Donziger understood full well that what he and his associates had done was wrong.
Tr. (Kohn) 1449:10–19.
The LAPs called one witness whose testimony differed slightly from Kohn's on certain points. Humberto Piaguaje, the “executive coordinator of the asamblea,”
testified that Fajardo, Yanza, and Piaguaje, during their April 2010 Philadelphia meeting with Kohn, asserted that there were “decisions that [Kohn] made that were above the interests of the members of the assembly for the struggle that they were involved in.”
Tr. (H. Piaguaje) 2678:10–13.
Thus, through Piaguaje's testimony, defendants appear to suggest that Kohn was fired because he was taking actions that the LAPs had not ratified and because he would not abide by his clients' wishes. But they fail to mention a single action Kohn took of which they did not approve (besides his decision to stop funding the case). And they fail to explain how what they describe as their decision to fire him changes the fact that Kohn repeatedly was lied to about Cabrera and other important events. Accordingly, the Court does not credit Piaguaje's claim.
E. The Search for New Funding—Patton Boggs, the Invictus Strategy, and Burford
By the end of 2009, Kohn no longer was supporting the lawsuit and the LAPs were in financial difficulty. Although Donziger had secured a $500,000 investment from Russell DeLeon in June 2009,
he knew that much more would be needed to keep the case going. Moreover, the LAP team's internal emails make clear that they expected to obtain a large judgment soon—a timetable that proved inaccurate—and Donziger knew he would need substantial U.S. legal help to mount a credible enforcement threat. The story of how he found it is important. It led to the refinement of the enforcement strategy that the LAP team planned to follow to collect the Judgment.
PX 543 (Jun. 30, 2009 Investment Agreement between R. DeLeon, S. Donziger, and J. Kohn) § 7.2.
1. Patton Boggs Is Retained, Develops the Enforcement Strategy, and Obtains Funding from Burford
As of late 2009, Donziger's plan for enforcement of the judgment he expected shortly to obtain was simple—to seek enforcement in the United States. That is what he then told Jeffrey Shinder, whom he considered hiring to run the enforcement effort.
Shinder testified as follows with respect to a late 2009 conversation with Donziger: “Q. Did you come to speak to Mr. Donziger in the fall of 2009? A. Yes, I did. Q. Generally, do you recall what legal services Mr. Donziger was looking for? A. I do. He was looking for enforcement counsel, lawyers in the United States who were going to take a judgment that he anticipated getting from the court in Ecuador and getting it enforced in the United States against Chevron, and that was the role we were auditioning for. Q. Did you say enforcing in the United States? A. Yes. Q. Did Mr. Donziger say that to you? A. Yes.” Tr. (Shinder) 1253:6–18.
PX 3100 (Bogart Direct) ¶ 5; PX 541 (Nov. 1, 2009 Ltr. from N. Economou to S. Donziger and L. Yanza).
PX 541 (Nov. 1, 2009 Ltr. from N. Economou to S. Donziger and L. Yanza).
PX 3100 (Bogart Direct) ¶ 5.
Burford “rapidly made it clear that [the Lago Agrio case] was outside its usual investment parameters and that Burford could only even consider the matter if highly regarded U.S. litigation counsel were involved.”
So Donziger—with the assistance of Economou and Burford—expanded the search for “highly regarded U.S. litigation counsel.” In January 2010, Economou and Burford chief executive Christopher Bogart had a meeting with Donziger, James Tyrrell, a senior partner of Patton Boggs, and Eric Westenberger, another partner at the firm.
Tyrrell Dep. Tr. at 81:13–23.
PX 1389 (Response to Request for Information), at 7 of 88.
“[S]wift recovery is of paramount importance ... A thoughtfully crafted, multi-front approach, not only increases the odds of obtaining expedient and significant recovery, it also serves the related purpose of keeping Chevron on its heels.”
The point of the multi-front strategy thus was to leverage the expense, risks, and burden to Chevron of defending itself in multiple jurisdictions to achieve a swift recovery, most likely by precipitating a settlement.
Before the month of February was out, Patton Boggs “had secured a leading role in the [l]itigation, with Jim Tyrrell as the lead partner.”
PX 3100 (Bogart Direct) ¶ 6; PX 1391R (July 12, 2010 Ltr. from J. Tyrrell to S. Donziger) (“PB's work on behalf of the plaintiffs ... first commenced in February 2010”).
PX 3100 (Bogart Direct) ¶ 7.
Patton Boggs quickly became heavily involved in the Lago Agrio litigation, both in the United States and in Ecuador. By July 2010, it had “assist[ed] Ecuadorian counsel in sustaining and prosecuting plaintiffs' claims against [Chevron] in Ecuador, and defend[ed] multiple ancillary 28 U.S.C. § 1782 actions across six U.S. jurisdictions.”
It also had “drafted ... briefs filed in both U.S. Courts and the Lago Agrio Court, performed a sizeable document review in connection with the Colorado § 1782 proceedings [against Stratus]” (although PB did not appear formally in that action), and led efforts to retain Ecuadorian law experts.
PX 1391R (July 12, 2010 Ltr. from J. Tyrrell to S. Donziger).
In conducting its due diligence, Burford largely relied on Patton Boggs to keep it apprised of events in the litigation, to assess the merits of the LAPs' case, and to come up with a coherent enforcement strategy that would be undertaken once the LAPs received a judgment in their favor. Moreover, “it was agreed [with Burford during its due diligence] that Patton Boggs would provide its analysis on ... [a] judgment enforcement strategy to Burford, and that Burford would not try independently to perform that work, although Burford remained in close and active contact with Tyrrell and ... Westenberger about their work.”
PX 3100 (Bogart Direct) ¶ 4.
The enforcement strategy was key to inducing Burford to invest in the case. So Patton Boggs prepared a document setting forth the LAPs' plan, a document that was entitled “Invictus” and that has become known as the “Invictus Memo.”
PX 2382 (Invictus Memo).
PX 2382 (Sept. 5, 2010 Memo from C. Bogart to Burford Investment Comm.), at 3.
PX 3100 (Bogart Direct) ¶ 8.
Id. ¶ 25; PX 2456 (Nov. 2, 2010 Email from C. Bogart to S. Donziger, N. Economou, and W. Carmody) (“I confirm that we have funded Patton Boggs' London account.”).
PX 552 (Burford Funding Agreement).
2. The Invictus Strategy
The Invictus strategy is significant not only because Burford relied on it in approving the investment, but because the LAP team has been carrying it out since the Judgment was rendered in 2011.
Invictus built on the LAPs' previous intention to seek to enforce the anticipated favorable judgment in the United States and the Patton Boggs proposal to Donziger. It set out a plan to enforce it “quickly, if not immediately, on multiple enforcement fronts—in the United States and abroad.”
PX 2382 (Invictus Memo), at 15.
But Invictus recognized also that enforcement in the United States could prove difficult. It emphasized that “Patton Boggs' current and former representation of numerous, geographically diverse foreign governments means that barriers to judgment recognition in a given country may not necessarily preclude enforcement there.”
Id. at 22.
It further elaborated that “Patton Boggs [would] use its political connections and strategic alliances to ascertain which nations' governments are not beholden to Chevron, so as to minimize the prospect of adverse governmental interference in the enforcement process.”
“proceeding as an initial matter in a jurisdiction housing the highest concentration of Chevron's domestic assets would offer certain obvious advantages, including efficiency. Nonetheless, it is more important for Plaintiffs to proceed initially in a jurisdiction that promises the most favorable law and practical circumstances. To that end, Plaintiffs' Team will identify and potentially target certain ‘keystone’ nations—that is, nations that enjoy reciprocity, or, better yet, are part of a judgment recognition treaty—with nations that serve as the locus for greater Chevron assets. For instance, while enforcing western judgments in the Middle East is notoriously challenging, certain countries in that region have entered into relevant treaties with European nations. If the Aguinda Plaintiffs are able to obtain conversion of the judgment in one of those European nations, this may open the door to enforcement in the Middle Eastern target nation.”
Id. at 21 (emphasis in original).
Id. at 26.
The Invictus Memo made clear that the LAPs' enforcement strategy contemplated an initial multi-pronged attack on Chevron, its assets, and subsidiaries in multiple jurisdictions outside the United States followed by proceedings here. Although Burford was enticed by the Invictus strategy, however, it did not stick around long enough to see it implemented.
F. Fajardo Obtains a Broader Power of Attorney, and Donziger and Fajardo Enter Into Their First Written Retention Agreements with the LAPs
There is a final point to be made about the Burford story: it led to a broadening of Fajardo's power of attorney from the LAPs and the execution of a formal retention agreement between Donziger and the LAPs. Both are relevant.
On November 5, 2010, four days after he signed the Burford Funding Agreement on the LAPs' behalf, Fajardo obtained a new power of attorney (“POA”) from the LAPs.
The reason, among others, for the broadened POA was that Donziger had secured funding by promising investors a share in the LAPs' recovery from a judgment. The Funding Agreement with Burford made clear that Burford's return on its investment would be paid from the LAPs' share of any recovery on a judgment net of the portion allocated to the attorneys' fees.
PX 392 (Fajardo Nov. 2010 Power of Attorney), at 1–2.
The new POA was “a broadening or extension of the power of attorney that was previously granted to [Fajardo], for which reason the [LAPs] ratif[y] and approve[ ] each and every one of the actions performed by the attorney Pablo Fajardo Mendoza ... in ... legal actions in ... court of law, national or foreign, financial or administrative actions and that have been performed directly or through other persons legally authorized by him for the defense of his/her interests.” Id.
Moreover, Donziger recently had agreed to amend his March 2010 funding agreement with Russell DeLeon by “deleting the[ ]reference [of DeLeon's recovery] to percentage of Attorney Fees” and changing it to “1.75% of Net Plaintiff recovery.”
Donziger Jan. 31, 2011 Dep. Tr. at 4075:10–16.
PX 1402 (July 27, 2010 Email from R. DeLeon to S. Donziger re: “Amendment to Agreement”).
Id. (“Does Pablo have authority to sign for [the LAPs]? If so, how can this be clarified?”).
In order to address these concerns and to ensure that the funding agreements with Burford and DeLeon would be enforceable, the LAP team drafted a broader POA for Fajardo. It drew up also a retention agreement between Donziger and the LAPs, which was signed in January 2011.
Donziger and Fajardo had signed also retention agreements with various U.S. law firms on the LAPs' behalf. Donziger Jan. 18, 2011 Dep. Tr. at 3207:1–22.
PX 558 (Donziger Jan. 2011 Retention Agreement).
Id. at 2.
More will be said on this agreement below in connection with other matters. But for now it suffices to note only this. Although Fajardo, as a matter of form and convenience, signed Donziger's agreement in his capacity as attorney-in-fact for the LAPs, the Court finds that no change in the substance of the relationship was intended or occurred, at least in any time period relevant to this case. Donziger remained firmly in charge. The paperwork done in early 2011 was undertaken principally to ensure that the new investors, who were to receive portions of any recovery net of attorney fees, had a written paper trail that led back to the LAPs individually. While those concerned with the documentation were at it, Donziger and Fajardo, who both had contingent fee arrangements, obtained written agreements of their own.
G. Burford Terminates the Funding Agreement
Burford funded the $4 million first tranche under the Funding Agreement in November 2010. It never funded the others. On September 23, 2011, Burford informed the LAPs that it was terminating the Funding Agreement.
PX 1490 (Sept. 29, 2011 Ltr. from Burford to P. Fajardo, El Frente de Defensa de la Amazonia, S. Donziger, Purrington Moody Weil LLP, and L. Yanza).
Tyrrell of Patton Boggs informed Bogart shortly after Donziger's depositions in January 2011 that Donziger had not “told the truth” to Patton Boggs about the LAPs “voluminous” contacts with Cabrera when he retained the firm. PX 1473 (Bogart Notes of Jan. 27, 2011 Call with J. Tyrrell). (The notes are received as evidence of Tyrrell's state of mind but not for the truth of the matters stated.)
During its due diligence, Burford specifically had asked Donziger and Patton Boggs whether Chevron's allegations about the LAPs' relationship with Cabrera were a cause for concern.
PX 3100 (Bogart Direct) ¶ 18.
But subsequent events—including testimony given by Donziger in the Section 1782 proceeding in this Court—“flatly contradict[ed]” those representations.
Id. ¶ 38; PX 1490 (Sept. 29, 2011 Ltr. from Burford to P. Fajardo, El Frente de Defensa de la Amazonia, S. Donziger, Purrington Moody Weil LLP, and L. Yanza).
PX 1490 (Sept. 29, 2011 Ltr. from Burford to P. Fajardo, El Frente de Defensa de la Amazonia, S. Donziger, Purrington Moody Weil LLP, and L. Yanza).
PX 3100 (Bogart Direct) ¶ 18.
Id. ¶ 36 (quoting PX 1490 (Sept. 29, 2011 Ltr. from Burford to P. Fajardo, El Frente de Defensa de la Amazonia, S. Donziger, Purrington Moody Weil LLP, and L. Yanza)).
The question whether Patton Boggs misled Burford concerning the Cabrera episode one day may be important to a Chevron claim against Patton Boggs in a related action or in any litigation that may arise between Burford and Patton Boggs. But those cases are not now before the Court, and the answer to that question is not material to the resolution of this one. Two things are plain here, however. First, the romancing of Burford led to the development of the Invictus strategy of proceeding on multiple fronts, especially in foreign courts, rather than bringing a single enforcement against Chevron in the United States. Second, there is not much doubt that Donziger misled Burford—either by misstating or failing to disclose material facts—in his determination to raise money to pay for the litigation.
H. Donziger and Patton Boggs Try to Fix the Cabrera Problem—the Cleansing Experts
As noted, after the Denver court granted the Section 1782 application against Stratus, the LAP lawyers knew they no longer could ignore the LAP team's involvement in drafting the Cabrera Report, as the truth soon was to be exposed. So they planned to hire a new expert to address Cabrera's findings in the hope of providing alternative grounds for the damages evaluation. One of the LAPs' lawyers explained that:
“The path for an Ecuadorian decision will be simple. We would hope the judge would say/rule: There has been much controversy surrounding the Cabrera report, and objections to it. [Perhaps: The court did not anticipate that there was the degree of collaboration between plaintiffs' counsel and Cabrera, that there may have been. Given these issues, the court is not relying on Cabrera for its ruling.] However, the Court now has additional submissions from the parties ... The court finds the new report (demonstrating damages of $—billion) to be persuasive, reliable and accurate and therefore rules....”
PX 1371 (June 14, 2010 Email from J. Abady to E. Yennock, E. Westenberger, E. Daleo, J. Tyrrell, I. Moll, S. Donziger, B. Narwold, I. Maazel, A. Wilson, A. Celli, N. Economou, J. Brickell re: “Current Thinking on Ecuadorian Submission”) (brackets in original).
“Simply put, our local team is convinced that a court ruling—relying solely on Cabrera—is potentially imminent if we don't get something on file immediately.... If we cop to having written portions of the report, the details of exactly how that might have been accomplished will be for another day, when and if the relevant people are deposed as part of the 1782s, but hopefully by that time, the process of having both sides cure this with new submissions will be under way and render the details of the Cabrera report a thing of the past. We will have already admitted that we authored portions of the report; the details of how that was accomplished might be inter[ ]esting for Chevron, but u [lt]imately irrelevant because of our admission and alternative grounds for a damage evaluation.”
But the LAP team knew that it had to move quickly. It needed to submit the Fajardo Petition
PX 384R (Fajardo Petition).
“The Ecuador team is getting nervous that there is an increasing risk that our ‘cleansing’ process is going to be outrun by the judge and we will end up with a decision based entirely on Cabrera. Absent our intervention ASAP, they believe the judge could issue autos para sentencia in about 3–4 weeks, which would in effect bar our remedy to the Cabrera problem.”
PX 1370 (Jun. 14, 2010 Email from S. Donziger to J. Tyrrell, E. Westenberger, and E. Daleo).
The Fajardo Petition was filed one week later.
PX 384R (Fajardo Petition).
Id. at 2.
PX 387 (Aug. 2, 2010 Lago Agrio Court Order).
PX 1410 (Aug. 18, 2010 Email from A. Small to S. Donziger, E. Westenberger and J. Abady re: “Brainstorming on Expert Issues”).
Patton Boggs ultimately hired the Weinberg Group to manage the cleansing process.
Donziger and Patton Boggs lawyers told the Weinberg Group that “the defendants in the case had made allegations of veracity of the [Cabrera] report and involvement by another consulting firm in connection with the independent expert, and that because of these questions of veracity that they wanted to supplement or have an outside third party look at some of the same data and prepare a report.”
Dunkelberger Dep. Tr. at 10:9–15.
Id. at 51:6–14.
Id. at 60:19–61:11.
Id. at 250:2–24.
Id. at 81:24–82:7.
The Weinberg Group recruited a team of experts to work on drafting the cleansing reports.
Id. at 91:16–22.
Donziger Jan. 30, 2011 Dep. Tr. at 4065:16–22.
Donziger Jan. 31, 2011 Dep. Tr. at 4067:11–21.
Tr. (Donziger) 2577:4–11.
Allen Dep. Tr. at 90:4–10.
Shefftz Dep. Tr. at 68:14–24.
Indeed, as one Patton Boggs attorney wrote to Donziger, the cleansing should “address Cabrera's findings in such a subtle way that someone reading the new expert report (the Court in Lago or an enforcement court elsewhere) might feel comfortable concluding that certain parts of Cabrera are a valid basis for damages.”
Id. at 63:18–64:9.
PX 1410 (Aug. 18, 2010 Email from A. Small to S. Donziger, E. Westenberger, and J. Abady re: “Brainstorming on Expert Issues”).
With the cleansing reports in the Lago Agrio record, the 188–page single spaced Judgment was issued on February 14, 2011 by then-Judge Zambrano.
It found Chevron liable for at least seven categories of harm to the environment and human health. It awarded $8.646 billion plus another $8.646 billion to be paid unless Chevron issued a public apology within 15 days.
PX 400 (Lago Agrio Judgment).
The Judgment professed to disclaim reliance on the Cabrera Report.
It stated also that the author or authors had “not considered the conclusions presented by the experts in their reports, because they contradict each other despite the fact that they refer to the same reality....”
Id. at 49–51.
Id. at 94.
The Judgment mentioned some of Chevron's charges of misconduct by Donziger, many of which were based on his statements recorded in Crude out takes.
It characterized his statements regarding the Ecuadorian judiciary as “disrespectful.” It went on, however, to state that there was “no record in the case file of any power of attorney granted to him by the plaintiffs.... Therefore, insofar as concerns the merits of his statements, they [a reference to Chevron's arguments] are rejected ... and the Court does not recognize anything that Mr. Donziger might say or do when he is in front of the cameras or in any other act.”
Id. at 50–52.
Id. at 51.
Finally, the Judgment ordered that the LAPs establish a trust for the benefit of the ADF “or the person or persons that it designates” and that Chevron pay the damages awarded to that trust.
It directed that the trust's board of directors be made up of the “representatives of the Defense Front,” i.e., the ADF, and provided that the board would choose the contractors who would perform the remediation.
Id. at 186.
Id. at 187.
Chevron issued no apology. Instead, it filed a motion for clarification and expansion of the Judgment three days after it was issued.
PX 2502 (Chevron Motion for Clarification and Expansion of the Lago Agrio Judgment).
It questioned also the Judgment's award of punitive damages, “which are not defined in the Ecuadorian legal system,” and were “completely identical to the items indicated in the Cabrera Report,” which the Judgment purported to exclude from its consideration.
Id. at 2–3.
Id. at 23.
The Lago Agrio court issued a clarification order on March 4, 2011.
PX 429 (Mar. 4, 2011 Judgment Clarification Order).
and reiterated that “the Court decided to refrain entirely from relying on Expert Cabrera's report when rendering judgment.... [T]he report had NO bearing on the decision. So even if there was fraud, it could not cause any harm to” Chevron.
Id. at 3.
The clarification order stated that the punitive damage award was based on Chevron “misconduct during these proceedings” and that it was “in accordance with Article 18 of the Civil Code” and the “universal principles of law to sanction someone who well deserved it, to set an example.”
Id. at 8–9.
Id. at 9.
B. Chevron's Ghostwriting and Bribery Claims
Chevron contends that Zambrano did not write the Judgment, that the LAPs prepared it, and that the LAPs bribed Zambrano to decide the case in their favor and to sign the judgment they had prepared. The evidence concerning those contentions and its analysis are extensive. The Court here summarizes its findings before proceeding to the detailed discussion of how it reached them.
The first major point is that the Court finds that Zambrano did not write the Judgment, at least in any material part. The LAP team wrote it, and Zambrano signed it. The following sections explain the Court's bases for that conclusion.
In Part IX.A, the Court examines Zambrano's trial testimony and finds that it was not credible. Zambrano neither could recall nor explain key aspects of the 188 page opinion despite his claim that he alone wrote it. He was a new judge with very little civil experience, so much so that he admittedly had another former judge ghostwrite orders for him in civil cases. He was unfamiliar with—and on occasion bewildered by—certain of the most important concepts and evidence with which the opinion dealt. His testimony was internally inconsistent and at odds with other evidence in the record. He was an evasive witness. Finally, Zambrano had economic and other motives to testify as he did. His livelihood, what remains of his reputation after having been removed from the bench, and perhaps even his personal safety hinged on his protecting the legitimacy of the $18 billion Judgment by claiming authorship.
Having concluded that Zambrano did not write the Judgment, the Court turns in Part IX.B to the question who did. It examines the overwhelming and unrefuted evidence establishing that portions of at least eight of the LAP team's internal work product documents appear verbatim or in substance in the Judgment. These documents never were filed with the Lago Agrio court or made part of the official case record. Defendants utterly failed to explain how or why their internal work product—their “fingerprints”—show up in the Judgment. As will be seen, the most logical conclusion is that members of the LAP team wrote at least material portions of the Judgment, and probably substantially all of it, and that they copied from their own internal files in doing so. And direct evidence from the LAPs' internal emails—dealt with in Part XI.B.3—suggests that the LAP team had been preparing since at least 2009 to write a draft judgment to pass to the judge, this despite the fact that one of their own Ecuadorian law experts testified that the submission of proposed judgments to an Ecuadorian judge is improper.
The next question is how it came to pass that Zambrano decided the case for the LAPs and signed a judgment they prepared for him. The Court in Parts X and XI examines Chevron's contention that the Judgment was the result of a corrupt scheme in which the LAPs promised to pay Zambrano $500,000 from the proceeds of the Judgment in exchange for his deciding the case their way and permitting them to write the Judgment. In doing so, it details each of the witnesses' accounts of what happened in Lago Agrio in the years and months leading to the Judgment, considers the evidence corroborating or conflicting with each account, and assesses the credibility of each witness. Having concluded based entirely on direct and uncontroverted evidence that the LAPs wrote the Judgment, the Court credits Guerra's explanation that they got Zambrano to sign it by bribing him. Although Guerra's credibility is not impeccable, that portion of his account was corroborated extensively by independent evidence. Donziger and Zambrano provided no credible evidence to support their versions of what transpired. IX. The LAPs Wrote the Judgment A. Zambrano Was Not the Author
Zambrano testified at trial. He claimed that he “was the one who exclusively drafted” the Lago Agrio Judgment, that “no one ... helped [him] to write the judgment,” and that he did all the research for the Judgment.
Tr. (Zambrano) 1608:12–16.
The Court rejects Zambrano's claim of authorship, let alone sole authorship, as unpersuasive for a host of reasons.
1. Zambrano Was Unfamiliar With Key Aspects of the Judgment He Signed
Even at the most general level—that is, without considering the inconsistencies between Zambrano's deposition (taken days before his trial testimony) and his trial testimony, the internal inconsistencies in his trial testimony, and the inconsistencies between his testimony and other evidence—Zambrano was a remarkably unpersuasive witness.
As an initial matter, Zambrano was unable to answer basic questions about the Judgment that he ostensibly wrote and that he came to New York to defend.
The Judgment states that “benzene ... is the most powerful carcinogenic agent considered in this decision.”
PX 400 (Lago Agrio Judgment), at 107.
Tr. (Zambrano) 1611:15–18.
He perhaps meant to refer, incorrectly in response to this question, to hexavalant chromium, which is a different known carcinogen. See id. 1610:21–23.
Zambrano was asked also which report the Judgment stated is “statistical data of highest importance to delivering this ruling.”
Id. 1613:1–16 (quoting PX 400 (Lago Agrio Judgment), at 134).
PX 400 (Lago Agrio Judgment), at 134.
The Judgment does not identify by name the author of the study Cáncer en la Amazonáía Ecuadoriana. Defendants nowhere suggest that Barros was the author this study.
Zambrano was unable also to recall the theory of causation on which the Judgment relied.
Tr. (Zambrano) 1614:7–10; PX 400 (Lago Agrio Judgment), at 88.
PX 399 (Lago Agrio Judgment (Spanish)), at 20–21.
Tr. (Zambrano) 1614:11–12.
TPH—which stands for total petroleum hydrocarbons—appears over 35 times in the Judgment.
See, e.g., PX 400 (Lago Agrio Judgment), at 100, 101, 102, 104.
Id. at 181.
Tr. (Zambrano) 1615:1–10.
Zambrano's inability to recall every detail of a 188–page decision of course would not itself prove that he had not written it. But the aspects of the Judgment he was unable to recall were not insignificant details—they included the identification of a substance for the presence of which the Judgment awarded $5 billion, the identity of a substance that the Judgment described as the most powerful carcinogenic agent it considered, and the source of the most important statistical data. It is extremely unlikely that a judge who claims to have spent many months reviewing the record
and to have written this lengthy and detailed decision would not recall such important aspects—especially when, as will be seen, that Judgment was hailed by the president of Ecuador as the most important decision in the country's history. When this is taken together with the evidence discussed below, it is significant.
Zambrano testified that he set to work on the Judgment right after he began his second tenure on the case with the benefit of the notes he had made during his brief prior tenure. He claimed that he read the entire court record in order to render his decision and that he finished doing so “[w]ay before January 2011 ... [and] [b]y that time ... [he] w[as] already polishing the draft of the judgment.” Id. 1736:21–1737:2
2. Zambrano's Account of the Preparation of the Judgment Was Self Contradictory and Implausible
In a declaration submitted to this Court in March 2013, Zambrano stated: “I confirm that I am the only author of the judgment that I issued on February 14, 2011.... I did not receive support or assistance from Dr. Alberto Guerra or from any other person ....”
PX 6330 (Zambrano Mar. 28, 2013 Decl.) ¶ 14 (emphasis added).
PX 6391 (Zambrano Sept. 2013 Decl. to Ecuadorian Prosecutors), at 1 (“I am the only author of the decision issued on February 14, 2011, that I have not had any help from any person....”).
Zambrano testified: “I would begin dictating by taking a document from here, another one from over there. So you have an idea as to what the office was set up ... the cuerpos of the trial were laid out. On some of them I had the corresponding annotations. On some occasions I would sit on the piece of furniture that was next to her desk. I would dictate. Other times I would stand up because I would reach for a document or refer to a cuerpo or some other writing. I wold refer to notes that I had made and in my mind I was developing the idea I wanted to state so she would type it accurately.” Tr. (Zambrano) 1661:16–1662:10.
Calva was not a court employee. Her father was a lawyer in Lago Agrio who often appeared before then-Judge Zambrano. Tr. (Zambrano) 1659:23–1660:13. Zambrano hired her at his personal expense in mid-November 2010, id. 1664:12–15, to help him with the Judgment in the Chevron case because, he said, “it was a very voluminous trial. [Calva] was an excellent typist; she was very good at typing. She also know very much about the computing system. She had just graduated ... and her mother asked me if she could help me in some kind of situation, and precisely I needed help. That's why I made the proposal to her that I could give her $15 per day, and the mother accepted willingly.” Id. 1818:8–15.
In fact, Calva's existence first was disclosed by Guerra. Other aspects of Guerra's testimony will be explored more fully below. For present purposes, it suffices to note that Guerra testified that the daughter of an attorney friend of Zambrano, Arturo Calva, retyped drafts of orders in the Chevron case into Zambrano's computer at Zambrano's office.
PX 4800 (Guerra Direct) ¶ 46.
DI 1642 (Oct. 30, 2013 LAPs Mot. to Amend Witness List).
At that point, Zambrano changed his story. He mentioned Ms. Calva during the following week, both at his deposition and at trial, claiming for the first time that he had dictated the entire Judgment to Calva.
In addition to Zambrano's failure to mention Calva in his declaration and statement, Zambrano's testimony at trial regarding her role was internally inconsistent. For example, Zambrano first testified that “nobody helped [him] do the research [he] needed to do to write and author the judgment.”
But when he later was asked how he had found French, British, Australian, and American authorities that were cited in the Judgment, Zambrano explained that Ms. Calva, an 18–year old whom he paid $15 per day, was “the one who would go onto the internet. She would look for a specific subject ... she would print them out so that I would read them later.”
Tr. (Zambrano) 1608:14–16.
In any case, however, there was no credible explanation of how Calva, as Zambrano claimed, found French, British, Australian, and American legal authorities on the Internet given that there is no evidence that she had any legal training or spoke French or English. Nor was there any reasonable explanation of how Zambrano could “read ... later,” much less deal intelligently with, any such French or English language authorities in light of the fact that he reads neither French nor English, has no legal training in the common law, and even had very little experience with civil matters in Ecuador.
Id. 1616:23–1617:4; see also id. 1619:4–6, 1620:1–4.
Zambrano later testified that he never performed internet searches himself. Id. 1684:7–10
Defendants contend that Zambrano did not have to read the French sources cited in the Judgment because he “copied [them] from [an] Ecuadorian Supreme Court case which went through and discussed Colombian, Argentinean, and French law.” Tr. (summation) 2902:7–11. But Zambrano's testimony at trial suggested that he never actually had read that case. He was unable to recall its name, the names of the parties, or what it was about—even after being shown a copy of the decision by defense counsel. Tr. (Zambrano) 1885:1–20, 1887:10–23. And even if the supreme court case could have explained the French language authorities that are cited in the Judgment, it does not explain the American, English, or Australian ones. PX 1141 (June 18, 2009 Email from P. Fajardo to J. Prieto, J. Sáenz, and S. Donziger attaching Torres de Concha v. Petroecuador ). It nowhere cites or discusses cases or law from those countries. Id.
Finally, Zambrano was adamant that Calva typed only what he dictated orally to her. He “never show[ed] Ms. Calva any document for her to type from.”
But the 188–page Judgment contains many complicated words, citations, and numerical sequences. The sampling data cited in the Judgment consists of strings of alphanumeric sequences with dashes, periods, underscores, odd spacing, and parentheses in them. For example:
Tr. (Zambrano) 1879:23–25.
“con resultados como 3142 y 466 en Auca 1 en AU01–PIT1–SD2–SU2–R(220–240 cm)—sv y AU01–A1–SD1–SU1–R(60–100cm)—sv; 2450 y 876 en Cononaco 6 en CON6–A2–SE1—sv y CON6–PIT1–SD1–DU1–R(160–260cm)—sv; 154.152,73.6325,70.4021 en Shushufindi 18, en SSF18–A1–SU2–R(O.Om)—sv, SSF18–PIT2–SD1–SU1–R(1.5–2.0m)—sv; y SSF18–A1–SU1–R (0.0 m)—sv).”
PX 399 (Lago Agrio Judgment (Spanish)), at 109.
It is not credible that Zambrano dictated these sequences to Calva orally and that Calva then typed them exactly into the draft without looking at any underlying document. Moreover, as will appear, the Judgment contains portions of eight documents from the LAPs' internal files, many of them in haec verba. Even assuming that Zambrano actually prepared the Judgment, as he claims, he certainly would not have dictated these pre-existing documents to Ms. Calva rather than giving them to her with markings indicating exactly what he wanted her to copy.
Of course, Ms. Calva readily could have confirmed or denied Zambrano's account. When her name surfaced, the Court granted defendants' motion to add her as a witness.
DI 1681 (Nov. 5, 2013 Lago Agrio Court Order).
There is still another consideration. Judge Ordófiez began presiding over the Lago Agrio case on March 12, 2010 and was expected to continue for two years. Chevron moved to recuse him on August 2010. He opposed the motion, and he was not recused until October 1, 2010.
PX 6374 (Oct. 1, 2010 Lago Agrio Court Order).
PX 2546 (Oct. 11, 2010 Lago Agrio Court Order).
Tr. (Zambrano) 1911:2–5.
Thus, the intervals between the issuance of the Judgment on February 14, 2011 and (1) autos para sentencia, (2) Zambrano's assumption of jurisdiction as the presiding judge, and (3) the initial recusal were (1) less than two months, (2) about four months, and (3) about six months, respectively.
PX 397 (Dec. 17, 2010 Lago Agrio Court Order).
The Lago Agrio court record at the point at which the case was decided contained over 200,000 pages. While the 200,000 page figure no doubt overstates in some measure the part of the record that remained relevant to a decision on the merits,
Zambrano testified that he read every page of the Lago Agrio record to render the decision and that this was required by Ecuadorian law. Tr. (Zambrano) 1719:24–1720:16. Even assuming that reading every page would have been required as a formal matter of Ecuadorian law, the Court does not find it credible that Zambrano, or many other judges, would have read portions of the record that were not relevant to the decision of the case in the course of preparing a decision. It implies no criticism of any such omission, which is a different matter from Zambrano's apparent lack of candor in claiming that he actually had done that. Accordingly, the Court finds Chevron's argument that Zambrano could not even have read every page of the record during the total time over which he was assigned to the case ( see PX 4200 (Rayner Direct) passim ), though quite probably correct, immaterial on the authorship issue.
Moreover, the Judgment is a 188 page, single spaced document of considerable complexity that purports to rely on innumerable pieces of evidence, many of them lengthy documents themselves. The preparation of the Judgment in the time available, even assuming that the author or authors began as soon as Chevron moved to recuse Judge Ordóñez, would have been a Herculean task for anyone. To have done so without any assistance save an 18–year old typist, as Zambrano claimed, would have rendered its accomplishment in the relevant time period even less likely. And to have done so by dictating orally virtually every word, without the typist copying anything at all from other documents, as Zambrano claimed, would have made it still less probable.
One of Donziger's former associates wrote to Sáenz that the Lago Agrio record in January 2010—more than a year before the case was decided—contained “more than 200,000 pages of trial evidence, 62,000 scientific analyses produced by independent laboratories contracted by both parties, testimony from dozens of witnesses, and 101 judicial field inspections....” PX 1211 (Jan. 7, 2010 Email From L. Garr to J. Sáenz).
Zambrano's contention that he was aided by notes and materials he had collected during his first tenure on the case, i.e., in the roughly four month period starting in September 2009, is undermined by the fact he claimed to have destroyed those notes and materials. While that was understandable in light of Zambrano's removal from the bench, as he could not have any further use for them, there remains a lack of anything to corroborate that part of his story.
3. Zambrano's Testimony as to the Computer on Which He Claimed the Judgment Was Entered Was Inconsistent With the Evidence
Zambrano's testimony as to his alleged authorship of the Judgment was contradicted persuasively on yet another point by other evidence.
Zambrano testified that the only computer on which he and Calva wrote the Judgment was the new computer in his office at the Lago Agrio court.
Tr. (Zambrano) 1679:5–7, 1680:3–6; PX 6371 (Tarco Decl.).
On October 24, 2013, a week into trial, defendants moved for leave to call Milton Efrain Jaque Tarco, a witness not previously identified.
DI 1601 (Oct. 24, 2013 LAPs Mot. for Leave to Amend the Witness List).
PX 6371 (Tarco Decl.) ¶ 1.
Id. This statement was admissible against defendants as an adoptive admission by virtue of their submission of his declaration in support of their motion for leave to call him as a witness. SeeFed.R.Evid. 801(d)(2)(B); see also 2 Kenneth S. Broun, McCormick on Evidence § 261 (7th ed.) (“When a party offers in evidence a deposition or an affidavit to prove the matters stated therein, the party knows or should know the contents of the writing so offered and presumably desires that all of the contents be considered on its behalf since only the portion desired could be offered. Accordingly, it is reasonable to conclude that the writing so introduced may be used against the party as an adoptive admission in another suit.”); see, e.g., Attorney Gen. of U.S. v. Irish N. Aid Comm., 530 F.Supp. 241, 252 (S.D.N.Y.1981)aff'd,668 F.2d 159 (2d Cir.1982) (finding letters written to defendant that defendant had specifically adopted or incorporated by reference in its reply to the summary judgment motion admissible under F.R.E. 801(d)(2)(B)); Diaz v. Silver, 978 F.Supp. 96, 120 (E.D.N.Y.1997)aff'd,522 U.S. 801, 118 S.Ct. 36, 139 L.Ed.2d 5 (1997) and aff'd sub nom. Acosta v. Diaz, 522 U.S. 801, 118 S.Ct. 36, 139 L.Ed.2d 5 (1997) and aff'd sub nom. Lau v. Diaz, 522 U.S. 801, 118 S.Ct. 36, 139 L.Ed.2d 5 (1997) (referee's report admissible under 801(d)(2)(B) where state legislature submitted it to the Department of Justice in seeking preclearance under the Voting Rights Act).
PX 6371 (Tarco Decl.) ¶ 2.
Tarco explained in his declaration—which, to jump ahead, ultimately was received in evidence only as to two narrow points
PX 6371 (Tarco Decl.) ¶ 5.
Id. A “forensic copy” is “the exact image that is created of all of the data and information from the hard drives in a computer at a certain moment.” Id.
Id. ¶ 6.
Although the Court granted defendants' motion for leave to add Tarco to their witness list, defendants ultimately did not call him at trial. There appears to be at least one reason why they did not.
Tarco's declaration was received to establish the serial numbers of each of the computers that had been in Zambrano's office—PC–01 and PC–02.
Id. ¶ 5.
See PX 4108 (Lago Agrio Court Delivery Record of Furniture and/or Office Equipment); PX 4110 (same); PX 4109 (Lago Agrio Court Department of Fixed Assets Control of Fixed Assets for N. Zambrano); PX 4110 (Lago Agrio Court Record of Delivery of Furniture and/or Office of Equipment).
See PX 4122 (HP Shipment Detail).
Tr. (Lynch) 2808:9–11, 2813:4–13.
Lynch determined that the “old” computer was manufactured by HP in October 2006 (PX 4119 (Serial Number & Subassembly Tracking)), and given to Zambrano two years later. PX 4110 (Lago Agrio Court Record of Delivery of Furniture and/or Office of Equipment); Tr. (Lynch) 2812:22–2813:3. The new computer—on which Zambrano testified the Judgment was typed in full—was manufactured by HP in September 2010. PX 4121 (Serial Number and Subassembly Tracking). The Judicial Council of the Lago Agrio court purchased the new computer on November 26, 2011. PX 7772 (Ltr. No. AF–001–2013 from A. Jimenez).
Moreover, the new computer had not even been shipped by HP by October 10, 2010—the date on which the Tarco declaration stated that the PROVIDENCIAS file was created. Tr. (Lynch) 2819:25–2820:5. It was not received by the Ecuadorian Judicial Council until November 26, 2010, PX 7772 (Ltr. No. AF–001–2013 from A. Jimenez), almost two months after Zambrano was reassigned to the Chevron case.
Tr. (Zambrano) 1679:5–7; see also id. 1658:14–1659:6.
4. Zambrano's Self Interest
It is relevant to understand also the nature and extent of Zambrano's personal motives to support the LAPs and to deny Chevron's accusations. They are economic and political, and the two are interrelated.
One personal motive is quite simple—employment. Zambrano had been in government service almost his entire adult life, first in the Air Force, then as a prosecutor from 1994 until he was appointed a judge in 2008.
Id. 1894:25–1902:4; PX 4124 (July 30, 2008 Zambrano Judicial Appointment).
In May 2012, the Judiciary Council again found Zambrano guilty of judicial misconduct in another incident and imposed the further sanction of removal from office to be “recorded in his personnel file since he [then wa]s no longer part of the judicial branch.”
PX 411 (Feb. 29, 2012 Order). The Plenary Judicial Council found that Zambrano and Judge Ordófiez, previously mentioned, overturned a detention order and released from custody a defendant who had been apprehended in a truck containing 557 kilograms of cocaine. Id.
PX 6321 (May 22, 2012 Order), at 8.
Moreover, we infer that Zambrano's employment prospects in the legal field were quite limited and that the likelihood that he would be hired by the government after the Judiciary Council removed him from office as a judge for two incidents of misconduct was nil.
Tr. (Zambrano) 1801:23–25.
On January 28, 2013, Chevron filed a motion in this case to which it attached a declaration by Guerra that set forth his contention that Zambrano had been bribed. On March 13, 2013, Zambrano provided the defendants with a declaration contesting Guerra's allegations.
PX 6330 (Zambrano Decl.) ¶¶ 1, 14.
Tr. (Zambrano) 1792:4–21, 1802:9–1803:7.
This sequence of events gives rise to a strong inference that Zambrano's employment was—and remains—directly related to his testimony. Zambrano's attempt to deny any such connection only made the connection more likely because of the clumsy way in which he dissembled about it.
Zambrano testified that he had never visited the website of the Refinery of the Pacific, despite that he had been working there for six months. Tr. (Zambrano) 1794:15–19. He was unaware that he had an email address with the company. Id. 1795:15–17. And he claimed not to know whether Petroecuador was a majority shareholder of RFP, even though he admitted that Ecuadorian law requires that Petroecuador must own more than a majority share. Id. 1793:13–21, 1793:3–8.
The likelihood of such a connection is enhanced by the importance of the Lago Agrio case to the president and government of the ROE. It has been open and notorious in Ecuador for years that President Correa and the government support the LAPs in the case against Chevron. The government itself is litigating closely related issues against Chevron in an arbitration.
See, e.g., Chevron Corp. v. Republic of Ecuador, 987F.Supp.2d 82, 12 Civ. 1247(JEB), 2013 WL 5797334 (D.D.C. Oct. 29, 2013); Chevron Corp. v. Republic of Ecuador, 949 F.Supp.2d 57 (D.D.C.2013); Chevron Corp. v. Donziger, 886 F.Supp.2d 235, 248 (S.D.N.Y.2012).
Tr. (Zambrano) 1800:6–10; PX 2500 (Tr. of Feb. 14, 2011 Press Conference).
And he congratulated Zambrano for a decision that he described as “a touch of happiness ... that has been shared with all of you. This is happiness for all citizens, especially for the indigenous communities of the Ecuadorian Amazon.”
PX 2500 (Tr. of Feb. 14, 2011 Press Conference), at 3.
Id. at 4.
PX 2503 ( Correa says the judgment against Chevron in Ecuador must be respected, Ultimahora, Feb. 19, 2011).
Tr. (Zambrano) 1800:3–1801:4.
For one thing, Zambrano was at the press conference, which was a media event at which a high official of the judiciary lauded him publicly. People understandably forget minor details of such events, but Zambrano's claims to lack recollection of an event that likely was a high point of his career are implausible.
The claim of unawareness of the president's and the government's position on the lawsuit is even worse. Chevron's alegato—its final written argument before Zambrano rendered the Judgment—argued extensively that the case had been prejudicially influenced by the government. It made abundantly clear that the government generally and President Correa in particular supported the LAPs' case.
PX 6405 (Chevron alegato ), § 3.8, at 150–163 of 604.
Tr. (Zambrano) 1961:4–6.
The Court finds that Zambrano's disavowals of memory and of knowledge were false. The motive for this lack of candor was to attempt to defeat any inference that there was, or that Zambrano thought there was, a connection between his testimony and his job. But the attempts fail. The Court finds that Zambrano at least thought that his job would be in jeopardy if he did not testify favorably to the plaintiffs, and his desire to keep his job strongly motivated his testimony.
Given this finding, it is unnecessary to determine whether the job actually was given to him to buy his testimony or, in the vernacular, to “keep him sweet.” The Court does not, however, credit Zambrano's claim that he got the job over the Internet. Tr. (Zambrano) 1935:13–25. He made quite clear at trial that he had limited if any computer skills. If he is to be believed, he had an 18–year old typist do legal research for him on the computer. Tr. (Zambrano) 1684:3–11. He did not even know the email address assigned to him at Refinery of the Pacific. Tr. (Zambrano) 1796:12–14.
In sum, the Court finds that Zambrano did not write the Judgment issued under his name. He was astonishingly unfamiliar with important aspects of its contents. His testimony at trial was evasive and internally inconsistent. He repeatedly contradicted himself when attempting to explain how he wrote the Judgment, whether he received any assistance, and what materials he relied upon in doing so. The testimony he gave at trial was markedly different from that which he gave at his deposition just days before. And his responses and explanations at trial varied from one minute to the next. Not only was his version of events internally inconsistent, it was, as we shall see, in large respects thoroughly contradicted by evidence that was unrebutted and unexplained by the defendants. So we turn to the question of who did write it.
B. Evidence that the LAPs Wrote the Judgment
1. The LAPs' “Fingerprints” Are All Over the Judgment
We explain in Appendix I, § I, that the record in the Lago Agrio case consists of the documents duly filed with the clerk and added to the cuerpos, booklets each containing about 100 pages. Consideration of any other materials, including any materials provided to a judge or court official informally or ex parte, would have been improper under Ecuadorian law.
Infra App'x I Pages 1–5.
Zambrano stated that he decided the Lago Agrio case
That of course is a hotly contested issue and the Court does not credit Zambrano's claim of authorship. But Zambrano's testimony as to what materials properly could have been considered in deciding the case nonetheless has value, particularly as the thrust of his testimony was that everything was done with utter propriety.
Tr. (Zambrano) 1608:21–22.
Chevron exhaustively compared documents produced by defendants in discovery in this case and in the Section 1782 proceedings, on the one hand, with, on the other hand, the Lago Agrio court record—the record that Zambrano claimed was the sole source of evidence used in writing the Judgment. That comparison establishes that portions of eight documents produced by defendants in discovery—internal work product—appear in haec verba or in substance in the Judgment that Zambrano claims to have written himself.
Infra App'x I.
a. The Fusion Memo, the Draft Alegato, the Index Summaries, the Clapp Report and the Fajardo Trust Email
The first six of the eight documents—known as the Fusion Memo,
PX 435 (Fusion Memo).
PX 438 (Draft Alegato ).
PX 433–34 (Index Summaries).
PX 928 (Clapp Report).
PX 437 (Fajardo Trust Email).
Some of these inclusions and commonalities were on important issues, including the question whether Chevron could be held liable for alleged pre-acquisition torts of Texaco. Even more important, however, they are, as Chevron's counsel aptly called them, like “fingerprints.” There is no plausible explanation for their presence in the Judgment except that whoever wrote the Judgment copied parts of them. This becomes even clearer when one examines the commonalities between these six LAP internal work product documents and the Judgment. Examples of these are summarized in exhibits to Dr. Leonard's testimony,
PX 3700 (Leonard Direct) ¶ 80.
Id. ¶¶ 39–79.
and PX 2170, which “contain[ ] side-by-side comparisons highlighting text from the Ecuadorian Plaintiffs' unfiled work product in the above five exhibits that appears verbatim or nearly verbatim in the Ecuadorian Judgment.” PX 2164, which gives “39 examples of plagiarized text from the [se six pieces of the] Ecuadorian plaintiffs' unfiled work product that appear[ ] in the Ecuadorian Judgment,”
Id. ¶ 39.
Two other internal LAP documents that are not in the record
The fact that neither is in the Lago Agrio record is established by the testimony of Dr. Juola, PX 3800 ¶¶ 3, 27 (Selva Viva Database), and Mr. Hernandez (PX 3900) ¶¶ 3, 17–19, 35–36, 39) (Moodie Memo). The Court credits that testimony.
b. The Moodie Memo
On February 2, 2009, a former intern for the LAP team, Nick Moodie, prepared a memorandum for Prieto and Sáenz regarding “[t]he standard of proof in U.S. common-law toxic tort negligence claims” (the “Moodie Memo”).
PX 1101 (Moodie Memo).
There are three striking similarities in both documents' discussion of and citation to U.S. law on causation:
• First, the Moodie Memo discusses the “substantial factor” test, which it explains was taken from “Californian case law” and requires a plaintiff to prove that there is a “[r]easonable medical probability that D's conduct was a substantial factor in contributing to the aggregate dose of toxic substance and hence the risk of developing the disease.”
Id. at 2.
PX 400 (Lago Agrio Judgment), at 89–90 (“Finally, we refer to two theories that have been developed by Anglo–Saxon case law which refer to causation in harm to human health: the theory of the substantial factor and that of the most probable cause, which are legal theories of causation developed in the USA, Australia and England....”).
• Second, the Moodie Memo cites the California case, Rutherford v. Owens–Illinois, Inc.,
as reflective of U.S. law on causation in toxic substance cases and as requiring proof that “D's conduct was a substantial factor in contributing to the aggregate dose of toxic substance and hence the risk of developing the disease.”
The Judgment, citing Rutherford, also states that substantial factor requires “that the conduct of the defendant was a factor that contributed substantially to increasing the dose of harmful substances and ultimately the risk of developing illnesses.”
PX 1101 (Moodie Memo), at 2.
PX 400 (Lago Agrio Judgment), at 89.
• Third, the Moodie Memo states that the substantial factor test does not require that “it was toxic chemical's [ sic ] from D's conduct that actually produced the malignant growth (due to the ‘irreducible uncertainty of which particular fibre or fibres actually cause the cancer to begin forming’).”
The Judgment states that the substantial factor test means that agents “must be considered without the need to investigate which of them was precisely the cause of harm, due to the irrefutable lack of scientific uncertainty about which of the elements used by the defendant caused the harm.”
PX 1101 (Moodie Memo), at 2 (emphasis in original).
PX 400 (Lago Agrio Judgment), at 89–90.
Chevron expert Michael Green, a law professor from Wake Forest University School of Law “with substantial expertise in the area of causation in toxic tort lawsuits,”
analyzed the Judgment and the Moodie Memo. He expressed the view that it was odd that a court in Ecuador—a civil law country—would cite to and rely upon U.S. (and other common law countries') law on causation without any explanation for doing so.
PX 5100 (Green Direct) ¶ 1.
Id. ¶¶ 16–18.
Id. ¶ 20A–C.
The documents' citation to and discussion of Australian law also indicate that the Moodie Memo and the Judgment were written by the same author. Both documents cite to Australian law regarding its “process of inference” rule for causation. Both documents contain identical strings of words:
The Moodie Memo: “Australia: causation can be established by a process of inference which combines primary facts even if each piece of evidence alone does not rise above the level of possibility....”
PX 1101 (Moodie Memo), at 3 (emphasis added).
The Judgment: “Australian case law tells us that causation can be established by a process of inference which combines concrete facts even if the actual causation cannot be attributed to anyone of them by itself....”
PX 400 (Lago Agrio Judgment), at 90 (emphasis added).
This part of the Judgment, at least, was copied from the Moodie Memo. There is evidence also of additional copying from the Moodie Memo into the Judgment. Both documents refer to the Australian case law for the “process of inference” discussion.
Id. at 89–90; PX 1101 (Moodie Memo), at 3.
(2000) 49 NSWLR 262, PP 91, 98.
and author of the Seltsam opinion, testified at trial that the citation to his opinion, or to Australian law, for this proposition is anomalous. “Besides the similarity of the language,” he said, “it is striking that both the Ecuadorian Judgment and the Moodie Memo attribute this approach to Australian law, whereas it is a well-established proposition throughout the common law world. It is usually attributed, as [former Chief Justice Spigelman] did in Seltsam v. McGuinness, to the American text, Wigmore on Evidence 3rd Edition, paragraph 2497. To describe it as an Australian legal approach is inaccurate.”
PX 5000 (Spigelman Direct) ¶ 1.
Id. ¶ 18. Counsel for the Donziger defendants pointed at trial to what appears to be an Australian journal article, which cites the Seltsam case for this proposition and does not mention Wigmore on Evidence or any other American source. Tr. (Spigelman) 902:11–903:13; DX 1203 (K. Mengersen, S.A. Moynihan, and R.L. Tweedie, Causality and Association: The Statistical and Legal Approaches,Statistical Science, 2007), at 240. But the fact that Australian authors in an Australian publication cite exclusively to an Australian case in no way establishes that that case—or Australian law in general—is commonly cited in jurisdictions outside Australia, such as Ecuador.
Both Professor Green and former Chief Justice Spigelman identified other mistakes of U.S. and Australian law that are common to both the Moodie Memo and the Judgment.
It is unnecessary to list them all here. The fundamental point, however, is not that the Judgment came to mistaken or odd conclusions about the law of the United States or Australia. It instead is that both the Moodie Memo and the Judgment made the same mistakes in characterizing them. Nothing in the Moodie Memo appears anywhere in the Lago Agrio Record.
See PX 5100 (Green Direct) ¶¶ 21B–E; PX 5000 (Spigelman Direct) ¶ 17.
Thus, the likelihood that the Judgment independently would contain exactly the same errors in characterizations as appear in the Moodie Memo is almost zero. The Court finds that parts of the Moodie Memo were copied into and paraphrased in the Judgment.
PX 3900 (Hernandez Direct) ¶ 35 (“The Moodie Memo was not located in the Reviewed Record.... No complete excerpt from the Moodie Memo was located in the Reviewed Record....”).
c. Selva Viva Database
Spencer Lynch of Stroz Friedberg, LLC, compared the environmental sample names and testing results contained in the Judgment with those contained in the lab results filed with the judicial inspection reports in the Lago Agrio case (the “Filed Lab Results”). He compared them also with those contained in a series of spreadsheets that were produced to Chevron in discovery, but not filed with the Lago Agrio court (the “Selva Viva Database”).
While the Filed Lab Results “were similar in many ways to the” Selva Viva Database, Lynch found that there were “several notable differences [which] revealed that the [Selva Viva Database] was more likely the source of the information cited within the Ecuadorian Judgment” than the Filed Lab Results.
PX 439–441 (Selva Viva Database).
PX 4100 (Lynch Direct) ¶ 81.
Id.; see also PX 2175 (Portion of Judgment Showing Errors Common to Selva Viva Database).
First. Many of the Judgment's citations to sample results, each of which consisted of a series of letters and numbers, ended with the suffix “—sv” or “—tx.”
PX 4100 (Lynch Direct) ¶ 82.
In addition, both the Selva Viva Database and the Judgment used a naming convention “ending with numeric ranges and an ‘m’ or ‘cm’ enclosed within parentheses ... [but] the Filed Lab Results used a naming convention that ended with numeric ranges in parentheses, followed by an ‘m’ or ‘cm’ outside of the parentheses.”
Id.; PX 349–441 (Selva Viva Database).
PX 4100 (Lynch Direct) ¶ 83.
PX 399, 400 (Lago Agrio Judgment), at 108.
PX 4100 (Lynch Direct) ¶ 84.
Id.; see PX 2175 (Summary of Overlap and Common Errors in Judgment, Selva Viva Database, and Stratus Compilation).
Second. There are two striking discrepancies between numerical values in the Filed Lab Results and the Judgment that must have resulted from copying from the Selva Viva Database.
The first relates to reporting of concentrations of mercury. The sensitivity of testing to determine the presence or absence and, in the former case, concentration of a substance in a sample varies depending upon the capabilities of the equipment or testing method used. Where a test does not reveal the presence of the subject substance, the result often is reported as a less-than sign (“<”) followed by a number that indicates the minimum concentration of the subject substance that can be detected by the particular equipment and testing method used.
PX 4100 (Lynch Direct) ¶ 87; see also, e.g., 40 C.F.R. § 439.1(j) (“Non-detect (ND) means a concentration value below the minimum level that can be reliably measured by the analytical method”); Dennis R. Helsel, Nondetects and Data Analysis 9 (“[m]easurements whose values are known only to be above or below a threshold ... [are c]alled ‘less thans' or ‘nondetects' ”); id. at 6 (illustrating tabular presentation of nondetects using less than (“<”) symbol).
The Judgment contained the following passage (which, though it is extraneous to the present point, was relevant to liability and damages in Ecuador):
“Mercury has been considered as a possible human carcinogenic agent by the EPA and there are multiple studies showing the effects of mercury exposure, the most serious being permanent brain and kidney damage, which alerts this Court that alarming levels of mercury have been found in the Sacha, Shushufindi and Lago Agrio fields, where we found several samples reaching 7 mg/kg. taken by the experts José Robalino in the judicial inspection at Sacha Central (see samples—ESTS1_sv and SAC–PIT1–S1–l_sv); and SAC–PIT–1–S1–2_sv) and Xavier Grades at Shushufindi 8 and Lago Agrio Norte (see samples SSF08–PIT1–S1_sv, SSF08–PIT1–S2_sv, SSF08–PIT1–S3_sv, SSF08–PIT2–S11_sv, SSF08–PIT2–S3_SV, SSF08–PIT2–S4–1_sv, SSF08–PIT2–S5_sv, SSF08–PIT2–S6—sv, and also LAN–ESTA–B_sv, LAN–ESTA–B1_sv, LAN–ESTA–B2_sv, LAN–ESTA–C_sv, LAN–ESTBASUE1_sv, LAN–ESTBASUE2_sv, LAN–ESTB–D1_sv, LAN–ESTB–D2_sv, LAN–ESTB–E1_sv). In light of these results, showing evidence of the presence of mercury in elevated levels in soil samples collected during the judicial inspections, there is evidence of a worrying presence of this element in the soil of the ecosystem of the concession.”
PX 400 (Lago Agrio Judgment), at 109 (all emphasis added).
PX 4100 (Lynch Direct) ¶ 87.
The source of this anomaly is apparent. The Selva Viva Database separated the “<” sign from the following value by placing each in its own column. The column containing the “<” sign was labeled “flag.” The author or authors of the Judgment thus used the Selva Viva Database rather than the Filed Lab Results, ignored or did not understand the “flag” column, and wrongly reported each of these test results as showing a concentration of mercury of 7 mg/kg.
This is illustrated by Figure 26 in PX 4100 (Lynch Direct) ¶ 89; see also id. ¶¶ 87–88.
The next “tell” is quite similar. The Judgment reported the concentration of a substance allegedly found at some specific sites in milligrams per kilogram.
A milligram is one-thousandth of a gram. A concentration of one milligram is one one-thousandth of a gram per 1,000 grams of sample.
“and 3142 mg/kg., in the samples taken by the plaintiffs' experts, since the defendant's experts did not analyze this compound. On the other hand, the expert Luis Villacreces, in samples taken during the inspections of the Auca 1 well, Cononaco 6, the Sacha 51 well and wells 18, 4 and 7 at Shushufindi has provided results that exceed any standard of reasonable tolerance, with results such as 3,142 and 466 at Auca 1 in AU01–PIT1–SD2–SU2–R(220–240 cm)_sv and AU01–Al–SD1–SU1–R(60–100cm)_sv; 2450 and 876 at Cononaco 6 in CON6–A2–SE1_sv and”
PX 400 (Lago Agrio Judgment), at 109 (emphasis added).
Of course, the original Judgment (PX 399) was in Spanish; this is the stipulated English translation. But the phrase “3142 mg/kg” is identical in both.
In fact, the Filed Lab Results for these samples reported their findings in micrograms per kilogram (?g/kg)—that is, in millionths of a gram per kilogram.
Thus, the Judgment could not have obtained the results it reported from the Filed Lab Results. It had to have copied them from the Selva Viva Database which, unlike the Filed Lab Results, reported at least some of its test results in milligrams per kilograms.
PX 4100 (Lynch Direct) ¶ 90 & Fig. 27.
Id. & Fig. 28
It perhaps bears mention, though the point is extraneous for the present purpose of identifying copying in the Judgment from non-Record sources, that the use of milligrams per kilogram exaggerated the concentration of the subject substances in these samples by a factor of 1,000, assuming that the Filed Lab Results were accurate to begin with.
Finally. Both the Judgment and the Selva Viva Database incorrectly identified one of Chevron's experts, John Connor, as the submitter of a specific sample result.
Id. ¶ 85.
Id. ¶ 85 & Fig. 21.
The foregoing analysis, it should be understood, does not reflect any review by this Court of the substantive merits of the Judgment. The point is that these particular characteristics of the Judgment are inconsistent with the evidence in the Lago Agrio record upon which the Judgment purportedly relied, but appear in the Selva Viva Database, which is not in that record. This goes directly to the question of the authorship of the Judgment. At least in these respects, the Judgment was copied from LAP material outside the record, and Zambrano's testimony was untrue.
2. Defendants' Failure to Provide any Explanation for the Overlap
Defendants had remarkably little to say regarding the evidence of the extensive overlap between the Judgment and their internal work product. They did not explain how the LAPs' internal work product ended up verbatim or in substance in the Judgment, despite that it appears nowhere in the record. Donziger testified that he had “a variety of explanations” for how it had occurred, but failed to provide a single one.
Ponce testified that documents were provided to the judge at some judicial inspections and that certain actas from those judicial inspections (which were incorporated into the record) did not reflect all of the documents submitted by the parties.
Tr. (Donziger) 2600:6–9.
But he failed to identify a single occasion when that actually had happened, much less any given document that was submitted on such an occasion. Moreover, Ponce had left the LAP team before most of the LAP internal work product documents that appear in the Judgment even were created,
DX 1601 (Ponce Direct) ¶ 11.
Tr. (Ponce) 2272:22–2273:1, 2273:4–8.
Zambrano testified that documents related to the case that were not parts of the court record occasionally were left at the door of his office in the court.
Defendants thus appear to suggest that the overlap between the Judgment and the LAPs' internal documents is explained by the possibility that the documents were left at Zambrano's doorstep and that Zambrano copied from them. But Zambrano could not recall any of the specific documents that were left at his door.
Tr. (Zambrano) 1691:10–14.
Moreover, he was clear that he did not use any material that was left at his door. When documents were left for him, he explained, he “always matched it up with what already existed in the [ cuerpos of the] case.”
Tr. (Zambrano) 1694:15–21. When asked at trial whether he discarded documents that did not match those that were already in the cuerpos, Zambrano answered in the negative. Id. 1694:7–12. However, at his deposition two days earlier, Zambrano had testified that when documents were different from those in the cuerpos, he discarded them. Zambrano Dep. Tr. at 282:11–20. He testified at trial that his deposition testimony on this point was true. Tr. (Zambrano) 1694:23–25.
Again, the point is not that Zambrano wrote the Judgment. The Court finds that he did not. Rather, it is that this testimony confirms that he felt constrained to say that he relied only on material in the record.
More fundamentally, any contention that the eight internal LAP documents that appear verbatim or in substance in the Judgment were provided to the judge during the judicial inspections or were left at Zambrano's doorstep cannot be taken seriously. Not only would any such ex parte submission have contravened Ecuadorian law, but defendants utterly failed to prove that any such thing actually occurred. Had a member of the LAP team provided a document ex parte to Zambrano or any other judge, that person could and should have been brought to court or deposed to explain what the document was and when it was provided to the judge. But no such witness was produced. Defendants' failure to provide any evidence corroborating their explanation makes clear that it is nothing more than a post-hoc attempt to explain away the inexplicable.
Finally, it bears mention that Chevron has adduced evidence of only eight LAP documents that were copied into the Judgment. One may wonder why even more of the Judgment was not traced to the LAPs' internal work product. It is entirely conceivable, however, that Chevron would have done just that if it had been given complete access to the LAPs' documents. But documents from Ecuador were not produced in response to discovery requests and orders by this Court. Only through discovery from Donziger and others in the United States was Chevron able to obtain even the eight documents discussed above. Those eight documents firmly establish that the LAPs wrote at least material portions of the Judgment. In all the circumstances, the Court infers that the LAPs wrote all or most of it, particularly in light of evidence that they had been preparing for some time to write the whole Judgment.
3. Evidence that the LAPs Began Preparing the Judgment as Early as 2009
As one of the defendants' Ecuadorian law experts testified,
The testimony, which in this respect was uncontroverted, was given in a deposition and submitted under FED. R. CIV. P. 44.1 to facilitate the Court's decision on certain matters of Ecuadorian law.
Nevertheless, despite the lack of any meaningful discovery from the LAP team in Ecuador or testimony by any of its members, there is more than a hint in emails that Donziger produced under court order that the LAPs did prepare a form of judgment and, indeed, had begun that task in mid–2009, if not before.
DI 1751–5 (Rosero Dep. Tr.), at 124:12–125:19.
This is not unique to Ecuador. The same is true in Mexico. In re Bridgestone/Firestone, Inc. Tires Prods. Liab. Litig., 470 F.Supp.2d 917, 926 (S.D.Ind.2006) (“Under Mexican judicial procedures, it is improper to submit any proposed order to a Mexican state court.”) The parties have made no submissions on the point as to the law of other countries.
In late May or early June 2009, an intern named Brian Parker began working at the Selva Viva office. On June 5, 2009, Fajardo asked Donziger for “suggestions as to what he could do during these first few days.”
Donziger offered no printable ideas. But Fajardo responded to Donziger that he would give Parker “a research assignment for our legal alegato and the judgment, but without him knowing what he is doing ...”
PX 1137 (June 5, 2009 Email from P. Fajardo to S. Donziger re: “BRYAN” [sic] ).
Then, on June 18, 2009, Fajardo sent Donziger a copy of a new court decision. He added that “[t]he arguments by the magistrates are very interesting, I think they serve us well for our alegato and ...”
Id. (emphasis added); see also Donziger July 19, 2011 Dep. Tr. at 4763:24–4764:23, 4765:20–4766–17.
PX 1141 (June 18, 2009 Email from P. Fajardo to S. Donziger, J. Prieto, and J. Sáenz re: “THIS IS THE MOST COMPLETE ONE”) (ellipsis in original).
These emails are suggestive. The distinction drawn between the alegato— i.e., the written closing argument in an Ecuadorian litigation
—and the judgment in the email about Parker indicates that Fajardo's reference to “the judgment” meant exactly what it said. Parker was to do research for preparation of a judgment, but was not to be told the purpose of the assignment. Moreover, defendants have advanced no reason why it was important to keep Parker in the dark, save for the logical inference that he really was working on a judgment that could not properly have been submitted to the Lago Agrio court. Likewise, the strategically placed ellipsis at the end of the quoted sentence from the June 18 email implies that Fajardo knew that Donziger would know from the June 5 email that the ellipsis referred to the judgment.
Tr. (Zambrano) 1960:12–14 (“[The alegato] is a statement of position by one of the parties regarding a specific point that is in dispute in that litigation.”).
These emails, in and of themselves, of course do not prove that the LAP team began work in 2009 on a proposed judgment. But there is more as well that suggests that they did so, at least by some time in 2010.
Donziger's distrust of the competence and integrity of the Ecuadorian judiciary is clear. Moreover, Donziger and the LAPs had strong reasons to want to control the contents of, and therefore to write, the Judgment, assuming that they could obtain the judge's signature on it. They were deeply concerned by early to mid–2010 that the Lago Agrio court, even assuming it ruled in their favor, might rely on the Cabrera Report if left to its own devices.
Prieto's “go to jail” email was written in late March 2010, and this June 2010 email was written in the face of the imminent disclosure of “the Stratus materials” in the Colorado 1782 proceeding. Thus, there was an immediate threat that the Cabrera Report would be discredited as the work of the LAPs' consultants, Stratus. Reliance on it by the Ecuadorian court would have threatened to discredit even a judgment favorable to the LAPs— unless such a judgment were written in a particular way, as it ultimately was, with the disclaimer of reliance already noted. In fact, on the day that Donziger wrote the email just quoted, one of the LAPs' other U.S. lawyers spelled out the hope that the cleansing expert would provide an alternate basis for a decision and that the judge would decline to rely on the Cabrera Report and rely instead on the cleansing expert.
PX 1370 (June 14, 2010 Email from S. Donziger to J. Tyrrell, E. Westenberger, and E. Daleo re: “important update/Ecuador”) (“The Ecuador team is getting nervous that there is an increasing risk that our ‘cleansing’ process is going to be outrun by the judge and we will end up with a decision based entirely on Cabrera. Absent our intervention ASAP, they believe the judge could issue autos para sentencia in about 3–4 weeks, which would in effect bar our remedy to the Cabrera problem. Abady's firm is re-editing the submission in light of the recent complications with the Stratus materials ...”).
PX 1371 (June 14, 2010 Email from J. Abady to S. Donziger and others).
The probability that the LAPs drafted the judgment draws strength also from the following deposition testimony by Donziger:
“Q. Did the Lago Agrio plaintiff team at any time develop a proposed judgment for the Lago Agrio case? A. I don't believe so. I don't know. It is possible.”
Donziger, almost in the same breath, testified that he (1) believed that the LAPs had not prepared a proposed judgment, (2) did not know whether they had prepared a proposed judgment, and (3) thought it possible that they had prepared a proposed judgment. But this deposition took place only five months after the Judgment was issued. Chevron already had suggested that the Judgment, like the Cabrera Report, had been ghostwritten by the LAPs, or at least that the judge received “secret assistance” from the plaintiffs' team in writing it.
Donziger July 19, 2011 Dep. Tr. at 4814:22–4815:2.
So Chevron's suggestion that the LAPs had ghostwritten the Judgment, the Court finds, was in Donziger's mind when this deposition was taken. Given his lead role in the litigation and the emails discussed above, it is most unlikely that he did not know whether the LAPs had prepared a proposed judgment. If they had not, the easy and truthful answer would have been that they had not done so. Period. Indeed, the fact that Donziger obfuscated—that he quickly changed his answer to this very simple question from “I don't believe so” to “I don't know” to “[i]t is possible”—suggests that Donziger knew quite a bit more than he was willing to say and that he did not say what he knew because it would have been damaging.
C. Ultimate Findings on this Point—The LAPs Wrote the Judgment
Infra Facts § XII.A.1.
As we have noted, there is direct evidence that the LAPs began preparing a draft judgment as early as 2009. Donziger evaded the question whether they prepared a proposed judgment, notwithstanding that the submission of proposed judgments would have been improper in Ecuador. The Judgment copied extensively from eight LAP internal work product documents—documents which were not in the record, which Zambrano denied having used, and the presence of which in the Judgment defendants could not explain. There is extensive evidence of substantive ex parte contact by LAP lawyers,
including Donziger, with various Ecuadorian judges throughout the Lago Agrio case. There is the LAPs' previous ghostwriting of the Cabrera Report and their submission of a report supposedly written by Calmbacher but in fact written by the LAPs.
E.g., Donziger Jan. 29, 2011 Dep. Tr. at 3711:9–12 (LAP Ecuadorian lawyers “up to a certain point” “spoke regularly to the judge ex parte”); Infra Discussion § II.B.2, supra Facts § IV.F.1.
In addition, we have referred to the LAPs' strong motive to control the specific content of the Judgment insofar as it related to the Cabrera Report. Moreover, the LAPs' Cabrera Report problem had grown even more acute by later in 2010, when the Judgment must have been in preparation. By then, the Denver lawyers had withdrawn as counsel upon their discovery of what had transpired among Donziger, Stratus, and the LAPs. The LAPs' last-ditch effort to stop the production of the Stratus documents had failed.
Supra Facts § VII.C.1.
This Court had directed Donziger to produce extensive material and to submit to a deposition in a Section 1782 proceeding.
Chevron Corp. v. Berlinger, 629 F.3d 297, 305–06 (2d Cir.2011) (noting July 15, 2010 order to produce).
Other Section 1782 proceedings had been or were being filed around the country. Hopes of suppressing the facts that Cabrera had been neither impartial nor independent and that Stratus had written all or much of his report had been dashed.
In the circumstances, the Court finds that the LAPs wrote the Judgment in its entirety or in major part and that Zambrano made little or no contribution apart from his signature and perhaps some light editing designed to make it read more like other decisions he had signed in this and other cases. The Court would have made these findings without regard to the facts that Fajardo and the other Ecuadorian lawyers—those who naturally would have drafted or been involved intimately with the drafting of the judgment by the LAPs—(1) did not testify, and (2) did not produce documents pursuant to Chevron's request and the Court's order. But the inference from the absence of these witnesses strongly confirms these findings.
X. How it All Began: Guerra Ghostwrote Orders for Zambrano and the LAPs Paid Him
The LAPs wrote the Judgment. Zambrano did not. And yet the Judgment was issued by the Lago Agrio court under Zambrano's signature. How was this accomplished?
Chevron contends that the LAPs bribed Zambrano to allow them to write the Judgment and that this bribe was facilitated by Alberto Guerra. As will be seen, the Court finds that Chevron has so proved. To understand how this deal ultimately came to pass, however, we must turn back to mid–2009, when Zambrano first presided over the Lago Agrio case and the Judgment still was two years away.
A. The Guerra–Zambrano–Donziger Conflict
Alberto Guerra was the judge who presided over the Lago Agrio case from its filing until it was reassigned to another judge in 2004. But his involvement did not end then. Nor did it end when he was removed from the bench in May 2008.
PX 4800 (Guerra Direct) ¶ 7.
Chevron—in reliance on Guerra's testimony—claims that Guerra was a party to three distinct corrupt bargains with Zambrano before Zambrano too was removed from the bench:
• The first corrupt bargain, solely between Guerra and Zambrano, allegedly began after Guerra was removed from the bench. Zambrano, whose previous experience had been almost entirely as a prosecutor, was new to the bench and inexperienced in civil cases. He made an arrangement with Guerra pursuant to which Guerra drafted court decisions in civil cases over which Zambrano presided. Zambrano paid him for his ghostwriting services. There is no suggestion that Donziger or the LAPs were involved in this arrangement at its outset.
• The second was an outgrowth of the first. It came into existence when Zambrano was assigned in mid–2009 to preside over the Chevron case for the first of two occasions. Zambrano allegedly reached an unspecified arrangement with the LAPs to move the case along quickly and generally in the LAPs' favor. At Zambrano's suggestion, Guerra then made a deal with Donziger, Fajardo, and Yanza. The substance was that the LAPs paid Guerra roughly $1,000 per month to ghostwrite orders for Zambrano in the Chevron case that would give effect to the Zambrano–LAP deal, expediting the case in a way favorable to the LAPs.
• The third corrupt arrangement is said to have taken place in connection with Zambrano's second and decisive period of presiding over the Lago Agrio case, which began in mid- to late 2010. At Zambrano's request, Guerra allegedly facilitated a deal among Zambrano, Donziger, and Fajardo pursuant to which the LAPs promised to pay Zambrano $500,000 in exchange for Zambrano permitting the LAPs to write the decision. Fajardo then is said to have provided Zambrano and Guerra with a draft of the judgment to which Guerra made minor editorial changes. Zambrano allegedly signed and filed it.
Zambrano admitted at trial that he had Guerra draft decisions for him in civil cases but he denied that he paid Guerra to do so and denied that he had Guerra draft anything for him in the Lago Agrio Chevron case. He denied also the second and third alleged corrupt bargains and claimed that he dictated every word of the 188–page Judgment without any help from anyone except the typist.
Donziger admitted that Guerra proposed to him and Fajardo that Zambrano would throw the case and let the LAPs write the decision in exchange for a $500,000 bribe. He claimed, however, that he rejected the deal. Fajardo and Yanza declined to testify.
There are substantial credibility issues with respect to the testimony of Guerra, Zambrano, and Donziger. The resolution of these issues draws on the history of relationships among the five key actors, all of which span close to ten and in some cases more years. Moreover, it requires careful consideration of an enormous amount of testimony and documentary evidence, some important portions of which were ignored by both sides. Determinations of credibility depend also upon assessments of intangible factors such as the courtroom demeanor, tone, and manner of witnesses as well as other considerations and evidence.
“Findings of fact, whether based on oral or documentary evidence, must not be set aside unless clearly erroneous, and the reviewing court must give due regard to the trial court's opportunity to judge the witnesses' credibility.” Fed. R. Civ. P. 52(a)(6). “[W]hen findings are based on determinations regarding the credibility of witnesses, Rule 52(a) demands even greater deference to the trial court's findings; for only the trial judge can be aware of the variations in demeanor and tone of voice that bear so heavily on the listener's understanding of and belief in what is said.” Metzen v. United States, 19 F.3d 795, 797–98 (2d Cir.1994) (citation omitted).
B. Preliminary Observations on Credibility
Each of Guerra, Zambrano, and Donziger was a deeply flawed witness. The parties' opposing arguments naturally reflect that.
This is a civil case. Nevertheless, the defendants—in the classic manner of defendants attacking accomplice witnesses who “turn state's evidence” by testifying for the prosecution in exchange for what they trust will be reduced sentences for their own crimes—understandably train their guns on Guerra. They point out that Guerra admitted that he had been a corrupt judge, a crook just like many government accomplice witnesses in criminal cases. He later sought to profit from his proximity to these events, and he has succeeded in doing so. He is the beneficiary of what amounts to a private witness protection program created for him by Chevron, which facilitated his relocation from Ecuador to the United States and has been supporting and assisting him since his arrival here. The defendants therefore are quite right in the sense that a key witness against them, Guerra, is self interested. The Court recognizes that his testimony, in the words of the standard instruction given to juries with respect to such witnesses, “should be scrutinized with great care and viewed with particular caution....”
1 Leonard B. Sand et al., Modern Federal Jury Instructions Instr. 7–5 (Matthew Bender & Co.2013).
We bear in mind also another relevant portion of this standard instruction:
“The government argues, as it is permitted to do, that it must take the witnesses as it finds them. It argues that only people who themselves take part in criminal activity have the knowledge required to show criminal behavior by others.
For those very reasons, the law allows the use of accomplice testimony. Indeed, it is the law in federal courts that the testimony of accomplices may be enough in itself for conviction, if the jury finds that the testimony establishes guilt beyond a reasonable doubt.”
A fortiori the same is true in civil cases, in which the standard of proof is less than beyond a reasonable doubt.
Chevron, in the classic response, argues that conspiracies of the sort alleged here usually are proved only by the testimony of accomplices who often are scurrilous characters, that Guerra's testimony like that of many accomplice witnesses is corroborated by other evidence, and that the defendants' witnesses—Donziger and Zambrano—are at least equally flawed. We will deal below with the allegedly corroborating evidence, which requires extensive analysis. But it is well to recognize at the outset that Chevron too is quite right as to the matter of self interest.
Donziger of course stands to recover a contingent fee of more than $600 million if the Judgment is collected, a vast multiple of Guerra's economic interest. Nor, as already mentioned and as will be further detailed below, is his self interest purely economic.
Zambrano too is self interested. If indeed he was promised $500,000 from the proceeds of the Judgment, his chances of ever seeing a penny would be reduced by a finding that he was bribed to throw the case. $500,000 is a considerable fortune to someone in his position. His economic self interest in denying that corrupt bargain is obvious. And, as detailed previously, his self interest goes beyond that.
In sum, as the Court begins its analysis of what really happened in the final phase of the Lago Agrio case, it keeps in mind that all three of the these witnesses testified in ways that, if believed, would advance their own interests, economic and personal. Guerra's admitted corrupt behavior and the consequent attack on his character, which is entirely appropriate, should not obscure the fact that there are no saints here. Donziger and Zambrano are quite open to comparable attacks. The Court will return below to the credibility of the witnesses as it pertains to specific testimony and findings of fact. It turns first, however, to its discussion of the events that led up to the ultimate bribe deal.
C. Guerra's Ghostwriting for Zambrano
1. The Guerra–Zambrano Ghostwriting Deal—Unrelated Civil Cases
Guerra first met Zambrano when Guerra was a judge on the Provincial Court in Lago Agrio, where Zambrano was a prosecutor.
PX 4800 (Guerra Direct) ¶ 8; Tr. (Zambrano) 1629:19–1630:4.
PX 4800 (Guerra Direct) ¶ 4.
Id. ¶ 7.
Guerra said that “[a]ccording to the Judiciary Council, the reason for my dismissal was that I made statements that the Chevron case should be declared null, at a time when I no longer presided over the Chevron case. In reality, I believe I was dismissed because I confronted Judges Novillo and Yánez, who succeeded me as judges in this case, regarding several dubious and illegal rulings they had issued in the proceedings, and regarding their practice of asking the experts for 25 percent of their fees in consideration for having appointed them as such.” Id.
See Tr. (Zambrano) 1811:6–1812:2.
Guerra testified that “[a]s a former prosecutor,[ ] Zambrano had ample knowledge of criminal law and procedure, but very limited knowledge of civil law rules, substantively and especially procedurally.”
So when Zambrano became a judge, he was much more comfortable handling his criminal cases than his civil ones. He and Guerra entered into an agreement by which Zambrano paid Guerra $1,000 per month to assist Zambrano in drafting his “writs and rulings” in civil cases.
PX 4800 (Guerra Direct) ¶ 11.
Id. ¶ 11.
According to Guerra, he worked on the rulings in Zambrano's civil cases mainly on weekends at Guerra's home in Quito.
Id. ¶ 13.
Id. ¶¶ 13–15.
Guerra testified that he generally shipped the documents to Zambrano directly. At times, however, he shipped them to other individuals in Lago Agrio, who would then deliver them to Zambrano. Id. ¶ 16.
Guerra testified that Zambrano generally paid Guerra for his ghostwriting services in cash when they met in the Quito airport.
Id. ¶ 17.
That Guerra ghostwrote orders for Zambrano in cases other than Chevron is corroborated by independent evidence Chevron produced at trial.
First, as will be seen, Guerra in 2012 provided Chevron with full access to the hard drive of his personal computer.
Infra Facts § XI.A.1.a.iii.
PX 375, PX 1468, PX 1773–PX 1875; PX 4100 (Lynch Direct) ¶ 3e; PX 2177 (Summary Chart of non-Chevron draft rulings on Guerra's computer).
PX 4100 (Lynch Direct) ¶¶ 54–68. Chevron expert Spencer Lynch, the Director of Digital Forensics at Stroz Friedberg, LLC ( id. ¶ 1) compared the drafts orders found on Guerra's computer to court rulings published on the Ecuadorian court website, http:// www. funcion judicial sucubios. gob. ec/ index. php/ consulta- de- causas, in cases assigned to Zambrano. Id. His analysis revealed that text “appear[ed] verbatim, or nearly verbatim in 105 rulings issued by the Ecuadorian court [and] ... [a]t least 101 of the 105 rulings were issued by then judge Zambrano or in cases assigned to then-judge Zambrano.” Id ¶ 68b-c.
Second, the fact that Guerra and Zambrano at times shipped documents between them is corroborated by TAME's certified shipping records.
PX 1682 (TAME Shipment Records For Alberto Guerra Between Nov. 19, 2009 and Feb. 28, 2012).
Zambrano admitted that he and Guerra had a close relationship
Tr. (Zambrano) 1629:25–1630:4.
Zambrano at one point did deny that he paid Guerra for doing so although his testimony on the point was inconsistent.
As Chevron pointed out, Zambrano “stated that Guerra assisted him with drafting court orders because, at the time, Guerra ‘was facing a great financial need.’ Tr. (Zambrano) 1630:22–1631:3; see also id. 1814:4–11 (Guerra ‘was facing a very delicate financial situation’). But, despite having permitted Guerra to assist him by drafting orders because of Guerra's financial desperation, Zambrano denied having paid Guerra for ghostwriting his orders—implausibly implying that Guerra's financial need had resulted in his working for nothing. Tr. (Zambrano) 1630:22–1631:6.” DI 1847 (Chevron Corp. Post-trial Mem. of Law), at 101.
PX 1733 (Guerra Daily Planner); PX 1734 (Guerra Daily Planner).
He testified that he had lost the prior day planners. Tr. (Guerra) 1025:1–17.
PX 1735 (Guerra Daily Planner), at 1, 180; PX 1685 (Guerra Daily Planner Entry for Feb. 24, 2012).
The Court sees no persuasive reason why Guerra would have done this work for Zambrano without compensation, especially given that Guerra had been removed from the bench even before Zambrano became a judge and was in financial difficulty. Indeed, while Zambrano at one point denied such payments, his testimony on this point actually was internally contradictory and his claim that Guerra worked for nothing was not credible. And while it is true, as defendants argue, that the available day planners do not begin until 2011, the logic of the situation also supports Guerra's version.
The Court finds that Zambrano compensated Guerra for drafting orders on his civil cases and that the arrangement began in late 2008 or early 2009 and in any case before there was any immediate prospect of Zambrano being assigned the Chevron case. Zambrano's testimony that he did not pay Guerra and that the arrangement began in 2010 is not credible.
2. Zambrano's First Tenure Presiding Over the Lago Agrio Case
a. Guerra Reaches out to Chevron
In August 2009, Judge Nuñez was presiding over the Lago Agrio case. A scandal allegedly involving his conduct and the Chevron case broke in consequence of which he left the case and Zambrano became the presiding judge. According to Guerra, Zambrano instructed Guerra to reach out to the attorneys for Chevron “in order to negotiate an agreement by which the company would pay Zambrano and [Guerra] for issuing the final judgment in Chevron's favor.”
PX 4800 (Guerra Direct) ¶ 22.
Pursuant to Zambrano's instruction, Guerra called Alberto Racines, an attorney at the law firm of Adolfo Callejas, Chevron's Ecuadorian counsel, some time in the August to October 2009 period.
The two met, and Guerra informed Racines that he “could establish a direct connection with Judge Zambrano so they could discuss and negotiate important and decisive issues in the case, including the judgment.”
Id. ¶ 22; Tr. (Guerra) 916:3–3.
PX 4800 (Guerra Direct) ¶ 22; Tr. (Guerra) 916:3:917–4.
Guerra did not tell Racines that he was ghostwriting orders for Zambrano. Tr. (Guerra) 917:5–7.
Tr. (Guerra) 917:8–20.
Guerra claims that he reported Racines' rejection to Zambrano, who then decided to explore the possibility of a deal with the plaintiffs.
Zambrano explained that he already had reached an agreement with the LAPs' representatives to “move the case along in their favor” and told Guerra that he should “work out a financial agreement directly with Fajardo for payment of [Guerra's] ghostwriting services.”
PX 4800 (Guerra Direct) ¶ 23.
b. Following Chevron's Rejection, Guerra Makes a Deal With the LAPs
Guerra said that he first met with Fajardo in Quito to discuss the matter.
They agreed that: (1) Guerra would “move the case quickly,” (2) “Chevron's procedural options would be limited by not granting [its] motions on alleged essential errors in rulings [Guerra] was to write,” and (3) the LAPs' “representatives would pay [Guerra] approximately USD $1,000 per month for writing the court rulings [ ] Zambrano was supposed to write.”
Id.; Tr. (Guerra) 919:6–14.
But Fajardo told Guerra that Guerra should meet with Donziger promptly so that Donziger could hear the deal from Guerra's mouth. This was necessary, Fajardo said, because Donziger “was the boss of the attorneys—of the legal team” and “all important matters should be brought to [his] attention.”
PX 4800 (Guerra Direct) ¶ 23; Tr. (Guerra) 920:2–7.
PX 4800 (Guerra Direct) ¶ 23; Tr. (Guerra) 921:6–20.
At Fajardo's request, according to Guerra, Guerra several days later allegedly met with Donziger, Fajardo, and Yanza at the Honey & Honey Restaurant in Quito.
PX 4800 (Guerra Direct) ¶ 25; Tr. (Guerra) 921:5–25.
PX 4800 (Guerra Direct) ¶ 27.
Id.; Tr. (Guerra) 925:6–14.
c. Guerra Drafted Zambrano's Orders in the Chevron Case
During Zambrano's first tenure on the Chevron case Guerra wrote many of Zambrano's rulings in that case as well as others.
PX 4800 (Guerra Direct) ¶ 31; Tr. (Guerra) 930:7.
Tr. (Guerra) 930:14–16.
He occasionally drafted orders, or portions of orders, to favor Chevron because, he explained, “it could seem too obvious if every single portion of every single court order that [Guerra] drafted[.] [I]t could seem as though all of the orders were being issued for the benefit of the plaintiffs. That would have looked suspicious and the idea was to not have it look suspicious.” Id. 930:20–24.
PX 4800 (Guerra) ¶ 31.
Tr. (Guerra) 931:8–11.
In addition to 105 drafts of orders in Zambrano's other cases,
Supra note 920.
PX 1172, 1173, 1186, 1190–1193, 1197, 1209, 1220, 1243 (Guerra Draft Chevron Orders); PX 4100 (Lynch Direct) ¶ 34.
PX 4100 (Lynch Direct) ¶ 48.
The Court finds that the Zambrano orders were prepared from the Guerra drafts. The Guerra draft orders corroborate his testimony that he was ghostwriting orders for the Chevron case, although not the claim of an arrangement between Zambrano and the LAPs.
Id. ¶ 45 & Table 10.
Although the last-saved date for the ninth order postdated Zambrano's issuance of it, it is much more likely it actually was created by Guerra before Zambrano issued its counterpart. Chevron's forensic expert testified that the metadata of the order—which is 72 pages long—reflects that the order was edited for a total of only two minutes before it was last saved. Because it is impossible to draft a 72–page document in two minutes, and because the order is nearly identical to the order that was issued by Zambrano, it is much more likely, and the Court finds, that the ninth draft order was written by Guerra, issued by Zambrano, and for some reason later last-saved on Guerra's computer. Id.
The Court notes also that the fact that these draft Chevron orders all had a file system create date of July 23, 2010 does not suggest that all were created then or that they were not prepared by Guerra when he said he prepared them. Forensic analysis of his computer showed that he installed Windows XP on July 23, 2010 and then transferred these draft orders, as part of a larger transfer of data on the same date, from an external hard drive. The obvious inference is that Guerra backed up his computer to the external hard drive before installing Windows XP and then restored his files from the external hard drive to the computer. PX 4100 (Lynch Direct) ¶¶ 34–37; see Tr. (Lynch) 557:1–558:10.
d. The LAP Team Paid Guerra for His Ghostwriting Services
According to Guerra, the LAP team paid Guerra for his ghostwriting work directly, either in cash or by deposit into his bank account.
PX 4800 (Guerra Direct) ¶ 31; Tr. (Guerra) 931:21–22.
PX 4800 (Guerra Direct) ¶ 32; Tr. (Guerra) 932:10–11 (“[Fajardo] would hand me a blank white envelope and inside the envelope were [$]20 and $50 bills.”).
PX 4800 (Guerra Direct) ¶ 33.
Records of Guerra's bank account at Banco Pichincha
The Court has concluded, for reasons set out in Appendix III, that the records are admissible and it finds them persuasive.
Guerra's account statements and deposit slips confirm that in each of October, November, and December 2009, and February 2010, $1,000 was deposited into Guerra's account at Banco Pichincha.
PX 1713 (Guerra Banco Pichincha Deposit Slips); PX 1689, 1706–1708 (Guerra Banco Pichincha Account Statements).
PX 1719 (Dec. 23, 2009 Deposit Slip); PX 1718 (Feb. 5, 2010 Deposit Slip); Tr. (Donziger) 2596:1–4 (“Q. Ximena Centeno [wa]s an employee of Selva Viva [in December 2009], correct, sir? A. My understanding was that she worked for Selva Viva at that time, yes.”).
PX 1718 (Feb. 2010 Guerra Banco Pichincha Deposit Slip); PX 1713 (same), at 8; PX 1719 (Dec. 2009 Guerra Banco Pichincha Deposit Slip); PX 1713 (same), at 1.
PX 1741 (X. Centeno national identity card). The admissibility of this exhibit is dealt with in Appendix V.I.
DI 1671 (Owen Decl.) passim. The declaration was filed in opposition to defendants' motion (DI 1660) to strike, among other things, bank records offered through Guerra. Defendants neither objected to consideration of the declaration nor, for that matter, replied to Chevron's opposition to their motion. In any case, the Court is not bound by the rules of evidence in deciding preliminary questions of admissibility. Fed. R. Evid. 104(a).
Beginning in mid–2009, Fajardo began an email chain that involved Donziger and others and that referred to the PUPPET and the PUPPETEER. The text and context of the emails demonstrate these terms were code names, and that PUPPETEER referred to Guerra and PUPPET referred to Zambrano.
Donziger and Fajardo often used code names in internal emails. As Donziger admitted in a deposition, he did so “to prevent any reader of those documents from knowing exactly who it was [he] w[as] talking about....” Donziger Jan. 29, 2011 Dep. Tr. at 3817:13–18. One admitted example is Fajardo's 2007 cook-waiter-restaurant email, discussed above, in which Donziger admitted that “cook” meant Judge Yánez, “waiter” meant Cabrera, and “restaurant” meant Chevron.
The chain began on September 15, 2009—shortly after Judge Nuñez had recused himself and at about the same time at which (1) Zambrano had begun acting on the Chevron case, and (2) Guerra said he struck the ghostwriting deal with Fajardo and Donziger—with an email from Fajardo to Donziger, Sáenz, Prieto, and Yanza. The subject was “PUPPETEER.” Fajardo wrote:
“I think that everything is quiet ... The puppeteer is pulling the string and the puppet is returning the package ... By now it's pretty safe that there won't be anything to worry about ... The puppet will finish off the entire matter tomorrow ... I hope they don't fail me ...”
PX 1753 (Sept. 15, 2009 Email from P. Fajardo to S. Donziger, J. Prieto, J. Sáenz, L. Yanza, andrenatog 85@ hotmail. com re: “PUPPETEER”) (ellipses in original).
As we have seen, Zambrano formally took over and issued his first two orders in the Lago Agrio case on October 21, 2009.
He had issued some orders in it earlier. E.g., PX 348 (Oct. 3, 2009 Lago Agrio Court Order).
PX 1176 (Oct. 21, 2009 Email from P. Fajardo to S. Donziger, J. Sáenz, J. Prieto, L. Yanza, and R. Garcia re: “ONWARD”).
PX 1751 (Oct. 27, 2009 Email from P. Fajardo to S. Donziger and L. Yanza re: “NEWS”).
PX 583 (Banco Pichincha Account Summary for Selva Viva), at 51.
PX 1713 (Guerra Deposit Slips), at 10.
On November 26, 2009, another $1,000 in cash was withdrawn from the Selva Viva account.
PX 583 (Banco Pichincha Account Summary for Selva Viva), at 51.
PX 1713 (Guerra Deposit Slips), at 5, 11.
PX 1746 (Nov. 27, 2009 Email from L. Yanza to S. Donziger).
On December 22, 2009, $1,000 was withdrawn from the Selva Viva bank account.
PX 583 (Banco Pichincha Account Summary for Selva Viva), at 52.
PX 1713 (Guerra Deposit Slips), at 7; PX 1719 (same), at 1.
On February 4, 2010, $1,000 was withdrawn from the Selva Viva bank account.
PX 583 (Banco Pichincha Account Summary for Selva Viva), at 53.
PX 1713 (Guerra Deposit Slips), at 8; PX 1718 (same), at 1.
The alleged arrangement among the LAPs, Guerra, and Zambrano continued until Zambrano was replaced on the Lago Agrio case by Judge Leonardo Ordóñez in February 2010.
PX 4800 (Guerra Direct) ¶ 35; PX 2522 (Timeline of Judges in the Lago Agrio Litigation).
PX 4800 (Guerra Direct) ¶ 35.
D. Ultimate Findings on This Point—Guerra Was Zambrano's Paid Ghostwriter in Civil Cases and Was Paid By Donziger and the LAPs To Write Some of Zambrano's Orders in the Chevron Case
The Court finds that during Zambrano's first term on the Chevron case, Guerra was ghostwriting orders for him in civil cases generally and, to some extent, on the Chevron case in particular. He was paid for those services, at least as to the cases other than Chevron, by Zambrano. The bank records prove that he was paid for his services on the Lago Agrio Chevron case by the LAPs as well, which they did with Donziger's authorization and agreement.
This is confirmed by the PUPPETEER emails, in which PUPPETEER referred to Guerra and PUPPET to Zambrano. Indeed, the events of October 26–29, 2009, and of November 26–27, 2009, make that conclusion virtually inescapable.
Infra Facts § XI.D.2.
Defendants offered no evidence or testimony that rebuts or explains these emails or the payments. Fajardo and Yanza, the authors of the emails, declined to testify. Donziger at his deposition denied knowledge of the identities of the PUPPETEER and the PUPPET and claimed neither to have known to what Fajardo had been referring nor to have discussed the matter with him.
Donziger June 24, 2013 Dep. Tr. at 285:14–286:22; Donziger June 25, 2013 Dep. Tr. at 389:23–390:2.
Donziger attempted at trial to pass off the code names as jokes or nicknames.
But that attempt is unpersuasive, particularly in light of the fact that he admitted in a deposition that the LAP team used code names in emails “to prevent any reader of those documents from knowing exactly who it was [he] w[as] talking about.”
Tr. (Donziger) 2592:12–15, 2592:24–2593:4.
Donziger Jan. 29, 2011 Dep. Tr. at 3817:13–18.
But there remains an important qualification. Guerra asserted at trial that Zambrano, during his first tenure on the case (late 2009 into early 2010), told him that he, Zambrano, had made an agreement with the LAPs to move the case along in their favor and told Guerra to work out a deal with Fajardo to obtain payment from the LAPs for Guerra's ghostwriting services. Guerra claimed that he then met—first with Fajardo and later with Fajardo, Donziger, and Yanza—and worked out a deal to move the case in the LAPs' favor, limit Chevron's procedural options by denying its motions claiming essential errors, and to receive $1,000 per month from the LAPs for doing those orders for Zambrano.
Guerra first began telling his story to Chevron representatives in June 2012. He had a series of discussions with Chevron's lawyers in Ecuador, at least some of which were recorded and transcribed. In the June 25, 2012 interview, Guerra told a slightly different story about his ghostwriting role with respect to the Chevron Lago Agrio case during Zambrano's first tenure. Although he said that he was ghostwriting for Zambrano on the Chevron case and others, he never mentioned that Zambrano had reached any arrangement with the LAPs to issue orders in their favor. To the contrary, he suggested that Zambrano's motives for wanting to move the case were vanity and the hope that, if the case proceeded quickly, Zambrano later might be in a position to decide it and then to extract a lucrative payment from someone.
Indeed, Guerra told an anecdote, that he attributed to Fajardo, in which Fajardo claimed that he had approached Zambrano during this period ( i.e., Zambrano's first tenure on the case) to try to have the case expedited, but that Zambrano had thrown him out of his office.
DX 1360 (June 25, 2012 Interview Transcript), at 42–45 (during period in which Guerra wrote orders for Zambrano, Zambrano told him not to “give Chevron room for anything” out of vanity and avoidance of delay because he wanted to issue the judgment), 65 (“[d]on't give Chevron any room” “to reach such a point as to say: ‘Well, right now ..., now we're in a situation to talk, see. Cut the bull. Do you want to talk to me?”).
Id. at 69–70.
This inconsistency was not explored at trial by either side. Nevertheless, it is not easily reconciled with the truth of Guerra's later testimony that Zambrano had told him that Zambrano already had reached an unspecified arrangement with the LAPs to move the case quickly as opposed to wishing to do so for his own reasons. There is no other evidence that this arrangement took place. The Court therefore declines to find that the alleged arrangement between Zambrano and the LAPs during Zambrano's first tenure on the Lago Agrio case existed or to credit Guerra's testimony with respect to the alleged 2009 Honey & Honey restaurant meeting.
Donziger argued that Guerra must have lied concerning the alleged fall 2009 meeting at the Honey & Honey restaurant because Donziger was not then in Ecuador. While the Court does not credit Guerra's testimony with respect to that meeting, it finds Donziger's argument that he was not in Ecuador when it allegedly took place unpersuasive. Ecuadorian records establish that Donziger was in Ecuador from October 6 until some time on October 9, 2009. PX 1509 (Donziger Immigration Records). Donziger's contention that the alleged meeting must have taken place at a different time rests on assumptions that the Court regards as unfounded. Nevertheless, the point is academic in view of the Court's finding on this point, which to reiterate is that the LAPs, with Donziger's authorization, paid Guerra during this period to ghostwrite Zambrano's orders on the Chevron case and to do so to their advantage.
We proceed now to Zambrano's second tenure in the Lago Agrio Chevron case, the bribe, and the Judgment.
XI. The Story Ends: The LAPs Bribed Zambrano to Allow Them to Write the Judgment and Issue It Under His Name
As noted, Zambrano returned to preside over the Lago Agrio Chevron case in late 2010 when the case had progressed to the point at which a judgment was near. Chevron contends that the LAPs reached a deal with Zambrano by which they agreed to pay him $500,000 to allow them to write the Judgment in their favor, which he would sign and issue as his own. Guerra was instrumental in facilitating this plan. The Court in this section assesses Chevron's allegations. It first details each witness' account of what transpired among Guerra, Zambrano, and the LAPs during Zambrano's second tenure on the Lago Agrio Chevron case. It then discusses the pertinent credibility problems of each witness and examines the evidence corroborating or conflicting with each account. Finally, it explains why—given the history of the litigation, the weight of the evidence, and the credibility of the witnesses—the bribery claim is the explanation that makes sense and is persuasive.
A. Zambrano's Second Tenure Presiding Over the Lago Agrio Chevron Case: The Accounts of the Three Witnesses at Trial
a. Guerra's Account
i. More Ghostwriting, The Bribe, and The Judgment
In August 2010, Chevron moved to recuse Judge Ordófiez.
According to Guerra, Zambrano “saw this as an opportunity to once again take control of the Chevron case, and asked [Guerra] to help him write the court ruling sustaining Judge Ordófiez's disqualification from the case.”
PX 4800 (Guerra Direct) ¶ 36.
Id.; Tr. (Guerra) 975:15–977:3.
PX 4800 (Guerra Direct) ¶ 36; Tr. (Guerra) 987:1–21.
At more or less the same time, Guerra, who had maintained contact with the LAP team, on September 5, 2010, emailed Donziger to ask for legal advice on an immigration issue relating to Guerra's daughter.
PX 4800 (Guerra Direct) ¶ 37; Tr. (Guerra) 1033:24–1034:20. Guerra testified also that he discussed with Donziger an immigration issue concerning his son at the Honey & Honey Restaurant. Tr. (Guerra) 925:17–926:1.
PX 1745 (Sept. 5, 2010 Email from A. Guerra to S. Donziger re: “Greetings from Quito”).
Tr. (Guerra) 1035:13–20.
Id. (“By this date, Judge Zambrano and I knew that later on Judge Zambrano would rehear the case. In these circumstances and through this message, specifically regarding the issue that I will support the matter of Pablo Fajardo so it will come out soon and well, this subject was related only with the Chevron case.”).
PX 4800 (Guerra Direct) ¶ 37.
Guerra pursued the prospect of a deal with Chevron. He testified that “[g]iven that [his] previous attempts to approach Chevron through Mr. Racines had been unsuccessful, on this occasion [Guerra] asked an intermediary to propose to Chevron's attorneys that Chevron write the final judgment in the case in exchange for a payment to Mr. Zambrano and” to Guerra.
Id. ¶ 39; Tr. (Guerra) 987:5–21.
PX 4800 (Guerra Direct) ¶ 40; Tr. (Guerra) 990:9–18.
Guerra allegedly reported this to Zambrano, who then suggested that Guerra approach the LAPs' representative with essentially the same proposition—“that they could obtain a verdict in their favor, in exchange for a payment of at least USD $500,000 to Mr. Zambrano; and for whatever amount [Guerra] could negotiate or agree to for [him]self.”
PX 4800 (Guerra Direct) ¶ 41; Tr. (Guerra) 990:9–23.
PX 4800 (Guerra Direct) ¶ 41; Tr. (Guerra) 991:20–993:22.
PX 4800 (Guerra Direct) ¶ 42; Tr. (Guerra) 995:5–22.
The meeting took place at the Honey & Honey restaurant in Quito. Guerra summarized the proposal. Donziger had several questions for Guerra, including how he could be sure that Zambrano actually would rule in the LAPs' favor if the payment were made.
PX 4800 (Guerra Direct) ¶ 42; Tr. (Guerra) 995:23–997:9.
PX 4800 (Guerra Direct) ¶ 42; Tr. (Guerra) 996:12–16.
Some time later, Zambrano informed Guerra that he had been in direct contact with Fajardo and that “the Plaintiffs' representatives had agreed to pay him USD $500,000 from whatever money they were to collect from the judgment, in exchange for allowing them to write the judgment in the Plaintiffs' favor.”
PX 4800 (Guerra Direct) ¶ 43; Tr. (Guerra) 999:24–1001:12.
PX 4800 (Guerra Direct) ¶ 43; Tr. (Guerra) 1002:2–7.
There were objections to this testimony, which the Court ultimately received for the reasons set forth in Appendix V.II.
Guerra then resumed his role as Judge Zambrano's ghostwriter, albeit in a manner different from before.
Zambrano “advised [Guerra] that [they] had to be more careful because the attorneys for Chevron would be very attentive to any irregularities. Because of that, there were times when [Guerra] traveled to Lago Agrio to work on the court rulings for the Chevron case” and he shipped documents via TAME less frequently.
PX 4800 (Guerra Direct) ¶ 44; Tr. (Guerra) 1002:8–19.
PX 4800 (Guerra Direct) ¶ 44; Tr. (Guerra) 1000:24–1001:2, 1002:8–1003:11.
When Guerra was in Lago Agrio, he said, he worked on the Chevron rulings in Zambrano's apartment.
PX 4800 (Guerra Direct) ¶ 46; Tr. (Guerra) 1003:17–1004:7.
PX 4800 (Guerra Direct) ¶ 46; Tr. (Guerra) 1003:7–16.
PX 4800 (Guerra Direct) ¶ 46; Tr. (Guerra) 1002:15–19.
Zambrano apparently did this because “he did not want to upload the draft order onto his work computer from a flash drive, as he understood that computer technicians could detect when that happens and he did not want it to become known that the orders had not been drafted on his work computer.”
PX 4800 (Guerra Direct) ¶ 46; Tr. (Guerra) 1002:15–1003:3.
PX 4800 (Guerra Direct) ¶ 46.
About two weeks before the Judgment was issued in February 2011, Guerra went to Zambrano's apartment where he said he met with Fajardo and Zambrano. “Zambrano gave [Guerra] a draft of the judgment so that [Guerra] could revise it.”
He told Guerra that the LAPs' attorneys had written the judgment and delivered it to him, and it was then Guerra's job to “work on the document to fine-tune and polish it so it would have a more legal framework.”
Id. ¶ 47; Tr. (Guerra) 1009:6–1010:6.
PX 4800 (Guerra Direct) ¶ 47; Tr. (Guerra) 1009:6–1010:6.
PX 4800 (Guerra Direct) ¶ 47; Tr. (Guerra) 1010:21–1011:7.
Guerra worked on the draft judgment in Zambrano's apartment for several hours over the course of two days.
PX 4800 (Guerra Direct) ¶ 48; Tr. (Guerra) 1010:18–20.
PX 4800 (Guerra Direct) ¶ 49; Tr. (Guerra) 1011:8–23.
PX 4800 (Guerra Direct) ¶ 49; Tr. (Guerra) 1011:24–1012:12.
Guerra's edits were minor, involving mainly spelling and punctuation.
PX 4800 (Guerra Direct) ¶ 49.
Id.; Tr. (Guerra) 1017:23–1018:7.
PX 4800 (Guerra Direct) ¶ 49; Tr. (Guerra) 1020:3–5.
PX 4800 (Guerra Direct) ¶ 51; Tr. (Guerra) 1018:18–25.
Three days after it was issued, Chevron filed a request for expansion and clarification of the Judgment.
PX 2502 (Chevron Request for Clarification of Judgment).
PX 4800 (Guerra Direct) ¶ 52; Tr. (Guerra) 1020:6–9.
PX 429 (Mar. 4, 2011 Judgment Clarification Order).
ii. Guerra's Last Meeting with the LAP Team
Guerra continued assisting Zambrano with orders in his civil cases until Zambrano was dismissed from the court.
He had no further contact with the LAP team save a meeting in May or June 2011 with Fajardo and one of the LAP Representatives' U.S. lawyers at which Fajardo and the U.S. lawyer asked Guerra to “testify [in this case] about the suitability of the Ecuadorian legal system.”
PX 4800 (Guerra Direct) ¶ 54; Tr. (Guerra) 1020:19–22.
PX 4800 (Guerra Direct) ¶ 55.
Fajardo offered to pay for Guerra $5,000 for his testimony and to cover his airfare and expenses. Guerra did not disclose to the U.S. lawyer that he had served as Zambrano's ghostwriter or that Zambrano had agreed to $500,000 from the LAP team. Id. After the meeting, Fajardo never followed up with Guerra and the subject was dropped.
iii. Guerra Contacts Chevron
Guerra testified that in April 2012, Zambrano, who by then recently had been dismissed from the court, authorized Guerra to “begin talks with Chevron's representatives to reveal the truth regarding the drafting of the judgment in the Chevron case.”
Guerra explained that “[i]n [his] initial discussions with Chevron's representatives ... [he] attempted to negotiate a large payment for [himself], as [he] believed that, with the substantial $18 billion judgment issued by Mr. Zambrano, Chevron would be willing to pay [Guerra] a substantial amount for evidence and testimony that the judgment was illegal and obtained by fraud.”
Id. ¶ 58.
Zambrano “ultimately had a change of heart” and told Guerra “that he was not willing to provide information to Chevron or to reveal the truth.”
Id. ¶ 60.
PX 4800 (Guerra Direct) ¶ 61; PX 1671 (Guerra Jan. 27, 2013 Signed Agreement with Chevron) ¶ 2; Tr. (Guerra) 1152:12–22.
PX 1671 (Guerra Jan. 27, 2013 Signed Agreement with Chevron) ¶ 3.
Id. ¶ 7.
PX 4800 (Guerra Direct) ¶ 59.
In July 2012, Guerra began to turn over physical evidence to Chevron's representatives. He gave them his personal computer, on which he had typed many of the orders in Zambrano's cases,
PX 4800 (Guerra Direct) ¶ 61; PX 1736 # ; Tr. (Guerra) 1118:13–16.
PX 4800 (Guerra Direct) ¶ 61; PX 1738 # .
PX 1733, 1734 (Guerra Daily Planners); Tr. (Guerra) 1125:7–9.
PX 1682 (TAME Shipping Records).
PX 1727, 1728 (Guerra telephone records).
PX 4800 (Guerra Direct) ¶ 61; see Tr. (Guerra) 1160:22–1161:3.
PX 4800 (Guerra Direct) ¶ 61.
Id.; PX 1671, 1672 (Guerra Agreements with Chevron); Tr. (Guerra) 1043:6–15.
After two meetings with Chevron attorneys in Ecuador, and after he had turned over the bulk of his physical evidence,
Tr. (Guerra) 1070:1–1075:4.
DX 1363 (Guerra Nov. 17, 2013 Decl.); Tr. (Guerra) 1084:13–1085:1.
Fearing retaliation from the ROE, Guerra and his family (including his wife, his son, and his son's family) relocated to the United States.
PX 4800 (Guerra Direct) ¶ 64.
and, as his visa status does not allow him to work while he is in this country, Chevron pays him $10,000 per month for his living expenses, pays for health insurance coverage for Guerra and his family, leases a car for him, and pays for an attorney to represent him in any dealings with federal or state government investigative authorities or any civil litigation, and for an immigration attorney to deal with his resident status.
PX 1671 (Guerra Jan. 27, 2013 Signed Agreement with Chevron).
Id.; Tr. (Guerra) 1052:24–1064:9.
Shortly after Guerra left Ecuador, the LAP team filed a criminal complaint against him there.
PX 4800 (Guerra Direct) ¶ 64.
b. Assessing Guerra's Account
i. Guerra's Credibility
From the standpoint of demeanor, Guerra was an impressive witness. He testified clearly, directly, and responsively, regardless of which side questioned him. He rarely hesitated. On the other hand, it is appropriate to recognize that he was very extensively prepared for his testimony by Chevron.
While there is nothing wrong with extensive preparation of a witness, it may bear on the weight of the testimony. But there is more to assessing Guerra's credibility than the fact that he came across well on the stand.
Tr. (Guerra) 1049:9–1052:7.
The first consideration is Guerra's self interest—including the fact that Chevron, to summarize briefly, is supporting him and has assisted his relocation from Ecuador to the United States.
Second, Guerra admitted that he often has been dishonest.
PX 4800 (Guerra Direct) ¶ 55.
• Issued rulings in Zambrano's favor when Guerra was a judge and Zambrano a prosecutor in Lago Agrio. Although Guerra was “careful to issue these rulings with some legal grounds,” he claimed to have known “that the party benefitting from [his] decision was paying Mr. Zambrano bribes for arranging to have the case ruled in that party's favor, and Mr. Zambrano, from time to time, shared with [Guerra] a portion of those bribes.”
Id. ¶ 8.
• As a practicing attorney, Guerra “on occasion bribed judges, including judges on the nation's highest courts, to rule in [his] clients' favor or assist [Guerra] in obtaining favorable ruling.”
Id. ¶ 9.
• As a judge, Guerra “occasionally accepted bribes from litigants in exchange for issuing favorable rulings.”
• Ghostwrote orders for Zambrano in return for payments from both Zambrano and the LAP team.
• Attempted to solicit bribes from both the LAP team and, on at least two occasions, from Chevron.
• Solicited a $500,000 bribe to be paid by the LAP team to Zambrano in exchange for a ruling in the LAPs' favor.
• Was removed from the court apparently for making statements that the “Chevron case should be declared null, at a time when [he] no longer presided over the ... case.”
Id. ¶ 7.
• Admittedly lied to the Chevron investigators in claiming that the LAPs had offered him $300,000, a lie that he explained at trial by saying that he had been trying to exaggerate his own importance.
Tr. 1197:3–16; DX 1360 (June 25, 2012 Interview Tr.), at 10, 29, 48, 83, 87.
The details of some of these admissions are important to this story and indeed form the basis for much of Chevron's theory of how the Judgment came about. They will be dealt with more fully below. For present purposes, the Court notes only that Guerra's willingness to accept and solicit bribes, and his lie to Chevron about the supposed offer by the LAPs of $300,000, and other considerations, put his credibility in serious doubt, particularly in light of the benefits he has obtained from Chevron. Indeed, Guerra admitted that he came forward because he believed he would be “rewarded handsomely.”
PX 4800 (Guerra Direct) ¶ 58.
ii. Inconsistencies in Guerra's Account
As discussed, it appears that Guerra first began to tell his story to Chevron representatives in June 2012.
Rivero Apr. 24, 2013 Dep. Tr. at 90:12–91:4.
He told his story again when he met with Chevron lawyers in Chicago and signed the declaration that later was filed in this case. And he told it again at trial. Each recounting yielded variations in some of the details. The Court begins with the following concerning Guerra's participation in the drafting of the Judgment as they were matters upon which the defendants have focused.
Id. at 91:13–92:5; see DX 1360 (Transcript of July 13, 2012 Conversation between A. Guerra, Yohir Akerman, and A. Rivero); DX 1361 (Transcript of July 13, 2012 Conversation between A. Guerra and A. Rivero); DX 1362 (Transcript of July 31, 2012 Conversation between A. Guerra, Investigator 5, and A. Rivero).
First, Guerra's testimony regarding how he allegedly received the draft of the Judgment to begin his work on it changed.
As noted, Guerra testified at trial that Zambrano gave him a draft on Fajardo's laptop approximately two weeks before the Judgment was issued so that Guerra could revise it.
PX 4800 (Guerra Direct) ¶ 47.
Id. ¶¶ 47–48.
Id. ¶ 47.
Second, Guerra's testimony regarding his receipt of the “memory aid” from Fajardo while he was working on the Judgment changed as well.
At trial, he said that he called Fajardo to ask him about two sections of the draft that confused him at some point while he was working in Zambrano's apartment.
Id. ¶ 49.
DX 1361 (Tr., July 13, 2012 Conversation between A. Guerra and A. Rivero), at 48.
DX 1363 (Guerra Nov. 2012 Decl.) ¶ 26.
Guerra explained at trial that “[a]t the beginning, [he] was certain that [he] had received that memory aid via e-mail, but then [he] later recalled that [Fajardo] personally handed [Guerra] the document in the nighttime hours of the first day of [his] review of” the Judgment.
He said further that “[w]hen [he] first summarized these events in a sworn declaration in November 2012, [he] stated that [he] recalled receiving this ‘memory aid’ from Fajardo ... but [he] could not locate the document itself.”
Tr. (Guerra) 1012:9–12.
PX 4800 (Guerra Direct) ¶ 50.
Id.; Tr. (Guerra) 1016:3–9.
Defendants contend that Guerra initially told Chevron that he had received the Judgment and the memory aid on a flash drive and by email because Guerra wanted to convince Chevron that he had hard evidence to back up his story. He then gave Chevron representatives his computer, access to his email accounts, and a number of flash drives in exchange for payment, promising them that they would find the memory aid and a draft of the Judgment on his media. But when Chevron's experts searched his email and flash drives, they found no memory aid and no Judgment. So, defendants argue, Guerra changed his story to explain his alleged receipt of the memory aid and the draft judgment in ways consistent with the absence of those documents on Guerra's computer. But there is at least one problem with defendants' theory that these changes reflected a careful conforming by Guerra of the details of the story to new evidence as it emerged.
Guerra explicitly told Chevron's representatives in his July 2012 meetings that he had not found the memory aid or the draft of the Judgment on his computer or the flash drives.
DX 1361 (Tr., July 13, 2012 Conversation between A. Guerra and A. Rivero), at 61.
and that was accurate. It is entirely possible that Guerra told Chevron that he received the draft of the Judgment from Zambrano on a flash drive because that is how he normally received drafts of orders from Zambrano, that he so believed at the time, and that his memory subsequently was refreshed.
Third, there is another possibly troublesome question concerning the memory aid testimony. The memory aid itself, though it purports to contain a chronology of the Lago Agrio case, does not refer to anything that occurred after 2009 although it allegedly was provided to Guerra in late 2010 or early 2011.
Thus, one might expect that any chronology given to Guerra in late 2010 or early 2011 would have included events after 2009. Nevertheless, there is no necessary inconsistency in this, as Guerra stated that the memory aid responded to specific questions he had asked,
PX 1703 (memory aid); Tr. (Guerra) 1012:13–23.
Id. (Guerra) 1013:5–12.
We have discussed Zambrano's account of how he claimed to have prepared the Judgment. He claimed that he was the sole author of the Judgment. He never asked Guerra to make revisions to it before it was issued on February 14.
Tr. (Zambrano) 1810:1–4.
It is worth noting that Chevron unsuccessfully sought a favorable statement from Zambrano in this action. Zambrano testified that Guerra, in approximately August 2012, informed him that he had been speaking to Chevron representatives, and “that Chevron was willing to give [Zambrano] a minimum of $1 million or whatever he wanted” in exchange for his cooperation. Id. 1914:24–1915:2. Guerra met him at the Quito airport and gave Zambrano documents, including the business card of a Chevron attorney who wished to speak with him. Id. 1915:7–13; DX 92 (Zambrano Decl.; Rivero Business Card), at 138 of 250.
Guerra called Zambrano several times after their airport meeting to reiterate the proposal. Tr. (Zambrano) 1929:22–1930:9. In January 2013, Zambrano received a phone call from Rivero himself requesting that Zambrano meet with him in person. Id. 1930:10–25; DX 84 (Transcript of Recorded Call Between Zambrano and Rivero). Zambrano told Rivero that he would not speak with him until he confirmed that Rivero worked for Chevron and found out exactly what Guerra had told him. Zambrano secretly recorded the conversation. Tr. (Zambrano) 1931:5–15; DX 84 (Transcript of Recorded Call Between Zambrano and Rivero).
Zambrano did not follow up with Rivero. In March 2013, he signed a declaration that defendants filed in this action. PX 6330 (Zambrano Mar. 28, 2013 Decl.).
a. Donziger's Account
Donziger's direct testimony on these subjects was brief. He stated:
“I did not write the judgment in the [Lago Agrio] case in Ecuador. I have no knowledge that anybody on the legal team of the plaintiffs wrote the judgment in this case, or wrote any part of the judgment.
I have never met Judge Nicolás Zambrano, nor have I communicated with him. Other than his live testimony during this trial, I have never seen Judge Nicolás Zambrano.
I did not bribe Judge Zambrano. The allegations by former Judge Alberto Guerra that I was involved in a meeting where I ‘approved’ a plan arranged by Pablo Fajardo to pay Zambrano $500,000 is false.”
DX 1750 (Donziger Direct) ¶¶ 71–73.
With respect to Guerra, Donziger testified that he “did not agree or express any support for a plan to pay any amount of money so that the plaintiffs would be able to draft the final judgment.”
Id. ¶ 75.
Donziger stated that he “occasionally chatted about non-substantive matters” with Guerra when Guerra was the presiding judge on the Lago Agrio Chevron case, i.e., from May 2003 until January 2004.
Id. ¶ 77.
Tr. (Donziger) 2588:20–25.
PX 2469 (Mar. 1, 2008 Email from A. Guerra to S. Donziger re: “Request for Investigation” [ sic ] ); PX 1749 (Mar. 2, 2008 Email from S. Donziger to P. Fajardo re: “What should I do?”); Tr. (Donziger) 2589:14–20.
Donziger said that “[t]he one meeting with Guerra that stands apart vividly in [his] memory was the one in Quito” with Guerra and Fajardo
He did not deny that he had other meetings with Guerra, with or without Fajardo.
DX 1750 (Donziger Direct) ¶ 78.
The meeting took place in late 2010 at “a restaurant in Quito” and lasted approximately 45 minutes.
Tr. (Donziger) 2597:8–24.
DX 1750 (Donziger Direct) ¶ 78.
Tr. (Donziger) 2598:24–2599:7.
Donziger admitted that neither he nor anyone else on the LAP team reported Guerra's bribe solicitation.
for that, but the only one he gave was that he “felt like [Guerra's] offer didn't have a lot of credibility. And [Donziger] was very concerned that doing anything at that point to turn [Guerra] in would give Chevron an excuse to further use it against the court or against the process such that the trial could be derailed.”
b. Donziger's Credibility
i. Self Interest
That Donziger is deeply self interested—both on the ghostwriting questions and, in addition, with respect to the outcome of this case generally—is obvious. We have noted already that Donziger personally stands to gain a contingent fee in excess of $600 million
PX 558 (Donziger Jan. 2011 Retention Agreement), at 3.
Supra Facts § II.
“DONZIGER: You can never underestimate the power of personal relationships in this business. You know?
CAMERAMAN: What business is that?
DONZIGER: The business of getting press coverage as part of a legal strategy. CAMERAMAN: Hey, uh. Can we, Can we all fit in your—?
DONZIGER: The business of plaintiffs' law. To make fucking money.”
PX 57A (Apr. 24, 2007 Crude Clip), at CRS–258–00–CLIP–01.
And Donziger's self interest extends beyond money. As he confided to his personal notebook on April 4, 2007:
“I had an incredible email with Russ this morning. He read the VF [Vanity Fair] story.
R[u]ss is funding the case. Russ is funding the movie. And Russ wants to fund more cases and more movies.
I sit back and dream. I cannot believe what we have accomplished. Important people interested in us. A new paradigm of not only a case, but how to do a case. Chevron wanting to settle. Billions of dollars on the table. A movie, a possible book. I cannot keep up with it all.”
PX 203 (Donziger Notebook) (emphasis added).
Donziger has deceived when deception served his interests.
The Court considers the evidence of Donziger's prior deceit on the issue of his credibility and not to prove character for the purpose of showing that he acted in accordance with that character on other specific occasions.
• Donziger recruited Reyes and Pinto, ostensibly to act as independent monitors but in reality to work for the LAPs, to undermine an anticipated negative report from the court's settling experts. He made an under the table payment to induce them to do so. Contrary to the facts, he arranged with them to conceal their relationship with the LAPs to the court and to pose as independents. Donziger admitted in the privacy of his notebook that this was a “bargain with the devil” in which he had gone “over to the dark side.”
• Donziger recruited Cabrera and then ensured that Cabrera “would totally play ball” with the LAPs. He and his Ecuadorian colleagues secretly prepared the work plan, a version of which Cabrera, in accordance with the scheme, passed off on the court as his own. Donziger then hired and worked extensively with Stratus to have Stratus write most of the Cabrera Report that was supposed to be Cabrera's independent, impartial product. In order to conceal the roles of Stratus and the LAPs vis-a-vis Cabrera, he instructed Stratus' Beltman and Maest to keep their involvement secret. Once the report was filed, complete with Cabrera's repeated false protestations to the court of his independence, Donziger knowingly promoted the fiction of Cabrera's impartiality and independence, drafting or assisting in the drafting of numerous press releases touting the work of the “independent expert.”
• Donziger long hid the truth about Cabrera from Karen Hinton and others on the public relations team, whom he repeatedly had issue press releases emphasizing Cabrera's independence and lambasting Chevron's allegations to the contrary.
Tr. (Hinton) 2189:5–2190:3.
• Donziger concealed Stratus' real role from Kohn despite that Kohn at the time was funding the LAPs. Donziger hid from Kohn the fact that some of the funds Kohn provided were shuttled covertly to Cabrera through a “secret account.” And Donziger prevented Kohn from commissioning an independent investigation of the Cabrera episode when allegations of misconduct began to surface.
• Donziger concealed the truth about the Cabrera Report from certain, though not all, members of the LAP team. He did not inform the Weinberg Group or the cleansing experts that Cabrera had not been independent. Nor did he reveal that fact to his co-counsel in the United States, many of whom were working directly on the Cabrera fallout.
• Donziger convinced Shinder and McDermott to represent the LAPs in the Stratus Section 1782 proceeding by assuring them that Chevron's allegations concerning the LAPs' collusion with Cabrera were untrue. It was not until they learned the truth directly from Beltman that Donziger confessed that the LAPs' involvement in the preparation of the report were more extensive than he initially had indicated.
• Once the details of the Cabrera episode began to leak out, Donziger encouraged the American lawyers not to reveal in their court filings any more than they absolutely had to. He specifically warned them of the “negative fallout” that could occur if the Fajardo Declaration and Petition disclosed too much. As we know, the misleading Fajardo Declaration was filed in the Denver court and at least sixteen others in the United States, including this one.
iii. Misrepresentation to this Court
As noted, Prieto on March 30, 2010, sent an email to Donziger, Fajardo, and others expressing Prieto's concern that “the proceeding,” i.e., the Lago Agrio case, would be destroyed and “all of us, your attorneys, might go to jail” if Stratus' documents were produced in the Colorado Section 1782 proceeding.
PX 1279 (Mar. 30, 2010 Email from J. Prieto to S. Donziger, J. Sáenz, L. Yanza, and P. Fajardo re: “Protection Action”).
In a January 2011 deposition, Donziger admitted that Prieto's email expressed “concern[ ] that all of the local Ecuadorian lawyers for the Lago Agrio plaintiffs might end up in jail because of ... [t]he role they played related to Stratus, Mr. Cabrera ....”
But when he was questioned about the same email at a sanctions hearing before this Court in April 2013, Donziger said that Prieto had not been concerned with the substance of the Stratus documents that would be disclosed—that is, with the fact that the truth about the relationship among the LAP lawyers, Stratus and Cabrera would come out. He was concerned instead, Donziger claimed, with “his fear that by turning over documents in the United States via the Stratus 1782, that it would violate their Ecuadoran law obligations in Ecuador among local counsel”
Donziger Jan. 19, 2011 Dep. Tr. at 3381:14–20 (emphasis added).
Sanctions Hr'g (Donziger), at 113:9–18.
The hearing at which Donziger offered this new explanation for the email dealt with Chevron's motion to sanction Donziger and the LAPs for their failure to produce documents from Ecuador. Defendants had refused to produce the documents because, among other reasons, they claimed it would have been illegal under Ecuadorian law. Donziger's testimony at the sanctions hearing thus offered a convenient explanation for the very damaging email—with the added benefit that the new explanation was in line with defendants' newly-minted argument that Ecuadorian law prevented disclosure of Stratus' documents. But it was contradicted directly by his prior sworn testimony on the matter. The Court finds that this testimony by Donziger at the sanctions hearing deliberately was false.
Donziger sought to mislead this Court in another way, albeit perhaps not so blatantly.
On May 3, 2013, former counsel for Donziger sought and later obtained leave to withdraw as counsel on the ground of non-payment of fees. DI 1104 (LAPs Mem.); DI 1105 (Donziger Mem.). Following the withdrawal, Donziger repeatedly moved to adjourn deadlines or stay this case, always claiming that he had “limited resources” with which to secure new counsel and defend himself. DI 1212 (Donziger Aff.) ¶ 14; see also DI 1211 (Mot. to Stay) (“A stay is absolutely necessary if I am to have a realistic chance to obtain the funds for, and to retain, substitute counsel”); DI 1214 (May 23, 2013 Tr.), at 3:25–4:4; DI 1318 (July 18, 2013 Tr.), at 11:13–18 (“my prior counsel already spent thousands of hours dealing with their previous motions ... which essentially drove my counsel off of this case ... because I couldn't afford to pay their fees anymore because they were all wasted on these previous motions for summary judgment”); DI 1369 (Mot. for Order to Show Cause); DI 1435 (Mot. for Extension of Time); DI 1459 (LAPs Mem.).
Although the Court largely granted Donziger's requested relief, it made clear time and again that it would be willing to consider further extensions or delays if Donziger provided competent evidence or sworn testimony substantiating his claim that he was constrained by a lack of resources. E.g., DI 1214 (May 23, 2013 Tr.), at 13:25–14:6; DI 1185 (Order), at 3 (“The Court ... is willing to consider [Mr. Donziger's] issues in the event a well supported motion is filed.”); DI 1302 (Order Denying Mot. for Stay); DI 1407 (Order Denying Stay). Donziger never did so. At trial, however, Donziger admitted that, notwithstanding his claims of lack of resources, he actually had secured additional funding of $2.5 million in March 2013—two months before his counsel withdrew—from a British investor. See Tr. (Donziger) 2528:9–2529:11. He admitted also that he personally had received $600,000 in liquid assets and over one million in real estate over the preceding year and a half from probate actions he initiated against family members in Florida. Id. 2537:6–2539:2.
iv. Evasiveness and Demeanor
In November 2011, Donziger prepared a memorandum for himself in advance of his deposition in the Section 1782 case in this Court.
PX 2457 (Donziger Deposition Memo).
“Read: RICO, Borja, Cabrera report, Tropical Rainforest EP, Cancer–San Seb, Guanta, Genocide, Wray testimony (3rd day), Chevron's own test results; define SRD role; 2nd circuit brief; basis for belief people were dying.
Comments: ‘It's possible but I don't think so’; ‘I guess it's possible, but to best of my recollection I didn't.’ ”
Id. (emphasis added).
Tr. (Donziger) 2464:4–10.
Donziger graduated from Harvard Law School. He tried cases as a public defender in Washington before getting involved with Aguinda. He did not need a written reminder to respond to a question by saying, if such an answer would be true, that he did not remember or even that his best recollection was that something had or had not happened.
Donziger was evasive repeatedly at his deposition in the Section 1782 action against him, his deposition in this case, and again at trial. In his June 2013 deposition in this case, Donziger replied “I don't know” or “I don't recall” to more than 180 questions, nearly every substantive question posed to him.
Donziger June 24, 25, 28, 2013 Dep. Tr., passim.
The likelihood that Donziger's memory was as bad as these answers suggested is very small.
* * *
In sum, the Court declines to credit Zambrano's and Donziger's testimony with respect to the bribe scheme. As to Guerra, the Court has examined his credibility carefully, considered his past dishonesty, and examined the inconsistencies in his testimony. Guerra on many occasions has acted deceitfully and broken the law. Some details of his story of what transpired in the Lago Agrio case have changed. But that does not necessarily mean that it should be disregarded wholesale.
The Court next considers the circumstantial evidence relevant to the bribe scheme, and the defendants' evidence at trial. It concludes that this evidence leads to one conclusion: Guerra told the truth regarding the bribe and the essential fact as to who wrote the Judgment. The Court is convinced that the LAPs bribed Zambrano and wrote the Judgment in their favor.
B. Chevron's Circumstantial Evidence Pertinent to the Alleged Bribery
Certain facts probative of the validity of Chevron's contention that the LAPs bribed Zambrano are undisputed or already have been determined.
First, Guerra and Zambrano had a long standing and close relationship. No one disputes that Guerra drafted orders for Zambrano, at least in some civil cases other than Chevron. The Court has concluded that the arrangement between them was improper under Ecuadorian law and found, in addition, that Zambrano paid Guerra for his drafting services.
Second, Guerra drafted orders for Zambrano on the Chevron case, as well as others, during Zambrano's first tenure. The LAPs paid him $1,000 a month for his services with respect to Chevron.
Third, Guerra and Donziger both testified that Fajardo arranged a meeting in late 2010 at the restaurant in Quito at which Guerra proposed to fix the case with the judge (then Zambrano) for a $500,000 bribe. Donziger did not deny that Guerra proposed that the quid pro quo would include not only a decision in favor of the LAPs, but allowing the LAPs to write the Judgment. Nor did he deny Guerra's testimony that Fajardo was at the meeting.
Fourth, the Court has found that Zambrano did not write much, if any, of the Judgment.
Fifth, the Judgment includes substantial passages and references that do not appear anywhere in the Lago Agrio Record, but that do appear verbatim or in substance in a number of documents from the LAPs' files. Whoever wrote the Judgment copied those materials from the LAPs' unfiled work product. Moreover, a complete review of the LAPs' files never took place because the files located in Ecuador were not produced.
Sixth, neither Donziger nor the LAP team reported Guerra's bribe solicitation to authorities.
Indeed, the LAPs considered hiring Guerra as an expert witness on the fairness of the Ecuadorian judicial system for use in the United States long after Guerra had solicited a bribe from them to fix the Lago Agrio case.
While Donziger tried to explain this away, the fact that he did not report the bribe solicitation is undisputed. Moreover, the explanation is not persuasive. Donziger claimed that there were “various reasons” why no report was made, but the only reasons he mentioned were that he claimed that he did not regard Guerra as having had much credibility and that he was “very concerned that doing anything at that point to turn [Guerra] in would give Chevron an excuse to further use it against the court or against the process such that the trial could be derailed.” Tr. (Donziger) 2650:17–2651:2. Given the facts that (a) Donziger frequently claimed that he was afraid that Chevron would corrupt the process and buy a favorable outcome; (b) Donziger had made complaints against other judges, id. 2601:5–17; and (c) the Ecuadorian government, up to and including the president, was openly and fully supportive of Donziger and the LAPs, those explanations are of limited value. The failure of Donziger and the LAPs to report Guerra's bribe solicitation, moreover, certainly was not comparable to Chevron's failures in light of the hostility of the Ecuadorian government to Chevron. Supra Facts § IX.A.4, infra Discussion § VII.C.6.
Seventh, Fajardo—who is the LAPs' counsel of record in Ecuador and the holder of a power of attorney on behalf of all of the LAPs—and their other Ecuadorian lawyers declined to testify.
In addition to the foregoing, there is additional circumstantial evidence independent of Guerra's testimony.
First, Zambrano needed the money.
Zambrano's personal financial statement, filed in November 2010 although dated in July 2008, PX 393 (ROE Judiciary Council personnel action dated Nov. 16, 2010 attaching Zambrano's sworn assets statement dated July 31, 2008), showed that he had cash on hand of under $2,500, not even enough to pay his outstanding Diners Club balance. He owed banks nearly $8,000. Apart from two used vehicles, one of which was pledged, the only other material asset shown was $27,500 of real estate owned by his wife. Zambrano made no effort to explain these data, to show that his financial circumstances had improved, or to deny any economic motive to participate in the bribe arrangement. Nor is it likely that there was any improvement in Zambrano's financial situation between July 2008 and the issuance of the Judgment.
Second, Donziger and the LAPs had huge financial and other incentives to want to win.
Third, Donziger and the LAPs had at least two important reasons for wishing to control precise aspects of the decision, quite apart from winning in general.
The first already has been discussed—Donziger and the LAPs had strong incentives to ensure that the decision not rely on the Cabrera Report.
See supra Facts §§ 5.E.-G.
That Donziger's mind ran in this direction is shown by his reaction much earlier to Soltani's suggestion that Amazon Watch stop comparing the pollution in the Orienté to the Exxon Valdez spill. Rather than retreat, Donziger insisted that they stick to the claim. He warned that there would be “HUGE implications for the legal case” if they disavowed the comparison to Exxon Valdez, and told Amazon Watch that it “could terribly prejudice the people it is trying to help if it makes this change.” PX 860 (May 24, 2007 Email from S. Donziger to S. Tegel re: “private”).
DX 1482 (LAPs' Final Alegato ), passim.
The Court has not yet discussed the second, and it is this. The LAPs were concerned about an ambiguity in the EMA in connection with their attempts to raise new financing in 2010 after Kohn withdrew his support. As Patton Boggs spelled out in 2010 in the Invictus Memo, which was prepared in the effort to obtain a new investment from Burford, Article 43 of the EMA provides that the judge in an action such as the Lago Agrio case is to order payment of damages “to the community directly affected and to repair the harm and damage ... [and] also order the responsible party to pay to the moving party ten percent (10%) of the value of damages.”
Thus, “Art. 43 present[ed] some measure of risk that a substantial portion of the judgment could be awarded to a presently uninvolved—and therefore unforeseen—agency or public authority” with only ten percent going to the LAPs.
PX 1407 (Invictus Memo), at 27 (quoting EMA) (internal quotation marks omitted).
Although Patton Boggs said it thought the possibility of such an outcome was low, it recognized that such an outcome would dramatically reduce the money available for investors and the fees payable to the attorneys, both of which depended on the LAPs winning. This was of sufficient concern that the Invictus Memo contemplated that “the Plaintiff group [might] ... arrang[e] for receipt of any funds recovered against the judgment through payment agents in the United States and thereafter dividing those funds outside the Republic of Ecuador.”
Id. at 27–28.
The defendants in May 2012 did create a Gibralter company, Amazonia Recovery Limited (“Amazonia”) for receipt and distribution of any funds in consequence of the Judgment. See PX 657 (Amazonia Memorandum of Association); Donziger June 25, 2013 Dep. Tr. at 626:18–20, 627:12–24, 629:12–17, 631:3–6, 632:4–9, 633:22–634:2, 634:13–635:15; PX 1520 (diagram of Newco ( i.e., Amazonia) structure and fund flows). Amazonia, however, was not created until more than a year after the Judgment was rendered.
Writing the decision precisely as they wished and securing Zambrano's signature on it would have solved or, at least gone far toward solving, both the Cabrera Report and Article 43 problems. The disclaimer of reliance on the Cabrera Report offered the best hope for the first. Obtaining a judgment providing that all of the damages would be payable to the ADF, as the Judgment ultimately did, would have eliminated the EMA Article 43 concern.
Finally, there was no lack of opportunity. The LAPs previously had availed themselves of Guerra's ghostwriting efforts when Zambrano was on the case for the first time. These facts circumstantially support Chevron's contention.
C. Other Circumstantial Evidence—The Fajardo December 2010–January 2011 Emails
That said, and despite the fact that the defendants have not argued the point, there are two exhibits that at first blush would be in some tension with Chevron's claim that the defendants bribed Zambrano with respect to the outcome and the Judgment, if they were admissible and fully candid. They are emails by Fajardo dated December 31, 2010 and January 8, 2011.
DX 899 (Dec. 31, 2010 Email from P. Fajardo to E. Westenberger, S. Donziger and J. Sáenz re: “ABOUT THE ALEGATO”); DX 900 (Jan. 8, 2011 Emails from P. Fajardo to J. Sáenz, J. Prieto, S. Donziger, A. Carrasco, E. Westenberger, L. Yanza, and V. Barham; second email to J. Prieto, J. Sáenz, S. Donziger, toxico, A. Carrasco, E Westenberger, and V. Barham re: “CHEVRON'S ALEGATO”).
The December 31, 2010 email was addressed to Eric Westenberger of Patton Boggs, Donziger, and Sáenz. The subject was “ABOUT THE ALEGATO,” i.e., the final written argument to be submitted to the Lago Agrio court. Fajardo pointed out that the LAPs' final submission would have to be filed in the next week, that its preparation was being coordinated by Westenberger
and Sáenz, that Fajardo already had hoped to have received it for translation into Spanish, but that “it ha[d] not arrived, at least not yet.” He went on to say that “[n]obody knows when the Judge may issue the judgment ... but if the judge issues the judgment soon, we will end up with the document [ i.e., the alegato ] in hand and it will be useless to us.” The email closed by stating that “we are behind schedule with this memorandum of law, which could have serious consequences for the case.”
Patton Boggs in general and Westenberger in particular did a great deal of work in preparing the LAPs' alegato. E.g., Tyrrell Dep. Tr. at 315:4–13, 319:6–320:5; see also PX 7468 (Nov. 11, 2010 Email from S. Donziger to E. Westenberger and A. Small re: “this is latest draft of alegato”); PX 1470 (Jan. 12, 2011 Email Chain Between Patton Boggs lawyers re: review of final Alegato ).
DX 899 (Dec. 31, 2010 Email from P. Fajardo to E. Westenberger, S. Donziger and J. Sáenz re: “ABOUT THE ALEGATO”).
The January 8, 2011 emails
DX 900 (Jan. 8, 2011 Emails from P. Fajardo to J. Sáenz, J. Prieto, S. Donziger, A. Carrasco, E. Westenberger, L. Yanza, and V. Barham; second email to J. Prieto, J. Sáenz, S. Donziger, toxico, A. Carrasco, E. Westenberger, and V. Barham re: “CHEVRON'S ALEGATO”).
One of the addressees of the second Fajardo email of that date (that of 16:23:47) was <toxico@ ecuanex. net. ec> which, as the 15:49:22 email of that date reveals, is (or is among) Yanza's email addresses.
The first of Fajardo's two emails of that date reported that Chevron had filed its alegato on January 6. Prieto responded that he could not “believe they beat us!” to which Fajardo in turn replied that “[t]he one who strikes first has greater success or causes greater impact ... They want to influence the judge with their theory. It is a mistake on our part to have fallen asleep for so long on the alegato.”
Tyrrell Dep. Tr. at 260:12–17; Chevron Corp. v. Donziger, No. 11–1264, DI 92–3, at 87–88 (2d Cir. filed July 5, 2011).
DX 900 (Jan. 8, 2011 Emails from P. Fajardo to J. Sáenz, J. Prieto, S. Donziger, A. Carrasco, E. Westenberger, L. Yanza, and V. Barham; second email to J. Prieto, J. Sáenz, S. Donziger, toxico, A. Carrasco, E Westenberger, and V. Barham re: “CHEVRON'S ALEGATO”).
These emails, if admissible and taken literally, would be consistent with a belief on Fajardo's part in late December and early January 2011 that the result of the Lago Agrio case then was in doubt. If Fajardo in fact so believed, that fact would undercut Chevron's argument that the case had been fixed by then with the promise of $500,000 out of the judgment proceeds in exchange for Zambrano's promise to decide the case for the LAPs and to sign a judgment they prepared.
The emails, even if taken literally, would not utterly defeat the idea that Zambrano had been bribed. Even if the corrupt bargain had been struck, Fajardo may have been concerned that Zambrano would double cross the LAPs. Given the LAP team's views of Chevron, the risk of being outbid, whether real or the product of fevered speculation, may have been in his mind.
The key consideration is that the only individuals on the LAP side who necessarily would have known if a bribery deal had been struck would have been Fajardo and Donziger. That is so of Fajardo because he is said to have agreed to it. It is true of Donziger because his approval would have been essential for reasons discussed in the following section. Given the relationships on the LAP side of the case, it is not unreasonable to think that Yanza also perhaps would have known. But all of these emails went to other people as well, including Patton Boggs' Westenberger in the case of the December 31 email and Patton Boggs' Carrasco and Westenberger, as well as junior lawyers in Ecuador, in the case of the January 8 communications.
There is no reason to believe that any of the core three on the LAP side of the case—Fajardo, Donziger, and Yanza, if Yanza was knowledgeable about this—would have confided the fact that they had bribed Zambrano to any of the other recipients of the emails. Their goal was to urge the email recipients to finish the work on the alegato, which already was late, even if only to keep up the pretense that the Lago Agrio litigation was in real dispute and the end result in doubt. They could not successfully have done that if they had told those working on the alegato that “the fix was in” and that the alegato would be no more than window dressing. Equally important, this trio had a long record of keeping knowledge of questionable behavior as close to their personal vests as possible. That was the case with concealment from Kohn and Donziger's principal public relations person, Karen Hinton, of the true facts with respect to the Cabrera Report and the LAPs' relation to it. It is reflected in the edict in the Cabrera work plan, addressed to those who were in on the LAPs' role in the Cabrera Report, that everyone was to be “silent.” And there are other examples. The bottom line here is that there is no reasonable likelihood that Donziger, Fajardo, or Yanza would have disclosed a bribery arrangement, assuming it existed, to the other recipients of these two emails. The risks were too great.
That is especially true with respect to Eric Westenberger and Anne Carrasco of Patton Boggs, who were recipients. As Donziger, Fajardo, and Yanza must have known, they had no reason to suppose that these lawyers, who were subject to compulsory process in the United States, would have allowed themselves to be swept into a conspiracy to bribe a judge. Indeed, earlier in 2010, Donziger, Fajardo, and Yanza had seen the LAPs' Denver lawyers withdraw in the Stratus 1782 proceeding as soon as they learned the truth about the Cabrera Report.
Accordingly, these emails would not bear the weight that might have been placed upon them even if they were admissible in evidence.
Chevron objected to the emails on, inter alia, hearsay grounds.
As the text shows, the critical point for which the emails might be used would be to support assertions by Fajardo, explicit and implicit, that the outcome of the case was in doubt and that the submissions of which he was urging prompt completion could matter. This in turn could imply that the case had not been fixed. But the emails are inadmissible hearsay for any such purpose.
Fed.R.Evid. 802 renders “hearsay” inadmissible. Rule 801(c) defines “hearsay” as an out of court “statement” offered “to prove the truth of the matter asserted in the statement.” Rule 801(a) defines “statement” as “a person's oral assertion, written assertion, or nonverbal conduct, if the person intended it as an assertion.” Fajardo's statements in these emails, to the extent they are offered for the purpose of proving that the outcome of the Lago Agrio case was in doubt and thus that the case had not been fixed, were assertions and therefore classic hearsay. Nor would they be admissible under the state of mind exception to the extent they contain statements of belief. Fed.R.Evid. 803(3).
The defendants offered no evidence with respect to Guerra's contention that the LAPs bribed Zambrano save for Zambrano's denial and Donziger's testimony.
As noted, Zambrano was not credible. We are left then with Donziger's testimony.
1. Donziger's Testimony, Even If True, Would Not Negate the Alleged Bribe
It should be recalled at the outset that Donziger's testimony on this point was narrow. He essentially said no more than that Donziger himself “did not bribe Judge Zambrano,” that “allegations by former Judge Alberto Guerra that I [Donziger] was involved in a meeting where I ‘approved’ a plan arranged by Pablo Fajardo to pay Zambrano $500,000 is false,” and that he “did not agree or express any support for a plan to pay any amount of money so that the plaintiffs would be able to draft the final judgment.”
See supra Discussion § XI.A.3.a.
This testimony, assuming its truth, would be of only limited value. Among other things, Guerra never said he was present when Donziger agreed to the alleged bribe or that anyone told him that had occurred. He attributed the corrupt promise to Fajardo. Fajardo, on behalf of the LAPs, is alleged to have promised a bribe to Zambrano after the 2010 meeting at the Honey & Honey Restaurant and outside Donziger's presence. So Donziger's testimony would not necessarily have been inconsistent with a finding that Fajardo did precisely that. But this raises an additional issue that warrants serious consideration—whether Donziger authorized or approved any such deal, assuming it was made.
2. Donziger's Approval Was Necessary for the Alleged Deal With Zambrano
a. Donziger Controlled the LAP Team
Donziger once wrote that he was “at the epicenter of the legal, political, and media activity surrounding the case both in Ecuador and in the U.S.”
PX 806R (Donziger Book Proposal), at 5.
Id. at 3.
His January 2011 retention agreement with the LAPs—signed just a few months after the alleged bribery of Zambrano—bears this out, describing him as the LAPs' U.S. Representative and his duties as being “to exercise overall responsibility for the strategic direction of the Litigation and the day-to-day management of the Litigation.”
PX 1181 (Nov. 9, 2009 Email from S. Donziger to J. Kohn re: Trip to Ecuador), at 2.
PX 558 (Donziger Jan. 2011 Retention Agreement), at 2.
As the “cabeza”—or head—of the LAP team, Donziger supervised the Ecuadorian legal team, set deadlines, paid the lawyers' salaries, including Fajardo's,
reviewed at least their important court filings in Ecuador, and coordinated the work among the lawyers in Ecuador and the scientists, experts, lawyers, litigation funders, politicians, and media consultants in the United States and elsewhere.
See PX 4900R (Dahlberg Direct) ¶ 75.
See supra Facts § II.C.1.
PX 1509 (Donziger Ecuador Migration Record).
In addition, Donziger largely has controlled the money used for purposes of the Lago Agrio case, public relations, and related litigation. He was the intermediary between the Ecuadorian lawyers and Kohn when Kohn was funding the case. He recruited Russell DeLeon, his law school classmate, to fund Crude and other aspects of the LAPs' efforts. He secured funding from Burford, and, together with H5, brought on Patton Boggs. He occasionally paid even some of the LAP team's expenses and lawyers' salaries out of his personal funds.
Donziger has been intimately involved with the LAP team's legal strategy in the U.S. and in Ecuador. He hired David Russell to come up with the first damages estimate. With Russell, he hired the LAPs' first nominated expert, Calmbacher, and then rode herd over the completion of his reports. He repeatedly met with Ecuadorian judges presiding over the Lago Agrio case.
He recruited Reyes and Pinto, supposedly to serve as independent monitors but in reality to challenge the settling experts' conclusions concerning two site inspections, and agreed to make the under the table payments in the “bargain with the devil” referred to above. He (at Reyes' suggestion) selected and vetted Cabrera to be the global expert and made sure Cabrera was under the LAP team's control. He met with Cabrera and the LAP team on March 3, 2007 to plan Cabrera's work, and then he met with the American experts the following day to discuss their involvement in it. He recruited, hired, and worked directly with Stratus in drafting much of the Cabrera Report. And when the truth about Cabrera began to leak out, Donziger controlled the LAPs' efforts to minimize, contain, and spin it. He recruited and hired lawyers to assist the LAPs in the Stratus 1782 proceeding. And he personally was involved in determining what information the Fajardo Declaration and Petition would—and would not—reveal.
PX 207, 200, 192, 169R (Donziger Notebook), at 20.
Donziger's role is reflected in the fact that he stands to receive more money from the Lago Agrio case than any other lawyer—or law firm—who has worked on the case. His January 2011 retention agreement with the LAPs—signed just shortly after the LAP team allegedly struck the deal with Zambrano and shortly before the Judgment was issued—entitles him to 31.5 percent of all attorneys fees (which will be 20 percent of anything collected on the Judgment, net of certain preferred payments).
PX 558 (Donziger Jan. 2011 Retention Agreement), at 3.
b. Donziger's Approval Was Necessary, and Given, for the 2009 Ghostwriting Deal with Guerra
Guerra's testimony that the LAPs paid him for ghostwriting Zambrano's orders during Zambrano's first term as the Lago Agrio Chevron judge was extensively corroborated by independent evidence: the Guerra bank deposit slips (including those bearing the signature and cedula number of the LAPs' Ximena Centeno) and Guerra bank statements, the Selva Viva bank statements, and the PUPPETEER emails.
Supra Facts § X.C.2.d.
“The importance of this story to Chevron's case is simple: If the plaintiffs' lawyers in fact entered into a deal with Guerra in 2009 to influence the case, then that shows their willingness to act corruptly, making it far more likely that they bribed Judge Zambrano a year later.”
DI 1850 (Donziger Defs.' Post-trial Mem. of Law), at 38.
In sum, Donziger was the boss of the LAP team; Fajardo was his “local counsel.” If Fajardo promised consideration to Zambrano to fix the case, he would have done so only with Donziger's authorization.
E. Ultimate Findings on this Point—Fajardo, with Donziger's Approval, Promised Zambrano $500,000 of the Judgment Proceeds to Decide the Case for the LAPs and Sign a Judgment They Prepared
As we have seen, (1) Zambrano, a new judge inexperienced in civil matters, had his close friend and associate, Guerra, who had been removed from the bench for misconduct, drafting orders for him in civil cases which Zambrano signed and filed as his own; (2) Zambrano had motives to solicit a bribe in the Chevron case; (3) his friend and ghostwriter, Guerra, was a ready means of doing so; (4) Guerra concededly solicited the bribe from Donziger, Fajardo, and Yanza; (5) Donziger, Fajardo, and Yanza had motives and the opportunity to promise the bribe and, at least as long as the money was paid out of judgment proceeds and probably otherwise, the means to pay it; and (6) the Judgment that Zambrano ultimately signed copied from LAP internal work product that was not in the court record. In short, there is a classic circumstantial case—independent of Guerra's testimony—that the LAPs bribed Zambrano to rule in their favor and sign a judgment they wrote for him. To this must be added (1) the Court's finding that Zambrano could not and did not write the Judgment himself, least of all in the manner in which he claimed he did so, and (2) neither the files of the LAPs' Ecuadorian counsel nor their testimony was made available.
The defendants, to the extent they produced evidence, sought to deny the charge. But neither Zambrano nor Donziger was a credible witness, at least on this point. And the other witnesses associated with the defendants—Fajardo and Yanza—declined to testify. That said, this Court recognizes that “disbelief of a ... denial of a fact which the [adverse party] has the burden of proving is not sufficient to sustain [the adverse party's] burden.”
Wantanabe Realty Corp. v. City of New York, 315 F.Supp.2d 375, 393 n. 110 (S.D.N.Y.2003); accord Venzie Corp. v. U.S. Mineral Prods. Co., 521 F.2d 1309, 1313 (3d Cir.1975) (“While the jury was free to disregard the defendants' testimony that no agreement of any kind was formulated during the course of these contacts, mere disbelief could not rise to the level of positive proof of agreement to sustain plaintiffs' burden of proving conspiracy.”); Ortho Diag. Systs., Inc. v. Abbott Labs., Inc., 920 F.Supp. 455, 477 (S.D.N.Y.1996) (same).
This Court already has made clear its skepticism concerning Guerra's testimony, character, and motives. Among other things, it has concluded that Guerra's testimony to the effect that Zambrano had cut a deal with the LAPs during his first tenure on the Lago Agrio case was not sufficiently persuasive in view of prior statements he made to Chevron investigators. But, in language specifically approved by our Circuit:
“There never has been any positive rule of law which excluded evidence from careful consideration entirely, on account of the wilful falsehood of a witness as to some portions of his testimony. Such disregard of his oath is enough to justify the belief that the witness is capable of any amount of falsification, and to make it no more than prudent to regard all that he says with strong suspicion, and to place no reliance on his mere statements. But when the testimony is once before the jury, the weight and credibility of every portion of it is for them....”
In other words, a jury is entitled to believe part or even most of the testimony even of one who, it concludes, deliberately has lied under oath as to other particulars. Substantially the same is true of a judge sitting, as in this case, as the trier of the facts.
United States v. Weinstein, 452 F.2d 704, 713–14 (2d Cir.1971) (Friendly, C.J.) (quoting Knowles v. People, 15 Mich. 408, 412 (1867)).
In this particular instance, Guerra told the Chevron investigators very early on that (1) Zambrano told Guerra to go to Chevron and ‘have them give me [Zambrano] around 500 and see how much they give you, ... have them bring the judgment, we dress it up here and we issue it,’ (2) Guerra's attempt to do so was unsuccessful, (3) Zambrano later told Guerra that he ‘[made] contact with the other side ... [and] ultimately, he sets it up ... with Fajardo,’ and (4) and ‘they offered him ... half a million dollars ... [b]ut to be paid later.’
DX 1360 (June 25, 2012 Tr.), at 49, 51, 81.
DX 1363 (Guerra Nov. 17, 2013 Decl.) ¶ 23; PX 4800 (Guerra Direct) ¶¶ 41–43.
In view of the entire record—including but not limited to the circumstantial evidence that predominantly supports Chevron's contention and the Court's evaluation of all of the pertinent testimony—this Court finds that (a) Zambrano agreed with Fajardo to fix the case for a payment of $500,000 paid out of any judgment proceeds, (b) Fajardo did so with Donziger's express authorization, (c) the LAPs drafted all or most of the Judgment, and (d) Zambrano signed their draft without consequential modification as part of the quid pro quo for the promise of $500,000.
XII. The Appeals
A next logical point in the story of the Lago Agrio case is the appeals. In order to appreciate one aspect of that story, however, it is necessary first to describe briefly an event that occurred in this action only days after this case began.
Chevron filed its complaint in this case on February 1, 2011.
DI 1 (Complaint).
Id. at 147.
DI 91 (Chevron Reply Mem.).
It based this allegation primarily on the fact that Zambrano had stated to the press only weeks before the Judgment was issued that he had reviewed only three quarters of the approximately 200,000–page record.
Id. at 6, n. 1.
Chevron pointed out that it would have been impossible for the judge to have reviewed 50,000 pages and write a 188–page judgment in that period of time, and noted that it anticipated “requesting discovery on this issue shortly.”
Id. at 6.
Zambrano testified at trial that he lied to the reporter on this point. Tr. (Zambrano) 1738:9–12.
Id. at 6, n. 1.
With that fact in mind, we turn to the appeals.
A. The First Level Appeal
Both Chevron and the LAPs appealed the Judgment.
PX 430 (Appellate Judgment), at 1.
PX 2548 (LAPs' July 8, 2011 Filing with Appellate Court), at 4, 8–10.
1. The LAPs Contend that Chevron Set Up its Ghostwriting Claim
Shortly after the parties filed their appellate briefs, the Judicial Council of the Sucumbíos Court selected three judges from the trial court to hear the appeal.
Several months after the panel was chosen, the LAPs filed a motion requesting that the panel “take into account and analyze Chevron's [judgment fraud] allegations when deciding this appeal to prevent Chevron from taking advantage of this Division's possible silence and so continue its worldwide smear campaign against the Ecuadorian judicial system.”
PX 403 (Certificate of Lottery Drawing to Form the Sole Division of the Provincial Court of Justice of Sucumbios, No. 106–2011). Chevron contends that Judge Zambrano improperly and secretly influenced the selection of the panel, which, it claims, should have been done publicly by random lottery. It has failed, however, to provide evidence or foreign law materials explaining the procedure for selection of appellate judges under Ecuadorian law.
PX 2548 (LAPs' July 8, 2011 Filing with Appellate Court), at 12.
Although the LAPs admitted in the motion that they “ha[d] been unable to determine with certainty how it was that overlapping of information identified by Chevron occurred,” they suggested that “maybe it was the company [Chevron] itself that established the conditions for Judge Zambrano to be able to use the contested material[s] as a basis.”
The LAPs noted that Chevron first alleged that Zambrano had received secret assistance in its reply brief to this Court on February 15. They contended that “[t]he fact that Chevron has identified similarities and differences between the judgment of February 14, 2011, and some documents obtained from plaintiffs through collateral procedures initiated in the U.S., all in only one day, [wa]s categorical evidence that Chevron was ready to make these accusations before the judgment was rendered.”
Id. at 5.
Thus, the LAPs continued, “Chevron might know perfectly well how these materials were taken into account by Judge Zambrano.... Logic compels us to conclude that Chevron knew where to look for it because Chevron itself put it there from the beginning.”
Id. at 8–9 (emphasis in original).
Id. at 5, 10.
Chevron responded two weeks later. It denied the allegation that it had provided the LAPs' unfiled work product to Zambrano.
It noted that its February 15, 2011 filing with this Court said that it suspected fraud in the authorship based on “Judge Zambrano's admission only weeks before February 14, 2011, that he still had a quarter of the approximately 200,000–page record left to review.”
PX 2549 (Chevron Response to LAPs' July 8, 2011 Appellate Filing), at 1.
It was not until Chevron obtained further discovery from the LAPs' U.S. counsel and then compared the documents it received in discovery to the Judgment that it presented evidence of the overlap to the Ecuadorian appellate court in May 2011.
Id. at 5.
In fact, the footnote in Chevron's February 15, 2011 reply memorandum in this Court referred also to unspecified “indications in the Judgment itself.” DI 91, at 6 n. 1. But it did not explain what “indications” it had in mind. The Court notes, however, that at least one such indication was obvious on the face of the Judgment—the presence of the—sv and—tx suffixes in the Judgment's designations of samples. As previously discussed, those suffixes were not used in the Filed Lab Results in the Record, the ostensible source of the Judgment's references. Supra Facts § IX.B.1.C. “SV,” moreover, were the initials of Selva Viva, the LAPs' administrative entity.
Thus, the LAPs' assertion that Chevron had located the portions of the Judgment that matched the LAPs' internal files in “only one day” was false. Moreover, Chevron noted that, despite the LAPs' accusations and bluster, “ [n]owhere do Plaintiffs deny that they secretly provided Judge Zambrano with the content of their internal documents so that it could be incorporated into the text of the lower court judgment.”
PX 2549 (Chevron Response to LAPs' July 8, 2011 Appellate Filing), at 5.
Id. at 2 (emphasis in original).
Chevron appended to its response additional evidence of overlap, based in part on discovery it had obtained from Section 1782 proceedings in the U.S. Nonetheless, Chevron requested—based on the overlap evidence and the LAPs' failure to explain it or deny their involvement in writing the Judgment—that the Judgment be declared null and void.
2. The Appellate Panel Affirms the Judgment
The three judge appellate panel affirmed the Judgment on January 3, 2012, rejecting the arguments made by both parties.
PX 430 (Appellate Judgment).
As discussed below, the appellate judgment was not received for the truth of the matters stated therein and has no legal effect here.
the panel stated that it would not “refer at all” to Chevron's specific allegations “of fraud and corruption of plaintiffs, counsel and representatives ... except to let it be emphasized that the same accusations are pending resolution before authorities of the United States of America due to a complaint that has been filed by ... Chevron, under what is known as the RICO act, and this [court] has no competence to rule on the conduct of counsel, experts or other officials.....”
Id. at 1.
Id. at 10.
Indeed, the appellate court declined almost entirely to address Chevron's allegations concerning overlap between the Judgment and the LAPs' unfiled work product. While Chevron had not yet obtained Guerra's evidence by the time the appeal was decided, it did present to the appellate court some other evidence that it presented at trial in this case—for example, that portions of the unfiled Selva Viva Database, the Fajardo Trust Email, and the Fusion Memo—were copied either verbatim or in substance into the Judgment. But the appellate court by and large disregarded it. The court failed entirely to address the overlap between the Judgment and the Fusion Memo, the Index Summaries, and the Fajardo Trust Email.
And, while the appellate court stated that it “ha[d] been able to confirm first hand that the record include[d]” certain “information” in the Judgment that appeared also in the unfiled Selva Viva Database,
PX 430 (Appellate Judgment).
Id. at 11.
The appellate court thus declined to address the fundamental implication of the overlap between the Judgment and the LAPs' unfiled work product—that the LAPs had written, or assisted Zambrano in writing, the Judgment.
Moreover, for reasons previously stated, the appellate court decision may not be considered for the truth of the matters asserted, as it is hearsay if and to the extent it is offered for that purpose. Infra note 1563. The Court concludes below that it does not have issue preclusive effect on this or any other factual point. Infra Discussion § IX.A.
Moreover, to the extent the appellate court acknowledged that the Judgment incorrectly had reported some of the data samples—for example, its incorrect reporting of mercury and PAH levels as much higher than the Filed Lab Results reported them to be—it concluded that the errors were immaterial to the Judgment's damages award.
The panel did not attempt to re-calculate the damages based on the correct figures. It concluded simply that the judge had considered all of the evidence—not each piece individually—to arrive at the total damages award.
For example, the appellate court noted that, in listing some of the sample results, the Judgment omitted decimals—notwithstanding that the sampling results reported the decimals—and instead reported the next whole number. PX 430 (Appellate Judgment), at 11. This was particularly true for at least one sample of benzene. But the court concluded that “[t]his gaffe, no doubt involuntary, does not affect the merits of the judgment being examined, since, regardless, it refers to an alarming quantity of benzene in the environment.” Id. The appellate panel addressed also the fact that the Judgment reported certain results for PAHs in milligrams rather than micrograms but concluded only that “the assessment of the quantity of contamination based on these samples should be reduced considerably.” Id. And the panel noted that the Judgment omitted the “less than” symbol in reporting the results for mercury, and “[f]or this reason, emphasi[z]ed ... that the reference to the presence of ‘high levels' of mercury ... does not match the facts....” Id. at 12. Nonetheless, the court “consider[ed] that this error in the assessment of the laboratory results regarding a contaminating element d[id] not invalidate the remaining findings or reasoning regarding others which are in fact characterized as contaminating elements.” Id.
But that of course missed at least one major point—Chevron pointed to the overlap in general and to the errors and other idiosyncracies common to the Judgment and the unfiled LAP documents as evidence that the LAPs had written or secretly had a hand in writing the Judgment, which raised an entirely different issue from whether there simply had been factual errors.
“[T]he ... errors would not be capable of slanting [the Judgment's] reasoning, or inducing it to error ... because the judge in his judgment has not assessed each sample and its results separately, as if they described isolated facts, but instead it is the collection of information coming from various sources that undoubtedly has created in the trial judge the conviction of the existence of damage.” Id.
Consistent with its statement that it would not “refer at all” to Chevron's specific allegations “of fraud and corruption of plaintiffs, counsel and representatives,” the intermediate appellate court failed largely to address the question whether these commonalities supported Chevron's claim of misconduct.
3. The Appellate Clarification Order
The LAPs sought clarification of the appellate court's decision.
PX 2551 (LAPs' Appellate Clarification Request); PX 2552 (Chevron Response to LAPs' Appellate Clarification Request); PX 431 (Appellate Clarification Order).
and asked that “the [appellate] Division clarify and state that in fact it ha[d] analyzed Chevron's accusations, and that it ha[d] not found any fraud in the activities of the plaintiffs or their attorneys.”
PX 2551 (LAPs' Appellate Clarification Request), at 4; PX 2552 (Chevron Response to LAPs' Appellate Clarification Request), at 9 (citing PX 430 (Appellate Judgment), at 10).
PX 2551 (LAPs' Appellate Clarification Request), at 5 (emphasis added).
The appellate court issued its clarification order on January 13, 2012.
It stated that, while it did “not find evidence of ‘fraud,’ ” it was “stay[ing] out of these [fraud] accusations, preserving the parties' rights to present formal complaint to the Ecuadorian criminal authorities or to continue the course of the actions that have been filed in the United States of America.”
PX 431 (Appellate Clarification Order).
It noted that “[t]his was a determining factor for the [Appellate] Division's considerations in the judgment that is being clarified, since it is obvious that it was not its responsibility to hear and resolve proceedings that correspond to another ju risdiction....”
Id. at 4.
Nonetheless, the court stated conclusorily that “all of the samples, documents, reports, testimonies, interviews, transcripts and minutes, referred to in the judgment, are found in the record without the defendant identifying any that is not—the defendant's motions simply show disagreement with the reasoning, the interpretation and the value given to the evidence, but they do not identify correctly legal evidence that is in the record.”
But the clarification order—like the underlying appellate order—did not address any of Chevron's specific ghostwriting claims. Nor did it identify where in the record it had located the documents it claimed were there and—as noted previously—its statements concerning what it allegedly found in the record may not be considered for their truth. It posited instead that “[i]f there had been any ‘secret assistance,’ the presumed concordance between the plaintiffs' internal documentation, and the text of the judgment would not be limited to a fairly simple interpretation of evidence that is contained in the record.”
Id. at 3.
Id. at 4.
B. The National Court of Justice Affirms the Judgment in All But One Respect
Chevron sought review in the Ecuadorian National Court of Justice on January 20, 2012.
DX 1022 (Chevron Cassation Appeal).
Despite its limited scope of review, Chevron made a plethora of arguments—both legal and factual—to the National Court. Most relevant, however, were its contentions that the trial court proceedings should have been “nullified” because, inter alia, the LAPs had submitted fraudulent reports by Dr. Calmbacher, Cabrera had been appointed illegally and had illegally carried out his duties, and the LAPs had ghostwritten the Judgment.
The National Court issued its opinion affirming in large part the appellate court's decision on November 12, 2013, while trial in this case was underway.
It noted that “the cassation appeal is an extraordinary appeal granted to the losing party so that the Cassation Court may annul not every unfair judgment, but only those in which their own specific unfairness has been proved to have been founded on a wrongful interpretation of the law.”
PX 8095 (Opinion of Ecuadorian National Court of Justice).
Id. at 96.
With respect to Chevron's allegations concerning Calmbacher and Cabrera, the National Court noted that Chevron had not “mentioned which legal rule ha[d] been supposedly infringed” or “which procedural rules have rendered the proceeding absolutely null” and stated that it had concluded that the cassation court therefore was unable to pass on them.
Id.; see also id. at 97–98.
The National Court “concluded that ... [t]he court of appeals ha[d] adequately addressed the requests of the defendant with respect to the report of Mr. Cabrera and has properly weighed the evidence in accordance with the rules of the sound judgment, within which it has considered that the aforementioned report was not taken in consideration by the trial judge ....”
Id. at 156–57 (citing PX 400 (Lago Agrio Judgment), at 50–51).
Id. at 157.
The National Court stated also that Chevron's ghostwriting allegations were inappropriate for cassation review.
The National Court did not consider Chevron's allegations concerning Guerra or the bribe scheme. Chevron did not raise them in its cassation petition, as Guerra had not yet approached Chevron by the time the petition was filed.
“appellant has alleged that the judgment rendered by the trial judge was drafted by the plaintiffs, and making reference even to the commission of a procedural violation, which would result in the nullity of the trial court's judgment. The nullity of any judgment, according to the Code of Civil Procedure, arises for reasons expressly provided for in the law itself, which is something different from the grounds for nullity of a proceeding, as we discussed herein, therefore allegations such as those involving the perpetration of a crime are not sufficient legal foundation to lodge a cassation appeal and allege the nullity of a judicial proceeding, since the record also does not show any judicial determination on the commission of a crime.”
Id. at 99 (footnotes omitted).
The National Court affirmed the appellate court in all but one respect. It “quashed” the punitive damages award “since punitive damages are not contemplated under Ecuadorian law and public apologies are not admissible nor, therefore, is any award for that concept.”
Id. at 222.
As noted, the Invictus Memo set out a plan to enforce the Judgment “quickly, if not immediately, on multiple enforcement fronts—in the United States and abroad.”
PX 2382 (Invictus Memo), at 29.
“As with the domestic enforcement analysis, proceeding as an initial matter in a jurisdiction housing the highest concentration of Chevron's domestic assets would offer certain obvious advantages, including efficiency. Nonetheless, it is more important for Plaintiffs to proceed initially in a jurisdiction that promises the most favorable law and practical circumstances. To that end, Plaintiffs' Team will identify and potentially target certain ‘keystone’ nations—that is, nations that enjoy reciprocity, or, better yet, are part of a judgment recognition treaty—with nations that serve as the locus for greater Chevron assets.”
Id. at 35 (emphasis in original).
In pursuit of this strategy, the LAPs currently are seeking enforcement of the Judgment against subsidiaries of Chevron in Argentina,
PX 2461 (Order Issued by the National Civil Trial Court No. 61 of Argentina in Aguinda Salazar Maria v. Chevron Corp.).
In the Argentine case, the LAPs successfully convinced a trial court to embargo Chevron's Argentine subsidiary's assets, dividends, and future bank deposits. Id. at 2–4. The decision ultimately was reversed by the Argentine Supreme Court, which held that Chevron Argentina—the defendant in the Argentine case—was separate from Chevron Corporation—the defendant in the Lago Agrio case—and that the LAPs had failed to pierce the corporate veil. PX 273 (Order Issued by the Supreme Court of Justice of Argentina in Aguinda Salazar Maria v. Chevron Corp.).
PX 2306 (Filing in the Superior Court of Justice of Brazil).
The Brazilian action, see Tr. (J. Piaguaje) 2398:7–2399:3, so far as the record discloses still is in its initial stages.
PX 1004 (Amended Statement of Claim, filed in Yaiguaje v. Chevron Corp., Court File No. CV–12–454778, Ontario Superior Court of Justice).
An Ontario court stayed the LAPs' enforcement action against Chevron's Canadian subsidiary, holding that the LAPs had failed to pierce the corporate veil. The court held that the case could not proceed unless and until the LAPs located assets of Chevron Corporation in Canada. PX 660 (Order, Yaiguaje v. Chevron Corp., File No. CV–12–9808–00CL, Ontario, Canada). The stay of proceedings later was vacated by the Ontario Court of Appeal, http:// cdn 5. letters blogatory. com/ wp- content/ uploads/ 2013/ 12/ C 57019. rere_. pdf, which then stayed its decision pending Chevron's motion for leave to the Supreme Court of Canada, http:// cdn 5. letters blogatory. com/ wp- content/ uploads/ 2014/ 01/ 2014 ONCA 0040. pdf.
As noted, attempts to enforce the Judgment in the United States always have been part of the plan. Indeed, even when the defendants sought to defeat the preliminary injunction in this case by disclaiming any then present intention to seek enforcement in New York, they conspicuously did not disclaim any such intention elsewhere in the United States.
Moreover, the reasons for their failure to seek enforcement to date in the United States are fairly obvious.
As an initial matter, the defendants' repeated efforts to have this case assigned to a different judge make clear their preference for almost any other forum. Any attempt, however, to enforce the Judgment in the United States while this action remains pending would carry a substantial risk that the enforcement proceeding would be litigated here for two reasons.
First, as long as this action remains pending, any suit in a federal court by any of the LAPs (other than the two LAP Representatives who defended this case at trial) to enforce the judgment likely would be a compulsory counterclaim in this case, as the defaulting LAPs are defendants here and have not answered the complaint in this case. Fed.R.Civ.P. 13(a)(1).
Second, there in any event would be a substantial chance that any enforcement action brought in a federal court other than this one would be transferred to this Court under 28 U.S.C. § 1404(a) or 1407, as occurred with Patton Boggs' related lawsuit in the District of New Jersey. Patton Boggs LLP v. Chevron Corp., No. 12 Civ. 9176(LAK), DI 42 (filed Dec. 14, 2012). Moreover, as the LAPs all are aliens, any enforcement action brought in a state court, other than those of the two states of which Chevron is a citizen (California and Delaware), could and quite likely would be removed by Chevron to federal court and then likely transferred to this Court.
The LAPs are enforcing the Judgment in Ecuador despite that Chevron never has operated in the country and has no subsidiaries there. As noted, Invictus foreshadowed the LAPs' plan of seeking “attachment of Chevron's assets prior to successful recognition of the Ecuadorian judgment.”
It noted that “attachment would undoubtedly compound the pressure already placed on Chevron vis a vis an international enforcement campaign, and force Chevron to focus its resources on the proceedings initiated by the Plaintiffs, rather than its sideshows.”
PX 2382 (Invictus Memo), at 31.
A few months after the intermediate appellate court affirmed the Judgment, the Provincial Court of Sucumbíos issued orders attaching Chevron's assets and the assets of its subsidiaries worldwide. In furtherance of enforcement of the Judgment, it attached Chevron's intellectual property rights in Ecuador, funds going into or leaving Ecuador to Chevron's bank accounts abroad, and a $96 million arbitration award issued against the Republic of Ecuador (“Embargo Order”).
PX 432 (Oct. 15, 2012 Order issued in Summary Proceeding No. 21100–2003–0002), at 4 (attaching intellectual property, cash, and other assets in Ecuador, along with a $96,355,369 arbitration award issued against the ROE); PX 418 (Oct. 25, 2012 Order issued in Summary Proceeding No. 21100–2003–0002) (expanding attachment order); PX 7087 at 4 et seq. (Oct. 3, 2013 Official Letter of Ecuadorian Intellectual Property Inst. informed Lago Agrio court of notations of attachment of Chevron trademark registrations pursuant to attachment).
B. The Purpose of All of These Efforts
Donziger's and the LAPs' purposes in pursuing the expansive media campaign previously discussed, in their attempts to instigate the criminal prosecution of Chevron lawyers, in their efforts to precipitate disinvestments in Chevron stock, and in their overtures to government officials and agencies to investigate Chevron and in related activities, always have included driving Chevron to the settlement table.
On October 6, 2007, Donziger confided to his personal notebook the following:
“The key issue is criminal case. Can we get that going? What does it mean? I really want to consolidate control with contract before going down a road that I think could force them to the table for a possible settlement.”
Later that month, Donziger, on the eve of a mediation with settlement, wrote confidentially to another of his hired PR people that “[w]e need to get more press and increase the pressure b/w now and then, to get the price up.”
PX 169R (Donziger Notebook), at 6.
PX 931 (Oct. 29, 2007 Memo from S. Donziger to C. Lehane); see also PX 728 (Apr. 27, 2005 email from C. Lehane to S. Donziger and J. Kohn), at 2 (“As we have discussed, the Ecuadorian Amazon Chevron–Texaco project can be reduced, in the end, to a single strategic imperative: Bringing ChevronTexaco to the negotiation table by inflicting real economic pain on the company.”) (bold in original).
In August 2009, Donziger sent a new prospective PR firm a memorandum outlining his ideas for their efforts. It began by stating that the “primary objective is to pressure Chevron such that they will have to settle the case at a level that would allow for a comprehensive environmental clean-up” and then discussed generating pressure from shareholders, disinvestment, pressure from governmental investigators, diplomatic pressure, celebrity endorsements, and pressure from Congress and NGOs.
PX 7450 (Aug. 2009 Memo from S. Donziger to New Partners re “Idea for Campaign”).
To be sure, Donziger's long-time head PR person, Karen Hinton, testified at trial that Donziger's interest was only in taking the case to verdict and not in settling it:
“I had numerous conversations with Mr. Donziger about resolving the case. Mr. Donziger repeatedly told me that in the settlement talks Chevron refused to agree to pay for a full and complete remediation of the concession area. As a result, Mr. Donziger made it clear during this time that his clients did not want to settle the case. As Mr. Donziger repeatedly told me, settlement meant, by definition, compromise and his clients deserve a full recovery, not a compromised recovery. Since the sample data overwhelmingly proved contamination, Mr. Donziger and his clients wanted a full trial and verdict so the Amazon would get completely cleaned up (and not just partially). He also wanted Chevron to provide medical facilities and clean drinking water. Throughout the time I worked on the case, the team prepared the case for trial, not settlement.”
DX 1500 (Hinton Direct) ¶ 11.
The Court does not credit her assertions that Donziger told her that the sample data overwhelmingly proved contamination or that he would not compromise the case in any way meaningful to Chevron for that reason. Nor does it credit her testimony that “[t]hroughout the time [she] worked on the case, the team prepared the case for trial, not settlement.” Id.
The Court finds disingenuous Hinton's efforts to deny or to equivocate about Donziger's objective to use media and other outside attention of various sorts to force Chevron to the settlement table and to induce it to offer more in settlement than it otherwise would have done. Moreover, trying the case to judgment (and even through appeals) and achieving a favorable settlement are not mutually exclusive goals. There are indications that Donziger and the LAPs concluded long ago that trying the case to a decision could provide the best chance for a significant settlement.
She testified on cross examination as follows:
“Q. And at any time did Mr. Donziger tell you that his goal was to get more press, increase the pressure in order to get that settlement price higher? A. Are you speaking about a particular time frame?
Q. At any time, Ms. Hinton. A. Repeat it again.
Q. At any time, ma'am, did Mr. Donziger tell you that his goal was to increase press so that he could increase the pressure in order to get the settlement price higher? A. Yes.
Q. At any point in time, Ms. Hinton, did Mr. Donziger tell you that he wanted to force Chevron to the table for possible settlement? [Objection and ruling omitted] A. Not in those words.” Tr. (Hinton) 2159:3–18 (emphasis added).
See PX 1184 (Nov. 10, 2009 Ltr. from J. Kohn to P. Fajardo and L. Yanza re: “Ecuador–Texaco Case”), at 2; PX 1187 (Nov. 19, 2009 Ltr. from J. Kohn to P. Fajardo and L. Yanza re: “Ecuador–Texaco Case”), at 2 (noting reported “decision to not raise settlement before [they] ‘win’ the trial”).
This Court finds that Donziger and the LAPs were very much interested from the outset in settling the Lago Agrio case. Logic dictates the finding also that they are, and will remain, at least as interested in doing so now and in the future. The objects of all of Donziger's media and outside pressure efforts, including his attempt to have Chevron lawyers prosecuted criminally in Ecuador, prominently included increasing the pressure on Chevron to make it more willing to compromise, and at a higher amount, than otherwise would have been the case. The questions whether and to what extent those efforts were actionable, which is not quite as simple as the defendants would have them, are dealt with below.
Prior Proceedings in this Litigation
This action was filed on February 1, 2011 against the LAPs, Donziger, Fajardo, Yanza, the ADF, Selva Viva, and a number of other individuals and entities.
Among these were the Stratus Defendants—Stratus Consulting, Inc., the consulting firm that allegedly ghost-wrote all or most of the Cabrera Report, and two of its personnel, Douglas Beltman and Ann Maest. The Stratus Defendants ultimately settled with Chevron.
Two of the LAPs—Hugo Gerardo Camacho Naranjo and Javier Piaguaje Payaguaje (the “LAP Representatives”) answered and have defended the action. None of the other Ecuadorian defendants answered or moved with respect to the complaint. A certificate of default has been entered against them.
DI 128 (Letter from P. Fajardo to Court, Feb. 23, 2011); DI 127 (Order extending time).
The Amended Complaint
The amended complaint contained nine causes of action. As the Court has granted defendants' dismissal motions as to some,
only five remain—(1) counts 1 and 2, which assert substantive and conspiracy claims against Donziger under RICO, (2) Counts 3 and 7, which assert, respectively, fraud and civil conspiracy claims against all defendants, and (3) Count 8, which asserts that Donziger violated Section 487 of the New York Judiciary Law.
Id. ¶¶ 420–26.
Count 9 sought a declaration that the Judgment was unenforceable and unrecognizable “on, among others, grounds of fraud, failure [by Ecuador] to afford procedures compatible with due process, lack of impartial [Ecuadorian] tribunals, lack of personal jurisdiction, [and] contravention of public policy.”
Id. ¶ 430.
Two aspects of the defendants' answers
DI 307 (Donziger answer); DI 350 (LAP Representatives' answer).
First, Donziger's seventh affirmative defense asserts that “Chevron's claims are barred, in whole or in part, by the doctrines of collateral estoppel and/or res judicata.”
Likewise, the LAP Representatives' thirty-third affirmative defense asserts that “[t]he claims asserted in the Complaint and any relief sought thereunder are barred, in whole or in part, under the doctrines of res judicata and/or collateral estoppel.”
DI 307 (Donziger answer), at 71.
DI 350 (LAP Representatives' answer), at 106.
Second, both assert unclean hands and in pari delicto affirmative defenses.
Id. at 91–105; DI 307 (Donziger answer), at 71.
Indeed, they allege that:
“ As observed by the Ecuadorian Court in its final judgment, Chevron also engaged in the following procedural misconduct: raising at the eleventh hour ‘unresolved issues' previously abandoned by Chevron in an effort to delay resolution of the case; obstructing the evidence gathering process by launching frivolous attacks upon each and every expert report not submitted by a Chevron-affiliate, which the Court found to be designed to ‘impede the normal advance of the evidence gathering process, or even prolong it indefinitely;’ and frontally attacking the court in a display of shocking disrespect for the judicial process. Further, In [ sic ] summation of Chevron's behavior throughout the course of the litigation, the Court observed that ‘the following constitutes a display of procedural bad faith on the defendant's part: failure to ... [produce] ... documents ordered coupled with a failure to submit an excuse on the date indicated; attempting to abuse the merger between Chevron Corp. and Texaco Inc. as a mechanism to evade liability; abuse of the rights granted under procedural law, such as the right to submit the motions that the law allows for [...]; repeated motions on issues already ruled upon, and motions that by operation of law are inadmissible within summary verbal proceedings, and that have all warranted admonishments and fines against defense counsel defendant from the various Judges who have presided over this Court; [and] delays provoked through conduct that in principle is legitimate, but ... [which have] ... unfair consequences for the proceedings ... such as refusing and creating obstacles for payment of the experts who took office, thus preventing them from being able to commence their work....’ ” Id. at 103–04 (emphasis added). See also DI 350 (LAP Representatives' answer), at 101–04.
During discovery, the defendants refused to comply with Chevron's request for production of documents insofar as it sought documents located in Ecuador that were not in the personal physical possession of Donziger or the LAP Representatives—in principal part documents physically in the hands of Fajardo and the Ecuadorian LAP lawyers as well as Yanza, the ADF, and Selva Viva.
The Court granted Chevron's motion to compel production and, when the defendants did not comply, its motion for sanctions.
Chevron Corp. v. Donziger, 296 F.R.D. 168 (S.D.N.Y.2013).
Id. at 221–22 (striking defense unless documents relevant to personal jurisdiction were produced by Oct. 24, 2013, which they were not).
The Court concluded also that defendants' failure to comply with the order compelling production warrants (a) the inference that the documents requested but not produced would have been unfavorable to defendants, and (b) exclusion at trial of documents ordered but not produced. But it reserved for trial the questions whether to draw that inference and to exclude such documents. Id. at 221–24. In any event, the Court drew no such inference from the defendants' failure to comply and excluded no documents on that ground. In some instances, it drew inferences from the failure of the Ecuadorian lawyers to testify. As noted however, it would have made the same findings in the absence of such inferences.
The Partial Summary Judgment Motions
Chevron made four motions for partial summary judgment on various aspects of the case. Three motions were denied in their entirety and the fourth in all but one small respect.
Chevron Corp. v. Donziger, No. 11 Civ. 0691(LAK), 2013 WL 4482691 (S.D.N.Y. Aug. 22, 2013) (denying motion in the exercise of discretion without consideration of the merits); DI 1063 (Order, Apr. 24, 2013) (denying motion for partial summary judgment dismissing collateral estoppel affirmative defense); DI 878 (Order, Mar. 4, 2013) (denying motion for partial summary judgment on Count 8); Chevron Corp. v. Donziger, 886 F.Supp.2d 235 (S.D.N.Y.2012) (substantially denying motion for partial summary judgment dismissing former adjudication affirmative defenses). (The first of the cited decisions mistakenly spoke of three rather than four motions for partial summary judgment.)
From the very outset of this case, the defendants made repeated efforts to get rid of the judge, who previously had ruled against them and been affirmed in both the Berlinger and Donziger Section 1782 proceedings.
Chevron Corp. v. Berlinger, 629 F.3d 297, 305–06 (2d Cir.2011) (noting July 15, 2010 order to produce); In re Chevron Corp., 749 F.Supp.2d 141, 170 (S.D.N.Y.2010), aff'd sub nom. Lago Agrio Plaintiffs v. Chevron Corp., 409 Fed.Appx. 393 (2d Cir.2010) (summary order).
Defendants then unsuccessfully sought a writ of mandamus or an order reassigning the case to a different judge. The Court of Appeals summarily denied both requests. In denying mandamus, it stated that “[B]ias cannot be inferred from a mere pattern of rulings by a judicial officer, but requires evidence that the officer had it in for the party for reasons unrelated to the officer's view of the law[.]”
Chevron Corp. v. Donziger, 783 F.Supp.2d 713, 718 (S.D.N.Y.2011).
Chevron Corp. v. Naranjo, No. 11–2259–op, 2011 WL 4375022 (2d Cir. Sept. 19, 2011) (quoting McLaughlin v. Union Oil Co. of Calif., 869 F.2d 1039, 1047 (7th Cir.1989)).
Chevron Corp. v. Naranjo, 667 F.3d 232, 239 n. 11 (2d Cir.2012), cert. denied,––– U.S. ––––, 133 S.Ct. 423, 184 L.Ed.2d 288 (2012).
Undaunted, Donziger within days of the Court of Appeals' decision, made another motion for recusal,
DI 391 (Feb. 17, 2012 Mot. for Recusal).
Still undaunted, defendants later filed yet another mandamus petition, that one ostensibly to challenge a number of interlocutory rulings by this Court, but in which they again asked the Court of Appeals to reassign the case to another judge.
DI 392 (Feb. 24, 2012 Memo. Endorsement).
Petition for writ of mandamus, Naranjo v. Chevron Corp., No. 13–772 (2d Cir. filed Mar. 5, 2013), at 31–40.
Naranjo v. Chevron Corp., No. 13–772, DI 182 (2d Cir. filed Sept. 26, 2013).
Chevron waived all claims for damages and sought only equitable relief. The case was tried without a jury
from October 15 through November 26, 2013. In conformity with common practice in this district in non jury cases, the direct testimony of most witnesses was taken in the form of written statements, the truth of which was affirmed on the witness stand. The witnesses so testifying then were tendered for cross-examination, redirect, and any subsequent questioning as usual. Some exhibits were offered through witnesses in the usual way. Many were offered and received in bulk, subject to the filing and, where appropriate, rulings on objections to exhibits so offered.
Chevron called 25 witnesses live and offered deposition testimony of 22 additional witnesses. The defendants called only six witnesses live—Donziger, Hinton, Ponce, Javier Piaguaje, Selva Viva employee Donald Moncayo, and Assembly leader Humberto Piaguaje. They did not call Fajardo, Yanza, Sáenz, Prieto, or Cabrera, none of whom was deposed. The record thus lacks any testimony from them.
The trial was conspicuous for the fact that the defendants sought to offer extensive evidence of environmental conditions in the Orienté and of Texaco's alleged responsibility for them notwithstanding the Court's numerous pretrial rulings that those questions were not at issue in this case.
The post-trial briefing in this matter was notable for the fact that the defendants made little effort to address the evidence presented at trial or to argue the facts. They confined themselves, for the most part, to rearguing the contentions they made in Ecuador with respect to alleged environmental pollution in the Orienté and to legal arguments that, they contend, require dismissal even if the facts are as Chevron contends.
See DI 1850 (Donziger Defs.' Post-trial Mem. of Law); DI 1857 (Donziger Defs.' Post-trial Reply); DI 1851 (LAPs Reps.' Post-trial Mem. of Law); DI 1858 (LAPs Reps.' Post-trial Reply).
One consequence of this approach is that the defendants—who offered only a handful of their proposed exhibits through witnesses in open court
—made little effort to show the relevance or significance of most of the more than 1,000 exhibits they tendered in a mass submission on the last day of the trial. The Court therefore does not have the benefit of much reasoned discussion by defendants as to what defendants think they proved or disproved even assuming their exhibits are admissible, which many quite obviously are not. Nevertheless, the Court has considered the evidence on both sides and, to the extent it is admissible, given it such weight as it deserves.
That is true also, albeit not to the same extent, of Chevron. Chevron, however, has explained its case extensively both in summation and in extensive post-trial submissions.
As frequently occurs in bench trials, most of the exhibits on both sides were received subject to subsequent rulings on (1) motions to strike, where such motions were made, and (2) objections, which in the case of Chevron's objections are set forth in an extensive spreadsheet listing each exhibit, Chevron's objections, and defendants' responses. A similar practice was employed with respect to the parties' designations of deposition testimony.
Some of these motions and objections were ruled upon during or after the trial. Others are dealt with in this opinion, including in Appendix III. Beyond that, little purpose would be served by the making of specific rulings as to the admissibility of hundreds or possibly thousands of exhibits and many pages of deposition testimony that do not figure in the outcome. Suffice it to say that the Court has received in evidence any exhibit or testimony upon which it relies in this opinion.
Discussion and Additional Findings
Chevron's principal remaining claims seek equitable relief with respect to the Judgment both on non-statutory grounds and under RICO. These two claims are entirely independent of each other
There is a basis of subject matter jurisdiction over these and other non-federal claims completely independent of the RICO claims, namely 28 U.S.C. § 1332. See generally DI 283 (Am. Compl.), ¶¶ 8–17, 20, 23.
At the outset of the action, there was one uncertainty as to the existence of complete diversity, viz. the allegation that defendant Selva Viva Selviva CIA, LTDA (actually Selva Viva CIA, LTDA, subsequently referred to as “Selva Viva”) is an Ecuadorian limited liability company. Id. ¶ 14. Had that been true, it would have been a citizen of every state or nation of which any of its members was a citizen. E.g., Handelsman v. Bedford Vill. Assocs. L.P., 213 F.3d 48, 52 (2d Cir.2000). There is no allegation as to the identity or citizenship of its members. Accordingly, if paragraph 13 of the complaint (paragraph 14 of the amended complaint) had been accurate, plaintiff's failure to have alleged that none of Selva Viva's members was a citizen of Delaware or California, the states in which Chevron is organized and in which it has its principal place of business, respectively, would have been fatal to diversity or alienage jurisdiction. But that pleading flaw has been rendered immaterial by the proof at trial.
The Court finds that Selva Viva is, and from its inception always has been, an Ecuadorian corporation with its principal place of business in Ecuador. Tr. (Donziger) 2635:4–6 (Selva Viva is an entity created under corporate law of Ecuador); Donziger June 24, 2013 Dep. Tr. at 103:6–16 (acknowledging incorporation of Selva Viva and Donziger's designation as president); Tr. (H. Piaguaje) 2677:12–2678:3 (stating that witness is a 40 percent shareholder of Selva Viva); PX 6906 (record of incorporation of Selva Viva, its entry into the Register of Companies, and the designation of Donziger as president); PX 426 (Ecuadorian court record reflecting Fajardo's description of Selva Viva as a corporation); Tr. (Kohn) 1420:11–20 (Selva Viva headquartered in Quito, Ecuador); Tr. (Donziger) 10:6–17 (Selva Viva's office is in office of LAPs' Ecuadorian counsel); Donziger June 26, 2013 Dep. Tr. at 737:7–14 (Selva Viva office is in Ecuador); DX 226T–227T (same). It therefore is a citizen of Ecuador. Thus, plaintiff Chevron is a citizen of California and Delaware, and defendants all are citizens of Ecuador or of states other than California and Delaware. The matter in controversy, exclusive of interest and costs, obviously exceeds the sum of $75,000. Subject matter jurisdiction exists under 28 U.S.C. § 1332(a) and (c). For the sake of good order, the complaint and the amended complaint are deemed amended to conform to the proof that Selva Viva is an Ecuadorian corporation with its principal place of business in Ecuador. SeeFed.R.Civ.P. 15(b)(2); 28 U.S.C. § 1653. Accordingly, even a pretrial dismissal of the RICO claims would not have permitted dismissal of the non-RICO claims for want of subject matter jurisdiction.
The Court begins by disposing of Donziger's claim, raised only after trial, that the Court lacks subject matter jurisdiction because Chevron lacks Article III standing. It then turns to the merits of Chevron's claims, the affirmative defenses, and then to relief. The appendices to this opinion, filed separately for convenience, are an integral part of it and contain additional findings of fact and conclusions of law.
I. This Court Has Subject Matter Jurisdiction
Following the completion of the trial and all post-trial briefing, defendants moved to dismiss the case for lack of subject matter jurisdiction. They argue that Chevron lacks Article III standing by virtue of its recent withdrawal of its damage claim and its decision to limit the geographic scope of injunction against enforcement of the Judgment to the United States. Defendants claim that these recent changes in the relief sought eliminated any “case or controversy” between them and Chevron. Parenthetically, that is a proposition that defies common sense given the bitter adversity of the parties on the central issue between them, whether the Lago Agrio Judgment was procured by fraud. But putting that aside, their argument is completely baseless.
First, subject matter jurisdiction— including standing
15 Moore's Federal Practice § 101.32 (3d ed. 2013) (“Standing is determined as of the time suit is filed.”).
But defendants do not suggest that Chevron lacked standing when the action was brought. The basis for their present motion—Chevron's limitation of the relief it seeks—occurred only recently. So they have posed the wrong question. The right question is whether these recent changes have mooted the case.
See Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 184, 120 S.Ct. 693, 145 L.Ed.2d 610 (2000) (rejecting challenge to plaintiffs' standing because “unlawful conduct ... was occurring at the time the complaint was filed”); Grupo Dataflux v. Atlas Global Grp., L.P., 541 U.S. 567, 570–71, 124 S.Ct. 1920, 158 L.Ed.2d 866 (2004) (footnote omitted) (“It has long been the case that ‘the jurisdiction of the court depends upon the state of things at the time of the action brought.’ Mollan v. Torrance, 9 Wheat. 537, 539, 6 L.Ed. 154 (1824). This time-of-filing rule is hornbook law (quite literally) taught to first-year law students in any basic course on federal civil procedure.”). Accord, e.g., Utah Ass'n of Counties v. Bush, 455 F.3d 1094, 1099 (10th Cir.2006); Focus on the Family v. Pinellas Suncoast Trans. Auth., 344 F.3d 1263, 1275 (11th Cir.2003).
Lewis v. Continental Bank Corp., 494 U.S. 472, 477, 110 S.Ct. 1249, 108 L.Ed.2d 400 (1990); U.S. Parole Comm'n v. Geraghty, 445 U.S. 388, 397, 100 S.Ct. 1202, 63 L.Ed.2d 479 (1980) (“One commentator has defined mootness as ‘the doctrine of standing set in a time frame: The requisite personal interest that must exist at the commencement of the litigation (standing) must continue throughout its existence (mootness).’ ”) (quoting Henry P. Monaghan, Constitutional Adjudication: The Who and When, 82 Yale L.J. 1363, 1384 (1973)).
Second, even were the Court to engage defendants' standing argument—thereby ignoring the horn book law that subject matter jurisdiction and its standing component are determined as of the time the action is brought—it would reject it. Defendants' arguments ignore the factual record in this case. Given the record and this Court's findings, there would be standing here even if the matter were determined as of this moment.
In sum, this Court has subject matter jurisdiction.
A. This Case Is Not Moot
Article III of the Constitution limits the judicial power of the United States—and thus the jurisdiction of federal courts—in relevant part to “Cases, in Law and Equity, arising under this Constitution [and] the Laws of the United States” and “to Controversies between ... Citizens of different States”
.U.S. Const., art. III, § 2.
Assuming the existence of a case or controversy at the time an action is brought—and defendants' motion, not to mention their behavior in litigating this case over the past three years so assumes—the federal court continues to have subject matter jurisdiction unless and until “a suit becomes moot,” i.e., until “ ‘the issues presented are no longer “live” or the parties lack a legally cognizable interest in the outcome.’ ”
First, the litigants here plainly retain a “concrete interest” in the resolution of this case. Chevron insists that it has been a victim of defendants' fraud and racketeering activity. It alleges that it is threatened with additional injury. It seeks equitable relief both to rectify past injuries and prevent further injury. Donziger and the LAP Representatives argue in response that Chevron's claims are spurious, that this Court lacks jurisdiction to provide Chevron with any effective relief, and that comity in any event demands respect for the Lago Agrio Judgment and the various enforcement courts. Nevertheless, “there is not the slightest doubt that there continues to exist between the parties ‘that concrete adverseness which sharpens the presentation of issues.’ ”
Id. at 1024;see also Cabala v. Crowley, 736 F.3d 226, 229 (2d Cir.2013) (“Because the parties continued to dispute the form and extent of the relief to which [plaintiff] was entitled, the case never became moot.”).
Second, Chevron's withdrawal of its damage claim and its limitation of the geographic scope of the anti-enforcement injunction it seeks did not make it “impossible for [this] court to grant any effectual relief whatever.”
This Court can and, as will appear below, does impose a constructive trust on the proceeds of the Judgment to these defendants, including the proceeds of intellectual property and royalties already seized from Chevron in Ecuador in Judgment enforcement proceedings and a $96 million arbitration award in favor of Chevron against the ROE, in order to prevent these defendants from profiting unjustly at Chevron's expense. It can and, as will be appear below, does enjoin these defendants from pursuing any proceedings in the United States to enforce the Judgment, once again to prevent them from profiting from the fraud. Regardless of whether those and any other remedies granted would afford Chevron all the relief it could hope for with respect to the fraud and racketeering of which it complains, Chevron certainly has “a concrete interest, [even if others might characterize it as] small,” in obtaining them. The fact that the Court can afford Chevron such relief means this case is not moot.
Chafin, 133 S.Ct. at 1023.
Chafin, 133 S.Ct. at 1026 (“[T]he availability of a partial remedy is sufficient to prevent [a] case from being moot.”) (quoting Calderon v. Moore, 518 U.S. 149, 150, 116 S.Ct. 2066, 135 L.Ed.2d 453 (1996) ( per curiam )); Church of Scientology of Cal. v. United States, 506 U.S. 9, 12, 113 S.Ct. 447, 121 L.Ed.2d 313 (1992) (“Even though it is now too late to prevent, or to provide a fully satisfactory remedy for [plaintiff's injury], ... the availability of [any] possible remedy is sufficient to prevent this case from being moot.”).
B. This Court Had Subject Matter Jurisdiction When the Action Was Brought
Defendants have not questioned the existence of subject matter jurisdiction generally, or Chevron's standing in particular, as of the time this action was brought. But subject matter jurisdiction goes to the Court's power to hear a case, and the Court therefore is obliged to raise the issue of its own motion whenever a question appears. Accordingly, the Court does so now.
One element of a “case” or “controversy,” the existence of which is essential to the jurisdiction of a federal court, is that the plaintiff have standing to sue. The determination, as the Court has shown, is made “on the basis of what was known at the time a suit was initially filed.”
Hargrave v. Vermont, 340 F.3d 27, 34 n. 7 (2d Cir.2003); see also Davis v. Fed. Election Comm'n, 554 U.S. 724, 734, 128 S.Ct. 2759, 171 L.Ed.2d 737 (2008) (although the “proof required to establish standing increases as the suit proceeds, the standing inquiry remains focused on whether the party invoking jurisdiction had the requisite stake in the outcome when the suit was filed ” (emphasis added) (internal citation omitted)).
“[T]he irreducible constitutional minimum of standing contains three elements:” (1) “the plaintiff must have suffered an ‘injury in fact’—an invasion of a legally protected interest which is (a) concrete and particularized ... and (b) actual or imminent, not conjectural or hypothetical,” that is (2) “ ‘fairly traceable to the challenged action of the defendant,’ ” and (3) “likely” to “be redressed by a favorable decision.”
Although an “injury-in-fact” exists when a defendant has inflicted a “present harm” on a plaintiff, the “Supreme Court has recognized that a plaintiff in some circumstances may have standing to sue even when the plaintiff shows only an imminent threat of future harm or a present harm incurred in consequence of such a threat.”
Hedges v. Obama, 724 F.3d 170, 188–89 (2d Cir.2013).
The complaint in this case alleged that the defendants (1) corrupted the judicial process in Ecuador, (2) colluded with the Ecuadorian government, (3) improperly procured the appointment of Cabrera and secretly ghostwrote his report, (4) improperly induced the Ecuadorian government to prosecute two former Texaco lawyers, and (5) mounted a public relations blitz, aimed at Chevron and based in part on knowing misrepresentations, all to extort a payment from Chevron, and that they also had obstructed justice and tampered with witnesses in U.S. discovery proceedings to prevent proof of their misconduct.
Chevron asserted that it already had suffered substantial damages, that the entry of a large judgment against it was imminent as a result of the alleged corruption, that the defendants would move promptly to seek to enforce that judgment, and that it was threatened with irreparable injury absent equitable intervention.
See DI 1 (Feb. 1, 2011 Compl.).
The Judgment was entered thirteen days following the filing of the original complaint in this case, thus demonstrating that Chevron's claim that this event was imminent was well founded. See Hargrave, 340 F.3d at 34. In any case, Chevron alleged other, already consummated, injuries.
See, e.g., DI 1 (Feb. 1, 2011 Compl.) Prayer for Relief.
Those allegations satisfied Article III's standing requirements. And while a plaintiff ultimately bears the burden of proving, not merely alleging, facts sufficient to satisfy the standing requirements as of the date an action is begun, Chevron did so. The findings in this opinion demonstrate that Chevron proved the substantial truth of the facts alleged in the complaint. Finally, the remedy it initially sought— damages and a global injunction prohibiting the LAPs and both their Ecuadorian and U.S. counsel from enforcing or profiting in any way from the Judgment—would obviously redress Chevron's injuries by compensating it for injuries already incurred and by preventing future injuries stemming from both the Judgment and attempts to enforce it.
Defendants argue that even a global anti-enforcement injunction could not have redressed Chevron's injuries “because foreign courts would first have to decide to give it effect.” See DI 1861 (Defs.' Mem. of Law in Supp. Mot. to Dismiss for Lack of Jurisdiction), at 6 n. 4. That argument ignores the fact that even the possibility that foreign enforcement might enforce the Judgment is a threat directly caused by the fraudulent procurement of the judgment in the first place. It ignores also the facts that “[c]ourts often adjudicate disputes where the practical impact of any decision is not assured” and that “[c]ourts also decide cases against foreign nations, whose choices to respect final rulings are not guaranteed.” Chafin, 133 S.Ct. at 1025–26. Such potentialities have no bearing on jurisdiction.
Chevron had standing, and the Court had subject matter jurisdiction, as of the commencement of this action.
C. The Court Would Have Subject Matter Jurisdiction Even on Defendants' Erroneous Premise
Even were this Court to accept defendants' erroneous premise that the standing requirements that apply at the commencement of a lawsuit persist through the twists and turns that litigation can take—in other words, their invitation to ignore (1) the foundational principle that standing is determined at the time the complaint is filed, (2) the fact that Chevron both pleaded and proved that it had standing at the outset, and (3) the fact that this action is far from moot—the Court still would conclude that Chevron has standing here.
First, defendants' enforcement of the Judgment in Ecuador already has resulted in the loss by Chevron of Ecuadorian trademarks and related revenue streams, which are being applied to the satisfaction of the Judgment.
See DI 1847 (Chevron Corp.'s Post-trial Mem. of Law), at 197–98; DI 1848 (Chevron Corp.'s Proposed Findings of Fact) ¶ 127.
PX 6000 (Anson Direct) ¶¶ 48–49.
PX 432 (Oct. 15, 2012 Order issued in Summary Proceeding No. 21100–2003–0002), at 4 (attaching $96,355,369 arbitration award issued against the ROE).
The application of that property to the satisfaction of the Judgment—that is, to the benefit of the Judgment creditors and, through his contingent fee arrangement, Donziger—is a concrete, particular, and direct consequence of the fraudulent Judgment, not merely “fairly traceable” to it.
See, e.g., PX 432 (“Therefore, in strict compliance with Article 2367 of the Civil Code, which states that, ‘every personal obligation gives the creditor the right to satisfy it with all real property or personal property of the debtor, whether present or future, only excepting those that cannot be attached ...’, since none of the assets for which attachment is being requested is covered under this exception, and since it is necessary to comply with that ordered in the judgment being executed, against the defendant in this proceeding, Chevron Corp., it is ordered that the execution of this judgment be applicable to the entirety of the assets of Chevron Corporation, until such time as the entire obligation has been satisfied.”).
Defendants' argument that subsequent appellate proceedings constitute an intervening cause ignores the fact that “the ‘fairly traceable’ standard is lower than that of proximate cause.” Rothstein v. UBS AG, 708 F.3d 82, 91 (2d Cir.2013). Defendants' actions need not be “the very last step in the chain of causation” in order to establish causation for the purposes of Article III. Bennett v. Spear, 520 U.S. 154, 168–69, 117 S.Ct. 1154, 137 L.Ed.2d 281 (1997). It ignores also this Court's conclusion, infra, that the subsequent appellate rulings are not entitled to any recognition in consequence of the systemic deficiencies of the Ecuadorian legal system.
Those injuries are redressable by the constructive trust the Court today imposes on, and the related relief it grants with respect to, Donziger's right to share in those proceeds and any benefits accruing to the other defendants and the LAP Representatives. The constructive trust with respect to the any royalties and other income generated by the trademarks will deprive Donziger and these other defendants of any benefit from the Judgment and restor