Chevron Corp. v. Donziger

A provincial court in Ecuador has entered a multibillion dollar judgment against Chevron Corporation ("Chevron") in an action brought by indigenous peoples in the Amazonian rain forest (the "Lago Agrio Plaintiffs" or "LAPs").1 The gravamen of their case is alleged pollution of the rain forest in years ending in 1992 by Texaco, Inc. ("Texaco"), the stock of which Chevron acquired at the end of 2001.2

This claim originated in the United States. Three American lawyers began the original litigation in this Court many years ago.3 After the New York suit was dismissed in 2001 on forum non conveniens grounds, they brought a successor lawsuit on a different legal theory (the "Lago Agrio" case) in Ecuador. The judgment at issue here was entered in that case. The LAPs' attorneys and other representatives have stated that they intend to seek to collect on that judgment in multiple jurisdictions around the world, including by ex parte attachments, asset seizures, and other means, as promptly as possible, starting before completion of the Ecuadorian appellate process.4 The purpose of such multiplicitous and burdensome proceedings against a company like Chevron, which would be good for the money if the judgment ultimately stands up, is plain. By their own admissions, it is to exert pressure on Chevron by means of this litigation strategy to force a quick and richer settlement.

Chevron contends that the judgment is not enforceable outside Ecuador because (1) the Ecuadorian legal system does not provide impartial tribunals or procedures compatible with the requirements of due process of law, and (2) it was obtained by fraud led in major degree by a New York City lawyer, Steven Donziger, substantial parts of which were conducted in the United States. It brought this case for, among other relief, a declaration that the judgment is not entitled to recognition or enforcement. It now seeks a preliminary injunction principally to bar the enforcement of the judgment outside Ecuador pending the resolution of this case on the merits or, at least, the resolution of its prayer for a declaratory judgment.

This is an extraordinary case. The amount involved is large. Chevron challenges the fairness and integrity of the judicial system of Ecuador and thus implicates considerations of international comity. There are issues concerning the reach of U.S. law and questions pertaining to the conduct of the New York lawyer and others. There are other concerns.



The Court is mindful of the seriousness of each of them5 and does not act lightly. In the midst of the many "trees" in this vast record, however, sight should not be lost of the forest. Several points must be borne clearly in mind from the outset.



First, a great deal of the evidence of possible misconduct by Mr. Donziger and others, as well as important evidence regarding the unfairness and inadequacies of the Ecuadorian system and proceedings, consists of video recordings of the words of Donziger and others made by a New York documentary film maker, Joseph Berlinger, whom Donziger invited to film activities in relation to the Ecuadorian case and who ultimately released a documentary film about it called Crude. Still more comes from e-mails and other documents between and among Donziger and others working with him that were produced in related cases. Yet neither Donziger nor any of the other key actors has denied Chevron's allegations or attempted here to explain or justify under oath their recorded statements and written admissions. Thus, the record includes uncontradicted and unexplained statements by Donziger and some of his alleged co-conspirators including such highly pertinent comments as this:



They're all [i.e., the Ecuadorian judges] corrupt! It's—it's their birthright to be corrupt.6



Nor was this an offhand remark or a new sentiment on Donziger's part. In a brief filed in this Court in 2000 in an effort to avoid a forum non conveniens dismissal of his earlier case, Donziger stated that Ecuador could not provide an adequate forum and that its judiciary was corrupt.7



Second, the submissions made by Donziger and the two LAPs who have appeared by counsel (the "LAP Representatives")—the rest have defaulted—are replete with complaints that there is no hurry here, that the judgment cannot now be enforced under Ecuadorian law, that Donziger should have been given more time to respond to the motion, that the argument of the motion should have been delayed, and the like. As will appear, none of these contentions has merit even considered in isolation. But the details of each of these points should not obscure this overriding fact.



When it heard the preliminary injunction motion, this Court noted that any urgency could be eliminated if the defendants agreed to a temporary order that they maintain the status quo—that is, that no effort would be made to enforce the judgment—for a period sufficient to permit submission of additional papers and deliberation by the Court.8 The LAP Representatives refused.9 And while Donziger offered an extension of the temporary restraining order ("TRO") as to himself alone, that offer was essentially illusory

[768 F.Supp.2d 596]

because the lack of comparable relief as to the LAPs and some of the other defendants would have left Chevron without the protection that it sought—the LAPs simply could have used lawyers other than Donziger to seek enforcement.10 Moreover, when Chevron sought a severance and an expedited trial of its claim for a declaration that the judgment is not entitled to recognition or enforcement, the LAP Representatives, after first agreeing, back-pedaled and objected.11



Third, it must be borne in mind that this is a preliminary injunction motion. As the Supreme Court has said:



The purpose of a preliminary injunction is merely to preserve the relative position of the parties until a trial on the merits can be held. Given this limited purpose, and given the haste that is often necessary if those positions are to be preserved, a preliminary injunction is customarily granted on the basis of procedures that are less formal and evidence that is less complete than in a trial on the merits.12



Moreover, where, as here, the district court concludes that the risk of harm warrants a TRO to maintain the status quo to permit appropriate consideration of whether to issue a preliminary injunction, "Rule 65," in the eloquent words of the late Judge Friendly, "demands such but only such thoroughness as a burdened federal judiciary can reasonably be expected to attain within" the limited period during which the TRO may remain in effect.13



Fourth, there has been a great deal of posturing on both sides. Chevron, for example, complains of the Ecuadorian legal system and judiciary while the LAPs attempt to make much of the fact that Texaco, years ago, successfully obtained a forum non conveniens dismissal of the first of these cases, arguing among other things that the courts of Ecuador would be an adequate forum. Fair enough. But before rising to the bait on either side, however, it is well to bear in mind that the positions of both sides have changed 180 degrees since the predecessor litigation in New York. Chevron then touted the adequacy of the Ecuadorian judiciary, while the plaintiffs—in briefs bearing Donziger's name as counsel—argued that Ecuador could not provide an adequate forum and that its judiciary was corrupt. Similarly, the LAP Representatives argue that the LAPs are poor, indigenous people of the rain forest who cannot properly be sued in New York. In doing so, however, they utterly ignore the fact that they previously have sued both Texaco and Chevron here, voluntarily participated in still other cases in this Court, are voluntarily litigating in other federal courts around the country, and for years used Donziger and his New York office to mount public relations, political and fund raising efforts in support of their Ecuadorian efforts. So a good deal of the rhetoric and argument in this case on these and other issues must be viewed with a critical eye.



The parties here have submitted a large evidentiary record. The facts are essentially

[768 F.Supp.2d 597]

undisputed although the same perhaps cannot be said of each of the inferences to be drawn from certain of them. The Court has considered the matter carefully. This is its decision on the motion together with its findings of fact and conclusions of law.



I. The Background



Texaco's Former Operations in Ecuador



In 1964, Texaco Petroleum Company ("TexPet"), a fourth-tier subsidiary of Texaco, began oil exploration and drilling in the Oriente region of eastern Ecuador. In the following year, TexPet started operating a petroleum concession for a consortium owned in equal shares by TexPet and Gulf Oil Corporation (the "Consortium").14 In 1974, the Republic of Ecuador ("ROE") acquired Gulf's interest through its state-owned oil company, Petroecuador.15 Petroecuador and the ROE became the majority owner of the Consortium in 1976.16



TexPet operated a trans-Ecuadorian oil pipeline and the Consortium's drilling activities until 1990, when Petroecuador assumed those functions. Two years later, TexPet relinquished all of its interests in the Consortium, leaving it owned entirely by Petroecuador.17



Thus, while the point is only parenthetical, it is interesting that any pollution that may have been released in the past eighteen or more years occurred after Texaco ceased operations in Ecuador.18



The Beginning—the Aguinda Class Action in this Court



Donziger explained the genesis of what ultimately became the Lago Agrio case during the filming for Crude:



I got involved in this lawsuit because I went to law school with a young man back in the early nineteen nineties, whose father is from Ecuador, and found out about this. And his father is a sole practitioner, a lawyer in western Massachusetts, his name is Cristobal Bonifaz, and he started the case, along with his son, myself and the law firm—the Kohn law firm that's funding the case.19



The case they started20 was Aguinda v. Texaco, Inc., a Southern District of New York purported class action on behalf of inhabitants of the Ecuadorian rain forest— including as plaintiffs, it appears, all or most of the LAPs in the suit—that sought billions in damages for alleged personal injuries and property damage as a result of oil operations that allegedly "polluted the rain forests and rivers in Ecuador."21 The plaintiffs asked for billions of dollars also to "redress contamination of the water

[768 F.Supp.2d 598]

supplies and environment."22 In addition, they sought "equitable relief to remedy the contamination and spoliation [sic] of [plaintiffs'] properties, water supplies and environment."23 In other words, the complaint asked this Court to require Texaco to perform remediation work within Ecuador, another sovereign state.



Texaco promptly sought dismissal of the Aguinda action on the grounds, among others, of forum non conveniens and the failure to join the Republic of Ecuador 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.24 It argued, among other things, that Ecuador was an adequate and appropriate alternative forum.



As will appear, this Court ultimately dismissed the case on forum non conveniens grounds in 2001,25 and the Second Circuit affirmed.26 Nevertheless, important events took place while the case was pending.



Texaco Settles All Pollution Claims With Ecuador



While the Aguinda litigation was pending in New York, TexPet in 1994 entered into a Memorandum of Understanding27 and, in 1995, signed a settlement agreement with the ROE and Petroecuador (the "Settlement"). TexPet agreed to perform specified remedial environmental work in exchange for a release of claims by the ROE. The release, which covered TexPet, Texaco, and related companies, encompassed "all the Government's and Petroecuador's claims against the Releasees for Environmental Impact arising from the Operations of the Consortium, except for those related to the obligations contracted" under the Settlement, which were to be "released as the Environmental Remedial Work is performed to the satisfaction of the Government and Petroecuador."28 Moreover, the GOE represented that all of the claims asserted in the Aguinda action "belong[ed] to the government of the Republic of Ecuador under the Constitution and laws of Ecuador and under international law."29 Thus, the release by Ecuador seems to have been intended to put an end to any claims or litigation concerning Texaco's alleged pollution.



Three years later, the ROE entered into an agreement with TexPet (the "Final Release") in which the ROE agreed that the Settlement had been "fully performed and concluded" and "proceede[ed] to release, absolve, and discharge" TexPet and related companies, including its successors, "from any liability and claims ... for items related to the obligations assumed by Tex-Pet" in the Settlement.30



The Aguinda Plaintiffs and Lawyers Make A Deal With Ecuador



The Aguinda plaintiffs were not idle in Ecuador while their case was pending in New York. For one thing, they evidently were concerned about Texaco's claim that

[768 F.Supp.2d 599]

Ecuador was an indispensable party in view of the prayer for an equitable decree requiring environmental remediation in Ecuadorian territory. They obtained Ecuador's agreement 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."31 But there was a quid pro quo.



As spelled out in the formal agreement, dated November 20, 1996, between the plaintiffs and the Ecuadorian government, the Aguinda plaintiffs and their lawyers waived any rights to (1) make any claims against Ecuador, Petroecuador, and affiliates thereof, and (2) to collect from Texaco any amount arising from an award by this Court to Texaco of contribution against Ecuador, Petroecuador or affiliates.32 In other words, they effectively agreed to reduce the amount of any judgment they might obtain against Texaco by the amount of any award of contribution Texaco might obtain against Ecuador, Petroecuador or affiliates.



Ecuador's Environmental Management Act of 1999



That was not the end of the collaboration among Ecuador, Donziger and his colleagues, and the Aguinda plaintiffs against Texaco.



In 1999, Ecuador enacted the Environmental Management Act of 1999 (the "EMA"), which among other things created a new 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.33 The EMA became the basis upon which the Lago Agrio case was brought.34 And it is relevant to focus on the context in which the EMA was adopted.



By 1999, the Aguinda plaintiffs were litigating Texaco's motion to dismiss that case on the ground of forum non conveniens. They evidently understood, moreover, that Ecuador did not permit class actions or pretrial discovery and feared that class-wide tort claims such as those asserted in New York would not be entertained.35



When the Lago Agrio case was commenced in 2003, Cristobal Bonifaz—one of the lawyers with whom Donziger brought the Aguinda suit and in whose law office he worked at the time36—held a press conference in Ecuador. According to the Associated Press, Bonifaz indicated that "his team" had "worked with Ecuadorian lawyers to draft [the EMA] similar to the U.S. superfund law" and that those efforts were in preparation "for a possible move from U.S. courts."37





[768 F.Supp.2d 600]

Accordingly, recognizing that this like all findings at this stage is provisional, the Court infers that the EMA was substantially drafted and its enactment procured by Bonifaz, Donziger and other American attorneys for the Aguinda plaintiffs. They did so because they feared losing the forum non conveniens motion in New York and being remitted to Ecuador, which had no class actions and thus no vehicle for the sort of giant toxic tort and other litigations common in the United States. They intended the EMA to provide a basis for suing in Ecuador to recover billions in damages in the absence of any other vehicle for doing so.



The Lago Agrio Litigation—2003-2008



The Complaint



As noted, the Court of Appeals affirmed the dismissal of the Aguinda case in 2002. In 2003, a group of Ecuadorians, including many of the Aguinda plaintiffs, sued Chevron and Texaco in Lago Agrio, Ecuador.38 The complaint, brought on behalf of the LAPs, alleges environmental contamination by TexPet, Texaco's subsidiary, and Texaco in the years up to 1992. It states that Texaco was responsible for the activities of TexPet because it directed and controlled TexPet's operations and capitalized it in a manner designed to limit liability for any complaint derived from its activities.39 The complaint went on to allege in conclusory terms that Texaco and Chevron on October 9, 2001 merged into a "new company... replacing the previously mentioned [Texaco and Chevron] with regard to all obligations and rights" and maintains that Chevron therefore is subject to Texaco and TexPet liabilities.40 Consistent with the EMA, the complaint sought remediation of alleged pollution said to remain in the region inhabited by the plaintiffs, demanded judgment requiring that the necessary work be done, and sought health improvement and medical monitoring of the inhabitants be done, at the expense of "the defendant."41



The Lago Agrio litigation, though it was brought on behalf of similar and, in many

[768 F.Supp.2d 601]

cases, the same individuals, was a fundamentally different lawsuit than Aguinda. Aguinda sought predominantly damages for the plaintiffs and class members for injuries to person or property that each allegedly had suffered. The LAPs, however, sued in something akin to a parens patriae capacity to require the defendants to perform, or to pay the cost of performing, environmental and other remediation methods.



Donziger's Role



When the Lago Agrio case commenced in Ecuador, Ecuadorian lawyers naturally became involved. But Donziger too remained very much involved. In fact, his role was enormous. He became the fulcrum of the entire effort to use the Lago Agrio litigation to obtain a very large payment from Chevron. He has described himself as the "link to all of the work in the United States and all of the institutional history of the case."42 In a 2006 book proposal, he described his role as follows:



I have been 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.43



He has confirmed that his role in the litigation was not confined to time he spent in Ecuador. His "work doesn't let up just because [he is] in the U.S., at all."44 While he is in the United States, the work continues to be "intense" as he finds "ways to increase the leverage and ... cost to Chevron."45 In a telephone conversation about the same book deal, he assured the person with whom he spoke that he, Donziger, is "so much a part of the story that it would be hard for someone to do a book without [his] cooperation."46



These descriptions are understatements. As this Court previously found, Donziger:



attempted to (1) intimidate the Ecuadorian judges, (2) obtain political support for the Ecuadorian lawsuit, (3) persuade the [Government of Ecuador] to promote the interests of the Lago Agrio plaintiffs, (4) obtain favorable media coverage, (5) solicit the support of celebrities (including Daryl Hannah and Trudie Styler) and environmental groups, (6) procure and package `expert' testimony for use in Ecuador, (7) pressure Chevron to pay a large settlement, and (8) obtain a book deal.47



He was involved intimately in obtaining and formulating expert reports for submission in the Lago Agrio case; seeking political support of the president of Ecuador, among others; procuring favorable media coverage in the United States and elsewhere; and promoting critical attention to Chevron by U.S. and New York State public officials, all for the purpose of pressuring Chevron to pay a settlement. And while some of his activities occurred in Ecuador, many took place right here in Manhattan.





[768 F.Supp.2d 602]

To be sure, some Ecuadorians were importantly involved in the Lago Agrio case as well, most notably Pablo Fajardo and Luis Yanza. Fajardo is the lead attorney in the Ecuadorian courts on behalf of the LAPs. Yanza is the co-founder of the Amazon Defense Front (the "ADF"), a supposedly non-profit organization that purports to represent the LAPs and that seeks to be charged with administering any part of the judgment recovered against Chevron that does not go to the ROE or other defendants (i.e., the lawyers).48 The evidence establishes that Donziger, Fajardo, Yanza and the ADF have worked closely together at all relevant times.



Early Stages



The Initial Criminal Investigation—An Attempt to Defeat the Settlement



In 2003, the same year in which the Lago Agrio litigation was filed, the Comptroller General of the ROE filed a denuncia against TexPet lawyers, Rodrigo Pérez Pallares ("Pérez") and Ricardo Reis Veiga ("Veiga"), and former ROE and Petroecuador officials. It alleged that they had falsified public documents in connection with the Settlement and Final Release and had violated Ecuador's environmental laws. At least one purpose of doing so quickly became clear.



In 2004, the Ecuadorian Prosecutor General began an investigation of the criminal charges. The Ecuadorian Deputy Attorney General explained in an email to one of the LAPs' counsel in the Lago Agrio litigation that the criminal prosecutions were potentially a "way to nullify or undermine the value of the" Settlement and Final Release [of Texaco], though "evidence of criminal liability established by the Comptroller [General's] Office was rejected by the prosecutor."49



During this period, Donziger, Bonifaz, and others worked to encourage the ROE to bring criminal fraud charges against Pérez and Veiga.50 Two years later, however, the District Prosecutor found that "there [was] not sufficient evidence to pursue the case against ... Mr. Ricardo Reis Veiga and Mr. Rodrigo Pérez Pallares, representatives of TEXPET."51 As we shall see, the same District Prosecutor in his subsequent capacity as national Prosecutor General and after the political winds in Ecuador had changed, later decided to reopen the criminal investigation and charge Pérez and Veiga with the same allegations that he previously had dismissed for lack of evidence.



The Early Expert Inspections



In the early stages of the Lago Agrio litigation, the court directed the parties to investigate and report jointly on conditions at a number of former consortium production sites.52



The LAPs selected Dr. Charles Calmbacher to act as their expert in charge of the inspections and to report on some of the sites. In early 2005, they filed reports in his name for two of those sites, each purporting to show extensive environmental damage.53 Although it appears to have been unknown either to Chevron or the court at the time, it later became clear, as discussed below, that the reports the LAPs filed over Calmbacher's name were

[768 F.Supp.2d 603]

entirely false and fraudulent. In any case, however, events began to move in additional and important directions.



Donziger Solicits Berlinger to Make Crude



As this Court wrote previously:



In 2005, Steven Donziger, one of the lead counsel for the plaintiffs in the Lago Agrio Litigation, solicited award-winning producer and filmmaker Joseph Berlinger to create a documentary depicting the Lago Agrio Litigation from the perspective of his clients. Berlinger recounted 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.54



Principal photography begin in November 2005. "For the next three years, Berlinger shadowed the plaintiffs' lawyers and filmed `the events and people surrounding the trial,' compiling six hundred hours of raw footage."55 As will appear, Berlinger's appearance on the scene eventually had a huge impact on the Lago Agrio litigation and related matters.



The Global Assessment— The Cabrera Report



In 2006, just after Berlinger began filming, the LAPs asked the Lago Agrio court to end the judicial inspection process in which Dr. Calmbacher had participated.56 They later petitioned for the appointment of an expert for a "global assessment" of the alleged environmental effects,57 which was intended to complete the "final evidentiary phase" of the litigation.



On March 19, 2007, the Ecuadorian court appointed a supposedly neutral and independent Ecuadorian expert, Richard Stalin Cabrera Vega ("Cabrera"), to make the global assessment.58 Cabrera was sworn on June 13, 2007, with "responsibil[ity] for the entire report, the methodology used, for the work done by his assistants, etc. He understood that he was obliged to "perform his duties faithfully and in accordance with science, technology, and the law, with complete impartiality and independence vis-á-vis the parties."59



On March 28, 2008, Cabrera set the amount of damages at $16 billion and filed his report several days later.60 Chevron questioned his independence. Fajardo and others on the LAP side defended it in public statements. For example, in an April 3, 2008 press release issued by the ADF and Amazon Watch, Fajardo stated, "Chevron's claim that Professor Cabrera is cooperating with the [Lago Agrio] plaintiffs is completely false" and "Chevron is frightened by Cabrera precisely because he is an independent and credible expert."61 Kohn made the same claim regarding Cabrera's independence in an interview on Fox News during the following

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month.62 Chevrontoxico.com, a website sponsored by the LAPs regarding the litigation, described Cabrera as an "independent" expert,63 along with issuing other press releases and public statements made on behalf of the LAPs.64 As will appear, these statements were false.



At that point, the parties had the opportunity to comment on the Cabrera report. The LAPs hired Stratus Consulting, Inc. ("Stratus") to prepare comments on the Cabrera report, which were submitted to the Lago Agrio court on December 1, 2008.65 Amazon Watch and the ADF issued a press release describing Stratus's endorsement of the Cabrera report.66



As will appear, Cabrera was anything but independent and Stratus, in purporting to comment on Cabrera's work, in fact was commenting on its own—it actually had written all or most of the Cabrera report.



The Release of Crude Leads to U.S. Discovery Revealing Misconduct



The Release of Crude



Crude was released in early 2009. According to its press package, it "`captures the evidentiary phase of the Lago Agrio trial, including field inspections and the appointment of independent expert Richard Cabrera to assess the region.' The film depicts also the environmental damage allegedly caused by TexPet and interviews with Ecuadorians dying of diseases perhaps caused by oil spills."67 The Court has described a few key scenes elsewhere and incorporates that description here:



A. Plaintiffs' Counsel Meets with Expert Witness



Crude contains footage of a number of meetings that took place in the Dureno community of the indigenous Cofan people. A version of Crude `streamed' over Netflix depicts one such meeting, at which Dr. Beristain, an expert who contributed to Cabrera's neutral damages assessment, is shown working directly with both the Cofan people and plaintiffs' counsel. Berlinger, however, altered the scene at the direction of plaintiffs' counsel to conceal all images of Dr. Beristain before Crude was released on DVD. The interaction between plaintiffs' counsel and Dr. Beristain therefore does not appear in the final version of Crude sold on DVD in the United States.



B. Plaintiff's Counsel Interferes with Judicial Inspection



In another scene of Crude, Donziger, one of plaintiffs' lead counsel, persuades an Ecuadorian judge, apparently in the presence of Chevron's lawyers and news media, to block the judicial inspection of a laboratory allegedly being used by the Lago Agrio plaintiffs to test for environmental contamination. Donziger describes his use of `pressure tactics' to influence the judge and concedes that `[t]his is something you would never do in the United States, but Ecuador, you know, this is how the game is played, it's dirty.'



C. Plaintiffs' Representatives Meet with the Ecuadorian Government



In another scene, a representative of the plaintiffs informs Donziger that he had left the office of President Correa `after coordinating everything.' Donziger declares, `Congratulations. We've achieved something very important in this case.... Now we are friends with the President.' The film then offers a glimpse of a meeting between President Correa and plaintiffs' counsel that takes place on a helicopter. Later on, President Correa embraces Donziger and says, `Wonderful, keep it up!'



Donziger explains also that President Correa had called for criminal prosecutions to proceed against those who engineered the Settlement and Final Release. `Correa just said that anyone in the Ecuador government who approved the so-called remediation is now going to be subject to litigation in Ecuador. Those guys are shittin' in their pants right now.'68



While all of these sequences shed light on events in Ecuador, the revelation that Dr. Beristain, a contributor to Cabrera's supposedly independent global assessment, had been at a meeting with plaintiffs and plaintiffs' counsel—a matter raising a question about Cabrera's independence— was of particular concern. That was especially so in light of the fact that the images of Dr. Beristain at that meeting that were in a Netflix version had been edited out of the version released on DVD.



These and perhaps other circumstances caused Chevron during the first quarter of 2010 to begin seeking discovery under 28 U.S.C. § 1782 from American witnesses thought to have knowledge of pertinent facts. In a series of proceedings around the country, Chevron obtained, among other things, the outtakes from Crude—the video segments that did not make it into the film as released—as well as documents and testimony from Donziger, Stratus, and others. The information gained in the Section 1782 proceedings is remarkably informative about the Lago Agrio litigation and related matters bearing heavily on this motion and it provides a significant part of the evidentiary record.



Dr. Calmbacher Disavows Report the LAPs Filed Over His Name



As previously noted, Dr. Charles Calmbacher had been selected by the LAPs to act as their expert in charge of the inspections and to report on some of the sites. In early 2005, they filed reports in his name for two of those sites, each purporting to show extensive environmental damage. In early 2010, in one of Chevron's first Section 1782 proceedings, Dr. Calmbacher testified as follows:



Q. .. To the extent that someone took this signature page that is currently attached at the last page of Exhibit 12 and attached it to this report and represented to the Court in Lago Agrio that you had written this report and reached these conclusions, that would be false, correct? A. That's correct. I did not reach these conclusions and I did not write this report.69



Q. So the conclusions in the expert report for Shushufindi 48, Exhibit 13, to the extent they're presented to the Court as conclusions you reached, that presentation would be false, correct? A. Correct.70



Q. Did you ever find that any of the sites that you inspected required any further remediation? A. No.71



Q. While you were working as a judicial inspection expert for the plaintiffs, did you ever conclude that TexPet had failed to adequately remediate one of the sites? A. I didn't no.72





[768 F.Supp.2d 606]

Dr. Calmbacher made clear that he had "discussed what [his] findings were on this site and others" with Donziger and believes that Donziger would have known that the reports submitted over Calmbacher's name had not been authorized by Calmbacher.73 Donziger even told another member of the legal team via e-mail that Dr. Calmbacher "will still sign the [expert] reports," but the LAPs team "might have to write [the reports] in Quito."74 Dr. Calmbacher testified as well that Donziger told him that "he wanted the answer to be that there was contamination and people were injured ... [b]ecause it makes money. That's what wins his case."75



The LAPs terminated Dr. Calmbacher. There perhaps is bad feeling between them. Nevertheless, his testimony is evidence that persons acting on behalf of the LAPs prepared reports expressing views contrary to Calmbacher's and submitted those fictitious reports to the Lago Agrio court over his name. Perhaps there is a different explanation. But neither Donziger nor any other knowledgeable person on the LAP side has submitted an affidavit or other sworn proof—timely or not—denying Calmbacher's assertions or offering any explanation.



The Cabrera Report Exposed



The outtakes and other Section 1782 discovery yielded a great deal of evidence about Cabrera's appointment and the preparation of his purported report.



Cabrera's Appointment



There is substantial evidence of irregularity relating to the appointment and independence of Cabrera.



At about the time of the petitions to terminate the inspections and obtain a global assessment by an "independent" court appointee, the Ecuadorian judge, according to an e-mail from Donziger to Yanza, was "on his heels from ... charges of trading jobs for sex in the court."76 Donziger and the LAPs lawyers drafted a complaint against the judge. Before the complaint was filed, Fajardo, in consultation with Donziger, met ex parte with the judge concerning the pending request to terminate the previously ordered inspections in favor of the proposed "global assessment."77 Fajardo left the meeting with the belief that the judge wanted "to forestall the filing of a complaint against him by the" LAPs and the view that the LAPs' prospects with respect to obtaining the global assessment were "looking better."78



Fajardo had other ex parte meetings with the judge concerning the appointment. The Crude outtakes reveal Fajardo talking about the global assessment before Cabrera was appointed and stating that he had a pretty good idea of who would be appointed.79 Donziger boasted in the outtakes that Cabrera "never would have [been appointed] had we not really pushed him."80 The outtakes confirm also that the LAPs knew in advance that Cabrera would be the appointee.81 Then, not long

[768 F.Supp.2d 607]

after Cabrera was appointed and sworn in, Yanza e-mailed Donziger that he had met with Cabrera and that "everything [wa]s under control. We gave him some money in advance."82 Further, Donziger testified in a Section 1782 deposition in this Court:



Q. Did you tell Mr. Cabrera that if he served as the global court expert and the plaintiffs won the case that he would have a job the rest of his life being involved in the remediation; did you tell him that?



A. I might have. I don't remember.83



While the evidence is not conclusive and certainly would be open to further examination at trial, the foregoing suggests at least the possibilities that (1) the judge agreed to the global assessment in general and to appoint Cabrera in particular in exchange for the LAPs' agreement not to file a complaint against the judge, and (2) Cabrera, the supposedly independent court appointee, was paid money up front and promised future consideration by the LAPs in the event they prevailed. In the absence of any affidavit or other evidence from Donziger or Fajardo pointing to a different conclusion on these points, the Court concludes, solely for purposes of this motion, that Chevron has demonstrated at least serious questions as to the accuracy of each of the foregoing propositions.



The LAPs Ghost-Wrote All or Much of Cabrera's Report



On March 3, 2007, Donziger and Fajardo held a meeting with Cabrera and LAP environmental experts, including Stratus, for the purpose of planning the report to which Cabrera eventually would attach his name.



The Crude outtakes reveal that Fajardo on that occasion informed the group that the goal of the meeting was to "define the general structure of [the] global expert assessment."84 Donziger later clarified that the plaintiffs' work plan would involve not only evidence and remediation, but also writing the expert's opinion.85



At the meeting, Fajardo made a Power-Point presentation that outlined the Plan Para Examen Perietal Global, or Plan for the Global Expert Assessment.86 He emphasized to those present that everyone would contribute to the report, explaining: "And here is where we do want the support of our [i.e., the LAPs'] entire technical team ... of experts, scientists, attorneys, political scientists, so that all will contribute to that report—in other words—you see ... the work isn't going to be the expert's. All of us bear the burden."87 Someone asked whether the final report would be prepared only by the expert. Fajardo responded that the expert would "sign the report and review it. But all of us ... have to contribute to that report."88 Defendant Ann Maest of Stratus said, "Together?," which Fajardo confirmed. Maest then stated, "But not Chevron," a comment met with widespread laughter.89



In the afternoon session, the group discussed the "work plan," the first document that Cabrera would be required to sign and file with the Ecuadorian court.90 Donziger proposed that he and the U.S.-based

[768 F.Supp.2d 608]

consultants form a "work committee" to present a "draft plan" in a few days.91 Looking at Cabrera, Donziger then said, "and Richard, of course you really have to be comfortable with all that. And we'll also define the support the expert needs."92 The recording of the meeting ended with Donziger commenting, "We could jack this thing up to $30 billion in one day."93 Donziger later confirmed at his deposition that the LAPs' own experts provided Cabrera with a work plan that he later submitted to the court, ostensibly as a product of his own work.94



Outtakes recorded on the following day reveal that Donziger made clear to one of the Stratus consultants that everything the plaintiffs were doing was to be concealed from Chevron, his "goal [being] that they don't know shit."95 During the same lunch, the Stratus consultants told Donziger that there was no evidence that contamination from the pits had spread into the surrounding groundwater. Donziger responded in quite memorable fashion:



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, and [t]herefore, if we take our existing evidence on groundwater contamination, which admittedly is right below the source ... [a]nd wanted to extrapolate based on nothing other than our ... theory, then [w]e can do it. And we can get money for it.96



He went on:



"[T]his is all for the Court just a bunch of smoke and mirrors and bullshit."97 And when one consultant argued that "there [wa]s not enough information on that groundwater" and that "the one hole in the remediation, [wa]s the water," Donziger broke off the discussion, stating, "There's another point I got to make to these guys, but I can't get this on camera."98 The recording then ended.



This was not the only occasion during that lunch on which Donziger went "off the record." When one expert commented that it had been "bizarre" to have had Cabrera present at the meeting the day before, Donziger instructed the expert not to talk about that fact and told the camera operator that those comments were off the record.99 The expert elaborated that he was surprised that there had been a meeting during which "everything" had been laid out while the expert was present.100



Donziger and his team continued to "lay everything out" for Cabrera. But before they did that, they discussed planning what Cabrera could do "to prove his independence."101 In the meantime, Donziger worked with David Chapman of Stratus, among others, to determine how Stratus

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would do "much of the work, putting the pieces together and writing the report."102



Evidence indicates that Doug Beltman, other Stratus consultants, and subcontractors outlined103 and drafted substantial portions of the Cabrera report and many of its annexes104 and supervised their translation into Spanish105 until the document eventually was signed by Cabrera and submitted to the court. In January 2008, Donziger, Yanza, Fajardo, Beltman, and Maest met secretly with Cabrera, likely to discuss the report that was being prepared for him to sign.106 In March 2008, Ecuadorian counsel for the LAPs "conveyed a substantial amount of information prepared by Stratus to Cabrera and may not have contemporaneously advised Chevron (or the Court) of that submission."107 E-mail exchanges among Donziger, Beltman, and other Stratus consultants confirm that Stratus drafted substantial portions of the Cabrera report and its annexes.108 An outline of the expert report includes a table that assigns each annex to a member of the Stratus team. There is a note below the table which reads: "need to figure out to whom Richard [Cabrera] will attribute each of the annexes,"109 thus implying that the annexes would be supplied to Cabrera, but not attributed to the people who actually wrote them. A few weeks before the Cabrera report was submitted, Beltman sent Donziger a draft of the report for Donziger's feedback.110 And it appears to have been Beltman, copying Maest, who sent a complete draft of the report with Cabrera's name, in English, to a translation service less than three weeks before the report was filed.111



If there were any doubt as to the implication of this evidence, it was removed at Donziger's deposition where he admitted that Cabrera had "adopted pretty much verbatim what had been provided to him by Stratus.112 Indeed, he testified:



Q. Was it agreed that Stratus would draft the report in a form that could be submitted directly to the Ecuadorian court by Mr. Cabrera?



A. I don't have a specific recollection, but I think that was the general idea.113



As the facts concerning the ghost writing of the Cabrera report first threatened to come and then came out in the Section 1782 proceedings, at least some on the Lago Agrio side became deeply concerned.

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One of the LAPs' Ecuadorian lawyers wrote to Donziger that the "effects" of disclosure could be "potentially devastating in Ecuador (apart from destroying the proceeding, all of us, your attorneys, might go to jail)[.]"114 Moreover, although time does not permit detailed discussion of the evidence, there is extensive evidence that counsel for the LAPs and Donziger made Herculean and perhaps questionable efforts in the Section 1782 proceedings to prevent or delay the disclosure of material proving the roles of Stratus and other U.S. consultants in the Cabrera report.115



The "Cleansing" Operation



The disclosures concerning Stratus' ghost writing of all or much of the Cabrera report created a substantial problem for the LAPs and their lawyers. This led Donziger and lawyers from Patton Boggs and Emery Celli, which also represent the LAPs in United States Section 1782 proceedings, to brainstorm about submitting to the Ecuadorian court a new expert report that would appear to be independent but that would be premised on the data and conclusions purportedly reached by Cabrera. This effort to "cleanse" the Cabrera report is detailed in an August 2010 e-mail, approximately one month before the new report was submitted to the Lago Agrio court:



[O]ur new expert will most likely rely on some of the same data as Cabrera (and come to the same conclusions as Cabrera) ... We probably wouldn't want to draw that much attention to Cabrera, but we should think about whether our expert might 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.116



With Cabrera as a starting point, identify the data/evidence he used to support his numbers—Have our expert review this analysis and hopefully agree with some of his conclusions. More importantly however, we need to help the expert identify other sources in the record—ultimate conclusion could be higher or lower than Cabrera, and potentially based on a mixture of sources from Cabrera and the other record evidence we identify[.]117



Although the e-mail states that the attorneys would attempt to "find support from other evidence not relied upon by Cabrera,... independent credible evidence," it identified a plan to involve Beltman of Stratus—the U.S. environmental consultant

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who was instrumental in outlining and ghostwriting the Cabrera report.118



New reports were obtained and submitted.119 Nevertheless, the new consultants largely reviewed certain sections of the Cabrera report rather than conduct their own independent fact finding.120 Nearly all of the new experts completed their reports in less than a month without (1) visiting Ecuador, (2) conducting any new site inspections, (3) taking any new samples, (4) conducting any other form of environmental testing, or (5) taking steps independently to verify the data in the Cabrera report or other findings upon which they relied.121



* * *



While the evidence necessarily is incomplete, the record before the Court indicates the likelihood that (1) the concept of a global assessment by a court appointed expert and the selection in particular of Cabrera was accepted by the Ecuadorian court in order to forestall the filing by the LAPs of a complaint against the judge relating to a "sex for jobs" scandal, (2) Cabrera was not at all independent of the LAPs, as he had been selected, paid some money, and promised future compensation by them if they won, (3) the Cabrera report in fact was planned by Fajardo and other LAP representatives and, at least in substantial part, written by Stratus, (4) at the LAPs' request, Stratus submitted to the court comments on the purported Cabrera report without disclosing that Cabrera in at least major respects was not the author and that much of the report on which they purported to comment had been written by Stratus itself, (5) Cabrera, Fajardo, and the ADF, and others on the LAP side falsely represented to the Lago Agrio court and to the world at large that Cabrera was completely independent, and (6) when the provenance of the Cabrera report came out in the Section 1782 proceedings, the LAPs procured and submitted as new and independent analyses reports from still other consultants who had not visited Ecuador, conducted any site inspections, nor obtained any samples for this purpose, and had relied upon data in the discredited Cabrera report. For purposes of this motion, the Court so finds.



The LAPs' Use of Pressure Tactics and Political Influence in this Case



Given what has been said already, it is not surprising that the LAPs, through their lawyers and others, resorted to pressure tactics directed at the Ecuadorian courts as well as political influence to achieve their objectives.



Intimidation of the Ecuadorian Judges



We have seen already that the LAPs, through Fajardo, brought pressure to bear on the Lago Agrio judge to secure adoption of their proposal for a global assessment and the selection of Cabrera as the court-appointed expert. But they did not stop there.



Donziger has served as the field general in what he describes in the Crude outtakes

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as a "political battle ... being played out through a legal case,"122 a view that dovetails with his assessment of the Ecuadorian court system as corrupt and driven by politics. Donziger's activities in the United States and Ecuador have gone far beyond the rendition of professional legal services. Donziger, Fajardo, Yanza and the ADF have orchestrated a campaign to intimidate the Ecuadorian judiciary. According to Donziger, it has been important to mobilize the country politically "[s]o that no judge can rule against [the plaintiffs] and feel like he can get away with it in terms of his career."123 Donziger directed a member of the Ecuadorian legal team to "prepare a detailed plan with the necessary steps to attack the judge through legal, institutional channels and through any other channel [he could] think of."124



One example depicted in part in Crude shows Donziger and other LAP representatives traveling to an ex parte meeting with a judge on March 30, 2006. Prior to the meeting, Donziger described his plan to "intimidate," "pressure," and "humiliate" the judge:



The only language that I believe this judge is going to understand is one of pressure, intimidation and humiliation. And that's what we're doing today. We're going to let him know what time it is.... As a lawyer, I never do this. You don't have to do this in the United States. It's dirty It's necessary. I'm not letting them get away with this stuff.125



Donziger repeatedly referred to the Ecuadorian judicial system as "weak," "corrupt," and lacking integrity. He further explained to the camera on multiple occasions:



The judicial system is so utterly weak. The only way that 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. That would never happen in the United States or in any judicial system that had integrity.126



They're all [i.e., the Ecuadorian judges] corrupt! It's—it's their birthright to be corrupt.



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.127



[I]t's a problem of institutional weakness in the judiciary, generally, and of this court, in particular ... We believe they make decisions based on who they fear the most, not based on what the law should dictate.128



The Plan to Pressure the Court With an "Army"



Among the events filmed by the Crude crew was a conversation between Donziger and Fajardo in which Donziger and Fajardo

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discussed the need to "be more and more aggressive" and to "organize pressure demonstrations at the court." In the same clip, Donziger referred to the litigation as a "matter of combat" that requires "actually ... put[ting] an army together."129



The outtakes captured a June 6, 2007 meeting in which Donziger outlined a strategy to pressure the Ecuadorian court. Donziger told those present that the LAPs needed to "do more politically, to control the court, to pressure the court" because Ecuadorian courts "make decisions based on who they fear most, not based on what the laws should dictate."130 Donziger expressed concern that no one feared the plaintiffs, and he stated that the plaintiffs would not win unless the courts began to fear them.131 He described also his desire to take over the court with a massive protest as a way to send a message to the court of "don't fuck with us anymore—not now, and not—not later, and never."132 He then proposed raising "our own army" to which Yanza interjected "a specialized group ... for immediate action."133 During this exchange, Atossa Soltani of Amazon Watch said, "I just want you to know that it's ... illegal to conspire to break the law" to which Donziger said, "No law's been conspired to be broken."134 The conversation about raising an army to pressure the court then continued, with Yanza waving the camera away as he told Donziger that the "army" could be supplied with weapons.135



Two days later, speaking directly to the camera, Donziger continued to emphasize the importance of pressuring the judge in the Lago Agrio litigation. According to Donziger, the plaintiffs' "biggest problem" had been their inability to pressure the judge. He explained that suing Chevron for moral damages or pressuring the Prosecutor General to open criminal investigations was not sufficient to make the judge feel pressure.136 Donziger asserted that the plaintiffs needed to do things that the judge would "really feel" such as being "called out" by the president of the country or the supreme court, implying that Donziger and others could develop strategies that would result in such actions.137



Later that month, Donziger asked Berlinger and his crew to film the LAPs' "private `army,'" which he characterized as being "very effective" because "it followed a Texaco lawyer into the judge's chambers and had a confrontation" "a critical part of [the] strategy ... allowing the case to go forward ..."138



Killing the Judge?



Finally, Donziger participated in a dinner conversation about what might happen to a judge who ruled against the LAPs. One or more other participants in the conversation suggested that a judge would be "killed" for such a ruling. Donziger replied that the judge "might not be [killed], but he'll think—he thinks he will be ... which is just as good."139 The comment reveals at least Donziger's desire to benefit

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from fear engendered in the Ecuadorian judges.



Political Influence to Use the Criminal Process Against Former TexPet Lawyers to Extort a Settlement



We have referred previously to the consideration and abandonment in 2006, for lack of evidence, of criminal charges against two of Texaco's (and now Chevron's) attorneys, Pérez and Veiga, who negotiated and signed the Settlement and Final Release.



The Crude outtakes include a brief interview with Donziger on his way to President Correa's January 2007 inauguration, a subject discussed below as it relates to its consequences for the Ecuadorian judiciary. For present purposes, however, it is relevant that Donziger boasted that President Correa's inauguration was a potentially "critical event" for the outcome of the Lago Agrio litigation. Soon thereafter, Donziger explained that the LAPs and the ROE had "been really helping each other"140 and discussed the importance of working his contacts in the new government.141



On January 31, 2007, Donziger met with Joseph C. Kohn of Kohn Swift & Graf, P.C., a U.S. law firm providing financial support for the Lago Agrio litigation. He explained to Kohn that the plaintiffs had been working with the Prosecutor General's office and that, although the criminal proceedings were closed, there is "no finality" in Ecuador.142 Approximately a week later, the LAPs, in a radio segment, asked President Correa to bring criminal charges against Chevron's attorneys, specifically mentioning Pérez.143



This campaign continued. The outtakes show Donziger and others planning a press conference to pressure the Prosecutor General to bring criminal charges.144 On the following day, Donziger asked that posters be made of "Texaco's four accomplices,"145 including Pérez and Veiga— posters that later were displayed at a press conference and a demonstration.



In March 2007, President Correa pledged his full support for the LAPs.146 He followed that pledge with a meeting with Yanza. In a telephone conversation on or about April 23, 2007, Yanza reported to Donziger and Fajardo on a conversation he had had with President Correa. To the extent that his report may be gleaned from the outtakes, Yanza told Donziger that President Correa had an interest in learning more about the alleged environmental harm and "fraud in the field."147 He added to Donziger that President Correa "insist[ed]" that he continued to "[think] about doing something in the Prosecutor's Office."148 A day or two later, Yanza again reported to Donziger and Fajardo, asserting on that occasion that Yanza had "coordinat[ed] everything" with President Correa.149



Within a few days, President Correa, Yanza, Fajardo, and others boarded a government helicopter together to tour the

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Oriente region.150 In a voiceover in Crude, Donziger bragged: "We have achieved something very important in the case. We are now friends with the President." That "friendship" immediately became apparent. On the same day as his visit to the Oriente region, President Correa issued a press release "urg[ing] the Office of the Prosecutor to permit the Prosecution of the Petroecuador officials who accepted the remediation carried out by Texaco."151



The fact that there was no mention of the TexPet lawyers apparently bothered Donziger. In a telephone conversation the next day that was captured by Berlinger's cameras, Donziger said that "perhaps it is time to ask for the head of Pérez Pallares—given what the President said."152 On the following day, President Correa broadcast a call for the criminal prosecution of "Chevron-Texaco ... homeland-selling lawyers" in addition to the prosecution of Petroecuador officials.153



Finally, in one of the outtakes, Fajardo reported: "So, the President thinks that if we put in a little effort, before getting the public involved, the Prosecutor will yield, and will re-open that investigation into the fraud of, of the contract between Texaco and the Ecuadorian Government."154



On November 30, 2007, Ecuador's new Constituent Assembly, which by then was controlled by President Correa,155 removed the Prosecutor General, who had found no basis to support criminal charges against the Individual Petitioners and former ROE officials, and replaced him with Dr. Washington Pesántez Muñoz. Dr. Pesántez had been the District Prosecutor who had decided in March 2007 that "the report on the special audit conducted by the Comptroller General of Ecuador ... showed that there was no evidence of civil, administrative or criminal nature liability on the part of ... representatives of the TEXACO company, with respect to environmental damage that had allegedly been caused in the Amazon region."156 Several months later, however, Dr. Pesántez decided that the criminal case should be reopened.157



On March 31, 2008, less than a week after Cabrera reported a damages finding of $16 billion and a day before he filed his report with the court, Pérez and Veiga received notice that the new Prosecutor General had reactivated the criminal charges based on "new" evidence.158



On July 31, 2008, representatives of the LAPs, including Donziger, held a press conference during which Yanza commented that the plaintiffs had presented evidence to the Prosecutor General's office to encourage an investigation.159 President Correa, in a radio address less than two weeks later, offered his support for the criminal prosecutions:



But previous governments supported Texaco Chevron and betrayed our people: they signed agreements saying that everything was resolved, which has been one of the principal arguments by Texaco Chevron in its defense, when in fact nothing was resolved. Now, the Prosecutor General (Washington Pesántez), has, very properly, opened an investigation to punish those people, because it was a lie: there was nothing, nothing resolved, nothing cleaned up, all of the pollution.160



In June 2009, the Prosecutor General's office ordered Cabrera, in his capacity as the expert who conducted the environmental analysis regarding Texaco's presence in Ecuador, to give testimony.161 A month later, it issued a statement describing Cabrera's testimony. The account included a description of the global assessment process and the fact that Cabrera had referred the Prosecutor General to his report.162



Pérez and Veiga now face criminal charges in Ecuador. On April 29, 2010, the Prosecutor General issued official accusations to them. They await a preliminary hearing to determine whether the prosecution will proceed. It is reasonable to conclude that the Prosecutor General has revived the prosecution at least in part on the basis of the ostensibly independent Cabrera report, which was covertly written by the LAPs' consultants, at the urging of the LAPs with the support of President Correa.



The Legal and Political Climate in Ecuador—Fair Trial Becomes Impossible and the ROE, at the LAPs, Urgings, Seeks to Prosecute Chevron Lawyers for Tactical Reasons



The Court has drawn attention already to the fact that Aguinda plaintiffs and Texaco expressed sharply differing views to Judge Rakoff in 1999 and 2000 concerning the Ecuadorian courts and legal system. Donziger, representing the former, asserted that the Ecuadorian system was inadequate and the judiciary corrupt. Texaco disputed this. But the issue here is whether the judgment rendered in 2011 at the conclusion of a lawsuit begun in 2003 is foreclosed from recognition and enforcement by virtue of the conditions during that period, not during 1999-2000. It therefore is necessary to review the situation in Ecuador during the relevant time period.



The Ecuadorian Judiciary



The Court has noted already the inauguration of President Correa, Donziger's comment that prediction that it would be a "critical event" for the Lago Agrio litigation, and President Correa's pledge of full support for the Lago Agrio plaintiffs. It is important as well to consider the already troubled state of the Ecuadorian court system and the impact of President Correa's rise to power upon it.



The Ecuadorian judiciary has been in a state of severe institutional crisis for some time. Matters have deteriorated recently.163



From 1979 to 1998, judges of the Supreme Court of Justice, the highest court in Ecuador at that time, were appointed by the National Congress for six-year terms and therefore were highly susceptible to

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political influence.164 Ecuador's Nineteenth Constitution, in effect from 1998 until October 2008, overhauled the appointment system, providing that Supreme Court justices would serve life terms and that the Supreme Court en banc would appoint new justices.165 A brief period of stability and judicial independence followed these reforms.166



The 2004 Purge of the Supreme Court



This changed dramatically when the Ecuadorian Congress in 2004 and 2005, just after the Lago Agrio litigation was filed,167 purged the three highest judicial tribunals in Ecuador. In December 2004, the Congress, at the instigation of then-President Gutierrez, unconstitutionally replaced 27 of the 31 justices of the Supreme Court with new justices elected by Congress.168 Just five months later, President Gutierrez declared a state of emergency and removed all of the Supreme Court justices, including those recently elected. As a result, Ecuador was left without a Supreme Court for most of a year during which the Lago Agrio case was pending.



Ecuador's judiciary appears never to have recovered from these events. In November 2005, following President Gutierrez's downfall, new justices selected by a new qualification committee established by Congress were appointed.169 In May 2006, this new Supreme Court purported to limit lower-court judges to four-year terms and arrogated to itself the power to appoint and re-appoint lower court judges. "This circumstance made stability and continuity of the appointments of lower-court judges dependent on whether their rulings demonstrated their loyalty to the positions held by the higher-court judges who appointed them."170 In consequence, Supreme Court justices serve at the will of Congress and lower court judges have short terms of offices and futures dependent on reappointment by the Supreme Court.



President Correa's Influence Over the Judiciary



President Correa was elected president of Ecuador in 2006. He has condemned Ecuador's oil contracts as "true entrapment for the country."171 Moreover, the state of the Ecuadorian judiciary only worsened with the election of President Rafael Correa in November 2006.172



Shortly after assuming office, President Correa commanded the Supreme Electoral Tribunal, with threats of violence, to set a date for a plebiscite to create a Constituent Assembly to draft a new Constitution.173 When the Tribunal obeyed, 57 of the 100 congressional representatives challenged the constitutionality of the Tribunal's proceedings and voted to remove the President.174 The Tribunal, by then subservient to the President, dismissed these

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57 representatives and called on 57 alternate representatives loyal to the President to fill their seats.175 The representatives who had been dismissed brought suit in the Constitutional Tribunal, which ruled in their favor and ordered that they be reinstated. President Correa immediately condemned that decision. That very day, the newly appointed congressional majority unconstitutionally removed all of the judges of the Constitutional Tribunal and appointed new judges.176 The new Constitutional Tribunal reversed its previous decision with respect to the 57 original representatives and from that day forward consistently has backed the administration's decisions.



In April 2007, Ecuador voted to draft a new constitution, and a Constituent Assembly was formed. It issued "Mandate No. 1," which, among other things, eliminated Congress, the duties of which were assumed by the Constituent Assembly, and declared the Constituent Assembly's supremacy over the judiciary.177 When this was challenged before the Constitutional Tribunal, that body ruled that no judge could contravene the Constituent Assembly.



The new October 2008 constitution has further concentrated power in the hands of President Correa. It subjects certain decisions of the Supreme Court (renamed the National Court of Justice) to review by the Constitutional Tribunal (renamed the Constitutional Court).178 In addition, it terminated the appointments of 31 Supreme Court justices and subjected them to a lottery from which 21 randomly would be selected to serve on the National Court of Justice. Most of the 31 justices refused to submit to the lottery and resigned in protest, causing a gap of several months before the government was able to appoint interim justices.179



Since his re-election in November 2008, President Correa has continued to interfere in judicial matters of interest to the Ecuadorian government.180 In a number of recent cases, judges have been threatened with violence, removed, and/or prosecuted when they ruled against the government's interests.181 "In addition to direct government intervention in specific cases... the Judiciary is also frequently pressured by threats and criticism from key officials in the Correa Administration."182 The Justice Minister has called for the removal of an entire list of criminal judges, leading the President of the Court of Guayaquil to state that "this is only part of the government's plan to take over the country's

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courts of justice."183 In 2009, the President of the Civil and Criminal Commission of the National Assembly stated that "[o]ur system of justice has completely collapsed."184 And in June 2010, the Judicial Council publicly declared that currently "the Judicial Branch is not independent."185 "The absence of an independent Judiciary has in many cases allowed the Government to breach contractual relationships and stipulations with impunity.... Such breaches occur especially when there is interest on the part of the Government or strong political pressures."186 The Correa administration has targeted large foreign companies in particular for such treatment.187 In 2009, Ecuador withdrew from the International Centre for Settlement of Investment Disputes, and President Correa soon thereafter requested that Congress terminate 13 bilateral investment treaties that prescribed fair treatment toward foreign companies.188



All this has lead numerous independent commentators, identified in the Alvarez Report, to conclude that the rule of law is not respected in Ecuador in cases that have become politicized.189 Alvarez himself concludes that "[t]he cumulative effect of the political pressure on the Judiciary cannot be overstated The situation has become so dire that, in those cases where President Correa or others in his administration express a view, the judge must either rule accordingly or face the high likelihood of public condemnation, removal from office, and even criminal prosecution."190 "It is not possible to rely on the independence of the Judicial Branch, because it no longer acts impartially, with integrity and firmness in applying the law and administering justice. Rather, on the contrary, members of the Judiciary are

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subject to constant pressure, temptations and threats that influence their decisions."191



Reports by the World Bank and the U.S. State Department are to similar effect.192 The World Bank's Worldwide Governance Indicators show that in 2009 Ecuador was ranked in the lowest eight percent of the 213 economies studied with respect to "Rule of Law," lower than both Liberia and North Korea.193 Likewise, the State Department's three most recent Human Rights Reports for Ecuador have recognized that Ecuadorian judges sometimes decide cases as a result of substantial outside pressures, particularly in cases of interest to the government.194



Donziger Admits Corrupt Nature of the Ecuadorian Judiciary



Alvarez's conclusions are very much in-line with Donziger's oft stated opinions regarding the Ecuadorian judiciary. In the Crude outtakes, Donziger stated:



They're all [i.e., the Ecuadorian judges] corrupt! It's-it's their birthright to be corrupt.195



The judicial system is so utterly weak. The only way that 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. That would never happen in the United States or in any judicial system that had integrity.196



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.197



The Lago Agrio Judgment and the LAPs' Enforcement Plan



The Judgment



On February 14, 2011, the Lago Agrio court issued a multi-billion dollar judgment against Chevron. The court held that Texaco had caused extensive damage to the environment, peoples, and indigenous cultures in Ecuador in violation of Ecuadorian law at the time that Texaco had operated there, and it found that Chevron

[768 F.Supp.2d 621]

properly could be held liable by merger with Texaco and on a veil-piercing theory for any remediation owed by Texaco.198 In the course of deciding the LAPs' claims, the Lago Agrio court concluded also, inter alia, that (1) it was competent to hear the complaint,199 (2) the settlement between the ROE and Texpet and Texaco did not bind the LAPs,200 (3) it would not consider the Calmbacher and Cabrera reports in issuing the judgment,201 and (4) it would consider other expert assessments to which Chevron objected, presumably including the "cleansing" reports based on the excluded Cabrera report.202



The judgment awards: (1) $600 million for groundwater remediation, (2) $5.396 billion for soil remediation, (3) $200 million for damages to the native flora and fauna, (4) $150 million for drinking water remediation, (5) $1.4 billion for the delivery of health care, (6) $100 million for indigenous cultural damages, and (7) $800 million for excess cancer deaths,203 a total of $8.646 billion. This sum is to be administered by a commercial trust in Ecuador over which defendant ADF, headed by defendant Yanza, will exercise control.204 The judgment awarded also an additional 10 percent of the total directly to the ADF.205 Finally, the judgement granted punitive damages, equaling 100 percent of the $8.646 billion, unless Chevron issued a "public apology" to the LAPs within 15 days of the issuance of the judgment.206 To the Court's knowledge, Chevron has not issued such an apology, and the time set by the Ecuadorian court within which to do so has expired. This leaves the current value of the judgment at more than $18 billion.



Appellate Remedies in Ecuador



As the matter bears importantly on the urgency of this ruling and the issue of threatened irreparable injury, it is necessary to consider avenues open to Chevron in Ecuador.



Under Ecuadorian law, a lower court's judgment is stayed during the pendency of an initial appeal.207 The first appeal is heard by an intermediate appellate court, which reviews the facts and law de novo.208 Once that appeal is decided, either party may appeal that decision to the Supreme Court of Ecuador by filing a writ of cassation.209 Nevertheless, if the judgment is upheld or modified by the intermediate appeals court, it is enforceable while the writ of cassation is pending before the Supreme Court.210 The petitioner for the writ of cassation, however, may ask the intermediate court to stay enforcement upon the petitioner's posting a sufficient

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bond, the amount of which is decided by the intermediate court.211 As is discussed below, however, a stay in Ecuador would not necessarily stay proceedings outside Ecuador.



On February 17, 2011, the LAPs appealed the judgment, seeking, inter alia, to increase the damage award.212 On the same day, Chevron filed a motion with the lower court seeking clarification of certain aspects of its decision.213 Courts usually issue such clarifications within a few days of their filing.214 Once any clarification is issued, Chevron will have three days within which to appeal.215 To the Court's knowledge, no such clarification yet has been issued.



Once Chevron appeals, the appellate court may rule at any time, and there is good reason to believe that it will do so quickly in this case. In cases tried by what in Ecuador are known as summary verbal proceedings, as was the case here,216 the appellate court, as is customary in the United States, rules based on the existing record, which generally allows for more prompt disposition of these cases.217 Moreover, "[a]s a practical matter, the time it takes for the appellate court to rule will largely depend on how important the case is, how much pressure is placed on the appellate court by the parties or other forces to render its decision, and how loaded the dockers are of the judges appointed by the appellate panel."218 Here, all of these factors strongly indicate that the appellate court is likely to issue a decision quickly, at which point the judgment will become enforceable in Ecuador.219 Indeed, that court necessarily will understand that the LAPs have the full support of President Correa.



The LAPs' Enforcement Plan



Now that a judgment against Chevron has been rendered, there is good reason to believe the defendants quickly will move to

[768 F.Supp.2d 623]

enforce that judgment and seize assets simultaneously in multiple jurisdictions.



From at least September 2009 until the present, Donziger and other defendants have indicated their intent to pursue an aggressive world-wide enforcement strategy in order to obtain settlement leverage over Chevron without "waiting for the appeals process."220 According to an ADF press release, "[i]f the plaintiffs win a judgment against Chevron in Ecuador's courts, they plan to move `expeditiously' to seize Chevron's assets in the U.S. and other countries...."221 The press release quotes Donziger as saying that "Chevron operates in more than 100 countries and has numerous oil tankers that troll the world's waterways and dock in any number of ports[.] This could end up being one of the biggest forced asset seizures in history and it could have a significant disruptive impact on the company's operations."222 Donziger described the defendants' enforcement strategy in similar terms a year later while speaking at Duke University Law School:



[O]ne of Chevron's vulnerabilities is they have assets in over a hundred countries, and you could enforce a judgment out of Ecuador in any of many countries where they have enormous assets.... [S]o we're gonna be able to execute whatever judgment comes out of Ecuador... in whatever forum might ... be appropriate, including multiple places that ... you could file suits, you could seize assets, seize boats....223



The intent of this enforcement strategy is even more apparent in the undated "Invictus" memorandum,224 prepared by Patton Boggs, which outlines the LAPs' strategy. The plan is to seek to enforce the judgment "quickly, if not immediately, on multiple enforcement fronts in the United States and abroad."225 The LAPs "will look for ways to proceed against Chevron on a pre-judgment basis, largely as a means of attaining a favorable settlement at any early stage."226 "[A]ssets may be attached by way of an ex parte proceeding..., making [that] an extremely attractive option for obtaining leverage early in a case."227



The memorandum recognizes that the defendants may have trouble enforcing an Ecuadorian judgment in the United States,228 where several Section 1782 courts have rebuked the defendants for fraudulent conduct in connection with the Ecuadorian suit.229 As a result, the memorandum

[768 F.Supp.2d 624]

lays out a global plan of attack, identifying more than twenty countries as potentially desirable jurisdictions for asset seizure and enforcement efforts: "Particularly critical is avoiding—to the extent possible—relitigation of the merits of the case."230



Speed is central to the defendants' strategy: "Upon entry of judgment, Plaintiffs' team will move quickly to bring Chevron to the table ... and negotiate a favorable settlement before Chevron becomes entrenched in fighting enforcement.... Chevron's discomfort with having an enforceable judgment on the books, and with the uncertainty surrounding the manner in which Plaintiffs will seek to enforce that judgment, will create a window of opportunity for settlement."231



In the days since the Ecuadorian judgment issued, the LAPs have reiterated their intention to mount a multi-country full-court press to enforce the award against Chevron.



The UNCITRAL Arbitration



It remains only to consider that this case is not the only game in town. An international arbitration tribunal already has ordered Ecuador to put a halt to the LAPs' enforcement efforts.



The United States and Ecuador are parties to a bilateral investment treaty (the "BIT").232 The BIT, broadly speaking, provides that private parties having investment disputes with Ecuador may pursue their claims in accordance with the Arbitration Rules of the United Nations Commission on International Trade Law.233



In 2009, Chevron commenced a BIT arbitration against Ecuador. It there alleges that the ROE improperly colluded with the LAPs in relation to the Lago Agrio litigation, abused the criminal justice system and engaged in other coercive tactics, and breached its investment agreements and treaty obligations.234 It seeks, among other things, declarations that Chevron and its affiliates have no liability with respect to the alleged environmental pollution and that Ecuador has breached the BIT and its treaty obligations in various respects and indemnification from Ecuador for any liability Chevron may have in the Lago Agrio litigation.235



On February 9, 2011, the day after this Court issued the TRO, the arbitration tribunal entered an Order for Interim Measures.

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It found that Chevron "[had] made out a sufficient case" for the tribunal to take discretionary interim measures.236 It directed the ROE "to take all measures at its disposal to suspend or cause to be suspended the enforcement or recognition within and without Ecuador of any judgment against [Chevron] in the Lago Agrio case."237 It ordered also that the ROE inform the tribunal of its efforts to implement the order.238 That order, however, does not bind the LAPs or their counsel.

Chevron filed this action on February 1. The complaint asserts claims against 56 defendants who fall into four groups.



The first group is Donziger and his firm, the Law Offices of Steven R. Donziger.239



Second are Stratus and two of its employees—Beltman, an executive vice president, and Maest, a managing scientist.240



The third group comprises four Ecuadorian individuals and entities who, in various overlapping ways, have participated in the LAPs' representation in the Lago Agrio litigation. Fajardo is their counsel of record in that matter.241 The ADF is a non-profit organization headed by Yanza, and Fajardo is also its counsel.242 Selva Viva is an entity created by the ADF to administer litigation funds. It is managed by Yanza,243 and its president is or was Donziger.244



The fourth group of defendants is the LAPs.245



Additionally, the complaint alleges culpable conduct on the part of a number of nonparties including, inter alia, Joe Kohn, who in large part financed the Lago Agrio litigation, the Amazon Watch League, and certain American lawyers and law firms who have represented the LAPs in various U.S. proceedings.246

For the foregoing reasons, Chevron's motion [DI 4] for a preliminary injunction is granted as against all defendants other than Stratus Consulting, Inc. ("Stratus"), Douglas Beltman and Ann Maest, as there is no evidence that they have any intention of attempting to enforce, or interest in, the Ecuadorian judgment. It is denied as to those three defendants.

All defendants other than Stratus Beltman and Maest (their names being listed for convenience on the attached Schedule) be and they hereby are enjoined and restrained, pending the final determination of this action, from directly or indirectly funding, commencing, prosecuting, advancing in any way, or receiving benefit from any action or proceeding, outside the Republic of Ecuador, for recognition or enforcement of the judgment previously rendered in Maria Aguinday Otros v. Chevron Corporation, No. 002-2003, in the Provincial Court of Justice of Sucumbios, Ecuador (hereinafter the "Lago Agrio Case"), or any other judgment that hereafter may be rendered in the Lago Agrio Case by that court or by any other court in Ecuador in or by reason of the Lago Agrio Case (collectively, a "Judgment"), or for prejudgment seizure or attachment of assets, outside the Republic of Ecuador, based upon a Judgment.



This Preliminary Injunction takes effect immediately. Its continuation beyond 4 p.m. on March 15, 2011, Eastern Standard Time, is conditioned upon the posting by then of security as required in the Court's opinion of even date.



The Court is mindful of the parties' interest in having the enforceability and recognizability of the judgment outside of Ecuador determined without unnecessary delay. Moreover, the Court is obliged under FED.R.CIV.P. 57 to resolve declaratory judgment actions. The parties therefore may move promptly to sever Count 9 of the complaint, the declaratory judgment claim, and to establish an appropriate schedule for its prompt resolution



The parties' attention is drawn to FED. R.APP. P. 8(a)(1). The Court, as always, will entertain an order to show cause to bring on any motion for a stay of the preliminary injunction on short notice.