Chevron held its annual stockholders meeting in San Ramon, Calif., today, and environmental activists again demanded that the company settle a lawsuit brought against it in Ecuador. But new documents show these demands, like most before them, to be serving not justice but instead the pecuniary interests of a small group of contingency-fee lawyers and their allies.
The U.S. trial lawyers suing Chevron over alleged environmental damage in Ecuador have worked from a sophisticated political and PR plan that has sought to use Congress, state governments and major media and even directly influence President Obama to force the oil company into a settlement.
Documents obtained by Chevron in court proceedings* reveal the true nature of the campaign against the company: It’s not about using the law to find the truth, but rather applying the maximum amount of political pressure to extort billions of dollars from the U.S. corporate target. From those billions, the American contingency-fee attorneys and their operatives would take a huge share for their own enrichment.
Effectively using the discovery process to delve deep into the scheme, Chevron has uncovered sufficient proof of wrongdoing to bring a federal racketeering suit against the key actors behind the shakedown lawsuit.
Evidence of fraud at the heart of the anti-Chevron campaign has led a U.S. federal judge to block any effort by the “Lago Agrio” plaintiffs and their U.S. lawyers to collect on an $18 billion judgment handed down by an Ecuadorian court against the San Ramon, California company.
Chevron is the target because the company acquired Texaco in 2001; Texaco had operated in Ecuador’s Amazon in a consortium with the state-owned oil company, Petroecuador, from the 1960s until 1992. Texaco remediated any environmental damage before it left Ecuador, while Petroecuador continued operations (and pollution).
The campaign against Chevron is multifaceted and organized. We have referred to it as the “combine,” an alliance of trial lawyers, politicians, activists and supportive media. But the lawyers themselves depict the campaign as an encirclement, orchestrating numerous actors to pressure the company toward a settlement.
Above right is a chart created in January 2009 by Andrew Woods, an attorney who works with the Amazon Defense Coalition, the PR front group for New York trial lawyer Steven Donziger, his team of contingency-fee attorneys and the Ecuadorian plaintiffs suing Chevron. The document’s title is “Chevron’s Dilemma: Creating an Untenable Situation for a Multinational – Winter 2009.” (Click for a larger picture.)
Chevron submitted the chart on April 26 to the U.S. District Court for the Southern District of New York, one of a batch of 29 new submissions to support the company’s motion to hold Donziger in contempt for failing to disclose tens of thousands of documents he was under court order to make available to Chevron.
Each of the circles represents one of pressure points the lawyers are bringing to bear as they attempt to create “an untenable situation” for Chevron.
There’s the circle for “Crude,” the documentary-style film that director Joe Berlinger originally claimed was an independent and balanced exploration of the effects of oil development on Amazonian Indians. But New York trial lawyer Steven Donziger originally sold him on the project and subsequently Berlinger has conceded he let the lawyers make key editorial decisions to avoid undermining their storyline that Chevron is evil. In the circle you can see how the legal team planned to use the film:
- To be shown in local communities of the [Chevron] Board of Directors; Can generate media attention in home communities of BOD members.
- To be shown on Capitol Hill in coordination with Rep. McGovern
- Potential screening in White House.
Rep. McGovern is Jim McGovern (D-MA), one of the lawyers’ key allies on Capitol Hill. He spoke at a showing of the film in downtown Washington in October 2009, recalling a trip he had made to Ecuador — here’s a photo of the Congressman with Donziger in the jungle — and describing his efforts to bring President Obama into the anti-Chevron fight. “Ramp up the pressure!” McGovern urged the crowd at the Landmark E-Street Theatre. (See earlier Shopfloor posts on the movie.)
President Obama gets his own circle [below right], denoted, “Ongoing pressure of new administration publicly unfriendly to big oil companies.” Not just unfriendly to big oil companies, the President was a Harvard Law School classmate and former basketball playing buddy of Steven Donziger. How about that for an avenue of influence?
The trial lawyers knew they had an ally. As a Senator, Obama joined Sen. Patrick Leahy in writing a letter in 2006 to then-U.S. Trade Representative Rob Portman, highlighting the cause of the Amazonian Indians against Chevron. The Senators rejected any efforts to tie U.S. trade preferences for Ecuador to the country’s treatment of Chevron in the litigation, telling Portman: “While we are not prejudging the outcome of the case, we do believe the 30,000 indigenous residents of Ecuador deserve their day in court.”
That being the corrupted and politicized courts of Ecuador, which in February produced a $18 billion judgment against the company.
While the White House has stayed out of the issue publicly, the Obama Administration continued to support trade preferences for Ecuador, despite the continued assault on democratic institutions and U.S. interests by the leftist government of Rafael Correa.
Trying to involve so many groups — including state attorneys general, the media, and Chevron shareholders — in their campaign is expensive. A “confidential investment document” obtained by Chevron via court proceedings in the U.S. District Court, Eastern District of Pennsylvania, showed $6.5 million in expenses for the Philadelphia law firm of Kohn, Swift and Graf through March 2009. At one point in the movie “Crude,” partner Joe Kohn smilingly admits the firm is backing the litigation as a money-making venture.
And how. The confidential memo sent to lawsuit investor Russ DeLeon – an Internet poker magnate and another Donziger classmate at Harvard Law — shows the lawyers and their allies seeking up to 25 percent of the total settlement. If the $8 billion order held up, that would be $2 billion.
(The planned divvying up of money is fascinating. Political and communications consultant Chris Lehane is slated for a 2 percent of the share set aside for the Kohn/Donziger portion of the winnings, while the high-powered lobbying outfit, the Barnes Group, would land 17.5 percent. The arrangements may have changed since, as the law firm has distanced itself from the lawsuit after Donziger’s hubris and Chevron’s excellent legal efforts worked to destroy the litigation.)
Activists and apologists have portrayed the claims against Chevron as matter of “justice,” as they worked tirelessly to create a myth of the uncaring U.S. corporation exploiting Amazonian Indians.
But the Ecuadorians have never driven the litigation; their interests have always taken a back seat. From New York to Philadelphia to Washington, D.C., U.S.-contingency fee attorneys and their allies have been running the show, creating a circle of pressure against Chevron to try to force the company into a multi-billion-dollar settlement. Politics, public relations, media campaigns and lobbying have been their weapons, and justice has never been the goal.
* On April 26, 2011, Chevron’s attorneys with Gibson, Dunn & Crutcher filed 29 documents in U.S. District Court, Southern District of New York, as evidence in support of the company’s motion to hold Steven Donziger in contempt of court. This declaration summarizes the submissions, which we have posted at the NAM’s Scribd site.
Disclosure: In June 2009 I traveled on a Chevron-financed trip with two other bloggers to examine the scene on the ground in Ecuador. We were there for two days.