The National Association of Manufacturers has been a great place to work, and not only because of the latitude the NAM’s leaders gave me in writing about manufacturing, the economy and policy. The issues we promote seek to create a stronger manufacturing sector and more prosperous, free United States, and I’ve been privileged to help in whatever modest way I can. The people at the NAM are top-notch advocates and colleagues.

Shopfloor continues with many voices, and I wish them all the best.

So, in the words of Roy Rogers ….

cw

P.S. OK, I’ll admit it. I’m more a Yardbirds kind of guy.

Chevron put together a short video to present its side of the case to the stockholders, shown at the meeting after Amazon Watch’s Atossa Soltani raised the issue. Its showing produced a round of vigorous applause from the attendees.

Concise and pointed. Very well done.

We wrap up the trial lawyer, activist, politician and media alliance that has gone after Chevron in a post immediately below, “More than a Lawsuit: A Circle of Political Pressure Against Chevron.”

Chevron’s Dilemma: Creating an Untenable Situation for a Multinational – Winter 2009

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:

“Crude” 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.

Winfried Kretschmann

We pay attention to the Greens because they represent the environmentalist movement as an elected political force. The policies they promote in Germany have parallels in the United States, although it’s obviously easier to gain representation in a parliamentary system than in a mostly two-party system like the U.S. has.

In an interview with the news magazine Der Spiegel, Kretschman gave a stark description of what his coalition wishes to achieve. From “I Want a Quiet Revolution“:

SPIEGEL: The economy of the state of Baden-Württemberg grew by 5.5 percent last year. Is that good or bad?

Kretschmann: This concept of growth is outdated because it doesn’t distinguish between negative and positive effects. If you crash your car into a tree and total it, you’re helping to promote economic growth. We therefore need a new yardstick that provides information about whether growth also increases well-being.

SPIEGEL: What sort of a new measure do you have in mind?

Kretschmann: I don’t know yet. The traditional definition of growth, which measures prosperity solely in terms of the increase in the gross domestic product, is a dead-end solution. We can see where it’s taking us. This global economic model is hurting our planet.

Why not redefine “prosperity” and “jobs” while we’re at it?

Baden-Württemberg is home to Mercedes-Benz and Porsche, but the first instinct of the Greens is to undermine the state’s major industries. Immediately after his election, Kretschmann told the newspaper, Bild am Sonntag:

Fewer cars are, of course, better than more… We have to sell mobility concepts in the future, not just cars. That means walking, bike riding, driving and train riding. We have to link these things together cleverly, so that we continue to make progress and prevent environmental damage.

The Greens also support a speed limit on the Autobahn, always a controversial topic in Germany.

While local issues played a major factor in the Greens’ victory — for example, their opposition to a new train station in Stuttgart — the political fuel that powered their electoral success was the reaction to the Fukushima nuclear accident in Japan. The Greens grew out of the anti-nuke movement of the ’70s and ’80s and supports the shuttering of Germany’s nuclear power plants. Kretschmann told Der Spiegel, “The last nuclear power plant has to be shut down irrevocably.”

Opposition to nuclear power has become mainstream. The CDU-led federal government of Angela Merkel calls for phasing out nuclear power by 2022, and on Tuesday, the largest German industry group signed on.

BERLIN — Germany’s most powerful industrial sectors said Tuesday they are backing government plans to abolish nuclear power within about a decade, but warn that blackouts and other risks could arise from the decision.

“We believe that it is possible to replace nuclear power by 2022 or a date in that range,” said Christopher Gruenewald, head of energy and climate policy for the Federation of German Industry group that represents the nation’s manufacturers.

The accommodation may bring no political relief. In the state parliamentary elections in Bremen on Sunday, the Greens came in second behind the traditional ruling party, the SPD, and for the first time polled better than the CDU. Merkel blamed her party’s poor showing on the nuclear power issue.

Although we note that Bremen permitted 16- and 17-year-olds to vote, an invitation to ever-more radicalized politics. There’s now a push to expand the younger voting age nationwide.

From Hinton’s prepared statement:

One NERA study I directed on Tort Liability Costs for Small Businesses shows that tort costs are not borne evenly throughout the economy. Small businesses bear a relatively larger share of tort costs than larger businesses. For example, businesses with less than $10 million in revenues in 2008 represented

Paul Hinton

only 22 percent of U.S. business revenues but incurred 83 percent of tort costs. This is economically important because small businesses generate the majority of net new jobs, 65 percent over the past 17 years.The costs of the U.S. tort system may have effects on businesses similar to an implicit tax. The economic literature on the effects of taxes on business activity is instructive in identifying the effects of higher costs of business on economic development. This literature as well as surveys of business attitudes describe how business decisions on where to make investments and add jobs are sensitive to local costs of doing business. Tort liability costs may also affect the growth of existing businesses within the 50 states.

In another NERA study, I worked with colleagues to examine how relatively higher tort costs in the U.S. affect international competitiveness. We compared the growth of productivity in the manufacturing industries affected by asbestos litigation in the U.S. since the late 1980s to productivity growth of the same industries in other industrialized countries. We found that productivity growth in the U.S. industries affected by asbestos litigation was 0.5 percent per year slower than their counterparts in other countries. Over the period of study from 1987 to 2000, the lower U.S. productivity growth amounted to lost GDP of over $300bn, with $51bn of that loss realized in 2000.

Both these studies indicate that lowering the costs of the tort system could have a substantial impact on the promotion of business activity.

Hinton also cited a report from the Department of Commerce, “The U.S. Litigation Environment and Foreign Direct Investment, Supporting U.S. Competitiveness by Reducing Legal Costs and Uncertainty.” This report argued that a relatively costly tort system works to discourage foreign direct investment in favor of less litigious countries. All things being equal, “investment capital goes and stays where it is well treated,” Hinton said.

And when it comes to the costs of the U.S. civil justice system, all things are definitely unequal.

Video of the hearing is available here. For more, see the blog post by Rep. Randy Forbes (R-VA), “Can We Sue Our Way to Prosperity? Litigation’s Effect on America’s Global Competitiveness.”

Signed by a Working Woman, Clifton Springs, N.Y., 1911.

Nancy Cleeland, NLRB spokeswoman, interview with The Street, May 18, 2011:

“We are not telling Boeing they can’t build planes in South Carolina,” Cleeland clarified, in an interview. “We are talking about one specific piece of work: three planes a month. If they keep those three planes a month in Washington, there is no problem.” Beyond the ten planes, she said, Boeing could build whatever it wants in South Carolina.

Cleeland said the hysteria ought to be tamped down because the ruling’s implications are not as broad as opponents seem to believe.

It’s arrogance for a government agency to tell its critics to shut up and let the process work, and then comment about how those critics are being hysterical. Very arrogant.

The first day’s story, “Shale motherlode brings world of change,” reports on wide variety of economic effects and benefits, including the growing emphasis on workforce training to meet the energy sector’s demand for skilled employees.

A sidebar examines the small, ideologically committed opposition to domestic energy development, “‘Don’t frack with our water,’ say foes.”

Energy companies are doing big business, obviously, but the activity spreads throughout the economy, creating jobs and opportunity and allowing people to support their families. From Day Two’s entry, “Locals cash in on natural gas boom in Pa.“:

Other businesses also are seeing huge paydays. Rig workers for drilling companies such as Range Resources, one of the biggest players in the game, end up at local bars and restaurants after their shifts.

But they also must eat on the job. The hectic schedule doesn’t allow them to clean up and take a formal one-hour lunch break. Instead, the food comes to them.

“It’s the best thing that ever happened to me,” said Frank Puskarich, owner of Hog Father’s restaurant in Washington and daily caterer to Range Resources‘ “frack jobs” across the region. The boisterous barbecue pit master said he has hired eight employees who do nothing but prepare chicken, ribs, brisket, macaroni and cheese and other entrees for tired, hungry workers. He picked up the contract with Fort Worth, Texas-based Range Resources five years ago, and that also has helped drive business to his small establishment in Washington.

“It’s standing-room only for lunch” every day, Mr. Puskarich said. “[Business] has been tremendous. There’s a lot of work for people who want it, and not just in the food business.”

It’s a well-reported series.

• Three House members from South Carolina took to the House floor Monday to express their opposition to the National Labor Relations Board’s unprecedented complaint against Boeing for locating new production facilities for the 787 Dreamliner in South Carolina instead of unionized Washington State. The remarks by Reps. Trey Gowdy, Jeff Duncan and Mick Mulvaney are available here.

• LaborUnionReport.com theorizes that the NLRB’s actions could eventually work against non-unionized employers, as well. It’s an interesting legal discussion at “Opening Pandora’s Box Beyond Boeing: NLRB’s Attack on Free Enterprise Should Concern All Americans.”

• Richard Trumka, the AFL-CIO president, presented a well-structured, vigorous defense of the NLRB on the Boeing issue in his speech last week at the National Press Club. Trumka said: “While Boeing and the Chamber of Commerce may not like it, the law of the land protects working people who exercise that right against any retaliation by their employers.” And that was it. Reporters did not follow up in the Q&A, showing more interest in football.

• The issue is playing nationally. Rep. Tom Price (R-GA), a strong supporter of manufacturing, raised the NLRB issue in remarks last week at the Marietta Rotary Club. He said: “The National Labor Relations Board has moved in a destructive direction in regards to job creation, not just in favoring unions, but in telling airplane manufacturer Boeing that it was proposing not to all allow it to move a manufacturing facility from Washington, which is pro-union, to South Carolina, which is a right-to-work state, because it would, ‘harm union activities.’ Boeing has determined it works best for them to move part of its manufacturing capability to South Carolina. Think about what that means. Washington power brokers can pick winners and losers.”

From Wikipedia: “In 1986, the city dedicated the Friendship Archway, a traditional Chinese gate designed by local architect Alfred H. Liu. The colorful, $1 million work of public art includes 7 roofs up to 60 feet high, 7000 tiles, and 272 painted dragons in the style of the Ming and Qing Dynasties. Erected to celebrate friendship with Washington’s sister city of Beijing, it was hoped the arch would reinforce the neighborhood’s Chinese character. According to the plaque next to the arch, it is the largest such single-span archway in the world.”

In related news, “China expands export quotas of rare earth metals.”