In a Financial Post blog entry, “Turning the tables,” Silvia Santacruz, an Ecuadorian economist based in New York and the publisher of Ecuador Mining News.com, provides knowledgeable perspective about the trial lawyer/activist litigation against Chevron.  She also critiques the one-sided and misleading documentary-style film about the dispute, “Crude.” Companies usually try to buy peace in circumstances like these, Santacruz observes, funding NGOs in order to avoid a PR beating to their market capitalization. But…

[One] American firm — Chevron — is not only fearless of green campaigners’ tactics, it is giving them a taste of their own medicine. In the process, it may also highlight the problems with government ownership of natural resources, including eco-disasters, that environmentalist activists blithely ignore.

In this case, the government-owned operator is Petroecuador, which has continued to develop the Amazon region’s oil resources after ending its consortium with Texaco — later bought by Chevron — in 1992.  Santacruz, who recently traveled to the Lago Agrio region in Ecuador, reports the reality ignored by the activists, U.S. trial lawyers and, too often, the U.S. media who report on the litigation.

During my visit to the oil spills, I found some reforested sites, others being cleaned up, and just a few crude spills collected in pools. At one site, known as the “Presidential Well” after Correa gave a press conference there, I noticed that the pipelines were warm. Petroleum was being pumped, and the spill was recent — I threw a stone that sank instantly. I had no doubt: Petroecuador is currently operating there. So, how can Correa and environmentalists accuse Texaco of a “pollution 30 times greater than the Exxon-Mobil,” when the company left 20 years ago?

Recent data reveal that state-owned Petroecuador has caused 1,415 crude spills between 2000 and 2008, an average of one incident every other day. But environmentalists in Ecuador do not care about Petroecuador and continue to point fingers at Chevron instead. Astonishingly, my country’s ecological disaster does not make the green campaigners blink. State-owned companies’ pollution is simply not on their radar screen. They seem to care not so much about my country’s indigenous people as they do about Chevron’s pockets.

So that was actually Petroecuador oil that the actress Daryl Hannah stuck her hand into for all those anti-Chevron publicity photos. She seemed not to care so much about the country’s indigenous people as she did about her own self-promotion, but that’s Hollywood environmentalism for you.

Santacruz is an Ecuadorian, an economist, and a person with first-hand knowledge of the energy industry in developing countries. Her insights merit serious attention. Instead, we predict, the Amazon Defense Coalition will attack her motives and dream up some sort of nefarious connection. That’s SOP for the activists, who seem to care not so much about truth as they do about Chevron’s pockets.

The Financial Accounting Standards Board (FASB) has revived its ill-conceived proposal to require corporations to report possible financial losses from ongoing litigation. If enacted, this new standard would force companies to reveal critical information about their potential liabilities, legal strategies, and insurance coverage. While the reporting would be speculative and of minimal value to shareholders, it would still provide important information to trial lawyers — especially of the class-action ilk –and encourage more litigation against business.

FASB made its initial proposal in June 2008 but pulled back after a flood of opposition from companies, business groups and others. (Shopfloor.org’s coverage of the 2008 consideration.)

The board sought more comment, did some field testing, made some modest but still welcome adjustments, and on July 20 issued a new proposal, “Disclosure of Certain Loss Contingencies.” It’s better, but still not good. As The Wall Street Journal editorialized Thursday in “FASB’s Tort Bar Gift“:

Take the provision requiring companies to disclose their liability insurance coverage. Lawyers would be able to target their damage requests to the coverage maximum, or launch new lawsuits in the knowledge that more insurance dollars remain. This is why judges typically insist that coverage only be divulged under a secrecy order.

Another provision proposes that companies disclose the “average settlement amount” in various categories of litigation. This is another bull’s-eye for the trial bar, which will seek to meet or exceed that figure in each of its demands. It also sets a prejudicial standard for all companies in similar litigation to meet.

Oh, and don’t forget proposed disclosure of “the existence of studies in reputable scientific journals . . . that indicate potential significant hazards related to the entity’s products or operations.” So corporate America would be obliged to do the trial bar’s research.

The costs of U.S. hyperlitigiousness are already a major competitive disadvantage for companies operating in the United States. Why would anyone want to increase those costs?

On Thursday, FASB extended the comment deadline for another 30 days, setting the new deadline on September 20. (News release.) The National Association of Manufacturers is developing its comments.

As the proposal is now structured, the benefits in transparency for shareholder are minimal, the potential for expanded anti-competitive litigation is great.

And isn’t funny how two of the biggest potential boons for the U.S. trial lawyers are being considered largely out of the public eye in recondite areas of accounting standards and tax law? There’s the FASB proposal and also the attempt by the American Association for Justice to win a $1.6 billion tax break through the U.S. Treasury since the AAJ’s efforts have been thwarted in Congress.

Walter Olson at Overlawyered.com provides links to reaction here.

Outtakes from the documentary-style movie “Crude” should leave no doubt that the campaign against Chevron instigated by U.S. trial lawyers has nothing to do with the law or justice, and everything to do with politics, PR and manipulating Ecuador’s judicial system.

Chevron has recently filed additional transcripts in federal court to support the company’s legal motions. Among the transcripts’ astonishing revelations:

• The U.S. trial lawyer leading the litigation, Steven Donziger, and the plaintiffs’ team discuss the need for “an army” of supporters to surround the courthouse in Lago Agrio, Ecuador, to pressure the judge hearing the lawsuit.
• The head of the supposedly independent group, Amazon Watch, worries that the cameraman recording the conversation is documenting an illegal conspiracy.

In July, Chevron successfully argued in federal court — the Southern District of New York and the Second Circuit Court of Appeals — that it had a legal right to review outtakes from the anti-Chevron film, “Crude.”  Both the plaintiffs suing the company for $27.4 billion — the Amazon Defense Coalition, ostensibly representing Ecuadorians harmed by oil drilling — and the movie’s director, Joe Berlinger, vigorously fought the motion.

No wonder: The outtakes show the litigation not to be the great moral cause that plaintiffs claim, but rather a cynical shake-down effort directed at the company because it’s American and it’s profitable. But that’s the nature of many of the lawsuits filed against U.S. companies that operate in poor countries.

As evidence, consider Chevron Document 22-4 (available   here Scribd version,), which documents portions of a June 6, 2007 conversation among Donziger, Luis Yanza (Ecuadorian coordinator for the plaintiffs) and Atossa Soltani, founder and director of Amazon Watch.

Most of the conversation is in Spanish, translated into English. (The transcripts include both languages.) The word “ejército” is translated as “army,” but it sounds more like a goon squad to us. Luis Yanza says at one point: “They would have to receive minimal training… things– details, so they do a good job for us. That’s it. And then, if it goes well, and we need, uh, if we need weapons, we can provide weapons.”

This is the same Luis Yanza awarded the Goldman Environmental Prize in 2008, including an award of $150,000, for organizing Amazonian Indians.
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We’re struggling to make the connection: Passage of the DISCLOSE Act will create jobs, how exactly?

From Hotline on Call, “DISCLOSE Act Will Get Second Look”:

Senate Dems plan to bring up a campaign finance measure once again, according to the bill’s supporters who hope to win cloture by wooing key GOP senators.

The DISCLOSE Act, which could not clear Senate hurdles when it came up just before the Aug. recess, will head back to the floor for a vote when the Senate returns next month, according to spokespeople for Senate Maj. Leader Harry Reid and Sen. Chuck Schumer (D-NY), the bill’s lead sponsor.

The DISCLOSE Act is to free speech as the Employee Free Choice Act is to freedom of association.

That is, antithetical.

On July 27, the Senate failed to invoke cloture on S.3628, the DISCLOSE Act, by a vote of 57-41. Senate Majority Leader Harry Reid voted no in order to retain his parliamentary ability to bring the measure back up.

To again quote from the National Association of Manufacturers’ “Key Vote” letter in opposition to the bill:

Put simply, this bill threatens First Amendment freedoms and is a direct assault on the U.S. Constitution. Its purpose is to hinder the ability of organizations, including associations such as the NAM, to give a voice to their members’ views and priorities. The U.S. Supreme Court repeatedly has recognized that voluntary associations are key participants in the public debate, and that government’s attempts to curb participation in associations in order to stifle their voice in the public debate violate the First Amendment. There need be no further discussion on whether First Amendment freedoms should apply to some and not to others.

(Hat tip: Center for Competitive Politics, which posts, “DISCLOSE back from the dead?”

As we blog about frequently here at Shopfloor.org, Chevron is defending itself in the U.S. and Ecuador courts against litigation by U.S. trial lawyers and their activist allies who want the company to pay $27.4 billion for environmental damage in Ecuador allegedly committed by its predecessor company, Texaco.

Now Shopfloor is being mentioned in court filings in the case, but the claims made about blog posts here are just not true.

The most recent turn of legal events has involved outtakes from the documentary-style movie “Crude,” which covers the litigation against the company from a perspective sympathetic to the Ecuadorian victims of Western civilization. Chevron sought outtakes from the movie in federal court, and once acquiring them, identified clear incidents of the trial lawyer team scheming to maximize damages against the company, even to the extent of meeting with the supposedly “independent” court-appointed expert who later recommended the $27.4 billion award. Also damning were the claims from Steven Donziger, the U.S. trial lawyer leading the litigation, who said among other outrageous things:  “Hold on a second, you know, this is Ecuador. . . . You can say whatever you want and at the end of the day, there’s a thousand people around the courthouse, you’re going to get what you want. Sorry, but it’s true.”

The above information is available in Chevron’s Aug. 3 filing in U.S. District Court, Southern District Court of New York, “Chevron Corporation’s Memorandum of Law in support of a motion for a preservation order, and to supplement and enforce the subpoenas.” We wrote about the filing here, an Aug. 3 Shopfloor post, “‘Crude’ Footage Reveals Lies Behind Trial Lawyers’ Suit Against Chevron.”

Chevron obtained the footage after the legal process went from the District Court to the Second Circuit Court of Appeals. On July 15, the Second Circuit ordered Joe Berlinger, the director of the film, to make relevant footage available to Chevron. That order, which we wrote about here, includes a court instruction to Chevron: “2) Material produced under this order shall be used by the petitioners solely for litigation, arbitration, or submission to official bodies, either local or international.”

Lawyers for both Berlinger and the plaintiffs are now claiming that Shopfloor.org’s blogging about the court proceedings somehow represents a violation by Chevron of the Second Circuit Court of Appeals order which required Berlinger to turn over footage to the company.

Well, of course, Shopfloor is not Chevron and Chevron is not Shopfloor. Included in these most recent filings are misstatements of fact, which we will now correct.

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Lawrence McQuillan, who with Hovannes Abramyan  researched and wrote the Pacific Research Institute’s recent report, “U.S. Tort Liability Index: 2010 Report,” has been writing localized op-eds promoting tort reform as a jobs creator.

• Great Falls Tribune, “Tort reform would bring much-needed jobs to state”
• Pottstown Mercury, “Tort reform would bring jobs to Pennsylvania”
• Los Angeles Daily News, “State could jump-start its economy with tort reform”

Even California? Yes, even California.  From “How Lawsuit Reform Could Help California Recover“:

Asbestos awards in California’s more plaintiff-friendly counties such as Alameda and San Francisco average $3 million more than in other counties, according to an article in the American Bar Association Journal. Every business day, on average, personal injury lawyers also file nearly five class-action lawsuits in the Golden State. That destroys jobs in California.

 Entrepreneurs prefer to start, expand, or relocate businesses in states with balanced tort systems that discourage excessive litigation. These decisions matter a great deal. In 2006, job growth was 57 percent greater in the 10 states with the best tort climates than in the 10 worst states.

Business leaders remain leery of California because of its sky-high tort costs and skewed courtrooms, where business defendants lose at trial 65 percent of the time. The fear of lawsuits also causes companies to withdraw or withhold beneficial products.

From C-SPAN’s “Newsmakers” interview with Richard Trumka, president of the AFL-CIO:

Victoria McGrane (Dow-Jones): Labor has traditionally been a big opponent of the pending free trade pacts, including the one with South Korea. So how do you square those two, are you willing to work with the Obama Administration? Is there a South Korea trade agreement you could all get behind?

Richard Trumka (AFL-CIO) …Here’s what we’ve said all along. We haven’t been against trade agreements because we’re against trade agreements. We’ve been against trade agreements because they’ve been bad for this country. They haven’t given us a fair shake. Take South Korea, for instance. All of the non-tariff barriers that South Korea has that prevents our products from going into South Korea are preserved by the Bush trade agreements with South Korea. What we’re saying is make that fair. Eliminate those non-tariff barriers so that our products can go into their country as easy as their products can come into our country, and we’ll take a look at it. We’ll help you with those negotiations. If they do, we can support it. If they don’t, of course we’ll oppose it. We will oppose any bill that is one-sided, unfair, and will outsource more American jobs without us having a fair chance to compete, and that’s what that trade bill and the other ones that have been drafted do in their current form.

McGrane: Has the Obama Administration given you any confidence that they’re going to come up with a trade agreement that you can deal with? Their goal is November…

Trumka: They have. Well, they have. They’ve talked about going back and renegotiating it. They’ve asked various groups what they think the problems are with the bill. We’ve outlined to them what we think our problems are. We’ll work with them to try to see that those problems can be solved, and we’ll go from there.

Even acknowledging the point about Korea’s non-tariff barriers, Trumka’s claim to be willing to consider free trade agreements rings hollow. What free trade agreement has the AFL-CIO ever supported?

The U.S.-Colombia Free Trade Agreements poses next to no risk to job loss in the United States, yet the AFL-CIO fights it (relying on bogus claims about trade union activist deaths). Labor even opposed the U.S.-Oman FTA, a pact that poses no danger to U.S. workers. Opposition to FTAs is a matter of faith for most labor unions, and it’s disingenuous for Trumka to pretend otherwise.

Note: Frank Vargo, the NAM’s vice president for international economic affairs, appears on C-SPAN’s “Washington Journal” program at 8:30 a.m. Eastern this morning.

UPDATE: Here’s an .mp3 file of segment above.

The documentary evidence has been mounting for many months now that the U.S. trial lawyers’ litigation against Chevron for environmental damages in Ecuador was built on collusion, fraud and lies, all marketed as an environmental and humanitarian campaign.

This week’s revelations from outtakes from the documentary-style film “Crude” sealed the case. The collusion, fraud and lies are now on film, visible for the courts and the whole world to see.

So this next step makes eminent sense.

Chevron Files Petition in Ecuador Seeking Dismissal of Lawsuit

SAN RAMON, Calif., Aug. 6, 2010 – Chevron Corporation has today filed a petition before the Provincial Court of Sucumbíos in Lago Agrio, Ecuador seeking dismissal of the lawsuit pending against it there. In support of its petition, Chevron has submitted to the court video outtakes from the movie Crude that show the plaintiffs’ counsel, consultants, and associates meeting with the court’s supposedly neutral “Global Expert,” Richard Stalin Cabrera Vega, to plan and create the $27.3 billion damages report that Cabrera later would present to the court as his own.

Chevron believes that the video evidence proves that plaintiffs’ counsel and consultants colluded with Cabrera to present a fraudulent report and then to present a fraudulent “peer review” of their own work. Chevron also believes that the video proves that plaintiffs’ and Cabrera’s denials of their collusion in filings and testimony before the Ecuadorian court, before various United States courts and other institutions, and before the worldwide press have been false.

Chevron’s petition argues that the case must be dismissed as a sanction for the abusive misconduct by plaintiffs and their attorneys, and because the fraudulent “Global Expert” report submitted under Cabrera’s name is the only “evidence” supporting plaintiffs’ case.

Roger Alford of Pepperdine University School of Law has been reporting on Chevron’s court filing this week based on the “Crude” footage, including responses from Karen Hinton, the trial lawyers’ PR person, and an attorney for the Ecuadorian plaintiffs. His excellent posts are at the Opinio Juris blog here. But you cannot spin or explain away the clear meaning of the words of Steven Donziger, the head U.S. trial lawyer. As Alford writes:

In responding to concerns from their own experts that there was not evidence of groundwater contamination, Donziger replies, “This is all for the Court just a bunch of smoke and mirrors and bullshit.” (p. 12). That’s right, Donziger is caught on tape saying that the evidence he is gathering for inclusion in the court-appointed expert report about groundwater contamination is just smoke and mirrors and bullshit.

I would rarely advise our readers to read a court filing they don’t have to, especially during the summer recess. But this one is explosive.

Shopfloor posts:

• ‘Crude’ Footage Reveals Lies Behind Trial Lawyers’ Suit Against Chevron
• What Else Will Footage from ‘Crude’ Show?
• Chevron ‘Cherrypicks’ Film Footage? That’s Hilarious

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The New York Times ArtsBeat blog this afternoon became the first mainstream media outlet to report on Chevron’s court filing based on footage from the documentary-style film, “Crude,” about a lawsuit claiming the company is responsible for environmental damage in Ecuador’s Amazon jungle.

As we reported yesterday, the outtakes clearly show U.S. trial lawyers and activists instructing the supposedly independent, court-appointed expert — Richard Cabrera — on how to rig his report to maximize damage claims against the company. At one point, New York lawyer Steven Donziger declares, “We could jack this thing up to $30 billion …in one day.” Close! Cabrera recommended $27.4 billion in damages.

In his ArtsBeat piece, “Chevron Cites Documentary Footage in Its Fight Against Ecuadorean Plaintiffs,” reporter David Itzkoff elicits just an amazing quote from Ilann M. Maazel, a lawyer whose firm represents the Ecuadorean plaintiffs.

“They cherrypick a couple of minutes and share it with the court, but they’re not willing to release all the tapes,” Mr. Maazel said in a telephone interview. “I think it’s very revealing of their strategy of diversion and misleading people.”

That is an hilarious comment, reflecting either audacious spin or short-term memory damage. Chevron went to federal district court seeking all the outtakes from “Crude,” arguing — correctly, as it turned out — that the footage would show the plaintiffs conspiring with government experts. The director, Joe Berlinger, fought the attempt but eventually accepted as a “limited victory” the Second Circuit Court of Appeals’ ruling that required he make available only relevant footage depicting certain events or people.

After the Second Circuit’s ruling, Maazel went to court, filing an emergency motion seeking even further restrictions on the release of outtakes. (Shopfloor post, “After ‘Crude’ Ruling, Trial Lawyers Suing Chevron Get Nervous.“) In other words, the last thing Maazel wanted was for Berlinger to release all the tapes. Please, please, please cherrypick, he pleaded with the court.

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One of the reasons that Chevron filed the memorandum with U.S. District Court, Southern District of New York, we blogged about below is that the company has only started reviewing footage from the documentary-style film, “Crude.” Given how damning the early outtakes are, and the apparent games being played over the footage, what else might be out there? Better make sure the footage is preserved.

We especially liked the following passage from Chevron’s court filing, demonstrating once again that there’s no real distinction among the U.S. trial lawyers — Steven Donziger and the Philadelphia law firm funding the litigation, Kohn, Swift & Graf — the Ecuadorian lawyer/activists like Luis Yanza and Pablo Fajarda, and the supposed grassroots activists of the Amazon Defense Coalition, which turns out mostly to be PR person Karen Hinton.

It would strain the Second Circuit’s Order to include only footage of counsel and not footage of those working on behalf of or in concert with Plaintiffs’ counsel. There is little question that groups such as Soltani’s Amazon Watch and Amazon Defense Front have been working on behalf of or in concert with Plaintiffs’ counsel in connection with the Lago Agrio Litigation, and thus footage of personnel from those groups should be produced pursuant to the Second Circuit’s Order. Indeed, recognizing the role that personnel from such organizations have played on behalf of Plaintiffs’ counsel, Berlinger has treated Luis Yanza and other members of Amazon Defense Front as part of Plaintiffs’ litigation team, and has already produced footage including Luis Yanza. See Ex. U. Nonetheless, during the meet and confer, Berlinger’s counsel stated that Mr. Berlinger has taken the position that communications with or film involving Amazon Watch and the Frente are privileged, even though they stand effectively in the same position as Yanza. But Plaintiffs have asserted in the District Court in Colorado that the Frente, Amazon Watch, and Karen Hinton are so closely aligned that they fall within the circle of attorney-client privilege. Ex. QQ. They cannot possible contend here that communications with “Plaintiffs’ counsel” do not include Karen Hinton, the Frente, and Amazon Watch.

It’s the combine — trial lawyers, activists and the supposedly disinterested media — working to wring billions out of Chevron’s shareholders.

Chevron asks the court to order the plaintiffs and their team to preserve evidence, to allow further discovery, and to require director Joe Berlinger to produce the original footage log.