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Good News in Case Against “Legal Fraud of the Century”

By | Energy, Shopfloor Legal, Shopfloor Main | No Comments

There’s some good news today from the U.S. Court of Appeals for the Second Circuit in Chevron’s long-running battle over a court ruling in Ecuador that was obtained through a fraudulent scheme. The court affirmed the lower court’s decision, ruling that Chevron does not have to pay billions of dollars in damages because the original verdict was the product of fraud and racketeering activity.

If you’re a regular Shopfloor reader, you will recall many of the details of this case against Chevron, which has been referred to as the legal fraud of the century.” You can read more about the Second Circuit’s verdict and the long, drawn-out court battle here.

The case involves an American plaintiffs’ lawyer drumming up a lawsuit against Chevron for environmental damage in Ecuador, even though Chevron has never operated in Ecuador. As the case unraveled in a very public battle, it turned into a saga of fabricated evidence, intimidation and bribery—or unscrupulous lawyers and corrupt government officials conspiring to make billions they did not deserve.

In short, this case is a reminder that bad actors do try to pervert the justice system for their own financial gain—and that we must remain vigilant against such fraud and corruption. The Second Circuit’s ruling is a victory for Chevron and the people they employ, but more importantly for the rule of the law.

More Twists in the “Legal Fraud of the Century”

By | Briefly Legal, Shopfloor Legal | No Comments

I’ve written previously about a fraud-ridden, extortionate case brought against Chevron in an Ecuadorean court and masterminded by an American plaintiffs’ lawyer. Readers of Shopfloor will remember that after years of legal drama, the Ecuadorean court ordered Chevron to pay damages of $19 billion, which was later reduced to $9.5 billion. But then a federal court in the United States prevented enforcement of the judgment because the case’s mastermind, attorney Steven Donziger, was found liable for racketeering for using fraudulent and corrupt means to win the case in the first place. Read More

Activist Ignore Evidence to Back Shakedown Suit Against Chevron

By | Briefly Legal, Energy | 5 Comments

Activists and apologists for the shakedown litigation over supposed environmental damage in Ecuador once again tried to turn Chevron’s annual stockholders’ meeting in San Ramon, Calif., into a circus today. By now the Amazon Watch theatrics are old hat, and the cause they support — a lawsuit orchestrated by U.S. trial lawyers — has been revealed as fundamentally corrupt. Flying a banner off a bridge to promote a contingency-fee lawsuit demonstrates only witless fanaticism.

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.”

More than a Lawsuit: A Circle of Political Pressure Against Chevron

By | Briefly Legal, Energy, Trade | No Comments

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. Read More

Oil Hearing: When Government Targets Companies for Taxes

By | Energy, General, Taxation | No Comments

From today’s Senate Finance Committee festival of finger-pointing, “Oil and Gas Tax Incentives and Rising Energy Prices,” a serious observation from Rex Tillerson, Chairman and CEO of Exxon Mobil:

It is important to make clear that tax provisions such as the Section 199 Domestic Production Activities deduction are not special incentives, preferences or subsidies for oil and gas, but rather standard deductions applied across all businesses in the United States.

Section 199 applies today to all U.S. domestic producers and manufacturers – from newspaper publishers, to corn farmers, to movie producers, and even coffee roasters. All can claim this deduction, which is intended to support job creation and retention in the United States….

Frankly, to then deny a select few companies within the oil and gas industry this standard deduction is tantamount to job discrimination. Why should an American refinery worker employed by a major U.S. oil and gas company in Billings, Montana, be treated as inferior to an American movie producer in Hollywood, an American newspaper worker in New York, or an employee at a foreign-owned refinery in Lemont, Illinois?

That’s a good topic of a hearing: “Respecting the First Amendment: Ending Subsidies for Big Newspapers.”

Any Senator who labeled the current tax treatment of oil and gas producers a “subsidy” today clearly knows better. If translated into policy, this kind of cynical populism makes the United States less competitive and discourages job creation.

Here are the opening statements from today’s hearing … Read More

Accused of Racketeering, Anti-Chevron Consultants Now Work for Feds on Gulf Spill

By | Briefly Legal, Energy | 2 Comments

One of the central players in the multi-billion-dollar litigation shakedown against Chevron for supposed environmental damage in Ecuador is Stratus Consulting. When New York attorney Steven Donziger and his team of trial lawyers wanted support for their outrageous environmental claims against the oil company, they turned to the Boulder, Colorado-based firm. But Stratus’ involvement with Donziger and the others behind the Ecuadorian lawsuit has been so close and so suspect that Chevron felt justified in including Stratus in its federal civil racketeering suit.

This story reported today by Greenwire via The New York Times should therefore prompt a serious re-evaluation by the federal government of how it hires contractors in the wake of the Gulf Oil spill. From “Defendant in Racketeering Suit Works as U.S. Consultant on Gulf Spill“:

Boulder, Colo.-based Stratus Consulting, a long-term contractor with the National Oceanic and Atmospheric Administration and other federal agencies, is gathering and analyzing data concerning the Gulf of Mexico spill….

The filing of the racketeering suit raised eyebrows at NOAA, according to a government source familiar with the issue. The agency checked with the Justice Department to make sure it was OK to continue working with Stratus, the source added.

Stratus protests its innocence, as one would expect it to. But the court record — including documents from Steven Donziger himself — belies their protests. Greenwire:

Asked why Stratus believes its contracts with the government should not be affected by the racketeering case, Joe Silvers, an attorney who represents the firm, said it was because Chevron’s allegations “are demonstrably false and its legal maneuverings are a transparent attempt to avoid its environmental responsibilities in Ecuador without, in the least, questioning the science.”

Stratus “never engaged in the misconduct alleged by Chevron, and Chevron knows as much,” Silver added.

Really? One of Chevron’s most powerful accusations is that Stratus Consulting prepared the environmental report by Richard Cabrera, the “independent” expert appointed by an Ecuadorian court to recommend damages against Chevron. Cabrera is the one who eventually came up with the preposterous $27 billion figure — later inflated to $116 billion — seized on by the Donziger-led legal and PR operatives to supposedly prove the seriousness of their charges.

But Stratus wrote Cabrera’s report. That’s right. The U.S.-based consultants paid by the team suing Chevron actually wrote most of the report Cabrera submitted to the Ecuadorian court as his own work.
Who says so? Steven Donziger himself:

[If] Chevron succeeds in obtaining discovery from Stratus and deposing the Stratus principals (which we assume will happen although questions remain about the scope of production), they will find that Stratus wrote the bulk of the report adopted by Cabrera and submitted to the court. Various annexes and an executive summary were provided to local counsel, who provided it to Cabrera, who adopted it. There was significant back and forth collaboration between local counsel and Cabrera, and separately, via local counsel and Stratus. There are also numerous emails between Stratus and local counsel documenting how this work was done, and there are some emails between Stratus and U.S. counsel that show U.S. counsel (relying on guidance of local counsel) approved of this process, encouraged it, and was involved in it from a supervisory perspective. There was also at least one ex parte meeting between Stratus and Cabrera at which U.S. counsel was present. The emails and testimony likely will show some effort to keep the extent of this ex parte collaboration between our local counsel and Cabrera from being disclosed. (The entirety of the emails and production needs to be reviewed and privileges asserted so it is uncertain whether the emails will be disclosed.)

This damning admission, one of many, was made by Donziger in a document he created on April 16, 2010, a memo addressed to “Dear Fellow Counsel.” Read More

The Department of Interior Issues Its Fifth Permit – But It’s Still Not Enough

By | Energy | No Comments

The Obama Administration, today, issued its fifth deepwater permit since lifting the Gulf drilling moratorium, approving Chevron’s request to drill a “wildcat” well in 6,750 feet of water more than 200 miles off the coast of Louisiana.  This is the most important permit so far, in that it is actually for a new exploratory drilling as opposed to a permit that was previously issued.  It is also the second permit to be approved which is using the containment system designed by Marine Well Containment Company as its solution in the case of a loss of well control.  This is a good step forward and, we hope, marks the Administration’s intention to move more expeditiously on the other pending permits.  In addition, with the unrest in the Middle East, and the increasing oil prices, there is now talk of a possible double-dip recession.  Therefore, it is essential for the Interior to move on these permits as quickly as possible to ensure that as many companies are able to return to the Gulf of Mexico to safely drill and explore for domestic sources of oil and gas. 

Offshore drilling is a significant part of the U.S. economy.  The federal government estimates that the Gulf of Mexico Outer Continental Shelf contains proven reserves of 20.3 billion barrels of oil and 183.7 trillion cubic feet of gas.  Moreover, the waters off Alaska’s coast contain about 27 billion barrels of oil and 132 trillion cubic feet of natural gas.  These reserves can provide a dependable and secure source of energy which will keep energy costs low. 

With its action on Chevron’s application, Interior has shown itself capable of approving permits for new deepwater drilling.  Let’s see the agency follow through by moving on all these pending permits, ensuring that many companies are able to return to the Gulf of Mexico to safely drill and explore for domestic sources of oil and gas.

A Reasonable Award in Ecuador? Professor, You Can’t Be Serious

By | Briefly Legal, Energy, General, Media Relations, Trade | One Comment

In the flood of news coverage after Ecuadorian Judge Nicolas Zambrano announced an $8.6 billion damage award against Chevron, reporters sought out ostensibly independent experts to comment on the award. We laughed upon reading one such comment in an AP report:

A professor at Loyola Law School in Los Angeles who has studied the case, Georgene Vairo, said the comparatively small judgment is a signal from Ecuador that it is willing to negotiate a smaller fine.

“This is way low compared with what everyone was expecting to happen,” she said. “They are trying to show the world they are reasonable people. This is Ecuador coming to the table.”

Oh, please. The U.S. trial lawyers and their allies in Ecuador are on the record numerous times talking about their strategy to make those most outrageous, exorbitant claim for damages — $113 billion! — so they can pretend anything less is a sign of judicial reason and compromise.

Here’s an example, yet another damning revelation from outtakes from the documentary-style movie on the litigation, “Crude.”

Read More

If Elected, I Will Moonlight as a Hollywood Press Agent!

By | Culture and Entertainment, Energy, Regulations | No Comments

As the natural gas industry group Energy in Depth reports, “At a Capitol Hill press conference today, a small group of critics opposed to the responsible development of job-creating American oil and natural gas – including U.S. Rep. Maurice Hinchey (D-NY), actor Mark Ruffalo, and GasLand filmmaker Josh Fox – are poised to renew calls for a one-size-fits-all, federal takeover of hydraulic fracturing, a 60 year-old energy stimulation technology used to enhance 90 percent of the nation’s onshore wells.”

Lee Fuller, executive director of Energy In Depth, issued a statement:

It’s clear that this event, scripted by a Hollywood publicist one week before the Academy Awards, is focused on achieving staged drama and inside-the-beltway chatter about a ‘documentary’ that’s been debunked in its entirety.

Refusing to engage in a fact and science-based dialogue, New York City stage director Josh Fox, his Hollywood friends, and a few congressmen are more concerned with stunts and scare tactics than working to address critical energy security issues. The American people deserve and expect nothing less than a serious discussion and common sense solutions regarding national energy policy, not tired, misleading talking points from Hollywood elite who’ve never been on a drilling rig.

American natural gas and oil production must absolutely be done safely and in way that protects our environment and water. And for more than 60 years, state governments have ably and effectively regulated hydraulic fracturing. Energy-producing states, who understand their unique geology best, have inspectors and expert scientists in place to ensure that fracturing is done safely not impact groundwater.

The full statement is here. EID offers debunk the bunk-filled film, Gasland, at the group’s website here.

Seems like even members of Congress  can’t resist the lure of movies and movie stars, which is apparently what Mark Ruffalo is. They should try. Rep. Jim McGovern (D-MA), for example, was a prominent promoter of the anti-Chevron movie “Crude,” a film revealed to be a cynical part of the PR strategy directed by U.S. trial lawyers in a corrupt ashakedown suit.

No Surprise: Ecuador Judge Rules Against Chevron

By | Briefly Legal, Energy, General, Trade | One Comment

Chevron broke the news today that a judge in Ecuador has ruled against the company in the multiyear, multibillion-dollar litigation shakedown by U.S. trial lawyers claiming environmental damage in the Amazon. There has been so much wrongdoing and dishonesty by the plaintiffs in Ecuador and the United States that the ruling comes as no surprise.

From the Chevron news release, “Illegitimate Judgment Against Chevron in Ecuador Lawsuit“:

The Ecuadorian court’s judgment is illegitimate and unenforceable.  It is the product of fraud and is contrary to the legitimate scientific evidence.  Chevron will appeal this decision in Ecuador and intends to see that justice prevails.

United States and international tribunals already have taken steps to bar enforcement of the Ecuadorian ruling.  Chevron does not believe that today’s judgment is enforceable in any court that observes the rule of law.

Chevron intends to see that the perpetrators of this fraud are held accountable for their misconduct.

Reuters quotes Pablo Fajardo, a lawyer for the plaintiffs in Ecuador, that the judge’s award was $8 billion.

The amount of damages sought by the plaintiffs fluctuates according to various manipulated reports and political considerations, rising from $6 billion at one point to $26.7 billion to the most recent $113 billion. Lest one conclude, “Oh, Chevron actually came out OK,” it’s worth remembering that the plaintiffs’ team that organized the shakedown always sought a high damage figure as part of its strategy.

Outtakes from the documentary-style film “Crude” on the litigation revealed as much. Steven Donziger, the New York trial lawyer who has masterminded the suit, is seen discussing possible damages against Texaco (later acquired by Chevron). Donziger says:

  • “If we have a legitimate fifty billion dollar damages claim, and they end up—the judge says, well, I can’t give them less than five billion . . . . And, say, Tex had a huge victory.  They knocked out ninety percent of the damages claim.”  And …
  • “But as a concept, I ask, do we ask for much more than we really want as a strategy?  Do we ask for eight and expect three, so that [the judge] says, ‘Look, Texaco, I cut down the largest part.’”

In any case, the amount has no relation to reality — or justice. A $1 million, $1,000 or $100 finding of damages would be just as wrong because the lawsuit itself is corrupt. Chevron has filed a RICO suit against the U.S. and Ecuadorian lawyers and activists, detailing the multifacted conspiracy against the company.

Chevron’s point of view and numerous legal claims have also been recognized by legitimate judicial bodies of the United States and the Permanent Court of Arbitration in The Hague.

On February 8, U.S. District Court Judge Lewis Kaplan cited the record of widespread wrongdoing to block the plaintiffs from going after any of Chevron’s assets anywhere in the world. (New York Law Journal, Shopfloor)

Last week, the international arbitration panel ruled that Ecuador should not pursue any awards from the litigation pending Chevron’s arbitration vis a vis the country over violations of the Bilateral Investment Treaty. (Reuters: “Arbitrators find for Chevron in Ecuador dispute.”)

The lawsuit against Chevron was always extortionate, an operation meant to damage the company’s reputation enough so it would feel compelled to settle. The judge’s ruling  in Ecuador was supposed to provide the final bit of pressure necessary to force the settlement.

Fortunately, now that U.S. court proceedings have revealed the cynical conspiracy at the heart of the litigation, the ruling in Ecuador provides nothing more than additional evidence of corruption.

UPDATE (4:15 p.m.): In this Spanish-language report, the judge is identified as Nicolás Zambrano.