Michael Krauss, a lawyer who teaches “ethics” at a law school named after the late U.S. Supreme Court Justice Antonin Scalia, recently posted a blog on the Forbes website entitled “The Ecuador Saga Continues: Steven Donziger now owes Chevron more than $800,000” (Forbes 3/14/2018).  Steven Donziger is one of the lawyers representing thousands of indigenous residents of Ecuador’s oil-rich Amazon whose battles with Texaco (which merged with Chevron in 2001) began over twenty-five years ago.
Kraus says that Chevron has basically triumphed over evil: “appalling behavior” by Chevron’s enemies, he wrote, led to a “corrupt Ecuadorean court ruling” that ordered the company to pay $9 billion USD in damages for Texaco’s pollution of the Ecuadorian amazon from 1964 to 1990. “The war here is largely over.” declared Krauss. “Chevron has triumphed and what’s left is a kind of mopping up. A big part of that mopping up occurred on February 28, 2018, when United States District Court Judge Kaplan disposed of Chevron’s petition to be awarded court costs.” Krauss has written numerous blog posts on Forbes’ website cheering Chevron in this case. Here is one responseto him worth reading.
In 1993, Steven Donziger and a team of lawyers brought the case before a federal court in New York (where Texaco was based) hoping to get a verdict from a jury. From 1964-1990, Texaco ran “all drilling, waste-disposal, and pipeline operations”in the region where the indigenous plaintiffs, many of them farmers, lived. Sixteen billion gallons of toxic waste had been dumped. Residents had organized protests against Texaco since 1986. Again, it is worth emphasizing this: the legal battle against Texaco began in 1993, just after the company had spent 26 years contaminating the Ecuadorean Amazon.
Texaco fought for nine years to move the case back to Ecuador and filed numerous sworn statements praising Ecuador’s judiciary. Chevron, after absorbing Texaco in 2001, continued that key battle and won it in 2002. U.S. courts ruled that the lawsuit would have to be settled in Ecuador. Chevron’s incentive to avoid a jury (which are not used in Ecuador for civil suits) was obvious. In fact, Chevron weaseled out of facing a jury again years later when it ran back to U.S. courts after its legal battles in Ecuador took an unexpected turn.
Texaco started its work in Ecuador in the 1960s when former CIA officer Philip Ageerevealed that a modest budget allowed the CIA to play a huge role in Ecuadorean politics. Referring to a program that funded right wing politicians and journalists in Ecuador, a 1961 diary entry of Agee’s stated that “It costs about 50,000 dollars a year and in a place like Quito a thousand dollars a week buys a lot. The feelings I have is that we aren’t running the country but we are certainly helping to shape events in the direction and form we want.” Agee’s work with the CIA helped install a military dictatorship in Ecuador in 1963, the year before Texaco began its operations in Ecuador. Agee wrote “In March 1964, just after I left Ecuador, the military junta contracted for new exploration with the Texaco-Gulf consortium and subsequent contracts under other governments followed.”
In 2002, the year Chevron succeeded in getting the lawsuit moved to Ecuador, its operating revenue ($98.7 billion USD) was over three times larger than Ecuador’s GDP ($28.5 billion USD). If $50,000 USD in 1961 helped the CIA influence Ecuador’s politics to its liking, then an equivalent sum in 2002 (as explained here) would have been about $400,000 USD – a negligible price for Chevron. No wonder it was so determined to fight the lawsuit in Ecuador. However, large corporate interests (and the CIA) had their way for so long in Ecuador that conditions for a fierce backlash against them had developed by 2002. Decades of economic policies that privileged foreign and local elites crashed Ecuador’s banks and its entire economy in 1999. By the mid-2000s, according to UN figures, over half a million Ecuadorians had fled the disaster to live abroad. The money they sent back to Ecuador (remittances) in the first half of that decade averaged 6% of GDP – more than the Ecuadorean government’s social spending(health, education, housing and urban development) which was 4.3% by the middle of that decade.
In 2006, the election of Rafael Correa (who took office in 2007) brought a dramatic shift to the left in Ecuador’s economic and foreign policy. Correa’s government shutdown a U.S military base in the province of Manta; purged Ecuador’s intelligence services of US influence; and implemented economic policies that greatly reduced inequality and poverty. With Correa in office, Chevron suffered unprecedented defeats. In 2013, Ecuador’s Supreme Court upheld lower court rulings that ordered Chevron to pay the plaintiffs billions of dollars in damages although the court also reduced the damages awarded by lower courts by more than half to $9 billion USD. That clearly wasn’t the result Chevron anticipated when it moved the lawsuit to Ecuador.
By 2011, Chevron had already returned to U.S. courts looking for “relief” from its legal setbacks in Ecuador. The corporation found a determined champion in New York judge Lewis A. Kaplan. Chevron went on the offensive by suing Donziger under “racketeering” laws intended to target the mob. After refusing to seat a jury, Kaplan wrote a 485 page rulingconcluding that one of Donziger’s legal victories in Ecuador (specifically the first one in a provincial court) was “tainted” by corrupt tactics and, very importantly, that Ecuador’s entire judiciary was incapable of resolving the case fairly (pages 416 to 431 of the ruling). The later conclusion was made by Kaplan to get Chevron out of a promise it made to U.S. courts in 2002 (as a condition for moving the case to Ecuador) that it would respect what Ecuador’s judiciary decided. In a maneuver to ensure that Kaplan alone would assess the evidence, Chevron dropped its demand for damages against Donziger on the last possible day to avoid facing a jury. Kaplan also allowed Chevron to withdraw an allegation that Donziger had targeted the corporation with “sham litigation”. This enabled Chevron to take Texaco’s environmental practices in Ecuador off the table and to continue hiding internal documentsthat would otherwise have been disclosed during pre-trial discovery.
Chevron and its apologists like Michael Kraus tend to cite Kaplan’s ruling (and Chevron’s successful intimidation of some expert witnesses for the Ecuadoreans) as if they showed that Texaco did not contaminate the Ecuadorean Amazon from 1964-1990. They ignore that Chevron took great care to avoid ever defending Texaco’s record in Ecuador before a US jury. In his ruling, Kaplan stated that Donziger’s side “sought to offer extensive evidence of environmental conditions in the Orienté and of Texaco’s alleged responsibility for them notwithstanding the Court’s numerous pretrial rulings that those questions were not at issue in this case.”
Chevron was not even willing to defend before a jury the limited and strategically framed allegation that Donziger had used “corrupt means” to win in Ecuador. While Chevron was allowed to shield itself from discovery, Kaplan ensured it was ruthlessly applied to Donziger who was ordered to turn over his entire case file to Chevron. Kaplan even quotes from Donziger’s deeply personal notes in his ruling. Nevertheless, despite the deep dive allowed into Donziger’s personal and professional life, Kaplan’s ruling relied very heavily on the work of a disbarred Ecuadorian judge, Alberto Guerra.
In 2015, under cross examination in an investor-state arbitration hearing involving Ecuador and Chevron, the following exchange took place about assertions Guerra had made in Kaplan’s courtroom a year earlier:
Q. And among the ways you tried to leverage your position was to falsely tell the Chevron representatives that the Plaintiffs had offered you $300,000; isn’t that right?
GUERRA. Yes, sir. I lied there. I recognize it. I wasn’t truthful. That statement was never made by the representatives of the Plaintiffs.
Chevron provided Guerra with $2 million dollars of benefits for his testimony which included helping him and his family to relocate to the U.S.
Kaplan now says that Guerra’s testimony was “far from indispensable” to his judgement in favor of Chevron, a claim that doesn’t pass a simple laugh test. There are more than five hundred mentions of Guerra’s name in Kaplan’s ruling – on average more than one mention per page. Guerra’s name appears thirteen times in the table of contents alone.
Kaplan defiantly adds that “this Court would have reached precisely the same result in this case even without the testimony of Alberto Guerra.“ I have no doubt that is true. Kaplan was clearly going to rule as Chevron wanted no matter what the facts were. Sounding like somebody who takes the premise of Atlas Shruggedseriously, Kaplan once said“I don’t think there is anybody in this courtroom who wants to pull his car into a gas station to fill up and finds that there isn’t any gas there because these folks [Steven Donziger and the Ecuadorian plaintiffs] have attached it in Singapore or wherever else.” Moreover, though whatever combination of bias and incompetence, saying Guerra’s lies were “credible” speaks volumes about Kaplan’s capacity to “judge”.
The US Second Circuit Court of Appeals in New York – the same court that sent the lawsuit back to Ecuador in 2002 when it suited Chevron’s tactical interests – upheld Kaplan’s ruling in August of 2016. That same monththe court also upheld a ruling (fought for by Obama Administration lawyers) to shield UN troops from accountability for killing 10,000 Haitians through criminal negligence.
It should not come as any shock that a huge multinational corporation has worked legal systems in various countries to its liking. Avoiding a jury in the United States (twice) was Chevron’s most important achievement in this case. Even now, as the Ecuadorean plaintiffs fight in Canada to collect damages they won on the battlefield of Chevron’s choosing, they will not a get a jury under Canada’s judgement enforcement system. The Ecuadoreans have however won some battles in Canadian courts recently and attracted some high profile Canadian supporters in like Phil Fontaine, former chief of the Assembly of First Nations and Greenpeace co-founder Rex Weyler. They’ll need all the support they can get from Canadians.
Judges, like politicians, are at their worst when they evade informed public scrutiny.