The Oil and the Glory
The unseemly catfight in the Amazon River Basin
An Ecuadoran judge has slapped Chevron with an $8.6 billion fine for defiling a pristine Amazon rain forest and making a lot of people sick — and double that if the California company doesn’t apologize fast and publicly. Chevron and its powerful Washington lawyers have filed fraud and racketeering charges against the opposing attorneys, who ...
An Ecuadoran judge has slapped Chevron with an $8.6 billion fine for defiling a pristine Amazon rain forest and making a lot of people sick — and double that if the California company doesn’t apologize fast and publicly. Chevron and its powerful Washington lawyers have filed fraud and racketeering charges against the opposing attorneys, who themselves are suing Chevron for alleged conspiracy.
All of this has happened in recent days in a class-action suit filed in Ecuador by alleged victims of an oil operation in a place called Lago Agrio, in the Amazon River basin. The allegation is that Texaco (now owned by Chevron) dumped chemicals into the river. Chevron retorts that Texaco did damage the forest, but that it conducted a cleanup, and that what the plaintiffs are angry about happened after Texaco left Ecuador in 1992.
The lack of decorum we see today is de rigueur for Washington; since moving here, I have found the capital to be home to some of the nastiest and most offensive lawyers in the world — and that includes Russia, Pakistan, and Uzbekistan. Yet is it pollyannaish to look at this 18-year-old case and see something unseemly in, on one side, a lawyerly rush to capitalize financially on environmental degradation in a third world country, and, on the other, a strategy of eluding and crushing adversaries?
The case seems to boil down to a couple of simple facts: Texaco blundered by doing the absolute minimum to clean up Lago Agrio, where it produced oil alongside PetroEcuador, Ecuador’s state-owned oil company, from 1965 until 1992. Texaco owned a 37.5 percent share of the field, so that’s how much, according to its calculation, it cleaned up. Having been sued in the United States in 1993, Texaco made a second blunder by pushing for the case to be adjudicated in Ecuador, where it shifted in 2007 (here is a chronology), about the same time a completely different, pro-plaintiff Ecuadoran government took office.
(Here’s a loose rule: When faced with an environmentally based public relations disaster, plead the facts, but pay the full load and get the place cleaned up; unless you are Exxon Mobil and thus constitutionally opposed to a humanoid appearance, get the legalities settled and not pushed under a rug in a provincial (or third-world) courtroom.)
Whatever the case, the state of play is that Chevron is attempting to make the Ecuadoran verdict unenforceable, and many analysts think it will succeed, as Joe Carroll and Karen Gullo report at Bloomberg. As part of this, the company has put up a Web page that includes embarrassing outtakes from a film called Crude, in which plaintiff lawyers, in particular a garrulous New Yorker named Steven Donziger, are observed plotting various tactics in anticipation of or reaction to actions by Chevron. Here’s a sample:
Earlier this month, Chevron’s potent Washington lawyers, Gibson Dunn, filed a 207-page civil racketeering action against virtually every lawyer who has ever served in any capacity on the plaintiffs’ side. Alison Frankel wrote an excellent summary of the case at American Law Litigation Daily. Gibson Dunn accuses the plaintiff lawyers — including the powerful firm Patton Boggs — of fraud and attempted extortion. Last week, a U.S. federal judge in New York handed down a preemptive temporary freeze on the enforcement of the Ecuadoran court verdict.
What is going on in the background? The plaintiffs know that Chevron is unlikely to willingly pay up, and that the company has no assets in Ecuador to seize. So they plan to legally attach Chevron property elsewhere worth $8.6 billion. Kent Robertson, a Chevron spokesman on litigation, told me by email that the company’s aim is to prevent that from happening. How? By barring plaintiff lawyers — meaning those American dudes they are attempting to discredit in the lawsuit — from collecting anywhere in the world. If the racketeering suit is successful — meaning if the company shows that the judgment is tainted by fraud — they would accomplish that. Why would that be the case, I asked Robertson. He replied:
The lawsuit is funded, directed, and supported from the U.S. The lawyers running the plaintiffs’ campaign are American. The Lago Agrio plaintiffs have availed themselves on U.S. courts and have therefore subjected themselves to the authority of U.S. courts. Accordingly, they are subject to the authority of U.S. courts.
Now Patton Boggs is counterpunching, as Daniel Fisher writes at Forbes. In a conspiracy suit, it says that Gibson Dunn is attempting to "paralyze the Ecuadorean plaintiffs’ counsel with unmeritorious threats of disqualification, sanctions, restraining orders and other mechanisms."
Now that we are reduced to a catfight among lawyers, one is strained to sympathize with either side. All we know for sure is that Lago Agrio is filthy, and no one is cleaning it up.