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Lawyers in the Rain Forest

books and culture

Lawyers in the Rain Forest

How a dubious judgment against Chevron exposed the abuses of the plaintiffs’ bar March 19, 2015
Photo by newmy51

Law of the Jungle: The $19 Billion Legal Battle Over Oil in the Rain Forest and the Lawyer Who’d Stop at Nothing to Win, by Paul M. Barrett (Crown, 304 pp., $26)

Crude Awakening: Chevron in Ecuador (Kindle Single), by Michael D. Goldhaber (Rosetta Books, 85 pp., $2.99)

Many in the plaintiffs’ bar see themselves as modern-day gunslingers; their advocacy on behalf of the “injured” and “downtrodden” allows them to justify their extraordinary winnings. Further, with litigation often serving as a proxy for class warfare, plaintiffs’ lawyers regard suing deep-pocket defendants as a moral crusade. In their pursuit of corporate malefactors (and gargantuan contingent-fee recoveries), plaintiff’s attorneys often sacrifice ethics to the imperative of victory. Examples abound of trial lawyers who, seemingly at the top of their game, succumbed to venality and greed. As the monetary stakes rise, so does the temptation to cheat.

The widely publicized dispute between Chevron and trial lawyer Steven Donziger, played out in New York federal court in 2013 and chronicled in two recent books—Paul Barrett’s Law of the Jungle and Michael Goldhaber’s Crude Awakening—illustrates the extent of the corruption. The Chevron-Donziger saga has a Hollywood feel, but it turns the typical John Grisham plot line on its head: here, a corporate titan vindicates itself against a sleazy plaintiffs’ lawyer who masquerades as an idealistic environmental activist representing Ecuadoran peasants.

Barrett’s brisk narrative in Law of the Jungle resembles Jonathan Harr’s 1995 account of a toxic-tort lawsuit, A Civil Action—but again, this time the roles are reversed. Through a subsidiary, Texaco had explored for and produced oil in Ecuador’s rain forest beginning in the mid-1960s. In 1993, lawyers representing rainforest tribesmen brought a suit alleging that pollution caused by Texaco’s drilling had despoiled the environment near the Lago Agrio oilfield. The Harvard-trained Donziger hyped the deleterious health effects as a disaster worse than Chernobyl. In 2011, the plaintiffs obtained a $19 billion judgment—levied against Chevron, which had acquired Texaco in the meantime—in an Ecuadoran court.

It was an improbable victory for Donziger, an inexperienced litigator with little courtroom experience. During the period of Texaco’s production, Ecuador had no meaningful environmental laws in place and did not recognize class-action litigation. In 1998, Texaco got a release of liability from the Ecuadoran government in exchange for paying $40 million to clean up certain sites. So how did the plaintiffs win such a massive judgment? As Barrett explains, victory was obtained through an elaborate scheme involving blackmail, bribery, passage of retroactive laws (which Donziger helped draft), political intimidation, relentless publicity, falsified test results, “independent” court-appointed expert reports, a final judgment secretly ghost-written by the plaintiffs, and attempts by Donziger to prosecute Chevron’s local defense counsel in Ecuador. Hedge fund investors provided capital to pay for the scheme, and a corporate law firm teamed up with Donziger for 25 percent of the attorneys’ fees.

Donziger’s conduct was appalling. In 2009, Donziger and his team blocked the Ecuadoran government’s efforts to clean up waste oil pits that were allegedly poisoning the rainforest natives he was representing, because remediating the contamination would reveal that his cost estimates—and hence his inflated claims for damages—were grossly excessive. Donziger’s downfall came when he allowed movie cameras to record hundreds of hours of internal discussions in the course of filming Crude, an award-winning 2009 documentary that portrayed him and his clients in a favorable light (and which, it turns out, Donziger helped finance). Anticipating that Donziger would eventually try to have the foreign judgment enforced in the United States, Chevron’s legal team obtained candid “outtakes” from Crude—in which Donziger essentially incriminates himself—to try to prove that the foreign proceedings were fraudulent. The plaintiff's storyline completely unraveled in the New York courtroom of Judge Lewis Kaplan. The discovery and exposure of the scheme is the subject of Goldhaber’s blow-by-blow e-book, which reads like a gripping courtroom drama.

Chevron’s legal team, led by Gibson Dunn’s Randy Mastro, had experience uncovering foreign legal fraud from its representation of Dole Food in a similar toxic-tort case involving banana workers in Nicaragua. The Gibson Dunn team flawlessly executed an encore performance for Chevron, managing to obtain in discovery all of Donziger’s internal memoranda, including diary entries and his computer hard drives. Chevron deposed Donziger for 13 days. In 2011, Chevron filed a RICO lawsuit against Donziger and his accomplices. Donziger’s environmental consultants recanted their damages assessment as “tainted and not supported by reliable scientific bases.” With pluck and perseverance, and some Hollywood-style courtroom moments (including the devastating cross-examination of Nicolas Zambrano, the Ecuadoran judge who purportedly authored the $19 billion judgment), Mastro’s team uncovered Donziger’s misdeeds and led Judge Kaplan to conclude (in a scathing 485-page ruling) last year that the Ecuador litigation was a racketeering scheme. Donziger’s actions, said Judge Kaplan, were “offensive to the laws of any nation that aspires to the rule of law.”

Donziger may be disbarred or even prosecuted, and unless Judge Kaplan’s decision is reversed on appeal, the judgment against Chevron will not be enforced in the United States. Many lessons can be drawn from this unfortunate affair. One is that foreign legal proceedings should be viewed with suspicion. Another is that many lawsuits are bogus. The most important lesson, though, is this: just as a free society should be concerned about a government that is too powerful, it should be equally concerned about a legal system that concentrates too much power in the hands of the plaintiffs’ bar. Corruption is the inevitable result.

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