By Adam Klasfeld, Courthouse News Service
14 September 2016
Two years before a judge in the Ecuadorian Amazon handed Chevron a massive judgment for oil pollution, one of its executives pledged to "fight this case until hell freezes over and then fight it out on the ice."
So it's fitting that, after more than two decades of litigation across three continents, Chevron could face its final reckoning over a $9.5 billion environmental lawsuit in Canada, where balmy summer days have started to carry an autumn chill.
Dozens of the Ecuadorian villagers, representing a region of nearly 30,000 indigenous people, have been fighting for compensation to repair their rainforest lands since 1993, the year after Chevron's predecessor Texaco left their country.
Chevron meanwhile has sought to cast the Ecuadorian court proceedings against it as fraudulent since 2009.
The Ecuadorians won their verdict against Chevron in 2011, but Texaco's assets had long been pulled out of the country by then. As Chevron pursued international arbitration and a federal racketeering trial in New York, the Ecuadorians brought collections actions against Chevron's corporate subsidiaries in Brazil, Argentina and Canada. Canada's judiciary so far has been the only one to advance this maneuver.
In Ontario Superior Court proceedings that began Monday, Chevron has been trying to dodge a future enforcement action through two defenses.
The first involves the byzantine and secretive corporate structure of Chevron Canada, described in a redacted version of one of the parent company's filings as a "seventh-level indirect subsidiary of Chevron Corp."
Despite exploration of offshore oil fields, a refinery and the Alberta tar sands in Canada, Chevron insists that its heavy investment just north of its corporate headquarters is not enough to pierce through multiple layers of corporate veils.
Days ahead of this week's court proceedings, Greenpeace, Amazon Watch and the Sierra Club joined nine other civil-society groups with an open letter that urges Canadian courts to reject what they called "an international litigation 'shell game'" by Chevron to avoid liability.
"After agreeing to jurisdiction in Ecuador, Chevron sold its remaining assets there to escape justice," the letter says. "Now Chevron claims its assets in Canada are immunized because they are held by wholly owned subsidiaries. Chevron is seeking to make a mockery of justice by creating a jurisdiction shell-game to deny the Ecuadorians full justice for its environmental crimes in Ecuador."
Canadian human-rights lawyers are watching to see if Chevron's machinations will work.
Murray Klippenstein, an attorney representing indigenous Guatemalans who are suing the Canadian mining company HudBay, said in a phone interview that he the two international wrangles have more than a few overlaps.
In the HudBay case, Mayan women from Guatemala claim that security guards employed by HudBay's subsidiary in their home country gang-raped them.
Accusing the parent company for negligence in Canada, Klippenstein's clients achieved a breakthrough three years ago when HudBay dropped its objections to the Toronto venue.
In that sense, Klippenstein said, the case is the "mirror image" of what happened in the Chevron litigation, in which the indigenous plaintiffs initially filed their lawsuit in New York until the oil giant succeeded in moving the case to Ecuador.
"Having made its bed, Chevron finds it rather doesn't want to lie in it," said Klippenstein, who previously supported the Ecuadorians in a brief before the Supreme Court of Canada.
Despite having let Chevron boot the case to Ecuador, New York's federal courts ultimately provided Chevron with its most powerful tool for avoiding Latin American liabilities.
Two years ago in Manhattan, U.S. District Judge Lewis Kaplan ruled that lawyers for Ecuadorians obtained their case by bribery, coercion, fabricated evidence and other "corrupt means." The Second Circuit affirmed this decision last month, finding a "parade of corrupt actions" led to the verdict against Chevron.
But a legal brief to the Toronto court from the Ecuadorians' Canadian counsel notes that the evidence undermining Chevron's fraud claims never made it into the New York record.
The New York trial had already ended when Chevron's chief witness to its fraud allegations — an Ecuadorian judge named Alberto Guerra — retracted much of his testimony during arbitration.
Guerra, whom Chevron has paid at least $326,000, testified in the New York trial that Steven Donziger, the lead U.S. attorney for the Ecuadorians, promised him a cut of the Ecuadorians' award if he would transfer a ghostwritten verdict to his successor, Judge Nicolas Zambrano.
Chevron long acknowledged that the admittedly corrupt Guerra's witness-credibility problems, but the company insisted that extensive evidence corroborated his testimony. That corroborating evidence fell apart after the trial as well.
Courthouse News was first to report during the arbitration proceedings that the international tribunal had been presented with new forensic evidence showing that Zambrano's computer hard drives had a running draft on the judgment written over the course of months, apparently contradicting Guerra's claim that it was transferred electronically.
Attorneys for the Ecuadorians tried to present this evidence at their New York appeal — to no avail.
Chevron argued that the information was inadmissible because the trial record was closed, and the appellate court declined to write about it in their ruling.
Donziger, who contends this evidence vindicates him, said in an email that "the U.S. court refused to consider evidence that simply blows up Chevron's fake narrative of fraud, and they did it to protect an American company against an effort by a foreign country to hold it accountable for environmental misconduct."
Other supporters of the Ecuadorians have been ratcheting up their rhetoric against the U.S. judiciary recently.
Karen Hinton, a spokeswoman for the Amazon Defense Coalition who had recently resigned as New York City Mayor Bill de Blasio's former press secretary, reacted to the ruling with the perspective of one who has walked through the corridors of influence.
"Power protects power," she wrote in an essay on Medium. "This is a message to learn early in life when it comes to matters of the haves and have-nots in the world."
Still aligned with high-profile lawyers and environmental groups, Donziger said in a statement that the existence of the enforcement proceedings is in itself a "major historical accomplishment."
"[Chevron] has used dozens of law firms and more than 2,000 legal personnel over the last two decades to kill the case," he said. "That strategy has failed; the communities are within sniffing distance of a full recovery of the entire judgment. Never in history have people with so little come so far in a court battle. Don't forget, they have won the case. What is happening in Canada is simply a debt collection against a scofflaw defendant."
Chevron did not respond to an email request for comment.
The portion of this week's proceedings devoted to the admissibility of Chevron's fraud evidence is expected to begin on Wednesday.