Chevron Corporation v. Stratus Consulting, Inc. et al

Filing 335

ORDER granting in part and denying in part 318 the Stratus Respondents' Motion for Payment of Production Expenses, and granting in part and denying in part 319 Petitioner Chevron Corporation's Motion to Reallocate Document Production Costs. The Interested Parties shall reimburse Chevron in the amount of $9,130.00. By Magistrate Judge Michael E. Hegarty on 6/27/2011. (mehcd)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 10-cv-00047-MSK-MEH
CHEVRON CORPORATION,
Petitioner,
v.
STRATUS CONSULTING, INC.,
DAVID J. CHAPMAN,
DOUGLAS BELTMAN,
JENNIFER M.H. PEERS,
DAVID M. MILLS,
PETER N. JONES,
LAURA BELANGER, and
ANN S. MAEST,
Respondents.
REPUBLIC OF ECUADOR, et al.,
Interested Parties.

ORDER ON MOTIONS CONCERNING ALLOCATION OF COSTS

Michael E. Hegarty, United States Magistrate Judge.
Before the Court are the Stratus Respondents’ Motion for Payment of Production
Expenses [filed April 20, 2011; docket #318] and Petitioner Chevron Corporation’s Motion to
Reallocate Document Production Costs [filed April 20, 2011; docket #319]. This matter is
referred to this Court for disposition. (Dockets ##321, 322.) The motions are fully briefed, and
oral argument would not assist in their adjudication. For the reasons stated herein, the Court
GRANTS IN PART and DENIES IN PART both motions.

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I have previously addressed the background of this litigation. To restate it succinctly,
Chevron Corporation was sued in Ecuador for environmental damage, a suit that ultimately
resulted in an $18.2 billion judgment against Chevron. The Southern District of New York has
preliminarily enjoined enforcement of that judgment outside of Ecuador. Chevron contends that
Stratus Consulting, Inc. and its agents colluded with the Ecuadorean plaintiffs to influence a
court-appointed expert (Richard Cabrera) in submitting a report to the Ecuadorian court which
was favorable to the plaintiffs. At the time the Ecuador proceeding was nearing conclusion (but
before judgment was entered), and to support its allegation that Cabrera and others were
committing fraud on the Ecuadorean court, Chevron filed this Section 1782 petition against the
Stratus Consulting experts (who are located in Boulder, Colorado) to obtain evidence which it
could present in Ecuador. This is one of a number of similar actions filed in various jurisdictions
in this country.
This proceeding has resulted in numerous motions, hearings and orders. Concerned that
the Ecuadorean rug might be taken out from under it before it had an opportunity to present the
Ecuadorean court with evidence of fraud, Chevron pushed for expedited consideration of its
requests for production of documents, and, once I ordered that relief, for expedited production by
the Stratus respondents. It was my intent that document production costs attributable to the
urgency should be borne by Chevron, because it was the party seeking expedited (or, as was
presented to me on numerous occasions, virtual emergency) relief.

I determined that the

documents should be gathered and produced as soon as humanly possible by Stratus, and once
the “dust settled” and the emergency passed, to determine the allocation of costs associated with

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the production. I directed that Chevron pay hard costs “up front,” with ultimate responsibility to
be decided later (i.e., now).
Stratus billed Chevron $71,694, and Chevron has paid $44,977. Stratus now asks for the
remainder of its billings to be paid, and Chevron asks that it be reimbursed (either by Stratus or
the Ecuadorean plaintiffs) for monies already paid, relying principally upon my authority under
Fed. R. Civ. P. 45 to consider equity in determining whether a nonparty to a lawsuit (the status
that Stratus held at the time of the filing of this action) should bear the costs of production of
documents. According to Chevron, Stratus has engaged in inappropriate conduct with respect to
Mr. Cabrera’s work for the Ecuadorean court and, thus, has unclean hands in asking for this
Court’s protection from significant expense resulting from compliance with the document
requests. Chevron also seeks payment from the Ecuadorean plaintiffs (here, Interested Parties)
based on allegations of misconduct concerning, among other things, an attempt to stall
proceedings in the United States, so that Chevron would be unable to timely present its evidence
of fraud in Ecuador.
I have read the arguments and materials supplied by the litigants. I decline to engage in a
minute dissection of their positions. The litigants have traded scandalous allegations, ostensibly
providing some proof in support. I do not know the truth of these, and to even begin to include
such considerations in my deliberations would entail a multi-day hearing, the expense of which
would dwarf the amounts at stake in the current motions. That is not justice, nor is it consistent
with the inexpensive determination of this proceeding. Fed. R. Civ. P. 1.
What I know is this: Chevron contended that Stratus had a close relationship with
Cabrera and the Ecuadorean plaintiffs’ counsel, such that Stratus was not a disinterested
nonparty for purposes of Rule 45's protections; I asked Stratus’ counsel whether Stratus officials
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had ever met with Cabrera; Stratus’ counsel, Mr. Silver, stated that he investigated that issue
with his client and, after such investigation, believed that there had been no such meeting ever;
when I was told this in open court, I stated, “You know, in my world that's golden. I'll take a
representation like that from a lawyer any day and believe it”; in fact, Stratus’ representatives
(and Respondents here) Beltman and Maest had a meeting with Cabrera in Ecuador in January
2008. What I thought was “golden” has lost its luster. I do not accuse Mr. Silver of lying, but I
was not given the truth. For me, it begins and ends there. A major premise of my thinking
concerning allocation of costs was mistaken.

Because of Stratus’ interactions with the

Ecuadorean plaintiffs’ counsel and Cabrera, and because I originally intended that Stratus be
compensated only to the extent that it was forced to rush its production (concerning which, it
appears from internal communications, Stratus was not quite in the rush I asked them to be), I
find that just reimbursement from Chevron to Stratus is fifty percent of the latter’s expenses, or
$35,847. Chevron has paid $44,977, thus, they should be repaid $9130. But by whom should
they be repaid? In my opinion, Chevron should be repaid by the Interested Parties.
Chevron, Stratus and the Interested Parties all had some responsibility for the filing of
this proceeding, and each of them should have some skin in the game. In any event, I view a
payment of nine thousand dollars as largely symbolic, given the $18 billion award that the
Interested Parties have achieved in Ecuador against Chevron.
Regardless of what might have happened in another federal (or even a foreign)
jurisdiction, all counsel in this action have acted professionally and appropriately in my
presence. I have nothing negative to say about any of them. I believe this Order equitably
allocates costs based on the facts as I understand them.

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CONCLUSION
Accordingly, for the reasons stated above and the entire record herein, the Court
GRANTS IN PART and DENIES IN PART the Stratus Respondents’ Motion for Payment of
Production Expenses [filed April 20, 2011; docket #318], and GRANTS IN PART and
DENIES IN PART Petitioner Chevron Corporation’s Motion to Reallocate Document
Production Costs [filed April 20, 2011; docket #319], as stated herein. The Interested Parties
shall reimburse Chevron in the amount of $9130.
Entered and dated this 27th day of June, 2011, in Denver, Colorado.
BY THE COURT:

Michael E. Hegarty
United States Magistrate Judge

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