Chevron Corporation v. Donziger et al
Filing
1529
OPINION ON MOTIONS TO COMPEL AND FOR SANCTIONS re: 893 MOTION for Sanctions / PLAINTIFF CHEVRON CORPORATION'S NOTICE OF MOTION TO SANCTION AND HOLD THE DONZIGER DEFENDANTS AND LAP REPRESENTATIVES IN CONTEMPT OF COURT FOR DISOBEYING THE COUR T'S DISCOVERY ORDERS filed by Chevron Corporation. For the foregoing reasons, Chevron's motion to sanction and hold the Donziger Defendants and the LAP Representatives in contempt of court [DI 893] is granted in part and denied in part as set forth above. (Signed by Judge Lewis A. Kaplan on 10/10/2013) (lmb)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
------------------------------------------x
CHEVRON CORPORATION,
Plaintiff,
-against-
11 Civ. 0691 (LAK)
STEVEN DONZIGER, et al.,
Defendants.
------------------------------------------x
OPINION ON MOTIONS TO
COMPEL AND FOR SANCTIONS
Appearances:
Randy M. Mastro
Andrea E. Neuman
Scott A. Edelman
William E. Thompson
GIBSON, DUNN & CRUTCHER, LLP
Attorneys for Plaintiff
Julio C. Gomez
GOMEZ LLC
Tyler G. Doyle
Craig Smyser
Larry R. Veselka
SMYSER KAPLAN & VESELKA, L.L.P.
Attorneys for Defendants Hugo Gerardo Camacho Naranjo and
Javier Piaguaje Payaguaje
Stephen R. Donziger
DONZIGER & ASSOCIATES
John W. Keker
Elliot R. Peters
Christopher J. Young
Jan Nielsen Little
Matthew M. Werdeger
KEKER & VAN NEST, LLP
Attorneys for Donziger Defendants
TABLE OF CONTENTS
Facts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
I.
The Defendants’ Ecuadorian Associates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
II.
The Alleged Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
III.
The Evidence of Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
A.
Alleged Bribery of the Judge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
B.
Additional Evidence that the LAPs – Not the Judge – Wrote the Judgment
..........................................................8
C.
Evidence of Fraud With Respect to the Judicial Inspection Process . . . . 12
1.
Dr. Calmbacher . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.
The Termination of Judicial Inspections, Cabrera’s Appointment,
and the Cabrera Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.
Other Evidence of Fraud in Respect of the Cabrera Report . . . . 14
4.
The “Cleansing Reports” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
IV.
Chevron’s Unsuccessful Attempts to Obtain Discovery from Defendants . . . . . 20
A.
The Motion to Compel Production of Ecuadorian Documents in the Count
9 Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
B.
Chevron’s Document Requests in this Action . . . . . . . . . . . . . . . . . . . . . 22
C.
The Motion to Compel in this Action . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
1.
The Córdova Lawsuit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.
The Ruling on the Motion to Compel . . . . . . . . . . . . . . . . . . . . . 26
D.
The Motion for Sanctions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
I.
The February 11 Order Compelling Production . . . . . . . . . . . . . . . . . . . . . . . . . 29
A.
Mr. Donziger Has Had the Practical Ability to Obtain the Ecuadorian
Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
B.
The Ecuadorian Lawyers and Their Associates Are Agents of or Under the
Practical Control of the LAP Representatives . . . . . . . . . . . . . . . . . . . . . 42
C.
Ecuadorian Law and Principles of International Comity . . . . . . . . . . . . . 45
1.
Personal Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
2.
The Alleged Illegality of Production Under Ecuadorian Law Did
Not Preclude the Court’s Order to Produce . . . . . . . . . . . . . . . . . 52
i.
Whether There is a True Conflict of Law . . . . . . . . . . . . 53
ii.
Comity Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
a.
The Importance of the Documents to the Litigation
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
b.
Specificity of the Requests . . . . . . . . . . . . . . . . . 62
c.
The Availability of Alternative Means of Obtaining
the Information . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
d.
Whether the Information Originated in Ecuador . 63
e.
Balance of National Interests . . . . . . . . . . . . . . . . 64
f.
Hardship of Compliance . . . . . . . . . . . . . . . . . . . 66
II.
The Motion for Sanctions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
A.
The Parties’ Positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
B.
The LAP Representatives’ Jurisdictional Argument Fails . . . . . . . . . . . 69
C.
The February 11 Order Bound the Donziger Defendants . . . . . . . . . . . . 71
D.
Mr. Donziger Had and Has the Practical Ability to Obtain Documents
From the Ecuadorian Attorneys and Agents . . . . . . . . . . . . . . . . . . . . . . 72
E.
Ecuadorian Law Does Not Prevent the Imposition of Sanctions . . . . . . . 78
F.
G.
Defendants Have Acted Willfully and In Bad Faith . . . . . . . . . . . . . . . . 80
1.
Defendants Refuse to Produce Documents . . . . . . . . . . . . . . . . . 80
2.
The LAP Representatives’ U.S. Counsel Suggests that Fajardo File
Suit in Ecuador and Keeps the Suit’s Existence Secret . . . . . . . . 82
3.
The Córdova Suit Was Collusive . . . . . . . . . . . . . . . . . . . . . . . . . 84
4.
Further Evidence That Defendants Have Not Acted in Good Faith
With Respect to the Ecuadorian Documents . . . . . . . . . . . . . . . . 87
5.
Defendants’ Further Efforts to Block Discovery . . . . . . . . . . . . 92
Which Sanctions Are Appropriate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
1.
The LAP Representatives’ Personal Jurisdiction Defense . . . . . 95
2.
All Defendants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
i.
Adverse Inference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
ii.
Introduction at Trial of Responsive Documents . . . . . . 103
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
1
LEWIS A. KAPLAN, District Judge.
New York attorney Steven Donziger and his Ecuadorian clients have obtained an
$18.2 billion judgment against Chevron Corporation (“Chevron”) from an Ecuadorian court (the
“Judgment”). Chevron sues here for equitable relief,1 claiming that the Judgment was obtained by
fraud – including but not limited to bribery of the Ecuadorian judge – as part of a scheme to extort
money from it. The defendants include Mr. Donziger’s Ecuadorian clients, their lead Ecuadorian
counsel, and several other individuals and organizations allegedly complicit in the scheme. Other
than Mr. Donziger and his law firms (the “Donziger Defendants”), all of the defendants save two
individual Ecuadorians (the “LAP Representatives”) have defaulted.
Chevron has sought discovery – especially document production – from the Donziger
Defendants and the LAP Representatives in an effort to substantiate its claims. Its efforts have
largely been stonewalled. These defendants have not produced the requested documents or provided
other requested information that is in the hands of their own Ecuadorian lawyers and associates.
Chevron moved to compel production. While that motion was pending, the Ecuadorian lawyers –
at the suggestion of U.S. counsel for the LAP Representatives – caused a collusive lawsuit to be
brought in Ecuador, without notice to Chevron, that ultimately resulted in an injunction barring the
Ecuadorian lawyers and other associates from turning documents over in this case. This has not
stopped these defendants, however, from submitting documents in this case that they obtained from
their Ecuadorian lawyers when it suited their purposes – in one case just days after denying that they
had control over the documents submitted and claiming they could not produce them to Chevron.
The Court first ordered that the requested documents be produced. Defendants
1
Chevron has waived its damage claims against the defendants who have answered the
amended complaint. DI 1404, DI 1469.
2
declined to comply. Chevron then moved for sanctions, including contempt and default judgments.
The matter has been fully briefed, and the Court has had the benefit of an evidentiary hearing. The
Court now concludes that (1) these defendants have the practical ability to produce the documents,
(2) the collusive Ecuadorian injunction is no obstacle to the imposition of sanctions, and (3) these
defendants have acted in bad faith in their failure to produce documents in the hands of their
Ecuadorian attorneys and agents. While it declines to grant the more onerous sanctions sought by
Chevron, sanctions narrowly tailored to their actions are appropriate.
Facts
The history of the Ecuadorian litigation and the background of this case have been
set out in detail in at least three prior opinions.2 In order to understand fully the context of the
present motion, it nevertheless is necessary to revisit subjects previously covered, especially to bring
the account up to date in light of subsequent events.
I.
The Defendants’ Ecuadorian Associates
The documents Chevron seeks are in the physical possession, custody, or control, of
(1) the Lago Agrio Plaintiffs’(“LAPs”)3 Ecuadorian lawyers – including Pablo Fajardo, Juan Pablo
2
See Chevron Corp. v. Donziger, 768 F. Supp. 2d 581, 597-626 vacated sub nom. Chevron
Corp. v. Naranjo, 11-1150-CV L, 2011 WL 4375022 (2d Cir. Sept. 19, 2011) and rev’d and
remanded sub nom. Chevron Corp. v. Naranjo, 667 F.3d 232 (2d Cir. 2012) cert. denied,
133 S. Ct. 423, 184 L. Ed. 2d 288 (U.S. 2012); Chevron Corp. v. Donziger, 886 F. Supp.
2d 235, 241-48 (S.D.N.Y. 2012); Chevron Corp. v. Donziger, 11 Civ. 0691 (LAK), 2013
WL 1087236, *3-6 (S.D.N.Y. Mar. 15, 2013).
3
The LAPs are a group of 47 indigenous Ecuadorians who filed suit against Chevron in
Ecuador. They all are defendants in this action, although only two of them – the LAP
Representatives – have answered the complaint and are defending the action.
3
Sáenz, and Julio Prieto4 – and (2) three non-lawyers – Luis Yanza, the Amazon Defense Front
(“ADF”), and Selva Viva – who also are based in Ecuador. The relationships between and among
Mr. Donziger, the LAPs, and these lawyers and other allies naturally are significant, as they bear
on whether Mr. Donziger and the LAP Representatives have the ability, practical or legal, to obtain
the documents in question. The evidence concerning those relationships therefore is discussed in
detail in those sections of this opinion that deal with the control issue. But it is important to
understand several essential points at the outset.
First, Mr. Donziger has had practical control over the LAPs’ Ecuadorian and U.S.
litigation efforts for years. He has raised money to finance it, controlled or at least influenced the
way in which that money was spent, and has paid or approved payment of the Ecuadorian lawyers
and others. Fajardo was picked by Mr. Donziger to take over the lead role in court in the Ecuadorian
litigation as, in Mr. Donziger’s words, the LAPs’ “local counsel.”5
Second, at least one of the agreements between the LAPs and an outside investor who
provided financing for the litigation gave Donziger extensive legal rights to access documents and
information in the hands of the LAPs’ Ecuadorian counsel.6
4
Sáenz and Prieto are alleged co-conspirators in this case.
5
Gomez Decl. [DI 287] Ex. 15 (Donziger Dep.), at 3440:5-10.
Messrs. Sáenz and Prieto, also Ecuadorian lawyers, work under Fajardo’s supervision.
6
See, e.g., 11 Civ. 03718, DI 44, Ex. 46 (Treca Funding Agreement), § 5.1 (“the Claimants
shall, as requested by the Nominated Lawyers or [Donziger] . . . submit to examination by
the Active Lawyers [including Donziger] for the preparation of written statements,
subscribe to the same under oath if required, consult with the Active Lawyers [including
Donziger] for purposes of pursuing the Claim or settling the Award and appear at any
proceedings or hearing (including hearings located abroad) reasonably required in
connection with such statements or the Claim generally”).
4
Third, Luis Yanza, the principal non-lawyer Ecuadorian individual at issue here, is
Mr. Donziger’s “closest friend” in Ecuador. He heads the ADF – which purports to represent the
LAPs, albeit not in a professional legal capacity – and controls the responsive ADF documents. In
addition, he is the general manager of Selva Viva, which is an entity created by the ADF to
administer litigation funds and which also doubtless has responsive documents.7 Indeed, the
relationship among Messrs. Yanza, Donziger, and Fajardo is so close that all three work out of the
Selva Viva office in Quito, Mr. Donziger when he is in Ecuador rather than in New York, where he
resides and maintains his law office.
Fajardo, the ADF, Yanza, and Selva Viva all are defendants in this case. All have
been duly served and have defaulted.8 Nevertheless, they continue to assist in the defense. Among
other things, Fajardo and Sáenz have submitted declarations in support of the LAP Representatives
in this case.9
II.
The Alleged Fraud
Chevron asserts that the Ecuadorian Judgment is the product of fraud and RICO
violations. These claims rest on allegations, among others, that Mr. Donziger and others based in
7
Champion Decl [DI 400] Ex. 2023 (Aug. 14, 2007 Email from Donziger to Kohn and
others) (“The ADF created Selva Viva as a pass thru mechanism to administer the funds for
the litigation; the Frente [i.e., ADF] controls Selva Viva.”).
8
DI 469.
9
DI 128 (Fajardo); DI 152 (Sáenz).
5
the United States here conceived, substantially executed, largely funded, and significantly directed10
a scheme to extort and defraud Chevron, a U.S. company, by, among other things, (1) bringing the
lawsuit in Ecuador;11 (2) fabricating (principally in the United States) evidence for use in that
lawsuit in order to obtain a judgment there;12 (3) corrupting and pressuring Ecuadorian judges to
obtain the Judgment; (4) exerting pressure on Chevron to coerce it to pay money not only by means
of the Ecuadorian litigation and Judgment, but also by subjecting Chevron to public attacks in the
United States and elsewhere based on false and misleading statements;13 (5) inducing U.S. public
officials to investigate Chevron;14 and (6) making false statements to U.S. courts and intimidating
and tampering with witnesses in related U.S. court proceedings to cover up their improper
activities.15
10
Amended complaint (“Cpt.”) ¶ 1 (alleging that defendants “sought to extort, defraud, and
otherwise tortiously injure plaintiff Chevron by means of a plan they conceived and
substantially executed in the United States.”); id. ¶ 2 (“The enterprise’s ultimate aim is to
create enough pressure on Chevron in the United States to extort it into paying to stop the
campaign against it.”).
11
Id. ¶ 3.
12
E.g., id. ¶ 145 (“Back in the United States, preparations were well underway for drafting
Cabrera’s report [the report of a supposedly independent, court-appointed expert].”); id. ¶
151 (“While Stratus [LAP environmental consultant] was the primary coordinator of the
. . . Cabrera Report, other members of the [LAP’s] U.S.-based team of experts . . . also
contributed to the report without attribution in the report or disclosure to Chevron.”); id. ¶¶
353–56.
13
Id. ¶ 214.
14
Id. (“And they have taken this pressure campaign to U.S. state and federal agencies, seeking
their falsely induced assistance in this racketeering scheme.”); id. ¶ 216.
15
Id. ¶¶ 273–77, 291–300, 311–16.
6
Chevron has presented evidence supporting these allegations on various motions
throughout this litigation. The Court summarizes that evidence below.16
III.
The Evidence of Fraud
A.
Alleged Bribery of the Judge
Chevron has submitted a declaration of Alberto Guerra Bastidas, a former judge of
the Provincial Court of Sucumbios, Ecuador,17 the court that rendered the Judgment, and at one time
the judge assigned to the case against Chevron. In summary, Guerra states that the LAPs’ counsel
– Fajardo and Donziger – bribed the judge who signed the Ecuadorian Judgment, Nicolás Zambrano,
to decide the Lago Agrio case in favor of the LAPs and to permit the LAPs to write the decision that
the judge signed. Mr. Guerra was deposed in this action and reiterated his assertions. Although
former judge Zambrano18 has submitted a declaration denying the central allegations, he declined
16
The text and footnotes in Section III are taken largely from the Court’s opinion in Chevron
Corp. v. Donziger, 11 Civ. 0691 (LAK), 2013 WL 1087236.
17
Mastro Decl. [DI 746] Ex. C (Guerra Decl.). Mr. Guerra was dismissed as a judge in 2008,
ostensibly for private statements to the effect that the case against Chevron should be
dismissed. He avers, however, that the real reason for his dismissal was his confrontation
with two judges who later served on the Chevron case “regarding several dubious and illegal
rulings that had issued in the proceedings, and regarding their practice of asking the settling
experts for 25 percent of their fees in consideration for having them appointed as such.”
Guerra Decl. ¶ 6.
18
Judge Zambrano reportedly was removed from the bench after rendering the decision against
Chevron “for releasing a suspected drug trafficker in an act of ‘obvious negligence or an
inexcusable mistake.’” Eduardo Garcia & Alexandria Valencia, Chevron Hopes to Benefit
from Ecuador’s Judge Dismissal, REUTERS (Mar. 9, 2012) (available at
http://www.reuters.com/article/2012/03/09/ecuador-chevron-idUSL2E8E9ETI20120309)
(last visited Sept. 10, 2013).
7
to appear for deposition.19
The details of the alleged bribery and of some evidence corroborating Guerra’s
testimony are described extensively in Chevron Corp. v. Donziger,20 where the Court, for purposes
of dealing with claims of attorney-client privilege and work product, held that there was probable
cause to suspect fraud in the procurement of the Judgment. For present purposes it suffices to quote
this summary:
“Guerra . . . claims that there were corrupt bargains between the LAPs and former
Judge Zambrano in each of the two separate periods during which Zambrano
presided over the Chevron case, which were October 2009 until March 12, 2010 and
October 2010 through the entry of the judgment on February 14, 2011. During the
first period, Guerra asserts principally that (a) Zambrano told Guerra that he had
reached an agreement with the LAPs to quickly move the case in the plaintiffs’
favor, (b) Guerra then met with Fajardo, the LAPs’ lawyer, in Quito where the two
agreed that Guerra would write Zambrano’s decisions and favor Chevron, and (c)
Guerra later met in Quito with Fajardo, Donziger, and Yanza on which occasion
Donziger thanked him for ghostwriting Zambrano’s decisions and for ‘helping steer
the case in favor of the Plaintiffs’.’ During the second period, after former Judge
Zambrano began presiding over the case for the second time, (a) Zambrano
suggested that Guerra meet with the LAPs’ representatives to work out a deal to fix
the case, (b) Guerra then made such a proposal to Fajardo, subsequent to which (c)
Guerra met with Fajardo, Yanza, and Donziger at a restaurant in Quito where they
discussed the proposal, (d) Zambrano later told Guerra that he had spoken to Fajardo,
who had agreed to the deal, and (e) Guerra had subsequent meetings with Zambrano
both in Lago Agrio and in Quito in furtherance of the arrangement.”21
The Guerra declaration, if it ultimately is credited, establishes that the Judgment was
19
The LAP Representatives recently filed notice that Mr. Zambrano has agreed to testify in
Court and will submit to deposition before he does so. DI 1385.
20
11 Civ. 0691 (LAK), 2013 WL 1087236, at *6-7 (S.D.N.Y. Mar. 15, 2013), on
reconsideration, 2013 WL 1975439 (S.D.N.Y. May 14, 2013).
21
Chevron Corp. v. Donziger, 11 Civ. 0691 (LAK), 2013 WL 3294820, at *2 (S.D.N.Y. June
28, 2013) (on LAP Representatives’ motion to compel production of documents) (footnotes
omitted).
8
fraudulently obtained. Even before the Guerra affidavit was filed, however, Chevron had presented
other evidence of fraud in the procurement of the Judgment. More recently, it has submitted still
more.
B.
Additional Evidence that the LAPs – Not the Judge – Wrote the Judgment
On July 31, 2012, the Court granted in part and denied in part Chevron’s motion for
partial summary judgment seeking dismissal of the defenses of collateral estoppel and res judicata.22
In that opinion, the Court held that there was no genuine issue of material fact that fraud tainted
various aspects of the Lago Agrio litigation. Chevron subsequently submitted additional evidence
in support of its contention that the Judgment was obtained by fraud.
In its motion for partial summary judgment, Chevron’s “ghostwriting” allegations
– its contention that the Judgment was written in whole or in part by the LAPs, not the judge –
were based significantly on three LAP documents that were not part of the court record but parts of
which wound up in the Judgment:
•
A document entitled The Merger of Chevron Inc. and Texaco Inc. (the
“Unfiled Fusion Memo”) that was written by one or more members of the
LAP team and that addresses, among other things, successor liability.23
•
The Index Summaries – spreadsheets prepared by the LAP team that list and
summarize documents filed in the Lago Agrio court.
•
The Selva Viva Data Compilation, which “consists of spreadsheets
containing environmental sampling data.”24
22
Chevron Corp. v. Donziger, 886 F. Supp. 2d 292.
23
Id. at 253.
24
Id.
9
Chevron submitted analyses by experts that established that portions of each of these documents
appeared verbatim in the Judgment.25 Thus, Chevron contended that (1) relevant portions of the
Judgment either were written by the LAPs, who had generated the documents, and passed to the
judge ex parte, or (2) these documents themselves were provided ex parte to the Lago Agrio court,
which copied at least parts of them word-for-word into the Judgment.
There was and remains no evidence disputing the fact that parts of the Judgment were
virtually identical to the Unfiled Fusion Memo. This Court therefore held that this virtual identity
“demonstrate[d] as a matter of law that whoever wrote the Judgment had access to and copied
portions of the [Unfiled Fusion] Memo.”26 The Court, however, concluded that “[t]he identity of
language between parts of the Unfiled Fusion Memo and parts of the Judgment – troublesome as it
is – d[id] not alone warrant the conclusion that Chevron has established that there is no genuine
issue of material fact” that the Judgment had been written by someone other than the judge who
signed it.27 With respect to the Index Summaries and Selva Viva Data Compilation, the Court held
that “[w]hile the similarities between those documents and aspects of the Judgment supports the
premise that the author or authors of the Judgment had access to and copied them, the nature of their
contents makes it more difficult to conclude that any ex parte submission of them materially
impacted Chevron’s ability to present its defense.”28
25
Id. at 253-54.
26
Id. at 286.
27
Id. at 288.
28
Id. at 287 n.319.
10
Subsequent to that opinion, Chevron submitted additional evidence in support of
another motion, which sought a determination that certain documents sought from Patton Boggs as
to which the LAPs claimed privilege were producible under the crime-fraud exception to the
attorney-client privilege. It claimed that this added material showed that at least three other portions
of the Judgment are identical to other internal LAP documents that were not in the Ecuadorian court
record:
•
A memorandum by a Donziger intern (the “Moodie Memorandum”), which
analyzed causation under a doctrine applied in California asbestos litigation.
•
An analysis entitled La Explotacion De Petroleo En La Zona Conesionada
A Texaco Y Sus Impactos En La Salud De Las Personas, which was written
by LAP consultant Richard Clapp (the “Clapp Report”).
•
An email regarding trusts sent by Fajardo to alleged co-conspirators on June
18, 2009 (the “Fajardo Trust Email”).
Chevron supported its contention with respect to each document by analyses that concluded that (1)
the language or analysis in the relevant LAP internal document and the Judgment is nearly identical,
and (2) the analysis or language is not in the court record.29 In each case, Chevron’s evidence was
sufficient to warrant the conclusion that the items in question further supported the existence of
probable cause to suspect that the LAPs, not the judge, wrote the relevant part of the Judgment.30
29
See, e.g., Mastro Decl. [DI 658], Ex. 3003 (Green Decl.), at 2, ¶ 12 (“it is highly unlikely,
perhaps even more so than highly, that the passages in the [judgment regarding causation]
were prepared independently of the Moodie memorandum.”).
30
Chevron Corp. v. Donziger, 2013 WL 1087236, at *9 n.78.
Moodie Memorandum. Chevron’s expert explains that both the Moodie Memorandum and
the Judgment analyze “causation law of the United States and Australia, not Ecuador. . . .
Absent some explanation, [he] would consider it highly unlikely that an Ecuadorian court
would independently choose United States and Australian causation law, rather than
Ecuadorian causation law.” Mastro Decl. [DI 658], Ex. 3003 (Green Decl.), at 4, ¶ 13.
Moreover, the expert opines that the causation analysis in both the Judgment and the
11
memorandum was incorrect under U.S. law and, in any case, inapplicable to the Lago Agrio
case. While the LAPs argue that the expert’s work was not thorough and would not be
admissible in its present form at trial, it afforded a sufficient factual basis to support a
finding of probable cause for purposes of the crime-fraud exception to the attorney-client
privilege.
Clapp Report. Chevron has submitted evidence showing that portions of the Clapp Report
were included in an annex to the Cabrera Report. Mastro Decl. [DI 658], Ex. 3005 (Leonard
Report) at 9-10, 13. Emails between Donziger and a Stratus employee make clear that they
sought to keep the Clapp Report’s true authorship secret, presumably to create the
appearance that Cabrera had written it. See Hendricks Decl. [DI 34], Ex. 188 (Email from
Doug Beltman at Stratus to Donziger stating “We have to talk to Clapp about that 5-pager,
and how we have to limit its distribution. It CANNOT go into the Congressional Record as
being authored by him.”). The annex to the Cabrera report, however, “did not contain the
entirety of the Clapp Report . . . , and portions that were not included appear in the
judgment.” DI 657, at 7; Mastro Decl. [DI 658], Ex. 3005 (Leonard Report) at 33-34.
Chevron’s expert notes that this includes a 34-word string which appears both in the Clapp
Report and the Judgment, as well as two additional 16-word overlaps. Ex. 3006 (Juola
Report) at ¶¶ 23, 24. The portions of the Clapp Report that appear in the Judgment appear
nowhere else in the Lago Agrio court record. Id. at ¶ 29.
The LAPs do not dispute that sections of the Clapp Report appear verbatim in the Judgment
and are nowhere else in the Lago Agrio court record. They argue only that “Chevron has not
proved that the materials [including the Clapp Report] were not provided to the Judge in
some informal manner such that the materials did not get signed and numbered as part of the
record.” DI 712, at 5. But the LAPs point to no evidence that the Clapp Report ever was
submitted to the judge in a manner that did not result in its being part of the court record
much less that any such submission would not have been improper. Given the identity of
language in parts of the Clapp Report and the Judgment and the absence of that language
anywhere in the court record, this too supported the conclusion that there is probable cause
to suspect fraud for purposes of the crime-fraud exception to the attorney-client privilege.
Fajardo Trust Email. The same can be said for the Fajardo Trust email. On June 18, 2009,
Fajardo sent an email to Donziger and others concerning Ecuadorian trust law and the
Andrade v. Conolec case. DI 401, Ex. 2174. Portions of that email – including a
misquotation of the Andrade case – appear in the Judgment. The Court noted in its opinion
on Chevron’s motion for partial summary judgment that “Chevron has submitted no expert
reports documenting alleged plagiarism in the Judgment from the Fajardo email, or
indicating whether or not the Fajardo email was or was not a part of the Lago Agrio court
record.” Chevron v. Donziger, 886 F. Supp. 2d at 254 n.116. It recounted the LAPs’
contention that any language that was common to the Fajardo Trust Email and the Judgment
was merely “stock language” that could have been found independently in the court record.
Id. The Court therefore declined to find that there was no genuine issue of material fact that
the Fajardo Trust Email had been submitted fraudulently to the court.
Chevron’s new evidence overcomes these deficiencies, at least for present purposes.
Chevron’s expert now concludes that “parts of the [Judgment] must likely have had their
12
C.
Evidence of Fraud With Respect to the Judicial Inspection Process
1.
Dr. Calmbacher
Dr. Charles Calmbacher was the LAPs’ expert for some of the early judicial
inspections. Indeed, two reports were filed with the Lago Agrio court under his name and with his
signature. Those two reports, however, contained conclusions and findings that he later testified he
did not reach.31 The Court held on summary judgment that “the evidence is uncontradicted” that
“[w]hile his signatures on the reports were genuine, the text associated with them was not.”32 The
Court therefore concluded that “[i]t . . . is at least arguable that Chevron has established from Dr.
Calmbacher’s uncontradicted testimony . . . that the LAP lawyers wrote the reports submitted over
Dr. Calmbacher’s signatures and that Calmbacher did not in fact hold the views there stated.”33 The
Court declined to decide on summary judgment whether the submission of the purported
Calmbacher report was fraudulent as there was sufficient evidence of bad feeling between
Calmbacher and Donziger assessment by the trier of fact. The evidence, however, was sufficient
origin in the unfiled Fajardo Trust email.” Mastro Decl. [DI 658] Ex. 3005(Leonard Decl.),
at 33. This includes identical word strings which are found nowhere else in the court record,
id. at 30, and improper reliance on Andrade, which both the Fajardo Trust email and the
Judgment incorrectly cite as dealing with “the legal basis of the trust,” although the case
itself says nothing about trusts. Id. at 31. Furthermore, following a complete review of the
Lago Agrio court record, Chevron’s expert now has concluded that the Fajardo Trust Email
is found nowhere within it. Hernandez Aff. [DI 548] ¶ 26. The LAPs do not attempt to
explain how the language from the Fajardo Trust email ended up in the Judgment despite the
fact that it was never part of the Lago Agrio court record. Thus, the Fajordo Trust Email
further supports the probable cause finding.
31
Chevron Corp. v. Donziger, 886 F. Supp. 2d at 288.
32
Id.
33
Id.
13
to warrant the Court’s conclusion, for purposes of Chevron’s crime-fraud argument with respect to
certain privilege claims, that there was probable cause to suspect that the Calmbacher report was
tainted by fraud.34
2.
The Termination of Judicial Inspections, Cabrera’s Appointment, and the
Cabrera Report
In 2006, the LAPs applied to the Lago Agrio court to terminate at least some of the
judicial inspections that it had ordered. While that application was pending, Mr. Donziger drafted
a misconduct complaint against the judge to whom the case then was assigned, who, according to
Mr. Donziger, was “on his heels from . . . from trading jobs for sex in the court.”35 Pablo Fajardo,
the LAPs’ principal Ecuadorian lawyer, then had ex parte meetings with the judge36 during which
he (1) attempted to persuade the judge to appoint Cabrera as the global expert, which ultimately
occurred on March 19, 2007, and (2) “let [the judge] know [the LAPs] might file it [i.e., the
misconduct complaint] if he does not adhere to the law and what we need.”37
The Court held in its summary judgment opinion that there was no genuine issue of
material fact that “the decisions to terminate judicial inspections, to pursue the global assessment,
and to select Cabrera as the global expert were tainted by the duress and coercion applied to [the
34
Chevron Corp. v. Donziger, 2013 WL 1087236, at *9.
35
Chevron Corp. v. Donziger, 886 F. Supp. 2d at 288.
36
Id. at 256.
37
Id. (internal quotation marks omitted).
14
judge] by Donziger, Fajardo, and perhaps other.”38 The Court held also that there was no genuine
issue of fact that Cabrera’s
“report was not entirely or even predominantly his own work or that of any assistants
or consultants working only for him. There is no genuine issue with respect to the
facts that the LAP team secretly prepared his [i.e., Cabrera’s] work plan, worked
closely with him in carrying it out, and drafted most of the report and its annexes.
Nor is there any genuine issue regarding the fact that the LAP team then publicly
objected to the very report that they, in large part, secretly had drafted . . . . The
answers filed by Cabrera in response to the LAPs’ (and Chevron’s) objections – like
the report itself – were drafted at least in substantial part by the LAP team and
written to read as if Cabrera had written them.”39
It concluded as well that, while the Lago Agrio court “disclaimed reliance” on the Cabrera report,
Chevron had presented evidence from which it could be concluded that the Lago Agrio court in fact
had relied on the Cabrera report at least for certain determinations.40
3.
Other Evidence of Fraud in Respect of the Cabrera Report
Subsequent to the first partial summary judgment decision, Chevron submitted a
declaration of Ramiro Fernando Reyes Cisneros (“Reyes”),41 an Ecuadorian petroleum and
environmental engineer,42 that supported Chevron’s contention that the object of terminating the
original judicial inspections and appointing a single global expert was to obtain the appointment of
38
Id. at 289.
39
Id.
40
Id. at 289-90.
41
See Mastro Decl. [DI 658] Ex. 3014 (Reyes Decl.).
42
Id. ¶ 3.
15
someone chosen by the LAPs who would “play ball” with them.
Reyes’ declaration states that he was asked by the LAPs’ attorneys, before the
termination of the judicial inspections and the appointment of Cabrera as the global expert, to serve
as an independent expert to “monitor” the settling experts in the Lago Agrio case.43 Mr. Donziger
explained to Reyes at the time that he was unhappy with the reports plaintiffs’ then-experts had
submitted and wanted Reyes to submit to the Lago Agrio court another report that established “that
the findings of the settling experts’ report . . . were wrong.”44 Reyes makes clear that Donziger and
the other attorneys aimed to keep their relationship with Reyes secret so that his report would appear
to be “independent.”45 He claims that, despite Donziger’s wishes, he believed that “the evidence did
not support Mr. Donziger’s position and [he] could not twist [his] professional assessments to make
them fit the plaintiffs’ interests.”46 Accordingly, in a report Reyes prepared and showed to
Donziger, he concluded that, while “the settling experts had failed to strictly follow their judicial
mandate . . . their report contained enough information for the Court to make its own ruling.”47
Donziger was dissatisfied with Reyes’ report and did not ask him to submit it to the court.48
43
The “settling experts” were meant to review and then provide opinions on the final reports
submitted by the original court-appointed experts before the judicial inspection process was
terminated. See Chevron Corp. v. Donziger, 886 F. Supp. 2d at 244.
44
Id. ¶ 20.
45
Id. ¶ 15.
46
Id. ¶ 20.
47
Id.
48
Id.
16
In 2006, after the Lago Agrio court halted the judicial inspections, Donziger and the
other LAP lawyers, according to Reyes, informed Reyes that they wanted him to serve as the global
“court-appointed” expert49 and that he would “need . . . to state that Chevron was the only party
responsible for environmental damages and the harm to the local community.”50 When Donziger
later told Reyes that the “judge . . . was putting up hurdles to [Reyes’] appointment as expert,” Reyes
and Donziger discussed appointing Cabrera instead.51 At a later meeting with Cabrera and certain
LAP attorneys which Reyes attended, “Mr. Fajardo, Mr. Yanza and Mr. Donziger dropped any
pretense that Mr. Cabrera would act independently in writing an expert report that would be
technically sound and executed according to professional standards. On the contrary, it was obvious
[to Reyes] that the plaintiffs had already predetermined the findings of the global assessment, that
they themselves would write a report that would support their claim . . . and would simply put Mr.
Cabrera’s name on it.”52
4.
The “Cleansing Reports”
As the evidence of infirmities in and affecting the Cabrera fraud was coming to light,
the LAP team privately began to “acknowledge[] problems associated with Cabrera’s lack of
49
Id. ¶ 22.
50
Id. ¶ 25.
51
Id. ¶¶ 29-30.
52
Id. ¶ 35.
17
independence.”53 The LAPs’ lawyers’ planned to hire a new expert to address Cabrera’s findings and
“submit an additional expert report to the Lago Agrio court that would appear to be independent of
but that, in fact, would rely on the data and conclusions reached in the Cabrera report.”54 One of the
LAPs’ lawyers explained that the new expert’s report was intended to “‘cleanse’ any perceived
impropriety related to the Cabrera Report.”55 Another wrote that, with the new expert’s report,
“[t]he path for an Ecuadorian decision will be simple. We would hope the judge
would say/rule: There has been much controversy surrounding the Cabrera report, and
objections to it. [Perhaps: The court did not anticipate that there was the degree of
collaboration between plaintiffs’ counsel and Cabrera, that there may have been.
Given these issues, the court is not relying on Cabrera for its ruling.] However, the
Court now has additional submissions from the parties . . . The court finds the new
report (demonstrating damages of $ — billion) to be persuasive, reliable and accurate
and therefore rules . . . .”56
Ultimately, the LAPs petitioned the Lago Agrio court to allow the parties to submit
“supplementary information to aid th[e] Court in the process of assessing the global damages.”57
The court granted the LAPs’ request and the LAPs submitted seven new reports to the Lago Agrio
court from newly hired experts.58 The LAPs’ attorneys had instructed the new experts to rely on the
Cabrera report but had not told them that Cabrera’s report had been written by Stratus Consulting and
53
Chevron Corp. v. Donziger, 886 F. Supp. 2d at 261.
54
Id.
55
Hendricks Decl [DI 9] Ex. 13 (May 20, 2010 email from PB partner Eric Westernberger
to others).
56
Champion Decl. [DI 400] Ex. 2060 (June 14, 2010 email).
57
Stavers Decl. [DI 549] Ex. 2420 (Fajardo declaration submitted to Lago Agrio court (the
“Fajardo Lago Agrio Decl.”)), at 2.
58
Chevron Corp. v. Donziger, 886 F. Supp. 2d at 261.
18
the LAP team rather than Cabrera.59 This occurred despite the fact that, in Mr. Donziger’s words, the
“general idea” had been that “Stratus would draft the report in a form that could be submitted directly
to the Ecuadorian court by Mr. Cabrera.”60 “[T]he . . . [new] experts that submitted reports later
admitted that they never had traveled to Ecuador for the purpose of gathering data to support their
reports. At least four relied on the data and conclusions in the Cabrera report.”61 For example, one
of the purportedly independent cleansing experts later admitted that he had “relied on parts of the
Cabrera report” and “made no efforts to independently verify underlying data.”62 Another expert said
he relied on “data series and cost figures” from the Cabrera report without “know[ing] one way or
the other whether they’re correct or not.”63
In the Judgment, which allegedly was written by the LAPs and signed by the judge
in exchange for the promised bribe, the Lago Agrio court purported to disclaim reliance on the
Cabrera report. The Judgment, however, contains at least some evidence that it relied upon the
Cabrera report in that it relied on cleansing reports, which in turn rested on Cabrera. For example,
in assessing damages, the Judgment cited a cleansing report that “contain[ed] no damage assessment
59
See e.g., Stavers Decl. [DI 549] Ex. 2417 (Shefftz deposition transcript), at 68:14-24
(cleansing expert was told “that the Cabrera report was prepared by an independent [and
neutral] expert”).
60
Hendricks Decl. [DI 8] Ex. 6 (Donziger deposition transcript), at 2253:5-11.
61
Chevron Corp. v. Donziger, 886 F. Supp. 2d at 261.
62
Champion Decl. [DI 400] Ex. 2073 (Allen deposition transcript), at 171:18-172:3.
63
Champion Decl. [DI 400] Ex. 2074 (Shefftz deposition transcript), at 63:3-21.
19
independent of that in the Cabrera report.”64 Thus, this Court concluded on the partial summary
judgment motion that “[t]he uncontradicted evidence . . . shows that the Cabrera report was tainted
and that the Lago Agrio court relied to some extent on that report, both directly and via its reliance
on the [cleansing] report.”65
*
*
*
Based on the foregoing, the Court concluded that there is
“probable cause to suspect, taking the matters essentially in chronological order, that
(1) the LAPs wrote the Calmbacher reports that were filed with the Lago Agrio court
and attached Calmbacher’s signatures to them, knowing that the reports did not reflect
his views, (2) the judicial inspection process was terminated, the global expert
proposal adopted, and Cabrera selected as the global expert as a result of the LAPs’
threat that they would file a misconduct complaint against the judge if he did not
accede to their wishes that he take these actions, (3) the LAPs secretly planned and
wrote all or at least the great majority of Cabrera’s report, were complicit in its
presentation to the Lago Agrio court as Cabrera’s independent work, and took other
steps to bolster the false pretense that the report had been independent, (5) the LAPs
entered into an improper relationship with Judge Zambrano during his first tenure as
the presiding judge pursuant to which Judge Zambrano agreed ‘to quickly move the
case along in their favor,’ (6) and the LAPs then entered into a supplementary and
equally improper relationship with Guerra pursuant to which Guerra agreed to move
the case quickly and limit Chevron’s procedural options ‘by not granting their
motions on alleged essential errors in rulings [Guerra] was to write, in exchange for
payment by the LAPs’ representatives of approximately USD $1,000 per month for
writing the court rulings Mr. Zambrano was supposed to write.’ In addition, there is
probable cause also to suspect that LAP lawyers and other representatives later bribed
Judge Zambrano to obtain the result they wanted and, pursuant to the arrangement
they struck with him, actually wrote the decision to which he signed his named after
some cosmetic and inconsequential editing by Guerra.”66
The Court therefore held that Chevron had satisfied the first prong of the crime-fraud exception to
64
Chevron Corp. v. Donziger, 886 F. Supp. 2d at 290.
65
Id.
66
Chevron Corp. v. Donziger, 2013 WL 1087326, at *12.
20
the attorney-client privilege – that there was probable cause to suspect a crime or fraud had been
committed – with respect to five topics: the Calmbacher report, the decision to terminate the judicial
inspection process, the selection and appointment of Cabrera and the preparation and submission of
his report, the authorship of the Judgment, and the submission of declarations signed by Fajardo to
the Lago Agrio court and U.S. courts, which concealed and misrepresented material facts regarding
the Cabrera report.67
IV.
Chevron’s Unsuccessful Attempts to Obtain Discovery from Defendants
Some important events described above occurred in Ecuador and involved Mr.
Donziger and/or the Ecuadorian lawyers and associates. Nonetheless, in both this action and the
Count 9 Action,68 defendants have refused to produce any documents in the possession, custody, or
control of their attorneys and agents in Ecuador. While their refusal has remained consistent, the
basis they have provided for it has changed dramatically throughout the history of this case.
67
Subsequent to the Court’s crime-fraud ruling, Chevron settled with the Stratus defendants.
DI 1002. Two of the Stratus defendants – Douglas Beltman and Ann Maest – submitted
declarations in which they attested in substance that, at the direction of Donziger, they had
written the Cabrera report and several of its annexes, and that the report’s damage
calculations and scientific conclusions were based at least in part on faulty assumptions and
improper and unreliable calculations and scientific techniques. See Stavers Decl. [DI 1007]
Exs. 3652, 3653. These declarations were filed subsequent to the Court’s order compelling
production of documents from Ecuador. The Court did not rely on them in concluding that
production was appropriate.
68
The “Count 9 Action” refers to 11 Civ. 3718 (LAK), which came into existence by the
severance of Count 9 of Chevron’s amended complaint in this action. The Count 9 Action,
which sought a declaratory judgment, has been dismissed.
21
A.
The Motion to Compel Production of Ecuadorian Documents in the Count 9 Action
The first point to bear in mind is that the defendants’ contention that production of
documents in the hands of their Ecuadorian lawyers and associates would violate Ecuadorian law is
a belated afterthought. Documents in the hands of those individuals and entities were sought in the
Count 9 Action, but defendants made no such argument there despite extensive litigation concerning
the production of those documents.
Chevron first moved in the Count 9 Action to compel the LAP Representatives to
produce documents in the possession, custody, or control of their attorneys in Ecuador.69 The LAP
Representatives opposed the motion, contending, inter alia, that they could not produce those
documents because the Ecuadorian attorneys were not their agents and therefore were not subject to
their control.70 They did not contend that production would be unlawful under Ecuadorian law. This
Court ordered production, holding that (1) Federal Rule of Civil Procedure 34 requires that a party
served with a request for documents produce requested items “in the responding party’s possession,
custody, or control,” (2) lawyers are agents of their clients and, therefore, (3) the LAP
Representatives were obliged to produce all responsive documents in the possession, custody, or
control of their Ecuadorian attorneys and agents.71
Notwithstanding the Court’s order, the LAP Representatives refused to produce any
69
11 Civ. 3718, DI 77.
70
11 Civ. 3718, DI 96.
71
11 Civ. 3718, DI 101 (citing Fed. R. Civ. P. 34(a)(1)).
22
documents from their Ecuadorian attorneys. Chevron moved for sanctions72 in response to which the
LAPs offered a new basis for their nonproduction – they argued, inter alia, that collecting, reviewing,
and producing documents from their “approximately 87 lawyers . . . who have represented the
Ecuadorian claimaints” would be too burdensome.73
Magistrate Judge James C. Francis IV rejected the LAP Representatives’ position,
again ordered production, and deferred determination of Chevron’s motion for a contempt ruling
pending defendants’ compliance with the order.74 Ultimately, the dismissal of the Count 9 Action
intervened before the sanctions issued was decided. But the key point for present purposes is that
the defendants at no point argued in the Count 9 Action that production of the Ecuadorian documents
was foreclosed by Ecuadorian law.
B.
Chevron’s Document Requests in this Action
Chevron served its first set of requests for the production of documents in this action
on the Donziger Defendants and the LAP Representatives on June 7, 2012.75 The defendants served
72
See 11 Civ. 3718, DI 178.
73
11 Civ. 3718, DI 215, at 7-8.
74
11 Civ. 3718, DI 240.
75
Champion Decl. [DI 895] Exs. 3504, 3505, 3506, 3507.
The document requests stated that they required production of responsive documents“in the
possession, custody, or control of DEFENDANT’s agents, attorneys or representatives
(including but not limited to attorneys in this action, attorneys in the LAGO AGRIO
LITIGATION, Pablo Fajardo Mendoza, Luis Yanza, Julio Prieto Méndez, Juan Pablo
Sáenz).” E.g., DI 3504, at 1.
23
their responses and objections on July 9, 2012.76 They did not object to the requests on the ground
that any specific provision of Ecuadorian law prevented their attorneys and agents from producing
the requested documents to them.77 Nor did they object to producing responsive documents in the
physical possession of their Ecuadorian attorneys and allies on the ground that they lacked control
over or practical ability to procure the documents from them.78 And the LAP Representatives did not
contend that they could not be compelled to produce documents because they were objecting to the
exercise of personal jurisdiction over them. Nonetheless, defendants failed to produce – or to claim
privilege as required by Rule26(b)(5)(A) and S.D.N.Y. Rule 26.2 with respect to – any responsive
documents in the possession, custody, or control over their agents and attorneys in Ecuador.79
76
See Donziger Defs.’ Responses and Objections to Chevron Corp.’s First Set of Requests for
the Production of Documents [DI 1508]; LAP Reps.’ Joint Amended Objections and
Responses to Chevron’s First Set of Requests for Production of Documents [DI 616], Ex.
2.
77
See DI 616, Ex. 2. The LAP Representatives did lodge boilerplate objections to Chevron’s
document requests, contending that the requests “call for . . . documents . . . that are
protected from disclosure by the attorney-client privilege, the work product doctrine, the
common-interest privilege, and/or any other privilege, immunity, confidentiality, or
limitation on discovery pursuant to the constitutions, laws, or judicial orders of any tribunal
of either the United States or the Republic of Ecuador.” Id. at 15. Insofar as they purported
to invoke Ecuadorian law, on an “and/or” basis, they failed to identify any particular
Ecuadorian law or decisions said to preclude disclosure.
78
Id.
79
While defendants did object to production on alleged privilege grounds, they did so only
in conclusory terms. Their failure to file the privilege logs required by the rules cited in the
text waived any privilege objections that otherwise might have existed. See infra n. 235 and
accompanying text.
24
C.
The Motion to Compel in this Action
Chevron first moved on August 12, 2012 to compel the LAP Representatives and the
Donziger Defendants to produce responsive documents in the hands of their Ecuadorian lawyers and
other associates.80 This time the LAP Representatives conceded that Fajardo was their agent.81 They
nevertheless resisted the motion, arguing, inter alia, that the motion was premature and that Chevron
had failed to establish that the ADF, Yanza, and Selva Viva were their agents or subject to their
control.82 The Donziger Defendants argued that Chevron had not shown that Mr. Donziger had the
practical ability to obtain documents from his Ecuadorian co-counsel and the others.83 Now, however
– for the first time in over a year of litigation concerning Chevron’s efforts to obtain production of
responsive documents from the LAPs’ Ecuadorian attorneys and allies – both the Donziger
Defendants and the LAP Representatives claimed that Ecuadorian law prohibited the attorneys from
turning them over.
The LAP Representatives submitted a declaration by an Ecuadorian lawyer who
contended that a “quasi-contractual community” among a group of clients represented by a single
lawyer is created by Ecuadorian law and that anything belonging to any of the member of the
community belongs to the community as a whole.84 This includes documents and “client secrets.”
80
DI 562.
81
DI 563, at 2.
82
Id.
83
DI 564, at 1-2.
84
DI 563, Ex. 1.
25
The attorney, he argued, cannot provide to any individual client his or her own documents (or any
documents belonging to the community) without the express permission of every member of the
community. Production of responsive documents in the hands of the Ecuadorian lawyers, he
asserted, therefore would be forbidden absent the express permission of all of the clients – the LAPs.
Chevron disputed these conclusions with a declaration of another Ecuadorian lawyer,
who contended that the LAP Representatives’ argument was erroneous.85 In the end, however, it
became unnecessary to resolve this dispute, which was overtaken by events.
1.
The Córdova Lawsuit
While Chevron’s motion was pending, and unbeknownst to Chevron or the Court,
Attorney Smyser, formerly an attorney in this case for the LAP Representatives, “suggest[ed]” – as
he put it – “to the Ecuadorian legal team that someone should consider seeking an Ecuadorian court
ruling on the issue of document production.”86 Although Smyser claimed that “Mr. Fajardo did not
indicate whether he would act on the suggestion,”87 a lawsuit was filed in Ecuador on October 18,
2012, in the name of one of the non-defending LAPs, Octavio Ismael Córdova Huanca, against
Córdova’s attorneys – Fajardo, Sáenz, and Prieto, as well as Yanza – to bar them from turning over
85
Ltr., Randy Mastro, Sept. 5, 2012.
86
DI 899 (Ltr., Craig Smyser and Larry R. Veselka, Mar. 8, 2013), at 2; see also Smyser Decl.
[DI 952], at ¶ 2 (“On October 4, 2012, I participated in a phone call with Pablo Fajardo and
Jarod Stewart and discussed, among other things, Chevron’s motion to compel . . . . I
suggested that given the parties’ competing expert declarations on an issue of Ecuadorian
law, the best way to resolve the issue would be to ask an Ecuadorian court for a ruling on the
rights and obligations of the lawyers and the clients in this relationship governed by
Ecuadorian law.”).
87
Smyser Decl. [DI 952], at ¶ 2.
26
any information in discovery in this case (the “Córdova Lawsuit”).88
Three months later, the LAP Representatives for the first time informed Chevron and
this Court of the Córdova lawsuit89 when they submitted a copy of a ruling from an Ecuadorian trial
court which stated that:
“PABLO FAJARDO MENDOZA, LUIS FRANCISCO YANZA ANGAMARCA,
JULIO MARCELO PRIETO MENDEZ, and JUAN PABLO SANEZ MENA, ARE
ORDERED NOT TO DELIVER TO Judge Lewis Kaplan of second district of the
State of New York, or to anyone, any information that they have [or various
categories of documents] that has been generated by, or is known to, the
DEFENDANTS by their representation and that is available to them regarding the
lawsuit against Chevron.”90
This ruling, the defendants contended, “control[led] the issue of obtaining discovery in Ecuador.”91
2.
The Ruling on the Motion to Compel
The Court granted Chevron’s motion to compel documents from the LAP
Representatives’ Ecuadorian attorneys and agents by order dated February 11, 2013, with the promise
of a fuller opinion to follow.92 The order provided in relevant part:
“The Court now grants Chevron’s motion (Dkt. 562) in all respects. The LAP
Representatives and Donziger, in responding to the Chevron RFP, shall produce all
responsive documents that are in the possession, custody or control of their
Ecuadorian attorneys and agents. Any such responsive documents as to which no
88
DI 734, Ex. A (Córdova Ruling).
89
See DI 734.
90
DI 734, Ex. A (Córdova Ruling), at 4-5.
91
DI 734.
92
DI 787.
27
work product or attorney-client privilege is claimed shall be produced on or before
March 6, 2013, which is 21 days after the date of this order and is consistent with the
schedule to which the parties stipulated in Dkt. 703. In the event work product,
attorney-client privilege, or other privilege is claimed with respect to any such
responsive documents, the LAP Representatives and Donziger shall provide a
privilege log on or before February 22, 2013, the date agreed upon in the parties’
Third Discovery Stipulation, dated February 11, 2013.”93
The order further directed defendants to advise the Court whether they would comply
with the order compelling production. The defendants responded that they would not.94
D.
The Motion for Sanctions
Chevron then moved, on March 12, 2013, to sanction and hold the Donziger
Defendants and the LAP Representatives in contempt and to grant other relief for their failure to
comply with the Court’s order compelling production of the Ecuadorian documents.95 Chevron
argued that defendants’ failure to comply with the order, as well as various other discovery abuses,
justified imposition of a wide array of sanctions, including holding defendants in contempt, entry of
default judgments, striking defendants’ affirmative defenses, prohibiting defendants from opposing
Chevron’s RICO and fraud claims, entering adverse findings of fact, and directing the jury to draw
adverse inferences as to the Ecuadorian documents.96
Defendants argued that sanctions would be inappropriate because, among other
93
Id.
94
Then-counsel for the defendants stated that they had informed Fajardo of the order and
asked him whether he would provide the responsive documents, but that Fajardo declined.
DI 836, DI 841.
95
DI 893.
96
Id. at 19-23.
28
reasons, compliance with the Court’s order was impossible under Ecuadorian law. The LAP
Representatives argued also – for the first time in this matter – that the Court’s order compelling
production did not apply to them because the Court lacks personal jurisdiction over them. The
Donziger Defendants reiterated their argument, first made in opposition to Chevron’s motion to
compel, that they could not obtain documents from the Ecuadorian attorneys and associates because
they were not Mr. Donziger’s agents and he did not control them.
On April 16 through 18, 2013, the Court held an evidentiary hearing limited to the
issues:
“1.
Whether and to what extent Donziger, the LAP Representatives, and their
respective U.S. counsel acted in good faith to produce documents that are
response to Chevron’s First Set of Requests for Production of Documents and
that are located in Ecuador.
2.
Whether and to what extent Donziger, the LAP Representatives, and their
respective U.S. counsel have acted in good faith to comply with this Court’s
order of February 13, 2013 [granting Chevron’s motion to compel the
production of documents in the possession of defendants’ attorneys and agents
in Ecuador].
3.
Whether and to what extent Donziger, the LAP Representatives, and their
respective U.S. counsel acted improperly or in bad faith with respect to the
commencement, prosecution, and disclosure or lack thereof of proceedings in
Ecuador that culminated in [the Córdova ruling] and in relation to the delay
of proceedings in this Court during the pendency of that Ecuadorian
proceeding.
4.
Whether and to what extent Donziger, individually and through his U.S.
counsel, has and has had the practical ability to obtain documents and
information from the LAPs’ Ecuadorian counsel, Luis Yanza, Selva Viva, and
the Amazon Defense Front.
5.
Whether and to what extent the LAP Representatives, individually and
through Donziger, Donziger’s U.S. counsel, and their own U.S. counsel, have
and have had the practical ability to obtain documents and information from
the LAPs’ Ecuadorian counsel, Luis Yanza, Selva Viva, and the Amazon
29
Defense Front.”97
Discussion
Part I below elucidates the bases for the order granting Chevron’s motion to compel
– to that extent, this is the opinion promised by the February 11, 2013 order compelling production
(the “February 11 Order”). Part II deals with the motion for sanctions.
In setting forth the basis for the February 11 Order, the Court refers only to evidence
before it at the time that order was issued. Additional pertinent evidence – including the record of
the April 2013 evidentiary hearing on the motion for sanctions – was placed before it later and is
considered in Part II.
I.
The February 11 Order Compelling Production
Rule 26 of the Federal Rules of Civil Procedure provides that a party “may obtain
discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense.”98 Rule
34 in turn provides that a party served with a document request must produce requested items “in the
responding party’s possession, custody or control.”99 A party is deemed to “control” documents that
it has the legal right or the practical ability to obtain – even where those documents are in the
physical possession of non-parties.100 “Documents in the possession of a party’s attorney may be
97
DI 997.
98
Fed. R. Civ. P. 26(b)(1).
99
Fed. R. Civ. P. 34(a)(1).
100
7 MOORE’S FEDERAL PRACTICE § 34.14[2], at 34-73 to 34-77, 34-79, 34-81-82 (3d ed.
2013); 8B C. WRIGHT & A. MILLER, FEDERAL PRACTICE AND PROCEDURE: CIVIL § 2210, at
30
considered to be within the control of the party.”101
Defendants refused to produce any documents – or even enumerate documents as to
which they claimed privilege or work product protection – in the possession of their lawyers and
agents in Ecuador. They made essentially three arguments in opposition to the motion to compel:
(1) the LAP Representatives contended that Chevron failed to show that Yanza, the ADF, and Selva
Viva were agents of the LAPs and therefore subject to their control; (2) the Donziger Defendants
argued that Chevron did not establish that they had the practical ability to obtain documents in the
possession of the Ecuadorian attorneys; and (3) both the Donziger Defendants and the LAP
Representatives claimed that their Ecuadorian attorneys were prevented by Ecuadorian law from
producing documents they obtained from the LAPs or created in the course of representing them.
As these arguments are somewhat entwined with one another, a brief description of the Court’s
discussion of them is in order.
First, as noted, Rule 34 requires a party to produce documents over which it has
practical control. Thus, Parts A and B explain the basis for the Court’s conclusions that Mr. Donziger
and the LAP Representatives have practical control over the Ecuadorian attorneys and associates.
Second, as will be seen, a Court may compel production of documents even where
foreign law prohibits it, but only if (1) it has personal jurisdiction over the parties from whom
production is sought, and (2) ordering production is in accord with principles of international comity.
In Part C(1), the Court explains its conclusion that it has personal jurisdiction over the LAP
149-153 (2010).
101
7 MOORE’S FEDERAL PRACTICE § 34.14 [2][c], at 34-80.
31
Representatives, at least for purposes of the motion to compel.102 Having concluded that defendants
have at least practical control over the Ecuadorian documents and that the Court has personal
jurisdiction over the LAP Representatives for this purpose, the Court concludes in Part C(2)(a) that
Ecuadorian law at least nominally prohibits production of the documents from Ecuador.
Nevertheless, in Part C(2)(b) it explains that the Ecuadorian prohibition was not conclusive and that
the factors pertinent to the comity analysis warranted the conclusion that the February 11 Order,
which compelled production of responsive documents in the possession of the Ecuadorian attorneys
and agents, was appropriate.
A.
Mr. Donziger Has Had the Practical Ability to Obtain the Ecuadorian Documents
In determining who controls and directs the Lago Agrio litigation and the lawyers and
associates working for the LAPs, we must begin with the person who claims – in his words – to
“know more about the details of this story than anybody,”103 Mr. Donziger. Donziger – again in his
own words – is “the person primarily responsible for putting [the Lago Agrio team] together and
supervising it.”104 He is – yet again, in his words – “at the epicenter of the legal, political, and media
activity surrounding the case both in Ecuador and the U.S. [and has] close ties with almost all of the
important characters in the [cases], including Amazon indigenous leaders, high-ranking Ecuadorian
government officials, the world’s leading scientists who deal with oil remediation, environmental
102
It is not disputed that the Court has personal jurisdiction over Donziger.
103
Hendricks Decl. [DI 9] Ex. 14 (Donziger book proposal), at 2.
104
Id.
32
activists, and many of Chevron’s key players.”105
Mr. Donziger has been “working on the . . . case . . . almost since the day [he]
graduated from Harvard Law School in . . . 1991.”106 He was invited by an Ecuadorian lawyer
working in the United States – Cristobal Bonifaz – to travel to Ecuador and speak with the residents
of the Ecuadorian rainforest about whether to bring a lawsuit against the Texaco Petroleum Company
(“TexPet”), then a fourth-tier subsidiary of Texaco.107 Donziger and the other lawyers eventually
filed suit in this Court against TexPet and others on behalf of a class of Ecuadorian plaintiffs who
claimed TexPet had caused harm to their health and environment.108 The case – Aguinda v. Texaco
– eventually was dismissed on the ground of forum non conveniens.109
While Aguinda was pending in New York, however, Texaco signed a settlement
agreement with the Republic of Ecuador (“ROE”) and Petroecuador, Ecuador’s state-owned oil
company, under which TexPet agreed to perform environmental remediation work in exchange for
the ROE and Petroecuador releasing it from all liability and claims.110 But the settlement and release
ultimately failed to end all litigation against TexPet relating to its work in Ecuador. In 1999, while
105
Id. at 4.
106
Id.
107
Id. at 9. Chevron acquired all of the shares of Texaco in 2001. Chevron v. Donziger, 886
F. Supp. 2d at 241.
108
Chevron v. Donziger, 886 F. Supp. 2d at 241-42.
109
Aguinda v. Texaco, 303 F.3d 470 (2d Cir. 2002).
110
Chevron Corp. v. Donziger, 768 F. Supp. 2d at 598; Republic of Ecuador, 376 F. Supp. 2d
at 342; 11 Civ. 3718, Hendricks Decl. II Ex. 46.
33
the Aguinda plaintiffs were litigating Texaco’s motion to dismiss, Ecuador enacted the
Environmental Management Act of 1999 (the “EMA”), which inter alia created a new private right
of action for damages for the cost of remediation of environmental harms generally.111 The EMA
became the basis upon which the Lago Agrio case was brought. And it eventually became clear that
Bonifaz and his team – which included Mr. Donziger – had “worked with Ecuadorian lawyers to draft
[the EMA] similar to the U.S. superfund law” in preparation “for a possible move [of the case] from
U.S. courts.”112
In 2003, following the dismissal of Aguinda, the LAPs, represented by Ecuadorian
counsel acting with Mr. Donziger, filed suit against Chevron – which by then had acquired all of
Texaco’s common stock in a reverse triangular merger – in Lago Agrio, Ecuador.113 Because
Donziger was not licensed to practice law in Ecuador, however, a local lawyer was needed to appear
in court. Alberto Wray initially was the lead Ecuadorian lawyer.114 Donziger later promoted Fajardo
to lead the Ecuadorian team,115 and he has worked intimately with Fajardo ever since.
Mr. Donziger’s dominant role with respect to Fajardo and the more junior Ecuadorian
lawyers is clear from his own writings. Donziger refers to them as his “local counsel.”116 Fajardo
111
Chevron v. Donziger, 886 F. Supp. 2d at 242 (citing Act 99-37, Registro Oficial No. 245,
July 30, 1999).
112
See 11 Civ. 3718, Hendricks Decl. II, at 2.
113
Chevron v. Donziger, 886 F. Supp. 2d at 243.
114
Hendricks Decl. [DI 9] Ex. 14 (Donziger book proposal), at 22.
115
See id. at 21, 25-26.
116
Gomez Decl. [DI 287], Ex. 15 (Donziger Dep.), at 3440:5-10.
34
refers to Donziger as “as the ‘cabeza’ [i.e., the head or chief] of the lawsuit.”117 Donziger once wrote
that Fajardo “at times . . . seems very immature and unsophisticated - but the only thin[g] holding
him back is lack of experience.”118 In particular, Donziger felt that Fajardo and the other Ecuadorian
lawyers did not fully comprehend the necessity of making sure the Ecuadorian judges “fear[ed]”
them. He wrote of a conversation he once had with Fajardo and Yanza:
“I launched into my familiar lecture about how the only way the court will respect us
is if they fear us - and that the only way they will fear us is if they think we have . .
. control over their careers, their jobs, their reputations - that is to say, their ability to
earn a livelihood. Goes back to what Mateo said months ago, to my Peru analogy
about that petty thief being burned at the stake. I have never felt Pablo understood
this fundamental issue, even though he is a committed leftist - it’s like he really
believes in the law as a vehicle for social change. But it also has to do with
something he can’t control, but I suspect that he realizes privately - his lowly social
status in a country where privilege is ingrained and totally tied to power. When Pablo
walks into the court, he is one of them, no different from the secretaries and clerks a punk kid from the Amazon, with nothing to back him up, nothing to fear, no strings
to pull. When [Texaco’s lawyer] walks into the court, he has 500 years of history
behind him - plus the awesome power of an international company, unlimited
resources, full-page ads, a villa on a military base, and utter arrogance that comes
from knowing you are the it man. So when Pablo says he talks to Guerra, or any of
the other judges, I just don’t know what happens behind those doors. I know he does
his best, and what he says is likely excellent. But they don’t fear him, and without
fear, we are going to lose no matter how strong the evidence. In fact, because there
is so little fear of us, Texaco is in the game in a big way despite the fact they are
losing overwhelmingly.”119
Donziger expressed also his concern that Texaco’s lawyers “just out-argue us and my biggest concern
is that I don’t think Pablo [Fajardo] and Julio [Prieto] can do much better than they are doing, given
their capacities and lack of understanding of Ecuadorian and international law. . . . They don’t have
117
Hendricks Decl. [DI 28] Ex. 76 (Donziger journal), at 23 of 109.
118
Id. at 28 of 109.
119
Id. at 55 of 109.
35
the capacity.”120
In light of the foregoing, it is not surprising that Mr. Donziger “play[s] [what he has
called] an integral role i[n] designing the [Lago Agrio] trial strategy and working closely with”
Fajardo, Yanza – whom he has described as his “closest friend in Ecuador and the coordinator of the
case for the affected communities” – and the rest of the Ecuadorian team.121 His “supervis[ion]”122
of the Lago Agrio litigation and the LAPs’ Ecuadorian lawyers has been extensive. He has visited
his “local counsel” in Quito at least monthly. He has reviewed the Ecuadorian lawyers’ work
product, provided them with memoranda and documents to be filed with the Lago Agrio court (at
least one of which in substance ended up in the Judgment despite the fact that it is not in the Lago
Agrio record),123 coordinated filings both in Ecuador and in the various U.S. litigations,124 met with
several of the Ecuadorian judges presiding over the Lago Agrio case,125 and managed the LAPs’
120
Id. at DONZ00036231-32.
121
Hendricks Decl. [DI 9] Ex. 14 (Donziger book proposal), at 21.
122
Id. at 2.
123
See Chevron Corp. v. Donziger, 2013 WL 1087236, at *9 & n.78 (discussing memo written
by Donziger intern whose analysis on Australian causation law ended up in the Judgment).
124
See e.g., Hendricks Decl [DI 28] Ex. 76 (Donziger journal) at 44 of 109 (“Feel overwhelmed.
I need another lawyer. I have the annexes [to the Cabrera report], the intervention in Sand
and SF, the Bar complaint, Miles and the FCPA complaint, the Fraud memo – we have to
get this stuff in.”).
125
See, e.g., id. at 4 of 109 (“Met with judge in Lago on April 10. . . Met in empty warehouse
near his house, across from the TAME office in Lago Agrio. He seemed very agitated.
Said we were not helping him.”); 26 of 109 (“Guerra will be the judge to decide the case.
We have to start lobbying him, working with him.”); id. at 36 of 109 (“Meeting with Judge:
on Sat night at Lupe’s house.”); id. at 38 of 109 (“Meeting with Judge in hotel: On Tuesday
night in Hotel Auca”); id. at 26 (Jan. 19, 2007 journal entry noting: “Met with judge last
36
experts. Donziger hired and worked directly with Stratus, which wrote Cabrera’s report.126 Indeed,
he was present at meetings in which members of the LAP team met ex parte with Cabrera and a
representative of Stratus to discuss the extent to which Stratus would be involved in drafting the
report.127
Mr. Donziger’s own words are not the only proof of his extensive involvement in and
control over the Lago Agrio litigation. Indeed, the retention agreement into which he entered with
the LAPs and Fajardo very clearly enumerates his responsibilities and makes clear his role as chief
of the Lago Agrio team. That agreement, entered into in January 2011, provides:
night in house. Humble house, furniture. Made tea. I really like the guy. Remember last
August I wanted to ride the wave and get him off case? This was an example of Pablo’s
total intelligence. We saved him, and now we are reaping the benefits.”); id., at 1 of 109
(“Two very disturbing meetings with Judge in Lago on May 21. First with Trudie and
Luis Yanza full of his charm and bullshit, starts blaming Texaco for filing too many
papers. And then that night, I saw another side of Pablo. He called to ask if I would call
the judge so we could go see him at his house. . . . I called the judge and he asked that
we bring over some whiskey or some wine. We didn’t. When we got there, he was
clearly drunk and had a young woman.”); id. at DONZ0036233 (“lunch after with judge,
he hits on Atossa and two Scandanavian [sic] women”); id. at DONZ0036235 (“Lunch
meeting with judge. This was second meeting with judge - had lunch with him the previous
day in Cangrejo Rojo. I love it – this lobbying. I am good at it.).
126
See Chevron Corp. v. Donziger, 886 F. Supp. 2d at 258-59 (describing meeting Donziger,
a Stratus representative, and others had with Cabrera to “lay out the entire case and legal
theory for Mr. Cabrera.”) The Reyes declaration states that Donziger asked Reyes to serve
as an independent expert to “monitor” the settling experts in the Lago Agrio case. Chevron
Corp. v. Donziger, 2013 WL 1087236, at *10 (citing Mastro Decl. [DI 658] Ex. 3014 (Reyes
Decl.)). According to Reyes, Donziger asked Reyes to write a report establishing that the
settling experts were wrong. Id. Later, Donziger and the other LAP lawyers informed Reyes
that they wanted him to serve as the global “court-appointed” expert. Id. at *11. When the
Lago Agrio court “put up hurdles” to his appointment, Donziger and Reyes discussed
appointing Cabrera instead. Id. Reyes’ account is corroborated – at least to some degree –
by Donziger’s own journal. See Hendricks Decl [DI 28], Ex. 76, at 18 of 109, 20 of 109,
DONZ0036276.
127
Chevron Corp. v. Donziger, 886 F. Supp. 2d at 258; In re Application of Chevron Corp., No.
M–19–111, Berlinger Decl. ¶ 18; Hendricks Decl. [DI 8], Ex. 6 (Donziger Dep. Transcript),
at 1120-1121.
37
“(2)
Devotion of Resources
(a)
[Mr. Donziger’s] Firm agrees that it shall zealously represent the
[LAPS] in connection with the [Lago Agrio] Litigation and shall
commit substantial resources to the Litigation as may be required in
order to zealously prosecute and defend the Litigation whether
foreseen or unforeseen. . . .
(b)
In addition, the [LAPs] hereby appoint Steven R. Donziger, Esq. To
act as their United States Representatives (“Plaintiffs’ U.S.
Representatives”) to exercise overall responsibility for the strategic
direction of the [Lago Agrio] Litigation and the day-to-day
management of the [Lago Agrio] Litigation. Without limiting the
generality of the foregoing, the Plaintiffs’ U.S. Representative shall
have primary responsibility for the following:
(i)
coordinating the overall legal strategy of the Plaintiffs to
pursue and defend all aspects of the [Lago Agrio] Litigation,
as applicable, in such a manner as to advance and further the
interests of the [LAPs] in the [Lago Agrio] Litigation to
maximum extent (including, without limitation, coordinating
the United States legal strategy with the Ecuadorian legal
strategy);
(ii)
assembling and organizing the various United States lawyers
and law firms who or which from time to time will represent
the [LAPs] in connection with the [Lago Agrio] Litigation
(including, without limitation, preparing and negotiating
engagement agreements with such lawyers and law firms on
behalf of the Plaintiffs; and coordinating the efforts and
undertakings of such lawyers and law firms);
(iii)
coordinating the efforts to procure funding or financing for the
[Lago Agrio] Litigation from on or more third parties . . . .
(iv)
assembling and organizing the various non-legal advisors,
experts, service provides and others who or which from time
to time will assist the Plaintiffs in pursuing and/or defending
various aspects of the [Lago Agrio] Litigation and
coordinating the efforts and undertakings of such advisors,
experts, service providers and others; and
(v)
coordinating the media, public affairs and public relations
activities on behalf of the [LAPs] . . . .”
38
“The Plaintiffs’ U.S. Representative hereby acknowledges that, in carrying out the
foregoing responsibilities, he will be required to provide his efforts in the United
States, Ecuador and elsewhere.”128
And, as his retention agreement makes clear, Mr. Donziger’s involvement has not
been limited to Ecuador. The Court previously has noted that “[Donziger’s] firm has been the
functional equivalent of the LAPs’ New York office.”129 He has performed a variety of roles on
behalf of the LAPs, including in New York – “public relations, hiring and consulting with experts,
political activity, fund raising and so on.”130 He persuaded Berlinger to film and produce Crude.131
He reached out to financial and political bodies to support and publicize the litigation and to exert
pressure on Chevron to settle.132 And he contacted New York’s then Attorney General,133 who sent
Chevron a letter requesting follow up about the veracity of Chevron’s public disclosures respecting
liability in Ecuador.134
Moreover, as the coordinator and supervisor of the LAPs’ team, Mr. Donziger largely
has controlled its funding. Donziger took the lead in soliciting funds from investors and was
128
Hendricks Decl. [DI 355] Ex. 1122 (Donziger retention agreement), at 2-3 (emphasis added).
129
Chevron Corp. v. Donziger, 768 F. Supp. 2d at 641.
130
Id.
131
Chevron Corp v. Donziger, 886 F. Supp. 2d at 244-45.
132
See, e.g., 10 MC 00002, Hendricks Decl. II Ex. 277.
133
Id., Ex. 6, at 719:2-720:12.
134
Id., Ex. 271.
39
primarily responsible for engaging the investment firms.135 And once the funding was secured, he
controlled or had veto power over the manner in which the funds provided to the Lago Agrio team
were spent.136 Mr. Donziger served also as the intermediary between the Ecuadorian lawyers and
associates and the Kohn law firm, which acted as the primary funder for the Ecuadorian litigation for
several years.137 Indeed, there is evidence that when the Ecuadorian lawyers and agents needed
money, they contacted Mr. Donziger, who transferred it to the team’s bank accounts in Ecuador.138
Mr. Donziger on occasion has even paid the salaries of his local counsel out of his personal
accounts139 and determined whether and to what extent they would receive bonuses for their work on
135
See, e.g., DI 814, Ex. 3 (Steven Donziger’s Responses and Objections to Chevron
Corporation’s First Set of Requests for Admission), at 156-57 (“REQUEST FOR
ADMISSION NO. 530: Admit that under the 2010 Torvia Agreement, Torvia made an
additional contribution in the amount of $1.25 million on August 17, 2010 into a bank
account held in YOUR name or controlled by YOU. RESPONSE TO REQUEST FOR
ADMISSION NO. 530: . . . Donziger admits that he received $1.25 million from Torvia
Limited on or about March 10, 2010.”).
136
See, e.g., 11 Civ. 03718, DI 44, Ex. 46 (Treca Funding Agreement), at Sched. 1, p. 2.
137
11 Civ. 3718, Champion Decl. [DI 37], Exs. 13-14 (Jan. 2007 emails between Donziger and
Joseph Kohn discussing Kohn’s transfers of money “to Quito” used to fund the litigation
and “pay off some debts”), Exs. 15-18, 24-29 (documents reflecting payments made by
Kohn to LAPs’ scientific consultants).
138
See, e.g., Champion Decl. [DI 400], Ex. 2021 (June 2007 emails between Donziger and
Yanza discussing transfers of money from Donziger to Yanza’s accounts), Ex. 2022 (Sept.
2007 email from Yanza to Donziger stating, “[w]e need 50 thousand more next Monday at
the latest.”); Ex 2026 (Sept. 2007 email from Yanza to Donziger relaying the ADF’s
account information and saying “I hope you make a deposit right away”).
139
See e.g., DI 562, Ex. 1, 2, (Donziger Dep. Tr.), at 4912:19-22 (“I think [Yanza’s] salary was
set by mutual consent between Mr. Kohn and myself on the one hand, and Mr. Yanza on
the other, when Mr. Kohn was involved in the case). See also DI 814, Ex. 2 ( Steven
Donziger’s Responses and Objections to Chevron Corporation’s First Set of Requests for
Admission), at 23 (“REQUEST FOR ADMISSION NO. 7: Admit that YOU were involved
in setting Luis Yanza’s monthly salary for his work concerning the LAGO AGRIO
40
the Lago Agrio team.140
The fact that Mr. Donziger has played the leading role in the litigation against
Chevron for many years is borne out by his position in the team’s compensation structure. Mr.
Donziger stands to receive more money from the Lago Agrio litigation than any other lawyer – or
law firm – working on the case for the LAPs. The LAPs have agreed to a contingent fee for all of
their lawyers of 20 percent of any recovery.141 Donziger’s retention agreement with them entitles him
to 31.5 percent of the total contingency fee.142 Thus, he would stand to receive over $1 billion if the
Judgment were collected in its entirety. This is more than three times the amount Fajardo would be
entitled to receive.143 In addition, Mr. Donziger’s retention agreement provides also that Mr.
Donziger is entitled to a monthly retainer – paid by the LAPs – for his services on the Lago Agrio
LITIGATION. RESPONSE TO REQUEST FOR ADMISSION NO. 7: . . . Donziger
admits that he was aware of, and at times participated in, discussion concerning Luis
Yanza’s compensation.”); id. at 24-25 (same for Juan Pablo Sáenz); id. at 26 (same for Julio
Prieto).
140
DI 562, at 3; Ex. 2 (Donziger Dep. Tr.), at 4913: (Q: Who determined whether Mr. Yanza
would receive a bonus? A: I think, again, it was done by mutual consent between Mr.
Yanza and myself after Mr. Kohn had withdrawn from the case.”). See also DI 814, Ex. 2
( Steven Donziger’s Responses and Objections to Chevron Corporation’s First Set of
Requests for Admission), at 23-24 (“REQUEST FOR ADMISSION NO. 9: Admit that
YOU were involved in setting Luis Yanza’s bonuses for work concerning the LAGO
AGRIO LITIGATION. RESPONSE TO REQUEST FOR ADMISSION NO. 9: . . .
Donziger admits that he was aware of, and at times participated in, discussion concerning
Luis Yanza’s compensation.”); id. at 25-27 (same for Juan Pablo Sáenz.); id. at 26 (same
for Julio Prieto).
141
Hendricks Decl. [DI 355] Ex. 1122 (Donziger retention agreement), at 3.
142
Id.
143
Hendricks Decl. [DI 355] Ex. 1106 (Fajardo retention agreement), at 2.
41
team.144
Nonetheless, despite the overwhelming evidence that Donziger has controlled the
Lago Agrio litigation team – as well as evidence that, when the American legal team (led by
Donziger and Patton Boggs) needed documents,145 declarations,146 or assistance from the Ecuadorian
attorneys, they got it – Donziger contended in his opposition to the motion to compel that he was
unable to obtain documents from the Ecuadorians. But he presented no evidence on the motion to
compel to support his assertion that he lacked control over the Ecuadorian attorneys and agents. He
pointed to no instance in which he had asked the Ecuadorians for documents and they had refused
to provide them,147 this despite Chevron’s presentation of evidence of many instances in which
Fajardo and others complied with Donziger’s various requests.148
The evidence Chevron presented, as well as Mr. Donziger’s failure meaningfully to
144
Hendricks Decl. [DI 355] Ex. 1122 (Donziger retention agreement), at 4.
145
See, e.g., Champion Decl. [DI 400] Ex. 2036 (Dec. 17, 2007 email from Fajardo to
Donziger) (“Commander, this is the document submitted by the expert that you requested”).
146
Chevron Corp. v. Donziger, 2013 WL 1087236, at *13-14 (describing how Donziger and PB
orchestrated the filing of a declaration signed by Fajardo – written by PB – to the District of
Colorado in the Stratus 1782 proceeding); id. (email from PB partner that said, “[t]his is why
we struggled with who should sign the declaration. If Steve [Donziger] signs, he will most
certainly be deposed. Same for any other counsel in the U.S. We figured that with
[Fajardo], they likely would not slow down the process by deposing him.”) (citing Stavers
Decl [DI 549] Ex. 2407).
147
Later, in response to Chevron’s motion to impose sanctions based on non-compliance with
the order compelling production, Donziger did submit evidence in an effort to establish that
he no longer had the practical ability to obtain the requested documents from Ecuador. We
discuss that evidence, which was not before the Court on the motion to compel production,
in connection with the application for sanctions.
148
See supra nn. 140, 141.
42
confront any of it, led the Court to find that Mr. Donziger – who initiated the Lago Agrio litigation,
put together the legal teams in Ecuador and the United States, controlled the funding and managed
the litigation strategy, and controlled at least to some degree the salaries of the Ecuadorian lawyers
– had and has the ability to obtain documents from his Ecuadorian team.
B.
The Ecuadorian Lawyers and Their Associates Are Agents of or Under the
Practical Control of the LAP Representatives
The LAP Representatives conceded on the motion to compel that Fajardo and the other
Ecuadorian attorneys are their agents for purposes of Rule 34.149 They argued, however, that Chevron
had failed to establish that the non-lawyers – Luis Yanza, the ADF, and Selva Viva – were their
agents and or otherwise subject to their control for purposes of Rule 34.150 This argument was belied
by the record as well as defendants’ own statements and actions throughout the history of this case.
As previously described, Donziger – in addition to being the LAPs’ so-called U.S.
Representative151 – is the “cabeza” or head of the Ecuadorian legal team. According to Donziger,
Yanza is not only Donziger’s “closest friend in Ecuador,” but “a central part of the [Ecuadorian]
litigation team, even though he is not a lawyer. He purports to represent the plaintiffs. He is
149
In the Count 9 Action, the Court ruled that the Ecuadorian lawyers were the LAP
Representatives’ agents and ordered production, stating “that the attorneys were agents of
their clients, and that ‘[a]n agent is subject to a duty to provide his principal with
information relevant to the affairs entrusted to him or her provided only that doing so would
not violate a superior duty owed to another.’” 11 Civ. 3718, DI 101, at 3 (citing Evvtex Co.
v. Hartley Cooper Assocs., Ltd., 102 F.3d 1327, 1332 (2d Cir. 1996); RESTATEMENT
(THIRD) OF AGENCY § 8.11 (2006). This is not disputed in this action.
150
DI 563, at 2.
151
Hendricks Decl. [DI 355] Ex. 1122 (Donziger retention agreement), at 1-2.
43
involved in strategy discussions. And throughout the many years of his involvement in the case, he
always has played that role.”152 At the direction of Donziger and Fajardo, Yanza consistently has
been a key player in the LAPs’ legal battle in Ecuador. He has “work[ed] full time in his role as case
coordinator for the” LAPs.153 He has lobbied the president of Ecuador on the LAPs’ behalf.154
According to Guerra, Yanza was involved in setting up and carrying out the scheme to pay Guerra
and Zambrano to render the Judgment in the LAPs’ favor. He has raised funds to support and run
the Lago Agrio litigation team and even signed the LAPs’ funding agreements with various litigation
funders on the LAPs’ behalf pursuant to a power of attorney.155 So too did he sign Donziger’s
retainer agreement on the LAPs’ behalf with U.S. counsel pursuant to a special power of attorney.156
The suggestion that he is not the LAPs’ agent and, in addition, subject to their practical control
through Donziger, strains credulity.
So does the argument concerning the ADF and Selva Viva, both of which are run by
Yanza. The ADF and Selva Viva were created by Yanza and others to handle the Lago Agrio team’s
funding and expenses and ultimately to deal with the proceeds from the Judgment. Yanza co-founded
152
Hendricks Decl. [DI 400] Ex. 2010 (Donziger Dep. Tr.), at 107:18-24.
153
DI 562, Ex. 2 (Donziger deposition transcript), at 4920:11-17.
154
In re Chevron Corp., 749 F. Supp. 2d at 155.
155
See 11 Civ. 3718, DI 44, Ex. 46 (Treca Funding Agreement), at S-3; DI 370-9 (Michael
Donziger Funding Agreement), at S-2; DI 355-36 (Sherman Funding Agreement), at S-2;
DI 355-32 (Torvia Limited Funding Agreement), at S-2; DI 355-36 (Wiese Funding
Agreement), at S-2.
156
Hendricks Decl. [DI 355] Ex. 1122 (Donziger retention agreement), at 12.
44
the ADF – a non-profit organization purporting to represent the LAPs in the Lago Agrio Litigation.157
And Yanza is “paid by the Lago Agrio Plaintiffs’ team for his services in running Selva Viva,”158 –
an entity created by the ADF to administer litigation funds159 – of which Mr. Donziger was and may
still be president.160
In entering the February 11 Order, the Court concluded that the Ecuadorian lawyers,
Yanza, the ADF, and Selva Viva are agents of the LAPs and, in any case, directly or indirectly
subject to their practical control.
*
*
*
Having determined that Donziger had the practical ability to obtain documents from
the LAPs’ Ecuadorian lawyers and associates and that the non-lawyer associates were agents of and
subject to the practical control of the LAP Representatives, the Court then turned to defendants’ final
argument: that production of the LAPs’ documents was illegal under Ecuadorian law. As will be
seen, the Court determined that ordering production of the documents was appropriate whether or not
Ecuadorian law prevented it. In so holding – although the LAP Representatives did not contend on
157
Chevron Corp. v. Donziger, 886 F. Supp. 2d at 249 n.85; DI 168 (Lago Agrio Judgment),
at 186.
158
DI 562, Ex. 2 (Donziger deposition transcript), at 4911:19-22; id. at 4920:11-17 (Donziger
testifies that Yanza “was working full time in his role as case coordinator for the affected
communities. So as part of that role he ran the Selva Viva entity.”); see also Champion
Decl. [DI 400] Ex. 2023 (“Luis Yanza [is] the coordinator of the [Lago Agrio] case, and the
guy who runs the Selva Viva account. He is the same guy we have always worked with.”).
159
Champion Decl [DI 400] Ex. 2023 (Aug. 14, 2007 Email from Donziger to Kohn and
others) (“The [ADF] created Selva Viva as a pass thru mechanism to administer the funds
for the litigation; the Frente controls Selva Viva.”).
160
In re Chevron Corp., 10 MC 0002 (LAK), DI 14-5 (Oct. 8, 2004 Ltr.).
45
the motion to compel that their unresolved objection to the Court’s personal jurisdiction over them
precluded an order compelling production – the Court nevertheless considered that possibility and
concluded that it did not.
C.
Ecuadorian Law and Principles of International Comity
Defendants argued that this Court could not properly conclude that they had control
over the Ecuadorian documents and therefore could not order them to produce the documents. The
argument was this: “[T]he attorney-client relationship at issue in Chevron’s motion is between
Ecuadorian clients and lawyers and is thus governed by Ecuadorian law.”161 Fajardo was precluded
by Ecuadorian law from producing the documents. Shcherbakovskiy v. Da Capo Al Fine, Ltd.,162
defendants contended, held that a federal district court could not compel production of documents,
the production of which would violate foreign law. Accordingly, in their view, this Court could not
grant Chevron’s motion to compel. But the argument was unpersuasive because defendants misread
Shcherbakovskiy.
Shcherbakovskiy in relevant part involved an appeal from a default judgment entered
as a sanction for plaintiff’s failure to comply with an order to produce documents, the production of
which the plaintiff claimed would have violated Russian law. In granting that default judgment, the
district court “took the view that Russian law was irrelevant to discovery matters in United States
courts” and, in addition, rejected plaintiff’s factual claim on credibility grounds.163 The Court of
161
DI 563, at 2.
162
490 F.3d 130 (2d Cir. 2007).
163
Id. at 138.
46
Appeals reversed, holding that “Russian law is relevant to the issues,”164 and remanded for further
proceedings. On remand, the district court considered Russian law, but nevertheless reimposed
sanctions for non-production, which the Court of Appeals then affirmed.165
Defendants here sought great comfort in the Second Circuit’s statement that “[i]f
Russian law prohibits appellant from obtaining and producing the documents even with the
agreement of [the board of the company of which the plaintiff was the board chair] . . . then the
matter is at an end.”166 They interpret that as meaning that a U.S. court may not compel production
of documents, the furnishing of which would violate the law of another nation. But they are mistaken
for two reasons.
First, they ignore the fact that the “at an end” statement, whatever precisely it was
intended to convey, was dictum. The relevant holding of the case was simply that Russian law was
pertinent. Absent a determination that Russian law prohibited production, there was no occasion to
consider the implications of any such conclusion.
Second, they ignore the fact that the Supreme Court has made clear that “it is well
settled that [foreign] statutes do not deprive an American court of the power to order a party subject
to its jurisdiction to produce evidence even though the act of production may violate that statute.”167
A district court may “impose discovery under the Federal Rules of Civil Procedure when it has
164
Id. at 139.
165
Shcherbakovskiy v. Seitz, 03 Civ. 1220 (RPP), 2010 WL 3155169, at *14 (S.D.N.Y. July
30, 2010), aff’d, 450 Fed. App’x. 87 (2d Cir. 2011).
166
Id. at 139.
167
Société Nationale Industrielle Aérospatiale v. U.S. Dist. Court for S. Dist. of Iowa, 482 U.S.
522, 544 n.29 (1987) (hereinafter Aérospatiale).
47
personal jurisdiction over the foreign party” notwithstanding provisions of foreign law that would
prohibit production.168 In such circumstances, the court should undertake a “particularized analysis
of the respective interests of the foreign nation and the requesting nation” before doing so.169 This
comity analysis requires a court to balance the interests of the United States in fully and fairly
adjudicating disputes before its courts, the party requesting the information in obtaining information
it contends is necessary for prosecution of its suit, and the foreign nation whose laws prohibit the
information from being disclosed.170 Accordingly, the Court turned to the personal jurisdiction
prerequisite and then to the comity analysis.
1.
Personal Jurisdiction
The LAP Representatives asserted in their answer to Chevron’s complaint that the
Court lacks personal jurisdiction over them. They did not, however, object to Chevron’s document
requests on this ground. Nor did they raise it in their opposition to Chevron’s motion to compel.
Indeed, never during the three days of hearings the Court held in an effort to resolve the parties’
168
Aérospatiale, 482 U.S. at 553 n.4. Moreover, prohibitions of foreign law do not necessarily
bar the conclusion that a party has “control” over documents for purposes of Rule 34.
Société Internationale pour Participations Industrielles et Commerciales, S. A. v. Rogers,
357 U.S. 197, 204 (1958); see also Tiffany (NJ) LLC v. Qi Andrew, 276 F.R.D. 143, 150
(S.D.N.Y. 2011) (defendant bank had custody and control over requested documents even
though production prohibited by Chinese law); Minpeco, S.A. v. Conticommodity Servs., Inc.,
116 F.R.D. 517, 520 (S.D.N.Y. 1987) (finding control even where Swiss bank secrecy law
prohibited production of documents).
169
Aérospatiale, 482 U.S. at 543.
170
E.g., In re Grand Jury Subpoena dated August 9, 2000, 218 F. Supp. 2d 544, 554 (S.D.N.Y.
2002) (“When the laws of two jurisdictions conflict, the court must balance the interests,
including the respective interests of the states involved and the hardship that would be
imposed upon the person or entity subject to compliance.”).
48
disputes over their respective document requests was such an argument made.
The LAP Representatives’ failure to raise personal jurisdiction waived that argument
for purposes of the motion to compel.171 But even if they properly and timely had argued that the
Court lacked the power to compel them to produce documents because it did not have personal
jurisdiction over them, the Court would have rejected that argument.
In Insurance Corporation of Ireland v. Compagnie des Bauxites de Guinee,172 the
petitioner argued that the district court’s imposition of sanctions for the petitioner’s failure to produce
jurisdictional discovery was improper because the court lacked personal jurisdiction to order such
production in the first place. Petitioner contended that “a party need not obey the orders of a court
until it is established that the court has personal jurisdiction over that party. If there is no obligation
to obey a judicial order, a sanction cannot be applied for the failure to comply.”173
The Supreme Court rejected that argument. It held in essence that a court has
jurisdiction to determine whether it has jurisdiction: “By submitting to the jurisdiction of the court
171
Richmark Corp. v. Timber Falling Consultants, 959 F.2d 1468, 1473 (9th Cir. 1992)
(defendant waived argument that Chinese secrecy laws prevented production of documents
where defendant failed to object on that ground or to make argument in its opposition to
plaintiff's motion to compel); Marx v. Kelly, Hart & Hallman, P.C., 929 F.2d 8, 12 (1st Cir.
1991) (“If the responding party fails to make a timely objection [to a request for discovery
under Rule 34], or fails to state the reason for an objection, he may be held to have waived
any or all of his objections”); Eldaghar v. City of New York Dep’t of Citywide Admin. Servs.,
02 Civ. 9151(KMW)(HBP), 2003 WL 22455224, at *1 (S.D.N.Y. Oct. 28, 2003) (“The law
is well settled that a failure to assert objections to a discovery request in a timely manner
operates as a waiver.”); Cohalan v. Genie Indus., Inc., 276 F.R.D. 161, 163 (S.D.N.Y. 2011)
(same); 7 MOORE’S FEDERAL PRACTICE § 34.13[2][b] at 34-58 (3d ed. 2013) (“If a party
responding to a Rule 34 request objects to a particular item or category of the request, the
reason for the objection must be stated . . . . Failure to comply . . . may be held to be a waiver
of any objections not adequately stated.”).
172
456 U.S. 694, 706 (1982).
173
Id. at 706.
49
for the limited purpose of challenging jurisdiction, the defendant agrees to abide by the court’s
determination on the issue of jurisdiction.”174 A defendant cannot challenge the court’s jurisdiction
over it and then refuse to comply with the court’s order compelling production of discovery pertinent
to deciding the jurisdictional objection. Indeed, it is axiomatic that plaintiffs must “be given an
opportunity to conduct discovery on . . . jurisdictional facts, at least where the facts, for which
discovery is sought, are peculiarly within the knowledge of the opposing party.”175
As noted, the LAP Representatives challenge this Court’s jurisdiction over them,176
and the Court has not yet resolved the jurisdictional challenge. This did not, however, justify the
LAP Representatives’ refusal to produce documents to Chevron.
The LAP Representatives moved to dismiss this case for lack of personal jurisdiction.
They contended that their retention of Mr. Donziger and their participation in litigation in New York
– both of which the Court previously held were grounds on which Chevron was likely to prevail on
174
Id.
175
Gualandi v. Adams, 385 F.3d 236, 244 (2d Cir. 2004) (citing Kamen v. Am. Tel. & Tel. Co.,
791 F.2d 1006, 1011 (2d Cir. 1986)). Indeed, courts have held that a party may not assert
foreign law as a defense to jurisdictional discovery. See, e.g., Rich v. KIS Calif., Inc., 121
F.R.D. 254, 259 (M.D.N.C. 1988) (rejecting defendants’ attempt to evoke Hague Convention
to resist jurisdictional discovery).
176
The Court first addressed the jurisdiction question in its opinion on Chevron’s motion for
a preliminary injunction barring enforcement in the Count 9 Action. The Court held that
“Chevron [was] likely to prevail on its contention that the LAP Representatives [we]re doing
business in New York” and were subject to specific jurisdiction for purposes of N.Y. CPLR
§§ 301 and 302 “by virtue of their repeated litigation in this Court and Donziger’s activities
on their behalf.” Chevron Corp. v. Donziger, 768 F. Supp. 2d at 642.
50
yhe jurisdictional issue177 – were insufficient to satisfy N.Y. CPLR §§ 301 and 302.178
The Court noted that the LAP Representatives’ motion involved arguments and facts
that went beyond the allegations in Chevron’s complaint and in substance was “one for summary
judgment” on the issue of personal jurisdiction.179 The Court determined that deferral of the motion
therefore would be “appropriate and preferable here because discovery [was] just beginning in this
action, and the factual issues pertinent to th[e] motion [we]re intertwined with the merits.”180 In other
words, discovery was necessary to resolve the LAPs’ jurisdictional challenge. It therefore denied the
LAP Representative’s motion without prejudice to renewal following the close of discovery.181
Because the Court determined that the issue of personal jurisdiction is intertwined with
the merits of Chevron’s claims, and because material evidence bearing on many of Chevron’s
allegations likely resides in Ecuador, Chevron is entitled to discovery from the Ecuadorian attorneys
and agents in order to prove that the Court has jurisdiction over the LAP Representatives. Moreover,
the Court noted in its order denying without prejudice the LAP Representatives’ motion to dismiss
that N.Y. CPLR § 301 “extends general jurisdiction to a non-domiciliary based on sufficient presence
177
Id.
178
See DI 517.
179
Id. at 1-2.
180
DI 572. at 2.
181
DI 572.
The LAP Representatives have not renewed the motion in the months since discovery
closed. Nor did their proposed special verdict form request submission of the issue to the
jury.
51
in New York of its agent even where the non-domiciliary did not exercise ‘direct control over its
putative agent.’”182 Thus, the extent to which the LAP Representatives authorized or ratified Mr.
Donziger’s New York-based activities – either directly or through their attorney-in-fact, Pablo
Fajardo, or their other attorneys and agents – necessarily is informed by communications among the
LAP Representatives, their Ecuadorian representatives, and Mr. Donziger, as well as the activities
of Mr. Donziger. Discovery of those communications and activities is necessary to resolve the LAPs’
jurisdictional challenge. Indeed, many of Chevron’s document requests seek information directly
related to these issues.183
182
DI 572, at 2 n.8 (citing Wiwa v. Royal Dutch Petroleum Co., 226 F.3d 88, 95 (2d Cir.
2000)).
183
E.g., DI 616-2 (LAP Reps.’ Responses and Objections to Chevron’s Doc. Requests), 3
(“ALL DOCUMENTS RELATED TO any travel by any LAGO AGRIO PLAINTIFF to the
New York RELATED TO CHEVRON or the CHEVRON LITIGATIONS”); 5 (“ALL
DOCUMENTS RELATED TO any travel by any of the non-U.S. resident RICO
DEFENDANTS or non-U.S. CO-CONSPIRATORS to New York RELATED TO
CHEVRON or the CHEVRON LITIGATIONS”); 13 (“ALL DOCUMENTS RELATED TO
the hiring or retention of counsel for the LAGO AGIO LITIGATION”); 14 (“ALL
DOCUMENTS RELATED TO the authority of Steven Donziger to act on behalf of the
LAGO AGRIO PLAINTIFFS in the United States or Ecuador”); 26 (“ALL
COMMUNICATIONS between any LAGO AGRIO PLAINTIFF and Steven Donziger”);
27 (“ALL AGREEMENTS RELATED TO the funding of the LAGO AGRIO LITIGATION
or the CRIMINAL CASES”); 28 (“ALL DOCUMENTS RELATED TO any PERSON,
excluding counsel of record, who financially supported or invested in . .. The LAGO AGRIO
LITIGATION”); DI 616-3 (LAP Reps.’ Responses and Objections to Chevron’s Doc.
Requests, Part II) 35 (“ALL DOCUMENTS RELATED TO funding by KOHN SWIFT &
GRAF . . . of the CHEVRON LITIGATIONS”); 36 (“ALL DOCUMENTS that set forth an
accounting of the expenditures for the CHEVRON LITIGATIONS including but no limited
to any accountings prepared by SELVA VIVA”); 37 (“ALL DOCUMENTS RELATED TO
the CHEVRON LITIGATIONS associated with savings, checking, money market, brokerage
or any other credit or debit accounts belonging to Steven Donziger”); DI 616-5 (LAP Reps.’
Responses and Objections to Chevron’s Doc. Requests, Part IV) 87 (“ALL DOCUMENTS
RELATED TO E-TECH”); 93 (“ALL DOCUMENTS RELATED TO the work of SELVA
VIVA RELATED TO the CHEVRON LITIGATIONS”); 94 (“ALL DOCUMENTS
RELATED TO the identification or recruitment by any LAGO AGRIO PLAINTIFF
RELATED PARTY of any person other than CABRERA to potentially serve as the global
expert and any COMMUNICATIONS with such person”); DI 616-6 (LAP Reps.’ Responses
and Objections to Chevron’s Doc. Requests, Part V) (“ALL DOCUMENTS RELATED TO
52
The LAP Representatives’ attempt to prevent discovery from Ecuador therefore prevented
jurisdictional among other discovery. This was impermissible. Defendants could not successfully
have premised their refusal to provide such discovery on an argument that the Court lacks jurisdiction
over them – and they in fact made no such argument in opposition to the motion to compel. Thus,
the Court determined that it has jurisdiction over the LAP Representatives at least for purposes of the
motion to compel184 and therefore had the power to order production of the documents
notwithstanding Ecuadorian law. It next turned to the question whether such an order was
appropriate given the principles of international comity.
2.
The Alleged Illegality of Production Under Ecuadorian Law Did Not Preclude
the Court’s Order to Produce
A district court has the power to order production of documents located abroad even
Steven Donziger’s allocation or distribution of any of the proceeds RELATED TO the
LAGO AGRIO JUDGMENT including all COMMUNICATIONS RELATED TO the
same”); 120 (“ALL DOCUMENTS RELATED TO the release, disposal, sale, transfer or gift
whether through contract or otherwise of any interest in any of the proceeds from the LAGO
AGRIO JUDGMENT to any individual or entity by any of the LAGO AGRIO
PLAINTIFFS, any of the RICO DEFENDANTS or any of the CO-CONSPIRATORS”); 135
(“ALL DOCUMENTS RELATED TO Joseph Berlinger, Michael Bonfiglio, @Radical
Media or any PERSONS employed by them or working at their direction, CONCERNING
the CHEVRON LITIGATIONS or the film Crude; The Real Price of Oil”); 137 (“ALL
DOCUMENTS RELATED TO any COMMUNICATIONS by any of the LAGO AGRIO
PLAINTIFF RELATED PARTIES with any State Attorney General’s Office or its
employees REGARDING CHEVRON”); 139 (“ALL DOCUMENTS RELATED TO any
COMMUNICATION by any of the LAGO AGRIO PLAINTIFF RELATED PARTIES with
any State’s Office of the Comptroller or its employees including the Office of the New York
State Comptroller”).
184
See RESTATEMENT (THIRD) OF FOREIGN RELATIONS LAW OF THE UNITED STATES § 442,
Reporter’s Note No. 11 (1987) (“Challenges to [personal] jurisdiction may depend on
questions of fact. . . . In such circumstances, some United States courts have sustained
discovery requests related to these questions before a determination of jurisdiction, provided
the plaintiff has made an initial showing giving reason to believe that the bases for
jurisdiction are present.”).
53
where disclosure of those documents is prohibited by foreign law.185 As noted, defendants contended
in their opposition to the motion to compel that Ecuadorian law – specifically, the alleged obligations
of a lawyer to a group of clients represented as a collective – prohibits their Ecuadorian attorneys and
associates from producing responsive documents to them or to Chevron. The indispensable first step
in the comity analysis, however, was to determine whether there was a true conflict between the
Córdova injunction and U.S. law.186
i.
Whether There is a True Conflict of Law
Among the relevant principles is whether there is a true conflict of law between
Ecuador and the United States with respect to the Court’s authority to compel production of
responsive documents.
a.
Ecuadorian Law
The Córdova injunction barred Fajardo, other lawyers, and Yanza from producing
documents because allowing production would violate “Subsections a), b), c) and 1) of Section 7 of
Art. 76 of the [Ecuadorian] Constitution[, which] provide that: “No one may be denied the right to
defend his interests in any phase or stage of the proceeding; To have the time and means adequate
185
Aerospatiale, 482 U.S. at 544 n.29 (1987) (“It is well settled that [foreign blocking] statutes
do not deprive an American court of the power to order a party subject to its jurisdiction to
produce evidence even though the act of production may violate that statute.”) (citing
Rogers, 357 U.S. at 202).
186
See, e.g., Hartford Fire Ins. Co. v. California, 509 U.S. 764, 798 (1993) (“The only
substantial question in this litigation is whether ‘there is in fact a true conflict between
domestic and foreign law.’”) (quoting Aérospatiele, 482 U.S. at 555 (concurring in part and
dissenting in part)); In re Maxwell Commc’n Corp. plc by Homan, 93 F.3d 1036, 1049 (2d
Cir. 1996) (“International comity comes into play only when there is a true conflict between
American law and that of a foreign jurisdiction.”); Linde v. Arab Bank, PLC, 706 F.3d 92,
111 (2d Cir. 2013).
54
for the preparation of his defense; To be heard at the appropriate time and on equal terms.”187
As will be seen below, there are troubling aspects as to the manner in which the
Córdova ruling was sought and procured, matters that go to the good faith of the LAPs and their
attorneys. But this Court perhaps may not, and in any case did not here, disregard that ruling insofar
as it purports to state the law of Ecuador. Accordingly, the Court assumed, at least for purposes of
this motion, that the Córdova injunction is binding in Ecuador on those persons to whom it is
directed.
The next step in the analysis was to consider how U.S. law would have treated
a comparable situation, this in order to assess the existence and extent of any conflict between U.S.
and Ecuadorian principles, the latter as embodied in the Córdova ruling.
b.
U.S. Law
Under U.S. law, confidential attorney-client communications for the purpose of
obtaining or communicating legal advice are protected from disclosure by the attorney-client
privilege. Certain other materials are protected by the work product doctrine. But it certainly cannot
be said that there never may be any discovery of anything at all from attorneys. Among other
considerations, the privilege and work product protection are waivable including, for example, by
selective dissemination. Attorneys often come into possession of relevant documents that are neither
attorney-client communications nor work product and which therefore are discoverable. Privilege
and work product protection may be vitiated by the crime-fraud exception. All of these possibilities
are dealt with by the requirement that the party asserting privilege or work product protection against
disclosure bears the burden of establishing that the prerequisites to protection are satisfied. In the
187
DI 734, Ex. A, at 3.
55
case of document discovery, this requires at a minimum the preparation of a so-called privilege log
setting forth basic information to permit the existence of protection to be contested in a meaningful
way.188 In short, U.S. law permits discovery of relevant documents from attorneys unless a privilege
or other protection from disclosure is duly claimed, the relevant particulars of the claim of privilege
or other protection from disclosure are set forth as to each allegedly protected document, and the
claim of protection sustained.
The Córdova injunction reflects the very different view that there may be no
disclosure of documents possessed by attorneys – period. That is very much at odds with U.S. law.
The Córdova injunction is at odds with U.S. law in a second respect – it enjoins any
disclosure by Yanza, who is not an attorney. While there are circumstances under U.S. law in which
some materials possessed or generated by lay persons working with attorneys come within
protections normally afforded to attorneys,189 the circumstances warranting the extension of
protections to such persons – typically, that the materials in question were integral to the lay person
assisting the attorney in performing his legal function – must be established by the party claiming
them.190 There is nothing in the record or in the Córdova ruling that suggests that all responsive
documents in the possession, custody, or control of Yanza were integral to any assistance he provided
to the attorneys in performing the attorneys’ function of representing their clients in the Ecuadorian
188
See, e.g., Fed. R. Civ. P. 26(b)(5); S.D.N.Y. Civ. R. 26.2.
189
E.g., United States v. Kovel, 296 F.2d 918 (2d Cir.1961) (client’s communications with
accountant employed by his attorney privileged where made to enable attorney to
understand the client’s situation in order to provide legal advice).
190
See, e.g,, In re Grand Jury Subpoenas Dated March 24, 2003 Directed to (A) Grand Jury
Witness & (B) Grand Jury Witness, 265 F. Supp. 2d 321 (S.D.N.Y. 2003).
56
courts. Indeed, given the abundance of evidence of Yanza’s activity in lobbying the Ecuadorian
government, it seems altogether likely that he possesses or controls documents that do not even
remotely come within any such description.
Accordingly, the Córdova ruling conflicts with U.S. law at least in the foregoing
respects. Moreover, it must be noted that defendants did not argue in their opposition to the motion
to compel that U.S. law prohibited an order compelling production of documents from their
Ecuadorian attorneys and associates. Nor did they contend sufficiently that any of the responsive
documents in Fajardo’s and the other Ecuadorians’ possession were privileged or protected by the
work product doctrine under U.S. law. Because it is the burden of the party asserting a privilege to
establish its existence,191 and because defendants failed so to establish, they have waived any
contention that any responsive documents in the possession, custody, or control of the Ecuadorian
attorneys and associates would have been protected from disclosure under U.S. law by the attorneyclient privilege or work product doctrine.
Finally, the Córdova decision did not adopt the controverted argument that the LAP
Representatives made here in opposition to the motion to compel – that an Ecuadorian lawyer
representing a group of clients is prohibited by Ecuadorian law from disclosing the documents and
“secrets” of any without the express permission of all. Indeed, neither the decision itself nor so much
of the record as the parties submitted to this Court on this motion suggested that the argument was
made by the plaintiff in Córdova. But the result here would have been the same even if Ecuadorian
191
Spectrum Sys. Int’l Corp. v. Chem. Bank, 78 N.Y.2d 371, 377 (1991) (“the burden of
establishing any right to protection is on the party asserting it; the protection claimed must
be narrowly construed; and its application must be consistent with the purposes underlying
the immunity”); see also United States v. Schwimmer, 892 F.2d 237, 244 (2d Cir. 1989)
(same).
57
law were to that effect.
The relevant U.S. analogy is to situations in which two or more clients share a single
lawyer or there is a joint representation of multiple clients by multiple lawyers – in other words, the
so-called joint defense privilege or “common interest rule.”192 That rule “serves to protect the
confidentiality of communications passing from one party to the attorney for another party where a
joint defense effort or strategy has been decided upon and undertaken by the parties and their
respective counsel.”193 The common interest rule “has been described as ‘an extension of the
attorney-client privilege.’”194 A party asserting it first must establish that the documents purportedly
subject to the rule are in fact attorney-client communications subject to the attorney-client
privilege.195 Thus, “[a]s in all claims of privilege arising out of the attorney-client relationship, a
claim resting on the common interest rule requires a showing that the communication in question was
given in confidence and that the client reasonably understood it to be so given.”196 And once the
party claiming common interest privilege has established that the documents in question are subject
to the attorney-client privilege, it must further show that (1) it shares a common legal interest with
the party with whom the documents or information were shared, and (2) the statements for which
192
Schwimmer, 892 F.2d at 243.
193
Id.
194
Id. (citing Waller v. Financial Corp. of Am., 828 F.2d 579, 583 n. 7 (9th Cir.1987)).
195
Schwimmer, 892 F.2d at 243 (quoting Waller v. Fin. Corp. Of Am., 828 F.2d 579, 583 n.7
(9th Cir. 1987)).
196
Id. at 244.
58
protection is sought were designed to further that interest.197
The common interest rule, like all privileges, is narrowly construed and subject to
many exceptions.198 The burden of establishing that it applies, “in all its elements, always rests upon
the person asserting it.”199 This showing must be made on a document-by-document basis, and based
on “competent evidence, usually through the admission of affidavits, deposition testimony or other
admissible evidence.”200
Defendants did not show that the common interest privilege would have protected
each and every responsive document at issue here, assuming arguendo that U.S. law controlled any
protection they might have enjoyed. They presented no evidence – either to this Court nor, so far as
the record reveals, to the court in the Córdova action – showing that each document satisfies the
requisite criteria. They submitted no privilege log or description of the documents. They have not
established, as would be required under U.S. law, that each responsive document (1) reflects attorneyclient communications, and (2) is subject to the common interest rule. They simply contended that
no document in the possession of any of the Ecuadorian attorneys and agents may be produced.
Assuming arguendo that Ecuadorian law is what the defendants say it is – that an
Ecuadorian lawyer representing a group of clients is prohibited by Ecuadorian law from disclosing
the documents and “secrets” of any without the express permission of all – it goes far beyond the
197
E.g., Gulf Islands Leasing v. Bombardier Capital, 215 F.R.D. 466, 471 (S.D.N.Y 2003).
198
United States v. Weissman, 195 F.3d 96, 100 (2d Cir. 1999) (“Privileges should be narrowly
construed and expansions cautiously extended.”)
199
Schwimmer, 892 F.2d at 244.
200
Bombardier Capital, 215 F.R.D. at 472 (citing von Bulow by Auersperg v. von Bulow, 811
F.2d 136, 147 (2d Cir. 1987)).
59
protections from discovery afforded by U.S. law. There is a true conflict on this assumption as well.
*
*
*
Having determined that (1) defendants have at least practical control over the
documents in the possession of their Ecuadorian attorneys and agents for Rule 34 purposes, (2) the
Court has jurisdiction over defendants, in the case of the LAP Representatives for the purpose of
compelling at least jurisdictional discovery, (3) Ecuadorian law prohibits or, in the case of the “group
privilege” argument, is assumed to prohibit production of the requested documents, and (4) there is
a true conflict between Ecuadorian and U.S. law, the Court then determined whether an order
compelling defendants to produce the documents would be in accord with principles of international
comity.
ii.
Comity Analysis
A district court has wide discretion to determine whether and to what extent it should
compel discovery by a party over which it has jurisdiction where that party contends that foreign law
prohibits production. In such cases, the Supreme Court has held, a court faced with the determination
should undertake a “particularized analysis of the respective interests of the foreign nation and the
requesting nation.”201 That analysis involves consideration of the factors set forth in what is now
Section 442 of the Restatement (Third) of Foreign Relations Law of the United States,202 which are:
“(1) the importance to the . . . litigation of the documents or other information
requested; (2) the degree of specificity of the request; (3) whether the information
originated in the United States; (4) the availability of alternative means of securing
201
Aérospatiale, 482 U.S. at 543-44.
202
Id. at 544 n.28 (quoting RESTATEMENT OF FOREIGN RELATIONS LAW OF THE UNITED STATES
(REVISED) § 471(1)(c) (Tent. Draft No. 7, 1986 (approved May 14, 1986)); see also Linde
v. Arab Bank, PLC, 706 F.3d 92, 109-110 (2d Cir. 2013).
60
the information; and (5) the extent to which noncompliance with the request would
undermine important interests of the United States, or compliance with the request
would undermine important interests of the state where the information is located.”203
Courts in the Second Circuit consider also the “hardship of compliance on the party or witness from
whom discovery is sought [and] the good faith of the party resisting discovery.”204
None of the parties addressed these factors on Chevron’s motion to compel. The LAP
Representatives and the Donziger Defendants argued simply that Ecuadorian law prohibits
production of the documents and production therefore could not be compelled.205 Chevron took an
equally simple position, first failing to consider Ecuadorian law at all, and then contending that
defendants were wrong as to its substance. After first considering the analysis set forth above,
however, the Court undertook a comity analysis.
a.
The Importance of the Documents to the Litigation
The first factor the Court analyzed was the importance of the documents to this
litigation. A court need consider only the relevance of the requested documents to the case; it need
not find that the documents are “vital to a proper defense of this action.”206 Moreover, “production
is favored when the evidence sought from the producing party is directly probative to the issues of
203
Aérospatiale, 482 U.S. at 544 n.28 (quoting RESTATEMENT OF FOREIGN RELATIONS LAW
OF THE UNITED STATES (Revised) § 471(1)(c) (Tent. Draft No. 7, 1986 (approved May 14,
1986)).
204
Tiffany (NJ) LLC, 276 F.R.D. at 151 (quoting Gucci Am., Inc. V. Corveal Fashion, 09 Civ.
8459 (RJS) (THK), 2010 WL 808639, at *2 (S.D.N.Y. Mar. 8, 2010)).
205
DI 563, 564.
206
Reino de España v. Am. Bureau of Shipping, 03Civ. 3573 (LTS), 2005 WL 1813017, at *7
(S.D.N.Y. Aug. 1, 2005) (internal citations and quotation marks omitted).
61
the case.”207
Chevron’s complaint centers on allegations that Mr. Donziger – based in New York
– acted in concert with the LAPs’ attorneys and agents – based in Ecuador – and others to conceive,
substantially execute, largely fund, and significantly direct a scheme to extort and defraud Chevron
by, among other things bringing a lawsuit in Ecuador.
First, as discussed above, many of the documents Chevron seeks would go directly
to the nature and extent of the activities of Donziger and others in New York on behalf of the LAPs,
which would be highly pertinent to the existence of personal jurisdiction over the LAP
Representatives.
Second, many of Chevron’s document requests seek information relating to the alleged
activities the LAPs’ attorneys and agents undertook to carry out the alleged scheme, as well as their
communications with Donziger and others in New York and elsewhere in the United States who
allegedly directed or participated in it. The requests seek documents relating, among other things, to:
the LAPs’ agents communications with members of the Ecuadorian government and judiciary, their
ex parte contacts with Cabrera and other court-appointed experts, payments they allegedly made to
Ecuadorian judges, documents they allegedly provided to the Lago Agrio judge that were not in the
Lago Agrio court record, and the manner in which the Lago Agrio litigation was financed and run.
Although defendants did not provide the Court with any description of the documents in their
Ecuadorian attorneys’ possession, there is no doubt – and neither the LAP Representatives nor
Donziger have attempted to dispute – that the documents at issue are relevant, perhaps vital, to
Chevron’s prosecution of this case.
207
Reino de España, 2005 WL 1813017, at *7.
62
The importance of the documents, both to this litigation generally and to the personal
jurisdiction issue in particular, counseled strongly in favor of production.
b.
Specificity of the Requests
“Generalized searches for information, the disclosure of which is prohibited under
foreign law, are discouraged.”208 Where document requests are overbroad and not tailored to the
allegations in the complaint, this factor will counsel against production.
In the time since Chevron first served its documents requests, the parties have
engaged in meet-and-confers to address defendants’ objections to the requests. The requests were
narrowed substantially, partly by agreement and then in consequence of rulings made during oral
argument on December 20, 2012.209 By the time the Court issued the February 11 order compelling
discovery, Chevron’s document requests had been narrowed significantly. There was no significant
issue as to the level of specificity.
c.
The Availability of Alternative Means of Obtaining the
Information
The bulk of the information sought in Chevron’s document requests could not be
obtained by other means. Many of the events that led up to the Judgment took place in Ecuador,
albeit probably with supervision, planning, and assistance from the United States. Many of these
events – e.g., the judicial inspection process, Cabrera’s appointment and the filing of his report, and
208
Richmark Corp., 959 F.2d at 1475.
209
DI 721, ¶ 3 & Schs. 5 (pp. xxiii-xlvi) -6 (pp. xlvii-lxxii).
63
the alleged ghostwriting of all or part of the Judgment – allegedly were orchestrated and committed
in large part by Mr. Donziger and the LAPs’ Ecuadorian attorneys and agents, the very people from
whom Chevron sought documents. Chevron could not reasonably have obtained equivalent
information from other sources.210 Defendants did not contend otherwise, at least persuasively.211
d.
Whether the Information Originated in Ecuador
The documents at issue on the motion to compel are located – and many likely
originated – in Ecuador. However, where “the information cannot be easily obtained through
alternative means, the origin of the information can be counterbalanced with the inability to obtain
the information through an alternative means, thus favoring disclosure.”212 As explained above,
Chevron could not readily obtain the information it seeks from other sources, if at all. This factor
thus counseled in favor of production.
210
It is true that the Court ordered limited production from Patton Boggs in part because
Chevron was unable to get discovery from the LAPs’ Ecuadorian attorneys and agents.
Chevron Corp. v. Donziger, 2013 WL 1087236, at *21-22. There is no basis to conclude,
however, that PB – an American law firm, albeit one heavily involved since 2010 in most
aspects of the Ecuadorian and U.S. litigation efforts – can provide discovery that is
substantially equivalent to that which could be provided by the Ecuadorian attorneys and
agents who were personally involved in the events Chevron alleges were tainted by fraud.
211
Chevron contends that “these documents are not otherwise available to Chevron, because
the custodians at issue are not directly subject to compulsory process of the Court.” DI 562,
at 2.
212
Lantheus Med., 841 F. Supp. 2d at 793 (citing Gucci Am., 2010 WL 808639, at *3
(emphasis in original)).
64
e.
Balance of National Interests
The fifth factor is the balance of the interests of Ecuador in enforcing its laws against
the interests of the United States in requiring production of the documents. Courts consider this the
most important factor in the comity analysis.
Certainly the Córdova ruling reflects a determination by an Ecuadorian governmental
body. Ecuador presumably has an interest in seeing that it is complied with.
On the other hand,“the United States has ‘a substantial interest in fully and fairly
adjudicating matters before its courts,’ [and] [a]chieving that goal is only possible with complete
discovery.”213 At issue in this litigation are, among other things, the actions taken by the defendants
in the Ecuadorian proceedings. The absence of the Ecuadorian attorneys’ and agents’ documents
threatens the Court’s ability to ensure that the truth underlying these matters is revealed and that the
case is fairly and properly adjudicated.
The United States has an interest also in ensuring that its laws are enforced. And,
“[a]lthough the interest of the United States in criminal and civil enforcement suits is normally
stronger than its interest in private disputes,” this distinction is less significant where, as here, claims
are brought under RICO, which has the effect “intended by Congress . . . of enforcing the law by
means of ‘private attorney generals.’”214 The Supreme Court has recognized that RICO “bring[s] to
bear the pressure of ‘private attorneys general’ on a serious national problem for which public
213
Gucci Am., Inc., 2010 WL 808639, at *5 (quoting Minpeco, S.A. v. Conticommodity
Servs., Inc., 116 F.R.D. 517, 524 (S.D.N.Y. 1987)).
214
Minpeco. S.A., 116 F.R.D. at 523.
65
prosecutorial resources are deemed inadequate.”215 The important interest of combating the “serious
national problem[s]” of racketeering and corruption would be undermined absent production of these
documents.
Finally, “when foreign governments . . . have considered their vital national interests
threatened, they have not hesitated to make known their objections to the enforcement of a subpoena
to the issuing court.”216 The fact that the Ecuadorian government – which has not hesitated to make
clear its support for the LAP team217 – neither sought to intervene in this discovery dispute nor
expressed a view on this issue cuts against a finding that Ecuador’s interests outweigh those of the
United States on this issue.
215
Agency Holding Corp. v. Malley-Duff & Assocs., Inc., 483 U.S. 143, 151 (1987); see also
Linde, 706 F.3d at 112 (finding U.S. had interest in compelling disclosure of foreign
documents in suit brought under Alien-Terrorism Act because the “legislative history
reflects that Congress conceived of the ATA, at least in part, as a mechanism for protecting
the public’s interests through private enforcement”).
216
United States v. First Nat. City Bank, 396 F.2d 897, 904 (2d Cir. 1968); see also United
States v. Davis, 767 F.2d 1025, 1035 (2d Cir. 1985) (“The absence of any objection by the
Cayman government to the subpoena and subsequent order . . . is significant.”).
217
See, e.g., In re Application of Chevron Corp., 709 F. Supp. 2d 283, 289 (S.D.N.Y. 2010)
aff’d sub nom. Chevron Corp. v. Berlinger, 629 F.3d 297 (2d Cir. 2011) (describing scene
from Crude in which “a representative of the plaintiffs informs Donziger that he had left the
office of President Correa ‘after coordinating everything.’ Donziger declares,
‘Congratulations. We’ve achieved something very important in this case . . . . Now we are
friends with the President.’ The film then offers a glimpse of a meeting between President
Correa and plaintiffs’ counsel that takes place on a helicopter. Later on, President Correa
embraces Donziger and says, ‘Wonderful, keep it up!’”). See also Ecuador President Rafael
Correa: Chevron is ‘Enemy of Our Country’, AGENCE FRANCE PRESSE, Aug. 17, 2013,
a
v
a
i
l
a
b
l
e
a
t
http://www.huffingtonpost.com/2013/08/17/ecuador-president-rafael-correa_n_3773558.
html.
66
f.
Hardship of Compliance
Finally, in determining whether to compel discovery from a party that claims
production is prohibited by foreign law, courts should consider the effect the discovery order is likely
to have on the party facing conflicting legal obligations. If a party is likely to face criminal
prosecution for complying with an order, a court should be more reluctant to order production than
where there is no such risk.218
While no one has indicated that criminal prosecution would be a theoretical
consequence of violating the Córdova injunction, the Court so assumes. It notes also that the
provision of the Ecuadorian penal code cited by the LAPs in their opposition to the motion to compel
provides that “any . . . professional entrusted with a secret by reason of the profession they exercise
and who disclose the secret, even in a court of law, will be punished with a prison term of one to six
months and a fine of eight to sixteen United States dollars.”219 Nevertheless, neither the LAP
Representatives nor the Donziger Defendants asserted that anyone likely would be prosecuted
criminally, or even sued civilly, if they and their Ecuadorian attorneys and associates complied fully
with an order compelling production. Defendants did “not submit[] any authority regarding the
likelihood of prosecution, conviction, or imposition of . . . a sentence or fine” if their lawyers and
associates were to turn over their documents.220 Moreover, the record reveals that Fajardo has
218
Societe Internationale, 357 U.S. at 211.
219
DI 563, Ex. A, at 1. The provision states also that “[e]xceptions will be granted if the law
obligates the party in question to disclose the secret.”
220
Gucci Am., Inc. 2010 WL 808639, at *6. Moreover, “the mere threat of criminal
prosecution abroad does not strip our courts of the authority to order production of relevant
materials in private civil litigation.” Linde, 706 F.3d at 114.
67
provided Donziger and the LAPs’ U.S. attorneys with documents and materials throughout the
history of this case when such materials were thought helpful to their position.221 Not once has he
been prosecuted or subjected to any penalty. The absence of any such evidence weighs against a
finding that a party faces hardship if it complies with a discovery request.222 This factor counseled
in favor of ordering production.
*
*
*
In sum, the Court was persuaded that principles of comity weighed in favor of
ordering the production of the documents Chevron requested from the LAP Representatives’
attorneys and agents in Ecuador. Chevron’s motion to compel production of documents from the
LAPs’ Ecuadorian attorneys and agents therefore was granted.
II.
The Motion for Sanctions
As noted, defendants informed the Court that they would not comply with the order
compelling production of documents from Ecuador. Chevron then moved to sanction and hold the
Donziger Defendants and the LAP Representatives in contempt of court for their failure to comply
with the Court’s order compelling production of the Ecuadorian documents. Having reviewed the
parties’ briefs and concluded the evidentiary hearing, the Court now resolves Chevron’s sanctions
motion.
221
See, e.g., DI 1316 (“the LAP Representatives former counsel admitted that he received the
Zambrano declaration and the tape recordings from Pablo Fajardo”) (citing Mastro Decl. [DI
1075] Ex. 5 (Apr. 8, 2013 Ltr. From Craig Smyser to Randy Mastro)); DI 974 Ex. 1
(Zambrano Decl.); DI 66-2 & 138-13 (Fajardo Decl.); DI 154 (Sáenz Decl.); Chevron Corp.
v. Stratus Consulting, Inc., No. 10 Civ. 00047 (D. Colo.), DI 99 (Fajardo Decl.).
222
Tiffany (NJ) LLC, 276 F.R.D. at 158.
68
A.
The Parties’ Positions
Federal Rule of Civil Procedure 37(b)(2) permits a court to impose sanctions for a
party’s failure to obey a discovery order. “Where, as here, the nature of the alleged breach of a
discovery obligation is the non-production of evidence,” Rule 37(b) affords a court “broad discretion
in fashioning an appropriate sanction.”223 The Rule instructs that the sanction be “just,”224 which
means that “the severity of the sanction must be commensurate with the non-compliance.”225
Sanctions for failure to comply with discovery orders should “insofar as possible, . . . restor[e] the
prejudiced party to the same position [it] would have been in absent the wrongful [withholding] of
evidence by the opposing party.”226
Chevron contends that (1) defendants failed to exercise reasonable diligence in
seeking documents in the possession of their Ecuadorian agents, and (2) defendants’ justifications
for their failure to produce the documents as ordered by the Court – including that they were
prohibited from doing so by Ecuadorian law – are “baseless.”227 In addition, Chevron argues that
defendants should be sanctioned for their failure “to comply with their discovery obligations apart
223
Residential Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99, 107 (2d Cir. 2002).
224
Fed. R. Civ. P. 37(b)(2)(A).
225
Shcherbakovskiy 490 F.3d at 140.
226
Kronisch v. United States, 150 F.3d 112, 126 (2d Cir. 1998). Although Kronisch concerned
the destruction of evidence rather than its non-production, the Second Circuit has made
clear that evidence need not be destroyed for an adverse inference instruction to apply. See,
e.g., Reilly v. Natwest Mkts. Grp., Inc., 181 F.3d 253, 267 (2d Cir. 1999) (affirming an
adverse inference instruction where party failed to produce documents until the eve of trial
due to gross negligence).
227
DI 894, at 15.
69
from the Ecuadorian documents.”228 According to Chevron, these discovery abuses – combined with
defendants’ refusal to produce the Ecuadorian documents – justify a broad range of sanctions.
The LAP Representatives argue that (1) the Court’s order compelling production of
the Ecuadorian documents “does not apply to” them because the Court lacks personal jurisdiction
over them,229 (2) the LAP Representatives have no ability to produce documents in the possession
of their Ecuadorian lawyers and agents because Ecuadorian law prohibits disclosure of such
documents,230 and therefore (3) none of the requested sanctions is appropriate.
The Donziger Defendants contend that (1) they “do[] not have any Ecuadorian
attorneys and agents” from which they could have requested documents and therefore did not violate
the Court’s order compelling discovery,231 (2) they do not possess, or have the ability to obtain,
documents in the possession of the attorneys and agents in Ecuador, and (3) Chevron’s “other gripes
concerning Donziger’s document production and supplemental interrogatory responses are premature
and without merit.”232
B.
The LAP Representatives’ Jurisdictional Argument Fails
The LAP Representatives contend that the February 11 Order compelling production
228
Id. at 8.
229
DI 950, at 10.
230
Id. at 11.
231
DI 947, at 10.
232
Id. at 19.
70
of responsive documents from Ecuador did not apply to them because the Court lacks personal
jurisdiction over them. The order, however, was directed squarely at them in unmistakable terms –
it obviously “applied” to them. Thus, their argument in substance is that the February 11 Order,
insofar as it applied to them, was erroneous and that they therefore cannot be sanctioned for refusing
to comply with it. They are mistaken.
First, the LAP Representatives did not object to Chevron’s document requests on
jurisdictional grounds or attempt to limit Chevron’s document requests to those relating to
jurisdictional issues. Nor did they make any such argument in their opposition to Chevron’s motion
to compel. They thereby waived any contention that they should not have been ordered to comply
with the document requests on the theory that the Court lacked personal jurisdiction over them.233
Second, “all orders and judgments of courts must be complied with promptly. If a
person to whom a court directs an order believes that order is incorrect the remedy is to appeal, but,
absent a stay, he must comply promptly with the order pending appeal. Persons who make private
determinations of the law and refuse to obey an order generally risk criminal contempt even if the
order is ultimately ruled incorrect.”234 So too here. A party ordered to furnish discovery must
comply with that order subject to any appellate recourse that may be open to it. Refusal to comply
risks the imposition of sanctions.
Third, the Supreme Court clearly has held that sanctions may be imposed on a party
233
E.g., Eldaghar, 2003 WL 22455224, at *1; Cohalan, 276 F.R.D.at 163; Hall v. Sullivan, 231
F.R.D. at 473; 7 MOORE’S FEDERAL PRACTICE § 34.13[2][b]. at 34-58 (3d ed. 2013) (“If a
party responding to a Rule 34 request objects to a particular item or category of the request,
the reason for the objection must be stated . . . Failure to comply . . . may be held to be a
waiver of any objections not adequately stated.”).
234
Maness v. Meyers, 419 U.S. 449, 458 (1975).
71
that protests a court’s exercise of personal jurisdiction over it where that party refuses to provide
discovery relevant to resolve the jurisdictional issue.235 That is exactly the situation here, as much
of the discovery sought from the LAP Representatives goes to the issue whether the Court has
personal jurisdiction over them. Put differently, the Court has personal jurisdiction over the LAP
Representatives for purposes of the motions to compel and for sanctions.
C.
The February 11 Order Bound the Donziger Defendants
Mr. Donziger argues that the February 11 Order did not require the Donziger
Defendants to produce documents that physically were in the hands of the Ecuadorians because he
has no Ecuadorian attorneys or agents. This contention is untenable.
Chevron’s motion sought an order compelling production by both the LAP
Representatives and the Donziger Defendants of all responsive documents in the hands of the
Ecuadorian attorneys and associates, including Fajardo, Sáenz, Prieto, Yanza, the ADF, and Selva
Viva.236 It contended that Mr. Donziger controlled the Ecuadorian litigation for the LAPs and that
he had practical control over the Ecuadorian attorneys and associates, as he supervised their activities,
decided on their salaries and bonuses, controlled the flow of money to them from the United States,
and “acted in some respects like the Ecuadorian lawyers’ virtual employer.”237 In opposing the
motion, the Donziger Defendants argued only that Chevron had failed to establish Mr. Donziger’s
practical control over the Ecuadorian attorneys and associates and that production by them of the
235
Ins. Corp. of Ireland, 456 U.S. at 706.
236
DI 562.
237
Id. at 3.
72
documents would contravene Ecuadorian law.238 There was no contention that the Donziger
Defendants should not be compelled to produce those documents because the Ecuadorians were not
Mr. Donziger’s attorneys or agents except, perhaps, to whatever extent such a contention was implied
by his denial of practical control over them.
The February 11 Order unambiguously granted Chevron’s motion “in all respects.”239
The Donziger Defendants thus were obliged to produce all responsive documents in the possession,
custody or control of Fajardo, Sáenz, Prieto, Yanza, the ADF and Selva Viva, among others,
regardless of whether they were Mr. Donziger’s personal attorneys or agents. That in fact was the
sole focus of the motion insofar as it concerned the Donziger Defendants. There was no doubt on
that score whatever.
D.
Mr. Donziger Had and Has the Practical Ability to Obtain Documents From the
Ecuadorian Attorneys and Agents
As discussed above, Chevron presented considerable evidence on its motion to compel
establishing that Mr. Donziger is able to and indeed does obtain documents from the Ecuadorian
attorneys and associates. It has submitted further evidence on its motion for sanctions establishing
that his ability to obtain these documents has not diminished.
Nonetheless, Mr. Donziger argues that he asked Fajardo to produce the documents
Chevron sought and the Court ordered produced, but that Fajardo refused.240 Chevron, he contends,
238
DI 564, at 2.
239
DI 787.
240
DI 841, Ex. B, at 1 (Email from Fajardo to Donziger’s former counsel informing him that
Fajardo would not produce the documents and asserting that “Judge Lewis Kaplan, induced
73
has failed to show that he has the practical ability to compel Fajardo to do otherwise. He contends
that Fajardo and the other Ecuadorian attorneys are not his agents. He works for them, not the other
way around.241 He argues that he does not now control the Ecuadorian legal team, whatever may
have been the case in the past, as a result of his having been directed by this Court in a prior action
to turn over his case file.242 He relies for this proposition particularly on a February 11, 2013 Fajardo
email, which stated to members of the Ecuadorian team that “[i]n recent years, Steven [Donziger] has
been carrying out the functions of legal team coordination, communication and coordination in lobby
efforts, support and work with shareholders seeking financial resources to fund the case.”243 From
that point on, however, “[f]or the coordination of the legal team in the United States, the plaintiffs
have designated Juan Pablo Sáenz as the main attorney to replace Steven.”244
But the Court held in its decision on Chevron’s motion to compel and finds again on
this motion that Mr. Donziger has the practical ability to obtain documents from the Ecuadorian
attorneys and agents.
The question whether Fajardo and the others are Mr. Donziger’s agents in a strict legal
sense is a red herring. The issue is whether Mr. Donziger has practical control over them, regardless
by Chevron Corporation, is very much mistaken in falsely asserting that we (attorneys in
Ecuador) are attorneys and agents of Mr. Steven Donziger.”).
241
DI 947, at 12-16.
242
“[W]ith the decisions by this Court for me to turn over my entire case file, as well as the
filing of the RICO case, my advice to the [LAPs’s Ecuadorian counsel] I believe has had a
significantly diminished degree of influence as a result of the position that I’m put in.” Apr.
16, 2013 Tr. at 98:12-24.
243
Apr. 17, 2013 Hearing Ex. A.
244
Id.
74
of the precise legal structure. The Court held in issuing the February 11 Order that he has such
control as the practical head of the Ecuadorian legal team and the LAPs’ U.S. representative. And
the record now contains even more evidence that supports that finding. For example, there is
additional evidence that Fajardo sent documents to Mr. Donziger in response to various requests.245
There is additional evidence also of Mr. Donziger’s involvement in filings in the Lago Agrio
litigation, evidence that demonstrates his supervisory and commanding role and his ability to demand
and obtain documents from his “local counsel.” In one instance, Donziger on July 19, 2010, emailed
Fajardo and Sáenz and asked “[w]hen is the draft of the motion mentioned below going to be ready?
We’d like to read it asap.”246 And in another, Donziger emailed Fajardo, Prieto, Sáenz, and Yanza
with a list of tasks they needed to accomplish, explaining that
“[t]oday is Sunday but it’s urgent that we resolve the following by Monday: (1) The
local motion with the court – we need a draft right away with the translation so we
can review it here before submitting it in Lago Agrio. The sooner it can be submitted
the better; rush if possible friends. 2) Translators to translate several legal documents
quickly for the Yankee attorneys. We need two for next week, full time if possible.
3) I’m thinking that Pablo should come to the U.S. for the hearing. Let’s talk later.
Please friends, we are in a difficult situation; I’m asking you to work today.”247
Fajardo responded with an update on each task. Prieto replied that he could “start on the motion.
245
See, e.g., Champion Decl. [DI 966] Ex. 3604 (March 16, 2010 Email from Fajardo to
Donziger associate including “a good summary to share with Shinder/Denver folks re:
Cabrera’s appointment.”); Apr. 16 2013 Tr. Ex. 4 (July 22, 2010 email from Donziger to
Fajardo) (Donziger asks “Can you send me the summary that I recently asked for?” and
Fajardo complies).
246
Champion Decl. [DI 966] Ex. 3610.
247
Id. Ex. 3609 (Mar. 7, 2010 email from Donziger to Yanza, Prieto, Sáenz, Fajardo, Garr, and
Page) (emphasis added).
75
Which motion exactly?” and then later sent a draft.248
In another instance, Mr. Donziger on June 6, 2008, instructed Fajardo, Sáenz, and
Prieto to “[g]et this done on time and don’t fuck up please.”249 One does not tell one’s boss to get
something done on time and “don’t fuck up.” When such language is used, it is by bosses to
subordinates. The logical conclusion here, based not only on this piece of evidence but the entire
record, and the one the Court adopts, is that Mr. Donziger for years has been the “boss” of the
Ecuadorian team. He has given it orders and demanded compliance. The only remaining question
is whether circumstances have changed as Mr. Donziger claimed at the hearing.
Mr. Donziger attributes the proposed change in his role to dissatisfaction by the
Ecuadorians with the fact that he was ordered by this Court in November 2010 (and the Second
Circuit, a fact he does not mention) to “turn over [his] entire case file” in the Section 1782
proceeding. And he seeks corroboration of the alleged change in Fajardo’s February 11, 2013 email,
which purported to replace Donziger as the coordinator of the U.S. litigation with Juan Pablo Sáenz,
one of Fajardo’s Ecuadorian subordinates. But neither the timeline nor the inherent logic of this
argument hangs together.
As an initial matter, this Court’s ruling in the Section 1782 proceeding was issued on
November 10, 2010.250 Almost immediately thereafter – in January 2011– the LAPs entered into a
248
Id.
249
Id. 3618; see also id. Ex. 3603 (Nov. 9, 2007 email from Donziger to Fajardo) (“Hey you
little bastard, where is the document?”); id. Ex. 3617 (Sept. 20, 2010 Email from Donziger
to Sáenz, Fajardo, Prieto, Yanza and others) (“Friends, Let’s talk tonight. Let’s not do
anything rash please. Let’s analyze it first as a group.”).
250
In re Chevron Corp., 749 F. Supp. 2d 141 (S.D.N.Y. 2010) aff’d sub nom. Lago Agrio
Plaintiffs v. Chevron Corp., 409 F. App’x 393 (2d Cir. 2010).
76
new retainer agreement with Donziger – an agreement that would make him a billionaire if the
Judgment were collected in full.251 Moreover, that agreement gives him the prospect of far greater
compensation than any other individual lawyer on the LAP team, including Fajardo. Its execution
and richness – and its continuation right to the present252 – both are in very serious tension with the
suggestion that Donziger’s role changed in the wake of the discovery orders in the 1782 proceeding.
And this is borne out by the fact that Donziger has made payments from his accounts to Fajardo and
others in Ecuador even after the Court’s November 2010 ruling,253 that he is still traveling at least
monthly to Quito,254 and that he still communicates with his Ecuadorian colleagues multiple times
a day.255 Nor has he come forward with evidence showing that he no longer pays or approves
payments to the Ecuadorian attorneys, that his trips and communication with the Ecuadorian legal
team are any less frequent, or that his involvement in determining strategy is any less pronounced
today than what it was when he was – in his own words – the person “primarily responsible” for
251
Hendricks Decl. [DI 355] Ex. 1122 (Donziger retention agreement), at 1.
252
Donziger testified during the sanctions hearing that his “compensation remains the same
today as it was under the retainer agreement dated January 5, 2011.” Apr. 16, 2013 Hearing
Tr. at 128:13-15.
253
See, e.g., Champion Decl. [DI 966] Exs. 3622, 3623, 3625 (showing transfers made from
Donziger’s bank accounts to LAPs’ lawyers in Ecuador in 2010-2011). Although Chevron
has not submitted more recent evidence of payments made through Donziger’s accounts,
that is presumably because the Court set the discovery cutoff for all documents related to
payments made by Donziger in connection with the Chevron litigation to July 10, 2012. See
DI 721, at 54-55.
254
Champion Decl. [DI 966] Ex. 3601 (Donziger’s migration records from 2005-2013).
255
Champion Dec. [DI 895] Ex. 3519 (Donziger privilege log).
77
“putting . . . together” and “supervising” the Lago Agrio team.256
That leaves Fajardo’s February 11, 2013 email, which purported to appoint Mr. Sáenz
to take over certain of Mr. Donziger’s responsibilities.257 Even taken in its own terms, it appears to
be an attempt to create a facade to hide reality and to buttress Mr. Donziger’s argument that he no
longer is in control rather than to portray reality. Mr. Sáenz is an Ecuadorian lawyer who has
practiced for less than five years.258 The likelihood that such a person would be selected to take over
the particular responsibilities at issue, which are described in the sealed exhibit, seems limited.
Moreover, the timing of that email is revealing.
The ostensible cause of the alleged change in Mr. Donziger’s position of command
is this Court’s November 2010 ruling. Yet there is no evidence at all of any such change until after
Chevron moved in August 2012 to compel production of documents from Ecuador. The LAP
Representatives’ first response was to contend that the motion was premature. As a decision on that
issue became imminent, however, the LAPs – at the suggestion of one of their U.S. counsel – on
October 18, 2012 commenced the Córdova action in Ecuador in an effort to obtain any injunction
barring production of Ecuadorian documents in this case. On January 1, 2013, one of the LAP
Representatives’ U.S. lawyers informed Fajardo that he anticipated that this Court would soon “issue
a court order ruling on the issue of Messrs. Camacho and Piaguaje have the capacity to obtain the
documents from you . . . , documents that belong to all the plaintiffs [and that they] anticipate[d] that
the [Court would] say that they do have that capacity and that the [Court would] order them to obtain
256
Hendricks Decl. [DI 9] Ex. 14 (Donziger book proposal), at 2.
257
Apr. 17, 2013 Hearing Ex. A.
258
Sáenz Decl. [DI 152] ¶ 2.
78
the documents to be provided to Chevron.”259 The Córdova injunction then issued on January 15,
2013, and this Court was so informed a week later.260 The Fajardo email purportedly appointing
Sáenz was created on February 11, 2013, coincidentally the very day on which the February 11 Order
compelling production was issued.
This evidence suggests that the LAPs anticipated that the motion to compel would be
decided against them. They appear to have sought to create a defense in depth against that possibility
as well as against the risk of sanctions in the event they failed to comply. Those defenses certainly
included the Córdova action and appear to have included the Fajardo February 11 email. In any case,
however, the argument that the February 11, 2013 email was a consequence of the November 10,
2010 decision in the Section 1782 proceeding is not persuasive. Nor is the contention that it reflected
or effected any material change in Mr. Donziger’s position as the commander of the entire Lago
Agrio legal effort. In all the circumstances, it is more likely than not that Fajardo’s email – an email
by a long time subordinate purporting to displace his long time supervisor and “cabeza” – reflected
an effort to create a false impression in order to avoid the entry of or defeat the purpose of the
February 11 Order, as was the Córdova lawsuit.
The Court therefore finds that Mr. Donziger had and has the practical ability to obtain
documents from the Ecuadorian attorneys and associates.
E.
Ecuadorian Law Does Not Prevent the Imposition of Sanctions
Finally, defendants contend that sanctions are inappropriate because compliance with
259
Apr. 17, 2013 Hearing Ex. B (Jan 1, 2013 Email from Jarod Stewart to Fajardo).
260
DI 734.
79
the Court’s order is legally impossible: Fajardo, they say, is prohibited by Ecuadorian law from
producing the documents, and will not do so. Thus defendants actually are making two distinct,
albeit somewhat related, arguments, viz. that the Court should not impose sanctions because (1)
Ecuadorian law prohibits the disclosure and, in any case, (2) these parties should not be punished for
Fajardo’s refusal, justified by Ecuadorian law or not, to turn over the discovery.
We begin with the proposition that sanctions should not be imposed because the
discovery is prohibited by Ecuadorian law. As discussed above, when a party invokes foreign law
to justify its noncompliance with a court’s discovery order, courts must consider whether principles
of international comity permit an order compelling discovery and subsequent imposition of sanctions.
In doing so, courts should weigh the factors contained in Section 442 of the Restatement (Third) of
Foreign Relations Law.261 In addition, “[c]ases from our Circuit counsel that, when deciding whether
to impose sanctions, a district court should also examine . . . whether that party has demonstrated
good faith in addressing its discovery obligations.”262 A court may impose the harshest sanctions –
including contempt, dismissal, or default – where it finds that a party has deliberately concealed
information or failed to make a good faith effort to comply with a discovery order.263 However, a
court may impose less severe sanctions even if it does not find that a party has acted in bad faith or
willfully.264
261
Linde, 706 F.3d at 111 (“In general, the careful application of Restatement § 442 will
faithfully adhere to the principles of international comity.”).
262
Id. at 110.
263
RESTATEMENT § 442(2)(b).
264
Id. § 442(2)(c).
80
The Court already has considered the factors set out in Section 442 of the Restatement,
as well as the question whether defendants or, for that matter, Fajardo might face any hardship if they
complied with the Court’s order.265 It is “not required to consider [them] anew in reviewing a
requests for sanctions based on noncompliance.”266 Having determined that ordering production of
the documents from Ecuador was warranted notwithstanding Ecuadorian law, the Court proceeds to
consider the final factor: whether defendants have acted in good faith in their attempts to produce
the requested documents to Chevron and to comply with the Court’s order.
F.
Defendants Have Acted Willfully and In Bad Faith
The Donziger Defendants and the LAP Representatives contend that they have acted
in good faith in their attempts to comply with the Court’s order. They say they asked Fajardo for the
documents and he refused to provide them. Fajardo’s refusal to produce the documents, they claim,
is not their fault and certainly does not amount to bad faith on their part. But defendants’ argument
fails to take account of all the relevant facts. It leaves out a variety of events that occurred before this
Court, in Ecuadorian courts, and behind the scenes, the sum total of which amounted to bad faith.
A brief summary of those events is in order.
1.
Defendants Refuse to Produce Documents
Chevron served its first set of requests for the production of documents on the
265
See supra § 1.3.
266
Linde, 269 F.R.D. at 196 (citing Weiss v. Nat’l Westminster Bank, PLC, 242 F.R.D. 33, 35
(E.D.N.Y. 2007).
81
Donziger Defendants and the LAP Representatives on June 7, 2012.267 The Donziger Defendants did
not object to producing any documents on the ground that he lacked control over the Ecuadorian
attorneys or the practical ability to obtain documents from them.268 Nor did they claim that alleged
Ecuadorian “group secrecy” law prevented them from producing any documents. The LAP
Representatives did not object to producing any documents on the ground that the Court lacked
personal jurisdiction over them. Nor did they object on the basis that any specific provision of
Ecuadorian law prevented their attorneys and agents from producing the requested documents to
them. Nonetheless, all of these defendants declined to produce any documents in the possession,
custody, or control over their agents and attorneys in Ecuador.
Chevron moved to compel production of documents in the possession, custody, or
control of the Ecuadorian attorneys and agents on August 13, 2012.269 The LAP Representatives
opposed Chevron’s motion on the ground that alleged Ecuadorian “group secrecy” law prevented
Fajardo from turning over the LAPs’ documents without the express permission of all his clients.270
As detailed previously, this was the first time that argument was made to Chevron or to the Court.
Donziger opposed the motion claiming, inter alia, that Fajardo and the other Ecuadorian attorneys
were not his agents and that he therefore lacked the ability to obtain documents from them.
267
Champion Decl. [DI 895] Exs. 3504-7.
268
Despite the fact that the document requests made clear that they applied to all documents
“in the possession, custody, or control of DEFENDANT’s agents, attorneys or
representatives (including but not limited to attorneys in this action, attorneys in the LAGO
AGRIO LITIGATION, Pablo Fajardo Mendoza, Luis Yanza, Julio Prieto Méndez, Juan
Pablo Sáenz).”
269
DI 562.
270
DI 563.
82
2.
The LAP Representatives’ U.S. Counsel Suggests that Fajardo File Suit in
Ecuador and Keeps the Suit’s Existence Secret
On October 4, 2012, one of the LAP Representatives’ former counsel, Craig Smyser,
as he put it, suggested that Fajardo “ask an Ecuadorian court for a ruling on the rights and obligations
of the lawyers and the clients in this relationship governed by Ecuadorian law.”271 According to
Smyser, Fajardo “did not indicate then whether he would act on the suggestion.”272 On October 9,
2012, an associate at Smyser’s firm, Jarod Stewart, emailed Fajardo. He stated:
“Until now, Judge Kaplan has not issued an order [on Chevron’s motion to compel].
If you [pl.] can file in Ecuador an action requesting a declaratory judgment that says
that you [sing.] are barred from providing the documents without the permission of
all your clients, we could file this complaint before Judge Kaplan to inform him this
issue will be decided by a judge in Ecuador and that Judge Kaplan has to wait before
issuing his decision until the court in Ecuador has issued its ruling.”273
Fajardo responded, “I will keep you informed.”274
One week later, the Córdova Lawsuit was filed in the Provincial Court of Sucumbíos
in Ecuador.275 That same day, Smyser stated at a status conference before this Court: “I have asked
[Ecuadorian counsel] in person for the documents, and the lawyer has said, I can’t give them to
you.”276 He did not inform the Court or Chevron that he had suggested that Fajardo seek a
271
Smyser Decl. [DI 952] ¶ 2.
272
Id.
273
Apr. 17, 2013 Hearing, Ex. B (Oct. 9 2012 Email from Jarod Stewart to Fajardo).
274
Id.
275
Champion Decl. [DI 895], Ex. 3508.
276
Oct. 18, 2012 Tr. at 19:16-18.
83
declaratory judgment in Ecuador. A few days later, however, Stewart emailed Fajardo and Sáenz,
stating: “We want to know the current situation regarding the complaint for a declaratory judgment
in Ecuador regarding providing documents to Messrs. Camacho and Piaguaje.”277 On October 22,
2012, Fajardo informed Stewart “that a lawsuit had been filed in Ecuador to seek a declaration from
an Ecuadorian court as to the rights and obligations of the Aguinda plaintiffs and their lawyers.”278
On January 1, 2013, Fajardo informed Stewart that there would be a hearing on the
lawsuit in Ecuador.279 “After the hearing Mr. Fajardo informed [Stewart] that he did not know what
could happen because it would be the judge’s decision.”280 Two weeks later, Fajardo sent Stewart
a copy of the Ecuadorian court’s order granting Córdova’s request for an injunction.281 On January
23, 2013, defendants submitted the ruling to this Court, stating that it “resolves the legal question
whether Ecuadorian law legally prohibits counsel for Defendants from obtaining and producing to
Chevron the documents covered by Chevron’s motion to compel.”282
At a minimum, this time line reflects the fact that the LAP Representatives’ U.S.
counsel – while continuously telling this Court that they had asked Fajardo for the LAPs’ documents
– at the same time secretly suggested to him that he initiate a lawsuit in Ecuador in an effort to
277
Apr. 17, 2013 Hearing, Ex. 12 (Oct. 22, 2012 Email from Jarod Stewart to Fajardo).
278
Stewart Decl. [DI 951] ¶ 10.
279
Id. ¶ 11.
280
Id.
281
Id. ¶ 12.
282
DI 734, at 1.
84
foreclose that very possibility. And it reveals also that the U.S. lawyers were aware of the suit long
before they made its existence known to the Court. In fact, they did not inform Chevron or the Court
about the lawsuit until they were told Fajardo had received his desired result and the injunction had
been granted.
This gamesmanship in and of itself undermines the LAPs’ counsels’ contention that
that they acted in good faith in fulfilling their obligations to their clients and to this Court. But the
details of the Córdova case reveal an even more troubling state of affairs.
3.
The Córdova Suit Was Collusive
Although the Court will not pass judgment on the merits or outcome of the ruling in
the Córdova case as a matter of Ecuadorian law, a brief discussion of how it came to be and how the
dispute was presented to the Ecuadorian court is in order. It is important also to note that defendants
informed the Court of none of the following details.
First, the Córdova suit was collusive in the sense that there was no real dispute
between the parties. Both Córdova, the plaintiff, and Fajardo, the defendant, sought a declaration by
the court that Fajardo was prohibited from producing the LAPs’ documents. Indeed, Fajardo – who
ostensibly was the target of the requested injunction – argued in support of Córdova’s case. He told
the trial court that, if he were to turn over the documents, “it is obvious that constitutional rights of
the plaintiff and the other plaintiffs in the principal case [would be] violated.”283 The Ecuadorian
court in the final instance did what all of the parties before it – the plaintiff and the defendants –
asked it to do: it entered an order barring disclosure to this Court of any information possessed by
283
DI 734, Ex. A at 2-3.
85
or known to the defendants in that case concerning the Chevron litigation.284
Second, it is abundantly clear that the point of the Córdova suit was to frustrate
Chevron’s efforts to obtain discovery in this Court to which it was entitled. The LAPs concealed the
existence of the Córdova suit from Chevron until it was over and they had obtained their desired
result. Even assuming that Ecuadorian law did not require notice to or joinder of Chevron on an
indispensable party or other basis, the LAPs’ concealment of the action, especially given the ongoing
litigation in this Court concerning the production of the Ecuadorian documents, was done in bad
faith.
Third, in an effort to convince the Ecuadorian court that an injunction was necessary,
Fajardo made representations that directly contradicted those that the LAP Representatives’ former
U.S. counsel made to this Court. Fajardo told the Ecuadorian court that, “faced with the strong
284
Id. at 4-5. In addition, Fajardo holds a broad power of attorney on behalf of all of the LAPs.
Hendricks [DI 106] Ex. 481. He thus was in a position to facilitate all of the U.S. discovery
on behalf of all of them, not to mention himself, had he wished to do so. He likewise was
in a position to have resisted the Córdova suit, both individually and on behalf of the other
LAPs, had he so desired.
Moreover, the language of the ruling itself is troublesome. Section FIVE of the Ecuadorian
court’s decision, which contains its reasoning, begins as follows:
1
2
3
4
5
6
7
8
9
10
“The plaintiff, in bringing a suit for the protection of constitutional rights, must prove that
rights referred to that might be violated will cause him serious harm, which has been proven
in this case. Therefore, it is appropriate to apply Section 21 of Art. 66, and Arts. 75 and 76
of the Constitution of the Republic of Ecuador referred to by the plaintiff. On pages 51 et
seq. of the record and in the public hearing, the plaintiff submitted documentation with a
translation into Spanish by [name omitted], in which it appears that the Judge of the United
States of American Lewis A. Kaplan of the second district of the State of New York
demands our confidential information in favor of his jurisdiction, this has been requested
from our attorneys . . .” DI 787, at 4 (emphasis added).
Note that the writer of the decision on line 2 spoke of the plaintiff in the third person — as
“him.” Two sentences later, however, in lines 8 and 9, the writer referred to the confidential
information and the LAPs’ attorneys as “our” information and “our” attorneys instead of the
plaintiff’s information and the plaintiff’s attorneys.
86
pressure to which we, the attorneys and social leaders, have been subjected in this lawsuit, and in
view of an increasing threats, even to punish our attorneys in the United States, we have discussed
this matter and decided to turn over the information Chevron is demanding.”285 This, of course, flew
in the face of what Fajardo allegedly told the LAPs’ former U.S. counsel, who in turn consistently
told this Court from the beginning of this discovery dispute that Fajardo refused to turn over the
LAPs’ documents because he was prevented by Ecuadorian law from doing so.
Fourth, the argument Córdova made to the Ecuadorian courts as to why the injunction
was necessary, which ultimately appears to have been accepted, was different from that which the
LAP Representatives made to this Court. For example, Córdova argued to the Ecuadorian court that,
“if the plaintiffs provide Chevron with even a small part of the information, our chance of success
both at the National Court and the judgment enforcement stge would be seriously and irremediably
harmed. The oil company would learn intimate details regarding the internal operations of the
plaintiffs’ team . . . . That would irreparably harm my . . . right of access to Justice and to the
effective, impartial and expeditious protection of rights . . . protected by Article 75 of the
Constitution. . . .”286 And he contended to the trial judge that ultimately granted the injunction that
“our struggle against [the] petroleum giant would be destroyed and the company would not carry out
the court-ordered environmental remediation action” if Fajardo and the other lawyers were to turn
over the requested documents.287
This was not the argument the LAP Representatives made to this Court when they
285
DI 734, Ex. A, at 3 (emphasis added).
286
Champion Decl. [DI 895], Ex. 3513, at 2-3.
287
Champion Decl. [DI 895], Ex. 3516, at 2-3 (brackets in original).
87
informed it that Ecuadorian law prohibited production of the documents. Instead, the LAP
Representatives told this Court that Ecuadorian law prohibited a lawyer representing a group of
clients from disclosing the clients’ “secrets” to a third party unless all of the clients agreed to the
disclosure. The argument Córdova made to the Ecuadorian courts – that production of a party’s
documents is forbidden by the Ecuadorian Constitution because the parties must be “on equal terms”
– was never made to this one, at least as far as can be discerned from the papers the parties have
submitted.
Thus, the Córdova suit – whatever its merits – reveals a collusive and clandestine
attempt by the LAPs’ Ecuadorian and U.S. attorneys to keep the documents in Ecuador from being
produced and to do so without permitting Chevron from even attempting to contest the case before
it was decided.
4.
Further Evidence That Defendants Have Not Acted in Good Faith With
Respect to the Ecuadorian Documents
When assessing the good faith factor of the comity analysis, a court will consider
whether and to what extent a party has attempted to obtain the discovery in question. Where foreign
law prevents production of documents, good faith may be demonstrated where a party seeks a waiver
of the foreign law,288 attempts to obtain the documents from other sources,289 or produces the
documents in question to the extent they are not protected by foreign law.290
288
See Linde, 706 F.3d at 113; Richmark Corp., 959 F.2d at1479.
289
See Linde, 706 F.3d at 110.
290
Rogers, 357 U.S. at 203.
88
Defendants did none of these things.291 They did not attempt meaningfully to comply
with Chevron’s document requests or the Court’s order compelling production. Instead, they sought
a court order preventing the production.292 Moreover, the record indicates that at least some of the
LAPs – including one of the LAP Representatives – never were even asked for their permission to
allow Fajardo to produce their documents, which would have sufficed at least until entry of the
Córdova injunction. Moreover, although Fajardo stated in a letter to the LAP Representatives that
he was “expressly prohibited by [his] clients and the law from” producing the documents,293 the
record indicates that his statement was based on a personal assumption, not on any actual prohibition
by the plaintiffs’ themselves. For example, when defendant Camacho was asked at his deposition
whether “Mr. Fajardo . . . ever asked [Camacho] if [Fajardo] c[ould] make copies of [the plaintiffs’]
documents and give them to Mr. Donziger,” Mr. Camacho responded, “No.”294 And, to the extent
that Fajardo did “ask” some of his clients for their permission to produce their files to the LAP
Representatives, he informed them also that permitting him to do so, in his opinion, would violate
Ecuadorian law. Defendant Piaguaje testified at the sanctions hearing as follows:
291
“The district court is free to consider the full record in the case in order to select the
appropriate sanction.” S. New England Tel. Co. v. Global NAPs Inc., 624 F.3d 123, 144 (2d
Cir. 2010) (internal citation and quotation marks omitted).
292
This in and of itself is evidence of bad faith. “Evidence that parties or targets have actively
sought a prohibition against disclosure . . . may be regarded as evidence of bad faith and
justification for sanctions in accordance with Subsection 2(b).” RESTATEMENT (THIRD) OF
FOREIGN RELATIONS LAW § 442 cmt. h (1987); see also In re Grand Jury Subpoena Dated
August 9, 2000, 218 F. Supp. 2d 544, 563 (S.D.N.Y. 2002) (a party that “‘courted legal
impediments’ . . . does not appear to have genuinely attempted to comply”) (citing Minpeco,
116 F.R.D. at 528).
293
DI 563, Ex. 2 (Aug. 14, 2012 Ltr. from Fajardo to Camacho and Piaguaje).
294
DI 1180, Ex. 1 (Camacho Dep. Tr.), at 181:17-22
89
Q:
When you were present [at a meeting with the plaintiffs’ representatives], did
anything happen with respect to producing documents or not in this case in the
United States? A: When I was in a meeting – well, not all the – it was
only the representatives and not all the plaintiffs were there.
Q:
When you were in a meeting with the representatives of the various private
groups, was any action taken with respect to producing documents in this
case? * * * A: We talked about the issue, but then if Attorney Fajardo
later says that it cannot be done because there are laws in Ecuador, laws that
say[] it couldn’t be done, then also the other [plaintiffs] are also in
agreement.”295
Thus, despite the fact that, according to defendants, Ecuadorian law permits disclosure of the
documents in Fajardo’s possession if all of the plaintiffs agreed to such disclosure, Fajardo apparently
informed the plaintiffs that any disclosure at all would violate Ecuadorian law.
But defendants’ lack of good faith did not end there. There are myriad other ways
defendants could have attempted to obtain the Ecuadorian documents. The LAP Representatives, at
least in theory, could have intervened in the Córdova suit to resist the injunction in order to permit
them to produce the documents here. But they were prevented from doing so because their lawyers
never made them aware that such a suit was filed.296 Nor did the LAP Representatives threaten to sue
or fire Fajardo for his refusal to provide them with the documents so they could comply with this
Court’s order, despite that his refusal constituted a breach of his retainer agreement.297
Mr. Donziger also has failed to pursue any of the other options available to him to
295
Apr. 17, 2013 Tr. at 245:15-246:2.
296
DI 1180, Ex. 1 (Camacho Dep.) at 181:23-182:6; 182:15-19 (“Q: Did anyone ever tell you
that there was going to be a court hearing on the issue of whether Mr. Córdova could
prevent Mr. Yanza and Mr. Fajardo from providing you documents for your defense? A:
No.”).
297
Hendricks Decl. [DI 355] Ex. 1106 (Fajardo Retainer Agreement), at 5 (“The Plaintiffs’
files shall be and remain the property of the Plaintiffs.”).
90
comply with the Court’s order. He did not attempt to enforce his contractual rights to access the
documents.298 He did not initiate legal action against Fajardo. He did not discharge or stop paying
Fajardo or the other Ecuadorian attorneys for their failure to provide him with the documents.299
Instead, he continued to fund their operation, supervise or assist in their work, and communicate with
and visit them as frequently as he ever did.
Nor has Mr. Donziger made any legitimate effort to comply with Chevron’s document
requests or the Court’s order compelling production. He testified that he had “one or two
conversations” with Fajardo after Chevron moved to compel to discuss whether Fajardo would
produce the LAPs’ documents.300 Fajardo allegedly refused. But neither Donziger nor his former
counsel ever indicated to Fajardo that they had actually wanted the documents from Fajardo or
instructed him to produce them. Instead, Donziger testified that he merely “discuss[ed] with
[Fajardo] whether [Donziger was] going to produce documents from [Fajardo’s] files.”301 Never did
Donziger demand that Fajardo provide them.
Then, “[i]mmediately after” the Court ordered defendants to advise the Court whether
298
Id. at 5 (Fajardo “will provide the Other Plaintiffs’ Representatives [including Mr.
Donziger] with access to the Plaintiffs’ files at such reasonable times as may be requested
by the Other Plaintiffs’ Representatives”).
299
See, e.g., In re Auction Houses Antitrust Litig., 196 F.R.D. 444, 445-46 (S.D.N.Y. 2000)
(finding party’s effort to obtain information from former employee pursuant to discovery
request insufficient where party “requested [former employee] to furnish the information and
that [former employee] declined to do so . . . . But [party] does not say that it has done
anything more than request [former employee] to provide the information necessary . . .
[and] has not threatened to cease payments to him and his counsel or to consider its
indemnification obligation as unenforceable in light of [former employee’s] position”)
300
Apr. 16, 2013 Hearing Tr. at 24:14-22.
301
Id. at 25:4-8.
91
they would comply with the order, former “counsel for Donziger sent a letter to Fajardo, enclosing
Chevron’s requests for production to Donziger”302 and asking him whether he intended to produce
the documents. But the letter that so stated was not a serious attempt to obtain production of the
requested documents. It contained no demand. It threatened no consequences if the documents were
turned over. And it went out of its way to state that “Mr. Donziger does not consider you [Fajardo]
to be his attorney nor his agent.”303 Indeed, the letter was “calculated to fail.”304 Unsurprisingly,
Fajardo replied that he would not produce the documents because, inter alia, “Judge Lewis Kaplan,
induced by Chevron Corporation, is very much mistaken in falsely asserting that we (attorneys in
Ecuador) are attorneys and agents of Mr. Steven Donziger.”305
Finally, mere weeks ago, defendants produced 29 Ecuadorian documents that had not
previously been produced to Chevron.306 Defendants included these documents – minutes from
meetings of the “Asamblea” – on their list of exhibits they plan to introduce at trial.307 These
documents clearly were responsive to Chevron’s document requests, which explicitly called for all
302
DI 947, at 7.
303
DI 841, Ex. 1. Moreover, so far as the record discloses – and neither Donziger nor his
former counsel have indicated to the contrary – this was the first time Chevron’s document
requests to Donziger were provided to Fajardo.
304
Linde, 706 F.3d at 113 (citing Linde v. Arab Bank, PLC, 269 F.R.D. 186, (E.D.N.Y. 2010)).
305
DI 841, Ex. 2, at 1.
306
Chevron’s request for production 149 requested “ALL DOCUMENTS RELATED To the
ASSEMBLY OF THE AFFECTED.” Champion Decl [DI 895] (Ex. 3504), ¶ 9.
307
DI 1377 (Defendants’ Joint Preliminary Trial Report), Ex 1, at 16-19 (Defs.’ Exs 218-246).
92
documents related to the Asamblea.308 Moreover, these documents – the property of the LAPs –
likely would fall within the definition of materials the production of which was barred by Córdova.
That these documents were not disclosed until the eve of trial underscores the gamesmanship and bad
faith of defendants and their Ecuadorian counsel when it comes to production of key documents from
Ecuador and reveals that their strategy has always been to produce materials when it suits their
purposes and is most helpful to their case, notwithstanding Court orders for full production or
prejudice to the plaintiff.
5.
Defendants’ Further Efforts to Block Discovery
Defendants’ recalcitrance in the discovery process is not limited to the dispute over
the Ecuadorian documents. Chevron has fared no better in getting the LAPs’ agents to submit to
deposition309 or the LAP Representatives to provide adequate responses to its interrogatories and
requests for admission (“RFAs”). In both the Count 9 Action and this one, the LAP Representatives
have made many baseless objections and arguments in efforts to justify their refusal to respond
adequately to Chevron’s RFAs.310 In the Count 9 Action, the LAP Representatives claimed not to
have knowledge of or recollect the information necessary to answer many of Chevron’s
308
The “Asamblea de Afectados por Texaco” is said to be a group of Ecuadorian indigenous
organizations affiliated with the plaintiffs who claim to have been affected by Texaco’s
operations in the region. DI 355-37 (Ex. 1122), Ex A.
309
None of the LAPs’ Ecuadorian attorneys or agents submitted to deposition in this or the
Count 9 Action.
310
For example, in the Count 9 action, the LAPs refused to respond to any of Chevron’s RFAs
because they claimed the term “drafted” was ambiguous. See 11 Civ. 3718, DI 71, Ex. 3.
93
interrogatories.311 In this action, the LAP Representatives and the Donziger Defendants initially
refused to respond to a single interrogatory propounded by Chevron based on an unfounded
numerosity objection.312 And both the Donziger Defendants and the LAP Representatives have
refused to respond to many of Chevron’s requests for admissions on the ground that they could not
be asked to admit facts relating to the acts of their Ecuadorian attorneys and agents and/or could not
admit or deny the truth of any event they did not personally witness.313
Finally, it must be noted that defendants’ agents and attorneys – most notably Fajardo
– have produced documents when it has been helpful to the LAP Representatives and Donziger
Defendants in this Court and refused when it has not. Indeed, as discussed previously, Fajardo and
Yanza have provided to Donziger documents, including memoranda, expert summaries, and court
filings, throughout this litigation. So too has Fajardo provided the LAP Representatives’ former U.S.
counsel with documents they recently have filed in this case – including an affidavit of a former
Ecuadorian judge314 and alleged tape recordings of conversations that the judge claims to have had
with a private Chevron lawyer.315 So far as this Court is aware, Fajardo never was sued or prosecuted
311
See 11 Civ. 3718, DI 72, Ex. 3, 4.
312
DI 781 Exs. 4, 5; DI 809 (Order Granting Chevron’s Motion to Compel).
313
See DI 815, Ex. 3; DI 814, Exs. 2,3.
314
Apr. 17, 2013 Tr. at 255:5-16.
315
Id. 259:1-6. When Chevron moved to compel production of these recordings, the LAP
Representatives informed the Court that they “d[id] not have the recordings that are the
subject of Chevron’s motion to compel.” DI 870. The Court eventually denied Chevron’s
motion to compel on that basis. DI 937. Two weeks later, the LAP Representatives
submitted the recordings to the Court. DI 974 Exs. 2, 3. Smyser testified that he did not
have the recordings when he responded to Chevron’s motion to compel, but that he did not
bother to ask Fajardo or the other Ecuadorian lawyers whether they had a copy of the tape
94
for producing these documents. It is clear that the defendants have “decided when [they] will be
cooperative, and when [they] will not be cooperative, which [they] ha[ve] no right to do.”316 This
“selective compliance with foreign . . . secrecy laws . . . highlights the limits of [their] supposed good
faith and casts doubt on [their] claims of hardship.”317
*
*
*
The Court finds that defendants have practical control over the responsive documents
ordered produced by the February 11 Order and that they have not produced them as required.
Indeed, they have not made a good faith effort to comply. Instead, they have sought to evade their
discovery obligations and the Court’s order. Neither the Córdova inunction nor any other Ecuadorian
law excuses their non-compliance. Sanctions are warranted.
G.
Which Sanctions Are Appropriate
“Rule 37(b)(2) contains two standards – one general and one specific – that limit a
district court’s discretion [in determining which sanctions are appropriate]. First, any sanction must
be ‘just’; second, the sanction must be specifically related to the particular ‘claim’ which was at issue
in the order to provide discovery.”318 Thus, the Court must select sanctions that are “commensurate
recording before doing so. Apr. 17, 2013 Tr. at 259:17-20.
316
Linde, 269 F.R.D. at 200 (citing Cine Forty-Second St. Theatre Corp. v. Allied Artists
Pictures Corp., 602 F.2d 1062, 1065 (2d Cir. 1979).
317
Id.
318
Ins. Corp. of Ir., 456 U.S. at 707.
95
with the non-compliance”319 such that they restore the prejudiced party, as nearly as possible, to the
position it would have occupied had the discovery been produced and the evidence disclosed.
Chevron contends that a broad range of sanctions – including contempt, entry of
default judgments, striking defendants’ answers or affirmative defense, adverse findings of fact, and
directing that adverse inferences be drawn as to the Ecuadorian documents320 – are appropriate. The
Court declines to impose the harshest of these sanctions, notwithstanding defendants’ obdurate and
quite possibly contemptuous refusal to comply with their discovery obligations. Instead, the Court
carefully has selected sanctions that address defendants’ misbehavior and seek to place Chevron in
a position as near as possible to that which it would occupy had the documents from Ecuador been
produced.
1.
The LAP Representatives’ Personal Jurisdiction Defense
As noted, the LAP Representatives waived their personal jurisdiction objection to
producing the Ecuadorian documents and to sanctions for failing to comply with the order to produce
them by failing properly to assert it in their responses to Chevron’s document requests and in
opposition to Chevron’s motion to compel. But even if they had not waived it, a sanction striking
their personal jurisdiction defense would be appropriate for their failure to comply with the order to
produce insofar as it required production of documents bearing on their personal jurisdiction defense
in this action.
319
Shcherbakovskiy, 490 F.3d at 140.
320
DI 894, at 19-23.
96
The Supreme Court held in Insurance Corporation of Ireland321 that a court may order
a party that contests the exercise of personal jurisdiction over it to provide discovery relevant to
deciding the jurisdiction issue. But it dealt also with the consequences of a failure by such a party
to comply with an order compelling it to provide such jurisdictional discovery.
The district court in Insurance Corporation of Ireland ordered discovery for the
purposes of determining jurisdiction. After the petitioner refused to produce the required documents,
the district court struck its personal jurisdiction defense. The district court made clear, however, that
“even if there was not compliance with the discovery order, this sanction would not be applied if
petitioners were to ‘produce statistics and other information’ that would indicate an absence of
personal jurisdiction.”322
The Supreme Court affirmed the sanctions order, finding that “[i]n effect, the District
Court simply placed the burden of proof upon petitioners on the issue of personal jurisdiction.
Petitioners failed to comply with the discovery order; they also failed to make any attempt to meet
this burden of proof. This course of behavior, coupled with the ample warnings, demonstrates the
‘justice’ of the trial court’s order.”323
The Court held also that the sanction was commensurate with the petitioner’s noncompliance. Respondent
“was seeking through discovery to respond to petitioners’ contention that the District
Court did not have personal jurisdiction. Having put the issue in question, petitioners
did not have the option of blocking the reasonable attempt of [respondent] to meet its
321
456 U.S. 694.
322
Id. at 708 (citation omitted).
323
Id.
97
burden of proof . . . . Because of petitioners’ failure to comply with the discovery
orders, respondent was unable to establish the full extent of the contacts between
petitioners and Pennsylvania, the critical issue in proving personal jurisdiction.”324
Thus, the Supreme Court held that the district court properly treated petitioner’s refusal to provide
jurisdictional discovery as an “admission of the want of merit in the asserted defense.”325
The Supreme Court’s holding in Insurance Corporation of Ireland applies squarely
to this case. As noted above, the documents Chevron seeks from the Ecuadorian attorneys and
associates include material that goes to the question of this Court’s personal jurisdiction over the LAP
Representatives. As in Insurance Corporation of Ireland, Chevron’s “allegation that the court [has]
personal jurisdiction over [the LAPs is] not a frivolous claim, and its attempt to use discovery to
substantiate this claim [is] not, therefore, itself a misuse of judicial process.”326 Indeed, this Court
previously determined that, based on the facts then available to it, Chevron is likely to prevail in its
contention that the Court has personal jurisdiction over the LAP Representatives.327
Accordingly, the LAP Representatives’ personal jurisdiction defense is stricken
unless, on or before October 24, 2013, they comply with the February 11 Order to the extent it
requires production of documents responsive to the requests enumerated in footnote 183 that are in
the possession, custody or control of their agents, attorneys or representatives in Ecuador including
but not limited to their attorneys in this action, their attorneys in the Lago Agrio Litigation (including
324
Id. at 708-9.
325
Id. (quoting Hammond Packing Co. v. State of Ark., 212 U.S. 322, 3501 (1909).
326
Id. at 708.
327
Chevron Corp. v. Donziger, 768 F. Supp. 2d at 642.
98
but not limited to Fajardo, Prieto, and Sáenz), and Yanza, the ADF, and Selva Viva.
Striking the LAP Representatives’ personal jurisdiction defense is an entirely
appropriate sanction given the noncompliance with the February 11 Order and the Supreme Court’s
holding in Insurance Corporation of Ireland. Nonetheless, the Court recognizes that a reviewing
court may disagree with this resolution of the personal jurisdiction issue. Accordingly, in order to
afford a reviewing court a full record on the issue, the Court will take evidence and making findings
at trial on the question whether it has personal jurisdiction over the LAP Representatives independent
of this sanctions order.
2.
All Defendants
The Donziger Defendants have not contested the Court’s personal jurisdiction over
them and thus never could have objected to production of the requested documents on jurisdictional
grounds. As noted, the LAP Representatives might have done so, but did not. Accordingly, the
Court turns to the consideration of sanctions for failure to comply with all aspects of the February
11 Order as against all defendants as distinguished from the failure to comply to the extent the order
compelled production of documents relevant to personal jurisdiction over the LAP Representatives.
Chevron contends that the Court should prohibit defendants from offering evidence
in opposition to Chevron’s RICO, RICO conspiracy, civil conspiracy, and fraud claims.328 The effect
of such a sanction essentially would be to enter default judgments against the defendants. Although
defendants willfully and knowingly have disobeyed the February 11 order, the Court determines that
such a harsh course of action is inappropriate in this case and that more narrowly tailored sanctions
328
DI 894, at 22.
99
are available.329
i.
Adverse Inference
An adverse inference serves the remedial purpose “of restoring the prejudiced party
to the same position he would have been in absent the wrongful destruction of [or willful refusal to
produce] evidence by the opposing party.”330 Where “an adverse inference . . . is sought on the basis
that the evidence was not produced in time for use at trial, the party seeking the instruction must
show (1) that the party having control over the evidence had an obligation to timely produce it; (2)
that the party that failed to timely produce the evidence had ‘a culpable state of mind’; and (3) that
the missing evidence is ‘relevant’ to the party’s claim or defense such that a reasonable trier of fact
could find that it would support that claim or defense.”331 Chevron has satisfied all three of these
requirements as to these defendants.
First, the February 11 Order required the Donziger Defendants and the LAP
Representatives to produce the responsive documents to the extent they were in the possession,
custody, or control of the Ecuadorian attorneys and associates identified in the document requests.
That order unequivocally rejected the Donziger Defendants’ contention that the Court’s order does
329
In re WRT Energy Sec. Litig., 246 F.R.D. 185, 200 (S.D.N.Y. 2007) (precluding a party from
introducing certain evidence was “an appropriate sanction here, particularly because it can
be tailored to mitigate the specific prejudice that the Underwriter Defendants would
otherwise suffer. However, in the process of leveling the playing field, care must be taken
not to tilt it too far in favor of the party seeking sanctions.”).
330
Residential Funding Corp., 306 F.3d at 108 (citing Kronish, 150 F.3d at 126).
331
Id. at 107.
100
not apply to him because he “has [no] Ecuadorian attorneys or agents”332 as well as the LAP
Representatives’ argument that they “are legally unable to obtain control over the requested
documents.”333
Second, as shown above, defendants repeatedly and willfully have refused to comply
with the Court’s discovery order.334 Although “the law in this Circuit regarding the level of fault
necessary to justify an adverse inference instruction is unsettled,” the decision whether to impose this
sanction should be made on a “case-by-case” basis.335 The district court should determine where a
party’s culpability falls “‘along a continuum of fault – ranging from innocence through the degrees
of negligence to intentionality.’”336 Where, as here, a party actively seeks legal impediments to
justify its non-production, selectively determines when it will produce documents and when it will
not, and continues to assert objections to discovery that long have been rejected, that party has
willfully and culpably failed to produce evidence and an adverse inference instruction is warranted.337
332
DI 947, at 23.
333
DI 950, at 21.
334
Residential Funding Corp., 306 F.3d at 113 (“District courts should not countenance
‘purposeful sluggishness’ in discovery on the part of parties or attorneys and should be
prepared to impose sanctions when they encounter it.”).
335
Reilly, 181 F.3d at 267.
336
Id. at 267 (quoting Welsh v. United States, 844 F.2d 1239, 1246 (6th Cir. 1988)).
337
See Residential Funding Corp., 306 F.3d at 10; Linde, 269 F.R.D. at 199-200. Moreover,
it is clear that adverse inference instructions may be appropriate even in the absence of bad
faith. See, e.g., Residential Funding Corp., 306 F.3d at 107 (“The sanction of an adverse
inference may be appropriate in some cases involving the negligent destruction of [or failure
to produce] evidence because each party should bear the risk of its own negligence.”); CineForty Second St., 602 F.2d at 1068; Reilly, 181 F.3d at 267.
101
Third, Chevron has shown that the evidence it seeks in the documents requested from
the Ecuadorian attorneys and agents is relevant to its claims. This factor requires a party “seeking
an adverse inference [to] adduce sufficient evidence from which a reasonable trier of fact could infer
that ‘the destroyed [or unavailable] evidence would have been of the nature alleged by the party
affected by its destruction [or unavailability].’”338
As an initial matter, “[w]here a party destroys [or fails to produce] evidence in bad
faith [or through gross negligence], that bad faith alone is sufficient circumstantial evidence from
which a reasonable fact finder could conclude that the missing evidence was unfavorable to that
party.”339 “Accordingly, where a party seeking an adverse inference adduces evidence that its
opponent destroyed potential evidence (or otherwise rendered it unavailable) in bad faith or through
gross negligence (satisfying the “culpable state of mind” factor), that same evidence of the
opponent’s state of mind will frequently also be sufficient to permit a jury to conclude that the
missing evidence is favorable to the party (satisfying the “relevance” factor).”340 As defendants have
acted willfully in failing to produce the evidence from Ecuador, Chevron need not show that the
evidence it seeks is likely relevant to its claims. But it has certainly made that showing.
As detailed above and in several prior opinions,341 Chevron has adduced considerable
338
Residential Funding Corp., 306 F.3d at 109 (quoting Kronisch, 150 F.3d at 127).
339
Id.; see also Kronisch, 150 F.3d at 126 (“It is a well-established and long-standing principle
of law that a party’s intentional destruction of evidence relevant to proof of an issue at trial
can support an inference that the evidence would have been unfavorable to the party
responsible for its destruction.”).
340
Id.
341
See, e.g., Chevron Corp. v. Donziger, 2013 WL 1087236; Chevron v. Donziger, 866 F.
Supp. 2d 235.
102
evidence that suggests that several aspects of the Lago Agrio litigation were tainted by fraud. It has
shown also that there is probable cause to believe that the Ecuadorian judge was bribed and that the
Judgment itself was written not by the judge who signed it but by the LAP Representatives lawyers
and agents. Many of the allegedly fraudulent acts – including the termination of the judicial
inspection process, the submission of Cabrera’s report, the bribing of the Ecuadorian judges, and the
ultimate rendition of the Judgment – were committed by or involved the Ecuadorian attorneys and
agents – the very people who possess the evidence Chevron seeks. Although the failure to produce
the documents or provide any description of them renders it impossible to determine precisely what
evidence the documents contain, Chevron has produced significant “evidence suggesting that a
document or documents relevant to substantiating [its] claim would have been included among the
[Ecuadorian] files.”342
Many of Chevron’s document requests seek information relating to the events the
Court has found (1) were tainted by fraud, or (2) as to which there is probable cause to suspect
fraud.343 Defendants have failed to produce the documents from their attorneys and agents in Ecuador
that would shed light on these events. Their failure to produce may very seriously prejudice
Chevron’s ability to prove various of its allegations. Thus, the Court in its discretion may infer from
defendants’ failure to produce documents in the possession of their attorneys and agents that the
evidence defendants refused to provide from their Ecuadorian attorneys and agents would have been
342
Kronisch, 150 F.3d at 128.
343
Champion Decl. [DI 895] Ex. A (“Facts the Court Should Deem Admitted for Defendants’
Failure to Produce the Ecuadorian Documents”).
103
unfavorable to them.344
ii.
Introduction at Trial of Responsive Documents
Finally, Rule 37 provides that the Court may prohibit a party that violates a discovery
order from “supporting or opposing designated claims or defenses, or from introducing designated
matters in evidence.”345 Such a sanction generally is available only where “the failure to comply
with a court order is due to willfulness or bad faith, or is otherwise culpable.”346
It would be entirely appropriate given the circumstances to prevent defendants from
introducing at trial documents that were held by defendants’ attorneys and agents in Ecuador and
responsive to Chevron’s requests but that were not produced pursuant to the February 11 Order.347
For more than three years – in both the Count 9 Action and this one – defendants have refused to
produce these documents notwithstanding Chevron’s requests and the Court’s orders compelling
them to do so. They have not hesitated to provide them to their co-counsel in the United States,
however, when it has suited the purposes of the defendants in this action. Such selective disclosure
of evidence favorable to their case most certainly has prejudiced Chevron and has provided
defendants with a tactical advantage. And Chevron likely would be prejudiced at trial should
defendants be permitted to introduce documents defendants were ordered but failed to produce.
344
4-75 Sand, Modern Federal Jury Instructions - Civil, P 75-7.
345
Fed. R. Civ. P. 37(b)(2)(A)(ii).
346
Daval Steel Prods., 951 F.2d at 1367.
347
See, e.g., Chanel, Inc. v. Veronique Idea Corp., 795 F. Supp. 2d 262, 270 (S.D.N.Y. 2011).
104
Nonetheless, the Court at this time declines to preclude defendants from introducing documents they
may or may not seek to introduce at trial. Instead, it will rule on the admissibility of any such
materials on a document-by-document basis if, as, and when defendants attempt to introduce them.
In doing so, it may exclude all or some such documents as a sanction irrespective of whether they
otherwise would have been admissible.
*
*
*
The Court has found that defendants have the ability to obtain documents in the
possession of their attorneys and agents in Ecuador and that their failure to do so under court order
evidences bad faith on their part. It therefore has determined that these sanctions are both just and
commensurate with the defendants’ bad faith and non-compliance with the Court’s order. Chevron’s
request for more onerous sanctions is denied.
Conclusion
For the foregoing reasons, Chevron’s motion to sanction and hold the Donziger
Defendants and the LAP Representatives in contempt of court [DI 893] is granted in part and denied
in part as set forth above.
SO ORDERED.
Dated:
October 10, 2013
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?