Chevron Ecuador Judgment Questioned As Plaintiffs Lawyers Are Ordered to Produce Privileged Documents
The tipping point in Chevron’s campaign to block enforcement of an Ecuadorean court’s $9 billion Chevron Ecuador judgment against the oil giant came at the end of 2010, when Manhattan federal judge Lewis Kaplan ruled that plaintiffs lawyer Steven Donziger had to turn over all of his privileged material — e-mails, journals, internal memos — to Chevron defense lawyers, thus letting the lawyers know the implication of those documents.
It was an extraordinary ruling, exposing the internal workings of the team representing Ecuadoreans who pushed for the Chevron Ecuador judgment and claimed to have been harmed by Chevron predecessor Texaco’s contamination of the Lago Agrio region of the rainforest.
Based on the privileged materials and those materials’ relationship to the Chevron Ecuador judgment, Chevron filed a suit accusing Donziger, the Lago Agrio plaintiffs, and many of their experts of racketeering. Under the aegis of the racketeering suit, Judge Kaplan issued a sweeping preliminary injunction in March, barring the plaintiffs from attempting to collect on the judgment an Ecuadorean judge handed down in February.
The injunction against collecting the judgment will be tested at a hearing before the U.S. Court of Appeals on Sept. 16, and then at a trial before Judge Kaplan that’s set to begin in November.
Chevron’s Gibson Dunn lawyers demanded yet more attorney-client privileged materials, these from two young lawyers who worked with Donziger and from the Philadelphia plaintiffs firm Kohn Swift & Graf. Kohn Swift financed the case for years, until name partner Joseph Kohn and Donziger fell out over case strategy.
In May the U.S. Court of Appeals for the Third Circuit overturned that order, ruling that Chevron was not entitled to privileged documents because it hadn’t shown evidence that the crime-fraud exception to privilege applies in the case.
But on Wednesday, the magistrate judge working with Judge Kaplan ordered the Kohn firm to produce its privileged documents. Chevron counsel Randy Mastro of Gibson Dunn said the order is “very significant,” and indicates that the firm has many documents Donziger didn’t previously produce to Chevron when the original Chevron Ecuador judgment was made. Documents that have already come out show Kohn urging other plaintiffs lawyers to settle for $700 million to $1.2 billion.
Mastro noted that Judge Francis analyzed whether the crime-fraud exception applies to a subset of documents belonging to one of Donziger’s former associates, and concluded the exception applies to some of those documents with regards to the Chevron Ecuador judgment case. “Judge Kaplan has already ‘effectively found’ a reasonable basis to suspect that the judgment in the Lago Agrio litigation was procured by fraud.”
“It’s extremely significant that the magistrate made express crime-fraud findings,” Mastro said with regards to the Chevron Ecuador judgment.
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