CHEVRON CORP. v. DONZIGER No. 11 Civ. 0691 (LAK).
783 F.Supp.2d 713 (2011)
CHEVRON CORPORATION, Plaintiff, v. Steven DONZIGER, et al., Defendants.
United States District Court, S.D. New York.
May 9, 2011.
Julio C. Gomez, Julio C. Gomez, Attorney at Law LLC, Carlos A. Zalaya, II. F. Gerald Maples, PA, Attorneys for Defendants Hugo Gerardo, Camacho Naranjo and Javier Piaguaje Payaguaje.
LEWIS A. KAPLAN, District Judge.
The so-called Lago Agrio plaintiffs
Chevron brought this action against the LAPs, Donziger and others on February 1, 2011. The amended complaint asserts, among other things, that the Ecuadorian judicial system "does not provide impartial tribunals or procedures compatible with the requirements of due process of law"
Two days later, Chevron sought a temporary restraining order ("TRO") and a preliminary injunction barring enforcement of the Judgment. After hearing both sides, the Court granted the TRO on February 8, 2011, and the preliminary injunction on March 7, 2011. Since then, the two LAPs who have appeared in this action, subsequently referred to as the LAP Representatives,
After participating in the Section 1782 proceedings before the undersigned for many months and unsuccessfully litigating the preliminary injunction motion and the motion for a separate and expedited trial of the declaratory judgment claim in this case, all without seeking recusal, the LAP Representatives now move to disqualify the undersigned, arguing that his impartiality in this case reasonably might be questioned. The motion rests entirely on rulings and events that occurred in the two previous Section 1782 proceedings and on this Court's rulings in this action. There is no claim of any extrajudicial source of bias.
The background of the litigation is set forth in the Court's prior opinions in the Section 1782 proceedings
I. The Aguinda and Lago Agrio Cases
The litigation that led to the Ecuadorian judgment arose out of the activities of a fourth-tier subsidiary of Texaco, Texaco Petroleum Company ("TexPet"), which operated and partly owned a petroleum concession in the Oriente region of eastern Ecuador from 1965 until the early 1990s. In 1990, TexPet turned operations of the concession over to the Republic of Ecuador ("ROE") which, through the state-owned oil company Petroecuador, had owned a 50 percent interest in the concession since 1976. In 1992, TexPet relinquished all of its interests in the concession, leaving it owned and operated entirely by Petroecuador from that point forward.
Donziger and certain other American lawyers took an interest in these events. In 1993, they filed Aguinda v. Texaco,
While the Aguinda litigation was pending, the ROE released TexPet from any claims arising out of those operations in exchange for TexPet performing certain remedial environmental work, which the ROE deemed completed in 1998. As the ROE represented at the time that all of the claims asserted in the Aguinda action belonged to it, the release seems to have been intended to put an end to any claims or litigation concerning TexPet's alleged pollution. In 2001, the Aguinda action was dismissed on the ground of forum non conveniens.
After the ROE released TexPet from liability, however, Ecuador enacted the Environmental Management Act of 1999. That statute, among other things, created a new private right of action for damages for the cost of remediation of environmental harms generally, as distinct from personal injuries or property damages to specific plaintiffs. In 2003, after Aguinda was dismissed, the LAPs commenced the Lago Agrio litigation against Chevron, a subsidiary of which had acquired all of Texaco's outstanding shares in 2001. That same year, the Comptroller General of the ROE filed a denuncia, apparently a criminal accusation, against two Chevron (formerly TexPet) lawyers, as well as former ROE and Petroecuador officials, alleging that they had falsified documents and violated Ecuadorian law in connection with the ROE's release of TexPet. Those charges were dropped in 2006 for insufficient evidence but were reactivated in 2008 — apparently at the urging of Donziger (who remained central to the LAPs' Lago Agrio litigation effort) and his colleagues by the new Ecuadorian administration led by then-recently elected President Correa. Those criminal charges, as far as the Court understands, remain
II. The Section 1782 Proceedings
In recent years, Chevron brought more than a dozen Section 1782 proceedings in U.S. courts to obtain evidence for use in the Ecuadorian litigation and an international arbitration it has brought against Ecuador in relation to these events. As noted, two of those cases were brought in the Southern District of New York and are before the undersigned.
A. The Berlinger Section 1782 Proceeding
The first related to the film Crude, the making of which Donziger had solicited and in which Donziger appeared on camera at great length. The film portrayed some of Donziger's activities in and statements about the Lago Agrio litigation. Among other things, the film, as released to the public, depicted:
In addition, one version of the film — in a part edited out of the version released generally at the LAPs' request — depicted an ex parte meeting involving Donziger, some of the LAPs, and others with an expert who contributed to a supposedly neutral damages assessment by a court-appointed expert.
This and other evidence led to Berlinger § 1782 I, which was affirmed on appeal and ultimately required the film maker to turn over the outtakes that did not make their way into Crude.
B. The Donziger Section 1782 Proceeding
The outtakes included, among other things, scenes in which Donziger and others spoke of pressuring the Ecuadorian judiciary to rule in the LAPs' favor, described the Ecuadorian judicial system as "corrupt," traveled to meet ex parte with an Ecuadorian judge, and appeared to be driving the criminal prosecutions of the two Chevron Ecuadorian lawyers. Chevron therefore obtained a Section 1782 subpoena requiring Donziger to produce documents and submit to a deposition. Donziger and the LAPs, separately represented, moved to quash.
At the heart of the motion to quash were Donziger's and the LAPs' arguments that discovery from Donziger would be inappropriate
As Donziger and the LAPs refused to cooperate in seeking a stay of proceedings in Ecuador to facilitate consideration of issues raised in this Court, the litigation of the motion to quash occurred under extreme time pressure. Chevron was faced with the imminent prospect of an enormous judgment in the Ecuadorian litigation, and the two Chevron attorneys were facing criminal prosecution there with a critical preliminary hearing just a short time away. All sought the evidence for use in defending themselves in Ecuador. Thus, it was apparent that Chevron and the two accused lawyers were in a race against time — delay served the interests of Donziger and the Ecuadorian plaintiffs because delay of discovery in the Section 1782 proceeding threatened to preclude its use either in the preliminary hearing in the Ecuadorian criminal case or before entry of judgment in the civil litigation.
The Court denied the motion to quash and ordered that Donziger comply with Chevron's subpoena.
III. This Action
As noted, Chevron filed this action on February 1, 2011. Its core is Chevron's claim that the Judgment is not recognizable or enforceable. The complaint asserts also claims under the Racketeer Influenced and Corrupt Organizations Act, several state law tort claims, and claims against Donziger for violating legal ethics standards. On February 3, Chevron moved for a TRO and a preliminary injunction barring enforcement of the Judgment.
A. Donziger's Letter of February 8, 2011
On February 8 — the date on which the Court had scheduled the TRO argument — Donziger requested an adjournment, claiming that he needed more time to obtain counsel.
First, it alleged that "the Court has shown antagonism towards [Donziger] and the Aguinda litigation."
Second, it asserted that the Court had "urged" Chevron to bring this action, a contention based on the Court's question during the argument of the motion to quash in the Donziger Section 1782 proceeding whether "the phrases Hobbs Act, extortion, RICO, have any bearing here?"
Third, Donziger claimed that this Court should not preside because Chevron contemplates the undersigned being a witness in this case. Not surprisingly, there is no suggestion either in the letter or elsewhere that the undersigned has any personal knowledge of any facts relevant to this action beyond whatever it has learned by presiding as a judge and certainly no suggestion that Chevron (or anyone else) intends to attempt to call him as a witness.
Fourth, the letter alleged that the Court had made a number of remarks about Donziger's conduct during proceedings in the Section 1782 proceedings that indicated that it had "reached conclusions as to numerous of the ultimate issues in this case."
B. Donziger's Motion to Reassign the Case
Approximately three weeks after the February 8 letter and approximately four weeks after Chevron filed this action, Donziger, joined by the LAP Representatives,
Second, although the subject had no proper bearing on whether the RDB had been abused by Chevron, as Donziger and the LAP Representatives claimed, much of the transfer motion repeated and expanded upon the assertions that the undersigned had demonstrated bias in favor of Chevron. Those contentions now form a substantial part of the basis for the present motion.
C. This Motion
Notwithstanding the allegations contained in Donziger's letter and the transfer motion, this is the first application by any party to this case or the Section 1782 proceedings to recuse the undersigned. It was made nearly two months after the transfer motion, more than two and a half months after Donziger's letter, nearly three months after Chevron filed this action, and more than one year after this Court began presiding over the related Section 1782 proceedings.
The motion largely echoes the arguments and allegations of Donziger's letter and the transfer motion. The LAP Representatives repeat the arguments that the undersigned (1) encouraged Chevron to bring this suit, (2) views the Lago Agrio litigation effort as a "game," (3) has prejudged the merits of this case, (4) has questioned the LAPs' existence by calling them the "so-called Lago Agrio Plaintiffs," (5) is antagonistic towards the government and courts of Ecuador, and (6) may be called as a witness in this action. To this they have added complaints about the substance of the Court's rulings on and in connection with the preliminary injunction and bifurcation motion and its denial of a stay pending appeal. In the last analysis, however, the motion rests almost entirely on criticism of and disagreement with the Court's rulings and reasoning in this case and in the Section 1782 proceedings.
I. Recusal Under Section 455(a)
The LAP Representatives argue only that the undersigned should be recused because his impartiality might reasonably be questioned.
A motion for recusal under Section 455(a) must be made "as soon as the facts on which it is premised are known to the parties."
B. The Substantive Standard
The substantive standard that governs this motion is plain:
Moreover, recusal under Section 455(a) typically is appropriate only in cases of bias or prejudice stemming from an extrajudicial source.
The Court's comments from the bench on various occasions, all or most in the Section 1782 proceedings, upon which the LAP Representatives rely — which, as discussed below, are wholly innocuous when read in context — were germane to the issues presented, based on the evidence, and made on the record in proceedings over which the Court was presiding. As the Supreme Court made clear in Liteky v. United States, comments based on evidence adduced before a judge are not a basis for recusal even where they reflect a disposition with respect to a litigant:
The Court continued:
To be sure, there may be cases in which "[a] favorable or unfavorable predisposition can also deserve to be characterized as `bias' or `prejudice' because, even though it springs from the facts adduced or the events occurring at trial, it is so extreme as to display clear inability to render fair judgment."
The LAPs' contention that the Court's rulings give rise to an appearance of partiality is baseless as well. The Supreme Court has been abundantly clear:
Here, there is no allegation of extrajudicial source. And the rulings complained of, which in some cases are rather different than the LAP Representatives' distorted and misleading accounts of them, plainly do not fall within "the rarest circumstances" in which they could evidence the requisite bias or appearance of partiality. They therefore "are proper grounds for appeal, not for recusal."
In affirming this Court's decision in that matter, however, the Court of Appeals wrote:
These principles alone suffice to dispose of this motion. But the motion fails for an additional reason. "In deciding the sensitive question of whether to recuse a judge, the test of impartiality is what a reasonable person, knowing and understanding all the facts and circumstances, would believe."
II. The Comments and Questions Relied Upon
A. The Allegation that the Court "Urged" Chevron to Bring this Action
The LAP Representatives and Donziger repeatedly have contended that the Court urged Chevron to bring this action by asking, during the September 23, 2010 argument of the motion to quash in the Section 1782 proceeding against Donziger, whether "the phrases Hobbs Act, extortion, RICO, have any bearing." The Court certainly did include those words in a much longer question on that occasion. But they were certainly not a suggestion that Chevron bring this case, as the record makes abundantly clear. So the LAP
Chevron moved for a Section 1782 subpoena for discovery from Donziger on August 18, 2010.
Donziger moved to quash the subpoena on August 27, 2010,
Thus, Chevron had laid out its RICO, Hobbs Act and extortion claims well before the motion to quash was argued and well before the Court even posed its question. In short, the chronology is flatly inconsistent with the LAP Representatives' contention. But that is not all.
When the motion to quash came on for argument on September 23, Donziger's counsel asserted that the crime-fraud exception did not apply because "there's no Ecuadorian statute or case saying that the principal conduct that's being attacked was unlawful."
The quoted words to which the LAP Representatives now object — that is, the non-underscored portion of the full text quoted above — thus adverted to an argument that Chevron already had made, were based on evidence before the Court, and came in response to Donziger's counsel's assertion that there was no evidence of illegality.
Given this record, the suggestion that this Court suggested that Chevron bring this action is entirely unsupportable.
B. The Court's Description of the Genesis of the Lago Agrio Litigation
The LAP Representatives and Donziger complain of the Court's description of the genesis of the Lago Agrio litigation. For example, the letter, transfer motion, and recusal motion all point to the Court's statement during the argument of the motion to quash last September in the Donziger Section 1782 proceeding that:
Once again, however, they ignore the very next words of out of the undersigned's mouth, which were these: "Maybe their case is meritorious, maybe it isn't. I haven't got a clue."
C. The Court's References to "Games"
The LAP Representatives protest certain statements in which the Court used the word "game" or the phrase "name of the game." These statements alluded primarily to Donziger's and the LAPs' delaying tactics, to wit, prolonging the Section 1782 proceedings in the apparent hope that the Ecuadorian court would render a judgment before Chevron and its Ecuadorian lawyers could obtain or make use of any discovery obtained through this Court. One such statement was "I know the game here."
The context of the statement was this: While arguing the motion to quash, Donziger requested that the Court grant him time to comply with the subpoena if the motion were denied. Mindful of the urgency of completing the discovery, the Court asked Donziger whether he would be willing to have the Ecuadorian litigation stayed pending his compliance. Donziger refused. In the ensuing exchange the Court remarked:
The Court did no more than recognize the obvious — that Donziger's request for more time, if granted and if no stay of the Ecuadorian case were in place, would have benefitted Donziger and the LAPs at the expense of Chevron and its attorneys facing prosecution in Ecuador. Moreover, there is strong evidence that delay was not merely the effect of various procedural moves and requests by Donziger and the LAPs, but the subjective purpose of at least some of them.
D. Allegations that the Court has Prejudged the Merits of this Case
The LAP Representatives contend that the Court has reached conclusions on a number of ultimate issues in this case. The argument appears to take two or three forms.
First, the LAP Representatives protest certain conclusions that the Court reached in ruling on Chevron's request for a preliminary injunction. The Court stated, for example, that "Chevron is likely to prevail on its claim that the judgment is neither recognizable nor enforceable."
Second, the LAP Representatives complain about the Court's statements regarding certain "issues" that, in fact, are nothing more than the undisputed factual background of this case. For example, during the argument of the TRO application, counsel for the LAP Representatives asserted that "Chevron's game is to leave these peasants with their land ruined and this oil down there uncleaned up."
Third, the LAP Representatives take issue with certain "conclusions" that were not conclusions at all. They allege, for example, that the Court has "conten[ded] that Chevron should not assume liability for Texaco."
The issue of Chevron's status (or lack thereof) as Texaco's successor in interest bears also on the LAP Representatives' incorrect assertion or implication that the Court has determined that Chevron is not bound here by statements made by Texaco during the Aguinda litigation,
E. Alleged Antagonism
The LAP Representatives argue that the Court has called the LAPs' existence into question by calling them the "so-called Lago Agrio Plaintiffs." This is groundless. The use of "so-called" simply indicates, consistent with the primary definition for the phrase, that these indigenous Ecuadorians are "commonly named" the Lago Agrio Plaintiffs, or "popularly so termed."
The LAP Representatives contend that certain other remarks by the Court evidence bias when in fact they stated conclusions, based on evidence, pertinent to the legal issues that were before the Court. For instance, the LAP Representatives argue that this Court's alleged bias in favor of Chevron is revealed by its statement, made during the TRO hearing, that Chevron is "a company of considerable importance to our economy that employs thousands
F. Allegations Against the Special Master
The LAP Representatives argue that the Special Master, Max Gitter, Esq., whom the Court appointed to preside over Donziger's deposition in the Donziger Section 1782 proceeding exhibited bias against Donziger and in favor of Chevron. For substantially the reasons discussed in Chevron's memorandum,
III. The Rulings Relied Upon
The LAP Representatives complain also that the Court's rulings in the Section 1782 proceedings and in this action are evidence of the Court's bias against them and the other defendants. They offer a number of instances of this alleged "pattern of inequitable and overly harsh treatment." Each example, however, is no more than a ruling by this Court based on fair legal reasoning. Where appealed, they were affirmed.
A. The Donziger Section 1782 Proceeding
1. Alleged Waiver of Privilege as to Three Documents Filed with the Court
The LAP Representatives protest the Court's ruling in the Donziger Section 1782 proceeding denying the LAPs' motion to file three documents under seal and holding that "the [public] filing of these documents with the Court waived whatever privileges otherwise might have attached to them."
The LAPs filed and sought to have sealed (1) a declaration of an attorney, (2) a document that appeared already to have been filed with the Ecuadorian court, and (3) an e-mail exchange between Donziger and a testifying expert. As the party asserting privilege, the LAPs had the burden of establishing it. They made no such showing. The Court, moreover, found no basis for asserting privilege on the face of the documents.
2. Rulings on Supplementing the Record
The LAP Representatives allege that the Court allowed Chevron, in the Donziger Section 1782 proceeding, to supplement the record on Donziger's motion to quash after briefing was completed but refused the LAPs' request to hold the record open for additional submissions.
On September 20, 2010, Chevron moved for leave to supplement the record with testimony and documents from other Section 1782 proceedings outside of this District and one additional video segment from the Crude outtakes.
3. Donziger's Failure to Submit a Privilege Log
The LAP Representatives complain also of the Court's holding in the Donziger 1782 proceeding that Donziger waived the attorney-client privilege and work product protection with respect to subpoenaed documents by failing to file a timely privilege log.
To begin with, the Second Circuit affirmed this Court's privilege ruling in Lago Agrio Plaintiffs v. Chevron Corp. The merits of this Court's decision on that matter have been established conclusively.
The complaint about the manner in which the issue was adjudicated is difficult to understand, but it appears to rest on the fact that the Court, given the press of time, first issued its ruling in summary form on October 20, 2010,
B. Proceedings in This Action
1. Alleged Waiver of Donziger's Right to Oppose Preliminary Injunction
The LAP Representatives claim that the Court ruled that Donziger waived his right to oppose entry of the preliminary injunction and that this is evidence of the Court's bias or impartiality.
Chevron moved for a TRO and a preliminary injunction on February 3, 2011. The Court scheduled argument on the TRO for February 8. On or before that date, the LAP representatives submitted a lengthy brief and over 1,200 pages of evidence. Donziger, an attorney who, moreover, was represented at the time by other counsel in the Donziger Section 1782 proceeding, submitted nothing.
When the TRO came on for argument, Donziger appeared but submitted no papers. The LAP Representatives, in contrast, filed another brief. As the motion for a preliminary injunction already had been pending for eight days, the Court set a deadline for opposition papers on the preliminary injunction motion of February 11.
Donziger did not file opposition papers by the February 11 deadline. He did, however, appear at oral argument on February 18, represented by counsel, who unsuccessfully sought an adjournment
Relying on the Supreme Court's holding in Lujan v. National Wildlife Federation,
In sum, then, the Court never ruled that Donziger waived his right to oppose the preliminary injunction motion. To the contrary, it considered the arguments his counsel made on February 18. Beyond that, it merely required adherence to the briefing schedule it had set, bearing in mind the urgency of the situation and the need to issue a decision on a very large and complex record before the TRO expired.
2. Alleged Waiver of Unclean Hands Defense
The LAP Representatives protest the Court's alleged ruling that they had waived their unclean hands defense.
As of February 11, the deadline for submission of opposition papers, the LAP Representatives had timely filed 95 pages of briefing and over 1,200 pages of affidavits and exhibits, none of which asserted any unclean hands defense.
On February 28, the LAP Representatives moved to increase the amount of the TRO bond that the Court had required.
Thus, the Court never ruled that the unclean hands defense had been waived. To the contrary, it expressly stated that the unclean hands defense "may of course be asserted by [the LAPs] in later proceedings."
3. Alleged Waiver of Personal Jurisdiction Objections
The LAP Representatives assert that "the Court ruled that the Ecuadorian plaintiffs waived their right to challenge personal jurisdiction."
So far as the LAP Representatives are concerned, they argued that Chevron was unlikely to prevail on the merits, and that a preliminary injunction should be denied, because they were not subject to personal jurisdiction here. The Court considered and rejected that argument on its merits.
In ruling on Chevron's motion for a preliminary injunction, the Court considered (as it was obliged to do) whether Chevron was reasonably likely to succeed in proving the Court's personal jurisdiction over the non-appearing LAPs.
4. Recent Rulings
The LAP Representatives complain also of the Court's rulings on subsequent motions in this action. The Court sees no reason to address any of these arguments, all of which are baseless as readily appears from the Court's prior decisions.
IV. Alleged External Opinion
Finally, the LAP Representatives' reply memorandum concludes with the claim that it does not matter what they, Chevron or the Court think about the Court's ability to provide impartial justice. "What matters is that the public — and in this case, the `public' includes the global judicial and diplomatic community — perceive this Court as offering a fair and impartial forum to adjudicate Chevron's grave and extraordinary claims." And they end with the assertion that "[i]t has become abundantly clear ... to any reasonably impartial observer" that this is an occasion when the Court has succumbed to prejudices and passions at the expense of reason and temperance." This is evidenced, they claim, by two news clippings, one of which observed only that "Chevron has received the lion's share of rulings in Judge Kaplan's court" and the other of which expressed the view that "Steven Donziger seems to have drawn the distaste of Judge Kaplan"
That is especially true here given the LAPs' ready access to the media as evidenced by their procurement of the making of the film Crude to tell their story and their conduct of a media campaign.
This Court has considered this motion with the great care that it deserves. Informed persons, knowing and understanding all of the myriad and complex facts of these extensive proceedings, and putting aside the rhetoric and other devices deployed here by the LAP Representatives, readily would see that the Court's rulings have been firmly grounded in the law and the evidence. There is no objective reason
The motion to recuse the undersigned [DI 284] is denied.
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