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G:\LAK\DRAFTS\Chevron Case 1:11-cv-00691-LAK-JCF Document 1874 Filed 03/04/14 Page 1 of 497 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 Appearances: Randy M. Mastro Richard H. Friedman Andrea E. Neuman FRIEDMAN | RUBIN Reed M. Brodsky William E. Thompson Zoe Littlepage Anne Champion Rainey C. Booth GIBSON, DUNN & CRUTCHER, LLP LITTLEPAGE BOOTH Attorneys for Plaintiff Steven Donziger G. Robert Blakey William J. and Dorothy K. O’Neill Attorneys for Defendant Steven Donziger and Professor Emeritus Steven R. Donziger & Associates LLP Notre Dame Law School Amicus Curiae Julio C. Gomez JULIO C. GOMEZ, ATTORNEY AT LAW LLC Attorney for Defendants Hugo Gerardo Camacho Naranjo and Javier Piaguaje Payaguaje Case 1:11-cv-00691-LAK-JCF Document 1874 Filed 03/04/14 Page 2 of 497 Case 1:11-cv-00691-LAK-JCF Document 1874 Filed 03/04/14 Page 3 of 497 Table of Contents Introduction ..................................................................1 Facts........................................................................5 I. The Background ...................................................5 A. Texaco’s Operations in Ecuador ................................5 B. Aguinda ...................................................7 1. The Principal Plaintiffs’ Lawyers in Aguinda ...............8 a. Cristobal Bonifaz................................8 b. Steven Donziger.................................9 c. Joseph Kohn ..................................10 2. Key Events During Aguinda ............................11 a. Forum Non Conveniens – The Aguinda Plaintiffs Attack Ecuadorian Courts as Corrupt While Texaco Defends Them .............................................11 b. The Start of the LAPs’ Alliance With the ROE – The LAPs Agree Not to Sue PetroEcuador or the ROE..........13 c. The Aguinda Plaintiffs Seek to Recuse, and Attack, Judge Rakoff .......................................14 d. The Environmental Management Act is Passed in Ecuador .............................................15 e. Texaco Merges with a Chevron Subsidiary and Survives the Merger.......................................16 II. The Lago Agrio Litigation Begins ....................................16 A. Donziger’s Attitudes and Beliefs About the Ecuadorian Courts and the Conduct of Lawyers in Ecuador ...............................17 B. The Ecuadorian Judges ......................................21 C. The LAPs’ Team...........................................23 1. The American Lawyers................................23 2. The ADF, Selva Viva, and Luis Yanza....................28 3. The Ecuadorian Lawyers...............................30 4. The Assembly .......................................33 III. The Beginnings of Donziger’s Pressure Campaign .......................34 A. Donziger’s Strategy.........................................34 B. Donziger’s Public Relations Team and NGO Allies ................37 1. The Public Relations and Lobbying Team .................37 2. Amazon Watch.......................................39 C. The Pressure Begins – The LAPs’ First Scientist and the $6 Billion “Drive By” Damages Estimate ......................................41 D. Donziger Touts Russell’s “SWAG” and Other Misleading Descriptions of Conditions in the Orienté to Put Pressure on Chevron ..............43 E. False and Misleading Representations to Incite Governmental Action Against Chevron..................................................45 F. Donziger’s Attempt to Justify His Continued Use of Russell’s Disavowed i Case 1:11-cv-00691-LAK-JCF Document 1874 Filed 03/04/14 Page 4 of 497 Estimate is Unpersuasive.....................................49 IV. The First Phase of the Lago Agrio Case – The Judicial Inspections .........50 A. The Process ...............................................50 B. The LAPs’ Judicial Inspection Experts..........................53 C. The Calmbacher Episode.....................................54 D. The LAP Lawyers Halt Testing for BTEX and GRO Because it Is Yielding Unhelpful Results ..........................................57 E. Sacha-53 and the “Independent” Monitors – Donziger, in His Words, Goes Over to the “Dark Side” and Makes a “Bargain With the Devil”......60 F. The Termination of the LAPs’ Remaining Judicial Inspections and the Genesis of the Global Assessment..............................67 1. The LAPs Coerce the Judge to Cancel the LAPs’ Remaining Judicial Inspections..........................................69 2. Donziger Chooses Cabrera to be the Global Expert ..........72 V. The Second Phase of the Lago Agrio Case – The Cabrera “Global Expert” Report ...............................................................76 A. The LAPs Secretly Plan the Cabrera Report – The March 3 and 4, 2007 Meetings..................................................76 B. Donziger, Fajardo, and Yanza Put Together an “Army,” Cabrera is Sworn in, and the LAP Team Prepares His Work Plan ......................83 C. The Field Work ............................................87 1. The LAP Team Pays Cabrera to Ensure that He Would “Totally Play Ball”...............................................89 2. The LAP Team Provides Cabrera with Administrative “Support” and Controls his Field Work................................95 D. Donziger Attempts to Deceive Judge Sand About Cabrera’s Independence ........................................................100 E. Stratus Secretly Writes Most of the Report......................103 F. Stratus Criticizes its Own Report to Enhance the False Image of Cabrera’s Independence.............................................111 G. Donziger’s Explanation ....................................116 VI. The Pressure Campaign Continues – The LAP Team Turns Up the Heat By Pressing for Indictment of Former Texaco Lawyers.............................119 VII. The Third Phase of the Lago Agrio Case – 2009-2010: Evidence of the Cabrera Fraud Begins to Come Out, Kohn Leaves the Case, New Financing Is Found, and the Case Proceeds in Lago Agrio .......................................126 A. Donziger’s Assumption that What Happens in Ecuador, Stays in Ecuador ........................................................126 B. The Release of Crude.......................................127 C. The Section 1782 Proceedings ................................131 1. The Section 1782 Action Against Stratus – Denver Counsel Withdraw and Donziger and Fajardo Seek to Obstruct Justice Before the Federal Court....................................131 a. Donziger Retains U.S. Counsel to Represent the LAPs in Denver......................................131 ii Case 1:11-cv-00691-LAK-JCF Document 1874 Filed 03/04/14 Page 5 of 497 b. Beltman Discloses the Truth to Shinder – Denver Counsel Withdraw....................................134 c. Fajardo Submits a Misleading Affidavit in Denver and Elsewhere ...................................140 2. The New York 1782 Proceedings – Berlinger and Donziger . 146 3. The LAP Team Sought to Deceive This Court in the Berlinger 1782 Proceeding ........................................147 D. Donziger Deceives Kohn, Refuses His Demand for an Investigation of the Facts With Respect to Cabrera, and Precipitates a Final Break.......149 1. Donziger Misrepresented to and Concealed From Kohn Important Information Regarding Cabrera and Stratus ...............150 2. Donziger Deceives Kohn About the “Secret” Account .......152 3. Donziger Refuses to Cooperate With Kohn’s Demand for an Investigation Independent of Donziger...................154 ............................................156 4. Kohn Cuts Off Funding ...............................158 5. Defendants’ Response to Kohn’s Testimony ...............164 E. The Search for New Funding – Patton Boggs, the Invictus Strategy, and Burford..................................................166 1. Patton Boggs Is Retained, Develops the Enforcement Strategy, and Obtains Funding from Burford .........................166 2. The Invictus Strategy.................................170 F. Fajardo Obtains a Broader Power of Attorney, and Donziger and Fajardo Enter Into Their First Written Retention Agreements with the LAPs . 172 G. Burford Terminates the Funding Agreement .....................174 H. Donziger and Patton Boggs Try to Fix the Cabrera Problem – the Cleansing Experts..................................................175 VIII. The Judgment ...................................................179 A. Its Contents ..............................................179 B. Chevron’s Ghostwriting and Bribery Claims ....................182 IX. The LAPs Wrote the Judgment .....................................184 A. Zambrano Was Not the Author ...............................184 1. Zambrano Was Unfamiliar With Key Aspects of the Judgment He Signed ............................................184 2. Zambrano’s Account of the Preparation of the Judgment Was Self Contradictory and Implausible..........................187 3. Zambrano’s Testimony as to the Computer on Which He Claimed the Judgment Was Entered Was Inconsistent With the Evidence . 193 4. Zambrano’s Self Interest ..............................196 B. Evidence that the LAPs Wrote the Judgment ....................200 1. The LAPs’ “Fingerprints” Are All Over the Judgment .......200 a. The Fusion Memo, the Draft Alegato,
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