Did Chevron’s Lawyers Double-Cross the Oil Company?

Here’s a juicy tidbit being peddled by foes of Chevron (CVX), the big oil company: Gibson, Dunn & Crutcher, Chevron’s outside law firm, double-crossed its client! Whoa. Sounds like trouble for Gibson Dunn, one of the most prominent corporate law firms in the country. Until, that is, one actually looks at the facts.

“Chevron’s Own Lawyers Jeopardize Fate of Chevron-Ecuador RICO Lawsuit” declares the headline on a blog post by EarthRights International, a nonprofit advocacy group in Washington. I became aware of the post courtesy of a blast e-mail from Steven Donziger, a New York plaintiffs’ attorney who is being sued by Chevron. Donziger and EarthRights are slinging mud at Gibson Dunn in an attempt to confuse interested parties waiting for a verdict in Chevron v. Donziger. EarthRights goes so far as to suggest that “the next phase of this never-ending litigation may see Chevron suing its own lawyers.” Not likely.

Here’s the real story: Donziger successfully sued Chevron in Ecuador on behalf of thousands of poor rain-forest farmers and tribe members who blame the U.S. multinational for pollution in the Amazon. Courtroom hostilities that began more than 20 years ago in the U.S. culminated in an historic February 2011 verdict of $19 billion for Donziger’s clients, although the amount has since been halved by the Ecuadorian judiciary.

Chevron countered that Donziger achieved victory by means of coercion and bribery—allegations he denies. The oil company brought the fight back to the U.S. by suing the plaintiffs’ lawyer under American anti-racketeering law in federal court in New York. That civil trial unfolded last fall, and it did not go well for Donziger. He admits that he expects to be found liable—a ruling is likely any day now—for turning his Ecuadorian lawsuit into a shakedown operation.

A master of guerrilla communications, among other skills, Donziger is trying to sow discord between Chevron and Gibson Dunn in anticipation of the racketeering verdict and his inevitable appeal. His pitch has superficial sizzle: In its attempt to prove Donziger a veritable gangster, Chevron has asked a federal judge for an order barring the plaintiffs’ lawyer or his clients from benefiting from their ill-gotten verdict in Ecuador. (Donziger can’t force Chevron to pay up in Ecuador because the company has no assets to speak of in the small Andean country.)

Gibson Dunn has argued that U.S. District Judge Lewis Kaplan may impose such an order, or injunction, under the Racketeer Influenced and Corrupt Organizations (RICO) Act. In a separate case in New York federal court for a different client, though, Gibson Dunn has argued that a private party cannot obtain an injunction under RICO. Donziger spokesman Han Shan calls the contradictory positions a potential “fatal blow by Chevron’s own outside law firm, Gibson Dunn.”

Let’s sort it out. Whether RICO empowers private parties to obtain injunctions is an unresolved issue. Some judges say yes; others say no. Even though RICO has been around since 1970, it’s a complicated statute, and this wrinkle remains to be ironed out. Meanwhile, law firms are allowed to argue either way, depending on the interests of whoever is paying their bill.

That, for better or worse, is what lawyers do. One day, a lawyer works for the Justice Department trying to put white-collar defendants in prison; the next day (or more likely the next year) the lawyer defends the same sort of white-collar defendant. You want consistency? Hang around with a philosopher, a theologian, or, better yet, a well-trained dog.

Now when a hired-gun law firm is going to argue both sides of an issue, as Gibson Dunn did, it has to get permission from clients in the affected cases. Gibson Dunn did exactly that. Chevron spokesman Morgan Crinklaw said his employer gave a thumbs up. “The legal community has been aware of both sides of the open issue about private RICO injunctive relief for years,” Crinklaw told me via e-mail. “Chevron has no concerns about the work of a separate Gibson Dunn team, in a different case, involving different clients. Chevron believes that its requests for injunctive relief will be upheld [in the suit against Donziger], but the legal issue will ultimately be resolved by the Supreme Court. This is just the latest attempt by the plaintiffs to manufacture controversies and distract attention from their own fraudulent and criminal activity.”

Actually, it’s worse than that: Donziger is being disingenuous. “The silliness of this stunt,” Crinklaw added, “is demonstrated by the fact that plaintiffs’ long-time counsel, Emery Celli, is the law firm arguing for private RICO injunctive relief in the same separate case about which they now complain.”

Head spinning yet? Emery Celli Brinckerhoff & Abady, a New York firm that in the past has worked shoulder-to-shoulder with Donziger on behalf of the Ecuadorian plaintiffs, also popped up in the separate New York case—and took the opposite position from Donziger on RICO injunctions. It may not be pretty, but that’s just what lawyers do.

On Feb. 7, when Gibson Dunn’s malleability on the RICO issue was brought to the attention of Guido Calabresi of the U.S. Court of Appeals for the Second Circuit, the eminent jurist essentially yawned. Gibson Dunn’s lawyers “have the perfect right” to take different positions for different clients, Calabresi said.

The long legal battle over pollution in the Amazon has been characterized by inconsistency on both sides. Texaco, which Chevron acquired in 2001, originally fought to have the lawsuit dismissed in the U.S., saying the proper place to try it was Ecuador, whose courts the oil company praised. Once the combined corporation had the jurisdiction it wanted, Chevron turned around and argued that the Ecuadorian courts are corrupt. Donziger, for his part, originally wanted to litigate in New York, saying his clients couldn’t get justice in Ecuador. Once he enjoyed success there—allegedly by exploiting a certain laxness in Ecuadorian judicial customs—suddenly he saw the Andean nation as a veritable Olympus of courtroom propriety.

Lawyers make the arguments they think will work for present purposes. More significant in Chevron v. Donziger is whether the plaintiffs’ lawyer is in fact a huckster, as the oil company alleges, or has been unfairly persecuted, as Donziger insists. If he’s found liable of civil racketeering, that would undermine his ability to collect on the Ecuadorian verdict in third countries, whatever remedy Judge Kaplan fashions in New York. And Kaplan has options other than the RICO injunction.

A finding of liability would also undermine Donziger’s professional standing as an officer of the court and member of the bar. The questionable legal methods he used in Ecuador have given Chevron ample basis to resist resolution of the pollution dispute. In that light, one wonders whether Donziger’s stratagems, while seemingly clever, really serve the long-term interests of his clients.


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