Lago Agrio: Supreme Court Denies Donziger’s Petition For Cert.

Yesterday the Supreme Court denied the petition for a writ of certiorari filed by Steven Donziger and several Lago Agrio plaintiffs, seeking review of the Second Circuit decision affirming Judge Kaplan’s judgment in the Chevron RICO case. Barring any unexpected surprises, and barring any ancillary proceedings in aid of cases pending elsewhere, this brings the main Lago Agrio case to a close in the United States. Judge Kaplan’s injunction will remain in place.

Although I’ve sometimes criticized the PR coming from Donziger and his allies, I have to say I like his chutzpadik statement following the Court’s decision:

The refusal by the Supreme Court to address the fact Chevron fabricated evidence to cover up its massive pollution in Ecuador is a grave mistake and a sad reflection on the U.S. judiciary in the eyes of the world. … [T]he Supreme Court has missed the last chance for U.S. courts to salvage their international reputation when it comes to their disgraceful conduct related to the Ecuadorian villagers’ fight for justice.

You have to admire the framing: it’s not Donziger and the LAPs whose last chance passed them by, it’s the Court!

The latest decision has no immediate effect on other proceedings, for example the enforcement proceedings in Canada, though it does leave open the question of the preclusive effect of Judge Kaplan’s findings. It’s possible that now that the US proceedings are concluded, we will see some professional responsibility cases—I can imagine a bar complaint being brought against Donziger in light of what Judge Kaplan found, and I can also imagine a complaint being brought against Chevron’s lawyers on account of their payments to Guerra (though in such cases an ethics opinion from a recognized scholar tends to go a long way towards defusing a bar complaint).

This Post Has 5 Comments

  1. Alejandro Manevich

    Ted, preclusive effect is the $9B question. This raises a novel (to my knowledge) question in Canadian law: how to deal with two final, but inconsistent, foreign judgments. Beals v Saldanha, the key 2003 SCC precedent, set out the test for recognition AND enforcement of a foreign judgment. The first of these tends to be ignored in favour of the second, though, partly because the terms get used interchangeably. But they are quite distinct: a court can recognize, i.e. give preclusive effect to, a foreign judgment without enforcing it, i.e. issuing an order that the foreign judgment be enforceable as if it were a domestic judgment. Obviously enforcement entails recognition, but the reverse is not true. Also, enforcement requires bringing legal proceedings in Canada for that particular purpose, whereas recognition does not.

    So what happens in the Ontario Lago Agrio judgment enforcement proceedings when Chevron raises the US judgment in its defence, pitting the two foreign judgments against each other? I have no idea, but I’m certainly eager to find out!

    1. Ted Folkman

      Alex, thanks for this comment. I don’t think the conflict is between the US judgment and the Ecuadorian judgment. I think the potential conflict is between the US judgment and the forthcoming arbitration award, which might take a different view on the corruption. Then we would indeed face a difficult problem!

  2. Philipp Fölsing

    Ted, it is sad, indeed, that the Supreme Court will not answer the comity questions.

    Should US courts really be allowed to question foreign judgements, even if there is no attempt to collect the foreign judgement in the US?

    Should US courts really be allowed to issue advisory opinions with preclusive effect to sovereign courts of other countries?

    And did there really occur a domestic damage to Chevron US within the USA? The LAPs do not target Chevron US. They target foreign subsidiaries that are legally independent from Chevron US. So is a damage to a legally independent, foreign subsidiary really a damage to Chevron US? To come to that conclusion one has to pierce the corporate veil of the subsidiary.

    Another problem in my view is that Chevron US was the claimant in the US RICO action, but not its subsidiaries. The constructive trust was instituted in the favor of Chevron US, but not in the favor of its subsidiaries that took no part in the US proceedings. So, what happens if the LAPs are successful in the enforcement proceedings in Canada against Chevron Canada? Can the constructive trust claim reimbursement for that, too? I do not believe that Judge Kaplan had the power to institute a constructive trust in the favor of a foreign subsidiary that is legally independent from Chevron US and that was not party to the US proceedings.

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