LEWIS A. KAPLAN, District Judge.
TABLE OF CONTENTS
Facts ...............................................................................241
I. Background ....................................................................241
A. Texaco's Activities in Ecuador (1964-1992) ................................241
B. The Aguinda Litigation ....................................................241
C. Important Developments During the Aguinda Litigation ......................242
1. The Settlement and Final Release ......................................242
2. The Environmental Management Act of 1999 ..............................242
3. Chevron Acquires Shares of Texaco .....................................243
II. The Lago Agrio Litigation .....................................................243
A. Filing the Lawsuit ........................................................243
B. Summary of the Lago Agrio Proceedings .....................................244
C. Summary of the Lago Agrio Judgment ........................................245
D. The Ecuadorian Appellate Court's Treatment of Chevron's Fraud
Claim ...................................................................246
E. Developments Since the Appellate Decision .................................248
III. Prior Proceedings in this Litigation ..........................................248
A. The Pleadings .............................................................248
1. The Amended Complaint .................................................248
2. The Answers ...........................................................249
B. Prior Proceedings in this Court ...........................................250 C. Proceedings in the Court of Appeals .......................................251 D. The Present Motion ........................................................252 IV. The Alleged Fraud in Ecuador ..................................................252 A. The Alleged Ghost-Writing of Portions of the Court's Judgment .............253 B. Allegedly Fraudulent Evidence, the Termination of Judicial Inspections, and the Appointment of Cabrera .............................255 1. Calmbacher Reports ....................................................255 2. Ending of Judicial Inspections and Cabrera's Appointment ..............256 3. The Cabrera Report ....................................................258 a. Defendants Secretly Were Involved in Defining the Scope of Cabrera's Report ................................................258 b. The LAP Team Wrote Much of the Cabrera Report .....................259 4. The "Cleansing" Reports ...............................................260 Discussion ..........................................................................262 I. Summary Judgment Standard .....................................................262 A. General ...................................................................262 B. S.D.N.Y. Civil Rule 56.1 ..................................................263 II. The Res Judicata-Collateral Estoppel Defense Is Properly Before the Court and Is Not Moot .............................................................264 A. The Answers Are Sufficient to Assert the Judgment As Claim or Issue Preclusive and Were Intended to Do So ...................................265 1. The Answers Sufficiently Assert These Defenses Based on the Judgment ............................................................265 2. The Defendants' Intentions ............................................267 a. The SJ Defendants' Prior Communication With This Court ............267 b. The Argument to the Second Circuit ................................268 c. The Lack of Any Other Arguable Basis for the Defenses .............268 d. The Finality Argument .............................................270 B. The Disclaimer of Intention to Seek Enforcement of the Judgment in New York Neither Moots the Defenses Nor Sufficed to Withdraw Them Without Prejudice ..................................................271 1. The Representation Would Be Ineffective Even on Its Own Terms .........271 a. The Donziger Defendants Are Not Foreclosed from Asserting the Judgment as Res Judicata or Collateral Estoppel on the Theory that They Are Not Judgment Creditors and Hold No Rule 24 "Interest" in the Judgment ..............................272 b. The Representation Does Not Even Bind the LAP Representatives .................................................273 2. The Representation Did Not Moot the Defenses ..........................274 3. The Representation Was an Ineffective Unilateral Amendment to the SJ Defendants' Answers ..........................................275 C. Nothing in Naranjo Forecloses Consideration of the Defenses ...............277 III. The Enforceability and Recognizability of the Judgment ........................278 A. Burdens of Proof With Respect to Recognizability and Enforceability of the Judgment ............................................................280 B. Lack of Personal Jurisdiction .............................................280 C. Penal Character of the Judgment ...........................................280 D. Fraud .....................................................................281 1. The Extrinsic-Intrinsic Fraud Distinction .............................281 a. United States v. Throckmorton .....................................281 b. The Questionable Vitality of Throckmorton .........................282 c. Does the Recognition Act Incorporate the Extrinsic-Intrinsic Distinction? ....................................................285
2. Other Requirements ....................................................285 3. Does Chevron's Evidence of Fraud Warrant Summary Judgment of Non-Recognition? ....................................................286 a. The Alleged Ghost-Writing of the Judgment .........................286 b. The Calmbacher Reports ............................................288 c. The Termination of Judicial Inspections and Cabrera's Appointment .....................................................288 d. The Cabrera and "Cleansing" Reports ...............................289 IV. Chevron's Former Adjudication Arguments .......................................290 Conclusion ..........................................................................292
An Ecuadorian court has entered an $18.2 billion judgment (the "Judgment") against Chevron Corporation ("Chevron")
The answers to the amended complaint of Donziger and his law offices and of the LAP Representatives (collectively, the "SJ Defendants") assert affirmative defenses of res judicata and/or collateral estoppel. It is common ground among the parties that the Judgment may not be afforded res judicata or collateral estoppel effect unless it is entitled to recognition and enforcement here. So Chevron has moved for partial summary judgment dismissing these affirmative defenses to the extent that they are based on the Judgment on the theory that the Judgment is not entitled to recognition or enforcement and therefore would not be entitled to preclusive effect even if the other bases for preclusion were satisfied. And while Chevron's objections to recognition and enforcement in this action are broader, it bases this motion on contentions that the Judgment is not entitled to recognition because it (1) was procured by fraud, (2) constitutes an unenforceable penalty, and (3) was rendered against Chevron despite the fact that the Ecuadorian courts lacked personal jurisdiction over it. In the alternative, Chevron argues that the res judicata-collateral estoppel defense is without merit under the law of former adjudication without regard to the recognizability and enforceability of the Judgment.
The SJ Defendants respond that the res judicata-collateral estoppel defense does not raise the Judgment as preclusive of this action or any issue here, that they do not seek recognition or enforcement of the Judgment in New York, and that Chevron's motion therefore is moot or without merit. They have not responded to Chevron's motion on the merits.
The Court concludes that the SJ Defendants' position is incorrect and proceeds to the merits of Chevron's motion. It further concludes that Chevron's motion must be
In 1964, a fourth-tier subsidiary of Texaco Inc. ("Texaco"), Texaco Petroleum Company ("TexPet"), began exploring and drilling for oil in the Oriente region of eastern Ecuador.
In 1993, a group of Ecuadorians brought a class action lawsuit against Texaco seeking billions of dollars in damages from Texaco to "redress contamination of the water supplies and environment" allegedly caused by TexPet during its operations in Ecuador from 1964 to 1992.
Between 1993, when the Aguinda litigation began, and 2002, when the Second Circuit affirmed Judge Rakoff's dismissal of the action on forum non conveniens grounds, several relevant developments occurred.
In 1995, after TexPet had relinquished its interest in the Consortium, TexPet entered into a settlement agreement with the ROE and Petroecuador (the "Settlement").
In 1998, after TexPet had performed the environmental remediation work, the ROE entered into a second agreement with it (the "Final Release"), wherein the ROE agreed that the TexPet had "fully performed" under the Settlement.
In 1999, the ROE enacted the Environmental Management Act of 1999 (the "EMA"), which created a private right of action for Ecuadorians who have been individually affected to seek damages related to environmental harms to the community.
On October 9, 2001, while the Aguinda action still was pending in the Southern District of New York, a wholly owned subsidiary of Chevron, Keepep Inc., merged with and into Texaco.
The Lago Agrio Litigation began in 2003 when the LAPs, represented by Steven Donziger
Throughout the litigation, Chevron has argued that the Ecuadorian courts lacked personal jurisdiction over it
The Lago Agrio Litigation proceeded in what may be described as several stages.
In 2004, the Lago Agrio court ordered specific site inspections to assess "the approximately 122 wells and production installations in the former concession granted by the Ecuadorian government to what was called the PETROECUADOR-TEXACO Consortium."
Some of these inspections were completed including two sites in respect of which the LAPs submitted reports over the signature of one of their experts, Dr. Charles W. Calmbacher.
On April 1, 2008, Cabrera submitted what purported to be his report to the Lago Agrio court.
As part of a LAP public relations campaign surrounding the Lago Agrio proceedings, Donziger arranged for the making
The Netflix version included certain scenes not in the DVD version. One showed Dr. Carlos Beristain, who supposedly was an impartial contributor to Cabrera's report, working directly with the LAPs' counsel.
Based on evidence gained through the Section 1782 proceedings, Chevron began to argue, inter alia, that the Calmbacher reports, Cabrera's appointment, and the Cabrera report all were fraudulent. These arguments created concern among the LAPs' lawyers. New experts were hired to "address Cabrera's findings in such a subtle way that someone reading the new expert report ... might feel comfortable concluding that certain parts of Cabrera are a valid basis for damages."
On February 14, 2011, the Lago Agrio court issued the Judgment against Chevron in the aggregate amount of $18.2 billion.
The Judgment held, inter alia, that: (1) Texaco's and TexPet's operations in Ecuador from 1964 to 1992 had caused damage to the environment and the Ecuadorian people in violation of the EMA,
The Judgment awarded $8.646 billion in remediation damages and another $8.646 billion to be paid unless Chevron issued a "public apology" within 15 days of the issuance of the Judgment.
After the Lago Agrio court issued the Judgment and denied Chevron's subsequent motion for clarification and amplification,
The appellate court affirmed the Judgment in all material respects on January 3, 2012.
The only discrepancy in the Judgment addressed by the appellate court was the fact that certain data referred to in the Judgment included some minor errors.
In affirming the damage award, the appellate court specified that two trusts were to be set up and managed by defendant Amazon Defense Front ("ADF") — one for the $8.646 billion in remediation damages and the other for the $8.646 billion in "punitive damages."
Following the appellate court ruling, Chevron sought clarification on several aspects of that decision, including whether the appellate court had considered what was described as Chevron's "accusations" that "the [J]udgment ha[d] been based on information foreign to the record" and that the Lago Agrio court "had received `secret assistance' in drafting" it.
The court then wrote that Chevron had announced on the day following entry of the Judgment by the Lago Agrio court that it "suspected" that the trial judge "had received `secret assistance' in drafting the judgment and that it "therefore now ... is untimely to try to say this — before the Division — and not before who ruled on the cause in the first instance so that he clarify them."
Despite these "observation[s]," the court stated unequivocally that "it stay[ed] out of these accusations, preserving the parties' rights to present [a] formal complaint to the Ecuadorian criminal authorities or to continue the course of the actions that have been filed in the United States of America."
After the Ecuadorian appellate court's decision and clarification, Chevron filed a cassation petition on January 20, 2012, seeking review of the Judgment in Ecuador's National Court of Justice.
Since 2009, an international arbitration panel has been considering Chevron's claims against the ROE under a bilateral investment treaty (the "BIT")
The Ecuadorian appellate court responded to the First Interim Award by stating in a February 17, 2012 order that it had no authority to suspend enforcement of the Judgment because Chevron had not requested that a bond be fixed.
This action was filed on February 1, 2011 against the LAPs, the Donziger Defendants,
Counts 1 and 2 assert substantive and conspiracy claims under RICO and are described extensively in the recent decision ruling on the Donziger Defendants' motion to dismiss.
Counts 3 through 5 assert claims against all defendants for fraud, tortious interference with contract, and trespass to chattels relating to the allegedly unlawful scheme described above.
Count 6 asserts claims against all defendants for unjust enrichment on the ground that defendants have been and will be enriched as a result of the Judgment.
Count 7 asserts a state law claim for civil conspiracy against all defendants, alleging that they conspired to commit the substantive state law violations.
Count 8 asserts that the Donziger Defendants violated Section 487 of the New York Judiciary Law.
Count 9 sought a declaration that the Judgment was unenforceable and unrecognizable "on, among others, grounds of fraud, failure [by Ecuador] to afford procedures compatible with due process, lack of impartial [Ecuadorian] tribunals, lack of personal jurisdiction, [and] contravention of public policy."
Part of Count 3 and Counts 4 through 6 have been dismissed as to the Donziger and Stratus Defendants.
The SJ Defendants filed answers to Chevron's amended complaint.
First, the Donziger Defendants' seventh affirmative defense asserts that "Chevron's claims are barred, in whole or in
Second, both assert unclean hands and in pari delicto affirmative defenses.
This Court issued a preliminary injunction barring enforcement of the Judgment pendente lite in early March 2011. In April 2011, the Court bifurcated, and later severed, Chevron's declaratory judgment claim (Count 9) and stayed proceedings in the first eight counts pending its resolution.
After months of discovery, on the eve of the discovery deadline, and just before the
In September 2011, the Second Circuit vacated the preliminary injunction and stated that an opinion would follow. The subsequent opinion did not pass, one way or the other, on this Court's findings with respect to the nature of the Ecuadorian tribunals or the evidence of fraud in the procurement of the Judgment. Rather, it explained that the panel had vacated the preliminary injunction on the ground that:
The prayer for declaratory relief, the Circuit held, was of no avail because, in its view, a declaration with respect to the alleged the unenforceability or non-recognizability of the Judgment could not be had because the Recognition Act (1) "does not authorize a court to declare a foreign judgment null and void for all purposes in all countries,"
Chevron's petition for certiorari is pending in the Supreme Court.
Chevron now moves for partial summary judgment dismissing the SJ Defendants' affirmative defenses of res judicata and collateral estoppel on the grounds that (1) the Judgment may not be afforded any preclusive effect unless it may be recognized and enforced here, and (2) recognition and enforcement would be impermissible or inappropriate because (a) the Ecuadorian courts lacked personal jurisdiction over it, (b) the Judgment is penal in whole or in part, and (c) there was fraud in the procurement of the Judgment.
In response, the SJ Defendants argue principally that the motion is moot because they "are not asserting in this lawsuit the affirmative defenses of res judicata and/or collateral estoppel with respect to the Ecuadorian Judgment."
The Court turns to the factual underpinnings of Chevron's motion. It here summarizes the evidence advanced in support of the fraud claim, reserving discussion of any evidence pertinent to the other grounds of the motion for the discussion below.
While Chevron has made broader arguments in support of its fraud contention in other proceedings in this case, it relies in this motion principally on the following contentions:
First, material parts of the Judgment were ghost-written by the LAPs rather than written by the judge over whose name the Judgment was issued. Specifically, portions of at least three internal LAP documents that are not in the Lago Agrio court record and that dealt with allegedly material matters appear in haec verba in the Judgment, leading to the conclusion either that the judge improperly was given the LAP internal documents ex parte and simply copied portions of them or that the LAP team wrote at least parts of the Judgment itself.
Second, the two site inspection reports submitted over the signatures of Dr. Charles Calmbacher were bogus. While the signatures were genuine, the conclusions of the reports did not reflect his views and were not written by him.
Fourth, the LAP team secretly planned the Cabrera report, wrote most of it, and provided it to Cabrera, who signed and filed it under the false pretense that it was independent, fair, and impartial.
Fifth, the LAP team participated in an elaborate charade to bolster the Cabrera report. It first purported to object to the report, though it in fact had written at least most of it, thereby creating a false appearance of independence on the part of Cabrera. Then, after discovery proceedings in the United States had produced evidence showing that the LAP team secretly had written the Cabrera report, the LAPs submitted seven additional reports designed to "cleanse" any perceived improprieties in the Cabrera report.
The following facts, alleged by Chevron, all are supported by admissible evidence. The SJ Defendants have not objected to its admissibility, controverted it with admissible evidence, or responded to the corresponding paragraphs of Chevron's 56.1 Statement. Hence, all are undisputed and deemed admitted for the purposes of this motion except to the extent otherwise stated, which is limited to certain evidence pertaining to the Calmbacher reports.
The contention that at least parts of the Lago Agrio court's Judgment improperly were written by the LAP team relates principally to three internal LAP documents, none of which is in the Lago Agrio court record.
In each instance, Chevron's motion is supported by analyses by one or more experts that establish that one or more passages in these documents — and in the
Two other experts discuss the authorship of the Judgment more broadly. They compared documents known to have been written by Judge Zambrano, who issued
The LAPs selected Dr. Charles Calmbacher to serve as their expert for some of the judicial inspections ordered by the Lago Agrio court early in that litigation. On February 14, and March 8, 2005, respectively, "[t]he LAPs submitted reports for the judicial inspections of well sites Shushufindi 48 and Sacha 94 to the Ecuadorian court ... purporting to have been authored by ... Calmbacher and finding that `highly toxic chemicals' contaminated the area, that TexPet's remediation was `inadequate or insufficient,' and opining that Shushufindi 48 and Sacha 94 required `US$26,033,400' and `15,520,000 dollars' of further remediation respectively."
Although the signature pages bear Dr. Calmbacher's signature,
According to Dr. Calmbacher, Donziger knew that at least some of the conclusions listed in the Sacha 94 report were not Dr. Calmbacher's because Calmbacher previously had discussed his findings with Donziger.
"The official line if anybody asks is NOT that Chuck was fired, but that he is coming back home for rest and health reasons. If people ask if he is coming back to Ecuador, say that depends on his health and our needs. I do not want Texaco thinking we have internal problems."
In January and July of 2006, Pablo Fajardo, an Ecuadorian lawyer for the LAPs, filed motions with the Lago Agrio court to "waive" and "relinquish" the LAPs' right to conduct most of the further judicial inspections at specified sites.
During this period, Donziger and others drafted a complaint against Judge Yánez.
In December 2006, Fajardo requested that the Lago Agrio court appoint a global expert "to conduct the entire examination."
Ex parte meetings with Judge Yánez continued with the object of persuading him to appoint Cabrera as the global expert, which ultimately occurred on March 19, 2007.
At the June 13, 2007 ceremony at which he was installed, Cabrera swore to execute his duties "faithfully and in accordance with science, technology and the law and with complete impartiality and independence vis-a-vis the parties."
On March 3, 2007, shortly before his selection and more than three months before he was sworn in, Cabrera met ex parte with the LAPs and their agents, including Ann Maest of Stratus.
After the meeting, one of the LAPs' consulting experts stated that meeting with Cabrera was "bizarre." Donziger replied "[d]on't talk about it," and he immediately
Subsequently, lawyers and agents of the LAPs were involved in "putting together Cabrera's work team,"
In January 2008, the Stratus Defendants and others met with Cabrera and discussed that "Stratus individuals would draft materials that would be given to Mr. Cabrera for his hoped-for adoption in his report."
Over the next several weeks, the Stratus Defendants and others drafted the "Summary Report of Expert Examination" and the majority of the annexes that soon were filed as the Cabrera report.
The Cabrera report was filed with the Lago Agrio court on April 1, 2008. It falsely or, at least, deceptively stated that it had been "prepared by the Expert Richard Stalin Cabrera Vega" with the help of "my technical team, which consists of impartial professionals."
Both parties objected to the report. The LAP team — despite having drafted the vast majority of the report — publicly asserted that it was "unjustly favorable to [Chevron]" and "too conservative" in its damage calculations.
On November 17, 2008, Cabrera filed answers to these comments and objections and increased his damage assessment to more than $27 billion.
After the Cabrera report and the subsequent responses had been submitted — and after some of the evidence described above had been discovered through Section 1782 actions in the United States — members of
The LAP team responded by considering the hiring of a new expert to "address Cabrera's findings in such a subtle way that someone reading the new expert report... might feel comfortable concluding that certain parts of Cabrera are a valid basis for damages."
In the end, seven new reports were filed with the Lago Agrio court on September 16, 2010.
Summary judgment appropriately is granted where there is no genuine issue of material fact and where, based on those facts, the moving party is entitled to judgment as a matter of law.
Generally speaking, the moving party bears the burden of demonstrating that it is entitled to summary judgment.
Finally, evidence in support of or in opposition to a motion for summary judgment ordinarily must be, or be capable of presentation, in a form that would be admissible into evidence at trial.
Local Civil Rule 56.1 is relevant also to this motion. It provides as follows:
As this Court previously has noted, "[t]he purpose of the rule `is to assist the Court in understanding the scope of the summary judgment motion by highlighting those facts which the parties contend are in dispute.'"
Chevron filed a statement of undisputed facts in support of its motion and in accordance with Local Civil Rule 56.1(a) ("56.1 Statement"). Its 56.1 Statement contains more than 100 pages of factual statements — 245 individually numbered paragraphs — the contents of which are described as necessary.
The SJ Defendants did not submit a Rule 56.1(d) statement. Their memorandum instead states that:
The SJ Defendants and Chevron agree that "New York law would require Defendants to show that the [Ecuadorian] Judgment is entitled to recognition under the New York Recognition Act in order [for them] to invoke res judicata or collateral estoppel."
First, all of the SJ Defendants claim that their affirmative defenses of res judicata and collateral estoppel do not and were not intended to rely upon the Judgment.
Second, all contend that their affirmative defenses of res judicata and collateral estoppel, to any extent that they rested on the Judgment when they were interposed, were mooted by the LAP Representatives' Representation.
Finally, the Donziger Defendants argue that they in any case have no "interest" in the Judgment and therefore could not seek its recognition in New York, at least independent of the LAP Representatives.
The SJ Defendants' principal tactic in opposing Chevron's motion is to deny that the res judicata-collateral estoppel defense they pleaded "refer[s] to the Ecuadorian Judgment" at all.
The SJ Defendants' answers plead that the complaint is barred in whole or in part by res judicata, and the LAP Representatives' answer goes farther by relying explicitly on findings by the Lago Agrio court in pleading its unclean hands defense just two pages away. Nothing more is required to invoke the Judgment for preclusive purposes. The SJ Defendants' argument to the contrary is not persuasive.
To begin with, the SJ Defendants contend that the general allegation that the claim is barred by res judicata and collateral estoppel was not sufficient to invoke the Ecuadorian Judgment. They assert also, however, that their res judicata-collateral estoppel defense actually invoked only "prior rulings by the U.S. Court of Appeals for the Second Circuit and/or other U.S. federal district courts in related proceedings under 28 U.S.C. § 1782"
The SJ Defendants' repeated and explicit statements and actions in this and other courts demonstrate that it always was there intention to rely in this case on the Judgment as having preclusive effect until it suddenly seemed more attractive to change course in a tactical effort to avoid litigating the recognizability of the Judgment in this action while saving that issue for use in other fora.
First, the SJ Defendants' current claim be squared with their other actions and statements before this Court.
Shortly after Chevron filed this motion for summary judgment dismissing the res judicata- collateral estoppel defense to the extent it is based on the Judgment, the SJ Defendants requested (and later received) an extension of the time within which to file opposing papers.
Thus, as of the date of their letter — March 11, 2012 — the SJ Defendants apparently thought that Chevron's motion for partial summary judgment required a "response to [its] legal arguments" and the submission of "contradicting evidence" or a request for Rule 56(d) discovery to meet the motion on its factual merits.
That belief is consistent only with an understanding that the res judicata-collateral estoppel defense was based on the Judgment, as Chevron's motion goes only to that question. Yet, after being granted an extension explicitly for the purpose of marshaling their evidentiary response to the motion,
Nor can the SJ Defendants' current position be squared with the their prior statement to the Second Circuit, where they told that court in no uncertain terms that they were asserting the Judgment as
In their appeal from this Court's preliminary injunction, the LAP Representatives argued in the Circuit, among other things, that this Court had erred in enjoining enforcement of the Judgment in other countries because any country in which enforcement might be sought would be entitled to decide the question of enforceability for itself. In doing so, however, they went on to say that Chevron's fraud claims had been litigated in Ecuador and that "[p]rinciples of estoppel should preclude Chevron from re-litigating its fraud claims in the lower court, but the district court appears poised to disregard this well-settled principle."
Of course, both "the lower court" and "the district court" referred to this Court. And, as collateral estoppel is an affirmative defense, this Court could not have been "poised to disregard" the supposed preclusive effect of the Judgment, as the LAP Representatives asserted to the Second Circuit, unless the LAP Representatives had pleaded the alleged collateral estoppel effect of the Judgment in this Court.
It would be difficult to imagine any clearer evidence of what the LAP Representatives meant to plead and thought they had pleaded. Their recently adopted position as to whether they pleaded the Judgment as preclusive is directly at odds with what they said to the Court of Appeals.
Finally, there is no other arguable basis for any res judicata or collateral estoppel defense in this case. The suggestion in their motion papers that the SJ Defendants rely on "prior rulings by the U.S. Court of Appeals for the Second Circuit and/or other U.S. federal district courts in related proceedings under 28 U.S.C. § 1782"
No doubt recognizing this, the SJ Defendants attempted to rescue their position in an unauthorized sur-reply in opposition to Chevron's motion in which they gave four supposed "examples" of other rulings with alleged preclusive effect. But none could ground even a reasonable argument for preclusive effect in this case.
They point first to a statement in Aguinda v. Texaco, Inc.,
Finally, the SJ Defendants refer to two district court decisions in Section 1782 proceedings, one of which sought discovery from a consultant who had given evidence used in Ecuador and the other from a former lawyer for the LAPs. They suggest that each decision rejected the fraud claims that Chevron makes in its complaint. But the suggestion rests on selective quotation from each case. These cases involved rulings on the crime-fraud exception to evidentiary privileges and do not bear on Chevron's claims of fraud in the procurement of the Judgment.
In the last analysis, then, the rulings the SJ Defendants say they had in mind in pleading res judicata and collateral estoppel quite plainly could have no such effect here. That conclusion seriously undermines their last-minute contention that they never meant to invoke the Ecuadorian Judgment with respect to those defenses, as there was no other judgment upon which those defenses credibly could have been based.
Nor would it matter even if one or another of these rulings arguably might have some preclusive effect on the matters before this Court. For the fundamental point is simple: If the SJ Defendants' res judicata-collateral estoppel defense raised these rulings without even mentioning one of them, as the SJ Defendants now argue on this motion, then the SJ Defendants certainly raised the Ecuadorian Judgment even if their answers had not mentioned that decision either. The SJ Defendants are not permitted to plead a defense in the most general fashion and then later, upon challenge by an adversary's dispositive motion,
The SJ Defendants argue in passing that "the Ecuadorian Judgment was not final or entitled to preclusive effect at the time the Defendants filed their answers in 2011"
"As to the need for finality of decision," the Second Circuit has remarked, "collateral estoppel ... `does not require a judgment which ends the litigation ... and leaves nothing for the court to do but execute the judgment.'"
Nor did the pendency of the appeal in Ecuador preclude the use of res judicata or collateral estoppel. The better view, and that applied in New York and in the federal courts, "is that a judgment otherwise final remains so despite the taking of an appeal."
In sum, the SJ Defendants' current position that they have not asserted, and did not intend to assert, any alleged preclusive effect of the Judgment in response to Chevron's amended complaint is (1) inconsistent with their pleadings, (2) inconsistent with their statement to the Court of Appeals in Naranjo, and (3) inconsistent with their statements to this Court as well as with other evidence. It is a recently conceived argument intended to avoid meeting Chevron's motion on its merits without moving to discontinue the defense without prejudice and risking an adverse ruling.
The SJ Defendants' central argument in favor of the "moot[ness]"
Even if one were to put aside all of the foregoing problems, the Representation the LAP Representatives put forward as a last-minute tactical maneuver less than ten days before the Court of Appeals heard the preliminary injunction appeal would not bear the weight placed upon it
First, the Donziger Defendants are not parties to the Representation and are not bound by the actions of the LAP Representatives. The Donziger Defendants' res judicata- collateral estoppel defense therefore cannot be affected by the LAP Representatives' Representation in any event.
Second, as has been demonstrated, the LAP Representatives' unilateral declaration does not even bind the LAP Representatives themselves. It therefore cannot reasonably be given any effect in this case.
Because the Donziger Defendants are not parties to the Representation, they have constructed an additional argument that seeks to have the same effect. In order to understand the Donziger Defendants' argument as to this specific point, it is necessary to have a bit of background.
When the Court severed the count that sought a declaratory judgment against the LAPs and ordered it to trial, Donziger moved to intervene, arguing in part that his contingent fee arrangement was an "interest" in the Judgment within Rule 24(a) and that he therefore was entitled to intervene as of right.
To begin with, non-mutual collateral estoppel is a firmly established legal doctrine.
Nor is there any reason to conclude that the LAP Representatives' Representation would foreclose the Donziger Defendants from contending, in an effort to make out their own res judicata-collateral estoppel defense, that the Judgment is recognizable and enforceable, even if it would foreclose the LAP Representatives themselves. The Recognition Act, which reflects New York's adoption of the Uniform Foreign-Money Judgments Recognition Act (the "Uniform Act") in force in a majority of states, explicitly contemplates the recognition and enforcement of a foreign judgment in the context of an affirmative defense,
In short, whatever the effect of the Representation on the positions of the LAP Representatives, it has no bearing on the former adjudication defenses pleaded by the Donziger Defendants.
Finally, it is important to recognize the Representation for what it is — a unilateral declaration by two litigants of their then-present intention not to seek recognition or enforcement of the Judgment in any court located in the State of New York.
Judicial estoppel arises where (1) "a party's later position is clearly inconsistent with its earlier position"; (2) "the party's former position has been adopted in some way by the court in the earlier proceeding"; and (3) "the party asserting the two positions would derive an unfair advantage against the party seeking estoppel."
The Representation upon which the LAP Representatives rely cannot satisfy that standard. Even assuming that a later attempt by the LAP Representatives to obtain recognition or enforcement of the Judgment in a court in New York would be "clearly inconsistent" with the Representation, the Representation has not gained "adopt[ion] ... by the court."
The SJ Defendants maintain that the Ecuadorian Judgment is entitled to recognition and enforcement, which they acknowledge is a prerequisite to its use for purposes of their pleaded defenses of res judicata and collateral estoppel. Indeed, they purport to have reserved the right to claim that the Judgment is entitled to recognition and enforcement under New York law.
"[A] case is moot when the issues presented are no longer `live' or the parties lack a legally cognizable interest in the outcome."
Here, the issues whether the Judgment is recognizable or enforceable, including under New York law, and, in addition, whether it is entitled to claim or issue preclusive effect, retain undiminished vitality. There is therefore no colorable mootness argument based on the Representation.
The present use of the Representation in any case is nothing more than an attempted unilateral amendment of the answers. Indeed, the SJ Defendants admitted precisely this when they wrote in April 2012 that if the language in the answers "was sufficient to invoke the affirmative defense ... with respect to the" Judgment, "Defendants effectively withdrew that specific defense in this case" by means of the Representation.
Rule 15(a) of the Federal Rules of Civil Procedure provides in relevant part that "[a] party may amend its [answer] once as a matter of course within ... 21 days after serving it."
Count 9 of the amended complaint in this case, filed on April 20, 2011, sought among other things a declaration that the Judgment is not entitled to recognition or enforcement outside Ecuador.
It of course is well settled that leave to amend "shall be freely given when justice so requires."
First and foremost, allowing the SJ Defendants to take the issue of recognizability and enforceability off the table in this case while preserving it in every other court in this and other nations would be to acquiesce in a blatant exercise in forum shopping. This is particularly so because it is abundantly obvious that the effort has been made for the sole purposes of (a) avoiding what the SJ Defendants evidently fear would be an adverse result, and (b) shifting the issue to other fora more to their liking.
Second, the SJ Defendants easily could have attempted precisely the same tactic months earlier than they did. Had such an attempt been successful, the SJ Defendants would have saved themselves, their adversary, and the courts the enormous resources expended litigating precisely the issue they now seek to take to other fora. They have offered no excuse for their failure
Moreover, the analogy to Rule 41 of the Federal Rules is especially persuasive. That rule permits a plaintiff, once issue is joined or a motion for summary judgment filed, to discontinue an action without prejudice only with the adversary's consent or leave of the court.
While Rule 41 by its terms applies only to the voluntary dismissal of actions, its logic applies here.
Accordingly, even if the Court were to treat the Representation — which the SJ Defendants themselves characterize as an attempt withdraw this defense, but only in this case — as a motion for leave to amend, that motion would be denied.
Finally, the SJ Defendants argue also that were this Court to "[a]ddress the merits of Chevron's summary judgment motion, when Defendants have not sought, are not seeking, and will not seek recognition of the Ecuadorian Judgment in New York," it "would result in the speculative determination that the Second Circuit condemned in its ... opinion" in Naranjo, "constitut[ing] a request for an improper advisory opinion" that would be reversible error.
The SJ Defendants interposed the affirmative defense based on the Judgment and, moreover, asserted that the defense depends upon the Judgment's recognizability and enforceability. Yet Naranjo specifically acknowledged that the questions of recognizability and enforceability under the Recognition Act are properly raised in the context of an affirmative defense.
The parties agree that New York law "require[s]" the SJ Defendants "to show that the Judgment is entitled to recognition under the New York Recognition Act in order to invoke res judicata or collateral estoppel."
A preliminary word with respect to burdens of proof is in order.
The Precognition Act, Article 53 of the CPLR, reflects New York's enactment of the Uniform Act, which sets forth a number of mandatory and discretionary basis for non-recognition of foreign country money judgments that fall within its ambit.
Chevron invokes one mandatory ground of non-recognizability in support of this motion — lack of personal jurisdiction.
Its second argument — that the Judgment is not entitled to recognition and enforcement because it is penal in character — is based on undisputed and indisputable facts. The Judgment granted the relief it granted and stated the reasons the court gave for doing so. That relief and those reasons either make the judgment penal as a matter of law or they do not.
Chevron's final argument on this motion — that the Judgment was procured by fraud — does seriously implicate the burden of proof question. Chevron argues that the SJ Defendants have offered no evidence in response to Chevron's specific evidence of fraud, that they therefore have failed to raise a genuine issue of fact as to any of them, and that Chevron consequently is entitled to summary judgment dismissing the res judicata-collateral estoppel defense on the ground that the Judgment is not recognizable or enforceable. And it quite likely would be correct if the SJ Defendants bore the burden of proving that the Judgment was not procured by fraud.
Chevron argues that the Judgment may not be recognized or enforced because Ecuador lacked jurisdiction over its person. But CPLR Section 5305 provides in relevant part that a "foreign country judgment shall not be refused recognition for lack of personal jurisdiction if ... the defendant voluntarily appeared in the proceedings, other than for the purpose of ... contesting the jurisdiction of the court over him"
Chevron's own evidence shows that Chevron did far more before the Lago Agrio court than contest personal jurisdiction.
Chevron thus has failed to show that it is entitled to judgment as a matter of law foreclosing recognition or enforcement of the Judgment on the ground that the Ecuadorian court lacked jurisdiction over its person.
Chevron argues that the Judgment is penal in character and therefore not appropriately recognized or enforced in this country. It cites, appropriately, The Antelope,
There are reasons to believe that at least part of the Judgment may be penal in the relevant sense. But Chevron is entitled to summary judgment determining that the Judgment, or part of it that bears on the res judicata-collateral estoppel defense, is not entitled to recognition or enforcement only by showing that the Judgment is penal in whole or in material part as a matter of law. Its submission on this important and, in at least some respects, difficult issue of law, however, is limited to two paragraphs. Chevron's submission on this point is so cursory as to fail to persuade. Accordingly, so much of the motion as rests on the alleged penal character of the Judgment will be denied although the issue remains in the case.
The Court begins the discussion of the merits of Chevron's fraud arguments by considering the legal standards governing fraud as a basis for denial of recognition or enforcement of a foreign judgment.
In United States v. Throckmorton,
The Throckmorton Court sustained the dismissal of the government's petition on the ground of legal insufficiency. It held that a bill in equity collaterally attacking a prior judgment was insufficient unless it alleged that the prior judgment had been procured by fraud that was "extrinsic or collateral[] to the matter tried by the first court, and not ... fraud in the matter on which the decree was rendered."
Traditional examples of extrinsic fraud include "[k]eeping the unsuccessful party away from the court by a false promise of a compromise, or purposely keeping him in ignorance of the suit; or, where an attorney fraudulently pretends to represent a party, and connives at his defeat or, being regularly employed, corruptly sells out his client's interest."
Throckmorton thus contrasted extrinsic fraud — where "there has never been a real contest in the trial or hearing of the case"
Throckmorton's extrinsic-intrinsic distinction has been the subject of much criticism.
The plaintiff in Marshall alleged that twenty-four state court judgments had been entered against her on the basis of a forged letter and obtained a preliminary injunction restraining their enforcement. The case later was removed to federal court, then remanded to the state court, and there tried to a judgment for the defendant. The case ultimately reached the Supreme Court, where the defendant argued for affirmance on the bases that (1) the remand had been appropriate and, in any case, (2) federal court review of the underlying state court judgments would be impermissible.
The Supreme Court held that the removal had been proper and the remand erroneous. Moreover, it held that the plaintiff's collateral attack on the state court judgments was legally sufficient despite the fact that it rested on intrinsic fraud — the use of the forged letter. In doing so, it made clear that:
The availability of relief based on the use of false evidence in a prior case draws further support from Hazel-Atlas. That case turned on a claim of fraud perpetrated by the use — before the Patent Office and, in addition, the Third Circuit in an appeal from the dismissal of a patent infringement action — of a bogus article. The article had resulted in the affirmance of the dismissal of the infringement suit, the entry of judgment for the defendant by the district court pursuant to the Court of Appeals' mandate, and the defendant's acquiescence in a costly license agreement with the plaintiff-patentee. The Third Circuit denied relief from the earlier judgment on the ground, among others, that it lacked the power to set it aside because the term during which it had been rendered had expired. But the Supreme Court reversed. It stated in relevant part:
Thus, the Supreme Court in Hazel-Atlas unmistakably, despite its arguably puzzling citation to both Marshall and Throckmorton, said that "settled equitable principles" demanded "devitalization" of the prior judgment in a paradigmatic case of intrinsic fraud — the use of false evidence before a court.
All of that said, the facts that (1) neither Marshall nor Hazel-Atlas definitively stated that Throckmorton had been overruled, (2) Hazel-Atlas even cited it, and (3) the Supreme Court in the ensuing years has cited one or another of these cases with apparent approval has led to a controversy as to the Court's ultimate view.
In Dictograph Products Co. v. Sonotone Corp.,
The Circuit subsequently reaffirmed that view in Gleason v. Jandrucko.
Neither Throckmorton, Marshall, Dictograph, nor Jandrucko — nor any other authority — addresses directly the standard that governs fraud as the term is used in the Recognition Act. And while a handful of New York courts has paid at least lip service to the extrinsic-intrinsic distinction,
This Court previously has indicated its preliminary rejection of the view "that only extrinsic, as opposed to intrinsic, fraud is a basis for relief under Article 53 of the CPLR" for several reasons,
In considering whether a litigant is entitled to relief from a prior judgment on the ground of fraud, courts usually consider whether (1) the fraud (whether intrinsic or extrinsic) prevented a full and fair presentation of the litigant's claim or defense in the prior action or otherwise would render it unconscionable to give effect to the prior judgment, (2) the party seeking relief was diligent in discovering the fraud and attacking the judgment, and (3) evidence of the fraud is clear and convincing.
For the purpose of this motion, only the first of these considerations needs additional explication. When courts are asked to grant relief from or to decline to recognize a prior judgment on the ground of fraud, a central question is whether such an outcome is appropriate to "protect the fairness and integrity of litigation."
Viewing Chevron's ghost-writing allegation from the standpoint of the evidence, stripped of the rhetoric, the facts are these:
Hence, while Chevron has not articulated the point in exactly this way, it is implicit in its position that the LAPs or someone acting on their behalf (1) wrote all or much of the Judgment, gave that work to the judge ex parte, and the judge adopted it, or (2) gave the unfiled documents to the judge, who copied parts of them in preparing the Judgment.
To begin with, even assuming the judge did not draft much of the Judgment,
Second, even assuming that members of the LAP team wrote the portions of the Judgment that are identical to the Unfiled Fusion Memo and gave them to the judge, or that the judge or any public sector staff members copied those portions from the Unfiled Fusion Memo itself after receiving it ex parte, there remains an issue of materiality. The section of extensive overlap between the Judgment and the Unfiled Fusion Memo relates to the relationship among Texpet, Texaco, and the Consortium.
While more could be said on this point, that is sufficient. The identity of language between parts of the Unfiled Fusion Memo and parts of the Judgment — troublesome as it is — does not alone warrant the conclusion that Chevron has established that there is no genuine issue of material fact on this issue.
As noted, Dr. Calmbacher was the LAPs' chosen expert for at least some of the early judicial inspections, and two of his reports filed in Lago Agrio by the LAPs stated conclusions and findings that he later testified he did not reach.
There is, barely, enough in Donziger's email, assuming it were admissible, to support an argument that Dr. Calmbacher was unhappy with the LAPs or their lawyers. Chevron put the document into the record. Accordingly, there is a sufficient issue of credibility to prevent the Court from reaching a determination as a matter of law on this point. In any case, the subsequent abandonment of the judicial inspections in favor of the global expert procedure and the Lago Agrio court's disclaimer of reliance upon Dr. Calmbacher leave a genuine issue as to the materiality of the entire Calmbacher incident, at least if considered in isolation, even assuming that it involved fraud.
As detailed, the LAPs applied to the court to terminate the judicial inspections. While that application was pending, the judge to whom the case then was assigned, in Donziger's words, was "on his heels from ... charges of trading jobs for sex in the court." Donziger drafted a complaint against the judge. Fajardo had ex parte meetings with the judge and, in one such meeting, he "let [the judge] know [the LAPs] might file it if he does not adhere to the law and what we need." Judge Yánez then ruled in the LAPs favor and terminated most of the judicial inspections. Ex parte meetings between the LAP team and
In these circumstances, the decisions to terminate judicial inspections, to pursue the global assessment, and to select Cabrera as the global expert were tainted by the duress and coercion applied to him by Fajardo, Donziger, and perhaps others in ex parte meetings. The fact that it cannot be said with certainty that the decisions were incorrect or would not have been made absent the duress and coercion applied to Judge Yánez is immaterial. The point is that the undisputed facts show that the process in these respects was tainted.
The problems did not stop there. Cabrera ultimately filed a report recommending billions in damages against Chevron. But the report was not entirely or even predominantly his own work or that of any assistants or consultants working only for him. There is no genuine issue with respect to the facts that the LAP team secretly prepared his work plan, worked closely with him in carrying it out, and drafted most of the report and its annexes. Nor is there any genuine issue regarding the fact that the LAP team then publicly objected to the very report that they, in large part, secretly had drafted as "unjustly favorable to [Chevron]" and "too conservative" in its damage assessment.
The significance of the tainted Cabrera report, however, is a separate inquiry. For the purposes of this motion, relevant questions include whether Chevron was impaired materially in presenting its case fully and fairly and whether the taint in the Cabrera report was carried over into the Judgment, either directly or by means of the "cleansing" reports.
Chevron raised the issue of the Cabrera report's propriety before the Lago Agrio court. The court disclaimed reliance on it. On this motion, however, Chevron has presented evidence from which it might be concluded that the Lago Agrio court did rely on the Cabrera report at least to determine the number of oil pits requiring remediation
The uncontradicted evidence therefore shows that the Cabrera report was tainted and that the Lago Agrio court relied to some extent on that report, both directly and via its reliance on the Barnthouse report. But the contention that the Lago Agrio court, despite its disclaimer, relied heavily on the Cabrera report rests in some significant measure upon the lack of references to evidence supportive of the trial court's findings and independent of the Cabrera report in certain filings by the LAPs.
Certainly the uncontradicted evidence relating to the Cabrera report and its relationship to the Judgment is disturbing. It perhaps would justify a trier of fact in inferring conclusions broader than is appropriate on this motion. Moreover, additional evidence may emerge as the case develops. On the present record, however, the ultimate materiality of the taint that indisputably has been established thus far remains a genuine issue.
Chevron, in a brief section of its opening memorandum, argues that it is entitled to partial summary judgment dismissing the collateral estoppel defense based on the Judgment on the grounds that (a) it did not have a full and fair opportunity to litigate its defense in Ecuador, and (b) the Ecuadorian courts did not adjudicate the merits of its fraud claim. It contends also that the Judgment is not res judicata because the "claims" at issue here differ from those in question in Ecuador.
As an initial matter, a party resisting the application of collateral estoppel on the ground that it lacked a full and fair opportunity to litigate the issues said to be foreclosed by the previous judgment bears the burden of proof on that question.
Moving to the second argument, essential prerequisites to collateral estoppel include that the issue said to be preclusive is identical to an issue actually litigated and necessarily decided in the previous action.
The meaning of all this for collateral estoppel purposes is far from clear to an American observer.
The res judicata defense is another matter. The general principle is that a judgment in favor of a plaintiff precludes the defendant, in an action to enforce the judgment, from availing himself
The issues before the Court are whether (a) there is a genuine issue as to any fact material to the bases on which Chevron seeks dismissal of the res judicata-collateral estoppel defense, and (b) Chevron is entitled to that relief as a matter of law, and (c) Chevron in any case is entitled to judgment based on the law of former adjudication without regard to the recognizability or enforceability of the Judgment. Thus, the question is not whether the Court thinks it likely that Chevron ultimately will prevail on these arguments.
The crux of the motion is the contention that the Lago Agrio Judgment should not be recognized or enforced by reason of fraud. As the foregoing demonstrates, the LAPs' procurement of the termination of judicial inspections, the adoption of the global assessment, and the appointment of Cabrera all unquestionably were tainted. The secret participation of the LAP team in Cabrera's activities and its secret drafting of the bulk of Cabrera's report were tainted as well. Moreover, there are serious questions concerning the preparation of the Judgment itself in view of the identity between some portions of the Judgment and the Unfiled Fusion Memo, especially in light of the undisputed pattern of ex parte advocacy in the Lago Agrio Litigation and the undisputed instance of the LAP team's coercion of and duress on one of the judges to obtain a desired result.
But it cannot be said at this stage of the proceedings that Chevron is entitled to a determination in its favor as to the recognizability and enforceability of the Judgment or the collateral estoppel defense in view of the issues as to whether any of this materially affected Chevron's ability fully to present its defense or corrupted the judicial process so as to warrant such a determination. The Court, however, has reached a different conclusion as to res judicata. Accordingly, Chevron's motion for partial summary judgment dismissing the LAP Representatives' and the Donziger Defendants' affirmative defenses of res judicata and collateral estoppel [DI 396] is granted to the extent that the res judicata defenses are dismissed but otherwise denied.
SO ORDERED.
The Court takes judicial notice of the merger agreement ("Merger Agreement"), which was filed with the Securities and Exchange Commission as part of Amendment No. 4 to Form S-4 Registration Statement of Chevron, filed Aug. 27, 2001. It is included in DI 43 in Republic of Ecuador v. Chevron Corp., 99 Civ. 9958(LBS) (S.D.N.Y. filed Feb. 26, 2010), and is reproduced at pages A1991-2059 of the appendix in Republic of Ecuador v. Chevron Corp., 638 F.3d 384 (2d Cir.2011). Id.
To be sure, the law recognizes various bases for disregarding the existence of a corporate entity and imposing liability upon it stockholders. See, e.g., Trust v. Kummerfeld, 153 Fed.Appx. 761, 763 (2d Cir.2005); Scarbrough v. Perez, 870 F.2d 1079, 1083-84 (6th Cir. 1989); Wallace ex rel. Cencom Cable Inc. Partners II, L.P. v. Wood, 752 A.2d 1175, 1184 (Del.Ch.1999). But a litigant seeking to impose corporate obligations on a shareholder must allege facts that, if proven, would justify disregarding the corporate entity. The SJ Defendants have neither alleged such facts nor offered any such evidence in this case. It is interesting to note that Ecuador adheres to the familiar principle that shareholders of corporations are not responsible for corporate obligations. Art. 143 of the Ecuadorian Ley de Compañias provides, in translation, "[t]he company is a corporation whose capital, divided into shares negotiable, is formed by the contribution of the shareholders that are accountable only by the amount of their shares."
There is some evidence that the Lago Agrio court did rely on the Cabrera report for certain aspects of the Judgment. Pl. 56.1 St. [DI 398] ¶¶ 204-10; Champion Decl. [DI 401] ¶ 141 & Ex. 2138 (Di Paolo declaration), at 1-2 (stating that "it is impossible for the Ecuadorian court to accurately identify the number of pits or the number of pits requiring remediation using aerial photo interpretations"); id. ¶ 185 & Ex. 2182 (Younger report), Ex. A, at 17-18 (concluding that the pit count in the Judgment is based on Annex H-1 of the Cabrera report); see also id. ¶ 274 & Ex. 2269 (Annex R of the Cabrera report), at 13-16 (recommending a $428 million award for potable water system); id. ¶ 131 & Ex. 2128 (Barros report) (relying on Cabrera report for the alleged damage award of $430 million for a potable water system but noting that 65 percent of the affected area is connected to a public water system); DI 168 (Lago Agrio Judgment), at 182-83 (awarding $150 million in damages for a potable water system based on multiplying $430 million in damages by the 35 percent of the population in the affected area not serviced by the public water system).
The court did not require that the additional 10 percent of remediation damages granted under the EMA be placed in a trust. The court granted also a professional fee of 0.1 percent "of the values that are derived from the decisional act of this judgment" to the LAPs' counsel.
Pablo Fajardo, an Ecuadorian attorney for the LAPs, filed a virtually identical "representation" in Ecuador, which stated that "we, the representatives of the Plaintiffs, herewith wish to formally inform this Court that ... we will refrain from ever filing any action of any type in the State of New York, for the purpose of enforcing any Ruling handed down within the scope of this legal action, whether at this point in time or at any time when any such Ruling may become enforceable.... The foregoing notwithstanding, we, the Plaintiffs, herewith expressly reserve the right to enforce any Ruling issued within the scope of this legal action, always provided that the same is enforceable in any jurisdiction of the United States of America other than the State of New York as well as in all other countries throughout the entire world." Smyser Decl. [DI 451] ¶ 3 & Ex. B (Lago Agrio Representation).
Chevron cites two additional documents as evidence of copying of internal LAP documents by the Lago Agrio court or of drafting of all or part of the Judgment by the LAPs: (1) a June 18, 2009 email sent by Fajardo to Donziger and others concerning Ecuadorian trust law and the Andrade v. Conelec case, and (2) the LAPs' Draft Alegato, which is a document that outlined several of the LAPs' positions on various issues in the litigation. See Champion Decl. [DI 401] ¶ 177 & Ex. 2174 (June 18, 2009 email from Fajardo to Donziger and others); Champion Decl. [DI 400] ¶ 127 & Ex. 2124 (Draft Alegato).
With regard to Fajardo's email, the four "misquoted" words that allegedly demonstrate the identity of part of the Judgment to this document in three instances are virtual synonyms for each other and the fourth is a gendered article that reflects a different word choice in Spanish. The English translation of the Judgment therefore does not clearly reflect which version, if either, of the Andrade case is being quoted. Additionally, Chevron has submitted no expert reports documenting alleged plagiarism in the Judgment from the Fajardo email, or indicating whether or not the Fajardo email was or was not a part of the Lago Agrio court record. Indeed, the LAPs have asserted elsewhere that Fajardo's version of Andrade was derived from "stock language" that readily could have been found independently by the Lago Agrio court. See, e.g., Champion Decl. [DI 400] ¶ 130 & Ex. 2127 (Dec. 6, 2011 brief filed by LAPs in Chevron v. Salazar, No. 11-1150 (2d Cir. Dec. 6, 2011)), at 11 n.6. The Draft Alegato contains several word strings identical in the Judgment and the Fusion Memo. Champion Decl. [DI 400] ¶ 120 & Ex. 2117 (Leonard report), at 17-20); id. ¶ 121 & Ex. 2118 (Leonard supplemental report), Ex. A, at 24 (language from the Draft Alegato identical to language from the Unfiled Fusion Memo). Because the similarities of the Draft Alegato to portions of the Judgment thus appear to be coextensive with some of the similarities of the Unfiled Fusion Memo to the Judgment, the Court considers only the Unfiled Fusion Memo.
Dr. Calmbacher testified with respect to deposition exhibits 12 and 13. Exhibit 12 is a copy of the Sacha 94 report filed with the Lago Agrio court, a copy of which is Hendricks Decl. [DI 52] ¶ 489 & Ex. 397. Exhibit 13 is a copy of the Shushufindi 48 report filed with the Lago Agrio court, a copy of which is Champion Decl. [DI 402] ¶ 330 & Ex. 2325.
Some courts have held that Twombly and Iqbal do not apply to affirmative defenses. One has reasoned persuasively that the difference is justified by a host of factors, including "(1) textual differences between Rule 8(a), which requires that a plaintiff asserting a claim show entitlement to relief, and Rule 8(c), which requires only that the defendant state any defenses; (2) a diminished concern that plaintiffs receive notice in light of their ability to obtain more information during discovery; (3) the absence of a concern that the defense is `unlocking the doors of discovery'; (4) the limited discovery costs, in relation to the costs imposed on a defendant, since it is unlikely that either side will pursue discovery on frivolous defenses; (5) the unfairness of holding the defendant to the same pleading standard as the plaintiff, when the defendant has only a limited time to respond after service of the complaint while plaintiff has until the expiration of the statute of limitations; (6) the low likelihood that motions to strike affirmative defenses would expedite the litigation, given that leave to amend is routinely granted[;] (7) the risk that a defendant will waive a defense at trial by failing to plead it at the early stage of the litigation; (8) the lack of detail in Form 30, which demonstrates the appropriate pleading of an affirmative defense; and (9) the fact that a heightened pleading requirement would produce more motions to strike, which are disfavored." Bayer CropScience AG v. Dow AgroSciences LLC, No. 10 Civ. 1045, 2011 WL 6934557, at *1-2 (D.Del. Dec. 30, 2011); accord Kohler v. Big 5 Corp., No. 12 Civ. 00500, 2012 WL 1511748, at *2-3 (C.D.Cal. Apr. 30, 2012); Kohler v. Islands Rests., LP, 280 F.R.D. 560, 565-66 (S.D.Cal.2012); U.S. Bank Nat'l Ass'n v. Educ. Loans Inc., No. 11 Civ. 1445, 2011 WL 5520437, at *5-6 (D.Minn. Nov. 14, 2011); Bennett v. Sprint Nextel Corp., No. 09-2122, 2011 WL 4553055, at *1-2 (D.Kan. Sept. 29, 2011); Unicredit Bank AG v. Bucheli, No. 10-2436, 2011 WL 4036466, at *4-6 (D.Kan. Sept. 12, 2011).
Others have reached a contrary view, albeit often without much analysis. See, e.g., Botell v. United States, No. 11 Civ. 1545, 2012 WL 1027270, at *2 (E.D.Cal. Mar. 26, 2012) Barnes v. AT & T Pension Benefit Plan-Nonbargained Program, 718 F.Supp.2d 1167, 1171-72 (N.D.Cal.2010); Riemer v. Chase Bank USA, N.A., 274 F.R.D. 637, 639-40 (N.D.Ill.2011) (same); see also, e.g., In re Checking Account Overdraft Litig., 281 F.R.D. 667, 677-78 (S.D.Fla.2012); Vargas v. HWC Gen. Maintenance, No. H-11-875, 2012 WL 948892, at *3 (S.D.Tex. Mar. 20, 2012); Haley Paint Co. v. E.I. Du Pont De Nemours & Co., 279 F.R.D. 331, 335-36 (D.Md.2012).
But there is no occasion to resolve this question on this motion. Chevron has not contested the sufficiency of the answers in this respect. Certainly the SJ Defendants may not be heard to avoid Chevron's motion for partial summary judgment by contending that their own pleadings are insufficiently detailed.
Had the Second Circuit thought that the Representation had mooted the controversy as to the recognizability and enforceability of the Judgment, it would have been obliged to dismiss the Count 9 Action for want of subject matter jurisdiction. Implicit in its ruling, therefore, is a rejection of the position now taken by the SJ Defendants.
See Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962). In the Second Circuit, "[r]easons for a proper denial of leave to amend include undue delay, bad faith, futility of the amendment, and perhaps most important, the resulting prejudice to the opposing party." State Teachers Ret. Bd. v. Fluor Corp., 654 F.2d 843, 856 (2d Cir.1981); see McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 200 (2d Cir.2007) ("Although Rule 15(a) of the Federal Rules of Civil Procedure provides that leave to amend `shall be freely given when justice so requires,' it is within the sound discretion of the district court to grant or deny leave to amend.").
The point is analogous to that made by the Second Circuit in the infamous Manton case, a criminal prosecution of a Court of Appeals judge for taking bribes from litigants. The defendant argued that the trial court had erred in failing to instruct the jury that "there could be no obstruction of justice unless the decisions [of which the judge taking bribes took part in] were wrong." The Circuit rejected the argument, stating:
"We cannot doubt that the other judges who sat in the various cases acted honestly and with pure motives in joining in the decisions. No breath of suspicion has been directed against any of them and justly none could be. And for aught that now appears we may assume for present purposes that all of the cases in which Manton's action is alleged to have been corruptly secured were in fact rightly decided. But the unlawfulness of the conspiracy here in question is in no degree dependent upon the indefensibility of the decisions which were rendered in consummating it. Judicial action, whether just or unjust, right or wrong, is not for sale; and if the rule shall ever be accepted that the correctness of judicial action taken for a price removes the stain of corruption and exonerates the judge, the event will mark the first step toward the abandonment of that imperative requisite of even-handed justice proclaimed by Chief Justice Marshall more than a century ago; that the judge must be `perfectly and completely independent with nothing to influence or control him but God and his conscience.'" United States v. Manton, 107 F.2d 834, 846 (2d Cir.1939) (emphasis added).
His testimony was given in a Section 1782 proceeding in the United States in March 2010 — almost a year before the Judgment. See Champion Decl. [DI 402] ¶ 159 & Ex. 2156 (Calmbacher deposition transcript), at 1:11-16.
This statement ignored the fact that at least some evidence had been submitted in support of various Chevron motions. Pl. 56.1 St. [DI 398] ¶ 183.
