Sludge Match: Inside Chevron’s $9 Billion Legal Battle With Ecuadorean Villagers

On March 4th, a federal judge in New York City blocked one of the richest and most scrutinized judgments in the annals of class-action law from being enforced on U.S. soil. The announcement of that decision, a closely watched event in legal and environmental circles, further muddied the future of $9.5 billion in damages the Ecuadorean Supreme Court in 2012 ordered the oil giant Chevron to pay for the systematic contamination of a patch of Amazon rainforest the size of Rhode Island. In his decision capping a seven-week trial, Judge Lewis Kaplan declared the Ecuadorean judgment null and void. The ten-figure fine, he concluded, was the fruit of a jungle shakedown — the result of a “five-year effort to extort and defraud Chevron.”

The oil company cheered Kaplan’s decision as “a resounding victory for [us] and our stockholders.” Steven Donziger, the warhorse lawyer for the Ecuadorean plaintiffs, decried the judge as an accomplice in “the biggest corporate retaliation campaign in history.”

The New York trial marked more than a possible turning point in the no-holds-barred battle-royale pitting Chevron against homesteading farmers and a union of five Amazonian tribes. It was also a surprise homecoming. More than a decade ago, the same court ruled to move the case out of New York, where the plaintiffs thought it belonged, and down to Ecuador, where Chevron had cozy relations with key officials in government. The subsequent seesaw between sovereign legal systems is uncommon. So too Chevron’s decision to counterattack the Ecuadorean decision using the RICO Act, a collection of racketeering laws usually employed in the prosecution of meth-dealing biker gangs and famous Italian crime families. Which isn’t to say Chevron’s RICO suit lacked Sicilian-accented echoes with mob cases. The oil company’s sole witness to its central charge of bribery was a corrupt Ecuadorean ex-judge named Alberto Guerra, whose entire family has been naturalized and relocated on Chevron’s dime. The entire case turned on the testimony of a witness living under a corporate protection plan. (Chevron has stated that the company has taken “reasonable measures, based on third-party assessments, to protect Guerra’s safety and security.”) 

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The RICO decision put another wrinkle in a case defined by unprecedented international sprawl. What began around the time of Bill Clinton’s first inauguration as a class-action suit filed in a New York court has ramified into an overlapping thicket of legal systems and mutual corruption allegations playing out from Buenos Aires to Gibraltar, from Washington D.C. to the Hague. So far, half a dozen legal authorities have been called on to adjudicate the main-event suit and its related cases. Law professors call it a “challenging paradigmatic interface,” but it’s best described as an extraordinary jurisdictional clusterfuck.

“This drama is in unchartered territory,” says Josh Galperin of Yale’s Center for Environmental Law and Policy. “We don’t have much to compare it to.” Marco Simons, legal director of EarthRights International, notes a disorienting, mildly hallucinogenic aspect. “We could be looking at an Alice in Wonderland scenario of never-ending litigation,” he says. “It’s hard to see where this ends.” 

The man at the center of the case is 53-year-old lawyer Steven Donziger. He first visited the north of Ecuador as a young law school grad in the early 1990s and shortly after joined the Ecuadorean plaintiffs’ legal team at its inception in 1993. Donziger quickly emerged as its leader, or “cabeza.” Over the last 21 years, the case has dominated and directed his life in ways he could not have anticipated in law school, when he was playing basketball with Barack Obama and imagining a more conventional career in environmental and public interest law.

“Do you have any idea how crazy my life is?” Donziger asked me in the days following Kaplan’s RICO decision. “I don’t think anybody really understands what it’s like to be targeted by the full weight of a company like Chevron. They have private spies trailing my family everywhere we go. I had to hire a former FBI agent to prove I wasn’t crazy.” (Chevron denies these allegations.)

Donziger often voices incredulity over the wild swings and unremitting demands of the case that has made him famous and may yet make him wealthy. In interviews, he hits high notes of pride, defiance, righteousness, and, less often, bitterness. The only thing he never sounds, and cannot afford to be, is tired. His opponent is the second biggest oil company in the United States. It has sworn to fight him and his rainforest clients to the ends of the earth, which so far includes court systems and foreign offices on three continents. When it runs out of battlefield in this world, Chevron vows combat in the next —”until Hell freezes over, and then we’ll fight it out on the ice,” a company spokesperson said in 2009. 

Chevron vows combat ‘until hell freezes over, and then we’ll fight it out on the ice’

Staying in the ring against Chevron for two decades has required more than simple stamina. It has demanded of Donziger a fierce slow-burn resolve he has wielded in ingenious and self-defeating ways, a resolve that can tempt observers to invoke the well-intentioned mania of legendary gringos who came to the jungle to find glory and slay dragons with the locals only to be consumed by it. Like Amazon adventurers of a literary cut, Donziger brings a natural swagger to the job. It isn’t easy to imagine him sitting still for long, or discussing the case in anything but rhetorical machete slashes. 

“Chevron has spent over $2 billion trying to wear us out and shut us down,” he says. “But I’m still here, I’m still happy, and the case will continue until we get justice.”

Kaplan’s March 4th decision doesn’t end Donziger’s quest, because no one judge has that power. The New York court only blocked Donziger’s clients from seizing their $9.5 billion settlement in the fifty states. But Chevron has billions tied up in liquid, resource and investment assets in countries where Kaplan’s decision has no legal standing. The action now moves to third-party countries like Canada, where a Chevron subsidiary is developing the Alberta tar sands. Donziger will try to seize these assets; Chevron will try to stop him. The Canadian Supreme Court is scheduled to hear Chevron’s objections in November. Donziger is also making aggressive moves against Chevron assets in Argentina and Brazil.

Chevron remains busy on offense, making defendants of the original plaintiffs, and their allies in novel ways. It is seeking $32 million in legal costs from Donziger to pay for the RICO trial (which Donziger is appealing) as well as damages from Donziger’s financiers, including the Gibraltar-based online gambling mogul Russell DeLeon. In May, Chevron forced the white-shoe D.C. lobbying firm Patton Boggs to remove itself from the case and settled for $15 million. Most brazenly, Chevron has forced the government of Ecuador before an arbitration tribunal and is seeking damages for allowing the original Ecuador trial to proceed. (This is the same trial Chevron initially demanded be held in Ecuador and not New York). Altogether, the oil company has sued five different lawyers representing the Ecuadorian communities, three of the lawsuits’ funders, a scientific consultancy, and the rainforest-villager plaintiffs themselves.

Chevron’s full-court press has been effective. So effective that Donziger could not pay his counsel during the RICO suit and relied on volunteers to match Chevron’s dozens of lawyers and their flurries of motions. This aspect of the proceedings was a rerun of the Ecuador trial, where, according to groups like Amazon Watch, Chevron’s lawyers tried to intimidate judges with jail time if they failed to grant motions that could be comically numerous: the company once filed 39 in less than an hour. Donziger’s attorney, the San Francisco trial lawyer John Keker, used his motion to withdraw as an opportunity to blast the court and its presiding officer, accusing Judge Kaplan of turning the case into a “Dickensian farce” with his clear pro-Chevron bias.”

“Through scorched earth litigation, executed by its army of hundreds of lawyers, Chevron is using its limitless resources to crush defendants and win this case though might rather than merit,” wrote Keker. “Encouraged by this court’s implacable hostility toward Donziger, Chevron will file any motion, however meritless, in the hope that the Court will use it to hurt Donziger.”