WITH DISCOVERY BID, ECUADOR TURNS TABLES ON CHEVRON

September 14, 2010 By Rebecca Beyer
Daily Journal Staff Writer

SAN FRANCISCO - The Republic of Ecuador, which has seen its judicial system come under attack by Chevron Corp. in the last year, has taken a strategy from the oil giant's legal playbook in an effort to defend itself in an arbitration in The Hague.

Home to a massive environmental lawsuit against the San Ramon-based company, the South American country has stood by for nearly a year while Chevron - armed with a law dating back to the 1800s - has filed multiple discovery requests in federal courts across the United States aimed at proving the Ecuadorean judicial system is corrupt. In Ecuador, Chevron is fighting plaintiffs' claims that the company should be held responsible for cleaning up the devastation from nearly 30 years of drilling by Texaco in the Amazon rainforest (Chevron acquired Texaco in 2001).

On Friday, Ecuador filed its own discovery request in San Francisco federal court under the same law Chevron has been using - 28 U.S.C. 1782, a statute designed to help parties obtain U.S.-based evidence for use in foreign proceedings. Ecuador is seeking to depose Diego Borja, one of two men who secretly videotaped a conversation with the original Ecuadorean judge in the case. In re Application of the Republic of Ecuador, 10-80225. Chevron claims the tapes showed the judge - who denied wrongdoing but recused himself - had already made up his mind to rule in the plaintiffs' favor as part of a bribery scheme. But Ecuador cites a report made by an investigator hired by the plaintiffs that suggests Borja is improperly linked to Chevron.

A spokesman for Chevron said the Borja videos were authenticated by forensic experts and that it was too soon to say whether the company would oppose Ecuador's deposition request. Ecuador's filing is just the latest chapter in litigation that dates back 17 years, spans three continents and includes allegations of corruption and collusion on both sides. The country's 1782 petition also comes after Chevron has had great success using the law to obtain discovery from people involved in the Ecuadorean case on the plaintiffs' side.

"Turn-around is certainly fair play," said Georgene M. Vairo, a professor at Loyola Law School. "It's appropriate for Ecuador to try to protect itself by looking into the alleged wrongdoing of Chevron. 1782 is there to do that."

Although Ecuador is not a party in the litigation within its borders, it is a defendant in an international arbitration Chevron initiated in The Hague last year under the Bilateral Investment Treaty between Ecuador and the United States. There, Chevron is seeking, among other things, a declaration that it has no liability for the damage in the Amazon because of a settlement Texaco signed with Ecuador in 1995 in which the oil company agreed to do some environmental clean-up and Ecuador agreed to release any claims against the company.

In the arbitration, Chevron alleges that it is being denied due process in Ecuador because of a corrupt judicial system. For its part, Ecuador wants to depose Borja about his employment history, his relationship to Chevron, his wife's relationship to Chevron and his meetings with the judge and others. The discovery request is "directly relevant to the Republic's defense in the Treaty Arbitration," Ecuador's attorneys from Winston & Strawn wrote in Friday's filing, and "will help determine the authenticity, importance and relevance of Chevron's videotape evidence, and to discover the underlying motives for Borja to produce such clandestine videotapes."

Ecuador is represented by Washington, D.C. partner Eric W. Bloom and New York partner C. MacNeil Mitchell, who did not respond to a request for comment. Richard A. Lapping, of the firm's San Francisco office, declined to comment. Cristina C. Arguedas, an attorney for Borja from Arguedas, Cassman & Headley in Berkeley, declined to comment.

"I think it is legitimate for [Ecuador] to investigate instances of judicial corruption," said Andrea E. Neuman, a Gibson, Dunn & Crutcher partner in Irvine and one of Chevron's lead attorneys. "It strikes me that the target of the investigation here would normally be the judge who was seen on these authenticated tapes soliciting a multimillion-dollar bribe."

Edward A. Klein, a partner at Liner Grode Stein Yankelevitz Sunshine Regenstreif & Taylor in Los Angeles who has handled 1782 cases said Chevron would be "pretty hard-pressed to resist Ecuador's efforts to get discovery in the United States given Chevron's liberal use of the 1782 process."

Chevron has used the 1782 statute to get a wide range of discovery - mostly aimed at proving their claim that consultants on the plaintiffs' side were behind the $27 billion damages estimate found in a court-appointed expert's report - for use in the proceedings in Ecuador and The Hague. Its highest-profile use of the law came when a New York federal judge - and later the 2nd U.S. Circuit Court of Appeals - agreed with the company that a documentary filmmaker should turn over hundreds of hours of raw footage from "Crude," a film about the litigation (last week the same judge granted Chevron's request to depose the filmmaker). Earlier this month, a magistrate judge in New Mexico granted a discovery request for Chevron and cited the footage as one reason for doing so.

Karen Hinton, a spokeswoman for the plaintiffs in the Ecuadorean lawsuit, said Chevron's discovery efforts "are nothing but theatrics to draw attention away from what the company cannot deny, the overwhelming evidence that Texaco intentionally contaminated the rainforest and Chevron is now responsible for it."

In court papers, the plaintiffs have called Chevron's assertions that they have improperly colluded with the expert "hypocrisy," claiming Chevron's consultants' work appeared in the report of another court-appointed expert. No hearing date has been set on Ecuador's request to depose Borja.

rebecca_beyer@dailyjournal.com