UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

CHEVRON CORPORATION, Plaintiff, -against- Case No. 11-CV-3718 (LAK) STEVEN DONZIGER, et al., Defendants. ________________________________

EXPERT REPORT OF PROFESSOR GEORGE L. PRIEST

I. Initial Statement of Qualifications

1. I am the Edward J. Phelps Professor of Law and Economics at Yale Law

School, teaching courses in torts, insurance, insurance regulation, antitrust, regulated

industries, civil procedure, contracts, and commercial law, among other subjects. I have

served as a professor at Yale Law School since 1980. I served as the John M. Olin

Professor of Law and Economics at Yale Law School from 1986 through 2008.

2. I received a Bachelor of Arts degree from Yale in 1969 and a law degree

from the University of Chicago in 1973.

3. Throughout my career, my research has been in the field of law and

economics. I have published numerous articles in the areas of law and economics.

4. My background includes both the study and knowledge of remedies,

including both compensatory and punitive damages remedies. I have taught and

published about compensatory and punitive damages for many years. I have conducted

extensive empirical research projects regarding damages remedies, again of both

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compensatory and punitive damages. Since 1980, I have served as a consultant to the

Rand Corporation's Institute for Civil Justice in Santa Monica, California. With the

support of the Rand Corporation, I organized and directed empirical studies of civil jury

verdicts in the Chicago and San Francisco courts, the first major trial court studies of

their kind. See Peterson & Priest, The Civil Jury, Trends in Trials and Verdicts, Cook

County, Illinois, 1960-1979, Rand Corp., R-2881-ICJ (1982). The many important and

influential studies of civil jury verdicts by Rand Corporation scholars over the past

decade and a half all derive from this data source. I have also published several articles

discussing punitive damages with respect to the economic theory of punitive damages,

the economic effects of punitive damages verdicts, and articles presenting empirical

studies of punitive damages verdicts. I published an empirical study of punitive damages

verdicts using the trial court data described above in 1982, perhaps the first published

empirical study of punitive damages. Priest, Punitive Damages and Enterprise Liability,

56 So. Cal. L. Rev. 123 (1982).

5. Over the course of my career, I have published articles in the following

peer-reviewed economics journals: Journal of Law & Economics, Journal of Legal

Studies, Research in Law and Economics, Journal of Law, Economics & Organization,

Journal of Economic Perspectives, Journal of Risk & Uncertainty, Geneva Papers on Risk

and Insurance, the Italian journal Mercado, concorrenza, regale (Market, competition,

regulation), Journal of Reprints for Antitrust Law and Economics and, most recently,

Journal of Labor Economics and Supreme Court Economic Review.

6. I have served as a peer-review referee for the following economics

journals: American Economic Review, Economic Inquiry, Journal of Political Economy,

Review of Economics and Statistics, Rand Journal of Economics, Journal of Law &

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Economics, Journal of Legal Studies, and Journal of Law, Economics & Organization. I

have also served as a peer-review referee for the National Science Foundation, Law and

Social Science, Economics Division, for Law & Society Review, and for the journal

Science.

7. I have held appointments as a Visiting Professor in the Department of

Economics, University of Miami and the Department of Economics, University of

Toronto.

8. In 1991, I was elected the first President of the American Law and

Economics Association by the Association's members.

9. I have testified many times before Congress, before many state

legislatures, and before state and national regulatory commissions on civil judgment

damages issues, among other issues.

10. I have been invited numerous times to present lectures on economics-

related issues to state legislators, regulators, and state and federal appellate judges. For

many years, I have conducted a regular course on economics subjects, including

damages, for federal appellate judges and federal bankruptcy judges in a federal judicial

instruction program managed by George Mason University. I have also conducted

courses on economic subjects in an instructional program for state court judges managed

by the University of Kansas School of Law. I have lectured abroad on civil justice issues,

including damages, on many occasions. For the past 18 years, I have attended an annual

seminar on legal issues conducted by Yale Law School, chiefly addressing Latin

American legal issues, attended by law professors from most Latin American countries.

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11. From 1987 to 1989, I served on the American Bar Association President's

Commission to Improve the Liability Insurance System.

12. My experience extends beyond the academic. For the past twenty-one

years, I have served as a Special Master in the United States District Court for the District

of New Jersey in the litigation, McLendon v. The Continental Group, Inc., upon reference

by the Honorable H. Lee Sarokin and, subsequently, under the Honorable Dickinson R.

Debevoise. The McLendon case is a nationwide class action comprising over 7,000

settlement participants which was settled in 1990 for the sum of $415 million, and the

monitoring of this settlement continues today.

13. I have presented testimony on economics subjects, including damages,

either at trial, in deposition or by expert report in the following federal courts: the

Northern, Middle and Southern Districts of Alabama, Central and Northern Districts of

California, District of Connecticut, Middle and Southern Districts of Florida, Northern

District of Illinois, District of Maryland, District of Nevada, District of New Jersey,

Eastern District of New York, Northern District of Ohio, Northern District of Oklahoma,

Eastern and Western Districts of Pennsylvania, Middle District of Tennessee, Eastern

District of Texas, and the Court of Federal Claims; in federal Bankruptcy Courts for the

District of Delaware, Eastern District of Louisiana, the Southern District of New York

and the Western District of Pennsylvania; in state courts in the following states:

Alabama, Alaska, Arizona, California, Colorado, Connecticut, Florida, Iowa, Kansas,

Massachusetts, Michigan, Minnesota, Montana, New Jersey, New Mexico, New York,

Ohio, Tennessee, Texas, and West Virginia; and also in Ontario, Canada and Barcelona,

Spain.

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14. I view my expertise on the issues raised in this litigation to be based

upon the following:

a) my study and research for over 38 years of the economic principles of the operation of damages judgments;

b) my study over the same period, both theoretical and

empirical, of the application of damages judgments in civil litigation; and

c) my years of teaching the economic principles underlying

civil damages judgments and of the effects of such judgments.

15. My publications are listed in my current resume which is attached as

Appendix I. A list of previous testimony and my rate of compensation appear as

Appendix II. The materials I have reviewed appear as Appendix III.

II. Question Presented and Initial Statement of Opinions

16. I have been asked to address, from the standpoint of economic analysis,

the characterization and understanding of the judgment issued in the case Maria Aguinda,

et al. v. Chevron Corp. by the Ecuador Court on February 14, 2011 as clarified on March

4, 2011. As issued in Ecuador, the judgment is different in important respects from

judgments typically entered in civil litigation in the United States. (The judgment may

also be different than typical judgments in Ecuador courts, a subject I do not address.) I

have been asked to discuss differences between that judgment and judgments in civil

litigation in the United States. I will discuss these differences from an economic

perspective, intending to render no legal opinion on any issue before the Court.

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17. In the United States and in other nations with developed legal systems,

there is a general distinction between compensatory damages judgments—judgments that

seek to provide monies directly related to a specific victim’s injuries—and regulatory or

punitive damages judgments—judgments that seek to achieve, not compensation for a

specific victim’s loss, but broader social or regulatory goals, including deterrence of

harmful actions. Although sometimes the term “compensation” is used interchangeably

with respect to such judgments, there is a clear economic distinction between judgments

that provide direct compensation for an identified and measurable loss to a specific

individual and judgments that seek broader societal goals through the levy of the

judgments themselves and through the deterrent signal sent to other economic actors in

the society concerning the implications of their future activities.

18. For reasons I shall explain, the judgment issued by the Ecuador Court in

Maria Aguinda, et al. v. Chevron Corp. is clearly a regulatory or punitive damages

judgment, rather than a compensatory damages judgment. The judgment purportedly

seeks to effect broader societal goals, such as the promotion of indigenous culture, in

order to influence —deter—corporate activities in the future that might lead to cultural

assimilation in the allegedly affected areas or in other areas of Ecuador. The Judgment,

on its face, does not pretend to provide specific compensation to Ms. Aguinda or to other

named Plaintiffs in the litigation; indeed, any losses that they themselves may have

suffered from the allegedly harmful behavior are not mentioned or discussed. The central

purpose of the Judgment—as expressed by the Court—is to punish Chevron for the acts

of predecessor companies and to impose a regulatory penalty on Chevron to achieve

broader societal goals of remediation, health coverage, water treatment and the

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restoration of the habitat and culture of indigenous peoples, among other goals, allegedly

harmed by the acts of Chevron’s predecessors.

III. The Economic Distinction between Compensatory and Punitive or Regulatory Damages

19. In the United States and in the legal systems of most other nations, there is

a distinction between damages judgments that seek to compensate a victim for a

particular loss and damages judgments that seek to attain larger societal goals.

Compensatory damages—pure compensatory damages—seek to award a victim an

amount that represents the direct loss that the victim suffered from the harm caused by

the tortfeasor. The United States’ legal system is perhaps the most advanced in defining

compensatory damages of this nature (I have studied extensively U.S. versus other

nations’ measurement of compensatory damages) and, in general, calculates

compensatory damages as the sum of medical expenses that the injured victim will face

(including projected medical expenses for that person into the future), the wages or

earnings that the individual lost as a consequence of the injury (again, projected into the

future for that person with precision, including expected interest estimates, and the like),

and an amount representing the pain and suffering that the individual suffered (a less

precise category, but with well defined limits). Of course, no personal injury loss can

ever be perfectly compensated (except, perhaps, where the harm is solely pecuniary), but

the compensatory damages measures adopted by U.S. courts—and most other nations’

courts—attempt to achieve just compensation for the injured individual as best as can be

done given the injury.

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20. It is well established as an economic principle that the award of

compensatory damages will achieve two complementary goals: first, as discussed, it will

provide specific compensation to the injured victim; second, as an economic matter, it

will lead tortfeasors and potential tortfeasors to take into account the effect of their

actions on other parties as they conduct their affairs. According to economic analysis,

optimal deterrence of harmful actions is achieved by the full internalization of accident

costs, which can be generally achieved with the levy of full compensatory damages

alone.

21. A second and distinct set of remedies consists of regulatory orders or

punitive damages judgments whose intent is not to provide specific compensation equal

to losses suffered by identifiable persons, but to achieve some broader, societal end.

Often orders or judgments of this nature are issued directly by governmental regulatory

agencies, pursuant to a state’s police power or to some broader legal authority.

Nevertheless, there are contexts in which such remedies derive from individual civil

litigation. Punitive damages judgments are an example. In some set of cases, courts in

the U.S. award punitive damages judgments against defendants to achieve a deterrent

effect broader than the effect that follows from a compensatory damages judgment. For

example, where there is some reason to believe that the character of the defendant’s

actions was so heinous as to require further punishment beyond compelling the specific

compensatory damages award, courts may enter a punitive damages judgment. Even

under U.S. law and practice, however, punitive damages awards are peculiar because they

are paid to an individual plaintiff, while they are recognized to serve no compensatory

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function. The U.S. is unusual in this respect; most countries do not award punitive

damages judgments.

22. There is an ancient basis for the distinction between damages judgments

that are purely compensatory and damages judgments (or other judicial remedies) that

seek to attain broader public goals, often based upon the police power of the state.

Blackstone, who brought many of these instincts to bear in his treatise on English law,

summarized this history:

Wrongs are divisible into two sorts or species: private wrongs and public wrongs. The former are an infringement or privation of the private or civil rights belonging to individuals, considered as individuals, and are thereupon frequently termed “civil injuries;” the latter are a breach and violation of public rights and duties, which affect the whole community, and are distinguished by the harsher appellation of “crimes and misdemeanors.” [3 Blackstone Commentaries on the Law at 2 (1776)]

Perhaps it is expansive for economists to claim that Blackstone’s insights are economic in

nature, but there is a clear economic cast to Blackstone’s analysis.1 Of course, the

distinction that Blackstone delineates as between redress for purely private wrongs and

redress for the violation of public rights and duties is the basis for modern law. But this

distinction possesses an economic basis as well, distinguishing damages remedies that are

purely compensatory—designed to compensate specific individuals according to the

precise harm that they have suffered—versus damages remedies that are penal or

regulatory, like punitive damages, designed to achieve some broader societal goal.

1 But see, Richard A. Posner, Blackstone and Bentham, 19 J. L. Econ. 569 (1976) (explaining the inherent economic logic of Blackstone’s points.)

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23. Civil judgment damages awards of a regulatory or punitive nature may

enhance societal welfare in some contexts. From an economic standpoint, two central

questions arise: First, is the amount of the award measured properly to achieve the

broader societal end? Secondly, will the amounts awarded be appropriately invested to

achieve that end? Typically, implementation of a regulatory damages award will be

delegated to an appropriate regulatory agency to determine the measure of the award and

to supervise its execution. Again, this is to be distinguished from a compensatory

damages award, even where that award can be seen to serve some broader societal goal.

As an example, imagine that a first property owner sues a second for alleged

contamination. In the context of compensatory damages, the first property owner will

have established that he or she owns the specific land contaminated and will have

provided careful documentation of the expected costs of the remediation. Because the

first owner is in custody of the land, he or she can be presumed to expend the damages

amount appropriately to remediate the contamination. In the context of a broader

regulatory award, the regulatory agency with expertise over the subject at question will

be charged with those tasks. In the context of a punitive damages award, the sole

ambition is punishment, which is achieved by the levy of the award itself. How the

monies are spent is irrelevant.

IV. The Economic Analysis Applied to the Judgment in this Case

24. On February 14, 2011, the Ecuador Court in this litigation awarded a

judgment to the Plaintiffs. The Court awarded:

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a) $600 million for groundwater remediation;2

b) $5.396 billion for soil cleanup;3

c) $200 million for habitat and services reconstruction;4

d) $150 million for construction of new water supply;5

e) $1.4 billion for the development of a Health Improvement Plan;6

f) $100 million to restore the culture of the indigenous peoples;7

g) $800 million for the alleged increased risk of cancer on account of the alleged contamination;8 and

h) An additional 10 percent of the totals above to be directed to the Amazon Defense Front.9

25. It is evident that none of these elements of damages awarded by the

Ecuador Court are specifically compensatory to any named Plaintiff. Each of these

elements of damages are regulatory or punitive (the 10 percent figure is openly punitive)

in that they seek to achieve broader societal goals, including the deterrence of harm-

2 Judgment, Sentencia, Callejas R. Adolfo, Lawsuit No. 2003-0002 at 179. 3 Id. at 181. 4 Id. at 182. 5 Id. at 182-83. 6 Id. at 183. 7 Id. at 183. 8 Id. at 184.

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causing activity in the future, rather than to achieve specific compensation for the losses

suffered by any affected person. In fact, the Court acknowledges that fact in its

judgment, stating, “[a]ny person, entity or human group can be heard in criminal, civil or

administrative proceedings filed for violations of an environmental nature, even though

their own rights have not been violated, together with the fact that the complaint has been

signed by 42 citizens, the plaintiffs, who have not requested personal compensation for

any harm, but rather have demanded the protection of a collective right in accordance

with the formalities provided by the EMA, the redress of environmental harm, which as

has been alleged in this lawsuit, affects more than 30000 people, these supposedly being

undetermined.”10

26. This is not a surprising outcome. Although the litigation was nominally

brought by a specific set of Plaintiffs against Chevron—“MARIA AGUINDA

SALAZAR, widow, 54 years old; CARLOS GREFA HUATOTOCA, married, 42 years

old; CATALINA ANTONIA AGUINDA SALAZAR, married, 53 years old; etc.”—there

are no references in the Complaint, in the three Alegatos submitted by the Plaintiffs to the

Court, in the Court’s Judgment of February 14, 2011, nor in the Court’s Clarification of

Judgment of March 4, 2011, to any details of the alleged losses of the named Plaintiffs.

Some of the named Plaintiffs are purportedly members of those indigenous peoples

alleged to have been generally harmed by actions of Chevron’s predecessors, while

others are “colonos” or immigrants from other parts of Ecuador. But the specific harms

that they suffered as individuals were never a significant element of the litigation. As an

9 Id. at 187. There is an additional potential punitive damages element, essentially doubling all other damages elements, discussed below. 10 Id. at 33.

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example, in Part III of the Complaint, describing “Damages and Injured Population”, the

Complaint does not mention Ms. Aguinda, Mr. Grefa, or any other named Plaintiff. To

the contrary, it recites that “nearly 83% of the population has suffered illness due to

contamination” (¶ 2); and “[n]early 75% of the population who lives in areas next to

wells and facilities has been affected by total or partial loss of crops.” (¶ 3). Similarly, in

none of the three of the Plaintiffs’ Alegatos is there a reference to any loss specifically

suffered by any named Plaintiff; the Alegatos, instead, recount the aggregate estimates of

the Plaintiffs’ experts as to the gross award amounts that they are seeking. Finally, the

Ecuador Court, in its Judgment of February 14, 2011 does refer in small part to some

individuals who testified as to losses that they suffered: i.e., Silvio Albarracin, Miguel

Zumba, at p. 139. But these gentlemen are not named Plaintiffs and there is no careful

attempt to document their individual losses nor to measure them for purposes of a

damages award.

27. This is not meant necessarily as a criticism, but simply an explanation of

the procedure followed in this litigation in Ecuador. Litigation proceeds much differently

in the United States, and in other jurisdictions, even in the context of class litigation

seeking broader forms of recovery. In the United States, in class proceedings, the named

class plaintiffs are subjected to judicial scrutiny because, among other things, the named

class plaintiffs’ losses are meant to be representative of the losses of absent members of

the class. In such litigation, the losses suffered by each representative class member are

clearly delineated in order to allow a court to determine specific compensatory damages

for them. The individual class representatives’ damages then will serve as damages for

the absent members of the class to the extent that the evidence shows the named

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plaintiffs’ losses are in fact representative of those of the absent class members. Where

the evidence shows that the losses of the named and absent class members are likely to

vary considerably, this will bear significantly on whether class treatment is even

permissible at all.

28. There is nothing comparable in this litigation in Ecuador. There are no

individual losses detailed for any Plaintiff named in the case. The history of the person’s

involvement with the alleged contamination by the predecessors of Chevron is, at most,

merely assumed as part of larger, societal harms alleged to have been suffered. In fact,

from the Judgment, it does not appear that the named Plaintiffs were required to have

themselves suffered any injuries at all or even to live within the former Concession. As

far as can be determined from the Judgment, it does not appear that the named Plaintiffs

were subjected to any sort of “typicality” scrutiny.

29. As a consequence, the damages measures awarded by the Ecuador Court

bear no relation to any demonstrable or measured harm suffered by any of the named

Plaintiffs in the litigation, nor even more remotely, to unnamed persons who might

benefit from the awards in the case.

30. The damages awards, therefore, according to economic analysis, are

punitive or regulatory, aimed at achieving ends other than compensation.

31. There are other peculiarities in the Court’s Judgment. As an example, the

Court awards $150 million for the construction of a new water supply,11 but there was no

11 Judgment at 182-183.

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demand in the Plaintiffs’ Complaint with respect to a new water supply and there is no

assertion that any of the named Plaintiffs lacks potable water. A new water supply for

the region may be a good idea—the world aspires to clean water—but what is the

authority of the Court to enter such an order? The award of such a system is not

compensatory. The awards also are inconsistent with the regulatory standards in

Ecuadorian law, further demonstrating that they are penal in nature. The award for soil

remediation, for example, is based on a remediation standard (100 parts per million of

hydrocarbons in soil) that is an order of magnitude lower than even the most stringent

current Ecuadorian cleanup standard (1000 parts per million hydrocarbons in soil) and the

standard currently being used by Petroecuador with Ecuadorian government approval

(2,500 parts per million hydrocarbons in soil) to remediate these same pits in the former

concession area.12

32. Also obviously penal is the Court’s award of a ten percent add-on to the

preceding Judgment amounts to be given to the Amazon Defense Front.13 The economic

or legal basis for this element of the award remains unclear. There is no allegation or

proof that the Plaintiffs incurred any legal fees or litigation costs, much less $846 million

worth. It might be characterized as a punitive damages element. But, from an economic

standpoint, and from a legal standpoint in the U.S., punitive damages are meant to be

calibrated according to the maliciousness of the defendant’s actions which is not directly

related at all to the measure of the harm suffered by the victim. Here, the 10 percent add-

on resembles a tax levied against Chevron to support the Amazon Defense Front. (Note

12 Hinchee Expert Report, at 3-4. 13 Id. at 187.

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that there is an additional add-on for the Amazon Defense Front, equal to $8.46 billion,

discussed later.)

33. Note the peculiarity of regulatory damages awards of the nature of those

of the Ecuador Court in this litigation. Unlike regulatory orders implemented by a

government regulatory agency, or governmental fines, imposed for alleged wrongdoing

by a governmental body, the civil awards in this case are denominated as “civil

damages”, to be awarded to the individual Plaintiffs in the case. Thus, it is the purport of

this litigation to award Maria Aguinda and her co-Plaintiffs $1.4 billion for establishing a

health care system; $800 million, on account of excess cancers; $5.6 billion to repair soil

damage, and the like. The Court provides that these monies are to be administered by a

commercial trust in Ecuador, under the control of the Amazon Defense Front, an activist

organization purportedly representing indigenous people. But there is no specification of

the particular ways these monies are to be invested in order to achieve the purported

ends; surely, there are no contracts quoted nor entered with, say, soil remediation services

or water supply contractors to assure the dedication of these funds to these purposes. The

Amazon Defense Front is not alleged or shown to possess the expertise to design and

administer 1) groundwater remediation programs ($600 million); 2) soil cleanup ($5.396

billion); habitat reconstruction ($200 million); construction of a new water supply ($150

million); a comprehensive Health Improvement Plan ($1.4 billion); plus distribute?,

award? compensate? for increased risk of cancer ($800 million). That it would receive a

10 percent add-on and perhaps an $8.46 billion add-on, extends beyond any remedial

order in the U.S. or the history of the world. In the U.S. and other developed nations, any

one of these tasks would require extensive federal and state regulatory discussion and

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administration. Multiple state and federal regulatory agencies—agencies whose business

and expertise is, separately, in groundwater remediation; soil remediation; habitat

reconstruction; water supply construction; health care; and the like—would need to be

involved. According to the Judgment of the Ecuador Court, all of these tasks are to be

administered by a activist organization, the Amazon Defense Front.

34. Put in more simple terms, and ignoring the extraordinary scope of the

Court’s Judgment, it is impossible to regard these damages awards as directly

compensatory. In the context of the award of compensatory damages in the U.S. and in

other jurisdictions, a court will carefully measure the losses suffered by the victim and

award damages based upon those expected losses. The damages judgment is awarded to

the victim without constraint, imagining that the victim will choose the best means to

recover from the loss he or she has suffered as the condition of the victim may change

over time. The Judgment of the Ecuador Court is not compensatory in this sense. If this

Judgment were affirmed and executed, the Amazon Defense Front would receive custody

of billions of dollars to be spent as they please. There is no indication that the Court

possesses the authority or technical facility to supervise the expenditure of these monies:

the Court’s Judgment implicates extensive and disparate forms of environmental

remediation, infrastructure development and cultural intervention. There is no indication

that, at this moment, the Amazon Defense Front possesses the legal authority to engage in

massive soil remediation (of whose property? and with what permission?) or to

implement an improved water supply system (involving whose wells or water rights?)

This Judgment is not compensatory as the term is employed in the U.S.

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35. Two other features make the Ecuador Judgment most unusual even as a

punitive or regulatory action. Again, it is well established in economic analysis that the

purpose of a punitive or regulatory action is to create deterrence: applied to this case, to

inform for the future parties in the position of Chevron’s predecessors of the penal

implications of committing acts similar to those alleged to have been committed in the

past. It is well established in economic analysis, however, and a central feature of U.S.

law dealing with punitive damages and other penal sanctions that parties affected by

these potential judgments should be on notice of the potential fines, penalties and

regulatory actions that they might face given particular forms of behavior. Lawyers often

refer to this point as “due process”; in economics, it represents only sensible

administration designed to achieve a positive societal end. A person or firm will not be

deterred unless it is aware of the potential implications of its actions.

36. To my knowledge, this action is the first action of this nature litigated to

judgment in Ecuador; the Judgment is the first Judgment. There is no possible way that

any firm—predecessor of Chevron or not—could have been aware of the implications

imposed by the penal sanctions in this Judgment.

37. Moreover, and most peculiarly, the Court in its Judgment of February 14,

2011 awarded, in addition to the individual penal and regulatory elements listed above, a

further penal damages award equal to the sum total of all other damages elements—i.e.,

an additional $8.46 billion—if Chevron did not issue a public apology within 15 days of

the Judgment.14 In my many years of study of compensatory and punitive damages

judgments, I have never observed any similar award. From an economic standpoint,

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there is no basis for it: a punitive damages judgment is based upon the maliciousness of

the defendant’s action, not on whether the current defendant (of questionable relation to

the parties who engaged in the allegedly harmful practices) has issued a public apology

years subsequent to the allegedly wrongful actions. The Judgment and the procedure

leading to the Judgment violates deeply the economic principle of advance notice of

potential penalties, as well of the rights of a defendant to challenge and seek review of a

lower court judgment.

V. Conclusion

38. For all of the economic reasons explained above, without rendering any

legal conclusion, it is my opinion that:

1) There is an important distinction between damages awards that are compensatory, in the sense of providing specifically defined damages amounts to individuals who have suffered clearly identified injuries, and regulatory or punitive damages awards that seek to achieve broader societal goals;

2) The Judgment of the Ecuador Court of February 14, 2011, as

clarified by Judgment of March 4, 2011, cannot realistically be viewed as implicating compensatory damages, as opposed to achieving some regulatory or punitive end;

3) There is no reference in any of the legal materials attending the

litigation—the Complaint, the Plaintiffs’ Alegatos, or in the Judgment itself—of any careful attempt to indentify or measure specific losses to any person, whether named Plaintiff or not;

4) The specific damages amounts as awarded by the Court appear to

be awarded to the custody of the Amazon Defense Front, but without any serious consideration of how that organization might spend the monies to achieve the ends desired by the Court. These damages awards are not compensatory in any sense known in the U.S.;

14 Id. at 184-86.