TO THE SUBROGATE PRESIDENT OF THE PROVINCIAL COURT …€¦ · TO THE SUBROGATE PRESIDENT OF THE PROVINCIAL COURT OF JUSTICE OF SUCUMBÍOS: I, Dr. Adolfo Callejas Ribadeneira, counsel

-i-

TO THE SUBROGATE PRESIDENT OF THE PROVINCIAL COURT OF JUSTICE OF SUCUMBÍOS:

I, Dr. Adolfo Callejas Ribadeneira, counsel of record for CHEVRON CORPORATION, in Summary Oral Proceeding No. 002-2003, filed against my client by María Aguinda et al., considering the state of this case, appear and present the following legal brief, in defense of the interests of my client.

As Your Honor is aware, my client continues to receive new evidence of plaintiffs’ fraud that affects the validity of this proceeding. I therefore reserve the right to supplement this alegato with this evidence and respectfully request that no judgment be entered until all such evidence has been received, investigated, and addressed by this Court.

This legal brief covers the following topics as set out in the index below for your convenience:

EXECUTIVE SUMMARY ................................................................................................ 1

I. This Court Has No Jurisdiction over Chevron ........................................... 4 II. These Proceedings Should Be Terminated, with the Entire

Complaint Dismissed, Because They Have Been Permeated by Fraud ........................................................................................................ 5

III. Chevron Has Been Denied Due Process and Its Constitutional Rights ........................................................................................................ 7

IV. Systematic Constitutional Violations and Substantial Procedural Defects Render These Proceedings a Legal Nullity ................................ 11

V. The Plaintiffs Have No Viable Claim ....................................................... 12 VI. The Jurisdiction of This Court Is Limited by the Claims Included by

the Plaintiffs in Their Complaint .............................................................. 15 VII. The Plaintiffs Have Not Proven Essential Factual Elements of Their

Claim ....................................................................................................... 16 THE PLEADINGS AND PROCEEDINGS .................................................................... 20

I. The Complaint ........................................................................................ 20 II. The Answer to the Complaint .................................................................. 22 III. The Proceedings ................................................................................... 24

ARGUMENTS FOR THE DEFENSE ............................................................................ 24 CHAPTER I . THIS COURT HAS NO JURISDICTION OVER CHEVRON ................... 24

1.1 Chevron Never Operated in Ecuador ...................................................... 26

CERT. INTERMARK VER: JD

JP013871

Typewritten Text

-ii-

1.2 Only Texaco Agreed to Submit to Ecuadorian Jurisdiction and Chevron Is Not the Successor to Texaco ................................................ 26

1.3 Texaco Did Not Control TexPet’s Operations ......................................... 28 1.4 Even Texaco Did Not Consent to the Suit Filed by Plaintiffs ................... 29 1.5 The Court Has Improperly Exercised Jurisdiction over Chevron ............. 32

CHAPTER II . THESE PROCEEDINGS SHOULD BE TERMINATED BECAUSE THEY HAVE BEEN PERMEATED BY FRAUD ................................................. 33 2.1 The Plaintiffs Submitted Fabricated Evidence to This Court ................... 34 2.2 The Cabrera Report Was Fraudulent and Deeply Flawed ...................... 38

2.2.1 Unimpeachable Evidence Demonstrates That the So-Called “Independent Expert” Was Nothing More Than a Mouthpiece for Plaintiffs ................................................................................ 38

2.2.2 The Fraudulent Nature of Mr. Cabrera’s Report Is Evident from Its Many Flaws and Errors ................................................... 63

2.3 The Case Was Irremediably Tainted by Judge Núñez’s Rulings Against Chevron ..................................................................................... 65

2.4 The Constitutional Guarantee of Due Process Demands That This Case Be Dismissed................................................................................. 70

CHAPTER III . CHEVRON HAS BEEN DENIED DUE PROCESS AND ITS CONSTITUTIONAL RIGHTS ............................................................................. 76 3.1 The August 2, 2010 Providencia and the Submissions It Authorized

Violate Due Process and Aggravate the Fraud That Has Pervaded These Proceedings ................................................................................. 77

3.2 By Ignoring and Whitewashing the Plaintiffs’ Fraud, This Court Has Exposed Its Bias ..................................................................................... 81

3.3 The Truncated and Unreliable Judicial-Inspection Process .................... 83 3.3.1 The Process for Judicial Inspections Established by This

Court Was Improperly Truncated ................................................. 83 3.3.2 The Biased and Unreliable Reports of Plaintiffs’ Nominated

Experts ................................................................................ 90 3.3.3 The Prejudicial Denial of Chevron’s Essential-Error Petitions ...... 93

3.4 Mr. Cabrera’s Appointment and Fieldwork Violated Due Process .......... 95 3.4.1 Mr. Cabrera’s Appointment Was Unlawful ................................... 95 3.4.2 Mr. Cabrera Had Multiple Conflicts of Interests That He

Failed to Disclose ......................................................................... 97


-iii-

3.4.3 Mr. Cabrera’s Fieldwork Was Non-Transparent and Violated Scientific Protocol ......................................................................... 99

3.4.4 The Data Used in the Cabrera Report Is Incomplete, Unreliable, and Invalid ................................................................ 101

3.4.5 Mr. Cabrera Exceeded the Scope of His Mandate and This Court Refused to Allow His Deposition ...................................... 108

3.4.6 The Improper Refusal to Open Summary Proceedings for Proving Material Errors in Mr. Cabrera’s Report ........................ 113

3.5 The Submissions of September 16, 2010, Fail to Resolve the Due Process Violations That Plagued the Evidentiary Phases of This Case and The Case in its Entirety ........................................................ 114

3.6 Further Evidence of Bias and A Rush to Judgment As a Means of Cover-Up .............................................................................................. 117

3.7 The Plaintiffs Intend the Judgment to Be the Result of the Pressure Exerted by them on the Court ............................................................... 120

3.8 This Case Has Been Prejudicially Influenced by the Government of Ecuador ................................................................................................ 126

CHAPTER IV . SYSTEMATIC CONSTITUTIONAL VIOLATIONS AND SUBSTANTIAL PROCEDURAL DEFECTS RENDER THESE PROCEEDINGS A LEGAL NULLITY .............................................................. 138 4.1 Nullities Due to Violations of the Constitutional Right to Due

Process ................................................................................................. 140 4.2 Nullity Due to This Court’s Lack of Competence over Non-

Environmental Matters .......................................................................... 142 4.3 Nullity of the Complaint Due to Failure to Appear before the Court

Clerk by Those Who Do Not Know How to Read and Write, In Order to Stamp their Fingerprints As Required By Law ........................ 145

4.4 Nullity Due to the Lack of Legal Capacity of the Plaintiffs’ Joint Representative ...................................................................................... 146 4.4.1 Nullity for Lack of Legal Capacity of the Joint Counsel of

Record .............................................................................. 146 4.4.2 Nullity Due to Lack of Sufficient Authority to Relinquish the

Judicial Inspections For Lack of Authorization from Each of the Plaintiffs .............................................................................. 147

4.5 All Acts of Judge Ordóñez in the Case Taken After August 26, 2010 Are Null and Void .................................................................................. 149

CHAPTER V . THE PLAINTIFFS HAVE NO VIABLE CLAIM ..................................... 150 5.1 Chevron Is Not Liable for the Alleged Actions of Its Subsidiaries ......... 151


-iv-

5.2 The Plaintiffs’ Complaint Is Barred by the Res Judicata Effect of the Government Settlements ...................................................................... 151 5.2.1 The Municipal and Provincial Settlements ................................. 152 5.2.2 The Settlement with the Government of Ecuador and

Petroecuador ............................................................................. 155 5.2.3 The Government of Ecuador and the Local Governments

Acted on Behalf of Their Citizens ............................................... 157 5.2.4 The Settlement Agreements Signed with the Government of

Ecuador and the Local Governments Are Res Judicata ............. 160 5.3 The Plaintiffs’ Request for Damages Is Also Barred by the Principle

of Non-Retroactivity .............................................................................. 165 5.3.1 The Principle of Non-Retroactivity .............................................. 165 5.3.2 The Plaintiffs’ Claim for Damages Is Based upon the

Impermissible Retroactive Application of the EMA ..................... 166 5.3.2.1 Pre-1990 Causes of Action ................................... 167 5.3.2.2 Post-1990 Causes of Action ................................. 169 5.3.2.3 The Plaintiffs’ Request for Damages

Necessarily Is Premised upon the 1999 EMA ....... 170 5.3.3 The Cause of Action Granted by the EMA Constitutes a

Substantive Change in the Law and Thus Cannot Be Applied Retroactively .............................................................................. 175

CHAPTER VI . THIS COURT IS LIMITED TO THE CLAIMS MADE BY THE PLAINTIFFS .................................................................................................... 177 6.1 The Principle of Congruency ................................................................. 177 6.2 The Plaintiffs Asserted Specific and Limited Claims in Their

Complaint .............................................................................................. 180 6.3 Improper Attempts to Amend and Expand the Complaint in

Violation of the Code of Civil Procedure ............................................... 182 CHAPTER VII . THE PLAINTIFFS HAVE NOT PROVEN ESSENTIAL FACTUAL

ELEMENTS OF THEIR TORT CLAIM ............................................................. 190 7.1 The Plaintiffs Have Failed to Prove Negligence, Damage, and

Causation .............................................................................................. 190 7.2 Plaintiffs Have Failed to Prove Negligence or Intent ............................. 192 7.3 Plaintiffs Have Not Proven the Allegations of Damages Pled in

Their Complaint .................................................................................... 193


-v-

7.3.1 Plaintiffs Have Failed to Prove That Chevron Is Responsible for Environmental Remediation .................................................. 196

7.3.2 Plaintiffs Have Failed to Prove That Chevron Is Responsible for Public Costs of Healthcare in the Oriente. ............................ 213

7.4 The Damages Sought by Plaintiffs Apart from Those Pled in the Complaint Are Extra Petita and Unsupported by Both the Law and the Evidence ......................................................................................... 215 7.4.1 There Is No Credible Evidence of Excessive Cancer Deaths

in the Oriente ............................................................................. 215 7.4.2 There Is No Credible Evidence That Chevron Is Liable for

Damage to Indigenous Territory and Culture ............................. 223 7.4.3 There Is No Credible Evidence of Natural Resource

Damages .............................................................................. 228 7.4.4 There Is No Credible Evidence That Would Require Chevron

to Pay for Improvements to Petroecuador’s Petroleum Operations Infrastructure ........................................................... 231

7.4.5 There Is No Credible Evidence That Would Require Chevron to Fund a New Potable Water System ....................................... 233

7.4.6 Any Request for Punitive Damages Based on an Unjust Enrichment Theory Is Baseless .................................................. 236

7.5 The Plaintiffs Have Not Even Attempted to Link the Alleged Harms or Threats of Harm to the Consortium’s Operations ............................. 248

7.6 Although Chevron Bears No Duty to Offer Evidence, It Has Proven That the Plaintiffs’ Case Is Devoid of Merit ........................................... 252

7.7 Application of New Constitutional Provisions Is Improper and Would Deny Chevron Due Process ................................................................. 253

PRAYER FOR RELIEF .............................................................................................. 255


EXECUTIVE SUMMARY

For your quick reference, Mr. Subrogate President, outlined below are the most fundamental legal exceptions and defenses, both procedural and substantive, which my client has previously and timely raised with this Court using all available legal avenues and which will be discussed in greater detail in the body of the brief:

First, and as detailed in Chapter I, the case should be dismissed for lack of personal jurisdiction over Chevron Corporation (“Chevron”), which has been forced to litigate this action against its will, and despite having consistently raised this defense at all appropriate times. As Chevron’s answer to the complaint makes clear, there is no theory under which Chevron, the sole defendant, can be held liable for the operations of the Consortium between Petroecuador, Ecuador’s state-owned oil company, and Texaco Petroleum Company (“TexPet”), a subsidiary of Texaco Inc. (“Texaco”). Chevron had no connection with the Consortium and has never operated in Ecuador. The stock of Texaco was not acquired by Chevron or its subsidiaries until eleven years after TexPet ceased its operations in Ecuador. There was no merger, and Chevron, Texaco, and TexPet have remained at all times separate and distinct corporate entities, each with their own distinct legal existence, their own separate assets, and the full capacity to independently acquire rights and incur obligations. These uncontradicted facts legally preclude both the exercise of jurisdiction by this Court over Chevron and the imposition of liability upon Chevron though judgment.

Second, and as detailed in Chapter II, this case should be terminated as a nullity because its integrity has been irretrievably corrupted by fraud. The plaintiffs not only filed a complaint with forged signatures and failed to comply with specific formalities that the law requires for the validity thereof, but they also caused the fulfillment [sic] of essential procedural conditions such as your own lack of jurisdiction, Mr. Subrogate President; they also intentionally submitted fabricated expert reports that conflicted with the conclusions actually reached by an expert, Dr. Charles Calmbacher; one of the judges who heard this case was intimidated and extorted by the plaintiffs and their representatives to accept the appointment of the purportedly “independent expert” to perform the global expert assessment, whose report was in fact written by the plaintiffs, their attorneys, paid consultants and affiliated activists, and is deeply flawed, scientifically baseless, and biased; and one of the presiding judges was seen on video being involved in a US$3 million bribery scheme premised upon a judgment against my client. Much of this evidence comes from outtakes of the film Crude and other discovery in the United States, which shows that plaintiffs were cognizant of their wrongdoing and resorted to fraudulent tactics because of the admitted legal and factual problems in their case. The plaintiffs’ attempted to wipe the slate clean by submitting a new damages assessment at the tail-end of the trial pursuant to an ad hoc submission that has no basis in Ecuadorian law, but this failed to cure, and in fact exacerbated, that due-process violation. Although their new figure is, incredibly, even larger than the fraudulent US$27 billion figure offered in their ghostwritten Cabrera Report, it is largely based upon the same baseless and unreliable evidence and, therefore, merely recycles


- 2 -

the arguments in the Cabrera Report, and marks a further audacious extension of their fraud that is both legally and procedurally inept. At over US$113 billion, plaintiffs’ new request is a libelous amount, nearly double Ecuador’s gross domestic product. Depositions in the United States of the individuals whose reports were filed along with plaintiffs’ new damages request confirm that those reports have no scientific value and should be disregarded: the authors themselves have admitted to the severe limitations in their work, including their lack of expertise, their failure to perform any independent work, and their reliance upon untested assumptions. Depositions are currently being taken in the United States of individuals who filed reports on behalf of the plaintiffs, depositions that my client will be filing with this Court as they are obtained, because they confirm that those reports have no scientific value and were obtained on a biased basis by the plaintiffs and their representatives, and even by defrauding the authors. Thus, the proceedings were completely permeated by fraud and corruption, in violation of my client’s right to due process.

Third, and as detailed in Chapter III, this case has been marked by systematic violations of due process that render the entire proceeding null and void. Through its numerous biased and unfair rulings—including its refusal to investigate or even acknowledge the fraudulent conduct—this Court has made clear that this case is not governed by the rule of law. My client has been denied the most basic elements of due process, such as the right to an impartial tribunal, the right to be heard in a timely fashion, and the right to a defense. At the urging of the plaintiffs, this Court approved a trial process that was anything but transparent, open, and even-handed: The ever-changing procedures adopted by the Court were tailored to the plaintiffs’ interests and were intended to railroad a preordained judgment against Chevron, heedless of the facts and in contravention of the law. Throughout the case, whenever something related to the plaintiffs’ conduct could not be defended—including, most notably, the unimpeachable evidence of their fraud—this Court simply ignored it and continued to press ahead on the path of illegality and complicity. It is evident that this was a result of the intense political and social pressure brought to bear on this case by the plaintiffs, with even the Government of Ecuador publicly stating its interest in the final outcome.

Fourth, and as detailed in Chapter IV, this proceeding contains numerous “nullities” as defined under Ecuadorian law and, therefore, must be declared null and void. This proceeding must especially be declared null because of the massive fraud perpetrated by plaintiffs throughout the case. Additionally, this case has been marked by other violations of due process and by omissions of substantial solemnities required in every proceeding. These violations and omissions render the entire proceeding a nullity, and any judgment that fails to so declare would itself be a nullity.

Fifth, and as detailed in Chapter V, the plaintiffs have no cause of action for the relief that they seek, and this Court must therefore dismiss the complaint in toto. The plaintiffs have neither alleged nor proven any individual injury, but instead have brought public claims based upon alleged rights diffusely shared by all Ecuadorians. Identical claims and suits were filed and subsequently settled with the effect of res judicata by the central Ecuadorian Government and the local governments encompassing the former concession area. These government authorities were clearly acting on behalf of the


- 3 -

plaintiffs and those they purport, without basis, to represent. The plaintiffs cannot sue Chevron for the same alleged harms yet again. In addition, these claims for alleged damages to the environment and to public health are barred by the principle of non-retroactivity, as they are premised upon a law that was not enacted until nearly a decade after TexPet stopped operating in Ecuador. Further, the plaintiffs’ multi-billion-dollar claim for “unjust enrichment” impermissibly exceeds the scope of the complaint, runs afoul of Ecuador’s bar against punitive damages, is based primarily upon inapplicable foreign legal principles, and is intended as a transparent ploy to boost the potential judgment ever-higher.

Sixth, and as detailed in Chapter VI, the vast majority of the damages now claimed by plaintiffs are extra petita, and therefore barred by express provisions of Ecuadorian law. Apart from a ten percent bounty, the plaintiffs’ complaint seeks only the repair of alleged harms to the environment and improvements in public health. Yet the plaintiffs (both directly and through their mouthpiece, Mr. Cabrera) have belatedly demanded tens of billions of dollars in additional damages based on, for example, alleged “excess” cancer deaths, alleged changes to indigenous cultures, and alleged unfair profits. These additional allegations constitute an illegal attempt to modify the complaint and are wholly unsubstantiated, and their inclusion is part of plaintiffs’ cynical ploy to demand astronomical sums with the expectation that they will either coerce a settlement or be reduced by this Court, thereby providing a veneer of due process to this proceeding. Moreover, Chevron was never given an opportunity to defend itself with respect to these new, untimely claims, filed after the issues in this case had been established, since the complaint had already been answered. Principles of fair notice and congruency limit the Court’s competence to deciding only those matters raised by the plaintiffs in their complaint.

Seventh, and as detailed in Chapter VII, even if the plaintiffs had pled viable claims, which is not the case, they have failed to prove them. Neither the testing performed by plaintiffs’ nominated experts during the truncated judicial-inspection process, nor the fraudulent report from Mr. Cabrera, nor the illegal last-minute damages assessment submitted by the plaintiffs establishes any basis for allocating liability to Chevron. From the first, plaintiffs’ evidence has been driven and manipulated by their lawyers to create “expert” findings of significant contamination and large-scale damages, not by the technical and impartial work of experts fairly analyzing environmental data collected in accordance with scientific procedures. Thus, they falsified judicial-inspection reports and attempted to launder their consultants’ work as that of an independent expert. Even if this fraud could somehow be ignored, the testing by the plaintiffs’ nominated experts and Mr. Cabrera was inept, incomplete, and unreliable, lacking any probative value, because the evidence was incomplete, both because my client's allegations of essential error had not been ruled upon and because the discrepancies between those reports and the reports filed by Chevron's nominated experts had not been settled as required by law; moreover, the plaintiffs’ damages assessment of September 16, 2010, at 5:15 p.m. added no new testing, sampling, or evidence. Nothing the plaintiffs have offered refutes Chevron’s showing that TexPet’s prior remediation met the requisite standards and that there is no significant risk to human health at the remediated sites. Furthermore, plaintiffs cannot show any


- 4 -

negligence where TexPet was directly overseen by the State and complied with extant laws and regulations. And neither the report ghostwritten by the plaintiffs for Cabrera nor the economic evaluation filed subsequently by the plaintiffs on September 16, 2010 at 5:15 p.m. made any effort to link the alleged damages to TexPet or ever accounted for the fact that Petroecuador alone has operated in the former concession area for the past twenty years. The results are damages estimates—US$27 billion according to the Cabrera Report; an even more remarkable US$113 billion according to the plaintiffs—that are wholly unsubstantiated.

I. This Court Has No Jurisdiction over Chevron

Chevron is not subject to jurisdiction of the courts and laws of Ecuador, and there is no theory for holding it liable for the Consortium’s operations. Chevron has never been domiciled in Ecuador, never operated here, was never licensed to conduct operations here, never owned property here, never employed workers here, and has never had any business contacts here. The plaintiffs’ allegations thus are not and cannot be directed toward any activities that Chevron performed in Ecuador. Their allegations exclusively concern TexPet’s participation with Petroecuador in a Consortium, which ended in 1992.

The plaintiffs’ only argument on this point is their claim that Chevron “merged” with Texaco in 2001. But that is simply false: Texaco merged with a Chevron subsidiary named Keepep Inc., and, following that merger, Texaco remained an independent corporation capable of being sued in its own right. Indisputable evidence in the record demonstrates that Chevron, Texaco, and TexPet are all separately recognized legal entities. Chevron did not merge with Texaco or assume the liabilities of Texaco—let alone TexPet, the Texaco subsidiary that actually participated in the operations of the Consortium. Chevron in 2001 became the indirect shareholder, not the legal successor, of Texaco and TexPet. The plaintiffs cannot claim any confusion about this. Official and contemporaneous public documents filed with U.S. and other government authorities made clear that Chevron did not merge with Texaco, which became an independent subsidiary. Despite the clear legal division between Chevron and Texaco, Texaco avoided the possibility of doubt when it notified the plaintiffs and their attorneys in 2002, after the transactions through which Texaco became an indirect Chevron subsidiary but before this case was filed, that it had named agents in Ecuador having authority to accept service of process and answer complaints. The plaintiffs, however, elected to neither sue Texaco nor recognize the agents. And the plaintiffs have presented neither evidence nor a plausible legal argument that Texaco or TexPet is somehow the alter ego of Chevron. Consequently, there are no legal grounds whatsoever for exerting jurisdiction over Chevron.

For the same reasons, Chevron cannot be held substantively liable for the Consortium’s operations. Apart from their baseless attempt to treat Chevron and Texaco as a singular merged entity, the plaintiffs offer no theory for holding Chevron responsible for TexPet’s alleged acts in Ecuador. Indeed, they have not even established how liability could have been imposed independently on Texaco, an entity that indirectly owned TexPet’s fourth-level parent company at the time of the


- 5 -

Consortium’s operations. As the U.S. district court found in the Aguinda case in New York, which some of the same plaintiffs filed against Texaco in 1993 alleging individual damages as a result of TexPet’s operations, there is no “material competent evidence of meaningful Texaco involvement” with TexPet’s Ecuadorian operations. As such, there is certainly no basis for imposing liability on Chevron, which had no relationship with either Texaco or TexPet until well after the Consortium ended.

Despite the fact that Chevron raised these defenses at the outset of the case, this Court refused to rule on them and has improperly exercised de facto jurisdiction over Chevron for seven years. Chevron has thus been forced, under consistent protest to the exercise of jurisdiction and at great expense, to argue the merits of the case. It is far past time for this Court to declare that there are no grounds for asserting jurisdiction over, or imposing liability upon, Chevron. This case can and should be decided on the grounds presented above.

II. These Proceedings Should Be Terminated, with the Entire Complaint Dismissed, Because They Have Been Permeated by Fraud

In numerous respects, these proceedings have been tainted by fraudulent conduct on the part of the plaintiffs and their attorneys, the plaintiffs' nominated experts for the judicial inspections, the court-appointed “global” expert, and the judges presiding over this case. Much of this evidence is captured on authenticated videotape, including outtakes from the documentary Crude. Under these circumstances, no judgment against Chevron is legally acceptable. The fraud perpetrated in this suit undermines the integrity of these proceedings in their entirety and constitutes yet another violation of Chevron’s due process rights.

New revelations that I have presented during these proceedings show that the plaintiffs have perpetrated a fraud upon this Court, through the intentional submission of fabricated evidence. One of the experts nominated by the plaintiffs, Dr. Charles Calmbacher, testified under oath in a separate proceeding that the expert reports submitted in his name were not his reports. He had not authorized them, and he did not agree with their conclusions. Dr. Calmbacher found neither any threat to human health, nor that the remediation performed by TexPet at the sites he reviewed was inadequate, and he told the plaintiffs’ attorneys so. But in an act of outright fraud, the plaintiffs submitted, in Dr. Calmbacher’s name, reports that claimed to find high levels of contamination and insufficient remediation by TexPet at the same sites. These revelations taint all of the other expert reports submitted by the plaintiffs during the truncated judicial-inspection process (incomplete reports lacking probative value because they are tainted with essential error, and these defects have not been cured as required by law). Indeed, the plaintiffs’ American team leader, Steven Donziger, has been recorded on film describing the plaintiffs’ evidence as nothing more than “smoke and mirrors,” and “bullshit” for the Court and a “choreographed,” “good show” for the media.

The fraud did not end with the premature conclusion of the judicial inspections. Rather, the plaintiffs continued to mask the lack of evidence for their allegations, and


- 6 -

they not only secretly conspired using intimidation and extortion against the judge at that time, in order to secure the appointment of the supposedly "neutral and independent" expert, Richard Cabrera, to perform the global expert assessment, but they also secretly drafted the global report in question. The fix was in from the start: outtakes from the documentary film Crude show Mr. Cabrera meeting with the plaintiffs’ representatives prior to his appointment to plan every aspect of the global expert report, having secured the appointment through illicit ex parte meetings with Judge Yánez. As the plaintiffs’ lead U.S. lawyer said on video, “the judge is going to appoint a guy in Ecuador . . . but really, you know, we’ll be supporting him with the work—our people, E Tech, whoever we choose to use.” The details of this illicit collaboration have been confirmed through evidence obtained in judicial proceedings in the United States. Email exchanges document how Mr. Cabrera’s report and annexes were drafted by Stratus, a U.S. firm acting as a paid consultant to the plaintiffs, and affiliated activists working under the direction of the plaintiffs’ attorneys. The main report and many of the annexes were written in English, translated into Spanish, and then edited by plaintiffs’ attorneys, just in time to be filed under Mr. Cabrera’s signature. There is no evidence that Mr. Cabrera wrote any part of his report, that he edited it, or did anything other than sign it.

In addition, the costs of the surveys supposedly conducted of local Ecuadorians—upon which the ghostwritten Cabrera Report relied in assessing billions of dollars in damages—were not included in his work budget, and there is no doubt that the surveys were administered and paid for by the designated beneficiary of any judgment, the Amazon Defense Front (“Frente”). Video footage has come to light showing the individuals who performed the survey were working closely with the plaintiffs’ counsel and with other individuals involved in gathering “data” for it, even before Mr. Cabrera had been appointed as an expert. Mr. Cabrera’s report was the product of this unlawful collaboration with the plaintiffs, was written by their attorneys, paid consultants, and affiliated activists, and was simply signed by the expert. It therefore does not represent a neutral or independent effort to find the truth, and plaintiffs’ paid consultants have internally acknowledged the report’s substantial scientific flaws.

In a facile attempt to divert attention from their wrongdoing and salvage their irreparably tainted case, the plaintiffs asked to “start over” with a set of party-submitted damages assessments. Capitulating to the intense political pressure in this case, Judge Ordóñez and Your Honor have steadfastly ignored the irrefutable evidence of plaintiffs’ fraudulent misconduct and permitted plaintiffs to attempt to overcome their fraud through their unlawful submission of September 16, 2010, at 5:15 p.m. But that ad hoc filing is not competent evidence and does nothing to remedy the plaintiffs’ pervasive fraud. To the contrary, the plaintiffs’ brief of September 16, 2010 merely resurrects the corrupted data and “findings” that they themselves prepared and to which they previously tried to give credibility by filtration through the supposedly “independent” expert, Mr. Cabrera. Their eleventh-hour submission is, accordingly, just as fraudulent, baseless, and inept.


- 7 -

In addition, the Court has before it audiovisual recordings demonstrating that individuals from the Government are directly involved in managing the case and obtaining a judgment against Chevron. The tapes also disclose a US$3 million bribery scheme arising out of the preordained judgment against Chevron and apparently involving the Presidency of the Republic, the plaintiffs, and Judge Juan Núñez. Despite this proven bias, this Court has refused to nullify the orders that he had entered. Given the import of some of those decisions—such as the denial of an essential-error hearing on the Cabrera Report—this was a plain denial of justice.

As my client has repeatedly argued, in light of the unimpeachable evidence of pervasive fraud, this Court has no choice but to nullify the proceedings and terminate the case immediately. Given the pervasive fraud committed to the detriment of my client, a judgment that does not entail in toto dismissal of the complaint could not possibly be legally and morally issued consistent with due process. Plaintiffs’ attorneys and backers must be severely punished and sanctioned, and any sanction short of dismissal of the lawsuit and prosecution of the plaintiffs and their attorneys would trivialize the plaintiffs’ incredible misconduct that I have demonstrated.

III. Chevron Has Been Denied Due Process and Its Constitutional Rights

Due process is guided by certain immutable principles. Among them is the right to an impartial and independent tribunal that ensures the validity and probity of all evidence, the right to the timely and responsive resolution of key issues, and the right to know all claims and evidence so that a meaningful defense can be presented. The procedures adopted by this Court in this summary verbal proceeding, which constantly changed according to the plaintiffs’ interests, have denied Chevron this right.

When Chevron unearthed and submitted to this Court incontrovertible evidence of the fraud perpetrated by the plaintiffs' lawyers, this Court simply ignored them and failed to take the measures necessary to protect my client's due-process rights or to address the defects affecting the validity of these proceedings. There was no investigation whatsoever into this egregious misconduct, demonstrating this Court’s clear bias against my client and its refusal to abide by the rule of law. The plaintiffs’ lawyers were not sanctioned, and this case was allowed to proceed, on many occasions in violation of legal precepts, on an even faster track than before. Notwithstanding the pattern of malfeasance demonstrated by the plaintiffs and their lawyers, which was intended to overcome their lack of credible evidence, this Court permitted them to try to salvage their case and replace the tainted Cabrera Report and their falsified reports using a contrived and novel procedural mechanism without basis in law, i.e., an "ad hoc" legal brief.

This deus ex machina—an ad hoc filing on the eve of judgment, which allowed the plaintiffs to submit a new global damages assessment—did not rely on any new evidence, let alone any credible evidence. To the contrary, the plaintiffs’ assessment in their brief filed September 16, 2010 at 5:15 p.m., was nothing more than an audacious attempt to paper over their demonstrated misconduct. In that filing, plaintiffs demanded over US$100 billion in additional damages, based solely on the same data that my client


- 8 -

has repeatedly shown to be corrupted: the product of collusive, biased, and unscientific testing and analysis. This has been confirmed by depositions in the United States of the individuals who submitted reports that plaintiffs attached to their filing of September 16, 2010 at 5:15 p.m. in support of their damages figure. Under oath, those individuals have made concessions showing that their reports cannot be relied upon to make any damages calculations. In many cases, they simply assumed the validity of the Cabrera Report, without having been made aware of its fraudulent preparation or Chevron’s rebuttals of it. The authors also acknowledged severe limitations in their conclusions, citing, among other things, the absence of experience, questionable methodologies, and reliance upon unrealistic assumptions. I will continue to file this new and relevant evidence with the Court as it becomes available.

While recent events vividly illustrate the violation of my client’s rights, the truth is that Chevron has been denied due process from the very inception of this trial. After the plaintiffs filed their complaint, Chevron filed a number of fundamental legal defenses—including the absence of jurisdiction and the failure to plead any viable cause of action—that should have resulted in the Court dismissing the entire action immediately. Yet instead of resolving those dispositive legal issues at that time, this Court ordered the parties to commence the evidentiary process. Specifically, each side was to nominate experts to conduct judicial inspections of 122 sites operated by the Consortium to determine if environmental contamination was present and if the remediation done by TexPet between 1995 and 1998 met the requisite standards. Any disputes would be resolved by “settling” experts independently appointed by this Court. Subsequently, an expert or experts on behalf of each party, selected from among those who participated in the judicial inspections, was to act as expert for the expert examination of all fields operated by TexPet as operator of the former Petroecuador-Texaco Consortium and issue the related expert reports, through which they were to determine the environmental condition of the sites, possible damages, causation, and any necessary remediation. The global expert determination should have been based upon the undisputed scientific data offered by the parties’ experts during the judicial inspections and upon the settling experts’ resolution of divergent data.

This never happened. With less than half of the sites inspected, and with the lone report by independent settling experts finding that there was no significant health risk to humans at the Sacha-53 site, the plaintiffs’ lawyers succeeded in bringing the judicial inspections to a premature end. They were permitted to “relinquish” 64 of the site inspections and move immediately to a modified version of the global expert determination in which a single “expert” would make all determinations concerning contamination, causation, and remediation. This permitted the plaintiffs to evade their burden of proving their claims and denied Chevron an open and transparent process in which the plaintiffs’ evidence—which was tainted and unreliable in multiple respects—would have been assessed by independent settling experts, as happened with the Sacha-53 site. Notably, this Court granted this improper request after the plaintiffs orchestrated a public protest accusing this Court of favoring a corporate foreigner over indigenous Ecuadorians and after several Ecuadorians, including the manager of the presidential election campaign of Rafael Correa, signed an amicus brief urging this Court to expedite the litigation.


- 9 -

With the judicial inspections prematurely terminated, this Court, after a conspiracy by the plaintiffs that included intimidation and extortion of former Judge Yánez, appointed Richard Cabrera to determine both the existence and cause of any contamination throughout the former concession area. Mr. Cabrera’s work lacked scientific validity. Despite the fact that it took the parties’ judicial-inspection experts thirty months to perform testing at just forty-five sites during the judicial inspections, Mr. Cabrera purported to assess environmental conditions throughout the entirety of the former concession area in just nine months, spending only a few weeks in the field and visiting less than fifteen percent of wells and production stations in the former concession area. Although Mr. Cabrera purported to rely upon the testing from the truncated judicial inspections, he was not empowered to act as a settling-expert at this stage and, in all events, did not respond to Chevron’s objections to the plaintiffs’ sampling and testing methodologies or resolve the divergent conclusions that the parties’ judicial-inspection experts had reached. His testing of environmental conditions was thus plainly inadequate. And for reasons that are now clear, much of Mr. Cabrera’s work was performed in secret, without prior notice to Chevron, and in violation of the principle of disclosure of all evidence, thus preventing my client from meaningfully defending itself.

Chevron accordingly argued that the expert report contained essential errors, pointing out the manifest irregularities in Mr. Cabrera’s methodology, the absurdity of the conclusions in the report submitted in his name, and his failure to produce essential information about the sources upon which he purportedly relied, the data he collected, and the team that assisted him. Yet Judge Núñez—who recused himself from the case after audiovisual evidence surfaced indicating that he had prejudged Chevron’s liability and was involved in a US$3 million bribery scheme—refused Chevron’s petition by improperly treating it as a motion for clarification. In addition, Judge Núñez denied Chevron its right to question Mr. Cabrera in a deposition. Chevron has thus been denied the opportunity to review, and defend against, the purported basis for the allegations contained in the report signed by Mr. Cabrera. These decisions still stand despite Judge Núñez’s manifest bias against Chevron. The result: an unchallengeable unilateral condemnation prepared by the plaintiffs and their attorneys, paid consultants and affiliated activists, issued under the signature of a lone expert, containing unscientific and unsubstantiated conclusions that reflect a patent bias against Chevron.

From the start, the acts of the various judges who have heard this case have lacked the necessary objectivity, because they were subjected to unfair pressure both by the plaintiffs and by the Government, which has an interest in the results of the trial, which has affected the impartiality that they were required to have, as they were urged to rush to a preordained judgment against my client. Among other things, the use of the summary verbal procedure, the premature termination of the judicial inspections, and the failure to appoint experts proposed by Chevron, all demonstrate a desire to railroad a judgment against my client. With the judicial-inspection process cut short and Mr. Cabrera’s work revealed as a collusive fraud, this Court, through an unfounded ruling that lacks procedural value, gave the plaintiffs a third shot to “prove” their case, with the so-called "legal brief" filed on September 16, 2010 at 5:15 p.m. That order was aimed at assigning liability to Chevron notwithstanding, or even acknowledging,


- 10 -

plaintiffs’ egregious and fraudulent misconduct in the first two processes. Shortly thereafter, this Court issued autos para sentencia even as my client continues to discover and submit new evidence of the plaintiffs’ fraudulent activities, misconduct and bad faith.

This was not the fair process that Chevron was due, and it is a reflection of the tremendous social and political pressure that has been brought to bear on this case. As the plaintiffs’ lead U.S. attorney explained in an outtake from Crude, the plaintiffs’ strategy was always “to pressure the judge and the court,” including through high-level political contacts involving “influential people who talk to the judge.” The current Administration has not hesitated to sanction judges who rule against the Government’s interests, and the Government’s interests in this case could not have been more clear. Financially, a judgment against Chevron would benefit the Government not only by pushing its environmental obligations onto a foreign oil company, but also by transferring an enormous amount of money to Ecuador. Politically, this case has already diverted attention and responsibility for environmental conditions away from Petroecuador, which was the majority owner of the Consortium and is the sole operator of the former concession area today. It has allowed the Government to place blame for all social ills in the Ecuadorian Amazon on a long-departed U.S. oil company (TexPet). Thus, President Correa and other Government officials have repeatedly offered their public support for the plaintiffs while prejudging Chevron’s liability in the most strident terms.

Indeed, there is evidence indicating that well before this lawsuit was filed, the Government of Ecuador entered into a quid pro quo arrangement with the plaintiffs’ representatives under which the Government would support the plaintiffs in return for the Government and Petroecuador being absolved of any liability. The plaintiffs’ attorney Cristóbal Bonifaz, the architect of the Lago Agrio complaint, told the Hoy newspaper that “the plaintiffs and their attorneys have agreed—in legal documents—not to sue the State should it be found that the State was jointly responsible with Texaco for causing environmental damage.” In addition, in emails between the Attorney General’s office and representatives for the plaintiffs in 2005, an attorney for the plaintiffs wrote of “want[ing] the Government and the Attorney General to play for our side,” and Ecuador’s Deputy Attorney General responded that the Government was “searching for a way to nullify” the State’s settlement with TexPet, including by “criminally try[ing] those who executed the contract.” While this collusion was hidden and even falsely denied for years, President Correa has made no pretense of his support for the plaintiffs and his denunciation of the “multi-national corporation.” As the Attorney General told a reporter in 2008, “the Correa administration’s position in this case is clear: ‘The pollution is a result of Chevron’s actions and not of Petroecuador.’” And the release of the outtakes from Crude now confirm without doubt that the plaintiffs and the Government have long been collaborating to try to nullify the settlements with TexPet and ensure a judgment against Chevron.

As part of that agreement, the plaintiffs have worked with the Government to secure the criminal prosecution of two Chevron attorneys on a bogus and ill-defined claim of “fraud” relating to the State’s settlement with TexPet. The allegation of fraud


- 11 -

had previously been investigated by the Prosecutor General’s Office, and two different prosecutors general had recommended that the charges be dismissed. In addition, the State had abandoned the same fraud allegation in related civil litigation in the Federal Court for the Southern District of New York after having had the opportunity for discovery. Nonetheless, President Correa publicly called for the prosecution of those involved in the State’s settlement, and charges were thereafter brought by his new Prosecutor General, Dr. Washington Pesántez, who had previously rejected the fraud allegation in his capacity as District Prosecutor of Pichincha. It is thus clear that the prosecution has no basis in fact or law, but rather was intended to fulfill the Government’s part in its scheme with the plaintiffs’ representatives. As the U.S. State Department has repeatedly warned, “[c]riminal complaints and arrest warrants against foreign company officials have been used [in Ecuador] to pressure companies involved in commercial disputes.” That admonition has particular force given that the Prosecutor General has publicly stated that ninety percent of any judgment would go directly to the Ecuadorian Government.

Evidence submitted by my client further demonstrates that any judgment in this case would be the result of concerted pressure tactics on the Court, planned and executed by the plaintiffs and their representatives. As the plaintiffs’ lawyer put it in one of the Crude outtakes, “the only language that . . . this judge is gonna understand is one of pressure, intimidation, and humiliation.” A decision based on external pressure, rather than the law and the facts, violates basic principles of due process.

In sum, the evolving and ad hoc procedures adopted by this Court denied my client due process and manifested a rush to a preordained judgment against Chevron. From failing to promptly rule on Chevron’s dispositive defenses, to unlawfully alleviating the plaintiffs of their burden of proof by improperly relinquishing the judicial inspections that were requested and ordered, to ignoring, concealing, and absolving plaintiffs’ fraud, to (twice) prematurely ordering autos para sentencia, this Court has denied Chevron its due process rights. It is clear that this trial has been irremediably tainted by immense political pressure resulting from the improper influence exerted by the Government in this regard.

IV. Systematic Constitutional Violations and Substantial Procedural Defects Render These Proceedings a Legal Nullity

For many reasons discussed above, as well as others, this Court must declare the entirety of these proceedings a legal nullity. Any judgment issued by this Court under these circumstances would be null and void.

Above all, this case is a nullity the constitutional guarantee of due process has been repeatedly violated and because substantial solemnities required in all proceedings have been omitted. As discussed throughout this brief, Chevron’s rights were violated by, among other things, this Court’s refusal to investigate and sanction plaintiffs’ fraud; by the unlawful appointment of Mr. Cabrera; by the denial of the right to initiate essential error summary proceedings; and by the failure to annul the rulings issued by former Judge Yánez regarding the appointment of Mr. Cabrera and the failure


- 12 -

to annul the rulings of Judge Núñez, despite evidence that implicates him in bribery solicitation.

In addition, substantial solemnities required in all proceedings have been disregarded. For example, there is no subject-matter jurisdiction because plaintiffs have attempted to improperly join alleged claims arising under the Civil Code and the EMA in a summary verbal proceeding. In addition, Judge Ordóñez was without competence to issue orders, which still stand, because a recusal petition against him was pending at the time. This petition has still not been ruled upon. Nullity must also be declared because of the forging of the plaintiffs' signatures on the ratification of the complaint and the appointment of Dr. Alberto Wray as joint counsel of record for the plaintiffs, and because of the illegitimacy of attorney Pablo Fajardo as joint counsel of record, because not all of the plaintiffs had agreed to be represented by him as their joint representative. This not only affects the judge's jurisdiction over this case, but also renders null all of Mr. Fajardo’s purported filings on behalf of the plaintiffs. The purported relinquishment of the judicial inspections is null for the additional reason that it was not authorized by each of the plaintiffs, since eight of them did not ratify that relinquishment, and because that type of relinquishment, unlike in other law, is not provided for in Ecuadorian procedural law, which again means that the record is incomplete. These various violations demonstrate a remarkable disregard for Ecuadorian law and render these proceedings entirely null.

V. The Plaintiffs Have No Viable Claim

Any cause of action for environmental remediation of the former concession area by my client is barred by the releases that Texaco, TexPet, and their principals and affiliates received from the State and the relevant municipalities and province encompassing the former concession area. Before private individuals were authorized under the 1999 Environmental Management Act (“EMA”) to seek damages for alleged environmental harms, their communal rights were represented by the State and local governments. In fact, the environmental rights of the forty-eight named plaintiffs—as well as the unnamed thousands they purport to represent without basis—were vindicated and then released by the relevant governments. The plaintiffs cannot recover yet again for the same alleged injury, and their environmental claims are barred.

The four municipalities and the Provincial Council encompassing the former concession area brought separate suits against TexPet in 1994. Acting in their capacities as “small states . . . in each of their respective jurisdictions,” the municipalities viewed these lawsuits as fulfilling their obligation to protect the health and safety of their inhabitants and to assist the State in meeting its environmental obligations to all Ecuadorian citizens. Like the complaint here, these lawsuits were focused on alleged communal harms and sought to protect “the health of all citizens, animals, species, flora, fauna, rivers, water sources and soil” and to recover money as compensation for alleged “ecological damages” arising from the Consortium’s operations. Each suit by the municipalities and the Provincial Council was legally settled in 1996 on terms designed to “meet the interests of The Community and of its citizens as to any claims they may have against TEXPET.” In return for the funding of


- 13 -

certain social programs, the municipalities “exempt[ed], release[d], exonerate[d] and relieve[d] forever” TexPet, its principals, and affiliates “from any responsibility, claim, request, demand or complaint, be it past, present or future, for any and all reasons related to” the Consortium’s operations. The province of Sucumbíos also signed a settlement and granted a similar release. These agreements have the effect of res judicata, and each of the forty-eight named plaintiffs and the “affected communities” they purport to represent reside within—and were duly represented by—these governments. Therefore, these settlement agreements have the effect of res judicata with respect to the complaint in this case.

These releases supplemented a larger settlement between TexPet and the State in 1995. That agreement expressly covers “causes of action under Article 19(2) of the [1978] Political Constitution of the Republic of Ecuador,” which guaranteed all Ecuadorians the “right to live in an environment free of contamination” and placed the “duty [on] the State to assure this right and take responsibility for the protection of nature.” This was confirmed by Ecuador’s U.S. Ambassador at the time, who explained that the State—not the plaintiffs—was the sole “legal owner of the rivers, streams and natural resources and all public lands where the oil producing operations involved in this litigation are located,” and thus the sole “legal protector of the quality of the air, water, atmosphere and environment within its frontiers.” The settlement specifically noted that the scope of the remediation work for which TexPet was responsible as a minority partner of the Consortium “t[ook] into consideration the inhabitants of the Oriente region.” An official congressional report on the State’s settlement with TexPet explained that its purpose was to “indemnify or alleviate the negative environmental effects caused . . . to the Ecuadorian population living in [the] Amazonian region.” Thus, the State and Petroecuador were acting on behalf of all Ecuadorians when they, in exchange for substantial remedial work by TexPet, “release[d], acquit[ted] and forever discharge[d]” Texaco and TexPet of “all the Government’s and Petroecuador’s claims . . . for the Environmental Impact arising from the Operations of the Consortium.” This settlement also has the effect of res judicata.

Because the national and local governments have vindicated the diffuse environmental rights of Ecuadorians living in or near the former concession area, those claims cannot be brought again by the plaintiffs here. As reflected in the carve-out provision of the State’s settlement, the only claims that survived the settlements were those for personal injury and individualized property damage—indeed, those were the only private claims that existed at the time. But the plaintiffs, as noted, have neither alleged nor proven individual injuries. They instead seek to vindicate the exact same diffuse rights that were vindicated by the governments, which had already released TexPet and its affiliates from those liabilities.

Furthermore, the plaintiffs’ complaint cites numerous code and constitutional provisions that were in force when TexPet ceased its role as operator in 1990, but none provides a cause of action for the alleged damages to the environment and public health that they are seeking here. The only cited basis for this type of relief is Article 43 of the EMA, as the plaintiffs acknowledge in their supplemental damages assessment


- 14 -

filed on September 16, 2010 at 5:15 p.m. But that law was not enacted until 1999, and it cannot lawfully be applied retroactively to conduct that ended in 1990.

The plaintiffs concede that the EMA cannot be applied retroactively, but argue that their use of it is merely procedural. That is plainly incorrect—the EMA marks a substantive and significant change in the law. The laws extant during TexPet’s operations did not provide the relief requested by the plaintiffs. No claim for injunctive relief can properly be asserted against Chevron, because only Petroecuador has control over the land and activities at issue. Although the complaint cites provisions of the Civil Code that authorize compensation for individualized harm to one’s person or property, the plaintiffs have neither alleged nor proven any individual harm. The complaint also cites constitutional and statutory provisions that allow the plaintiffs to report alleged environmental contamination to the State and request that the State take action against the alleged wrongdoer, but these provisions do not provide causes of action against private parties for alleged damages caused to their community or collective rights. Indeed, there was no law in effect prior to 1990 that authorized private plaintiffs to sue for the remediation of environmental damages on behalf of all Ecuadorians. The plaintiffs’ counsel in the New York Aguinda case admitted as much, disclaiming any right to “seek[] damages for real property that they do not own.” Article 43 of the EMA thus creates an entirely new cause of action, which is surely why the plaintiffs’ counsel lobbied for its enactment.

Article 7 of the Ecuadorian Civil Code provides that laws are enacted “for the future only” and “have no retroactive effect.” The creation of a new cause of action marks a substantive, not procedural, change in the law that cannot be applied retroactively. Parties must be able to arrange their affairs in light of existing laws without the risk of being exposed to increased liabilities through the retroactive application of new laws. The plaintiffs’ retroactive use of the EMA to request billions of dollars in damages runs afoul of this fundamental precept.

Nor is there any viable legal basis for the plaintiffs’ demand, in their filing of September 16, 2010, at 5:15 p.m., of nearly US$40 billion under an “unjust enrichment” theory. In the first place, this claim does not appear in plaintiffs’ complaint. Moreover, even if they had pled such claim, plaintiffs have not proven that my client was enriched, much less unjustly enriched, by TexPet’s actions in the Oriente. Additionally, Ecuadorian law is clear that plaintiffs cannot rely on an “unjust enrichment” theory where there are specific legal bases for recovery—as there surely are for damage to the environment. Implicitly conceding the frivolous nature of their request, the plaintiffs invoke inapplicable principles of foreign law, such as the U.S. concept of punitive damages. Plaintiffs must resort to citing U.S. law because the concept of punitive damages does not exist in Ecuador. But awarding such damages on the facts of this case would be ludicrous in any country, given that TexPet always abided by governing legal requirements during its operations in the Oriente. This request doubtless represents yet another example of the plaintiffs’ attorneys’ cynical ploy—to which they admit in outtakes from the documentary Crude—to ask for damages in astronomical amounts so that if the Court awards less, it will appear as if Chevron was given a fair and just trial.


- 15 -

VI. The Jurisdiction of This Court Is Limited by the Claims Included by the Plaintiffs in Their Complaint

Chapter VI of the plaintiffs’ complaint seeks (i) removal of alleged contaminating elements that purportedly threaten the environment, such as removal of debris and allegedly contaminating materials in oil pits; (ii) damages payable to the Frente to repair alleged environmental damages and to monitor the health of nearby residents; and (iii) a payment equaling ten percent of the damages awarded for remediation, also paid to the Frente. The first request, presumably based upon Article 2236 of the Civil Code, is preventative and injunctive. It does not allege any injury or request any damages, but rather seeks to remove alleged threats to the environment before they cause injury. The second and third requests, expressly based upon Article 43 of the EMA, seek damages and a bounty not for any injury suffered by the forty-eight named plaintiffs or their property, but rather for alleged environmental damages to concession lands they do not own. Nowhere in their complaint do the plaintiffs allege any personal injuries, nor do they seek redress for any specific injuries to the allegedly “affected communities.”

Both Mr. Cabrera’s ghostwritten report and the plaintiffs’ attempt to rehabilitate that report in their ad hoc damages assessment of September 16, 2010 at 5:15 p.m., exceed the scope of the complaint and would effectively amend it, awarding the plaintiffs billions of dollars in damages that they never sought. Under Article 834 of the Code of Civil Procedure, “[o]nce the lawsuit has been filed, the plaintiff may not amend it.” The Cabrera Report violated this rule—as well as this Court’s mandate—by going well beyond the complaint’s requests for environmental remediation and improvements to public health. And the plaintiffs repeated this violation—and went outrageously further—in their last-ditch damages assessment on September 16, 2010, at 5:15 p.m. For example, plaintiffs (through Mr. Cabrera) made the incendiary, but wholly unsubstantiated, claim that US$9.5 billion should be paid for “excess” cancer deaths in the Oriente. In their damages assessment, the plaintiffs build on that baseless foundation, demanding the incredible sum of nearly US$70 billion for those unproven deaths and even hypothetical future deaths of non-parties. Mr. Cabrera’s report also included the payment of US$8.4 billion for “unfair profits” TexPet allegedly earned, a civil and penal levy unknown to Ecuadorian law that the plaintiffs never requested. In their September 16, 2010 filing, the plaintiffs boost that extra petita figure to almost US$40 billion. And Mr. Cabrera’s fraudulent report allocated nearly a billion dollars to improve Petroecuador’s infrastructure and to create a husbandry farm for indigenous populations, again with the plaintiffs following along and pushing even further in their September 16, 2010 assessment at 5:15 p.m., which is nothing more than a public-relations stunt.

These estimates lack any relationship to reality or to the specific environmental issues raised in the complaint. They are the product of the plaintiffs’ attempt to attribute—through fraud, the use of unsupported suppositions, and speculation—virtually every social ill in the Oriente today to the minority partner of the Consortium, whose operations ended on June 6, 1992. As noted above, these claims were never part of the claims in the complaint, and therefore, it is neither legal nor proper to claim,


- 16 -

after the conclusion of the evidentiary period, that my client must defend itself against these accusations and/or satisfy these claims.

Your Honor, as such, may not consider any relief beyond that requested in the plaintiffs’ complaint. The inclusion of anything else is extra petita and therefore barred, because Ecuadorian procedural law and due process prohibit the judge from considering matters not presented to him. The plaintiffs clearly knew as much; they admit in Crude outtakes that they cannot lawfully obtain “anything more than what has been petitioned in the lawsuit.”

VII. The Plaintiffs Have Not Proven Essential Factual Elements of Their Claim

Even if the plaintiffs' claim for alleged generalized damage to the environment had been legally and legitimately valid, they have not proven the elements of their tort claim: (i) negligence, (ii) damage, and (iii) a causal nexus between my client’s conduct and the alleged damage. Here, no competent evidence supports the plaintiffs’ sweeping allegations. To the contrary, on every element of their claim, all of the credible evidence contradicts them.

Negligence: The plaintiffs have not established TexPet’s negligence. Throughout the Consortium, TexPet’s operations complied with all applicable Ecuadorian laws and standards. All of TexPet’s work—including its environmental remediation in the former concession area—was overseen and approved by the Republic of Ecuador, and its operations complied with international oil-industry standards at the time. The principle of non-retroactivity, enshrined in Ecuadorian legislation, precludes any attempt to hold Chevron to substantive standards enacted after TexPet left Ecuador.

Damage: The plaintiffs have not proven the damages they allege. Irrespective of the plaintiffs’ specific claims, it is clear that none of their evidence can be trusted. The plaintiffs pressured experts and submitted at least two falsified reports during the judicial-inspection phase, and Mr. Cabrera’s global assessment has now been shown to have been nothing more than the plaintiffs’ fraud, a vehicle for them to submit the arguments of their lawyers and U.S. consultants cloaked as expert “evidence.” Their resort to fraud speaks volumes about plaintiffs’ evidence, which is unreliable on its own terms. During the judicial-inspection process, the plaintiffs-nominated experts failed to abide by the very protocols that the plaintiffs once agreed were necessary to produce reliable evidence. For example, much of their sample testing was done at the then-unaccredited HAVOC laboratory, and the plaintiffs even conducted some testing in their technical team’s own hotel room. The supposed global assessment was no better: Mr. Cabrera took only a handful of samples at forty-five of the 335 well and 19 production sites in the former concession area; half of his sampling was done in secret so that Chevron could not observe and object to his methodology; and over a quarter of his samples were discarded in the field.

The plaintiffs’ filing of September 16, 2010 at 5:15 p.m., which contains the "legal brief" with their criteria for evaluating the damages, whereby they attempt to salvage the


- 17 -

fabricated evidence filed by way of the Cabrera Report, is entitled to no weight under Ecuadorian law, solves none of these problems, and is merely an extension of the plaintiffs’ fraudulent conduct. It rests entirely on the same data from the judicial inspections and the “global” report that have been shown to be fraudulent, unreliable and incomplete. This has been admitted by the authors themselves in recent depositions. But no matter how they try to package it, plaintiffs’ flawed evidence cannot prove their only two pled claims for which they now request damages: (i) soil and groundwater remediation, and (ii) healthcare costs.

The plaintiffs’ evidence of soil and groundwater contamination, much of it fraudulent, cannot establish any cognizable claim against Chevron. Audits conducted at the end of the Consortium indicated limited environmental impact, and TexPet successfully remediated its share of this limited impact in cooperation with the Ecuadorian Government. With only one exception, the soil tests conducted by all the experts in the judicial-inspection phase show no exceedance of the criteria set forth in the settlement agreement executed with the Republic of Ecuador in 1995. Both the settling experts appointed in this case and peer-reviewed studies support this conclusion. Additionally, a comprehensive risk evaluation indicates that groundwater in the former concession area does not pose any petroleum-related health risks to local residents or workers. The plaintiffs cannot rebut these facts with Mr. Cabrera’s fraudulent report, which was actually the plaintiffs’ own admittedly unscientific work product passed off as “evidence.”

Regardless, any further remediation in the former concession area is the responsibility of Petroecuador. The Ecuadorian State has recognized this responsibility through PEPDA, now called UMR, a government program that remediates sites for which Petroecuador was responsible in the former concession area. At an average remediation cost of US$85,000 per site, the PEPDA/UMR remediation makes clear that the damage request in the Cabrera Report, an average of US$3.08 million per site for remediation, is absurd. Although the plaintiffs later reduced their damage request to between US$487 million to US$949 million in their September 16, 2010 submission, even this reduced figure is still based on (i) the fraudulent data of Mr. Cabrera, (ii) inapplicable remedial standards, (iii) an overestimation of the pits and soil volume requiring remediation, and (iv) an overestimate of the unit cost of remediation.

The plaintiffs’ public health claims—the only other claim pled in the complaint—are equally unsupported. While such claims would ordinarily seek to vindicate the individual rights that belong to residents of the allegedly affected communities, no individualized proof has been offered of any harm or threat of harm to the health of such residents. The plaintiffs have not identified a single specific individual suffering from health problems. This fatal defect aside, there is no reliable scientific evidence showing that any alleged adverse health impacts are attributable to petroleum activities. In fact, the health studies and health surveys claiming to find a causal link between various ailments and petroleum operations are riddled with methodological errors and biases and cannot form the basis of an inference of causation. Furthermore, the plaintiffs’ proposed plans to institute a healthcare program to compensate for the purported health impacts is logically unsound: Among other things, it ignores that many of the health


- 18 -

conditions in the Amazon region relate to socioeconomic issues, such as malnutrition, sanitation, lack of prenatal care, and other factors unrelated to petroleum operations and that are common to all of rural Ecuador. The plaintiffs request for US$1.4 billion on this basis is therefore without merit.

Aside from these claims for remediation and healthcare costs, all the plaintiffs’ other damage claims—totaling over US$100 billion—were not included in the plaintiffs’ original complaint. As such, these claims are extra petita, and this Court should reject them on that basis alone. However, even if the plaintiffs had included these claims in their complaint, they have no underlying merit.

The plaintiffs’ damage request of up to US$69.7 billion for excess cancer deaths is meritless because no scientific evidence supports any conclusion that unidentified third parties in the former concession area suffer from cancer attributable to petroleum exposure. The studies upon which the plaintiffs rely suffer from a number of methodological errors. Even ignoring these errors, none of the studies shows any causal connection between cancer and petroleum activities. And because plaintiffs have not proven any individual claims, they are forced to rely on the U.S.-based concept of a “Value of a Statistical Life” for a “unit” value to calculate the damages for supposed deaths. This valuation, however, is inappropriate because it ignores the economic realities of Ecuador in general, and the Amazon in particular. And the plaintiffs identify no theory under which they should be entitled to recover for the alleged cancer deaths of third parties they do not represent.

The plaintiffs’ request for US$481.5 million for projects to recover indigenous territory and culture is also devoid of merit. No scientific evidence demonstrates that TexPet’s petroleum exploration and production activities in the former concession area caused the purported harm to indigenous communities. Plaintiffs reach a contrary conclusion only by disregarding research demonstrating that the alleged loss of indigenous culture and deforestation is a direct result of education and colonization programs promoted by the Ecuadorian Government. To the extent such impacts can be attributed to the Consortium’s activities, those impacts were confined and negligible. Thus, any change to the culture of indigenous communities is the direct result of official policies of the Ecuadorian State—policies which my client had no role in formulating. Moreover, cultural change is not uncommon among indigenous groups in the Amazon, and indigenous populations have increased since 1955, and are growing at approximately the same rate as Ecuador’s overall population.

Likewise, no evidence supports the plaintiffs’ US$1.697 billion damage request for loss of ecosystem. The plaintiffs identify no specific ecological services lost as a result of TexPet’s activities. The surveys on which the report attributed to Mr. Cabrera and the plaintiffs’ expert rely cannot be used to place a value on allegedly lost ecological services in the Northeast region of Ecuador for multiple reasons, not the least of which is that not a single respondent in the surveys was from Ecuador. The plaintiffs nevertheless attempt to calculate the purported decrease of these phantom services—and do so without a baseline to measure against and over a greatly exaggerated area that bears no relation to the area allegedly affected by the former concession’s


- 19 -

operations. Both Mr. Cabrera and Lawrence Barnthouse, whom plaintiffs hired for their filing of September 16, 2010 at 5:15 p.m., present irreparably flawed analyses, failing, among other things, to take into account TexPet’s prior remediation, Petroecuador’s activities since the end of the Consortium, or the fact that roads and wellpads were legally permitted.

The recommendation, contained in the fraudulent Cabrera Report, of US$375 million of damages for improvements to Petroecuador’s petroleum operations infrastructure is also meritless. While plaintiffs apparently abandoned this claim in their filing of September 16, 2010 at 5:15 p.m., this request is patently absurd. Beginning in 1976, the Ecuadorian Government was the majority owner in the Consortium, determined how the Consortium was operated, and had a decisive influence in its administration. And since 1992, Petroecuador has been the sole operator of the former concession area and the exclusive owner of the oilfield equipment. As part of the settlement and exoneration signed with the Ecuadorian Government and Petroecuador, TexPet already paid for equipment upgrades allocated to TexPet as part of its responsibilities for the Consortium’s liabilities. There is therefore no basis to order Chevron to pay for improvements that are rightfully the responsibility of Petroecuador and the State and certainly no basis for writing that check to plaintiffs. Furthermore, plaintiffs’ consultants included costs for sites that they knew were outside the concession and were operated exclusively by Petroecuador.

The plaintiffs’ request for US$541.5 million in damages to construct drinking water systems is mystifying. Based on the results of over 7,000 analyses from 253 drinking water sampling events in the Oriente region, there is no indication of public health concerns related to drinking water as a result of petroleum exploration and production activities in the former concession area. The data show that petroleum-related contamination is not an issue, and there is no evidence of related public health concerns associated with petroleum exploration or production. Mr. Cabrera did not collect a single sample of drinking water, and the new report submitted by the plaintiffs contains no new data and is deeply flawed. Thus, there is no need for a new potable water system in the Oriente region financed by Chevron because there simply are no impacts to water resources as a result of TexPet’s operations in the former concession area. The Ecuadorian Government agrees, finding through studies it has sponsored that there is no need to replace the existing water supply system.

Finally, even if an unjust enrichment claim were contemplated by Ecuadorian law, could be properly heard by this Court and were included in the plaintiffs’ complaint, the US$37.86 billion claim is wholly without merit. First, TexPet’s operations never violated the extant regulatory standards of Ecuador or international norms. Second, since TexPet already undertook remediation, any compensation to the plaintiffs for unjust enrichment would be to ask the company to pay twice for the same alleged environmental damage. Third, the unjust enrichment damages requested by both the plaintiffs in their September 16, 2010 submission and Mr. Cabrera suffer from the same fatal mistakes. Both are based on data gathered in the expert report of Mr. Cabrera, which is tainted by fraud and unreliable. Fourth, even if TexPet did derive unfair profits


- 20 -

during Consortium operations, Chevron is not the successor of TexPet in any way whatsoever, and it cannot be held liable for TexPet’s actions.

Causation: There is no proof linking the injuries plaintiffs allege to TexPet’s actions as operator of the Consortium, conduct which ended twenty years ago. The former concession area has been actively operated by Petroecuador alone since 1992, during which time it has drilled more than 400 new wells, constructed hundreds of new pits, routinely discharged produced water until 2006, and caused thousands of oil spills. Yet Mr. Cabrera ignored this Court’s instructions to specify and chronologically trace any damages to pre- and post-Consortium activities. This defect is fatal to the plaintiffs’ claims regarding any link between the alleged environmental impact and TexPet’s activities. And that omission cannot be rectified by the preposterous legal theory offered by the Cabrera Report, which posited that Chevron is responsible for the volitional acts of Petroecuador over the past seventeen years. Under the Cabrera Report’s twisted analysis, an oil spill by Petroecuador in 2007 was the responsibility of Chevron, whose liability for operations wholly outside of its control apparently continues even today. As one of the plaintiffs’ Ecuadorian attorneys says in a Crude clip, it is “inconceivable to me that we can blame Texaco for everything that Petroecuador has been doing to this date.”

In sum, plaintiffs have not proven any of the three elements of their claim. Any eleventh-hour argument that the plaintiffs need not prove their case because Chevron bears the burden of proof would so fundamentally violate my clients due process rights that this trial would have to be declared null and void.

THE PLEADINGS AND PROCEEDINGS

This lawsuit is governed by a litigant-driven procedural system as opposed to a court-driven inquisitorial system, and the plaintiff bears the burden of proof, which is the opposite of the inquisitorial system, where the court moves the case forward. Thus, only those claims raised by the parties in the complaint and the answer may be considered by you, Mr. Acting President, in resolving the case. Article 273 of the Code of Civil Procedure adopts this mandatory principle: “The judgment shall resolve only the matters at issue in the lawsuit . . . .” In addressing this notion of “procedural congruency,” case law and legal authors agree that the judge, when ruling on the disputed matter, may not consider facts or issues not put forth when the issues were defined and proven by the parties. Going beyond what was requested results in a judgment that violates the principle of procedural “congruency,” which requires an identity between what is decided and the claims brought by the parties. It is important, therefore, to be clear as to the exact matters that were at issue at the commencement of this lawsuit, as the judgment rendered may address only those points. Any deviation from the scope of the initial pleadings violates the principles of due process, congruency, and legal certainty.

I. The Complaint

The complaint was filed by forty-eight Ecuadorians, solely against “ChevronTexaco Corporation.” It alleges that TexPet, a corporate entity that is not party


- 21 -

to this case and was not affiliated with Chevron in any way during the period of allegedly offending conduct, negligently employed certain alleged “methods and procedures” while acting as operator of the Petroecuador-Texaco Consortium ("Consortium") from 1964 to 1990, under a concession for the exploration and production of hydrocarbons in the Oriente region of Ecuador, which “caused environmental damage, health damage among the inhabitants, and produced patrimony loss.”1

1. The Relief Sought: The prayer for relief put forth in the complaint seeks (i) the elimination or removal of alleged contaminating elements that purportedly now threaten the environment and health of the inhabitants; 2 (ii) payment to the Frente of an amount, determined by an expert, needed to remediate alleged environmental damage;3 and (iii) payment to the Frente of ten percent of the amount awarded for remediation, plus the cost of the lawsuit and the value of the time and efforts employed in litigating it.4

2. The Legal Grounds: The complaint purports to be based on Articles “2241 and 2256 of the Civil Code” (currently Articles 2214 and 2229); on “Article 15 of Agreement 169 of the International Labor Organization”; on “number 6 of Article 23 of the Constitution [of 1998]” (in force in 2003), concordant with Article 86 of the same Constitution; on “Article 2260 of the Civil Code” (currently Article 2236); on “Article 41 of the Environmental Management Law (Law 99-37, Official Gazette 245 of July 30, 1999) . . . and on Article 43 of the same Law.”5 Based upon the particular relief requested by the plaintiffs in their complaint, and as admitted in their September 16 filing, it is clear that the EMA provides the sole legal basis for their claims.

3. The Parties: Plaintiffs purport to be suing as representatives of certain allegedly “affected communities” to protect their “collective” rights to a clean environment.6 Thus, plaintiffs’ claims are premised not upon any individual injury, but rather upon the diffuse environmental rights of all Ecuadorian citizens. The plaintiffs claim that TexPet perpetrated the alleged acts, and that Texaco, which is a third party not being sued, is liable for TexPet’s alleged “acts and omissions” because it was TexPet’s corporate principal.7 The complaint further claims that Texaco’s

1 Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a.m., Record at 73-80v, 73v-74v. 2 Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a.m., Record at 73-80v, 79. 3 Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a.m., Record at 73-80v, 80. 4 Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a.m., Record at 73-80v, 80. 5 Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a.m., Record at 73-80v, 78v-79. 6 Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a.m., Record at 73-80v, 78v-79. 7 Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a.m., Record at 73-80v, 78v.


- 22 -

alleged liability and obligations were “transferred” to ChevronTexaco Corporation through a corporate “merger” that occurred in 2001.8

4. The Amount: The complaint notes that “owing to the nature of the claim, the amount has not yet been determined.”9

II. The Answer to the Complaint

In the Conciliation and Answer to the Complaint Hearing, Chevron, pursuant to Article 835 of the Code of Civil Procedure, 10 asked the President of the Court to consider as a preliminary matter that Chevron (under Article 835 of the Code of Civil Procedure) 11 was improperly sued and, as a consequence, that the Court lacked jurisdiction over it.12 Chevron also raised the issue of personal jurisdiction as a principal defense, as an alternative to its jurisdictional argument under Article 835. Chevron also presented additional defenses and gave a detailed refutation of the complaint’s factual and legal allegations and requests for relief. Chevron took these steps solely in order to avoid default under Article 104 of the Code of Civil Procedure.13 It did so without waiving its preliminary objection and its primary defense based on the Court’s lack of jurisdiction.

Chevron’s defenses, as presented in its answer to the complaint, can be summarized as follows:

1. Lack of Jurisdiction: The Honorable Superior Court of Nueva Loja (currently the Provincial Court of Sucumbíos) lacks competence and jurisdiction to hear and decide the present case filed against Chevron. Neither Texaco nor TexPet was a named party in the present case, and Chevron is not Texaco’s legal successor

8 Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a.m., Record at 73-80v, 78v. 9 Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a.m., Record at 73-80v, 80v. 10 Article 835 provides: "If no settlement can be obtained and the matter involves liquidation of

interests, fruits or damages ordered in a final and binding judgment establishing the grounds for the liquidation and the manner in which it is to be carried out, the judge shall make the liquidation at the same hearing or shall notify the parties to do so within the following three days, and the advice of an expert (who shall be appointed by the judge and whose opinion shall be attached to the judgment) may be obtained. When there are no issues of material fact, the judgment shall be issued immediately or within the following three days."

11 Article 835 provides: "If no settlement can be obtained and the matter involves liquidation of interests, fruits or damages ordered in a final and binding judgment establishing the grounds for the liquidation and the manner in which it is to be carried out, the judge shall make the liquidation at the same hearing or shall notify the parties to do so within the following three days, and the advice of an expert (who shall be appointed by the judge and whose opinion shall be attached to the judgment) may be obtained. When there are no issues of material fact, the judgment shall be issued immediately or within the following three days."

12 Answer as Read into the Record § I, filed Oct. 21, 2003 at 9:10 a.m., Record at 243-67, 243. 13 Article 104 provides: “The defendant may amend his defenses and assert additional

substantive defenses before the evidentiary phase starts.”


- 23 -

such that it can be legally responsible for the alleged acts or omissions of Texaco or TexPet.14

2. No Legitimate Defendant: Whatever the Court’s power over Chevron in the jurisdictional sense, Chevron could not be held liable given the absence of any connection between Chevron and the facts alleged in the complaint. Chevron has neither caused the damage nor committed the acts alleged in plaintiffs’ complaint; has no legal obligation to remediate the alleged damage; is not liable for acts of third parties (such as the Government, settlers, other operating companies, large-scale agricultural producers, or Petroecuador); and is not subject to any laws on which the plaintiffs base their complaint.15

3. Improper Joinder of Claims: There is an improper joinder of claims under a summary verbal procedure, to the extent that the plaintiffs putatively bring both environmental claims and non-environmental claims, including claims under the Civil Code.16

4. Non-Retroactivity: All claims pled under the EMA are invalid because the acts and omissions upon which they are based occurred before the enactment of that law, which cannot be applied retroactively.17

5. Prescription: To the extent that any civil claims were pled, they are barred by the applicable statute of limitations pursuant to the provisions of Article 2259 of the Civil Code.18

6. Res Judicata: Texaco and TexPet had been legally released from any responsibility for the alleged environmental damage by the Consortium operations, and, as a current principal and affiliate of those companies, Chevron is likewise absolved from liability for such damages by virtue of the res judicata effect of the settlement agreements.19 To the extent that plaintiffs are seeking redress of contingent or future harm from alleged environmental conditions on

14 Answer as Read into the Record §§ I.1-I.4, filed Oct. 21, 2003 at 9:10 a.m., Record at 243-67,

243-43v. 15 Answer as Read into the Record §§ I.1-I.4, filed Oct. 21, 2003 at 9:10 a.m., Record at 243-67,

265. 16 Answer as Read into the Record § 2.C.1.1, filed Oct. 21, 2003 at 9:10 a.m., Record at 243-67,

262. 17 Answer as Read into the Record §§ II.C.1.2-1.3, filed Oct. 21, 2003 at 9:10 a.m., Record at

243-67, 262. 18 Answer as Read into the Record §§ II.C.2.1-2.2, filed Oct. 21, 2003 at 9:10 a.m., Record at

243-67, 263v; see also Article 2235 of the Civil Code (formerly Article 2259), which provides: “The causes of action provided for in this chapter for damages or intentional misconduct are time barred in four years, counted from the date on which the act was perpetrated.”

19 Answer as Read into the Record, §§ II.A.2.1, II.A.2.2.11, filed Oct. 21, 2003 at 9:10 a.m., Record at 243-67, 249v-50, 253.


- 24 -

the basis of Article 2260 of the Civil Code (currently Article 2236 of the Civil Code), those claims must proceed against the current operator and possessor of the concession area (and one of the Releasees of TexPet)—state-owned Petroecuador.20

7. Propriety of the Consortium’s Operations: The operations of the Consortium while TexPet was the operator complied with prevailing law and practices at the time, and any alleged impact that oil exploration operations have had on the lands in question were not caused by TexPet’s operations, but rather have been caused by intervening actions of the Ecuadorian State (e.g., colonization and deforestation) or the sole and subsequent operations of Petroecuador in those lands.21

III. The Proceedings

The presiding judge declined to rule on Chevron’s motion to dismiss for lack of jurisdiction and immediately ordered that the litigation continue under the summary verbal procedure, and directed the parties to proceed to the evidentiary phase of the case.

Since 2003, a record of nearly 200,000 pages has been amassed. Your Honor is the sixth judge to preside over this case, and has done so for only eight months. Still ongoing are defendant’s good faith efforts to unmask further evidence regarding plaintiffs’ egregious bad faith misconduct during the evidentiary phase of this case, including at least one example of them submitting fraudulent expert reports and several instances of improper collusion with the purportedly “neutral” experts they nominated. Given the size of the record, and the important processes still unfolding that demonstrate the fraud in which the plaintiffs have engaged, it was improper for Your Honor to have ordered autos para sentencia given that, in any event, due process, prudence, and procedural rules demand acceptance and consideration of all evidence relating to the plaintiffs’ fraudulent acts in this Court before entering any judgment.

ARGUMENTS FOR THE DEFENSE

CHAPTER I. THIS COURT HAS NO JURISDICTION OVER CHEVRON

A scrupulous and diligent analysis of the evidence is required at the beginning of the case where it is alleged that a foreign person is subject to the jurisdiction of the Ecuadorian judicial system, as this affects the competency of the Court and the wrongful assertion of jurisdiction could cause serious prejudice to the foreign person.

20 Answer as Read into the Record, § II.C.3, filed Oct. 21, 2003 at 9:10 a.m., Record at 243-67,

264v. 21 Answer as Read into the Record, § II.B.1.5, II.B.3.3, II.B.4.1, filed Oct. 21, 2003 at 9:10 a.m.,

Record at 243-67, 253v, 258-58v.


- 25 -

Chevron expressly posited as a principal defense (pursuant to Articles 9922 and 10023 of the Code of Civil Procedure) that the judges and courts of Ecuador lack jurisdiction and competence24 to hear the complaint for the following reasons.25

22 “Art. 99.- There are two types of defenses, procedural and substantive. A procedural defense

stays or delays the resolution of the case; while a substantive defense entails the dismissal of the claim subject matter of the complaint, in whole or in part.”

23 “Art. 100 (Ex 104) [Procedural defenses]. The most common procedural defenses relate to: (1) the judge (e.g. lack of jurisdiction); (2) the plaintiff (e.g. lack of standing to sue, lack of legal capacity or inadequate appointment); (3) the defendant (e.g. the guarantor’s right to force a creditor to sue the principal debtor first and the guarantor’s right to have all remedies first exhausted against the principal debtor); (4) the manner of pleading (e.g. including contradictory or incompatible claims); (5) the subject matter of the complaint, such as defenses to a claim made before the relevant statutory or contractual term has run; (6) the case or how it is to be heard (e.g. when consolidation is requested to avoid undue division of the case or a different procedure is required).”

24 “Article 1 of the Code of Civil Procedure gives the following definition of jurisdiction and competence: 'Jurisdiction, i.e. the power to administer justice, consists of the public authority to judge and to ensure enforcement of the judgment in a certain matter, an authority given to the magistrates and judges established by law. Competence is the manner in which said authority is distributed among the different Courts and tribunals according to territory, objects, persons and stages.’ Jurisdiction is a government function, part of the sovereignty of the State that guarantees or takes measures to ensure the law is respected. It is a complementary or additional activity of the legislative branch. It makes the general, abstract mandate of the law specific and concrete. Jurisdiction is exercised through entities having public authority. In view of the fact that one jurisdictional entity cannot handle all the cases filed in the country, the Constitution and the law have created multiple entities, among which has been distributed jurisdictional authority, precisely noting or limiting the scope of that authority, which is what is meant by competence; therefore, jurisdiction is the authority, while competence is the limits of the scope of the authority . . . . The Judge’s competence is a procedural requirement, i.e. a formal requirement for legally beginning and continuing proceedings. According to our procedural legislation, it is a substantive requirement, the omission of which annuls the proceedings if said violation influenced or could have influenced the judgment in the case (Article 355 (currently Article 346); Article 358 (currently Article 349) of the Code of Civil Procedure) . . . .” Angel Alarcón vs. Vìctor Platón, Cassation Ruling, Judgment of the Supreme Court of Justice, First Civil and Commercial Division, Case 250-98, Mar. 23, 1998, Official Gazette 319, May 18, 1998.

Article 76(3) of the current Constitution confirms that, under principle of due process, “[n]o one may be tried or punished for an act or omission that was not defined in the law, at the time it is committed, as a criminal, administrative or other violation, nor shall a penalty that is not provided for by the Constitution or the law be imposed. People may only be tried before a judge or competent authority and in compliance with the rules applicable to each procedure.”

“[T]he plea of lack of competence of the Judge hearing the case refers to a procedural impediment that may also be considered a demurrer when admissible, and is one of a group of pleas that refers ‘. . . just to the procedures or the proceedings, considering that the procedural requirements for proceeding with the case are absent, but without attacking the merits of the matter or the substantive law being cited’ (Devis Echandía, General Theory of Legal Process, Buenos Aires, Editorial Universidad, 1997, p. 231); . . . the competence of the Judge hearing the case is a procedural requirement for the complaint, and is necessary ‘to open the case or the legal procedural relationship, which must be examined by the Judge before admitting the complaint’ (id. at p. 276) . . . .” Santana Robledo vs. Maldonado Jaramillo, Judgment of the Supreme Court of Justice, First Civil and Commercial Division, Feb. 27, 2002, Case 41-2002, published in Official Gazette 575, May 14, 2002.


- 26 -

1.1 Chevron Never Operated in Ecuador

As was demonstrated during the proceedings, Chevron has never been domiciled nor operated in Ecuador. 26 Moreover, Chevron was never part of the Consortium nor did it have any relationship whatsoever with TexPet’s activities as the operator of the Consortium. Those activities ended in 1990, over a decade before Texaco became an indirect subsidiary of Chevron in 2001.27 Plaintiffs have not and could not present any evidence that Chevron was ever qualified to do business in Ecuador, that it ever owned property here, that it ever employed workers here, or that it otherwise did business here. 28 Rather, the evidence shows that Chevron was incorporated in 1926 under the laws of the State of Delaware, U.S.A.29 Accordingly, the judges and courts of Ecuador lack jurisdiction and competence to hear this complaint brought against Chevron.

1.2 Only Texaco Agreed to Submit to Ecuadorian Jurisdiction and Chevron Is Not the Successor to Texaco

The Aguinda class action brought in New York by some of the plaintiffs in this case was initiated solely and exclusively against Texaco Inc. That complaint was dismissed on the doctrine of forum non conveniens, and Texaco alone agreed to submit to Ecuadorian jurisdiction as a condition of dismissal.30

(continued…)

25 See Chevron’s Power of Attorney, filed Oct. 14, 2003, Record at 196-241, 199; Answer as Read into the Record § IV.1, filed Oct. 21, 2003 at 9:10 a.m., Record at 243-67, 265; see also Chevron’s motion filed Dec. 20, 2010 at 5:50 p.m.

26 See Answer as Read into the Record § I.1, filed Oct. 21, 2003 at 9:10 a.m., Record at 243-67, 243; Superintendent of Companies Response to Request for Production (“RFP”), filed Apr. 30, 2004 at 4:15 p.m., Record at 7279, 7279.

27 See Answer as Read into the Record §§ I.1.5-6, filed Oct. 21, 2003 at 9:10 a.m., Record at 243-67, 244; see Agreement of Feb. 26, 1986 between Corporación Estatal Petrolera Ecuatoriana (CEPE) and Texaco Petroleum Company Concerning the Operation of the Trans-Ecuadorian Pipeline, filed Apr. 27, 2004 at 2:40 p.m., Record at 7259-62.

28 See Affidavit of Frank Soler, dated Mar. 26, 2010 ¶¶ 17-18, submitted as Annex 18 to Chevron's Motion, filed Oct. 29, 2010 at 5:20 p.m.

29 See Certificate of Good Standing of ChevronTexaco Corporation, dated Aug. 7, 2003, attached as Annex 7 to Chevron’s Motion filed October 15, 2003 at 5:10 p.m., Record at 196-241, 232-33, 236, ; see also the Certificate of Good Standing of Chevron Corporation, dated Feb. 22, 2010, attached as Exhibit 1 of Annex 18 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

30 See Aguinda v. Texaco Inc., 142 F. Supp. 2d 534 (S.D.N.Y. 2001), aff’d, 303 F.3d 470 (2d Cir.

2002), Record at 9465-610, 9521.


- 27 -

The plaintiffs attempted to justify having sued Chevron, as opposed to Texaco, by incorrectly stating that Chevron and Texaco had merged.31 To the contrary, as Chevron maintained in its answer and as a matter of indisputable corporate fact, the only merger that took place was between Texaco and Keepep Inc., a subsidiary of Chevron.32 Texaco emerged from that merger as the surviving entity and became thereby a Chevron subsidiary.33 Chevron did not acquire any of Texaco’s assets or liabilities, and Texaco remained—as before the acquisition transaction—incorporated under the laws of the state of Delaware in the United States.34 Texaco continues to have its own assets and the full capacity to independently acquire rights and incur obligations maintained on its own financial books and records.35 That Texaco has the capacity to be sued in its own right further demonstrates that plaintiffs’ suit against Chevron cannot possibly be justified, particularly given that plaintiffs make no allegations against Chevron itself, but instead assert that Chevron’s liability is solely derivative. This runs counter to the fundamental principle, set forth in Article 1453 of the Civil Code, that each person is liable for its own actions. Plaintiffs have presented no legal or factual basis under U.S. or Ecuadorian law upon which this court might pierce the corporate veil between Chevron and Texaco, and the plaintiffs have never even attempted to do so. Similarly, plaintiffs have never shown that an alter ego relationship between Chevron and Texaco existed or that the two companies were ever in privity with one another.36

31 Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a.m., Record at 73-80v, 75. 32 See Answer as Read into the Record § I.1.2, filed Oct. 21, 2003 at 9:10 a.m., Record at 243-67,

243v; Chevron’s Power of Attorney, filed Oct. 14, 2003, Record at 196-241, 230-31; Affidavit of Frank Soler, dated Mar. 26, 2010 ¶ 8, submitted as Annex 18 to Chevron's Motion, filed Oct. 29, 2010 at 5:20 p.m.

33 October 2001 United States Securities and Exchange Commission (“SEC”) filing, attached as Annex A to Chevron's Second Rebuttal to the Barros Report, filed Jan. 29, 2010 at 3:30 p.m., Record at 166607-13, 166610 (the translation in Spanish is included at Record at 166759-67, 166764); November 2001 SEC filing, attached as Annex A to Chevron's Second Rebuttal to the Barros Report, filed Jan. 29, 2010 at 3:30 p.m., Record at 166633-75, 166641 (the translation into Spanish is included at Record at 166790-834, 166800); see also October 2000 Agreement and Plan of Merger, attached as Annex B to Chevron's Second Rebuttal to the Barros Report, filed Jan. 29, 2010 at 3:30 p.m., Record at 166680-751; Affidavit of Frank Soler, dated Mar. 26, 2010 ¶ 8, submitted as Annex 18 to Chevron's Motion, filed Oct. 29, 2010 at 5:20 p.m.

34 Chevron’s Power of Attorney, filed Oct. 14, 2003, Record at 196-241, 222, 228, 236, 239; Affidavit of Frank Soler, dated Mar. 26, 2010 ¶ 4 and attached Exhibit 2, submitted as Annex 18 to Chevron's Motion, filed Oct. 29, 2010 at 5:20 p.m.

35 Answer as Read into the Record § I.1.2, filed Oct. 21, 2003 at 9:10 a.m., Record at 243-67, 243v; Affidavit of Frank Soler, dated Mar. 26, 2010 ¶¶ 4, 9, 15, 16 and attached Exhibit 2, submitted as Annex 18 to Chevron's Motion, filed Oct. 29, 2010 at 5:20 p.m.

36 As such, any arguments stated in these lines are waived. In all events, Ecuadorian law is clear that a corporation is distinct and separate from its shareholders, and a shareholder will only be held liable for the corporation’s activities in rare circumstances, including clear and convincing evidence of fraud—an exacting standard that plaintiffs have come nowhere close to meeting. See Arts. 568 and 1957 of the Civil Code; Chupamar v. Diners Club, Judgment of the Supreme Court of Justice, First Civil and Commercial Division, dated Mar. 21, 2001, No. 120-2001, published in R.O. 350, June 19, 2001.


- 28 -

Plaintiffs allege that this corporate distinctiveness should be disregarded because of allegedly ambiguous press releases concerning the survival of Texaco Inc. after the acquisition of its stock by Chevron.37 But the plaintiffs were clearly on notice that Texaco Inc. remained an independent and separate corporation. After the merger Texaco’s lawyers formally notified the plaintiffs’ lawyers that Texaco had designated an “authorized agent for service of process for claims filed against Texaco in Ecuador.”38 That, along with the publicly available and official documents concerning the acquisition, clearly put plaintiffs on notice that Texaco continued to exist as a corporate entity distinct from Chevron and could have been sued in this lawsuit. The plaintiffs ignored the facts and instead chose to sue Chevron under the false pretense that Chevron is the successor-in-interest to Texaco,39 which is clearly not the case as a matter of law and fact.40 Indeed, plaintiffs’ erroneous allegation of a merger when they were on notice of Texaco’s continued corporate existence constitutes an abuse of right, as they have acted “without the diligence or care with which a reasonable man would exercise it.”41 There being no merger, it is not possible under the law for Chevron to be liable for the alleged conduct of Texaco or TexPet.

All of this is why, in private writings, Mr. Donziger criticized the plaintiffs’ former counsel, Dr. Alberto Wray, for “suing the wrong party in the complaint,”42 thus conceding that Chevron is correct that this Court lacks jurisdiction over it.

1.3 Texaco Did Not Control TexPet’s Operations

Contrary to the plaintiffs’ allegation, Texaco never controlled the operations of TexPet in Ecuador.43 This argument was already fully litigated and rejected in the Aguinda case in New York.

The Aguinda case in New York was brought by the same lawyers as this case. Many of the plaintiffs were the same plaintiffs as in this case, and it was a putative class

37 Plaintiffs’ Motion, filed Jan. 11, 2008 at 5:00 p.m., Record at 133988-134005, 133991-133992. 38 October 11, 2002 Letter from King and Spalding, filed Oct. 19, 2004 at 4:05 p.m., Record at

10327-28 (the translation in Spanish is included in the Record at 10329); January 2, 2003 Letter from King and Spalding, filed Oct. 19, 2004 at 4:05 p.m., Record at 10330-31.

39 See, e.g., Plaintiff’s Motion, filed Mar. 6, 2007 at 5:06 p.m., Record at 154650-651, 154650. 40 Affidavit of Frank Soler, dated Mar. 26, 2010 ¶¶ 3-4, 6-9, 14-16, 18 and attached Exhibits 1 and

2, submitted as Annex 18 to Chevron's Motion, filed Oct. 29, 2010 at 5:20 p.m. 41 ALESSANDRI RODRÍGUEZ, Arturo, Tort Liability Under Chilean Civil Law, Legal of Chile,

2005, p. 193; see also Supreme Court of Justice, First Civil and Mercantile Division, Lawsuit 334, Official Gazette 257, Aug. 18, 1999.

42 Diary of Steven Donziger, entry dated Jan. 24, 2006, attached as Annex 1 to Chevron’s Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p.m. (DONZ00036246).

43 Answer as Read into the Record § I.8, filed Oct. 21, 2003 at 9:10 a.m., Record at 243-67, 244v; Declaration of Lydia I. Beebe, Corporate Secretary of ChevronTexaco Corporation, submitted as part of ChevronTexaco Corporation Power of Attorney, dated Aug. 13, 2003, attached as Annex 1 to Chevron’s Motion filed October 15, 2003 at 5:10 p.m., Record at 196-241, 199-200, 202-203.


- 29 -

action on behalf of 30,000 residents in the region. The New York case also is cited as a factual precedent by the plaintiffs in their complaint in the present lawsuit. The judge in the New York case rejected the argument that Texaco controlled the operations of TexPet in Ecuador and concluded:

[T]he plaintiffs, after taking numerous depositions and obtaining responses to no fewer than 81 document requests and 143 interrogatories, were unable to adduce material competent evidence of meaningful Texaco involvement in the misconduct complained of—to the point that plaintiffs essentially stipulated as much.44

The record before the Court . . . clearly establishes that all of the Consortium’s key activities, including the decisions and practices here at issue, were managed, directed, and conducted by Consortium employees in Ecuador. By contrast, no one from Texaco or, indeed, anyone else operating in the United States, made any material decisions as to the Consortium’s activities and practices that are at issue here.45

The plaintiffs are precluded from relitigating this issue for a second time. Even if the plaintiffs were permitted to relitigate the issue, which the defense does not condone, the New York court’s conclusion was based upon exhaustive evidence, and given that the plaintiffs have failed to present evidence in this lawsuit to refute what has been resolved by the New York court, this Court should reject such an argument.

Texaco cannot be held liable for TexPet’s alleged acts in Ecuador, which acts (if they occurred) Texaco did not control. And even if the plaintiffs could have held Texaco liable, as demonstrated above, that liability could not be imposed upon Chevron, an independent entity that was unrelated to both Texaco and TexPet at the time TexPet operated in Ecuador.46

1.4 Even Texaco Did Not Consent to the Suit Filed by Plaintiffs

Even if the plaintiffs had sued Texaco, rather than Chevron, they still would have ignored the scope of Texaco’s consent to this Court’s jurisdiction. In Aguinda, Texaco consented to be sued only “on the claims (or their Ecuadorian . . . equivalents) set forth

44 Aguinda v. Texaco Inc., 142 F. Supp. 2d 534 (S.D.N.Y. 2001) at 4, aff’d, 303 F.3d 470 (2d Cir.

2002), Record at 9465-610, 9524 (the translation appears in at Record at 152880-912, 152822-83). 45 Aguinda v. Texaco Inc., 142 F. Supp. 2d 534 (S.D.N.Y. 2001) at 31, aff’d, 303 F.3d 470 (2d Cir.

2002), Record at 9465-610, 9551 (the translation appears in at Record at 152880-912, 152901). 46 See Affidavit of Frank Soler, dated Mar. 26, 2010 ¶¶ 3-5, 14, submitted as Annex 18 to

Chevron's Motion, filed Oct. 29, 2010 at 5:20 p.m.


- 30 -

in the complaints in the[] U.S. action[].”47 The claims in this case are asserted under Ecuadorian law,48 but they are not the Ecuadorian equivalent of the claims set forth in the U.S. action.

Aguinda was a putative class action seeking primarily “damages for injury to [the plaintiffs’] person[s] and property,” and the plaintiffs also sought “equitable relief to remediate their environment.”49 The plaintiffs in Aguinda expressly stated that they were “not seeking damages for real property which they do not own.”50 By contrast, the complaint here does not seek damages for individualized injury to the plaintiffs’ persons or property, but only seeks to vindicate a collective and diffuse right to a clean environment free of contamination.51 Under Ecuadorian law, “[d]iffuse interests” are defined as “homogenous interests of an indivisible nature, the owners of which are undetermined groups of individuals connected by common circumstances.”52 Similarly, Article 86 of the Constitution that was in effect when plaintiffs’ complaint was filed described the right to live in a healthy environment as a collective, public-interest right.53 But the Aguinda plaintiffs expressly conceded before the U.S. district court that there was no Ecuadorian equivalent for claims asserting a diffuse right to environmental remediation:

47 See Stipulation and Order at 2, Aguinda v. Texaco, Inc., No. 93-CV-7527 (S.D.N.Y. June 21,

2001), attached as Exhibit 33 to Chevron’s Motion, filed September 16, 2010 at 4:35 p.m. 48 See Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a.m., Record at 73-80v, 78v-79. 49 See Plaintiffs’ Memorandum of Law in Opposition to Texaco’s Motion to Dismiss for Failure to

Join Indispensable Parties at 3, Aguinda v. Texaco, Inc., No. 93-CV-7527 (S.D.N.Y. Mar. 10, 1994), attached as Exhibit 29 to Chevron’s Motion, filed September 16, 2010 at 4:35 p.m.; see also Plaintiffs’ Complaint in Aguinda v. Texaco, No. 93-CV-7527 (S.D.N.Y. Nov. 3, 1993), attached to Texaco Inc.’s Response to RFP, filed Sept. 27, 2004 at 5:15 p.m., Record at 9465-511, 9466-67, 9501 (a Spanish translation appears at Record at 164935-72, 164936-37, 164971.

50 See Plaintiffs’ Memorandum of Law in Opposition to Texaco’s Motion to Dismiss for Failure to Join Indispensable Parties at 3, Aguinda v. Texaco, Inc., No. 93-CV-7527 (S.D.N.Y. Mar. 10, 1994), attached as Exhibit 29 to Chevron’s Motion, filed September 16, 2010 at 4:35 p.m.

51 See Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a.m., Record at 73-80v, 79-80. Plaintiffs U.S. team leader, Stephen Donziger, admits as much in outtakes from the documentary Crude. “[E]ven if we win the case,” he says, “the people will never receive, as part of our lawsuit, compensation… from Texaco for all their personal damages; their sicknesses, their illnesses, their economic losses, the poverty, the emotional damage people feel . . . from losing family members… [U]nder Ecuadorian law, we can't sue for that. We're only suing for clean up.” Transcript of Crude Outtakes, attached as Annex 8 to Chevron’s Fourth Supplemental Motion for Terminating Sanctions, filed Dec. 22, 2010 at 5:45 p.m. (CRS 010-10-03).

52 Environmental Management Act, Glossary of Definitions. The Ecuadorian definition is consistent with the definition used in other jurisdictions and in the legal scholarship. For example, Article 81 of the Consumer Code of Brazil defines “diffuse right” as the “trans-individual and indivisible right that belongs to an undetermined group of persons who were not previously connected but are now connected solely by factual circumstances in a specific situation.”

53 Art. 86, 1998 Constitution of Ecuador.


- 31 -

[P]opular action, which can go forward only in cases specifically written in the law, which must be filed with names and not as representing a class or gender. . . . Among these cases civil damage actions directed at seeking compensation for negligence or intentional acts are not included.54

* * *

This [equitable] remedy cannot be achieved in Ecuadorian Courts where class actions are impossible.55

* * *

[C]ases resulting from environmental contamination [can] be filed only with administrative agencies and not the courts . . . . If administrative agencies do not act, plaintiffs can then only bring an action against the Government of Ecuador and not the party responsible for the damages.56

The plaintiffs’ former counsel unambiguously informed the U.S. court that “no one can bring an action in the name of another” in Ecuador, and that the Ecuadorian “Constitution expressly forbids” a person from litigating “on behalf of the people.”57 The Ecuadorian Ambassador to the United Status agreed, representing that only the State could maintain an action for alleged diffuse environmental harms,58 and that it had settled those claims vis-à-vis TexPet.59

54 Affidavit of Alberto Wray (Mar. 8, 1994), attached as Annex 1-A to Chevron’s Motion to Dismiss,

filed Oct. 8, 2007 at 8:10 a.m., Record at 132946-54, 132947. 55 Appellant’s Brief in Aguinda v. Texaco, Inc., 303 F.3d 470 (2d Cir. 2002), Record at 123236-

309v, 123258. 56 Appellant’s Brief in Aguinda v. Texaco, Inc., 303 F.3d 470 (2d Cir. 2002), Record at 123236-

309v, 123261. 57 Affidavit of Alberto Wray (Mar. 8, 1994), attached as Annex 1-A to Chevron’s Motion to Dismiss,

filed Oct. 8, 2007 at 8:10 a.m., Record at 132946-54, 132947; see also Appellant’s Brief in Aguinda v. Texaco, Inc., 303 F.3d 470 (2d Cir. 2002), Record at 123236-309v, 123259.

58 See Letter from Amb. E. Terán to Hon. J. Rakoff (June 10, 1996), attached as Annex 4 to Chevron’s Motion to Dismiss, filed Oct. 8, 2007 at 8:10 a.m., Record at 132975-77, 132975 (affirming that only the State could vindicate diffuse environmental rights as the “legal owner of the rivers, streams and natural resources and all public lands where the oil producing operations involved in this litigation are located”).

59 See Letter from Amb. I. Baki to Hon J. Rakoff (Nov. 11, 1998), attached to Chevron's Evidentiary Request No. 21 for the SSF-07 Essential Error Petition, filed Apr. 15, 2010 at 4:50 p.m., Record at 170390 (the Spanish translation is included at Record at 170425) (stating that the Ecuadorian State, by virtue of the 1995 and 1998 Agreements, had “absolved, liberated and forever freed TexPet, . . .


- 32 -

If the plaintiffs had timely sued Texaco on claims covered by its consent to Ecuadorian jurisdiction, then Texaco itself could have responded to the claims and met the obligations of any legitimate and enforceable judgment against it. But the only viable claims against TexPet after the government settlements, and the only claims Texaco consented to defend against in Ecuador, were individual claims for personal injury. Because the claims in this case are not the Ecuadorian equivalent of the claims in the New York case, Texaco’s consent to jurisdiction would not apply even if plaintiffs had sued Texaco. This Court would have no jurisdiction over Texaco to hear the claims plaintiffs have attempted to assert in this case, even if it had been sued, in the same way that this Court has no jurisdiction in this case over Chevron.

1.5 The Court Has Improperly Exercised Jurisdiction over Chevron

Both Ecuadorian law and general principles of due process hold that the judiciary should resolve questions of jurisdiction and competence at the very beginning of the lawsuit.60 “Given that jurisdiction is a mandatory provision of law, it is necessary to guarantee compliance with the provisions of law governing the same. . . . Jurisdiction appears as a procedural prerequisite, because it is related to the necessary condition for hearing and adjudicating litigation.” 61 From the outset, and despite the fact that the principal evidence on this issue has been in the record since 2003, the Court failed to rule on Chevron’s jurisdictional objections, and in the absence of such a ruling improperly exercised de facto jurisdiction over Chevron, forcing it, despite its repeated protests, to participate for more than six years in an expensive and improper lawsuit.62 “[W]henever there is lack of jurisdiction in the acts of a judge, there is an exceeding of one’s powers, and whenever there is an exceeding of one’s powers, there is

(continued…) Texaco, . . . its employees, principal and subsidiaries of any claim or litigation by the Government of the Republic of Ecuador concerning the obligations acquired by TexPet [in those agreements]”).

60 Article 129 of the Organic Code of the Judiciary provides: "In addition to the duties of any judicial officer, the judges, have the following generic powers and duties:

9. At any stage of the proceedings, the judges that become aware that they have no competence to hear the case on account of personal, territory or grade venue reasons, should refrain from hearing it, without declaring invalid the process they will pass it to the competent court or judge that should, from the point at which inhibition occurred, continue hearing the case.

If the incompetence is due to the subject matter, he will declare it null and void and will send the process to the competent court or judge for that would initiate the proceeding, but the time between the filing of the lawsuit and the declaration of nullity will not be computed in terms of the statute of limitations of the right or action." 61 VESCOVI, Enrique, General Theory of Legal Proceedings, TEMIS, Bogotá, 1999, pp. 147-148. 62 See, e.g., Chevron’s Motion to Dismiss, filed Oct. 8, 2007 at 8:10 a.m., Record at 132897-996,

132899-900, 132905-06, 132915-16.


- 33 -

incompetence, legal doctrine and scholars say.”63 Chevron was thus the victim of a procedural abuse and fraud since plaintiffs should have never sued Chevron and since this Court should have declared its lack of jurisdiction immediately, as confirmed in Article 129(9) of the Organic Code of the Judiciary. By failing to take timely action, this Court has shown its bias against my client and has become complicit in denying Chevron due process. This Court must now dismiss for lack of jurisdiction over Chevron.

CHAPTER II. THESE PROCEEDINGS SHOULD BE TERMINATED BECAUSE THEY HAVE BEEN

PERMEATED BY FRAUD

Over the course of this trial, my client has presented unimpeachable evidence revealing that plaintiffs’ counsel have brazenly corrupted these proceedings from their inception. The plaintiffs' attorneys filed the complaint along with a document supposedly ratifying it with at least 20 forged signatures, thus failing to comply with the specific solemnity contemplated in Article 1010 of the Code of Civil Procedure with respect to the plaintiffs who could not or did not know how to write, and the plaintiffs also intentionally submitted forged evidence to prove their false allegations and demands; colluded using intimidation and extortion to obtain the appointment of a supposedly "independent expert," Mr. Cabrera, with whom they conspired, and actually wrote his global expert report; and then tried to hide their wrongdoing. Subsequently, after their fraud was made public, they obtained from the former Judge, Dr. Ordóñez, an illegal order on August 2, 2010, at 9:00 a.m., allowing them to submit a contrived ad hoc "legal brief" with their criteria for the damages evaluation, which they filed on September 16, 2010, at 5:15 p.m., in a last-minute attempt to rehabilitate this case and whitewash their own fraud, by submitting an ad hoc filing addressing the global costs of remediation, cannot begin to—and does not even try to—remove the taint from these corrupt proceedings. The plaintiffs’ filing of September 16, 2010 at 5:15 p.m. simply assumes, without any basis, the liability of Chevron and uses the same corrupted data provided through Mr. Cabrera’s expert report to reach an even more outlandish damages figure. In addition, one of the presiding judges in this case has been implicated in an attempted bribery scheme, and another conspired with the plaintiffs’ attorneys in appointing Mr. Cabrera, in both cases destroying the integrity of the proceedings as a whole. The only appropriate course of action for this Court is to declare this case a nullity, as the entirety of the proceedings has been corrupted in violation of due process as a result of the plaintiffs’ pattern of wrongdoing and abuse of rights, which must not remain unsanctioned. See infra Chapter IV.64

63 PEÑAHERRERA, Victor Manuel, Lesson In Practical Civil and Criminal Law, EDINO,

Guayaquil, 1992, p. 125.

64 As my client continues to receive and review further evidence of the plaintiffs’ fraud, it expressly

reserves the right to file this evidence with this Court, and reiterates its request that this Court refrain from entering judgment until it has received and considered all such evidence.


- 34 -

2.1 The Plaintiffs Submitted Fabricated Evidence to This Court

In March 2010, sworn testimony in the United States from one of the plaintiffs’ nominated experts, Dr. Charles W. Calmbacher, revealed that the two reports submitted to this Court in his name—regarding the judicial inspection of the Sacha-94 and Shushufindi-48 sites—were falsified documents that he had never seen, never authorized, and never signed.65 Those fabricated reports claimed that there was a high level of contamination at those wellsites, that TexPet’s environmental remediation was inadequate, and that it would cost tens of millions of dollars to clean the soil at these sites once again.66

Dr. Calmbacher, who testified under oath pursuant to a subpoena obtained by Chevron in proceedings in the United States, explained that the fabricated reports directly contradicted the conclusions he had actually reached.67 In fact, Dr. Calmbacher affirmed in his testimony that he never “f[oun]d that any of the sites that [he] inspected had contamination of such an extent that it would endanger human health”; never “f[oun]d that any of the sites that [he] inspected required any further remediation”; never “conclude[d] that TexPet had failed to adequately remediate one of the sites”; and never “conclude[d] that any particular site posed a risk to human health or the environment.”68 Nor had Dr. Calmbacher ever “determine[d] the volume of soil that needed to be remediated” or “determine[d] what the cost of remediating soil at any of the sites would be.”69

The plaintiffs’ agents, including Mr. Donziger, knew that the submitted expert reports were falsified because Dr. Calmbacher personally relayed to them his actual

65 Official Transcript of Deposition of Dr. Charles W. Calmbacher at 112:1-8, 116:3-18, dated Mar.

29, 2010, attached as Annex 5 to Chevron’s Motion to Strike Dr. Calmbacher’s Judicial Inspection Reports, filed Apr. 14, 2010 at 3:42 p.m., Record at 168970-169158v, 169028, 169030 (the Spanish translation is included at Record 169072-157, 169127b, 169129v).

66 Expert Report of Dr. Charles W. Calmbacher regarding Sacha-94, filed Feb. 14, 2005 at 9:00 a.m., Record at 46239-79, 46272-73; Expert Report of Dr. Charles W. Calmbacher regarding Shushufindi-48, filed Mar. 8, 2005 at 12:00 p.m., Record at 52205-71, 52260-62.

67 Official Transcript of Deposition of Dr. Charles W. Calmbacher at 113:2-25, 117:6-20, dated Mar. 29, 2010, attached as Annex 5 to Chevron’s Motion to Strike Dr. Calmbacher’s Judicial Inspection Reports, filed Apr. 14, 2010 at 3:42 p.m., Record at 168970-169158v, 169028v, 169030v (the Spanish translation is included at Record at 169072-157, 169128, 169130) (Sacha-94 conclusions “are not conclusions I made” and Shushufindi conclusions “are not conclusions I would have written” because they are “false”).

68 Official Transcript of Deposition of Dr. Charles W. Calmbacher at 113:19-25, 115:19-24, dated Mar. 29, 2010, attached as Annex 5 to Chevron’s Motion to Strike Dr. Calmbacher’s Judicial Inspection Reports, filed Apr. 14, 2010 at 3:42 p.m., Record at 168970-169158v, 169028v, 169029v (the Spanish translation is included at Record at 169072-157, 169128, 169129).

69 Official Transcript of Deposition of Dr. Charles W. Calmbacher at 113:11-18, dated Mar. 29, 2010, attached as Annex 5 to Chevron’s Motion to Strike Dr. Calmbacher’s Judicial Inspection Reports, filed Apr. 14, 2010 at 3:42 p.m., Record at 168970-169158v, 169028v (the Spanish translation is included at Record at 169072-157, 169128).


- 35 -

conclusion, i.e., that he “did not see significant contamination that posed immediate threat to the environment or to humans or wildlife around it.” 70 But the plaintiffs apparently took Dr. Calmbacher’s signature from other documents, or from blank pages which he signed, and attached it instead to reports with findings contrary to those of Dr. Calmbacher.71 To prevent Dr. Calmbacher from learning of their fraudulent actions, the plaintiffs fired him and failed to notify him about this Court’s orders that he answer Chevron’s supplemental questions about his expert reports.72 Mr. Donziger later tried to convince Dr. Calmbacher not to comply with the subpoena issued by the U.S. court, in an effort to prevent the fraud from coming to light.73

70 Official Transcript of Deposition of Dr. Charles W. Calmbacher at 114:22-115:2, 118:15-119:1,

dated Mar. 29, 2010, attached as Annex 5 to Chevron’s Motion to Strike Dr. Calmbacher’s Judicial Inspection Reports, filed Apr. 14, 2010 at 3:42 p.m., Record at 168970-169158v, 169029-29v, 169031-31v (the Spanish translation is included at Record at 169072-157, 169128v-29v, 169130v-31).

71 Official Transcript of Deposition of Dr. Charles W. Calmbacher at 114:1-21, 116:3-117:20, dated Mar. 29, 2010, attached as Annex 5 to Chevron’s Motion to Strike Dr. Calmbacher’s Judicial Inspection Reports, filed Apr. 14, 2010 at 3:42 p.m., Record at 168970-169158v, 169029, 169030-30v (the Spanish translation is included at Record at 169072-157, 169128v, 169129v-30).

72 Official Transcript of Deposition of Dr. Charles W. Calmbacher at 11:22-25, 69:7-11, dated Mar. 29, 2010, attached as Annex 5 to Chevron’s Motion to Strike Dr. Calmbacher’s Judicial Inspection Reports, filed Apr. 14, 2010 at 3:42 p.m., Record at 168970-169158v, 168977v, 169003v (the Spanish translation is included at Record at 169072-157, 169077, 169103).

73 Official Transcript of Deposition of Dr. Charles W. Calmbacher at 144:14-146:7, dated Mar. 29, 2010, attached as Annex 5 to Chevron’s Motion to Strike Dr. Calmbacher’s Judicial Inspection Reports, filed Apr. 14, 2010 at 3:42 p.m., Record at 168970-169158v, 169044-45 (the Spanish translation is included at Record at 169072-157, 169143v-44v).

Dr. Calmbacher’s testimony that Mr. Donziger “exert[ed] … control over the plaintiffs’ experts in the litigation.” See Official Transcript of Deposition of Dr. Charles W. Calmbacher, dated Mar. 29, 2010, at 92:18 - 94:17 & Ex. 7, attached as Annex 5 to Chevron’s Motion filed Apr. 14, 2010 at 3:42 p.m., Record at 169072-158, 169083v (the English original is in the Record at 168970-169071v, 168984).


- 36 -

As Dr. Calmbacher’s testimony indicates, the plaintiffs submitted to the court “Calmbacher” reports that he did not agree with and did not sign. Plaintiffs’ malfeasance is further magnified by the fact that Dr. Calmbacher expressly warned Mr. Donziger not to alter his reports:

"It has also been stressed to me that it is highly unusual for a perito to allow others to contribute to the writing of a report. Comments or review is acceptable, but the perito's opinion and findings are final. I therefore have and feel no obligation to allow your team of textile engineers and associated crones to review or edit my reports. I am assured, as perito of the court, that I am completely within my rights to write and submit my report independent of those who have nominated me for appointment as perito. My sole obligation is to tell the truth, as I see it, to the court, no matter the consequences for either party."79

The submission of falsified expert reports is an outrageous act of fraud and bad faith and a corruption of these proceedings. It discredits not only the two reports submitted in Dr. Calmbacher’s name, but also all of the other evidence submitted by the experts nominated by the plaintiffs for the judicial inspections, which are tainted with defects of their own.

In fact, there is an additional reason to believe that other reports submitted by experts proposed by the plaintiffs were similarly fraudulent. Outtakes from the documentary Crude, a film recorded at the request of plaintiffs’ attorneys, show Mr. Donziger plotting to fraudulently manufacture scientific evidence for Mr. Cabrera’s Report. In the footage, experts from the plaintiffs’ technical team advise Mr. Donziger that there is no evidence regarding the extent of groundwater contamination. 80 Mr. Donziger dismisses their concerns, saying, “Hold on a second, you know, this is Ecuador. You can say whatever you want and at the end of the day, there’s a thousand people around the courthouse, you’re going to get what you want . . . . this is all for the

79 E-mail from Charles Calmbacher to Steven Donziger and David Russell, dated October 24, 2004 at 11:23 a.m., attached as Annex 2 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m. (DONZ0002422).

80 See Transcript of Crude Outtakes, attached as Annex 2 to Chevron’s Motion for Terminating Sanctions, filed Aug. 6, 2010 at 2:50 p.m. (CRS 195-05-01).


- 37 -

Court just a bunch of smoke and mirrors and bullshit.” 81 He goes on to say, “[w]e have enough, to get money, to win . . . we can do it, anything we want.” 82 When a consultant nevertheless continues to explain that “there is not enough information on that ground water” and that “the one hole in the remediation is the water,” Mr. Donziger says, “I got to make a point to these guys [the experts], but I can’t get this on camera,” and the clip ends.83

This reflects an unmistakable pattern of behavior with respect to the work of the experts nominated by the plaintiffs: From the first, plaintiffs’ evidence has been driven by lawyers demanding expert findings of significant contamination and large damages, not by experts fairly analyzing data collected in accordance with the scientific process. Mr. Donziger candidly admitted in a memorandum to his “case team” that “[t]he goal of the inspections [was] to win the legal case, not to produce an independent scientific report.”84 Indeed, as Dr. Calmbacher testified, Mr. Donziger “instructed” the experts to find contamination.85 To ensure that they did, Mr. Donziger further mandated in a memorandum to the plaintiffs’ technical team that all expert opinions be filtered through a team based out of plaintiffs’ counsel’s office, where a lawyer would help write and edit the experts' reports.86 The fact that plaintiffs’ evidence has been pre-cooked is seen in their use of unaccredited and makeshift laboratories, their utter lack of transparency, and their production of work that cannot be tested or replicated (traceability). This appalling display of disregard for the judicial process, coupled with the fraudulent reports submitted in Dr. Calmbacher’s name, shows that the plaintiffs cannot support their accusations and the claims in their complaint with scientific proof, and also illustrates the unethical and illegal lengths they will go to in order to manufacture a case against my client.87 It reflects Mr. Donziger’s admission that the judicial inspections

81 See Transcript of Crude Outtakes, attached as Annex 2 to Chevron’s Motion for Terminating

Sanctions, filed Aug. 6, 2010 at 2:50 p.m. (CRS-195-05-01). 82 See Transcript of Crude Outtakes, attached as Annex 2 to Chevron’s Motion for Terminating

Sanctions, filed Aug. 6, 2010 at 2:50 p.m. (CRS-195-05-01). 83 See Transcript of Crude Outtakes, attached as Annex 2 to Chevron’s Motion for Terminating

Sanctions, filed Aug. 6, 2010 at 2:50 p.m. (CRS-195-05-01). 84 See E-mail from Steven Donziger to the legal team on the case Ecuador v. Texaco, dated Sept.

9, 2004 at 11:21 a.m., attached as Annex 2 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m. (DONZ00022695).

85 See Official Transcript of Deposition of Dr. Charles W. Calmbacher at 52:13-18, dated Mar. 29, 2010, attached as Annex 5 to Chevron’s Motion to Strike Dr. Calmbacher’s Judicial Inspection Reports, filed Apr. 14, 2010 at 3:42 p.m., Record at 168998 (the Spanish translation is included in Record at 169097v).

86 See Official Transcript of Deposition of Dr. Charles W. Calmbacher at 92:18 - 94:17 & Ex. 7, dated Mar. 29, 2010, attached as Annex 5 to Chevron’s Motion to Strike Dr. Calmbacher’s Judicial Inspection Reports, filed Apr. 14, 2010 at 3:42 p.m., Record at 169018-19 (the Spanish translation is included in Record at 169117v-18v).

87 The plaintiffs also modified at least one judicial inspection site, Sacha-6, prior to the inspection to prepare it for their own purposes. See Judicial Inspection Acta for Sacha-6, filed Aug. 18, 2004 at 9:10 a.m., Record at 8703-30, 8703; see also Chevron’s Motion regarding Judicial Inspection of Sacha-6, filed


- 38 -

were “choreographed”; just “a good show” for the media.88 According to Mr. Donziger, the entire inspection process was “all about politics and arguing and bullshit and show.”89 Mr. Donziger expressed the “need to make facts . . . that help us” even though “the facts that we need don't always exist.”90 Nonetheless, according to Mr. Donziger, the lawyers “have to get the right facts. And if they don’t exist in an obvious way, you got to go figure out how to make 'em. Otherwise, you're gonna lose.”91

In light of this evidence that the plaintiffs fraudulently tainted the judicial-inspection process of this case, none of the data gathered during that phase can be relied upon by this Court, whether directly, or indirectly through the submission ordered in the illegal order of August 2, 2010, at 9:00 a.m. and filed by the plaintiffs on September 16, 2010, at 5:15 p.m. which rests in large part upon that data. See infra § 3.1.

2.2 The Cabrera Report Was Fraudulent and Deeply Flawed

2.2.1 Unimpeachable Evidence Demonstrates That the So-Called “Independent Expert” Was Nothing More Than a Mouthpiece for Plaintiffs

As early as September 2004, Mr. Donziger brought up the “‘elephant in the room,’” namely, “how we are going to end the inspections, and when we can start/finish the global peritaje.”92

(continued…) Aug. 17, 2004 at 5:30 p.m., Record at 8446-58, 8446-50, 8454-58 (attaching photographs of the preparation of the site by the plaintiffs).

88 Transcript of Crude Outtakes, attached as Annex 1 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m. (CRS 069-02-03). Mr. Donziger goes on to say that the judicial inspections were nothing more than "marketing." The idea was simply to "to get people to attend.” Id. In his mind, “these inspections . . . ha[d] nothing to do with the trial anymore” and that “legally, they're almost irrelevant.” Id. Similarly, when preparing to cross examine Ricardo Reis Veiga, the attorney who executed the remediation agreements, Mr. Donziger admitted that his intent was not to “obtain information.” “This is a show. It’s theatrics . . . . For the media. For the judge. To screw Reis Veiga.” Transcript of Crude Outtakes, attached as Annex 3 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m. (CRS 071-03-02).

89 Transcript of Crude Outtakes, attached as Annex 1 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m. (CRS 069-02-03).

90 Transcript of Crude Outtakes, attached as Annex 3 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m. (CRS 375-00-05).


92 E-mail from Charles Calmbacher to Steven Donziger, dated Sep. 28, 2004 at 12:42 p.m., at p. 2, attached as Annex 2 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m. (DONZ00022762).


- 39 -

Indeed,

Mr. Donziger confirmed to Crude filmmaker Michael Bonfiglio in November 2005 that “for reasons I don’t care to get into, it is highly doubtful we will do all 122 inspections.”95 As Your Honor is aware, the plaintiffs got their wish.

The judicial-inspection process was, by request of the plaintiffs, wrongfully truncated—before the settling experts had a chance to resolve the discordances between the reports of the party-nominated experts, and after those settling experts largely agreed with the determinations made by the experts nominated by Chevron about the one site on which they reported, Sacha-53.96 See infra § 3.3. After the report by the settling experts regarding the judicial inspection of the Sacha-53 site reached a result unfavorable to the plaintiffs, 97 the plaintiffs’ lawyers succeeded not only in relinquishing sixty-four of the judicial inspections they had originally requested, but also in obtaining the appointment of a single expert, instead of the experts nominated by both parties, to perform the global assessment of all the fields operated by the Consortium. 98 The Court agreed to the plaintiffs’ request to replace the judicial inspections with a global-assessment process, to be led by the mining engineer, Richard Cabrera. (Mr. Cabrera was not, however, nominated by the plaintiffs; he was purportedly chosen at random by the presiding judge.) This marked the complete breakdown of the process in this case. The judicial-inspection process leading to the Sacha-53 report allowed the parties to present their own evidence and contradict the other party’s evidence at each of the designated sites; to challenge the science and conclusions of the other side; and to have discordances in the reports of the party-nominated experts resolved by independent settling experts nominated by the Court, consistent with Articles 258 and 259 of the Code of Civil Procedure. With the appointment of Mr. Cabrera, this Court turned the process over to a single expert, who,

95 E-mail from Steven Donziger to Michael Bonfiglio, dated November 8, 2006 at 3:00 p.m., attached as Annex 4 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m. (MB-STIP00015491).

96 See Settling Experts’ Report on Sacha-53, filed Feb. 1, 2006 at 5:00 p.m., Record at 92492-685, 92522.

97 Settling Experts’ Report on Sacha-53, filed Feb. 1, 2006 at 5:00 p.m., Record at 92492-685, 92522.

98 Plaintiffs’ Motion regarding Relinquishment of Judicial Inspections, filed July 21, 2006 at 9:10 a.m., Record at 116431-35, 116434, Plaintiffs’ Motion, filed Dec. 4, 2006 at 5:20 p.m., Record at 123454-55.


- 40 -

in working clandestinely and in collusion with the plaintiffs, denied my client the right to defend itself. The fraud that has become this case was a direct result of this Court’s unlawful decision to upend the original process, which, being based upon the examination of specific sites that were to be evaluated on a site-by-site basis by settling experts, held at least some promise of producing credible results.

Documents show that the appointment of Mr. Cabrera was planned by the plaintiffs, who from the start sought to ensure the appointment of an expert who would be susceptible to their control. On July 25, 2006, when Mr. Fajardo argued that the plaintiffs should “agree to one perito, to get rid of the dirimente issue,” Mr. Donziger wondered in his diary: “But how can we control this perito?”99 He soon devised a way to guarantee such control. The plaintiffs’ November 2006 plan for the global expert report called for plaintiffs’ team to define the report’s methodology, structure, and components and to apply political pressure on the court and attorney general. 100 Mr. Donziger personally interviewed potential candidates for the position. On December 16, 2006, he had “a one hour interview” with Fernando Reyes, a prospective global expert, to do “a hard vet,” and specifically to ask Reyes “if he could be comfortable slamming [Texaco] with a 10 b[illion] judgment.”101 Two months later, on February 12, 2007, Mr. Donziger wrote that Mr. Cabrera was one of two real possibilities for the global expert position, and recorded that he had “met with Richard and Reyes on Sat afternoon in the Hotel Quito.”102 Mr. Donziger’s vision involved ”using E-tech to give [the expert] cover, but he has to totally play ball with us and let us take the lead while projecting the image that he is working for the court.”103

Once Mr. Donziger had decided upon Mr. Cabrera as the global expert who would conform to that vision, the plaintiffs imposed heavy and illegal pressure on the presiding judge, until Mr. Fajardo was “100% sure the judge would appoint [Cabrera].”104 Among other things, the plaintiffs engaged in blackmail: They “wrote up a complaint against Yanez, but never filed it, while letting him know we might file it if he

99 Diary of Steven Donziger, entry dated Jul. 25, 2006, attached as Annex 1 to Chevron’s Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30p.m., at 41(DONZ00027256).

100 Annex 1 to Chevron’s Fourth Supplemental Motion for Terminating Sanctions, filed Dec. 22, 2010 at 5:45 p.m. (DONZ00037146).

101 Diary of Steven Donziger, entry dated Dec. 16, 2006, attached as Annex 1 to Chevron’s Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p.m., at 22 (DONZ00027256).

102 Diary of Steven Donziger, entry dated Feb. 12, 2007, attached as Annex 1 to Chevron’s Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p.m., at 13 (DONZ00027256); see also Diary of Steven Donziger, entry dated Feb. 27, 2007, attached as Annex 1 to Chevron’s Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p.m., at 8 (DONZ00027256) (recording meeting between Mr. Donziger and “Fernando, Luis, Pablo and Richard” at which Mr. Donziger “[e]xplained everything”).

103 Diary of Steven Donziger, entry dated Dec. 16, 2006, attached as Annex 1 to Chevron’s Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p.m., at 22 (DONZ00027256).

104 Diary of Steven Donziger, entry dated Feb. 27, 2007, attached as Annex 1 to Chevron’s Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p.m., at 8 (DONZ00027256).


- 41 -

does not adhere to the law and what we need.”105 Outtakes from the documentary Crude also reference a series of clandestine, collusive, and ex parte meetings during which plaintiffs’ representatives successfully pressure Judge Yánez to appoint Mr. Cabrera.106 One meeting is actually captured on camera.107 Even Mr. Donziger has admitted that the judge “never would have done [the appointment] had we not really pushed him” at those meetings. 108 (During one of those meetings, Judge Yánez violated his obligation of impartiality and acted in the plaintiffs’ favor by actually suggesting that it would be effective, as a “symbolic thing . . .from a publicity point of view,” to swear in Mr. Cabrera at “one of the affected wells or a station.”109 On account of his evident partiality, as reflected by his provision of public-relations advice to plaintiffs, all of Judge Yánez’s orders—including the appointment of Mr. Cabrera—must be declared null and void.110) This is how, having obtained their desired appointment, the plaintiffs schemed to corrupt this global expert-assessment process from the very start.

The global assessment process was intended to be a neutral process conducted by independent experts. However, as stated by one of plaintiffs' consultants, it ended up “being a project that's . . . designed to benefit the . . . plaintiffs.”111 Although this filing, for ease of reference, will continue to refer to the “Cabrera” Report or the work of Mr. Cabrera, those are misnomers: Mr. Cabrera acted neither impartially nor independently.

105 Diary of Steven Donziger, entry dated Sept. 13, 2006, attached as Annex 1 to Chevron’s Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p.m., at 39 (DONZ00027256); see also E-mail from Steven Donziger to Joseph Kohn, dated Jul. 26, 2006 at 4:22 p.m., attached as Annex 1 to Chevron’s Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p.m., at 1 (DONZ00023182) (“The judge, who is on his heels from the charges of trading jobs for sex in the court, said he is going to accept our request to withdraw the rest of the inspections save the four we still want to do. This follows our press conference Monday . . . . The judge also I believe wants to forestall the filing of a complaint against him by us, which we have prepared but not yet filed.”).

106 See Transcript of Crude Outtakes, attached as Exhibit 5 to Chevron’s Supplemental Motion for Terminating Sanctions, filed Sept. 14, 2010 at 11:10 a.m., (CRS-158-02-06); see also Transcript of Crude Outtakes, attached as Exhibit 5 to Chevron’s Supplemental Motion for Terminating Sanctions, filed Sept. 14, 2010 at 11:10 a.m., (CRS-347-00-01); Transcript of Crude Outtakes, attached as Annex 1 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., (CRS-158-02-07).


108 Transcript of Crude Outtakes, attached as Annex 1 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m. (CRS 361-11-01). Ms. Atossa Soltani, the founder and director of Amazon Watch, is also shown on tape asking Judge Yánez why he has not yet appointed a global expert, further illustrating the pressure plaintiffs put on the Court. Transcript of Crude Outtakes, attached as Annex 3 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m. (CRS 347-00-02).

109 Transcript of Crude Outtakes, attached as Exhibit 5 to Chevron’s Supplemental Motion for Terminating Sanctions, filed Sept. 14, 2010 at 11:10 a.m., (CRS-158-02-06).

110 See Chevron Motion, filed Dec. 21, 2010 at 10:50 a.m.; Chevron Motion, filed Sept. 23, 2010 at 9:50 a.m.; see 2008 Const. art. 76(7)(a), (k); see also Organic Code of the Judiciary art. 9.



- 42 -

Rather, he worked alongside, and on behalf of, the plaintiffs’ representatives. As such, his expert report was a sham, drafted by the plaintiffs’ attorneys, consultants, and affiliated activists, and Chevron’s substantial evidence refuting the plaintiffs’ allegations never received fair consideration; the judges who succeeded former Judge Yánez in hearing this case were clearly biased and committed to protecting Mr. Cabrera, covering up the fraudulent acts of the plaintiffs’ attorneys, and affording them impunity, as is shown by the record and was reported by my client in a timely manner.

The most shocking evidence of this illegal collusion comes from unused film footage from the documentary film Crude. Those outtakes show Mr. Donziger explaining, prior to the appointment of Mr. Cabrera as expert, that this Court, per “typical Ecuador bullshit,” would “appoint someone from the court” to replace the judicial-inspection experts, and even more egregiously, Mr. Donziger confirmed, even at that early point, that “our people would do the basic work and give it to this guy [Cabrera].” Thus, the plaintiffs never expected Mr. Cabrera to “go out and do . . . the study.” Instead, they always knew that “it would be [plaintiffs’] team” doing the work and preparing the expert’s report for him.112 As Mr. Donziger explained on another occasion, “the judge is going to appoint a guy in Ecuador . . . but really, you know, we’ll be supporting him with the work—our people, E Tech, whoever we choose to use.”113 Furthermore, Mr. Donziger made clear that this was not to be a scientific or technical process, but rather a process led by the attorneys in order to “expedite” the case to a (preordained) judgment.114 “Science has to serve the law practice,” Mr. Donziger stated, “the scientists are not the ones who will determine what we do . . . —it’s the attorneys because they have to handle the case.” 115

112 Transcript of Crude Outtakes, attached as Exhibit 5 to Chevron’s Supplemental Motion for

Terminating Sanctions, filed Sept. 14, 2010 at 11:10 a.m., (CRS 169-05-01). 113 Transcript of Crude Outtakes, attached as Annex 1 to Chevron’s Motion filed Sept. 16, 2010 at

4:35 p.m., (CRS 138-02-01); Testimony from one of plaintiffs’ consultants, Mark A. Quarles, confirms that plaintiffs discussed a “role” for E-Tech in the global assessment. See Official Transcript of Deposition of Mark A. Quarles at 60:6-22, dated Sept. 1, 2010, attached as Annex 21 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m.

114 Transcript of Crude Outtakes, attached as Annex 1 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., (CRS 158-02-09).

115 Id. Mr. Donziger's view is that “science is very malleable” and so the lawyers “need to find the person who's gonna sort of to stand up to scrutiny as an objective scientist . . . but also can play ball with you.” Transcript of Crude Outtakes, attached as Annex 3 to Chevron’s Motion filed Dec. 8, 2010 at 4:21p.m. (CRS 375-00-16). Likewise, plaintiffs had no respect for the evidentiary process before Ecuadorian courts, noting that "[i]t's not like a US court in that respect, things are really loose here. . . . Rules of evidence are, like, not even close to what they are in the US. People can just say whatever the 'f' they want". Transcript of Crude Outtakes, attached as Annex 3 to Chevron’s Motion filed Dec. 8, 2010 at 4:21p.m. (CRS 042-14-05). Mr. Donziger also explained to some of plaintiffs’ consultants, “the lawyers will control the scope [of the process], not the science people.” E-mail from Richard Kamp, dated Feb. 12, 2007 at 3:49 p.m., forwarding e-mail from Steven Donziger to Mark Quarles, dated Feb. 7, 2007 at 10:52 p.m., attached as Annex 7 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec.8, 2010 at 4:21 p.m. (KAMP-NATIVE001786-001793, 001789).


- 43 -

That explanation soon became reality. As a result of Chevron’s proof of their collusion, the plaintiffs recently have conceded, both in this Court and in a filing in a court in the United States, that they have engaged in ex parte “dealings” with Mr. Cabrera to “advocate their own [the plaintiffs’] findings, conclusions, and valuations.”116 Those dealings were far deeper and more sustained than plaintiffs have yet been willing to acknowledge. Outtakes from Crude definitively prove that Mr. Cabrera and plaintiffs clandestinely, illegally, and improperly worked together to create the report that Mr. Cabrera ultimately filed under his name with this Court, which was literally drafted by plaintiffs’ own representatives, paid consultants and affiliated activitists.117

For example, unused footage from Crude shows Mr. Cabrera attending a March 3, 2007 meeting with plaintiffs’ attorneys and consultants to discuss the global expert examination.118 That meeting took place approximately two weeks before Judge Yánez selected and appointed Mr. Cabrera—purportedly at random—as the sole expert for global expert assessment expert, and nearly eleven months before the January 30, 2008 order at 9:00 a.m. that the plaintiffs have recently claimed in U.S. court proceedings supposedly authorized them to submit materials to Mr. Cabrera. According to one of the plaintiffs’ consultants, the meeting was a gathering of the plaintiffs’ technical and legal teams to discuss the next steps for the case.119 It was understood that everyone at the meeting was working for the plaintiffs and representing that party in the litigation.120 At that time, the consultant, Mr. Champ, did not realize that Mr. Cabrera was soon to be appointed by the Court as a purportedly “independent” expert. 121 Mr. Champ later testified that had he known that fact, he would have felt uncomfortable participating in the meeting.122

116 See Chevron’s Supplemental Motion to Strike Cabrera Reports, filed June 4, 2010 at 8:35

a.m., at 4; see also Plaintiff’s Motion at 5-7, filed June 21, 2010 at 2:20 p.m. 117 The plaintiffs even controlled picayune aspects of Mr. Cabrera’s work. For example, Mr.

Donziger was sent a draft of a letter, putatively from Cabrera to this Court, for review and comment prior to filing. E-mail from Joseph Mutti to Steven Donziger, dated Dec. 20, 2007 at 1:40 p.m., attached as Annex 1 to Chevron’s Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p.m. (DONZ00025621).

118 The members of plaintiffs’ litigation team present at the meeting are (1) Steven Donziger, plaintiffs’ U.S. team leader; (2) Pablo Fajardo, lead Ecuadorian counsel for plaintiffs; (3) Luis Yanza, representative of the Amazon Defense Front (also known as Frente) or Selva Viva, and who introduces himself as the “coordinator” for plaintiffs’ case; (4) Dick Kamp, director of E-Tech International; (5) Ann Maest, a managing scientist at Stratus Consulting, Inc. and E-Tech; and (6) Charlie Champ, of Champ Science and Engineering. See Chevron’s Motion for Terminating Sanctions at 15-16, filed Aug. 6, 2010 at 2:50 p.m.

119 See Official Transcript of Deposition of Charles Champ dated Sept. 9, 2010, at 93:8-19, submitted as Annex 35 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m.

120 See id. at 99:5-11, 386:11-16. 121 See id. at 386:11-22. 122 See id. at 386:17 - 387:22.


- 44 -

During this meeting of March 3, 2007, plaintiffs’ counsel Pablo Fajardo presented a PowerPoint outline of a “Plan Para Examen Pericial Global.”123 In a diary entry, Mr. Donziger described that, at the meeting, “he spen[t] the whole day making comments and mostly directing them to Richard. We laid out our entire case and legal theory—what a benefit! We need to do the same with the judge.”124 The footage shows that plaintiffs laid out every aspect of Mr. Cabrera’s report and work plan, including:

• What would be tested, how the sampling and analysis will be done, how the sites should be chosen, and what other “harms” should be computed;125

• The legal theory that “Texaco is liable for all of the existing damage, even that caused by Petroecuador”;126

• Details regarding the content of the expert report, including what legal standards and scientific methodologies should govern;127 and

• How the final report should look and the various sections that it should have.128

123 See Transcript of Crude Outtakes, attached as Annex 2 to Chevron’s Motion for Terminating

Sanctions, filed Aug. 6, 2010 at 2:50 p.m., (CRS-187-01-02-12). 124 Diary of Steven Donziger, entry dated Mar. 7, 2007, attached as Annex 1 to Chevron’s Third

Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p.m., at 5 (DONZ00027256).

125 See Transcript of Crude Outtakes, attached as Annex 2 to Chevron’s Motion for Terminating Sanctions, filed Aug. 6, 2010 at 2:50 p.m., (CRS-187-01-02-12 and CRS-193-00-01).

126 See Transcript of Crude Outtakes, attached as Annex 1 to Chevron’s Motion, filed Sept. 16, 2010 at 4:35 p.m., (CRS-187-01-02-11).

127 See Transcript of Crude Outtakes, attached as Annex 2 to Chevron’s Motion for Terminating Sanctions, filed Aug. 6, 2010 at 2:50 p.m., (CRS-188-00-02 and CRS-193-00-01).

128 See Transcript of Crude Outtakes, attached as Annex 2 to Chevron’s Motion for Terminating Sanctions, filed Aug. 6, 2010 at 2:50 p.m., (CRS-187-01-02-12). “[The report] must have an executive summary, a conclusive executive summary, that is, maybe the report is sixty, a hundred pages, which will make it difficult for the judge and perhaps other people to read, Maybe in five pages, or ten pages, a very clear executive summary, very didactic, understandable and conclusive. Is the one or isn’t there? . . . It must categorize the damage, what was asking, as far as- as far as the environment, for example. We must categorize the wells operated by Texaco, the ones remediated by Texaco, the hidden pools, the toxic components, a list of what was found during the expert’s study and the inspections, the extent of the damage, the toxic products . . .as far as the biotic aspect, damage to the flora and fauna, the most affected species, both land and lehthyological species, or fish. On the human side, effects on the indigenous peoples, culture, effects on people’s lives, both to their health and to their possessions, It must also have the repair mechanisms and establish the costs to repair the damage.” Id. In a subsequent meeting, plaintiffs’ attorneys and consultants discussed their "outline” for the “peritaje global.” Transcript of Crude Outtakes, attached as Annex 1 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., (CRS-198-00-06). Plaintiffs’ involvement in drafting Mr. Cabrera’s work plan is further corroborated by the fact that they provided one of their consultants with an unsigned copy of that document which apparently


- 45 -

Mr. Fajardo also outlines a plan to hide the truth from Chevron. For the amusement of the participants, he indicates that “Chevron’s main problem right now is that it doesn’t know what the hell is going to happen in the global expert examination. In other words, they don’t know that. I hope none of you tell them, please . . . it’s Chevron’s problem.”129 Mr. Fajardo also identifies various steps that must be taken to counteract my client’s possible actions, including: (i) the plaintiffs “[must k]eep up the pressure and constant oversight in the court”; (ii) “[m]ake certain that the expert constantly coordinates with the plaintiffs’ technical and legal team”; (iii) “[t]he plaintiffs’ technical coordinator must be [involved] in the process fulltime”; (iv) at least one lawyer must “[a]ccompany the expert in the field” to “protect the activity being performed”; and (v) plaintiffs must “provide the facilities and necessary support to the field team” and “support the expert in writing the report.”130

Mr. Fajardo emphasizes that “the burden isn’t going to be the expert’s. All of us bear the burden.”131 When one of the participants asks whether the final report will be completed by the expert alone, Mr. Fajardo states that “what the expert is going to do is . . . sign the report and review it. But all of us . . . have to contribute to that report.”132 A consultant then asks, “[t]ogether,” and Mr. Fajardo confirms. The consultant again asks, “[b]ut not Chevron,” to which everyone laughs, demonstrating their complicity in the conspiracy.133 Looking Mr. Cabrera in the eye, Mr. Donziger said: “and Richard, of

(continued…) had not been filed with this Court. See Official Transcript of Deposition of Mark A. Quarles at 110-14, dated Sept. 1, 2010, attached as Annex 21 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m.

129 See Transcript of Crude Outtakes, attached as Annex 2 to Chevron’s Motion for Terminating Sanctions, filed Aug. 6, 2010 at 2:50 p.m., (CRS-191-00-03).




133 See Transcript of Crude Outtakes, attached as Exhibit 2 to Chevron’s Motion for Terminating Sanctions, filed Aug. 6, 2010 at 2:50 p.m., (CRS-191-00-03). Other consultants were not as comfortable with plaintiffs’ ex parte contacts with Cabrera. Later footage from March 4, 2007 shows a consultant expressing his concern to Mr. Donziger, stating that “[h]aving the perito [Cabrera] there yesterday in retrospect . . . [t]hat was bizarre.” Id. at CRS-196-00-01. Mr. Donziger looks at the consultant for about two or three seconds, and then instructs him not to “talk about it” and tells the camera crew, “that is off the record.” Id. at CRS-196-00-01. The cameras are not turned off, however, and Mr. Donziger is recorded saying to the consultant, “That’s the way it works . . . . Believe me, I would much rather have it work the normal way. . . . I would much rather have it work the normal way, then I wouldn’t have to worry about stuff like that.” Id. at CRS-196-00-01.


- 46 -

course you really have to be comfortable with all that. And we’ll also def- define the support the expert needs.”134

The recording ends with Mr. Donziger talking about the ways to make Chevron pay more, and his foreshadowing comment that plaintiffs could “jack this thing up to thirty billion . . . in one day.”135 Of course, that is exactly what they eventually did, in Mr. Cabrera’s responses to the plaintiffs’ “observations” of his report, filed on November 17, 2008, at 8:25 a.m., when Mr. Cabrera increased his prior “damages” assessment against Chevron of approximately US$16 billion to over US$27 billion.

Additional evidence obtained by Chevron proves that the plaintiffs, their paid consultants, and affiliated activists followed through on their plans to collaborate with Mr. Cabrera. Consultant Douglas Beltman testified that he met personally with Mr. Cabrera, ex parte, in early 2008 in Quito, at a meeting that was also attended by the plaintiffs’ representatives (including Mr. Donziger) and other consultants (including Ann Maest of Stratus).136 Ms. Maest also produced notes of a meeting from January 2008 in which the plaintiffs’ consultants (again) discussed the contents of the Cabrera Report they themselves would draft and distributed the drafting assignments.137 Thereafter, on February 22, 2008, Mr. Beltman informed his colleagues that they must “write, over the next 2 to 3 weeks, probably the single most important technical document for the case,” a report which will “make recommendations for the court to consider in making its judgment.”138 A follow-up e-mail, sent a few days later, confirmed that this “technical document” was none other than the “Peritaje Global report.”139 That e-mail outlined the Cabrera Report and assigned various Stratus employees to draft portions of it,140 and

134 Transcript of Crude Outtakes, attached as Exhibit 2 to Chevron’s Motion for Terminating

Sanctions, filed Aug. 6, 2010 at 2:50 p.m., (CRS-189-00-02). 135 Transcript of Crude Outtakes, attached as Exhibit 2 to Chevron’s Motion for Terminating

Sanctions, filed Aug. 6, 2010 at 2:50 p.m., (CRS-193-00-01). 136 Official Transcript of Deposition of Douglas John Beltman at 33:19-34:14, dated Oct. 6, 2010,

attached as Annex 12 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m. 137 Notes by Ann Maest from Jan. 15, 2008 meeting (discussing contents of Cabrera Report)

(STRATUS-NATIVE008849), attached as Annex 10 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m. 138 E-mail from Douglas Beltman to Science Group, et al., dated Feb. 22, 2008, at 6:24 a.m.

(STRATUS-NATIVE043232), attached as Annex 10 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m. 139 E-mail from Douglas Beltman to Michael Carney, et al., dated Feb. 26, 2008, at 10:05 a.m.

(STRATUS-NATIVE043849), attached as Annex 10 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m. 140 E-mail from Douglas Beltman to Michael Carney, et al., dated Feb. 26, 2008, at 10:05 a.m.

(STRATUS-NATIVE043849-50), attached as Annex 10 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m. In fact, the Stratus spreadsheet keeping track of the in-progress annexes for the Cabrera Report included two columns next to one another: “Who will prepare” and “Attribution in PG Report.” Attachment to e-mail from Douglas Beltman to Michael Carney et al., dated Feb. 26, 2008 at 10:05 a.m., attached as Annex 8 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m. (STRATUS-NATIVE043851-043859, 043854). Thus, at least internally, the ghostwriting was transparent, although the fraud also became sufficiently difficult to coordinate that Mr. Beltman bemoaned “what a tangled web” it had become. E-mail from Douglas Beltman to David Mills, dated July 28, 2008 at


- 47 -

another document confirmed that Stratus was asked “to prepare both Spanish and English versions of the report and annexes.”141 Two weeks later, on March 10, 2008, Mr. Beltman told his colleagues that he has been too busy to “work much” on “the report itself,” which “has to go to the court in 2 weeks and get translated [first].”142 He asked his co-workers to help “finish what I started,” with the goal being to have “the entire report drafted by COB Tuesday.”143 Two days later, Mr. Beltman sent the “main report” to be translated into Spanish.144 Notably, the Stratus employees drafting the “Cabrera” report were even given ex parte access to Mr. Cabrera’s "TPH soils data," which were (according to Stratus) "not official[l]y released yet and are considered ‘secret.’"145

The involvement of plaintiffs’ team in directing Stratus’s work can be seen by the fact that the damage categories addressed by this consulting firm (hired and paid by the plaintiffs themselves) in its ghostwritten Cabrera Report had actually been “proposed” by Mr. Donziger himself, even before Mr. Cabrera’s appointment, which also shows the extent to which the plaintiffs were involved in directing Stratus' work.146 Further, the responsibility for drafting various annexes was delegated to consultants and activists in favor of the plaintiffs' cause, such as Adolfo Maldonado and even Mr. Donziger.147

(continued…) 8:56 p.m., attached as Annex 8 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m. (STRATUS-NATIVE057803).

141 E-mail from Douglas Beltman to Ann Maest, et al., dated Mar. 18, 2008, at 9:11 a.m. (STRATUS-NATIVE053439), attached as Annex 10 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

142 E-mail from Douglas Beltman to Ann Maest and Jennifer Peers, dated Mar. 10, 2008, at 9:25 p.m. (STRATUS-NATIVE055867), attached as Annex 10 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

143 E-mail from Douglas Beltman to Ann Maest and Jennifer Peers, dated Mar. 10, 2008, at 9:25 p.m. (STRATUS-NATIVE055867), attached as Annex 10 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

144 E-mail from Douglas Beltman to translator, dated Mar. 12, 2008, at 10:11 a.m. (STRATUS-NATIVE058388), attached as Annex 10 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.; see also Official Transcript of Deposition of Douglas John Beltman at 148:15-18, dated Oct. 6, 2010, attached as Annex 12 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

145 E-mail from Preston Sowell to Douglas Beltman, et al., dated Oct. 2, 2007, at 11:02 a.m. (STRATUS-NATIVE049071), attached as Annex 10 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

146 Official transcript of Deposition of Douglas John Beltman at 78:1-8, dated October 6, 2010, attached as Annex 9 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8,2010 at 4:21 p.m. Other documents indicate that plaintiffs' consultants depended on instructions from plaintiffs' attorneys. See Attachment to e-mail from Douglas Beltman to Michael Carney et al., dated Feb. 26, 2008 at 10:05 a.m., attached as Annex 8 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m. (STRATUS-NATIVE043851-043859, 043857), indicating that the consultants had to "ask Pablo [Fajardo]" whether to include certain information).

147 Attachment to e-mail from Douglas Beltman to Michael Carney et al., dated February 26, 2008 at 10:05 a.m., attached as Annex 8 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m. (STRATUS-NATIVE043851-043859).


- 48 -

David Mills, another of plaintiffs’ consultants at Stratus, corroborated that the “reports and summaries [Stratus] prepared in English” were translated to Spanish and then “submitted to Cabrera, and apparently Cabrera used [them] in part or in whole as part of the [Cabrera report] annexes.”148 With respect to his work on Stratus reports that were included as annexes to the Cabrera Report, Mr. Mills testified that his work had been done without any inputs or data from Mr. Cabrera or his disclosed team, and that no portion of those annexes had been drafted or even revised by them.149 Mr. Mills had no knowledge of Mr. Cabrera “independently working on a separate report” and implicitly acknowledged that Stratus’s work required no further action by Mr. Cabrera, as it “uses Richard Cabrera’s name and I in the first person.”150

Mr. Mills’ testimony corroborates that of William Powers, a consultant working with the plaintiffs and Stratus, who testified that Annex S of Mr. Cabrera’s report was nothing more than a “slightly different” version of a report he drafted for Stratus.151 A review of Mr. Powers’ report confirms that there are no substantive differences between that document and the document submitted to this Court as the work of Mr. Cabrera.152 Similarly, Mr. Powers admitted that his calculations were used in Annex T of the report submitted by Mr. Cabrera.153 Powers further testified that he was aware that his work would be “going into a larger report that Stratus was writing.”154

The work and drafting illicitly done by the plaintiffs’ own attorneys, paid consultants, and affiliated activists was not marginal or peripheral to the Cabrera Report. E-mails show that they wrote the entire report, including Cabrera’s summary

148 Official Transcript of Deposition of David M. Mills at 196:5-12, dated Oct. 20, 2010, attached as Annex 20 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

149 Official Transcript of Deposition of David M. Mills at 124:25-125:9, 247:3-6, 253:4-23, 281:22-282:1, dated Oct. 20, 2010, attached as Annex 20 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

150 Official Transcript of Deposition of David M. Mills at 150:23-24, 260:11-12, dated Oct. 20, 2010, attached as Annex 20 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

151 Transcript of Deposition of William Powers at 96:18-97:9, 98:11-20, 108:15-109:7, dated Sept. 10, 2010, attached as Annex 34 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m. Similarly, Mr. Doniziger is asked whether Mr. Charles Champ, one of the plaintiffs’ technical consultants, "need[s] an Ecuadorian counterpart to bless" his work. Transcript of Crude Outtakes, attached as Annex 3 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m. (CRS 169-05-12). Mr. Donziger explains that the work "will all go through the court-appointed expert." Id. When the questioner follows up, saying, "[s]o the court-appointed expert will just bless what--or presumably--or critique it or whatever," Mr. Donziger replies "Yeah." Id. When asked whether plaintiffs will need their "own Ecuadorian cleanup—cost?--estimator or whatever the hell you call it," Mr. Donziger answers, "No, no. That's--that's in the bag." Id.

152 See Powers Report, dated March 22, 2008, attached as Annex 18 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m.; see also Transcript of Deposition of William Powers at 108:15-109:7, 275:7-11, 276:5-8, dated Sept. 10, 2010, attached as Annex 34 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m.

153 Transcript of Deposition of William Powers at 251:4-253:1, 255:13-256:13, dated Sept. 10, 2010, attached as Annex 34 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m.

154 Id. at 90:4-9.


- 49 -

“Declaration of Findings,” which was translated from English, as well as the report’s annexes.155 It is doubtful whether Mr. Cabrera actually read (or had time to read) the 6,196 page document the plaintiffs drafted; one of the plaintiffs’ other consultants testified that it took him twenty-four working hours to analyze just a small portion of the Cabrera Report.156 Plainly the plaintiffs and their consultants did not anticipate that any supposed review by Mr. Cabrera’s would affect their filing, and in any case, an eleventh-hour “review” comes nowhere near meeting Mr. Cabrera’s obligation to perform his own work independently and impartially. That is why drafts written by Stratus had Mr. Cabrera’s name at the top, and were dated “March 24, 2008,” the date that Mr. Beltman believed the report would be submitted by Mr. Cabrera to this Court.157 (This Court ultimately granted Mr. Cabrera an extension, and the report was not submitted until April 1, 2008, but Mr. Beltman and the plaintiffs’ attorneys continued working on it right until that date, as the e-mails reflect, and the filed version of the report bears the date “March 24, 2008.”158) And it is why Mr. Beltman responded “yikes!” when he observed that the numbers in some of his annexes were changed by the plaintiffs’ team in Quito before they were submitted to the Court.159 Indeed, the target audience for Stratus’s work product, according to Mr. Beltman, was “the judge”—not Mr. Cabrera or his team.160 In all of the discovery my client has obtained to date, there is no record of Mr. Cabrera reviewing, much less editing, questioning, or changing the material given him. As Mr. Beltman admitted, Stratus’s work “got used almost straight as is” in the Cabrera Report.161

In sum, documents recently discovered by U.S. courts remove any doubt that the global assessment repeatedly heralded by plaintiffs and Mr. Cabrera as “impartial” and “independent” was, in fact, the wholly biased work of plaintiffs’ attorneys and paid

155 E-mail from Douglas Beltman to Ann Maest and Brian Lazar, dated Apr. 1, 2008, at 1:53 p.m. (STRATUS-NATIVE065493), attached as Annex 10 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

156 Official Transcript of Second Deposition of Mark A. Quarles at 359:11-360:21, dated Oct. 12, 2010, attached as Annex 11 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

157 Official Transcript of Deposition of Douglas John Beltman at 135:3-18, 198:12-199:11, 209:14-17, dated Oct. 6, 2010, attached as Annex 12 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

158 See E-mail from Douglas Beltman to Juan Pablo Sáenz and Steven Donziger, dated Mar. 25, 2008, at 9:44 a.m. (STRATUS-NATIVE063142), attached as Annex 10 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.; E-mail from Douglas Beltman to Steven Donziger, dated Mar. 30, 2008, at 9:48 p.m. (STRATUS-NATIVE069123) attached as Annex 10 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.; E-mail from Douglas Beltman to Ann Maest and Brian Lazar, dated Apr. 1, 2008, at 1:53 p.m. (STRATUS-NATIVE065493), attached as Annex 10 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

159 E-mail from Douglas Beltman to Brian Lazar, dated July 28, 2008, at 3:12 p.m., attached as Annex 10 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m. (STRATUS-NATIVE044716).

160 E-mail from Douglas Beltman to Michael Carney, dated March 1, 2008 at 8:14 p.m., attached as Annex 8 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m. (STRATUS-NATIVE059357).

161 Official Transcript of Deposition of Douglas John Beltman at 194:18-21, dated October 6, 2010, attached as Annex 8 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m.


- 50 -

consultants—it can no longer be considered the work of Mr. Cabrera and cannot possibly be given any credence by this Court.

Yet the plaintiffs’ attorneys and paid consultants wrote not just the original Cabrera Report, but also Mr. Cabrera’s purported responses to questions posed by the plaintiffs.162 Some of those “questions to the Perito,” according to an internal Stratus e-mail, were “assigned to us.”163 In other words, the plaintiffs asked and answered their own questions about their own work appearing in the Cabrera Report, increasing in the process the estimated damages by over US$10 billion. In an e-mail dated August 1, 2008, Mr. Beltman outlined for his colleagues what “we need to do for the comments on the Cabrera report.”164 His e-mail listed the various answers that need to be prepared, and what they should say. Notably, Mr. Beltman repeatedly referred to the plaintiffs’ questions in the first-person and to their own work as that of “Mr. Cabrera.” For example, he says that “[w]e comment on the lack of consideration given to cleanup of rivers and streams,” and “[w]e comment that Cabrera does not consider metal contamination in his cleanup costs.”165 He then suggests possible responses to those comments.166

Likewise, Mr. Powers confirmed that he drafted portions of Mr. Cabrera’s “answers” to questions that the plaintiffs raised about the initial Cabrera Report, by providing answers to Stratus regarding questions that were “substantively the same” as the “objections” plaintiffs had filed to Mr. Cabrera’s report.167 Mr. Powers attested that

162 E-mail from Douglas Beltman to Ann Maest, et al., dated Aug. 1, 2008, at 5:27 a.m.

(STRATUS-NATIVE058697), attached as Annex 10 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.; e-mail from Douglas Beltman to Jennifer Peers, et al., dated August 10, 2008 at 10:55 a.m. (STRATUS-NATIVE056768), attached as Annex 10 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.; see also E-mail from Jennifer Peers to Pablo Fajardo, et al., dated Aug. 12, 2008 at 6:17 p.m., attached as Annex 1 to Chevron’s Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p.m. (DONZ00026679). In fact, plaintiffs’ team in Ecuador requested Stratus’s ghostwritten answers to plaintiffs’ questions for Mr. Cabrera just “two days in advance” of the deadline for submission of the answers to the court. E-mail from Tania Naranjo to Ann Maest dated October 24, 2008 at 11:33 a.m., attached as Annex 8 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m. (STRATUS-NATIVE-045778).

163 E-mail from Douglas Beltman to Jennifer Peers and Ann Maest, dated October 27, 2008, at 6:18 p.m. (responding to Jennifer Peers’ e-mail referring to "questions to the Perito assigned to us")(STRATUS-NATIVE051388), attached as Annex 10 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

164 E-mail from Douglas Beltman to Ann Maest, et al., dated Aug. 1, 2008, at 5:27 a.m. (STRATUS-NATIVE058697), attached as Annex 10 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.



167 Id. at 93:7-94:5, 152:20-158:4, 162:5-166:19; see also e-mail from Ann Maest to William Powers, dated October 31, 2008, attached as Annex 19 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m.; e-mail exchange between Ann Maest and William Powers, dated Oct. 27, 2008, attached as Annex


- 51 -

the answers Mr. Cabrera gave to plaintiffs’ “objections” in the Supplemental Cabrera Report were also “substantively the same” as the answers that he had drafted for Stratus.168 In other words, the plaintiffs asked and answered their own questions—but they falsely made it appear as though Mr. Cabrera was responding to the "objections" to the initial report "of Mr. Cabrera." To further this charade, Stratus also published comments purporting to independently review and validate the Cabrera Report, and sought to persuade others in the field to lend their names to what they referred to as the work of the “Technical Special Master” acting in “the capacity of a neutral ‘expert’ to the Court.”169 But finding others willing to validate the Cabrera Report proved difficult; Mr. Beltman explained to Mr. Donziger that “some of the underlying work in the Cabrera report has weaknesses that an academic would probably have a hard time defending.”170 Plaintiffs have not, and cannot provide a valid explanation for why or how the supposedly independent court expert, Mr. Cabrera, submitted answers prepared by one of their own consultants to questions they themselves had posed.

The evidence also shows that the plaintiffs were conscious of the illegality of their actions and took steps to conceal it.171 The e-mails produced to my client in the last two months demonstrate that the plaintiffs’ consultants and lawyers were in constant communication with one another throughout this fraudulent process, as drafts, inserts, and annexes were transmitted back and forth.172 In one early outline of what would (continued…) 19 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m; Plaintiffs’ Observations of the Global Expert Report, filed Sept. 16, 2008 at 11:30 a.m., Record at 150878-150995v.

168 Transcript of Deposition of William Powers at 288:7-291:18, dated Sept. 10, 2010, attached as Annex 34 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m.

169 BELTMAN, Douglas, et al., Comments on the Report of the Court-Appointed Expert Ing. Richard Cabrera Vega in the Case of Maria Aguinda y Otros v. Chevron Corp., dated Dec. 1, 2008, at 1, attached as Annex 16 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m.

170 Annex 2 to Chevron’s Fourth Supplemental Motion for Terminating Sanctions, filed Dec. 22, 2010 at 5:45 p.m. (STRATUS-NATIVE042610).

171 For example, one of the consultants who had attended the March 3, 2007 meeting with Mr. Cabrera said that, during lunch the following day, Mr. Donziger “made a big point” that he “definitely didn’t want to talk about” Mr. Cabrera’s involvement “on film.” Deposition of Richard A. Kamp, dated Oct. 7-8, 2010, at 386:19-388:1, attached as Annex 11 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m.

172 See E-mail from Douglas Beltman to Juan Pablo Sáenz and Steven Donziger, dated Mar. 25, 2008, at 9:44 a.m. (STRATUS-NATIVE063142), attached as Annex 10 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.; E-mail from Douglas Beltman to Steven Donziger, dated Mar. 13, 2008, at 8:35 a.m. (STRATUS-NATIVE065019), attached as Annex 10 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.; E-mail from Douglas Beltman to Steven Donziger, dated Mar. 30, 2008, at 9:48 p.m. (STRATUS-NATIVE069123) attached as Annex 10 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.; E-mail from Douglas Beltman to Steven Donziger, dated Sept. 30, 2009, at 5:00 p.m. (STRATUS-NATIVE050326), attached as Annex 10 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.; see also E-mail from Douglas Beltman to Ann Maest, et al., dated Aug. 1, 2008, at 5:27 a.m. (referring to conversations with “Pablo”) (STRATUS-NATIVE058697), attached as Annex 10 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.;


- 52 -

become the Cabrera Report, a note observed the "need to figure out to whom Richard will attribute each of the annexes."173 The consultants thus understood the "need" to hide their own role. They also understood the need to hide the fact that the Cabrera Report was initially written in English, with Mr. Beltman telling a colleague to treat “our original English version as if it’s a translated version” of Cabrera’s work, rather than vice versa. 174 One Stratus employee advised that, in their ghostwritten “responses” to questions about the Cabrera Report, the consultants would try “to clean up the language so it sounds more like the Perito.”175 And Mr. Beltman acknowledged the need to keep the material “in a form that someone in Ecuador could have written,” to evade detection of the fraud.176 In a similar vein, Mr. Beltman by e-mail reminded Mr. Donziger that a report drafted by another of plaintiffs’ consultants, William Powers, needed to have “his name taken off” before it could be used.177 Likewise, a third plaintiffs’ consultant, Richard Clapp, drafted one report that “was incorporated into the expert report as an annex pretty much as is,” and another that “will probably appear in the expert’s response to comments.”178 Mr. Beltman warned Mr. Donziger not to show anyone these reports under Mr. Clapp’s name, “thereby distributing proof” of their true authorship.179 And before a meeting between Mr. Donziger and a U.S. Congressman, Mr. Beltman emphasized that a report authored by Mr. Clapp “CANNOT go into the

(continued…) see also Official Transcript of Deposition of Douglas John Beltman at 95:19-21, 98:24-99:7, dated Oct. 6, 2010, attached as Annex 12 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

173 E-mail from Douglas Beltman to Steven Donziger, dated March 11, 2008, at 2:22 p.m. (attaching outline of report) (STRATUS-NATIVE067410, 067418), attached as Annex 10 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

174 E-mail from Douglas Beltman to Brian Lazar, dated July 28, 2008, at 3:12 p.m. (STRATUS-NATIVE044716), attached as Annex 10 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

175 E-mail from Jennifer Peers to Ann Maest and Doug Beltman, dated Oct. 27 2008 at 4:59 p.m., attached as Annex 10 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m. (STRATUS-NATIVE051388-89).

176 E-mail from Douglas Beltman to Jennifer Peers and Ann Maest, dated October 29, 2008 at 5:29 p.m., attached as Annex 8 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m. (STRATUS-NATIVE053480).

177 E-mail from Douglas Beltman to Steven Donziger, dated March 23, 2008, at 4:02 a.m. (STRATUS-NATIVE063676), attached as Annex 10 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

178 E-mail from Douglas Beltman to Steven Donziger, dated Nov. 6, 2008, at 9:20 a.m. (STRATUS-NATIVE065062), attached as Annex 10 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

179 E-mail from Douglas Beltman to Steven Donziger, dated Nov. 6, 2008, at 9:20 a.m. (STRATUS-NATIVE065062), attached as Annex 10 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m. Similarly, in an email discussion concerning which materials to send to a reporter, Mr. Beltman advised that certain photos not be sent “[b]ecause of potential similarities with Cabrera’s figures.” E-mail from Douglas Beltman to Jennifer Peers et al., dated March 25, 2009, at 5:23 p.m., attached as Annex 8 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m. (STRATUS-NATIVE52245).


- 53 -

Congressional Record as being authored by him.”180 That would have revealed the extent of the plaintiffs’ fraud, which they were intent on covering up. Even as telltale signs of collusion began to emerge, Messrs. Beltman and Donziger discussed publicly asserting that Mr. Cabrera's work was "clearly his own."181 These blatantly false denials, which continue to this day, confirm the wantonness of plaintiffs' illicit conduct.

The recently obtained evidence of the reactions of the plaintiffs to early versions of the documentary Crude provide additional evidence of efforts to conceal their fraudulent conduct. Upon reviewing a rough and unreleased version of the film, Mr. Donziger complained to Mr. Berlinger that, “[l]egally, Chevron could use the film to help block enforcement of a foreign judgment and I believe they will do that if the film is released in its current state.” 182 Mr. Donziger therefore requested the removal of scenes “which are very undermining of the legal case.”183

Plaintiffs’ counsel were insistent upon removing the scenes revealing their work on the Cabrera Report. Plaintiffs were successful in getting Mr. Berlinger to excise the shots in which plaintiffs are seen working with one of Mr. Cabrera’s disclosed team members, Carlos Beristain, months before his appointment as an “independent” auxiliary expert.184 Specifically, Mr. Donziger told Mr. Berlinger to “please take out part where I talk about preparing a damages claim and other part where I say that we have

180 E-mail from Douglas Beltman to Steven Donziger, dated Nov. 18, 2008, at 1:57 p.m.

(STRATUS-NATIVE061311), attached as Annex 10 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m. 181 E-mail from Steven Donziger to Douglas Beltman, dated Mar. 18, 2009, at 12:38 p.m. (replying

to Beltman’s email containing draft text to address Chevron ad regarding language in Cabrera’s supplemental report) (STRATUS-NATIVE069215), attached as Annex 10 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m. New testimony from the plaintiffs’ other consultants further confirms that the plaintiffs’ attorneys understood their own unethical behavior. According to Richard Kamp, one of the plaintiffs’ consultants, Mr. Donziger “made a big point that we’re not going to talk about” Mr. Cabrera’s presence at the plaintiffs’ March 3, 2007, strategy meeting, at which they discussed the plan for the global expert evaluation before Mr. Cabrera was even appointed by this Court. See Official Transcript of Deposition of Richard A. Kamp at 387:5-6, dated Oct. 7-8, 2010, attached as Annex 13 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

182 Notes from Steven Donziger to Joseph Berlinger, dated Oct. 27, 2008, attached as Annex 5 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m. (JB01517) (offering his comments and suggestions on Crude).

183 Notes from Steven Donziger to Joseph Berlinger, dated Oct. 27, 2008, attached as Annex 5 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m., (offering his comments and suggestions on Crude) (JB01521); see also Official Transcript of Deposition of Joseph Berlinger, at 72:8-10, Oct. 28, 2010 (acknowledging that Mr. Donziger wanted “many” things taken out of the film).

184 E-mail from Mike Bonfiglio to Joseph Berlinger, dated April 14, 2010, at 12:08 a.m., attached as Annex 6 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m. (JB-NonWaiver00127806); see also Official Transcript of Deposition of Joseph Berlinger, dated Nov. 5, 2010, at 260:5-6, 268:4, 287:10-17, attached as Annex 12 to Chevron’s Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m. (acknowledging that the scene with Dr. Berstain was “troubling to the plaintiffs” and “upset” them and that “it is abundantly obvious if Dr. Beristain was a part of Cabrera’s independent team, he couldn’t also be working with the plaintiffs”).


- 54 -

assembled a team of experts” because “[t]here’s some detail here that is going to hurt the case.” 185 A few months later, Mr. Fajardo wrote separately to state that these scenes “are so serious that we can lose everything or a lot just because of those few, miniscule images,” and again urged that they “be corrected or removed.” 186 In another email, Mr. Fajardo, pleads with the filmmakers to remove scenes showing Mr. Beristain and Mr. Maldonado: “Those two guys must not appear in the documentary at all!” 187 Mr. Fajardo emphasizes that if the two remain in the film, “the entire case will simply fall apart on us.”188 In further recognition of their damning effect, Mr. Donziger offered to split the costs of making these deletions. 189 In addition to erasing evidence of their fraudulent work with Mr. Cabrera, Mr. Donziger also wanted to minimize his contacts with the Government, saying that inclusion of his quote that “we have just achieved something important in the case, we are now friends with the President,” would be “just devastating for the case in light of Chevron’s arguments.” 190 Mr. Donziger also requested that his assessments of the Ecuadorian judiciary—such as “‘there are almost no rules here’” and “‘it makes me sad that the courts are so utterly weak’”—be “removed” from the film. 191 This telling new evidence confirms that plaintiffs were fully aware of the impropriety of their actions and actively attempted to conceal them.

185 Notes from Steven Donziger to Joseph Berlinger, dated October 27, 2008, attached as

Annex 5 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m. (offering his comments and suggestions on Crude) (JB01522).

186 E-mail from Pablo Fajardo to Mike Bonfiglio et al., dated Jan. 22, 2009, at 1:03 p.m., attached as Annex 6 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m. (JB-NonWaiver00091322).

187 E-mail from Pablo Fajardo to Mike Bonfiglio, dated Dec. 25, 2008, at 10:19 p.m., attached as Annex 4 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m. (MB-STIP00097061).

188 E-mail from Pablo Fajardo to Mike Bonfiglio, dated Dec. 25, 2008, at 10:19 p.m., attached as Annex 4 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m. (MB-STIP00097061).

189 E-mail from Mike Bonfiglio to Joseph Berlinger, dated Jan. 28, 2009 at 3:58 p.m., attached as Annex 6 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m. (JB-NonWaiver00009135); Official Transcript of Deposition of Joseph Berlinger, at 294:25-295:11, Nov. 5, 2010, attached as Annex 12 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m.

190 Notes from Steven Donziger to Joseph Berlinger, dated October 27, 2008, attached as Annex 5 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m. (offering his comments and suggestions on Crude) (JB01523); see also the e-mail from Mike Bonfiglio to Joseph Berlinger, dated December 17, 2008, at 1:16 a.m., attached as Annex 6 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m. (JB-NonWaiver00063288).

191 Notes from Steven Donziger to Joseph Berlinger, dated October 27, 2008, attached as Annex 5 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m. (offering his comments and suggestions on Crude) (JB01520-21); see also the e-mail from Mike Bonfiglio to Joseph Berlinger, dated December 17, 2008, at 1:16 a.m., attached as Annex 6 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m. (JB-NonWaiver00063288); Official Transcript of Deposition of Joseph Berlinger, at 72:11-19, Oct. 28, 2010,


- 55 -

The illicit nature of plaintiffs’ conduct has also been acknowledged in newly obtained sworn testimony from one of the plaintiffs’ own attorneys who claims to not have been directly involved in these events.

Similarly, when Joseph Kohn, a U.S. lawyer whose law firm was funding the litigation in Lago Agrio, learned of the evidence that the plaintiffs had colluded with Mr. Cabrera, he wrote in a letter to the plaintiffs’ team:

We now find out that there may have been extensive, systematic contacts, orchestrated by Donziger, and with your participation and agreement, which have threatened the entire case. . . .

I am also shocked by recent disclosures concerning potentially improper and unethical, if not illegal, contacts with the court-appointed expert, Mr. Cabrera, which are coming out in the U.S. discovery proceedings being initiated by Chevron. Not only did we not know of any of this conduct, it is contrary to the assurances that Donziger and you made to us on numerous occasions. . . .

Finally, and most disturbing and shocking to our firm are recent revelations in Chevron’s discovery of the extent of contacts with Cabrera, which our firm had no knowledge of and never would have approved. Indeed, it appears to me that the outright refusal to provide us with any information about Cabrera’s report were intended to hide from us what may have been outrageously improper conduct.194

(continued…) attached as Annex 12 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m.

194 Letter from Joseph Kohn to Pablo Fajardo, et al., dated Aug. 9, 2010, at 2, 5, 6, attached as Annex 1 to Chevron’s Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p.m. (DONZ00026949)


- 56 -

And even Mr. Donziger himself predicted “that the information Stratus may provide will be damaging to the case and highly embarrassing.”195

The fact that the plaintiffs’ attorneys had long planned to corrupt the global expert investigation is further demonstrated by testimony from Mark Quarles and Richard Kamp, the plaintiffs’ consultants at another firm, E-Tech. Mr. Quarles testified that the plaintiffs’ attorneys had discussed with him the possibility of E-Tech “actually collecting the samples and writing the Peritaje Global report.”196 Although he claimed that E-Tech ultimately did not fulfill this role, he admits to having “spent a considerable amount of time defining what a scope of work would be for Peritaje Global” with Stratus, which ended up filling the role of ghostwriter of the Cabrera report instead of E-Tech.197 Mr. Quarles testified that he “would not have” “agreed to write the global expert report for Mr. Cabrera and allow him to submit it under his name.”198 Likewise, Mr. Kamp testified that he “probably would not have been involved in a process” that involved ghostwriting a report for a court-appointed expert, because he would “not understand the legality of it.”199 He added that it is not appropriate for a “court appointed expert to take word for word [what] somebody gives them and say this is my work.”200

Furthermore, among the individuals who assisted in the secret preparation of the Cabrera Report was Luis Villacreces,201 who had been nominated by the plaintiffs to serve as an expert during the judicial inspections process. His involvement in the fraudulent and collusive process of writing the Cabrera Report on the plaintiffs’ behalf suggests that he was anything but independent of the plaintiffs. This only raises further questions about how the plaintiffs—in addition to falsifying the expert reports of

195 Letter from Joseph Kohn to Pablo Fajardo, et al., dated Apr. 13, 2010, attached as Annex 1 to

Chevron’s Third Supplemental Motion for Terminating Sanctions, filed on Dec. 20, 2010 at 4:30 p.m. (informing the attorneys of a recent communication with Steven Donziger) (DONZ00036530).

196 Official Transcript of Second Deposition of Mark Quarles at 240:24-241:1, dated Oct. 12, 2010, attached as Annex 11 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

197 Official Transcript of Second Deposition of Mark Quarles at 248:15-17, dated Oct. 12, 2010, attached as Annex 11 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

198 Official Transcript of Second Deposition of Mark Quarles at 377:8-11, dated Oct. 12, 2010, attached as Annex 11 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m. At the time, Mr. Quarles told Mr. Donziger that he would “only certify the contents of a report if it is done under my direct supervision.” Mr. Donziger responded to this concern: “Don’t be so schematic. This is Ecuador.” E-mail from Richard Kamp, dated Feb. 12, 2007 at 3:49 p.m., forwarding e-mail from Steven Donziger to Mark Quarles, dated Feb. 7, 2007 at 4:04 p.m., attached as Annex 7 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m. (KAMP-NATIVE001786 to 001793, 001790).

199 Official Transcript of Deposition of Richard A. Kamp at 476:4-8, dated Oct. 7-8, 2010, attached as Annex 13 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

200 Official Transcript of Deposition of Richard A. Kamp at 252:6-13, dated Oct. 7-8, 2010, attached as Annex 13 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

201 E-mail from Douglas Beltman to Steven Donziger, dated Mar. 11, 2008, at 2:22 p.m. (STRATUS-NATIVE067410, 067412-18), attached as Annex 10 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.


- 57 -

Dr. Charles Calmbacher—may have deceived and defrauded the Court during the judicial inspections.

This involvement of Stratus was improper, not only because Mr. Cabrera never disclosed the assistance or communications, but also because Stratus had been hired by plaintiffs, was paid by the plaintiffs, and worked on their behalf. Chevron never had an opportunity to review, much less respond to, the Stratus’ work. Nor was my client given the opportunity to learn the full extent of the now evident ex parte communications and apparent collaboration between Mr. Cabrera and the plaintiffs’ representatives.

These emails and testimony confirm what Chevron already suspected based on the final product submitted by Mr. Cabrera. Mr. Cabrera’s report itself contains citations, cost estimates, figures, and technical annexes that could only have been provided ex parte by the plaintiffs’ representatives.202 Indeed, in his supplemental report, the author of the Cabrera Report cut-and-pasted significant portions of the plaintiffs’ submissions almost verbatim.203 Further, linguistic analysis by Dr. Teresa Turell revealed that, as has since been confirmed, much of the Cabrera Report was not written by Mr. Cabrera at all, but rather was translated from English, or was written in Spanish by a native speaker of English—a language which, as far as we know, is not spoken by Mr. Cabrera or anyone else on his team.204 Portions are translations of a report written by Stratus; many details in the Cabrera Report are identical to details in the Stratus report, including the entire proposed potable water system.205 The Stratus emails illustrate why: because Stratus wrote the report.

Evidence obtained by my client also demonstrates that whoever drafted the supplemental Cabrera Report used the database prepared for this trial by Selva Viva, the entity set up by the Frente and the plaintiffs’ lawyers in order to fund and facilitate this case. One of the plaintiffs’ environmental consultants, Laura Belanger, recently produced the database in response to a subpoena issued by a court in the United States, and forensics experts have confirmed that the database was the source for annexes and other data used in Cabrera’s supplemental report.206 In fact, entire tables

202 See Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 141082-203, 141101. In addition, because Mr. Cabrera is a geologist and had no lawyers on his team, the discussions of U.S. law in his submissions could only have come from the plaintiffs’ U.S. attorneys. Id.

203 See Chevron’s comprehensive brief on the fundamental problems with Mr. Cabrera’s reports (Cabrera Omnibus), filed May 21, 2010 at 4:35 p.m., at 14-17, Record at 178982-179041, 178995-98; see also Annex 23 of Expert Cabrera’s Response to Plaintiffs’ Questions regarding Global Report at 17-18, filed Nov. 17, 2008, at 8:25 a.m., Record at 152949-153000, 152966-67.

204 Cabrera Omnibus, filed May 21, 2010 at 4:35 p.m., at 13-14, Record at 178982-179041, 178994-95; Chevron’s Rebuttal to Fajardo’s Response at 18-19, filed July 12, 2010 at 2:39 p.m.

205 See Cabrera Omnibus, filed May 21, 2010 at 4:35 p.m., at 12-15, Record at 178982-179041, 178993-96; Chevron’s Supplemental Motion to Strike Cabrera Reports at 7-9, filed June 4, 2010 at 8:35 a.m.

206 Chevron’s Supplemental Motion to Strike Cabrera Reports at 5-6, filed June 4, 2010 at 8:35 a.m.


- 58 -

from the supplemental report’s annexes were adopted wholesale from the Selva Viva database, and some in fact include Selva Viva and Frente logos.207

The involvement of the plaintiffs’ counsel and supporters was particularly significant with respect to the health survey upon which Mr. Cabrera’s report relied in assessing almost US$10 billion in damages for “excess” cancer deaths. Carlos Beristain and Adolfo Maldonado began their work even before Mr. Cabrera was appointed as an expert, and conducted the surveys on behalf of the Frente and in conjunction with the plaintiffs’ legal and technical teams.208 Dr. Beristain himself has claimed that he began his research at least eight months before Mr. Cabrera began his official duties, and has acknowledged publicly that he was working in coordination with the Frente, the sole designated beneficiary of a possible judgment against Chevron.209 This is confirmed by evidence that the Frente paid for the survey to be conducted by Acción Ecológica and Oil Watch International which also support the plaintiffs—the original survey form in fact bears the names of these organizations.210

Footage taken for the documentary film Crude shows Mr. Donziger talking about using Dr. Beristain to do a study for the global damages report, as early as January 2007.211 And video also shows that contact between the plaintiffs and Dr. Beristain continued after Mr. Cabrera’s appointment. 212 On film, Dr. Beristain can be seen collaborating with plaintiffs’ team leaders, Messrs. Donziger and Fajardo, and with representatives of Acción Ecológica and the Frente, Adolfo Maldonado and Luis Yanza, at a focus group meeting to collect survey data from the area residents.213 On camera, Adolfo Maldonado describes the survey as being part of a project—run by “a group of people along with . . . the Front, Acción Ecológica and another series of organizations”—in order to “really analyze, systematize what that impact [of oil production] has been and, based on that, determine which—what may need to be . . .

207 Chevron’s Supplemental Motion to Strike Cabrera Reports at 5-6, filed June 4, 2010 at 8:35

a.m. 208 Cabrera Omnibus, filed May 21, 2010 at 4:35 p.m., at 20-24, Record at 178982-179041,

179001-05. 209 See Cabrera Omnibus, filed May 21, 2010 at 4:35 p.m., at 20-23, Record at 178982-179041,

179001-04; Chevron’s Objections to Expert Cabrera’s Supplemental Report at 7, filed Apr. 24, 2009 at 2:21 p.m., Record at 156327-35, 156333.

210 E-mail from Luis Yanza to Adolfo Maldonado (but sent to Adolfo Callejas), attached as Annex F to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 141268-73, 141270.

211 See transcript of Crude Outtakes, attached as Annex 1 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., (CRS 159-00-09).


213 Cabrera Omnibus, filed May 21, 2010 at 4:35 p.m., at 12, 23-24, Record at 178982-179041, 178993, 179004 -05.


- 59 -

corrected.”214 Maldonado explicitly states that the meeting is for the global assessment, and Dr. Beristain himself confirms this.215 Tellingly, the plaintiffs’ counsel attempted to hide this evidence of Dr. Beristain’s bias and partiality by asking the producer of Crude to edit this footage out of the film.216

Moreover, as shown in prior submissions, Mr. Cabrera took improper payments from the plaintiffs’ representatives, who also actively assisted him in his fieldwork.217 The plaintiffs’ counsel even acknowledged that two of the plaintiffs’ representatives, Donald Moncayo (a member of the Frente) and Silvio Jaya (a member of the plaintiffs’ technical team), “facilitate[d] the work of the expert and his team.”218 In addition, their coordination is further confirmed by the fact that, although Mr. Cabrera made no public announcement that he had completed and was going to file his work, plaintiffs’ representatives alerted the Crude film crew, which was present when Mr. Cabrera went to the Lago Agrio courtroom to deliver his first report.219

This overwhelming evidence of collusion stands in clear violation of this Court’s repeated orders, and in irreconcilable conflict with Mr. Cabrera’s own representations and statements made by the plaintiffs regarding his independence. This Court’s orders indicate that Mr. Cabrera had to be “responsible for the entire report, the methodology used, for the work done by his assistants, etc.”220 Mr. Cabrera was to “perform his work in an impartial manner and independently with respect to the parties, as well as comply with the requirements contained in the Code of Civil Procedure for the appointment and performance of experts.”221 The Court further ordered Mr. Cabrera to “observe and ensure . . . the impartiality of his work, and the transparency of his activities as a professional appointed.”222 In short, the Court directed Mr. Cabrera to “maintain strict independence with regard to the parties.”223

214 Transcript of Crude Outtakes, attached as Annex 1 to Chevron’s Motion filed Sept. 16, 2010 at

4:35 p.m., (CRS 301-00-06). 215 See transcript of Crude Outtakes, attached as Annex 1 to Chevron’s Motion filed Sept. 16,

2010 at 4:35, (CRS 301-00-06; CRS 342-01-03; CRS 342-01-07). 216 Cabrera Omnibus, filed May 21, 2010 at 4:35 p.m., at 24, Record at 178982-179041, 179005. 217 See Chevron’s Motion regarding Expert Cabrera’s Bias, Support of Plaintiffs and Negotiations

with the Amazon Defense Front, filed Dec. 18, 2008, at 3:12 p.m., Record at 153712-13, 153712-13; see also Cabrera Omnibus, filed May 21, 2010 at 4:35 p.m., at 11-12, 29, Record at 178982-179041, 178992-93, 179010.

218 Ruling Expected in Texaco’s Trial, El Comercio (Feb. 20, 2009). 219 See Crude Documentary (Joe Berlinger, First Run Features) (publicly available). 220 Order of Oct. 3, 2007, filed at 11:00 a.m., Record at 132846-56, 132850v. 221 Order of Oct. 3, 2007, filed at 11:00 a.m., Record at 132846-56, 132848v. 222 Order of Oct. 3, 2007, filed at 11:00 a.m., Record at 132846-56, 132851v. 223 Order of Oct. 3, 2007, filed at 11:00 a.m., Record at 132846-56, 132853v.


- 60 -

Mr. Cabrera repeatedly promised to abide by these standards. In June 2007, when he was sworn in as the sole expert for the performance of the assessment of all the fields operated by the former Petroecuador-TexPet Consortium, Mr. Cabrera promised to perform his duties “with complete impartiality and independence vis-à-vis the parties.”224 He assured the Court that he did “not have any relation or agreements with the plaintiffs” and that it was “an insult against [him] that [he] should be linked with the attorneys of the plaintiffs.”225 Mr. Cabrera also declared that he performed his expert examination with “absolute impartiality, honesty, transparency and professionalism.” 226 Even after filing his report, he stated he was “an honest man with nothing to hide” and emphatically declared to the Court, “I am not, nor will I be, subject to the views or whims of either of the parties.”227

Plaintiffs have also represented that they had no special or improper relationship with Mr. Cabrera. For example, Mr. Fajardo stated that the idea that Mr. Cabrera was working for plaintiffs was “simply ridiculous.”228 He also brushed aside my client’s assertion that there was “some type of collusion between plaintiffs and Cabrera” by calling this notion a “ridiculous affirmation.”229

Of course, the evidence described above reveals a reality very different from the representations of Mr. Cabrera and the plaintiffs. In open defiance of this Court’s orders, plaintiffs and Mr. Cabrera, beginning as early as March 2007 (and likely even earlier given that they first had to secure Mr. Cabrera’s complicity in the scheme and Judge Yánez’s agreement to appoint Mr. Cabrera), closely colluded to prepare, draft, and present a biased and fraudulent report and pass it off as an “independent” assessment of environmental harm and risk to human health in the area analyzed in the expert report.

All of this conduct by Mr. Cabrera violated several provisions of Ecuadorian law. First and foremost, “[t]he expert . . . is not the representative of the parties in the lawsuit, and his job is not to do something on behalf of someone else, but rather to issue his own opinion on a technical question.”230 Additionally, the expert is an assistant to

224 Transcript of Swearing In of Expert Richard Cabrera, filed June 13, 2007 at 9:45 a.m., Record at 130169-69v, 130169v.

225 Cabrera Submission, filed July 23, 2007 at 10:15 a.m., Record at 131972. 226 Cabrera Submission, filed Oct. 11, 2007 at 2:20 p.m., Record at 133178-80, 133178. 227 Cabrera Response to Chevron’s Deposition Request of Sept. 17, 2008, filed Oct. 8, 2008, at

10:50 a.m., Record at 151316-27, 151323. 228 Plaintiffs’ Motion filed Apr. 4, 2008 at 5:15 p.m., Record at 140166-140167. In related litigation

in the United States, plaintiffs’ consultant Mark A. Quarles filed a declaration indicating that Mr. Cabrera acted as an independent court expert. See Deposition of Mark A. Quarles at 121, Sept. 1, 2010, attached as Annex 21 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m. Mr. Quarles later admitted that had he known that “Mr. Cabrera was working directly with the plaintiffs,” he would not have signed such a declaration. Id. at 122.

229 Plaintiffs’ Motion, filed June 4, 2008 at 5:38 p.m., Record at 140466. 230 DE SANTO, Victor, Expert Evidence, Editorial Universidad, Buenos Aires, 1997, p.62.


- 61 -

justice who must act with absolute impartiality, truthfully submitting the technical reports requested of him, regardless of the origin of his appointment and without any interest other than to contribute to clarifying the facts so that a lawsuit can be decided in the fairest and most lawful manner possible.231

In addition to violating these principles, Mr. Cabrera also ran afoul of other legal provisions:

• Because an expert is an assistant to justice and above all to the judge, he must act in accordance with the same principles and obligations as those imposed in a general manner on judges; in other words, he must act in an impartial, disinterested manner and seek the historical and procedural truth. Article 9 of the Organic Judiciary Code prohibits the judge from meeting ex parte with one of the parties, so this obligation applies to the expert’s work as well and has been breached in this lawsuit.

• Mr. Cabrera has violated Article 251 of the Code of Civil Procedure, which required him to act with honesty and probity in carrying out the expert investigation and writing the related expert report “because the expert who acts as an auxiliary to the Judge assumes special responsibility, which can even result in civil and criminal liability if he fails to act faithfully within the scope of the law, by attempting to mislead the Judge.”232

• Mr. Cabrera has violated Article 257 of the Code of Civil Procedure, by failing to comply with his obligation to properly support each and every one of his statements and conclusions in his expert report. “In his report, the expert must provide the court with the elements that led him to the conclusions he arrives at . . . the expert opinion is only worth as much as the reasons supporting it. Expert reports must indicate the background and explanations that justify their opinion on the subject matter on which the reports are issued.”233

• Mr. Cabrera has violated the principle that evidence must be made public, as provided for in Article 120 of the Code of Civil Procedure, by refusing to turn over the surveys and documents on which he based his expert opinion and by refusing to identify the people who helped him prepare and draft the report.

231 DE SANTO, Victor, Expert Evidence, Editorial Universidad, Buenos Aires, 1997, p.72. 232 Carlita Rosenda Ordoñez vs. Gustavo Germán Granja Villacís, Case 83-99, Judgment of the

Supreme Court of Justice, First Civil and Commercial Division, Feb. 11, 1999, published in Official Gazette 159, Mar. 29, 1999.

233 WITTHAUS, Rodolfo E. Expert Evidence. Editorial Universidad. Buenos Aires. 1991. p. 53.


- 62 -

• Mr. Cabrera breached his obligation to act in a manner consistent with the purpose of the expert assessment and the instructions given by the judge. If an expert goes beyond the objective and scope of his appointment, his report lacks probative value, because the expert has not complied with his mandate. This obligation is set forth in Article 260 of the Code of Civil Procedure.

• Mr. Cabrera also violated his duty to provide additional explanations and to answer the comments on and challenges to his report.234 This violation is particularly egregious because it is now evident that Mr. Cabrera was secretly working in collusion with the plaintiffs’ representatives and paid consultants.

• In sum, Mr. Cabrera acted as an adversary to my client, not a neutral and independent auxiliary to the court.

Meanwhile, by their actions, the plaintiffs’ counsel have also violated numerous legal provisions. Article 335(9) of Ecuadorian Organic Code of the Judiciary prohibits attorneys from “[e]xercising the right of action or contradiction in abusive, malicious or temerarious fashion, violating the principle of good faith and loyalty by means of practices such as submission of deformed proofs, use of tricks, and bad faith . . . .” Plaintiffs’ counsel have also neglected their affirmative duty to act at all times “in keeping with principles of loyalty, integrity, truthfulness, honesty and good faith.”235 Indeed, the malfeasance committed here is likely criminal. The outtakes from Crude, which show plaintiffs’ counsel and consultants meeting with Mr. Cabrera before his appointment as expert to ensure that the scope, content, and drafting of his report would support plaintiffs’ case, plainly implicate the prohibition on collusion, which “was established for the purpose of judging and sanctioning fraudulent procedures between two or more persons having the purpose of inflicting damages to third parties.” 236 Assuming that plaintiffs must have made side payments or promises of side payments to obtain Mr. Cabrera’s complicity in this collusive scheme, they would be in violation of the prohibition on bribing experts found in Article 359 of the Criminal Code. Article 359 also prohibits the knowing use of “false witnesses or experts in a legal act.” More generally, Article 296 of the Criminal Code provides punishment for “[a]ny person who, in the course of a civil or administrative proceeding, . . . for the purpose of inducing the judge into error, artificially changes the state of things, places or people.”

234 See GHERSI, Carlos, Responsibility of an Expert, p. 9. 235 Article 330(2) of the Organic Code of the Judiciary. 236 The Law on Judgment of Collusion, First Consideration for Enacting the Law; see also id. art.

1. The Supreme Court of Justice has stated that collusion has two principal elements: “(a) that there should exist a fraudulent trial, proceeding, or an act or contract from both parties participating therein with the intent or full knowledge that it is done to the detriment of a third party. . . . and (b) that there should exist real damages against a third party such as deprivation of ownership, possession or tenancy of some personal property or some real rights on real property, or other rights legally pertaining to that person.” Criminal Division, Mar. 17, 1998, published in Judicial Gazette, year XCVIII, Series XVI, no. 11, p. 2877.


- 63 -

The involvement of the plaintiffs’ representatives in Mr. Cabrera’s work—especially when viewed in the context of Mr. Cabrera’s fabricated US$27 billion figure—suggests strongly that Mr. Cabrera did little more than act as a “front man” for the plaintiffs’ lawyers. The plaintiffs’ repeated and vehement denials of such collusion is a further violation of Ecuadorian law and demonstrates a manifest consciousness that their underlying collaboration was unlawful. Through their complicity, Mr. Cabrera and the plaintiffs have effectively stripped my client of its right to defense and to a neutral, fair, and impartial trial. In light of the unimpeachable evidence of pervasive fraud described above, this Court has no choice but to nullify the proceedings and dismiss this case. This step is necessary because no judgment consistent with due process could possibly be issued given the comprehensive fraud and deceit perpetrated against my client. Any sanction short of dismissal would trivialize plaintiffs’ incredible misconduct.

2.2.2 The Fraudulent Nature of Mr. Cabrera’s Report Is Evident from Its Many Flaws and Errors

The many flaws and scientific errors that taint Mr. Cabrera’s fieldwork are described infra §§ 3.4.3-3.4.6. Among other things, Mr. Cabrera’s inability and failure to engage in serious scientific sampling work; his selective choice of soil and “groundwater” samples; and his use of laboratories selected by the Frente, all confirm that his work was intended to serve the plaintiffs and not this Court.

Mr. Cabrera’s damages assessments, which as described were in fact written by plaintiffs’ attorneys and consultants, supra § 2.2.1, are similarly tainted with blatant errors, exaggerations, and non sequiturs. For example:

• As described infra § 3.4.5, Mr. Cabrera’s report found that Chevron should pay US$9.5 billion in compensation for excess cancer deaths, but never identified a single individual who died of cancer. Instead, Mr. Cabrera’s report relied on the biased Beristain and Maldonado survey, see supra § 2.2.1, which was conducted with the participation of the plaintiffs’ attorneys and simply asked leading survey questions to villagers, the answers to which were never submitted to the court or medically verified.

• In its soil remediation calculations, Mr. Cabrera’s ghostwritten report grossly overestimates both the volume of soil requiring remediation and the unit cost of remediation under conditions presented at the site. First, Mr. Cabrera’s report ignores comparable, and much lower, remediation costs per unit. Petroecuador has been remediating pits in the former concession for a number of years, yet Mr. Cabrera’s report estimates his costs per cubic meter at more than ten times what Petroecuador is paying for remediation in the same area. It draws its cost estimates not from any prior Ecuadorian remediation work, or even from petroleum sites elsewhere in the world, but from the remediation of sites affected by chlorinated solvents, creosote (used to preserve lumber), and other substances which are far more difficult to address than weathered crude.


- 64 -

Second, to exaggerate his volume figures and compound the overestimate of soil remediation costs, Mr. Cabrera’s report assumes a pit depth greater than the evidence can support and makes the unfounded and arbitrary supposition that each pit has a large "halo" of contaminated soil around it. Neither plaintiffs nor Mr. Cabrera conducted the methodical sampling necessary to determine the existence and/or extent of any such halo.237

• Mr. Cabrera’s report estimated the cost of repairing supposed “ecological” damages at nearly US$1.7 billion; in this category it included work to restore areas previously covered by natural rainforests to their former state, including places where roads and other infrastructure had been constructed. These infrastructure improvements were planned and approved by the Government of Ecuador, and in many cases inhabitants not only requested the work but also demanded it at public protests.238

• Mr. Cabrera’s report recommends that Chevron be forced to build a new potable-water system at a cost of US$428 million, even though drinking water samples taken as part of this trial clearly show contamination by untreated sewage and not by hydrocarbons attributable to activities of the Consortium.239

• The Cabrera Report also assesses hundreds of millions of dollars to pay for a cultural center, a new health care system, and modernization of Petroecuador’s oil infrastructure, without any attempt to link these damages to any operations of TexPet.240

The errors in, and lack of scientific basis for, Mr. Cabrera’s fieldwork and conclusions in his report illustrate the fraudulent nature of his role in this case. The Cabrera Report should be stricken from the record because it lacks evidentiary value. Without it, there is no evidence supporting the plaintiffs’ allegations, and therefore this action should be dismissed. Notably, the plaintiffs’ submission of September 16, 2010, at 5:15 p.m., contains no new data, sampling, or analysis, but rather relies heavily on the tainted data that the plaintiffs had themselves created and then delivered to Mr. Cabrera for inclusion in his report. See infra §§ 3.1, 3.5.

237 Cabrera Omnibus, filed May 21, 2010 at 4:35 p.m., at 40, Record at 178982-179041, 179021;

see also HINCHEE, Robert E., Rebuttal of the Method Used by Mr. Cabrera to Determine the Supposed Necessity and Cost of Remediation at 20-21, attached as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 148129-173, 148148-149.

238 Cabrera Omnibus, filed May 21, 2010 at 4:35 p.m., at 41, Record at 178982-179041, 179022. 239 Cabrera Omnibus, filed May 21, 2010 at 4:35 p.m., at 41-42, Record at 178982-179041,

179022-23. 240 Cabrera Omnibus, filed May 21, 2010 at 4:35 p.m., at 42-43, Record at 178982-179041,

179023-24.


- 65 -

2.3 The Case Was Irremediably Tainted by Judge Núñez’s Rulings Against Chevron

Judge Juan Núñez, who presided over this trial for over a year and issued many important rulings which have placed irreparable burdens on my client, has been implicated in an attempted bribery scheme that undermines the integrity of these proceedings in their entirety.241 During discussions among the apparent conspirators in the scheme, Judge Núñez was videotaped affirming his intention to issue a judgment in the plaintiffs’ favor and promising that any appeals of that judgment would be a “formality.” 242 Purported representatives of the Ecuadorian Government were also videotaped explaining that Government attorneys would assist Judge Núñez in crafting the decision.243 The attempted bribery scheme, the apparent involvement of the same Ecuadorian Government that has repeatedly pressured the Court to rule against Chevron, see infra § 3.7, and the Court’s failure to investigate the videotape evidence and its denial of Chevron’s motion to annul Judge Núñez’s biased rulings, 244 all demonstrate that Chevron cannot receive a fair trial, and that any judgment against Chevron would be irrevocably tainted by political pressure, corruption, and a basic lack of due process.

Chevron was given, and then provided to the proper Ecuadorian authorities, audiovisual recordings of four meetings where the bribery scheme was discussed. An expert analysis of the tapes ordered by the National Judicial Council concluded that these tapes are indeed authentic and unaltered.245 The recordings were made, without Chevron’s knowledge, by prospective environmental remediation contractors in May and June 2009 after receiving a bribe demand from persons purporting to represent the Ecuadorian Government and Alianza PAIS, the Government's political movement.246 The first and last of the recorded meetings took place in one of Alianza PAIS

241 Ruling of the Plenary Session of the Judiciary Council, dated Oct. 27, 2010 at 2:15 p.m.,

Disciplinary Case No. 008-2009-P-CPJS (decision in the case against Judge Juan Evangelista Núñez Sanabria), attached as Annex 14 to Chevron’s motion filed Dec. 20, 2010 at 5:50 p.m.

242 See Transcript of the June 5, 2009 Meeting between Judge Juan Evangelista Núñez Sanabria, Juan Pablo Novoa Velasco, Diego Fernando Borja Sánchez, and Wayne Douglas Hansen, attached as Annex 5-C to Chevron’s Motion in Support of Judge Núñez’s Recusal, filed Sept. 9, 2009 at 4:20 p.m., Record at 158285-322, 158301-02, 158317, 158319.

243 See Transcripts of the May 11, 2009 Meetings between Carlos Patricio García Ortega, Pablo Almeida, Aulo Gelio Servio Tulio Ávila Cartagena, Rubén Darío Miranda Martínez, and Diego Fernando Borja Sánchez, attached as Annex 5 to Chevron’s Motion in Support of Judge Núñez’s Recusal, filed Sept. 9, 2009 at 4:20 p.m., Record at 158218-255, 158252-53, 158252-53.

244 Number 13 of Order of Oct. 21, 2009 at 4:05 p.m., Record at 159061-63v, 159062. 245 See Expert Report of Hugo Rekalde D. Submitted to the Executive Director of the Judiciary

Council, attached as Annex 9 to Chevron’s Motion, filed July 13, 2010 at 8:48 a.m.; see also Chevron’s Motion at 5-6, filed July 13, 2010 at 8:48 a.m.

246 Letter from T. Cullen, Jr. to the Prosecutor General, attached to Chevron’s Motion regarding Judge Núñez bribery videos, filed Nov. 17, 2009 at 2:18 p.m., Record at 159290-95, 159290 (the Spanish translation is included at Record at 159293-95).


- 66 -

headquarters in Quito. The recordings show the purported Government representatives offering to hire potential remediation contractors to conduct a portion of the environmental remediation in Ecuador that Chevron would be required to fund as a result of a judgment against Chevron in this case. The remediation work would be awarded, however, only if the potential contractors paid a US$3 million bribe to be split as follows: US$1 million to Judge Núñez, US$1 million to those who claimed to be representatives of the Presidency of the Republic, and US$1 million to the plaintiffs.247

The purported Government representatives who participated in the meetings, and their stated positions, included Carlos Patricio García Ortega (Patricio García), apparently a political coordinator for Alianza PAIS; Juan Pablo Novoa Velasco (Pablo Novoa), a lawyer supposedly representing the Government; Aulo Gelio Servio Tulio Ávila Cartagena (Aulo Gelio Ávila), a lawyer close to Judge Núñez; Pablo Almeida, an environmental remediation contractor; and Rubén Dario Miranda Martinez (Rubén Miranda), assistant to Patricio García. 248 In the recordings, these purported representatives state that:

(i) The Ecuadorian Government managed Judge Núñez in his conduct of the case;249

(ii) “Chevron is going to lose the trial”;250

(iii) The Government will provide lawyers to help craft the opinion against Chevron;251

247 Letter from T. Cullen, Jr. to the Prosecutor General, attached to Chevron’s Motion regarding

Judge Núñez bribery videos, filed Nov. 17, 2009 at 2:18 p.m., Record at 159290-95, 159290 (the Spanish translation is included at Record at 159293-95); see also Transcript of June 22, 2009 Meeting between Carlos Patricio García Ortega, Rubén Darío Miranda Martínez, and Diego Fernando Borja Sánchez, attached as Annex 5-D to Chevron’s Motion in Support of Judge Núñez’s Recusal, filed Sept. 9, 2009 at 4:20 p.m., Record at 158323-64, 158326-27.

248 See Transcripts of the May 11, 2009 and June 5, 2009 Meetings between Carlos Patricio García Ortega, Pablo Almeida, Aulo Gelio Servio Tulio Ávila Cartagena, Rubén Darío Miranda Martínez, and Diego Fernando Borja Sánchez, attached as Annexes 5-A and 5-C to Chevron’s Motion in Support of Judge Núñez’s Recusal, filed Sept. 9, 2009 at 4:20 p.m., Record at 158218-255, and 158285-322, respectively, 158218, 158285.

249 See, e.g., Transcripts of the May 11, 2009 Meeting between Carlos Patricio García Ortega, Pablo Almeida, Aulo Gelio Servio Tulio Ávila Cartagena, Rubén Darío Miranda Martínez, and Diego Fernando Borja Sánchez, attached as Annex 5-A to Chevron’s Motion in Support of Judge Núñez’s Recusal, filed Sept. 9, 2009 at 4:20 p.m., Record at 158218-255, 158224, 158240-44.

250 See Transcript of the June 5, 2009 Meeting between Judge Juan Evangelista Núñez Sanabria, Juan Pablo Novoa Velasco, Diego Fernando Borja Sánchez, and Wayne Douglas Hansen, attached as Annex 5 to Chevron’s Motion in Support of Judge Núñez’s Recusal, filed Sept. 9, 2009 at 4:20 p.m., Record at 158285-322, 158302.

251 Transcript of the May 11, 2009 and June 5, 2009 Meeting between Carlos Patricio García Ortega, Pablo Almeida, Aulo Gelio Servio Tulio Ávila Cartagena, Rubén Darío Miranda Martínez, and Diego Fernando Borja Sánchez, attached as Annex 5 to Chevron’s Motion in Support of Judge Núñez’s


- 67 -

(iv) The president’s legal advisor has instructed Judge Núñez on how to route the judgment money;252 and

(v) Patricio García will deliver Judge Núñez’s share of the bribe money to him.253

According to the audiovisual recordings, in order to secure payment of the requested bribe, the purported Government representatives sought to assure the contractors that Judge Núñez would find Chevron liable―even though the trial was ongoing and evidence still being presented―and that the judgment would require Chevron to pay the Government billions of dollars for environmental remediation. To demonstrate to the contractors that the result of the trial had been preordained, the purported Government representatives took the contractors to meet with Judge Núñez twice during the period of time between the two meetings at the Alianza PAIS headquarters.254 The first meeting with Judge Núñez took place in the Judge’s office at the courthouse in Lago Agrio, and the second took place in a hotel in Quito. In the recordings of these meetings, Judge Núñez confirms that:

(vi) He will find Chevron guilty;255

(vii) The claim is for US$27 billion, and he will decide whether to award more or less;256

(continued…) Recusal filed Sept. 9, 2009 at 4:20 p.m., Record at 158218-255, and 158285-322, respectively, 158252-53; see also Transcript of the June 5, 2009 Meeting between Judge Juan Evangelista Núñez Sanabria, Juan Pablo Novoa Velasco, Diego Fernando Borja Sánchez, and Wayne Douglas Hansen, attached as Annex 5 to Chevron’s Motion in Support of Judge Núñez’s Recusal, filed Sept. 9, 2009 at 4:20 p.m., Record at 158285-322, 158319.

252 Transcript of the May 11, 2009 Meeting between Carlos Patricio García Ortega, Pablo Almeida, Aulo Gelio Servio Tulio Ávila Cartagena, Rubén Darío Miranda Martínez, and Diego Fernando Borja Sánchez, attached as Annex 5-A to Chevron’s Motion in Support of Judge Núñez’s Recusal filed Sept. 9, 2009 at 4:20 p.m., Record at 158218-255, and 158285-322, respectively, 158224.

253 Transcript of June 22, 2009 Meeting between Carlos Patricio García Ortega, Rubén Darío Miranda Martínez, and Diego Fernando Borja Sánchez, attached as Annex 5-D to Chevron’s Motion in Support of Judge Núñez’s Recusal ,filed Sept. 9, 2009 at 4:20 p.m., Record at 158323-64, 158329.

254 Letter from T. Cullen, Jr. to the Prosecutor General, attached to Chevron’s Motion regarding Judge Núñez bribery videos, filed Nov. 17, 2009 at 2:18 p.m., Record at 159290-95, 159294.

255 Transcript of the June 5, 2009 Meeting between Judge Juan Evangelista Núñez Sanabria, Juan Pablo Novoa Velasco, Diego Fernando Borja Sánchez, and Wayne Douglas Hansen, attached as Annex 5-C to Chevron’s Motion in Support of Judge Núñez’s Recusal filed Sept. 9, 2009 at 4:20 p.m., Record at 158285-322, 158319.

256 Transcript of the June 5, 2009 Meeting between Judge Juan Evangelista Núnez Sanabria, Juan Pablo Novoa Velasco, Diego Fernando Borja Sánchez, and Wayne Douglas Hansen, attached as Annex 5-C to Chevron’s Motion in Support of Judge Núñez’s Recusal filed Sept. 9, 2009 at 4:20 p.m., Record at 158285-322, 158319.


- 68 -

(viii) The award will be made in part to the Government;257

(ix) He will issue the ruling in October or November 2009;258 and

(x) The appeal process to the full chamber of the provincial court will be a formality.259

The participation of Judge Núñez in these meetings, and his apparent consignment of judicial power to the purported Government representatives to dictate the decision, irremediably taint and nullify the instant case against Chevron. Even Mr. Donziger admitted internally that the “judge should not have been in the meetings period.”260

After the discovery of these tapes, Judge Núñez requested that he be permitted to excuse himself voluntarily from the case on plainly inapplicable and benign grounds, thereby avoiding admission of any impropriety on his part.261 Upon learning of his action, on September 9, 2009, at 4:20 p.m., Chevron requested that the Subrogate President not accept Judge Núñez’s voluntary excusal, as it lacked valid legal grounds, and instead sanction Judge Núñez in conformity with the applicable regulations and the seriousness of the offense.262 In short, Chevron posited that Judge Núñez excused himself from this trial as a way to avoid taking responsibility and to obtain impunity against the extremely serious acts that my client had denounced with the public authorities. After Judge Núñez refused to support his request to excuse himself with documentation, it was initially denied, but later granted.263 He has thus been allowed to withdraw on vague and ambiguous grounds, thereby avoiding responding to, and

257 Transcript of the June 5, 2009 Meeting between Judge Juan Evangelista Núnez Sanabria,

Juan Pablo Novoa Velasco, Diego Fernando Borja Sánchez, and Wayne Douglas Hansen, attached as Annex 5-C to Chevron’s Motion in Support of Judge Núñez’s Recusal filed Sept. 9, 2009 at 4:20 p.m., Record at 158285-322, 158293.



260 Attached as Annex 1 to Chevron’s Fourth Supplemental Motion for Terminating Sanctions, filed Dec. 22, 2010 at 5:45 p.m. (DONZ00019514).

261 Judge Núñez Recusal Order, filed on Sept. 3, 2009 at 5:10 p.m., Record at 158177. 262 See Chevron’s Motion in Support of Judge Núñez’s Recusal, filed Sept. 9, 2009 at 4:20 p.m.,

Record at 158420-27. 263 See Decision regarding Judge Núñez’s Recusal, issued by the Provincial Court of Justice of

Sucumbíos, filed Sept. 28, 2009 at 10:00 a.m., Record at 158724.


- 69 -

preventing Chevron from proving, the gross improprieties he apparently committed in violation of Chevron’s rights.

There has not been any investigation of other aspects of the videotapes, a glaring omission given the existence of other evidence that corroborates both the identities of the participants on the tapes and the involvement of the Government in managing this case. For example, subsequent to the recordings, Mr. Garcia appeared on a radio program, admitting that he was “in charge” of a branch of the Alianza País movement and that he met with Diego Borja.264 Court filings in a different case also identify Mr. Garcia as a “public employee” belonging to the political office of the Alianza País movement. 265 Additionally, Mr. Novoa’s relationship with the Ecuadorian Government was confirmed when, in November 2009, Novoa was appointed to perform public functions as a bank liquidator, a potentially lucrative position often given as a patronage appointment under the purview of the Superintendence of Banks.266

Even prior to involvement in this apparent bribery scheme, Judge Núñez made no secret of the fact that he was biased in favor of the plaintiffs. The Economist, for example, observed that “[t]he judge in Lago Agrio, Juan Núñez, . . . has made no secret of his sympathy for the plaintiffs.”267 The New York Times similarly has noted that Judge Núñez’s “sympathies… are not hard to discern,” and that “he appears likely to rule against Chevron this year.”268 These publications followed a public demand from the current President for “expedited treatment of cases that are of interest to Ecuador” during a two-hour luncheon with the members of the National Court of Justice.269

Consistent with his videotaped activities and his statements to the press, prior to his withdrawal from this case, Judge Núñez issued unsupportable rulings against

264 See Transcript of Interview of Carlos Patricio García, La Clave, La Luna Radio Station, Sept. 4,

2009, attached as Annex to Chevron’s motion filed on July 13, 2010 at 8:48 a.m. 265 Robles v. Garcia, Pichincha Second Landlord-Tenant Court, Cause: 601 V.P. 2009, July 21,

2009. 266 See Andres v. State Attorney General, Case No. 2009-0827, Third Civil Court. Evidence also

confirms the position of other participants. For example, Rubén Dario Miranda sent Mr. Borja an email with instructions for wiring money into a bank account of a company registered as a vendor of Petroecuador. See E-mail from Rubén Dario Miranda to Diego Borja re: cuenta, June 22, 2009 2:20:27 p.m., attached as Annex 10 to Chevron’s Motion, filed July 13, 2010 at 8:48 a.m. Additionally, the Prosecutor General confirmed that another participant, Aulo Servio Avila, was the property registrar in Lago Agrio. See Transcript of Press Conference for Prosecutor Washington Pesántez, dated Sept. 4, 2009, attached as Annex 10 to Chevron’s Motion, filed July 13, 2010 at 8:48 a.m. .

267 Justice or Extortion?: The Hounding of an American Oil Company, The Economist, May 23-29, 2009, at 42, attached as Annex 6 to Chevron’s Motion in Support of Judge Núñez’s Recusal filed Sept. 9, 2009 at 4:20 p.m., Record at 158365-69, 158366, 158368.

268 In Ecuador, Resentment of an Oil Company Oozes, N.Y. Times, May 15, 2009, attached as Annex 7 to Chevron’s Motion in Support of Judge Núñez’s Recusal filed Sept. 9, 2009 at 4:20 p.m., Record at 158371-74, 158371.

269 CAMPANA M., Joffre, Interference in the Administration of Justice, El Universo (Mar. 5, 2009).


- 70 -

Chevron which are unreasoned, violate rules of procedure, and deprive Chevron of its due process rights. Most significantly, the judge refused to examine the patent irregularities in the work of the court-appointed “expert,” Richard Cabrera.270 In addition, Judge Núñez arbitrarily sanctioned one of Chevron’s attorneys for simply appealing the Court’s rulings.271 Judge Núñez even went so far as to order Petroecuador to cease its own belated remediation efforts in the region, so as to further bloat a judgment against Chevron. See infra § 7.3.1. On September 11, 2009, at 5:50 p.m., Chevron filed a motion pursuant to Article 9 of the Civil Code272 to declare Judge Núñez’s actions null.273 But the Court denied this motion, and a subsequent motion filed on September 17, 2009 at 5:43 p.m., thereby permitting Judge Núñez’s tainted rulings to stand.274 A proceeding that includes those biased rulings, and all of the other fundamental flaws discussed below, is fraudulent and cannot be a legitimate basis for any judgment against Chevron.

2.4 The Constitutional Guarantee of Due Process Demands That This Case Be Dismissed

As my client has requested, in light of the unimpeachable evidence of pervasive fraud and deceit, this Court has no choice but to nullify the proceedings and terminate the case immediately, in acknowledgement of the audacity and bad faith of plaintiffs’ attorneys, and to avoid being complicit in the plaintiffs’ fraud. This step is necessary because no judgment consistent with due process could possibly be issued given that the comprehensive fraud and deceit perpetrated against my client must be severely punished and sanctioned, and any sanction short of dismissal of the case and prosecution of the plaintiffs would trivialize the frightening and appalling misconduct on the part of the plaintiffs and their attorneys and backers.

Courts in the United States have recognized and the declared the plainly fraudulent nature of the plaintiffs’ conduct. One court remarked that “[t]he release of many hours of the outtakes [from the documentary Crude] has sent shockwaves through the nation’s legal communities, primarily because the footage shows, with unflattering frankness, inappropriate, unethical and perhaps illegal conduct. In the film itself, Attorney Donziger brags of his ex parte contacts with the Ecuadorian judge, confessing that he would never be allowed to do such things in the United States, but, in

270 See, e.g., Number 9 of Order of May 28, 2009, filed at 11:00 a.m., Record at 156691-93v,

156691-91v. 271 Number 11 of Order of Aug. 13, 2009, filed at 2:30 p.m., Record at 157929-31v, 157930-30v. 272 Article 9 provides: “Acts prohibited by law shall be null and void, unless an effect other than

nullity is expressly provided for in the event of a violation.” 273 Chevron’s Motion for Annulment of All Rulings Entered by Judge Núñez, filed Sept. 11, 2009

at 5:50 p.m., Record at 158430-38, 158435-38. 274 See Order of Oct. 21, 2009, filed at 4:05 p.m., at numeral 13 and 17, Record at 159061-63v,

159062.


- 71 -

Ecuador, everyone plays dirty.” 275 The same court concluded that “[t]he outtakes support, in large part,” my client’s “contentions of corruption in the judicial process.”276 Another court stated that while it was “unfamiliar with the practices of the Ecuadorian judicial system, . . . the concept of fraud is universal, and that what has blatantly occurred in this matter would in fact be considered fraud by any court.”277 “If such conduct does not amount to fraud in a particular country,” that court reasoned, “then that country has larger problems than an oil spill.” 278

With respect to the burden of proof, the evidence of the plaintiffs' malfeasance and fraud provided by Chevron leaves the plaintiffs with no valid evidence to support their claims. As explained, the plaintiffs tainted the entire judicial-inspections process by falsifying and submitting to the Court false and forged reports purporting to be written by Dr. Charles Calmbacher, one of the experts nominated by the plaintiffs themselves. In fact, Dr. Calmbacher did not write those reports and did not agree with the conclusions that the plaintiffs falsified. In light of that proven fraud, all of the reports submitted by the plaintiffs’ nominated experts during the judicial-inspection process are cast into doubt and cannot be deemed credible or worthy of evidentiary weight without a

275 In re Chevron Corp., No. 10-MC-21JH/LFG (D.N.M. Sept 1, 2010), at 3-4, attached as Annex

26 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m. Almost without exception, “every single [judge]” who has reviewed the evidence submitted to this Court has been “shocked to the core of his professional being.” See Hearing Transcript at 27:19-21, In re Chevron Corp., No. 10 MC 00002 (LAK) (S.D.N.Y. Sept. 23, 2010), submitted as Annex 19 to Chevron's Motion, filed Oct. 29, 2010, at 5:20 p.m. Some have even suggested that the conduct of plaintiffs’ attorneys would violate U.S. criminal law. See, e.g., id. at 24:21-22 (“Now, do the phrases Hobbs Act, extortion, RICO, have any bearing here?”).

276 In re Chevron Corp., No. 10-MC-21JH/LFG (D.N.M. Sept 1, 2010), at 4, attached as Annex 26 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m. Other courts have reached similar conclusions. See In re Chevron Corp., No. 10 MC 00001 (LAK) (S.D.N.Y. Sept. 7, 2010), at 3, attached as Annex 27 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., (“[T]he outtakes [from Crude] contain substantial evidence of misconduct in and relating to the Ecuadorian litigation.”).

277 Chevron Corp. v. Champ, Nos. 1:10mc 27, 1:10mc28 (W.D.N.C. Aug. 30, 2010), at 12, attached as Annex 25 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m.

278 Chevron Corp. v. Champ, Nos. 1:10mc 27, 1:10mc28 (W.D.N.C. Aug. 30, 2010), at 12, attached as Annex 25 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m. Additional courts have reached similar conclusions. Hearing Transcript at 44, In re Chevron Corp., No. 10-2675(SRC) (D.N.J. June 11, 2010), attached as Annex 23 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., (“In short, the provision of materials and information by consultants on the litigation team of the Lago Agrio plaintiffs in what appears to be a secret and an undisclosed aid of a supposedly neutral court-appointed expert in this Court's view constitutes a prima facie demonstration of a fraud on the tribunal.”); Hearing Transcript at 58, In re Chevron Corp., No. 10CV1146-IEG(WMC) (S.D. Cal. Aug. 27, 2010), attached as Annex 28 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., (“The two orders from the Ecuadorian tribunal were very clear that Mr. Cabrera was to give to the Court his independent intellectual work, and while he may adopt certain findings and conclusions of other experts, that adoption may occur only after he has independently assessed the integrity and validity of those findings and conclusions and notified the Court of such adoption, the reason for his adoption, and the process by which he came to the conclusion that such adoption was consistent with his own duties to the Court. It appears that Mr. Cabrera has failed to do that . . , and Chevron has a right to explore . . . whether indeed the crime fraud exception is implicated as directly as the evidence suggests it has been. ‘No fraud is more odious than an attempt to subvert the administration of justice.’").


- 72 -

complete investigation, particularly given the fact that my client has made claims of essential error and fraud with respect to them, many of which have been denied; and others, in violation of an express legal rule, have not been resolved within the deadlines imposed by Article 258 of the Code of Civil Procedure. And the report submitted in Mr. Cabrera’s name has now been revealed as an utter fraud—the product of collusion that began before he was even appointed as an expert by this Court; written by plaintiffs, their counsel, and their consultants to reach a result that was outlined even before Mr. Cabrera began the show of his inept field work. Their efforts were designed solely to impose massive and unprecedented liability on my client even in the face of express acknowledgement of the absence of evidence supporting their allegations. Indeed, Mr. Cabrera’s report suggested that Chevron was responsible for millions and millions of dollars for groundwater remediation without obtaining or analyzing a valid groundwater sample. No judgment can be based upon this “evidence.”

In a last-ditch effort to save their case, the plaintiffs proposed—and the Court accepted—a plan for the parties to submit ad hoc reports addressing the cost of remediation. But the plaintiffs’ submission containing their assessment of alleged damages does nothing to remedy the fraud that has irreparably tainted their “evidence.” Indeed, it contains no new data and relies on no new samples; it merely recycles the opinions and concepts from the Cabrera Report, inflating its already outrageous and arbitrary determinations. Instead, it merely accepts as fact the wholly unreliable data produced by the experts they nominated to perform the fraudulent judicial inspections and the collusion by Mr. Cabrera, using those corrupted figures to support further inflated damage estimates with no basis in law or fact. See infra §§ 3.1, 3.5. (As the plaintiffs’ former counsel, Mr. Bonifaz, pointed out years ago in a statement that remains true, “[a]ll the numbers about billions of dollars that get passed around are purely for PR purposes.”279) Any award issued as a result of these irreparably tainted proceedings would be a gross violation of the universal norms of due process included in Ecuador’s constitution.

The plaintiffs have also insisted that their case is “unaffected” because there exists other evidence in their favor.280 There exists no such other competent evidence. See infra Chapter VII. But, in any event, the contention ignores that courts can and do legitimately infer, from the very fact that a party saw the need to resort to fraud, that the party has no confidence in the strength of his case. The plaintiffs were unable to prove their case using honest evidence and truly independent analysis, and therefore had to corrupt the judicial process through the knowing submission of falsified (fabricated) evidence and through the illicit collusion with Mr. Cabrera and secret ghostwriting of his report. That misconduct, which the plaintiffs have never even bothered to try to defend, hardly leaves their other evidence “unaffected.”

279 E-mail from Cristóbal Bonifaz to Alberto Wray, et al. dated Dec. 12, 2004 at 2:34 p.m.,

attached as Annex 1 to Chevron’s Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p.m. (DONZ0027310).

280 Plaintiffs’ Motion, filed Oct. 14, 2010 at 11:30 a.m., at 3-4.


- 73 -

To the contrary: When a party commits a fraud upon the Court, the Court cannot allow that party to evade the consequences by arguing that the tainted testimony or evidence was not critical to their case or that their suit has merit nevertheless. Having gone to “considerable trouble and expense” to perpetrate their fraud, the plaintiffs are “in no position now to dispute its effectiveness.”281 Had they any confidence in the strength of their own case, they would not have resorted to these disgraceful tactics: “Truth needs no disguise.”282 Where, as here, the fraud goes to the merits and core of plaintiffs’ case, there is no way for the plaintiffs to escape the consequences of their misconduct by pointing to “other” evidence. As a U.S. court explained,283 “[h]istory is not so glibly to be erased. Once a litigant chooses to practice fraud, that misconduct infects his cause of action, in whatever guises it may subsequently appear.”284 The plaintiffs cannot “simply walk away” from what was done with Mr. Cabrera, now that they have been caught “red-handed.”285

In any event, the plaintiffs have not walked away from Mr. Cabrera. Even their filing of September 16, 2010, at 5:15 p.m., which came after the plaintiffs’ fraud had been exposed, relied on the same fraudulent and tainted evidence, derived from Mr. Cabrera and from the judicial inspections. See infra § 3.5. It is not surprising that the plaintiffs have been unable to abandon the Cabrera Report, because notwithstanding their current claims, they have long pronounced that it was the critical element of their proof in this case. In their submissions to this Court, the plaintiffs predicted that “[t]he expert examination, in turn, will prove the magnitude of the damage and the remediation,” 286 and as such, that it constitutes “a proceeding of special importance.”287 In private, the plaintiffs were even more candid. Mr. Donziger has written that the Cabrera Report “is the most important thing in the case, the basis for them to pay millions of dollars.” 288 Outtakes from the documentary Crude show plaintiffs’ attorneys referring to the Cabrera Report as “the most important evidence we have in the case.”289 They viewed it as “huge for us.”290 And, when the Cabrera Report

281 Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238, 247 (1944) 282 Id. 283 Aoude v. Mobil Oil Corp., 892 F.2d 1115 (1st Cir. 1989). 284 Id. at 1121. 285 Id. at 1120-21. 286 Plaintiffs’ Motion regarding Procedures for Global Assessment Phase, filed Apr. 26, 2007 at

6:00 p.m., Record at 129589-91, 129590. 287 Plaintiffs’ Motion To Dismiss Chevron’s Motion of Mar. 2, 2007 regarding Global Assessment,

filed Mar. 9, 2007 at 5:25 p.m., Record at 126732-34, 126733. 288 E-mail from Steven Donziger to Pablo Fajardo, et al., dated Feb. 16, 2007 at 4:54 p.m., at 2,


289 Transcript of Crude Outtakes, attached as Annex 1 of Chevron Motion, filed Sept. 16, 2010 at 4:35 p.m. (CRS 187-01-02).


- 74 -

was submitted, Mr. Donziger told the press that the case was at a “critical and important moment” in light of the report.291 One of the plaintiffs’ consultants, Mr. Douglas Beltman, who was paid by the plaintiffs to secretly write the “main” report, told his colleagues that it was “probably the single most important technical document for the case.”292

Having repeatedly touted the Cabrera Report as the key and central evidence in their case against Chevron, the plaintiffs can hardly now argue that the Cabrera Report is irrelevant or that they are still in a position to win the case even after their fraudulently manufacturing the “most important” evidence in the case. The plaintiffs’ prior remarks fatally belie their eleventh-hour effort to avoid liability for the gross misconduct.

Moreover, apart from confirming that the plaintiffs lack any real evidence to support their claims, the falsified Calmbacher reports and the revelations contained in outtakes from the film Crude, demand a severe sanction for the plaintiffs’ reckless and malicious procedural conduct, abusing the judicial process and violating the law and this Court’s orders. It is particularly important for this Court to follow the money in and where it is spent: the plaintiffs have paid fees directly for the services of experts, including Mr. Cabrera,293 who have acted in collusion with the plaintiffs and from whose results the plaintiffs, the Frente, and the Government hope to receive exorbitant sums of money, supposedly for environmental remediation work, based on the compensation they expect Chevron to pay. Following those payments, it is clear who is paying for what and what they hope to get, yet this Court—as it does whenever faced with indefensible conduct by the plaintiffs—has wholly ignored it. Of course the scope and seriousness of the misconduct compel nullification of the proceedings and termination of this trial by its complete dismissal, as well as prosecution of the plaintiffs and their attorneys.

The Ecuadorian Constitution mandates that “[n]oncompliance with court orders shall be punished by the law.”294 The judge also holds the express and inherent (continued…)

290 Transcript of Crude Outtakes, attached as Annex 8 to Chevron’s Motion filed Dec. 22, 2010 at 5:45 p.m. (CRS 200-01-03).

291 Transcript of Crude Outtakes, attached as Annex 8 to Chevron’s Motion filed Dec. 22, 2010 at 5:45 p.m. (CRS 475-00-03).

292 E-mail from Douglas Beltman to Science Group, et al., dated Feb. 22, 2008, at 6:24 a.m. (STRATUS-NATIVE043232), attached as Annex 10 to Chevron Motion, filed Oct. 29, 2010 at 5:20 p.m.

293 Mr. Cabrera recognized “the fees agreed to by the Frente de Defensa Amazónico [were] already…paid to [him]” in a communication that was sent to the then-President of the Court, Judge Germán Yánez and later hurriedly withdrawn from the file by permission of that same judge. Letter from Expert Cabrera to President Germán Yánez of the Superior Court of Justice of Nueva Loja, Feb. 7, 2007, attached as Annex to Chevron’s Motion filed Jul. 2, 2007 at 9:00 a.m., Record at 130663-72, 130672. See Attestation by Liliana Suárez Clerk of the Superior Court, filed Jun. 4, 2008 at 8:00 a.m., Record at 140413-16, 140413 (providing attestation as ordered in Order of May 30, 2008 at 10:30 a.m.). See also Order, filed May 30, 2008 at 10:30 a.m., Record at 140405-12, 140410v.

294 1998 Const., art. 24(17); 2008 Const., art. 75.


- 75 -

competence to dismiss proceedings as an appropriate sanction for serious and repeated noncompliance with the Constitution and other laws. It “must . . . reject” any “clear fraud against the law” as well as any court filing that reflects “clear abuse of right.”295 In particular, “distorted evidence as well as all types of abuse of right . . . shall be penalized.”296 A case cannot simply be permitted to proceed once it has become evident that a party has grossly abused the judicial process. Surely this is so where the party’s misconduct is, as here, also criminal in nature.

Not only does Ecuadorian law require that the plaintiffs’ fraud be sanctioned in the strongest possible fashion, but international principles of due process require the same, under the ancient legal maxim “dolus et fraus una in parte sanari debent,” meaning, deceit and fraud must always be remedied.297 International tribunals have acted in accord. For example, in the Lehigh Valley Railroad Co. Case, the tribunal set aside its decision when it learned that a party had filed false pleadings and suborned perjury. The court declared that when a tribunal has been “misled by fraud and collusion on the part of the witnesses . . . [n]o tribunal worthy [of] its name or of any respect may allow its decision to stand if such allegations are well-founded.”298 And, of course, courts across the world refuse to recognize foreign judgments that are tainted by fraud. Recent examples from the United States include Transportes Aereos Pegaso, S.A. de C.V. v. Bell Helicopter Textron, Inc.,299 involving a solicited bribe; Manez Lopez v. Ford Motor Co.,300 involving inappropriate contacts with court officials, and de la Mata v. Am. Life Ins. Co.,301 involving a plaintiff who hid evidence. Courts in other countries follow the same rule.302

In this case, the plaintiffs have meticulously engineered a fraud, threatening, ignoring, and jeopardizing the very validity of the judicial process. Your Honor should exercise your authority to sanction that outrageous conduct by immediately terminating

295 Ecuadorian Organic Code of the Judiciary, art. 130. 296 Ecuadorian Organic Code of the Judiciary, art. 26 297 PELOUBET, S.S. A Collection of Legal Maxims in Law and Equity. George S. Diossy. New

York. 1880. p. 58. No. 480. 298 Lehigh Valley Railroad Company v. Germany, Decision and Opinion of Mixed Claims

Commission, United States and Germany, dated Dec. 15, 1933, published in Reports of International Arbitral Awards, United Nations, 2006, Volume III, at 189-90; see also La Abra Silver Mining Co. Case and Benjamin Weil Case, published in MOORE, John Bassett, History and Digest of the International Arbitrations to which the United States has been a Party. Volume II. Washington. 1898. p. 1333-39.

299 Transportes Aereos Pegaso, S.A. de C.V. v. Bell Helicopter Textron, Inc., 623 F. Supp. 2d 518, 534-38 (D. Del. 2009).

300 Manez Lopez v. Ford Motor Co., 470 F. Supp. 2d 917, 922-29 (S.D. Ind. 2006). 301 de la Mata v. Am. Life Ins. Co., 771 F. Supp. 1375, 1388-89 (D. Del. 1991). 302 GERHARD, Walter and BAUMGARTNER, Samuel P. Recognition and Enforcement of

Foreign Judgments Outside the Scope of the Brussels and Lugano Conventions. Kluwer Law International. The Hague. 2000. p. 31.


- 76 -

this case by completely dismissing the complaint and ordering the prosecution of the plaintiffs.

Moreover, as my client has requested, this Court should conduct a complete, exhaustive, and transparent investigation into the fraudulent activities of the plaintiffs. As even the plaintiffs’ lead counsel, Mr. Fajardo, has publicly admitted, my client has presented “over 50 thousand pages of information questioning the judicial process and its validity,” all of which “have to be analyzed by Judge Zambrano now.”303 The Office of the Public Prosecutor should also be informed, so that it can conduct its own investigation regarding the possibly criminal activities described above. Such egregious acts of deceit and corruption simply cannot go unpunished.

CHAPTER III. CHEVRON HAS BEEN DENIED DUE PROCESS

AND ITS CONSTITUTIONAL RIGHTS

“Due process” as a fundamental guarantee has continually evolved throughout Ecuadorian constitutional history.304 It has been defined as

a set of substantive and procedural rights possessed by persons and not dependent on the State, recognized by the Constitution, that seek to protect liberty and to ensure that anyone being tried shall enjoy guarantees for exercising the right to defend themselves and for obtaining from judicial and administrative entities a fair, prompt and transparent trial. Guarantees related to due process are covered by Article 24 of the [Constitution], and according to the principle of legal hierarchy, prevail over any subsidiary law, procedural practice or authority.305

The right to due process and its various guarantees are aimed at ensuring, among other things, (i) the right to a defense (i.e., ensuring both parties have equal access to the court, equal access to witnesses and experts, and equal opportunity to present their claims, defenses, and relevant evidence to prove their claims and rebut the opposing party’s claims); (ii) the right to be judged by a “natural judge” (i.e., judges that act independently, impartially, and competently); and (iii) the openness of trials (i.e., ensuring that all fact-finding be conducted transparently, that, among others, the experts provide all data that they rely upon, and respond to the questions posed to them). These rights have been incorporated into the Constitutions of 1978, 1998, and 2008

303 Interview of Pablo Fajardo, EcuadorInmediato Radio, El Poder de la Palabra, Dec. 20, 2010 at 7:00 p.m.

304 See, e.g., Article 76 of the Constitution; Article 24 of the 1998 Constitution; Article 19(16) of the 1978 Constitution.

305 CORRAL, Fabián, Due Process, El Comercio, Nov. 9, 2006, at A3 (discussing the 1998 Constitution).


- 77 -

which, according to Santiago Andrade Ubidia, give “a new role to the judge, as guarantor of . . . the rights and guarantees established in the Constitution.”306 In this trial, each and every one of these basic guarantees has been violated or ignored throughout this lawsuit, as shown and summarized below.

As discussed here, Chevron has been denied its right to due process through a pattern of unlawful, improper, and unfair orders that should be declared null and void. These orders lack the necessary reasoning and have deprived Chevron of its basic entitlement to defend itself before independent and impartial judges. Among the most egregious of these orders was that of August 2, 2010, at 9:00 a.m., in which the judge, using the ploy of ruling sua sponte, arbitrarily and without stating the reasons for his decision, ordered the parties to file an unlawful "legal brief" on the economic criteria and the economic valuation for repairing the (alleged) "damage." The provisions of that order not only indisputably constituted malfeasance of office by the judge, which cannot be covered up, through which a priori, and before issuing a judgment, he not only took for granted the very existence of the alleged damage that were supposed to be evaluated, but also, through the supposed, poorly defined "legal brief" he created ad hoc a new procedural step, which is not provided for in the law, through which not only has an attempt has been made to cover up and dismiss the plaintiffs' malfeasance, bad faith and fraud and the nullities that remove any weight from the evidence produced by the plaintiffs through the judicial inspections and the global expert assessment, but that order also validated, with the judge's active participation, the plaintiffs' attempt to surreptitiously reintroduce their fabricated evidence, to “paper over” the procedural fraud they had committed through expert reports that were falsified and the supposedly independent expert, Mr. Cabrera, whose “independent” report they secretly authored. In doing so, the judge cemented the constitutional violations my client has suffered as a result of the fraud that has permeated this trial, as discussed in Chapter II, supra. In addition to denying my client the right to be tried in accordance with the rule of law, these serial violations of due process constitute nullities that require the entire proceeding to be declared null and void. See infra Chapter IV.

3.1 The August 2, 2010 Providencia at 9:00 a.m. and the Submissions It Authorized Violate Due Process and Aggravate the Fraud That Has Pervaded These Proceedings

In response to the evidence of the plaintiffs' malfeasance and procedural fraud detailed above, supra §§ 2.1, 2.2, which was reported to this Court in numerous motions requesting action, Judge Ordóñez not only failed to terminate this action or sanction the plaintiffs in any way for their evident and egregious misconduct intended to deceive this Court in the manner that would be proper in this case, nor has he sent copies of the record to the Prosecutor so that these crimes can be investigated and punished; rather, he unexpectedly accepted the plaintiffs’ petition to invent a novel

306 ANDRADE UBIDIA, Santiago, The Judicial Branch in the current Constitution of the Republic,

published in The New Constitution of Ecuador: The State, Rights, and Institutions, Editorial Corporación Editora Nacional, Quito, 2009, p. 240.


- 78 -

mechanism—a second, ad hoc evidentiary period, wrongly referred to as a "legal brief"—without legal basis, to attempt to whitewash their fraudulent conduct. But it is obvious that nothing the plaintiffs request can be given any credence, let alone overcome or substitute for the fraudulent, unreliable, and insufficient evidence that they offered throughout this trial.307 That order of August 2, 2010, at 9:00 a.m. violates my client’s due process rights and demonstrated Judge Ordóñez’s clear partiality for, and complete alignment with, the plaintiffs. Your Honor demonstrated the same bias when you denied my client’s request to revoke the August 2 order.308

The plaintiffs, recognizing that they could no longer rely on the results and conclusions of the reports produced by the experts they had nominated to perform judicial inspections, reports that contain indefensible basic errors, or continue to defend the flawed and fraudulent Cabrera Report secretly composed by the plaintiffs’ own team of counsel and consultants, requested that this Court order the parties to submit “a legal brief” that would analyze “the economic criteria applicable for reparation of environmental damage.” 309 This order, which was issued over my client’s strong objections,310 additionally declared a priori that the judge would refuse to consider any other filings made by the parties, thereby infringing the parties’ right to request the clarification or even reversal of that order. It is, to say the least, astounding and illogical that a court of law charged with discerning the truth would wholly ignore irrefutable evidence that one of the parties had falsified evidence and corrupted the principal expert’s work and instead, in the absence of any reliable or sufficient evidence of the supposed harm or the existence of causation, call for an assessment of damages from the parties. The fact that other courts—when reviewing the same evidence—have concluded that the plaintiffs’ actions would “be considered fraud by any court” further illustrates the utterly indefensible nature of this Court’s action.311 For this and a number of other reasons, the order of August 2, 2010, at 9:00 a.m. is indefensible and wholly improper, illegal and illegitimate.

First, an ad hoc “legal brief,” such as the one submitted by plaintiffs on September 16, 2010, at 5:15 p.m., cannot cure the fundamental problems with the Cabrera Report, namely its nullity and absence of evidentiary value, or the malfeasance by the plaintiffs that has pervaded this trial. As discussed infra § 3.5, the fact remains that the “economic criteria” formulated by plaintiffs are based largely on the flawed and fraudulent evidence fabricated during the performance of the judicial inspections, through the submission of reports lacking any basis, tainted with essential errors and fraud, evidence that was produced with the manifest intent to make a

307 Order, filed Aug. 2, 2010 at 9:00 a.m. 308 Order, filed Oct. 11, 2010 at 5:17 p.m., numeral 29, at 5. 309 Plaintiffs’ Motion at 2, 8, filed June 21, 2010 at 2:20 p.m.; see also Order of Aug. 2, 2010 at

9:00 a.m. 310 See Chevron’s Rebuttal to Plaintiffs’ Response, filed July 12, 2010 at 2:39 p.m. 311 Chevron Corp. v. Champ, Nos. 1:10mc 27, 1:10mc28 (W.D.N.C. Aug. 30, 2010), at 12,

attached as Annex 25 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m.


- 79 -

distorted presentation of the facts in dispute and to mislead the courts, in order to harm my client, in the same way as the expert examination of all the fields operated by the former Consortium, which like the judicial inspections, suffers from the same defects indicated above. Repackaging or recycling the same evidence does nothing to remedy plaintiffs’ misconduct and bad faith or the fraud that such misconduct brought about. In fact, this Court’s decision to authorize the untimely, unnatural legal briefs (used as a vehicle for the plaintiffs to reintroduce their fraudulent evidence and attempt to make it legitimate) only made the nullity problems worse and violate even more the constitutional right to due process to which my client is entitled. After all, the fraudulent Cabrera Report was intended by the plaintiffs to serve as a substitute for the 64 judicial inspections that they illegally waived, while those that had already been performed were tainted by the plaintiffs' misconduct and suffered from defects of essential error (which included acting with fraud) alleged by my client, the hearing of which was arbitrarily denied in some cases, and improperly conducted in other cases without being resolved to date. And then this Court gave plaintiffs a third bite at the apple. In doing so, it ignored the fact that when previously provided with opportunities to prove their case, plaintiffs first falsified the reports of their nominated expert, Dr. Calmbacher, and then improperly worked with the “neutral” expert, Mr. Cabrera, to craft a fraudulent report intended to lead the administration of justice into error and to gravely harm Chevron. In light of those deceitful and fraudulent activities, this Court cannot possibly give any probative validity to plaintiffs’ submission on September 16, 2010, at 5:15 p.m., in which they state their “economic criteria” for the assessment of environmental damages. In any other system of justice, the plaintiffs would have been prevented from continuing with the trial and their counsel would have been suspended from practicing law. They certainly would not have been given the chance to whitewash their malfeasance, take advantage of their own deceitful actions, and try to salvage their case in an ad hoc eleventh-hour filing of new (recycled) evidence.

Second, without any investigation conducted in accordance with the legal rules, which eliminates any doubts regarding the now public and probably criminal acts of the plaintiffs in producing the fabricated "evidence" of damages alleged in their complaint and which result solely from the Cabrera Report, it was absolutely improper for the judge to order a quantification of the damages, or even worse, for him to consider or give any merit to such quantification when he decides the case. A case cannot go forward without competent or reliable evidence, both procedurally and in terms of relevance to the issues in the case, that is not fabricated and does not contain a distorted portrayal of the facts, and also proves the supposed damages alleged in the complaint. Ordering the parties to file “legal briefs” on economic criteria for purposes of reparation of damages without having first determined in a judgment that such damages exist and that the defendant is liable for them and must be ordered to redress them was not only an arbitrary decision that undeniably involves a rush to judgment, but is contrary to reason, logic and law. Therefore, Judge Ordóñez revealed his opinion in the case prematurely when he issued his order of August 2, 2010, at 9:00 a.m., which effectively constituted an advance opinion, which although it


- 80 -

attempted to confirm, it recognized and could only be proper by assuming a priori, both that damages occurred and that my client was liable to repair them.312

Third, there was no procedural basis in law for the order’s call for supplemental briefing on the issue of alleged damages. By law, judges must “administer justice by applying the relevant legal provision.”313 This Court is not empowered to invent novel means of proof not envisaged in the law, let alone to require parties to collaborate in the conduct of proceedings or procedural steps that are not contemplated or authorized in the law. In accordance with the rule of law, and preexisting rules of procedure that govern lawsuits in general and summary verbal proceedings (as in the present case) in particular, the plaintiffs have had the opportunity to prove their case, but they were unable to do so without illegally resorting to fabricated evidence and distorted facts, with the intent to mislead the court and injure my client. The filings requested by Judge Ordóñez in his order of August 2, 2010 at 9:00 a.m. are not the way or the means to provide evidence, nor are they consistent with any type of evidence admissible under the Code of Civil Procedure. These "legal briefs" cannot validate or rectify the plaintiffs’ failure to submit any competent evidence, with a logical, technical and scientific basis that also has probative value.314

Fourth, Judge Ordóñez’s order of August 2, 2010, at 9:00 a.m., in refusing to consider any additional filings beyond those ordered by the Court, was an unconstitutional, illegal, and illegitimate restriction on my client’s right of petition.315 This Court has a constitutional obligation to act impartially and ensure due process, and my client is entitled to submit concrete evidence that its rights have been egregiously violated during these proceedings. The violation of my client’s constitutional rights by the order of August 2, 2010, at 9:00 a.m. is all the more striking and astounding since Judge Ordóñez claimed that he would not even take into account evidence which shows fraudulent acts on the part of the plaintiffs that would merit annulment of this proceeding. In other words, the order attempted to cover up and exclude evidence that shows the plaintiffs' corruption and the nullities that affect the validity of this trial, as well as the now public misconduct of the plaintiffs to mislead the judge; moreover, this order shows that the judge was not concerned in the slightest about the legitimacy of his decisions; otherwise, he not only would not have issued the order that did, but he would also have thoroughly investigated the evidence of malfeasance, bad faith and procedural fraud and sanctioned it; similarly, in compliance with his obligations as a judge, he would have declared the nullity of the proceedings in all areas where appropriate. The order stating that this Court would ignore any other submissions or petitions by the parties is yet another manifestation of

312 See Chevron’s Revocation Motion at 8-9, filed Aug. 5, 2010 at 4:30 p.m. 313 Article 129(2) of the Organic Code of the Judiciary. 314 See Chevron’s Revocation Motion at 5-8, filed Aug. 5, 2010 at 4:30 p.m.; see also Chevron’s

Motion to Recuse Judge Ordonez at 24 -25, filed Aug. 26, 2010 at 2:45 p.m. 315 See Chevron’s Revocation Motion at 9-10, filed Aug. 5, 2010 at 4:30 p.m.


- 81 -

the fact that because of the acts and influence of the plaintiffs and other judges biased in their favor, everything done in this trial lacks any credibility and is an utter sham.

In sum, this Court’s refusal to act upon, or even acknowledge, the overwhelming evidence of the plaintiffs’ fraudulent and deceitful conduct is utterly indefensible. The baseless and arbitrary order made on August 2, 2010 at 9:00 a.m. reflects the intense and illegal social and political pressure to award the plaintiffs a large judgment, heedless of the law or the facts. In order to preserve my client’s right to due process, this case should have been terminated at once. Instead, the plaintiffs went unpunished and, in fact, were given yet another chance to attempt to illegally salvage their case, even though all of the evidence they submitted with regard to the supposed environmental damages they allege in their complaint was falsified, illegal, and not at all reliable. This was a gross violation of the most basic constitutional principles of due process and the most basic principles of procedural law.

3.2 By Ignoring and Whitewashing the Plaintiffs’ Fraud, This Court Has Exposed Its Bias

Judge Ordóñez, in steadfastly and arbitrarily refusing to acknowledge or even investigate the plaintiffs’ pattern of malfeasance, and instead accepting a suggestion by the plaintiffs (even though their acts as perpetrators of procedural fraud to mislead the court and harm my client have come to light) and issuing an arbitrary, baseless order revealed that he was not and could not be an impartial judge in this matter. For these and other reasons, my client therefore sought and obtained his recusal from the case according to the law.316

The Constitution and the Organic Code of the Judiciary guarantee the impartiality of the judge.317 Principles of due process protect the same right.318 An impartial judge means one who will not “replace his judgment with considerations of friendship, enmity, sympathy or dislike with respect to the litigants or their legal representatives, or with the possibility of personal gain or illicitly offered gifts, or with political reasons.”319

By issuing the orders described above, supra § 3.1—refusing to investigate the plaintiffs’ actions despite concrete proof of fraud, and inventing an evidentiary process solely to assist the plaintiffs in whitewashing their misconduct—Judge Ordóñez revealed his lack of interest in the truth; his lack of intent to rule based on the facts and law; his lack of regard for due process; and his lack of impartiality. Accordingly, my client

316 See Motion to Recuse Judge Ordóñez, filed Aug. 26, 2010 at 2:45 p.m. 317 2008 Const. art. 76(7)(k); Organic Code of the Judiciary, art. 9. 318 See 2008 Const. art. 76(7)(a). 319 DEVIS ECHANDÍA, Hernando. General Theory of Process. 3rd Edition, Editorial Universidad,

Buenos Aires, 2002, p. 129.


- 82 -

requested that Judge Ordóñez be recused from these proceedings on account of his evident bias.320

But even this effort to obtain due process was thwarted by Judge Ordóñez’s determination to rule against my client. Under Ecuadorian law, Judge Ordóñez had no authority to order autos para sentencia in this proceeding while a recusal motion was pending against him. See infra § 4.4. He lost all authority to act, by operation of law. Nonetheless, Judge Ordóñez, knowing of the pending recusal motion against him, ignored it and issued three orders, one of which declared autos para sentencia.321 The court clerk has certified that Judge Ordóñez, without any legal authority, withheld the recusal motion and thus prevented it from being transmitted to the appropriate judge for over two weeks. 322 The motion was finally transmitted to you, your Honor, who accepted it and ordered Judge Ordóñez to respond to the allegations within twenty-four hours.323 In yet another improper and suspicious delay, nearly two weeks passed before Judge Ordóñez was officially served with your order, during which time Judge Ordóñez issued two of his three illegal orders, including autos para sentencia.324

The fact that Judge Ordóñez knew that his jurisdiction had been suspended and yet continued to exercise jurisdiction over the case violates Article 164 of the Organic Code of the Judicial Function, Article 864 of the Code of Civil Procedure, and Article 256 of the Criminal Code. Even the plaintiffs’ representatives admitted that because “[Judge] Ordóñez . . . kn[e]w about the recusal . . . he was prevented from making rulings. . . . [Judge] Ordóñez has made two rulings while being recused which, by Law, he cannot do.”325 This fact also provides further evidence that Judge Ordóñez had succumbed to the external pressure to rule against my client, regardless of the law or the evidence. To hinder the recusal proceeding while entering key rulings sought by the plaintiffs is inexcusable. His flagrant march towards judgment in the absence of jurisdiction and in the face of clear evidence of plaintiffs’ fraud betray a clear bias and constitute a serious violation of my client’s constitutional right to due process.

The fact that Judge Ordóñez was ultimately recused does not remedy the violations discussed above. Because Judge Ordóñez was recused for his failure to

320 Recusal was also requested because the judge failed to rule on at least fifty motions within

triple the time allowed by law. See Code of Civil Procedure, art. 856(10); Chevron’s motion filed on Aug. 26, 2010 at 2:45 p.m.; Chevron’s motion filed at Oct. 15, 2010 at 2:25 pm.

321 Order of Sept. 17, 2010 at 8:05 a.m. 322 Recusal Case No. 002-2010, Order of Sept. 24, 2010 at 4:30 p.m. 323 Recusal Case No. 002-2010, Order of Sept. 16, 2010 at 11:10 a.m. 324 See Order of Sept. 17, 2010 at 8:05 a.m., (ordering autos para sentencia); see also Recusal

Case No. 002-2010, Order of Sept. 24, 2010 at 4:30 p.m., (ordering the court clerk to serve Dr. Leonardo Ordóñez with the recusal motion in accordance with what was “ordered in the orders of September 16, 2010 at 11:10 a.m. and September 20, 2010 at 4:15 p.m.”); Recusal Case No. 002-2010, Response by Judge Leonardo Ordóñez to Chevron’s motion for recusal, filed Sept. 28, 2010 at 5:58 p.m.

325 Interview of Luis Yanza, Radio Amazonas, Sept. 25, 2010.


- 83 -

comply with procedural deadlines, this Court has never addressed his evident bias against my client. The only remedy for such bias is the nullification of Judge Ordóñez’s rulings, at least from August 2, 2010 onward.

Yet, apart from the temporary withdrawal of autos para sentencia, Your Honor ratified the key orders issued by Judge Ordóñez instead of nullifying them, thus evidencing the very same partiality that he displayed.326 Like Judge Ordóñez, Your Honor has refused (you will decide at the appropriate procedural time) to sanction the plaintiffs for falsifying evidence, lying to this Court, intimidating and extorting judges (Yánez) and ghostwriting Mr. Cabrera’s report, among other unlawful misconduct. Like Judge Ordóñez, Your Honor has refused to commence any investigation into the compelling evidence of these fraudulent activities. And like Judge Ordóñez, Your Honor has instead rushed toward the premature declaration of autos para sentencia, zealously hastening a judgment against my client even as new and shocking evidence of the scope and extent of the plaintiffs’ fraud continues to be revealed. Thus, like Judge Ordóñez, by acting in violation of express legal and constitutional principles and rules of due process, Your Honor has not only revealed your bias against my client, but has also violated my client's right to defend itself, and its right to receive a fair trial and be judged by an independent, impartial judge.

3.3 The Truncated and Unreliable Judicial-Inspection Process

While recent events have provided irrefutable evidence of this Court’s refusal to grant expeditious, timely and impartial judicial protection to safeguard my client’s rights in this case, the truth is that my client has been denied due process from the very start of these proceedings.

3.3.1 The Process for Judicial Inspections Established by This Court Was Improperly Truncated

When this Court failed to act at the outset of this case on Chevron’s dispositive motions, such as those regarding this Court’s lack of jurisdiction and the plaintiffs’ suit against the wrong party, Chevron was forced to proceed to the evidentiary phase.327 In order to guarantee that all of the experts in the case would act in a transparent and reliable manner, the parties spent several months negotiating a “procedural agreement” that, once finalized, was filed with the Court. 328 This agreement included three documents: (i) the Terms of Reference for the Participation of the Experts During the Judicial Inspections; (ii) a Sample Collection Plan for the environmental evaluation of the sites subject to judicial inspection; and (iii) an Analysis Plan outlining the analytical

326 See, e.g., Order, filed Oct. 11, 2010 at 5:17 p.m. 327 See Order Granting Judicial Inspections, filed Oct. 29, 2003 at 5:55 p.m., Record at 4681-84v,

4681-81v. 328 Reference Terms for Acts of the Experts During Judicial Inspections, filed Aug. 18, 2004 at

8:02 a.m., Record at 8470-74, 8550-51, approved by Order of Aug. 26, 2004, filed at 9:00 a.m., Record at 9051-53, 9052.


- 84 -

protocols for analyzing samples taken during the judicial inspections sought by the parties and ordered by the judge, within the evidentiary period.329 The Court approved this “procedural agreement” in an order issued on August 26, 2004, at 9:00 a.m., thereby making the agreement’s contents binding rules for the case.330

Within this framework, the Court ordered that two experts participate in each of the “judicial” inspections, one suggested by each party.331 The Court also ordered that if the respective party-appointed experts issued “divergent” reports, then such divergence would be “settled” by experts appointed by the Court.332 In addition, per the plaintiffs’ request, the Court further ordered that the experts appointed for the inspections also would participate in the “global” assessment of all of the fields operated by the former Consortium, selecting from among those that participated in different judicial inspections requested by the parties.333

Pursuant to the procedural agreement approved by this Court and Article 252 of the Code of Civil Procedure, each party suggested its own experts to participate in the judicial inspections, while the Court, in turn, appointed the respective settling experts.334 In two cases, however, the expert suggested by the plaintiffs, Dr. Charles Calmbacher, did not submit an expert report (Sacha-6 and Sacha-21). (It was later revealed that Dr. Calmbacher had been fired by the plaintiffs because his conclusions did not support their allegations, and that the two reports submitted in his name, for Sacha-94 and Shushufindi-48, had been forged by the plaintiffs. See supra § 2.1.)

In several other cases, the plaintiffs refused to nominate an expert at all.335 In all other cases, the reports submitted by the parties’ experts presented conflicting data, conflicting interpretations of data, and conflicting conclusions, which should have resulted in resolution by the court-appointed settling experts. 336 There was no

329 Reference Terms for Acts of the Experts During Judicial Inspections, filed Aug. 18, 2004 at 8:02 a.m., Record at 8470-551, 8470-72, 8475-8518, 8519-49.

330 Order of Aug. 26, 2004, filed at 9:00 a.m., Record at 9051-53, 9052. 331 See Reference Terms for Acts of the Experts During Judicial Inspections, filed Aug. 18, 2004

at 8:02 a.m., Record at 8470-8551, 8470-71; See also Order of Aug. 26, 2004, filed at 9:00 a.m., Record at 9051-52v, 9052.

332 See Order of Sept. 16, 2004, filed at 9:30 a.m., Record at 79736-36v, 79736. 333 Plaintiffs’ Motion Requesting Judicial Inspections and Global Assessment, filed Oct. 29, 2003

at 5:45 p.m., Record at 4677-78, 4677v-78; Order of Oct. 29, 2003 at 5:55 p.m., Record at 4681-84v, 4683v-84.

334 Chevron’s Motion regarding Requirements, Roles, and Responsibilities of the Experts, filed Nov. 23, 2005 at 3:10 p.m., Record at 84794-98, 84794-95; see also Chevron’s Motion, filed Sept. 20, 2005 at 5:00 p.m., Record at 79738-42, 79739-41; Order of Sept. 16, 2005 at 9:30 a.m., Record at 79736-36v, 79736.

335 See Chevron’s Pleading regarding Enforcement of Joint Agreement on Judicial Inspection and Expert Procedures, filed Nov. 7, 2008, at 5:02 p.m., Record at 152818-21, 152820.

336 See Chevron’s Motion to Dismiss, filed Oct. 8, 2007 at 8:10 a.m., Record at 132897-996, 132920.


- 85 -

impediment to doing so since settling experts had been named for this express purpose and had participated in conducting each of the respective judicial inspections.

Nevertheless, the Court ordered the settling experts to review and address the parties’ experts’ conflicting reports for only one of the sites examined in one judicial-inspection: Sacha-53.337 Based on their review of both parties’ experts’ reports, the settling experts concluded that pits 3 and 4 at this site did not require any further action under the standards established in the Remedial Action Plan (“RAP”). The settling experts also concluded that all pits at Sacha-53 were unlikely to impact the health of the people living in the area. The settling experts concluded that testing at pits 1 and 2 demonstrated proper remediation and compliance with all 1995 standards for hydrocarbon activities. Referring to the analysis for pits 1, 2, and 3, as well as for the “old spill zone” at the Sacha-53 well site, the settling experts also concluded that there was insufficient evidence “to affirm or reject an impact on vegetation and cattle in the vicinity of the well; no analysis of contaminant elements that are potentially present in plant and animal tissues are presented.”338

After the report of the settling experts was submitted for the Sacha-53 well-site, the plaintiffs’ lawyers—who were also running low on funds—opposed any further work by the settling experts.339 For example, the plaintiffs began refusing to pay the settling experts’ fees.340 Despite repeated requests by Chevron to have the appointed settling experts make a decision regarding divergent reports of the experts suggested by the parties for judicial-inspections, the Court inexplicably did not order further settling expert reports.341

As early as January 2006, the plaintiffs began to take action to expedite the process of judicial inspections sought by the parties and ordered by the court. After the settling experts had issued their report on Sacha-53, however, which was unfavorable to the plaintiffs, the plaintiffs, arguing that their financial resources were limited, sought to terminate the entire judicial inspection process altogether. This was a desperate maneuver to avoid at all costs any more judicial inspections—a reflection of the fact that the plaintiffs’ case could not withstand independent and unbiased scientific scrutiny.

337 Order of Sept. 16, 2005 at 9:30 a.m., Record at 79736-36v, 79736. 338 Settling Experts’ Report, filed Feb. 1, 2006 at 5:00 p.m., Record at 92492-685, 92576. 339 Plaintiffs’ Objection to Appointment of Settling Experts, filed Mar. 2, 2006 at 5:45 p.m., Record

at 97394-400, 97399. 340 Plaintiffs’ Objection to Paying Settling Expert Fees, filed June 13, 2006 at 5:52 p.m., Record at

112195-96. 341 Order Denying Chevron’s Request for Settling Expert, filed Mar. 19, 2007 at 8:30 a.m., Record

at 127044-45v, 127044-44v; See also Chevron’s Second Motion Requesting Settling Expert for Guanta 7, filed Mar. 9, 2007 at 5:10 p.m., Record at 126723; Order of Mar. 5, 2007 at 5:50 p.m., Record at 126682-85, 126682v; Chevron Motion Requesting Settling Expert for Guanta 7, filed Feb. 28, 2007 at 5:30 p.m., Record at 126287-126290, 126289-90.


- 86 -

The plaintiffs first tried, in January 2006, to “withdraw” from twenty-six judicial inspections because, in their opinion, the judicial inspections had gone on for too long and were unnecessary, particularly because, during the expert examination of all fields operated by TexPet as operator of the former Consortium, an exhaustive investigation of these sites would be conducted during the global assessment.342 This request was effectively denied by this Court on June 8, 2006.343

On February 1, 2006, at 5:00 p.m., the settling experts issued their report on Sacha-53, refuting plaintiffs’ allegations regarding the insufficiency of TexPet's remediation work and the existence of alleged massive contamination and risks to human health. Then, in June 2006, a consulting attorney for the plaintiffs publicly stated regarding funding that “we’ve been sort of living on a shoestring for the last couple of inspections.” 344 That same month, plaintiffs successfully delayed further judicial inspections based upon a lack of resources.345 In July 2006, now citing Article 11 of the Civil Code,346 the plaintiffs moved to “relinquish” sixty-four of the ninety-seven judicial inspections they had originally requested.347 The Court accepted the relinquishment,348 thereby altering the ruling issued on October 29, 2003, at 5:55 p.m.,349 which, in turn, violated the provisions of Article 292 of the Code of Civil Procedure.350

The relinquishment of the judicial inspections by the plaintiffs’ violated, among other things, the legal concept of “unity of the act,”351 which makes clear that the judicial inspections requested by the plaintiffs were not ninety-seven individual procedures but rather an evidentiary unit. Under the principle of community or acquisition, the production of evidence requested by one of the parties and ordered by the Court does not belong to or benefit only the one who provides or requests it, since once evidence is

342 Plaintiffs’ Motion regarding Waiver of Judicial Inspections, filed Jan. 27, 2006 at 5:10 p.m., Record at 92442-44, 92443.

343 See Order of June 8, 2006, filed at 8:30 a.m., Record at 112062-66v, 112065v-112066. 344 See Crude Documentary (Joe Berlinger, First Run Features) (publicly available). 345 Order of June 19, 2006, filed at 3:00 p.m., Record at 112208-09, 112208v. 346 Article 11 of the Civil Code provides: “The rights conferred by law can be relinquished,

provided that they only concern the individual interest of the one relinquishing, and that their relinquishment is not prohibited.”

347 Plaintiffs’ Motion regarding Relinquishment of Judicial Inspections, filed July 21, 2006 at 9:10 a.m., Record at 116431-34, 116434.

348 Order of Aug. 22, 2006, filed at 11:00 a.m., Record at 117589-90, 117589. 349 Order of Oct. 29, 2003 at 5:55 p.m., Record at 4681-84v, 4683v. 350 Article 292 of the Code of Civil Procedure provides: “Motions that violate the provisions of the

previous article, or whose purpose is to the change the sense of judgments, collateral orders or procedural orders, or to delay the progress of the case, or to intentionally harm the other party, shall be dismissed and penalized in accordance with the following article.”

351 This concept is defined as the “commission of an act with legal consequences without interruption, from the commencement to the conclusion thereof.” SANCHEZ ZURATY, Manuel, Basic Legal Dictionary, Editorial Jurídica del Ecuador, 2d ed., vol. 2, 1993, p. 783.


- 87 -

admitted into the proceeding it may also benefit the opposing party.352 In other words, once production of evidence is ordered by the Court, it becomes part of the proceeding and is no longer at the free disposal of the party that requested the production of evidence, but rather comes to belong to all of the litigants. The requested evidence also aids the judge as he seeks to enter a well-founded and reasoned decision, as required by Article 76 of the Constitution. As conceded by Dr. Wray, counsel of record for the plaintiffs, “[e]vidence is indivisible . . . trying to divide it . . . would mean directly violating the right to due process established in the Constitution and Article 8 of the American Convention on Human Rights, which protects judicial guarantees.”353 “I must remind you, your Honor, that evidence is indivisible, such that inspections are not exclusively the defendant’s proceedings, but rather are case proceedings in which both parties have the same rights.”354

Furthermore, even if the plaintiffs could relinquish their own duty to present evidence requested and ordered by the Court, a notion the defense does not accept, they certainly had no right to relinquish the settling experts’ duty to resolve the divergent conclusions reached by the party-nominated experts in their expert reports regarding the inspections already completed. Both parties agreed that the independent settling experts would resolve conflicting conclusions, and both parties had the right to insist on having that process carried out according to a definitive court order. Pursuant to Article 250 of the Code of Civil Procedure, “[a]n expert or experts will be appointed for issues in dispute that require knowledge of a certain science, art or trade.” This provision reflects that there are certain judicial disputes that relate to technical and scientific matters that are not within the jurisdictional authority of the judge hearing the case and therefore, they require an expert report to assist the judge in resolving the controverted technical and scientific allegations at issue. Given the divergent results from the expert reports from the judicial-inspection process, it was necessary under Article 259 of the Code of Civil Procedure to appoint settling experts to render a conclusion. As none of the judges who previously heard this lawsuit did so, the divergent expert reports cannot be given any evidentiary value. In particular, the reports submitted by the plaintiffs’ nominated experts cannot be given any weight because many of them are affected by my client's allegations of essential error and fraud, and these allegations have not been resolved in a timely manner as ordered by law, and because the only settling experts appointed in this case found that the reports of the plaintiffs’ nominated experts regarding the judicial inspection of Sacha-53 were false.

352 DEVIS ECHANDIA, Hernando, General Theory of Court Evidence, 5th ed., vol. I, Editorial

ABC, Bogotá, Columbia, p. 118. 353 Plaintiffs’ Motion, filed Oct. 5, 2005 at 11:50a.m., Record at 80940-41, 80940v. 354 Plaintiffs’ Objections to Suspension of Judicial Inspection at Guanta Productions Station, filed

Oct. 19, 2005 at 9:50 a.m., Record at 81535, 81535; see also Plaintiffs’ Motion in Response to Chevron’s Objections, filed Oct. 5, 2005 at 11:50 a.m., Record at 80940-41, 80940.


- 88 -

Accordingly, Chevron opposed the relinquishment because it would violate Ecuadorian law355 and would infringe upon Chevron’s due process right to present its defense.356 The Court’s decision accepting relinquishment came after the plaintiffs orchestrated a public protest accusing this Court of favoring a corporate foreigner over indigenous Ecuadorians and after several Ecuadorians, including the manager of President Correa’s election campaign, signed an amicus brief urging this Court to expedite the litigation. 357 Chevron complained that this unlawful change in the procedural agreement was the product of this external pressure.358

In response to Chevron’s motion for revocation of the Court’s decision accepting the plaintiffs’ relinquishment of the judicial inspections pursuant to Article 43 of the Code of Civil Procedure,359 the Court ordered each of the forty-eight named plaintiffs were to personally ratify the purported relinquishment of the judicial inspections.360 But not all of the plaintiffs gave the necessary ratification. Even after several extensions, at the end of the period granted, seven plaintiffs had not ratified the relinquishment request.361

355 As explained in a leading treatise, under the maxim of “quae non sunt permissae prohibita

intelliguntur [that which is not permitted must be deemed prohibited],” in order “[t]o determine the validity of an act, . . . one must ask whether any legal principle allows it.” GARCÍA DE ENTERRÍA, and Eduardo Tomás-Ramón Fernández, Administrative Law Course, Editorial Civitas, Madrid, 1974, Vol. I, p. 448 (citing Ballbe).

356 Chevron’s Motion regarding Plaintiffs’ Relinquishment of Judicial Inspections, filed Feb. 22, 2006 at 9:38 a.m., Record at 95411-21, 95416-18.

357 See Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 141082-203, 141091; Amicus Brief, filed July 21, 2006 at 9:15 a.m., Record at 116436-41, 116440.

358 Chevron’s Motion, filed Aug. 16, 2006 at 5:40 p.m., Record at 117234-52, 117243. 359 Article 43 of the Code of Civil Procedure provides: “In every lawsuit, the parties shall appear

either in person, or by way of their legal representative or counsel of record, and the latter must prove his right of representation as soon as he appears in the lawsuit, unless the judge, for serious reasons, grants him a period in which to submit his power of attorney, and this period shall not exceed 15 days in the client is in Ecuador, or 60 days if he is abroad. No such time shall be granted, regardless of the reason for which it is invoked, if an unknown person or a person without responsibility presents himself.

If the counsel of record does not submit the power of attorney within the period referred to in the previous paragraph, he shall pay any costs and damages that this may cause, in addition to a fine from one ten U.S. dollars for each day of delay resulting from the false representation, the total amount of which shall not exceed the equivalent of 360 days. When imposing the fine, half of which shall be paid to the tax authorities and the other half to the injured party, the judge shall take into account the nature of the case and the amount in controversy. Persons held to be false representatives shall pay the costs and damages of the proceeding even if they later provide evidence of their right of representation after the statement.”

360 Order of Oct. 2, 2006, filed at 3:30 p.m., Record at 120552-55, 120552v. 361 See Chevron’s Motion regarding Seven Plaintiffs, filed Feb. 27, 2007 at 5:42 p.m., Record at

126252-53, 126253; see also Chevron’s Motion regarding Plaintiffs’ Relinquishment of Judicial Inspections, filed Mar. 22, 2007 at 5:32 p.m., Record at 127962, 127962 (noting that it is unclear which plaintiffs ratified the request to relinquish a number of pending inspections).


- 89 -

Despite this nullity, the Court contradicted its previous rulings and accepted the waiver in violation of clear procedural law.362 See infra § 4.4.2.

The “relinquishment” of the judicial inspections has the same meaning and effect as the “waiver,” which was previously sought by the plaintiffs but not accepted by the court (“since whoever desists, waives”).363 All waivers must meet two requirements: (i) that only the particular interest of the one waiving is involved, and (ii) that waiver does not harm the rights of other persons.364 Additionally, waiver cannot be granted to “those who intend to elude, by means of the waiver, the procedural advantage that could be had by the other party or a third party.”365

Here, the non-production of evidence requested by the parties and ordered by this Court affected Chevron’s rights. Indeed, the curtailment of the evidentiary process prejudicially affected Chevron’s right to defend itself. Chevron was entitled to have a judicial inspection conducted at each designated site and to present as a part of this process concrete evidence confirming TexPet’s remedial work and refuting the plaintiffs’ sweeping allegations of harm. Completion of all site inspections was also needed to ensure that any judgment was based upon science and hard facts, not generalization, conjecture, or extrapolation. In addition, Chevron was entitled to have the independent settling experts resolve the divergent data and conclusions submitted by the party-nominated experts during the judicial-inspection process. Instead, that work was not done, and in violation of the procedural agreement approved by the parties and this Court, the relinquished judicial inspections were replaced by an expert examination supposedly conducted by Mr. Cabrera, see supra § 2.2, who was neither independent nor qualified to be an expert. This Court has itself recognized that “expert Cabrera is not a settling expert and this is not the function for which he was appointed.”366 The harm to Chevron becomes even more acute when coupled with Judge Núñez’s biased suggestion toward the end of the case, discussed further infra § 7.7, that the burden of proof would be retroactively reversed and shifted to Chevron under provisions of the new 2008 Constitution.367 In sum, Chevron was illegally and unacceptably denied all

362 Order of Jan. 22, 2007, filed at 9:00 a.m., Record at 125656-59, 125657 (“[C]onsequently, the waiver of the judicial inspections indicated in the waiver submissions are legally effective with respect to the motion for revocation filed by the defendant on September 13, 2006, at 4:00 p.m., subject to the provisions of this order.”).

363 Banco del Pacífico vs. Sostenes Onias Cedeño Loor, Judgment of the Supreme Court of Justice, First Civil and Commercial Division, Case 228-2001, published in Official Gazette No. 378, July 27, 2001. From a legal standpoint, the authority to waive is conditioned on application solely to the interest of the person waiving such and that his waiver is not prohibited. See also Order of Jun. 19, 2006 at 3:00 p.m., Record at 112208-09v, 112208v.

364 See Article 11 of the Civil Code. 365 Article 375 of the Code of Civil Procedure. 366 Order of May 30, 2008, filed at 10:30 a.m., Record at 140405-11v, 140406. 367 Order of Aug. 13, 2009, filed at 2:30 p.m., numeral 10, Record at 157929-31v, 157929v-30,

citing Article 397(1) of the current Constitution: “The burden of proof about inexistence of potential or real damages shall be upon the promoter of the activity or the defendant.”


- 90 -

possibility to defend itself, refute the plaintiffs’ evidence, and file evidence in support of its allegations and defenses.

3.3.2 The Biased and Unreliable Reports of Plaintiffs’ Nominated Experts

Prior to the improper relinquishment of judicial inspections, the plaintiffs’ nominated experts submitted forty-three expert reports to this Court. Those reports are tainted, biased, and unreliable, and their findings cannot be used in this proceeding consistent with due process.368 As noted in notes recently produced by the director of Crude, Joseph Berlinger, even Mr. Donziger acknowledged “that the scientific work has been spotty.”369 Or, as he later wrote, “screwy.”370

First, two of the reports which the plaintiffs stated had been authored by their nominated expert, Dr. Charles Calmbacher, were utter forgeries, as Dr. Calmbacher testified under oath in the United States and as discussed in detail above and will be discussed again below. Supra § 2.1. Dr. Calmbacher’s testimony shows that, for the plaintiffs, the judicial-inspection process was one driven by lawyers who sought to achieve predetermined results regardless of the fact that those results had no relationship to historical reality or logical coherence and were devoid of scientific and technical basis.371

Second, although the plaintiffs’ nominated experts were instructed by the Court to conduct their work “in accordance with science, impartiality, and independence,”372 they failed to do so. Instead, they colluded with the plaintiffs’ lawyers, as well as with the Frente, and with Selva Viva, entities created by the plaintiffs for purposes of this litigation. In a serious conflict of interests (to put it mildly), the experts used samples and data provided by the Frente and by Selva Viva, even though the former is named as beneficiary of any judgment from this lawsuit373 and the latter is a creation of the

368 Chevron Motion to Strike Judicial Inspection Reports at 1-2, 5, filed Aug. 6, 2010 at 2:30 p.m. 369 E-mail from Joe Berlinger to Mike Bonfiglio and Alyse Spiegel, dated January 28, 2008 at 2:08

p.m., attached as Annex 6 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m. (JB-NonWaiver00092079-83).

370 Diary of Steven Donziger entry dated Mar. 7, 2006, at 5, attached as Annex 1 to Chevron’s Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p.m. (DONZ0027256); see also Diary of Steven Donziger entry dated Jun. 3, 2006, at 2, attached as Annex 1 to Chevron’s Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p.m. (DONZ0023089) (expressing concern that the plaintiffs do not have the “really tight science” needed in order to win the case).

371 Chevron Motion to Strike Judicial Inspection Reports at 7-11, filed Aug. 6, 2010 at 2:30 p.m. 372 Chevron Motion to Strike Judicial Inspection Reports at 2, filed Aug. 6, 2010 at 2:30 p.m. 373 The plaintiffs tried to hide the fact that the Frente was a beneficiary, with Mr. Donziger writing

in 2008 that “it would be best if Chevron did not know that the Front will receive money because . . . politically that could harm the image.” Email from Steven Donziger to Luis Yanza, dated Sept. 9, 2008 at 8:31 a.m., attached as Annex 1 to Chevron’s Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p.m., at 1(DONZ00030370).


- 91 -

plaintiffs. The experts also did testing at the “Selva Viva Laboratory,” which was in truth (as Dr. Calmbacher testified) the hotel room used by the plaintiffs’ technical team, not an independent or accredited laboratory. Moreover, one of the plaintiffs’ nominated experts, Édison Camino, was managing Selva Viva on behalf of the plaintiffs at the same time as he was serving as a supposedly impartial expert.374

plaintiffs’ nominated experts rely on test results from the patently

non-independent, unaccredited Selva Viva Laboratory.379

Third, the plaintiffs’ nominated experts failed to use the sampling and analysis plans ordered by this Court, instead using unreliable methods and instruments to collect samples, unaccredited laboratories to analyze them, and incomplete or falsified documentation to conceal those failures. As to collection, the experts used crude devices and improper equipment, which could not gather scientifically representative samples. As to analysis, the experts used primitive and technically improper methods to determine contamination levels—for example, “organoleptic perception,” which means looking at and smelling the sample to choose the samples which would be sent to unaccredited laboratories. Infra § 3.4.4. Moreover, the majority of the samples taken by plaintiffs’ nominated experts were analyzed by HAVOC laboratory, which lacked the proper accreditation, as my client has repeatedly pointed out and the plaintiffs are now

374 Chevron Motion to Strike Judicial Inspection Reports at 16-19, filed Aug. 6, 2010 at 2:30 p.m.

379 Laboratory Results from the Judicial Inspection of Sacha-51, attached as Annex 2 to Edison Camino Castro’s Report on Sacha-51, filed April 27, 2005 at 10:30 a.m., Record at 59790-96, 59792-94; Laboratory Results from the Judicial Inspection of Sacha-10, attached as Annex 2 to Edison Camino Castro’s Report on Sacha-10, filed April 19, 2005 at 5:45 p.m., Record at 52615-18, 52618.


- 92 -

seen conceding in the Crude outtakes. 380 In an effort to conceal this fraud—and because according to Mr. Donziger, "without our lab, we don't have evidence"381—the plaintiffs repeatedly prevented the Twentieth Civil Court of Pichincha and Chevron from conducting the inspections of the HAVOC laboratory ordered by that court.382 En route to block one of these inspections, Mr. Donziger explains on camera that in Ecuador, “this is how the game is played, it’s dirty.”383 Mr. Donziger also later admitted that he had, “via intimidation, put an end to two lawsuits,” including “the one about the Havoc inspections.”384 And the plaintiffs’ nominated experts did not retain or provide complete documentation for their sampling and analysis (such as the crucial chain of custody forms), making it impossible to verify the scientific validity of their work.385 Ultimately, the pervasively biased process utilized by the plaintiffs’ nominated experts precludes any confidence in the conclusions they reached.

Finally, the plaintiffs’ nominated experts egregiously misrepresented the results of laboratory testing, claiming contamination where the data said otherwise. Likewise, these experts altered and mistranslated quotations from scientific publications in order to distort the text and support the plaintiffs’ baseless claims. They also applied the wrong remediation standards to give the worst appearance possible to their (flawed) data.386

380 DOUGLAS, Gregory S., Refutation of Mr. Cabrera’s Analytical Data and Evaluation of the

Validity of his Sampling and Analysis Programs attached as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 148180-267, 148210; see also Transcript of Crude Outtakes, attached as Annex 1 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m. (CRS 068-00-02).

381 E-mail from Steven Donziger to Michael Bonfiglio et al., dated March 23, 2006 at 5:42 p.m., attached as Annex 4 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m. (MB-STIP00016392).

382 Chevron’s Oct. 19, 2006 Press Release, For the 6th Time the Judge is Impeded from Carrying out the Judicial Inspection, attached as Appendix 2 to Chevron’s Objections to Expert Mora’s JI Report for Shushufindi-25, filed Mar. 13, 2007 at 5:15 p.m., Record at 126743-127041, 126968-70.

383 See Transcript of Crude Outtakes, attached as Annex 1 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., (CRS-052-00-5).

384 Diary of Steven Donziger, entry dated May 13 2006, at 6, attached as Annex 1 to Chevron’s Third Supplemental Motion for Terminating Sanctions filed Dec. 20, 2010 at 4:30 p.m. (DONZ00023089).

385 Chevron Motion to Strike Judicial Inspection Reports at 20-21, 26-27, filed Aug. 6, 2010 at 2:30 p.m.

386 Chevron Motion to Strike Judicial Inspection Reports at 33-34, 36, filed Aug. 6, 2010 at 2:30 p.m.


- 93 -

None of the reports submitted by plaintiffs’ nominated experts are worthy of any credence, given the procedural and substantive errors that occurred during their preparation. It is thus no surprise that the settling experts, with respect to the one site for which they rendered conclusions, agreed largely with the conclusions of my client’s nominated experts, not with those of the plaintiffs’ nominated experts. The reports of these latter experts should have been stricken from the record. Any reliance thereupon, in light of the facts detailed above, would violate my client’s due process rights.

3.3.3 The Prejudicial Denial of Chevron’s Essential-Error Petitions

Pursuant to the provisions of Article 258 of the Code of Civil Procedure—which provides that “[o]nce it has been summarily proven that an expert report is tainted with material error, the judge must, at the request of a party or on his own motion, order that the report be corrected by another expert or experts, without prejudice to any liability they may have incurred as a result of fraud or bad faith”—Chevron has alleged the existence of essential errors in many of the reports of the experts proposed by the plaintiffs.389 The Court does not have the authority to refuse such requests to open summary proceedings for those errors, and to decide them on a timely basis.390 Yet that has happened on a number of occasions with respect to many expert reports—another example of this Court ignoring what cannot be defended by the plaintiffs, with severe prejudice to Chevron’s defense.391

In one case, Judge Yánez rejected a request to open summary proceedings with respect to the report of the plaintiffs’ nominated expert, Xavier Grandes (judicial inspection of the Shushufindi 08 well site), reasoning that the technical subjects of the

389 See, e.g., Chevron’s Motion regarding Expert Jose Robalino Hidalgo’s Report on Sacha-57, filed Jan 11, 2006 at 7:20 p.m., Record at 89316-47, 89335; Chevron’s Motion regarding Expert Xavier Alonso Grandes Zambonino’s Report on Shushufindi-8, filed Feb. 15, 2006 at 11:30 a.m., Record at 93577-616, 93579; Chevron’s Motion in support of 26 additional essential error petitions, filed May 12, 2010 at 9:50 a.m.

390 See Article 258 of the Code of Civil Procedure. 391 See, e.g., Order of Feb. 17, 2006, filed at 2:30 p.m., Record at 93637-39v, 93638-38v; Order

of July 27, 2010 at 10:00 a.m., and Chevron’s objections to that Order, filed on July 29, 2010 at 3:23 p.m. and 3:28 p.m., and on July 30, 2010 at 5:48 p.m. In a very important ruling on cassation, the Ecuadorian courts have cited author Guash Fernández, who states that “[i]n this way, stating the basis for a ruling is a manner of distinguishing between rationality and arbitrariness. Reasoning is arbitrary when it lacks any basis whatsoever or when it is erroneous.” Mariana del Carmen Ponce Játiva vs. César Villegas Játiva y otros, Judgment of the Supreme Court of Justice, First Civil and Commercial Division, Case 215-2004, published in Official Gazette Supplement 537, Mar. 4., 2005.


- 94 -

report could be analyzed by the court-appointed settling experts.392 But the settling experts were never able to fulfill that role because the Court never ordered the submission of any additional settling reports, thus perfecting the violation of my client’s right to defend itself, as such evidence was incomplete.

Later, Judge Núñez, manifesting his bias against Chevron, arbitrarily refused to handle my client’s petition of essential error with respect to the report of Oscar Dávila.393 The expert, Mr. Dávila, participated in the judicial inspection of the Shushufindi North production-station site. His report was challenged because though it did not contain any data from laboratory analysis, it still included statements regarding the alleged existence of contamination. As shown in earlier filings, the refusal of the biased Judge Núñez to open summary proceedings to investigate these essential errors prevented Chevron from exploring Mr. Dávila’s relationship with the plaintiffs’ counsel and their supporting company, Selva Viva Cía. Ltda.394

Judge Ordóñez ignored the evidence filed in twelve petitions for essential error, and with respect to another thirteen such petitions, he refused to permit the experts to respond or my client to submit any non-documentary evidence in support.395 Your Honor ratified these decisions,396 leaving the record in the indefensible state of being incomplete and having denied my client its right to summary proceedings on numerous essential-error petitions and having failed to issue decisions on those petitions where a summary proceeding was held.

392 Order of Feb. 17, 2006, filed at 2:30 p.m., Record at 93637-39v, 93638-38v. 393 Order of May 28, 2009, filed at 11:00 a.m., numeral 32, Record at 156691-93v, 156693-93v:

“32. The submission filed by the defendant and received in the Office of the President’s Clerk on May 21, 2009, at 11:46 a.m., and in response to the text thereof, it is hereby ordered: having reviewed the docket, we noted in the text of the certificate of judicial inspection of the Shushufindi Norte Station, which can be found on pages 17,712 to 17,775 of the record, that the experts who participated in that investigation were experts designated by the plaintiffs, designated by the defendants and also a settling expert appointed by the court: Eng. John Connor, Eng. Oscar Dávila, Eng. Fernando Albán, Eng. Johnny Zambrano, all of whom have submitted their reports on the results of their investigations. Now that the reports have been submitted by the experts identified above, with regard to the investigation they participated in, at the request of the parties they will be asked for explanations of the text of their reports. At the defendant’s request, he has answered the questions he was asked, has submitted additional reports to expand upon and clarify what the parties have asked, as permitted by Section 257 of the Consolidated Code of Civil Procedure, if the report is obscure or insufficient to establish the facts in controversy; therefore, there are no grounds to commence summary proceedings against this expert Richard Cabrera Vega, and the motion to do so is hereby denied; in any event, ‘It is not the judge’s obligation to abide by the expert’s opinion if it is counter to the judge’s own conviction,” particularly in a case such as this where we have the reports of other experts who participated in the investigation, all of which will be analyzed by the Judge. ”

394 See, e.g., Chevron Motion to Strike Judicial Inspection Reports at 11-36, filed Aug. 6, 2010 at 2:30 p.m.

395 Order of July 27, 2010, filed at 10:00 a.m. 396 Order of July 29, 2010 at 5:00 p.m.


- 95 -

These rulings have prevented my client from defending itself against the evidence brought against it—evidence that we know, from the U.S. discovery, is fraudulent. This is an indication of the failure of the Ecuadorian judicial system to provide justice. And the prejudice to my client from this is particularly serious because this is an environmental lawsuit involving an oral summary proceeding. First, suits for environmental damage raise technical issues; therefore, judges must be guided by expert opinions. If the opinion of an expert contains serious errors, as occurred multiple times in this case, preventing a defendant from proving those essential errors is tantamount to leaving that party defenseless. Second, given that, in this oral summary proceeding, this Court has not allowed appeals of interlocutory decisions even when they cause harm, or of incidental proceedings, the Court has a special duty to guarantee the integrity of the proceedings and protect the exercise of the parties’ rights.

3.4 Mr. Cabrera’s Appointment and Fieldwork Violated Due Process

3.4.1 Mr. Cabrera’s Appointment Was Unlawful

After the report by the settling experts at the Sacha-53 site reached a result unfavorable to the plaintiffs, 397 the plaintiffs’ lawyers—running low on funds 398 —succeeded not only in relinquishing sixty-four of the judicial inspections they had originally requested, but also in obtaining the appointment of a single expert, instead of the two experts who were nominated by the parties (one by each party), to perform the global assessment of all the fields used by the Consortium.399 Under great pressure from the plaintiffs, see supra § 2.2.1, Judge Yánez appointed Richard Cabrera as the lone global-assessment expert for this case.400 The appointment of Mr. Cabrera was both substantively and procedurally improper.

Mr. Cabrera did not meet any of the requirements requested by the plaintiffs themselves in their motion for a global expert assessment; the procedural agreement that was approved by the Court required that all experts have expertise in environmental engineering and applied ecology.401 But Mr. Cabrera, a mining engineer,

397 Settling Experts’ Report on Sacha-53, filed Feb. 1, 2006 at 5:00 p.m., Record at 92492-685,

92522. 398 See Crude Documentary (Joe Berlinger, First Run Features) (publicly available). 399 Plaintiffs’ Motion regarding Relinquishment of Judicial Inspections, filed July 21, 2006 at 9:10

a.m., Record at 116431-35, 116434, Plaintiffs’ Motion, filed Dec. 4, 2006 at 5:20 p.m., Record at 123454-55, 123454.

400 Transcript of Swearing In of Expert Richard Cabrera, filed June 13, 2007 at 9:45 a.m., Record at 130169-69v, 130169.

401 Plaintiffs’ Motion, filed Oct. 29, 2003 at 5:45 p.m., Record at 4677-78, 4678; Order of Oct. 29, 2003, filed at 5:55 p.m., Record at 4681-84v, 4683v-84.


- 96 -

lacked those qualifications. Indeed, Mr. Cabrera’s curriculum vitae makes clear that he lacked sufficient specialized qualifications in the field of hydrocarbons.402

As Chevron pointed out when he was appointed, Mr. Cabrera’s appointment plainly prejudiced Chevron, as he lacked the necessary education, training, and experience required to evaluate the existence and scope of any alleged contamination at an oilfield site, much less assess the source of purported contamination for sites involving multiple actors or develop an appropriate remedy. Mr. Cabrera was accredited as an expert only for this case; he had no formal training in environmental chemistry or petroleum chemistry; his list of prior work projects was extremely limited; he had no relevant scientific publications; and he lacked experience working at hydrocarbon exploration and production sites, or at any type of petroleum-impacted site. 403 Environmental professionals who routinely perform environmental studies related to the impact of petroleum production must be well-versed in petroleum chemistry and knowledgeable about how samples are taken in situ, how to carry out laboratory operations, and how to assure quality control.404 Mr. Cabrera had none of these qualifications and had he actually performed the work, it appears that this study would have been the first one of its kind that he has ever performed.405

It is a fundamental precept of due process that any expert whose conclusions may be used by a court as a basis for assigning legal liability to a party must possess the education, training, and experience necessary to allow him to reach those conclusions using scientifically valid methods. 406 Mr. Cabrera did not have these qualifications, and his appointment denied Chevron of its right to due process.

Based on the procedural agreement, the experts for the global assessment should have been the same that had worked during the judicial inspections. Mr. Cabrera, however, was not one of those experts. And although he had been appointed by the Court as a settling expert for three judicial inspections (Auca-01, Yuca-

402 See Curriculum Vitae of Richard Cabrera Vega, filed Nov. 14, 2006 at 9:30 a.m., Record at

122522-28, 122524-26. 403 DOUGLAS, Gregory S., Refutation of Mr. Cabrera’s Analytical Data and Evaluation of the

Validity of his Sampling and Analysis Programs, attached as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 148180-267, 148187; see also Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 141082-203, 141087, 191092, 141180-81.

404 DOUGLAS, Gregory S., Refutation of Mr. Cabrera’s Analytical Data and Evaluation of the Validity of his Sampling and Analysis Programs, at 8, attached as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 148180-267, 148187.

405 DOUGLAS, Gregory S., Refutation of Mr. Cabrera’s Analytical Data and Evaluation of the Validity of his Sampling and Analysis Programs, attached as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 148180-267, 148187.

406 See Article 251 of the Code of Civil Procedure provides: “The persons appointed must be of legal age, recognized honesty and probity, have sufficient knowledge of the matter on which they must report . . . .”


- 97 -

2B, and Cononaco-06 sites), Mr. Cabrera was not one of the party-nominated experts and, thus, was not in the pool of candidates for the “global” assessment, as the plaintiffs themselves designed it. In addition, Mr. Cabrera was unqualified because he was not registered with the Court as an expert per the requirements set forth in Article 252 of the Code of Civil Procedure. 407 Compounding the two previous violations, once Mr. Cabrera was notified of his appointment as expert, he was not sworn-in within the five-day period set forth in Article 261 of the Code of Civil Procedure.408 According to the law, this led to the expiration of his appointment, and it was therefore necessary, pursuant to Article 254 of the Code of Civil Procedure, to appoint a new expert.409 Yet Judge Yánez illegally and arbitrarily let lapse the notification sent to Mr. Cabrera and ordered him to be notified again. The rules governing expiration of expert appointments derive from public law, and therefore cannot be modified by a judge.

The fact that Mr. Cabrera assumed his duties in the manner described above was absolutely improper and illegal, which means that the report he subsequently submitted is null and void and, therefore, lacks legal validity. See infra § 4.1.

3.4.2 Mr. Cabrera Had Multiple Conflicts of Interests That He Failed to Disclose

As the court-appointed “global expert,” Mr. Cabrera was required to be independent and unbiased. But even before his illegal appointment and installation, Mr. Cabrera was neither.

Mr. Cabrera deliberately concealed a conflict of interests that biased him towards recommending that Chevron pay for massive remediation. At the time Mr. Cabrera was appointed an expert in this case, he owned a majority interest in a company named CAMPET.410 CAMPET’s activities include the control and cleanup of hydrocarbon spills

407 Article 252 of the Code of Civil Procedure provides: “The judge shall appoint a person of his

own choosing, from among the persons registered with the appellate courts, to serve as a single expert. However, the parties may unanimously elect the expert or agree to have more than one expert appointed for the inspection, and this agreement shall be binding on the judge.”

408 Article 261 of the Code of Civil Procedure provides: “The appointment of an expert or experts shall lapse if they have not accepted the position within five days from the notice of their appointment, if they fail to appear at the inspection on the appointed date, or if they fail to present their report within the term established by the judge.”

409 Article 254 of the Code of Civil Procedure provides: “If the expert or experts fail to appear in order to be sworn in, or fail to perform the expert evaluation or fail to issue their report within the term granted therefore, or if the parties who elected the expert do not indicate where he is to be notified, the appointment shall lapse and the judge shall appoint a new expert.”

410 See Resolution No. 3 of the Superintendency of Companies, dated July 29, 2003, attached as Annex 1 to Chevron’s Motion to Strike Cabrera Report filed Feb. 9, 2010 at 9:07 a.m., Record at 169056-71, 167057, 167059v, 167062, 167067-68 (date of incorporation and business purpose of CAMPET, Companía Ambiental Minera-Petrolera S.A.).


- 98 -

and the installation of geomembranes, and it has been registered to offer this sort of service to Petroecuador since 2004.411

Mr. Cabrera’s relationship with CAMPET creates an obvious conflict of interests. The company, and by consequence Mr. Cabrera personally, could benefit from Mr. Cabrera’s work on this case. If even a small fraction of the amount recommended by Mr. Cabrera is actually spent on remediation, then many hundreds of millions of dollars will flow to the local remediation industry of which CAMPET is a part. For example, Mr. Cabrera’s bias is evident in his recommendation of an enormous soil remediation project for US$2.743 billion dollars, at a cost of approximately US$489 per cubic meter of soil. This estimate is equivalent to ten times more than the per-cubic-meter cost that Petroecuador has paid when it has remediated oil production sites. Regardless of whether CAMPET receives a remediation contract that can be directly linked to this Court’s judgment, it stands to benefit—along with other companies—from this massive flow of new remediation work at exorbitant costs. Mr. Cabrera’s strained efforts to absolve Petroecuador of all responsibility, even for its unilateral operations long after TexPet ceased to operate in Ecuador, discussed infra § 7.5, certainly benefits Petroecuador. This fact could predictably lead Petroecuador to treat CAMPET favorably in the future, rendering the Cabrera Report’s conclusions on this point highly suspect .

In addition, Mr. Cabrera failed to disclose another conflict of interests: both before and during his service in this matter, the plaintiffs’ former counsel in this case paid him to serve as an expert in another case claiming environmental damage.412 In Arias v. DynCorp, a group of plaintiffs alleged that the use of a pesticide in Colombia and Ecuador had harmed human health, the water supply, and agricultural resources in the Oriente region. Those plaintiffs relied heavily on expert reports co-written by Mr. Cabrera in August 2006 and January 2008, while this case was ongoing. They were represented by U.S. attorneys Cristóbal Bonifaz, who also represented the plaintiffs here until February 2006, and Terry Collingsworth, who represented the Ecuadorian State in connection with arbitration related to this case.413 It is well known that Mr. Cabrera’s reports in DynCorp blamed pesticides—not petroleum—for the harms alleged in that case, which overlap significantly with the harms alleged by the plaintiffs here.

With these conflicts of interests, Mr. Cabrera should not have agreed to participate in this lawsuit. At minimum, the law required him to disclose the conflicts.

411 CAMPET’s Current Registration with the Superintendency of Companies, attached as Annex 14 to Chevron’s Motion to Strike Cabrera Report filed Feb. 9, 2010 at 9:07 a.m., Record at 167169-70, 167170; List of Services that CAMPET Can Provide Petroecuador, attached as Annex 3 to Chevron’s Motion, filed Feb. 9, 2010 at 9:07 a.m., Record at 167075-76, 167076 (CAMPET registration to provide services for Petroecuador).

412 Cabrera Omnibus, filed May 21, 2010 at 4:35 p.m., at 8-9, Record at 178982-179041, 178989-90.

413 Id.


- 99 -

The Code of Civil Procedure requires an expert to satisfy all of the requirements established in it, to take an oath, and to perform honestly and with integrity, which includes being forthright and honest in all of his actions.414 Mr. Cabrera’s failure to disclose his personal financial interest in the CAMPET company or his ongoing work for plaintiffs’ former counsel is inconsistent with these requirements. His conflicts of interest, and his failure to disclose them, prevent him from being of “recognized honesty and probity”415 and preclude him from performing his duties in compliance with the laws and regulations.416 Therefore, this Court must consider the Cabrera Report as having not been submitted and, therefore, said report must not be taken into account by the Court when rendering a decision.

3.4.3 Mr. Cabrera’s Fieldwork Was Non-Transparent and Violated Scientific Protocol

When he was officially installed in his position,417 Mr. Cabrera promised under oath to carry out only the work requested by the plaintiffs and approved by this Court.418 The Court granted Mr. Cabrera a period of 120 working days to carry out the assessment and to present his report. He was also granted a period of five days to propose a schedule of visits to the sites to be assessed in order to guarantee the publicity of the evidence, which includes the right of the parties to be present during the expert assessment.419

Mr. Cabrera did not present the schedule for the sites to be assessed in the “global” assessment. Instead, he submitted a vague “work plan.” In it, he failed to comply with the Court’s instructions to assess each and every one of the sites in Appendix A of the complaint. This and other actions by Mr. Cabrera to shield his work from Chevron’s oversight was done, the evidence now shows, at the request of Mr. Donziger, who indicates in one of the Crude outtakes that he wanted to prevent Chevron from exposing the impropriety of Mr. Cabrera’s work, as it had done with respect to the HAVOC laboratory.420 Mr. Donziger expresses that it is “very important” that Mr. Cabrera’s strategy be kept secret, because “we always want [Chevron] to be

414 Article 256 of the Code of Civil Procedure: “To serve in the position of expert, the appointee

must accept such and swear that he will perform such faithfully and lawfully.” 415 Article 251 of the Code of Civil Procedure. 416 Article 256 of the Code of Civil Procedure. 417 Transcript of Swearing In of Expert Richard Cabrera, filed June 13, 2007 at 9:45 a.m., Record

at 130169-69v, 130169. 418 See Transcript of Swearing In of Expert Richard Cabrera, filed June 13, 2007 at 9:45 a.m.,

Record at 130169-69v, 130169; see also Plaintiffs’ Motion of Oct. 29, 2003, filed at 5:45 p.m., Record at 4677-78, 4677v, ordered in the Order of Oct. 29, 2003 at 5:55 p.m., 4681-84v, 4684.

419 Article 120 of the Code of Civil Procedure provides: “All evidence is public, and the parties are entitled to attend the taking of evidence.”



- 100 -

guessing . . . always confused.” To this end, Mr. Donziger directs his associates to “come up with an operating plan to evade them,” so that Chevron will be unable to verify the accuracy of the work being done.421

Ultimately, Mr. Cabrera, with the plaintiffs’ consent and the Court’s permission, ended up assessing only forty-nine sites (less than fifteen percent) of a total of 316 wells and nineteen stations located in an area of approximately 440,000 hectares.422 And this assessment was hastily done in the condensed period provided by the Court: all forty-nine sites were purportedly assessed and a report written by Mr. Cabrera in 120 working days, while preparation of the judicial-inspection reports by other experts took between fifty and ninety working days per site.423

In addition, many of the site assessments were performed in secret, which was no doubt intended to prevent my client from exposing Mr. Cabrera’s improper working relationship with plaintiffs.424 Ignoring transparency and Chevron’s right to defend itself, Mr. Cabrera did not announce his scheduled assessment or permit the presence of Chevron’s representatives at the assessment425 sites in two fieldwork campaigns, the last of which ended on November 3, 2007.426 Indeed, Mr. Cabrera had expressly stated before the Court and under oath that the fieldwork began on July 4, 2007, and concluded on September 28, 2007.427 In fact, part of Mr. Cabrera’s assessment was carried out during the two fieldwork campaigns by technical teams that were never officially presented to the Court and that secretly collected approximately fifty percent of the soil and water samples428 separately from Mr. Cabrera and in the absence of the

421 See transcript of Crude Outtakes, attached as Annex 1 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., (CRS 147-01-01); see also Transcript of Crude Outtakes, attached as Exhibit 2 to Chevron’s Motion for Terminating Sanctions, filed Aug. 6, 2010 at 2:50 p.m., (CRS-196-00-01) (Mr. Donziger stating that "[o]ur goal is that they [Chevron] don't know shit”).

422 Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 141082-203, 141088, 141120; Cabrera Omnibus, filed May 21, 2010 at 4:35 p.m., at 48, Record at 178982-179041, 179029.

423 See Chevron’s Request for Modification of Mar. 19, 2007 Order, filed Mar 22, 2007 at 5:37 p.m., Record at 127965-75, 127973.

424 See Chevron’s Motion to Order Expert Cabrera to Take All Samples Again to Ensure Compliance with Due Process, filed Dec. 5, 2007 at 5:33 p.m., Record at 133788-89, 133788.

425 See Expert Cabrera’s Submission, filed Oct. 11, 2007 at 5:56 p.m., Record at 133206 (in response to Chevron’s letter on the need for a work schedule).

426 The first of these assessments occurred between September 15 and 19, 2007, convened again on October 4, 2007, and concluded on October 10, 2007; the second began on October 15, 2007 and concluded on November 3, 2007. See Underground Water Monitoring and Water Campaigns, attached as Annex A to Cabrera Global Report, filed on Apr. 1, 2008, at 8:30 a.m., Record at 138207-316, 138317-139054.

427 Transcript of Hearing regarding Opening of Control Samples, filed Aug. 29, 2008, at 3:10 p.m., Record at 151537-39, 151538-39 (“[O]n July 4, 2007, the proceedings began with sampling . . . this fieldwork was continued until September 28, 2007, when it was completed.”).

428 Chevron’s Objections to Expert Cabrera’s Global Report, filed on Sept. 15, 2008, at 2:14 p.m., Record at 141082-203, 141102; see also DOUGLAS, Gregory S., Refutation of Mr. Cabrera’s Analytical


- 101 -

parties.429 Likewise, the survey of the supposedly affected population—upon which Mr. Cabrera grounds many of his conclusions regarding excessive cancer deaths—had been carried out in clandestinely as well, beginning several months before Mr. Cabrera was sworn in and began his field work, as the Crude outtakes show.430 See supra § 2.2.1.

On many other occasions, Mr. Cabrera physically prevented Chevron’s field team from closely observing and acquiring split samples of soil and/or water samples he collected.431 As a result, there is no way for the defendant to independently verify and validate the (limited) environmental chemistry results in his report. This action by Mr. Cabrera has sullied the transparency and validity of his expert examination and destroyed all evidentiary value of his samples and the data derived therefrom.

3.4.4 The Data Used in the Cabrera Report Is Incomplete, Unreliable, and Invalid

The sampling done by Mr. Cabrera, as well as the analysis based upon that sampling, are deeply flawed. They do not satisfy even minimum scientific standards.

Mr. Cabrera’s supposed site sampling was deficient in many respects. As the court-appointed expert, it was Mr. Cabrera’s responsibility to have direct, personal involvement and oversight of each phase of the “global” study, from sample collection to data analysis. 432 Delegation of this role to individuals whose qualifications and affiliations are unknown, as Mr. Cabrera did here, prevents any confidence in the accuracy and credibility of the resulting data. For example, in numerous instances, Mr. Cabrera’s signature does not appear on the chain of custody, rendering those

(continued…) Data and Evaluation of the Validity of his Sampling and Analysis Programs, at 10, attached as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008 at 2:14 p.m., Record at 148180-267, 148189.

429 Of the 376 samples of soil and water included in the expert report, 187 were taken by third parties in the absence of Mr. Cabrera. DOUGLAS, Gregory S., Refutation of Mr. Cabrera’s Analytical Data and Evaluation of the Validity of his Sampling and Analysis Programs, attached as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 148180-267, 148190.

430 Cabrera Omnibus, filed May 21, 2010 at 4:35 p.m., at 12, 23-24, Record at 178982-179041, 178993, 179004-05; Transcript of Crude Outtakes, attached as Annex 1 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m. (CRS 301-00-06); see also Chevron’s Rebuttal to Cabrera Supplemental Report, filed Feb. 10, 2009 at 5:35 p.m., Record at 154322-545, 154340; see also Expert Cabrera’s Submission, filed on Oct. 8, 2008, at 10:50 a.m., Record at 151316-27, 151322-23; Chevron’s Objections to Expert Cabrera’s Supplemental Report, filed Apr. 24, 2009 at 2:21 p.m., Record at 156327-79, 156329.

431 See DOUGLAS, Gregory S., Refutation of Mr. Cabrera’s Analytical Data and Evaluation of the Validity of his Sampling and Analysis Programs, attached as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 148180-267, 148199.

432 See Chevron’s Objection to Expert Cabrera’s Work Plan, filed Jul. 2, 2007 at 1:00 p.m., Record at 130673-87, 130676.


- 102 -

samples of doubtful origin and inadmissible.433 In addition, approximately half of the samples taken by staff were taken in secret, without prior notice to the Court or the parties. 434 These unlawfully collected samples represent approximately half of the samples presented in Mr. Cabrera’s report and ninety-four percent of his so-called groundwater samples.435

Nor were Mr. Cabrera’s site samples representative or comprehensive. For example, Mr. Cabrera claimed there were 141 pits at the sites that he visited, but he only collected samples from eighty-five, so he only offered data for sixty percent of the pits that he claims exist—and these represent a mere nine percent of his unsubstantiated total pit count (916) in the area of the former concession.436 Notably, plaintiffs were advised by their original Ecuadorian counsel, Dr. Wray, that "'[i]t will be best to go to each site in the global [examination]’" because '”[w]here you haven't gone, you can't ask for damages.’” 437

In addition, Mr. Cabrera did not collect a single sample of water from flowing surface bodies, nor did he collect samples from any drinking water wells or potable-water supplies within the concession area.438 Instead, he collected one sample from an open pit and one from stagnant water in a low-lying area and erroneously labeled them as surface water.439 He also collected five samples from open boreholes, which he erroneously deemed groundwater.440 Notably, despite these irregularities, none of the water samples collected by Mr. Cabrera exceeds the World Health Organization’s or the

433 See Chevron’s Motion to Revoke Order of Oct. 21, 2009 regarding Payment to CORPLAB,

filed Oct. 26, 2009 at 10:08 a.m., Record at 159085-121, 159092-96. 434 See Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008 at 2:14 p.m.,

Record at 141082-203, 141102. 435 DOUGLAS, Gregory S., Refutation of Mr. Cabrera’s Analytical Data and Evaluation of the

Validity of his Sampling and Analysis Programs, attached as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 148180-267, 148189.


437 Transcript of Crude Outtakes, attached as Annex 1 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., (CRS-189-01).

438 See DOUGLAS, Gregory S., Refutation of Mr. Cabrera’s Analytical Data and Evaluation of the Validity of his Sampling and Analysis Programs, attached as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 148180-267, 148192.




- 103 -

United States Environmental Protection Agency’s drinking water standards for metals and relevant petroleum hydrocarbons.441

Mr. Cabrera selectively discarded twenty-seven percent of his soil samples that had no hydrocarbon odor or visible contamination and therefore, according to his criteria, were free of hydrocarbons.442 In doing so, Mr. Cabrera, at best, assessed isolated pockets of contamination rather than assessing the sites, or the former concession, as a whole. Of the discarded samples, twenty-two correspond to nineteen pits at thirteen sites that he visited. When challenged about his skewed sampling, Mr. Cabrera replied that his “mission is to investigate the contamination.” 443 Of course, Mr. Cabrera’s mission was to seek the truth, not to reach a predetermined result, but evidently he did not see it that way, for the reasons I have now made public. Indeed, in discussing what samples to take in the "global" report, one of the plaintiffs' consultants took the position that “[i]f we don't find anything then we don't ever report it.”444

Even with respect to those samples that Mr. Cabrera did collect, the analyses performed upon them were scientifically flawed. Proper analysis of various elements (water, soil, sediments, etc.) is one of the cornerstones to the environmental investigation of potentially affected sites.445 Establishing or, at a minimum, identifying the analytical protocols used in the course of an investigation (and any deviations from those methods) is the only way an expert can produce scientifically reliable results capable of being independently evaluated and confirmed. Prior to the start of judicial inspections, the parties negotiated and agreed to sampling and analytical protocols that would ensure transparency and reliability. 446 Although the Court approved these methodologies, neither the plaintiffs nor Mr. Cabrera applied even the most basic portions of those protocols, such as using a laboratory accredited to perform the proper analytical tests at the time such tests were performed.

441 DOUGLAS, Gregory S., Refutation of Mr. Cabrera’s Analytical Data and Evaluation of the

Validity of his Sampling and Analysis Programs, attached as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 148180-267, 148192.


443 Chevron Motion, filed July 31, 2007 at 3:20 p.m., Record at 132063-66,132063; Chevron Motion, filed May 21, 2010 at 4:35 p.m., at 49, Record at 178982-179041, 179030.

444 Transcript of Crude Outtakes, attached as Annex 8 to Chevron’s Motion filed Dec. 22, 2010 at 5:45 p.m. (CRS CRS-197-00-01).

445 See DOUGLAS, Gregory S., Evaluation of the Validity of the Plaintiffs’ Suggested Experts’ Analytical Data from the Judicial Inspections, attached as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 146197-268, 146202-03.

446 See Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 141082-203, 141090.


- 104 -

Indeed, although Mr. Cabrera stated in his work plan that only laboratories accredited by the Ecuadorian Accreditation Organization would be used,447 in his report he misrepresented the accreditation of the four laboratories he relied upon—Gruentec, LabSu, Umwelt, and CORPLAB—since they were not accredited to perform all of the analyses listed in the analytical plan.448 There are no indications that Mr. Cabrera ever audited the laboratories or reviewed their accreditation. 449 In fact, when Chevron specifically questioned Mr. Cabrera on the subject of laboratory accreditation, Mr. Cabrera responded (in a submission likely written by plaintiffs, supra § 2.2.1) that Chevron would have to obtain that information from the laboratory itself.450

Moreover, a large portion of the data that Mr. Cabrera used came from laboratory analyses presented by the plaintiffs’ nominated experts during the judicial inspections.451 Over three-quarters of those analyses were made by the laboratory HAVOC, which, as I have repeatedly argued, did not have accreditation at the time it performed these analyses. 452 Without proper accreditation, there is no way to guarantee that the laboratory has the necessary infrastructure (e.g., correctly calibrated analytical chemistry instruments), qualifications (e.g., trained staff), and experience (e.g., working with petroleum impacted samples) to perform the work. Therefore, any analytical chemistry data produced by a laboratory that is not properly accredited for the specific matrix, analysis, and concentration range must be considered invalid and inadmissible. (Tellingly, the plaintiffs repeatedly prevented the 20th Civil Court of Pichincha and Chevron from performing the inspections of HAVOC that had been ordered by that court.453) See supra § 3.4.4. Recently obtained emails from plaintiffs’ consultants demonstrate that plaintiffs knew that HAVOC’s analysis of polycyclic aromatic hydrocarbons (“PAHs”) was invalid, because they were using screening test

447 Expert Cabrera’s Work Plan, filed June 25, 2007 at 2:30 p.m., Record at 130640-51, 130646. 448 See DOUGLAS, Gregory S., Refutation of Mr. Cabrera’s Analytical Data and Evaluation of the

Validity of his Sampling and Analysis Programs, at 15, 17, attached as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 148180-267, 148194, 148196.

449 See Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 141082-203, 141190.

450 See Mr. Cabrera’s answers to Chevron’s questions of Dec. 12, 2008, Mar. 4, 2009 at 8:30 p.m., Record at 154587-88.


452 DOUGLAS, Gregory S., Refutation of Mr. Cabrera’s Analytical Data and Evaluation of the Validity of his Sampling and Analysis Programs, attached as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008 at 2:14 p.m., Record at 148180-267, 148210.

453 Chevron’s Oct. 19, 2006 Press Release, For the 6th Time the Judge is Impeded from Carrying out the Judicial Inspection, attached as Appendix 2 to Chevron’s Objections to Expert Mora’s JI Report for Sushufindi-25, filed Mar. 13, 2007 at 5:15 p.m., Record at 126743-127041, 126968-70.


- 105 -

kits for total PAHs—a method that is not U.S. Environmental Protection Agency (“U.S. EPA”) approved, nor in the analysis plan.454

Perhaps as significant as the failure to use an accredited lab, both the plaintiffs and Mr. Cabrera failed to provide the quality control analyses necessary to confirm the accuracy and precision for each analytical method.455 For each of Mr. Cabrera’s five sampling trips (the sixth trip was not conducted by Mr. Cabrera), there are one or more quality issues with the data that render the results invalid. The laboratories plaintiffs and their consultants used to prepare the report they attributed to Mr. Cabrera did not supply, or supplied incomplete, quality assurance/quality control (“QA/QC”) information.456 Likewise, the data produced by HAVOC lacked information regarding Data Quality Objectives which is another reason why that data must be considered invalid and should be held inadmissible.457

Because of the absence of QA/QC data, Chevron is unable to independently determine the reliability of the data in the Cabrera Report or the data of the plaintiffs’ nominated experts. In essence, Mr. Cabrera and the plaintiffs ask Chevron and this Court to take their word that the data is valid—an impossible request to grant in light of the overwhelming evidence of Mr. Cabrera’s fraudulent work. Chevron has previously discovered and presented to this Court concrete reasons why this information cannot be accepted. These reasons include the following:

• Chevron conducted a double blind study to document the HAVOC laboratory’s analytical capabilities for most of the critical chemical analyses performed.458 The results of this study demonstrate with a high

454 DOUGLAS, Gregory S., The Misuse of Field Screening Test Kits To Report Individual PAH

Concentrations In Judicial Inspection Samples, attached as Annex 9 to Chevron’s Fourth Supplemental Motion for Terminating Sanctions, filed on Dec. 22, 2010 at 5:45 p.m.

455 See DOUGLAS, Gregory S., Evaluation of the Validity of the Plaintiffs’ Suggested Experts’ Analytical Data from the Judicial Inspections, attached as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008 at 2:14 p.m., Record at 146198-268, 146201; see also DOUGLAS, Gregory S., Refutation of Mr. Cabrera’s Analytical Data and Evaluation of the Validity of his Sampling and Analysis Programs, attached as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008 at 2:14 p.m., Record at 148180-267, 148212.

456 See DOUGLAS, Gregory S., Refutation of Mr. Cabrera’s Analytical Data and Evaluation of the Validity of his Sampling and Analysis Programs, attached as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008 at 2:14 p.m., Record at 148180-267, 148185.

457 See DOUGLAS, Gregory S., Evaluation of the Validity of the Plaintiffs’ Suggested Experts’ Analytical Data from the Judicial Inspections, attached as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008 at 2:14 p.m., Record at 146198-268, 146222-224.

458 In a “double blind” study, an unrelated third party prepares samples with known chemical concentrations and delivers them to a subject laboratory for testing. The subject laboratory is unaware that chemical concentrations are predetermined. The third party then compares the results of the subject laboratory’s tests to the known chemical concentrations and submits its evaluation to the client (in this case, the defendant). DOUGLAS, Gregory S., Evaluation of the Validity of the Plaintiffs’ Suggested Experts’ Analytical Data from the Judicial Inspections, at 36-44, attached as Appendix to Chevron’s


- 106 -

degree of scientific certainty that HAVOC was not capable of producing defensible, accurate, and precise analytical data.459

• The analytical tests used in the Cabrera Report and by plaintiffs’ nominated experts to determine TPH levels in soil and water (Methods EPA 418.1 and APHA 5520F) were not agreed upon by the parties and have long been recognized as having limited utility, given the tendency of these methods to lead to false positives for or gross overestimates of TPH in water and soil samples, particularly common in samples with low hydrocarbon concentrations.460

• The HAVOC lab misreported detection limits (the minimum concentration of a substance that can be measured and reported with ninety-nine percent confidence that the analyte concentration is greater than zero) as hits on sixteen different compounds for water samples. In all cases, the HAVOC MDLs are lower by one to three orders of magnitude than those of the approved method, and more surprisingly, they are all the same (0.000001 mg/L).461

In light of all of the above, and given the limited sampling performed by Mr. Cabrera, it is not surprising that in private communications recently produced to Chevron, Mr. Beltman, the plaintiffs' paid consultant who took the lead on ghostwriting Mr. Cabrera’s report, admitted that the multi-billion-dollar remediation estimates done by Stratus in Mr. Cabrera’s name lacked scientific foundation. Mr. Beltman conceded to Mr. Donziger that “we do not know how much it will cost to remediate the contaminated soils in the Oriente”; “[w]e don’t know what the area or volume of soils is that requires remediation because the data collections to date have not been designed to define the full extent of contamination”; and we “also don’t know how much the cleanup will cost per soil unit area or volume.” 462 In the same memorandum, Mr. Beltman also (continued…) Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008 at 2:14 p.m., Record at 146198-268, 146233-41.

459 See DOUGLAS, Gregory S., Evaluation of the Validity of the Plaintiffs’ Suggested Experts’ Analytical Data from the Judicial Inspections, at 5, 36, attached as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008 at 2:14 p.m., Record at 146198-268, 146202, 146233.

460 DOUGLAS, Gregory S., Evaluation of the Validity of the Plaintiffs’ Suggested Experts’ Analytical Data from the Judicial Inspections, at 12-13, attached as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008 at 2:14 p.m., Record at 146198-268, 146209-10.

461 DOUGLAS, Gregory S., Evaluation of the Validity of the Plaintiffs’ Suggested Experts’ Analytical Data from the Judicial Inspections, at 19, attached as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008 at 2:14 p.m., Record at 146198-268, 146216.

462 E-mail from Douglas Beltman to Steven Donziger, dated Sep. 23, 2008 at 7:28 p.m., attached as Annex 8 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m. (attaching memoranda regarding a settlement, including one analyzing the potential relationship


- 107 -

acknowledged that the Cabrera Report overstated the per-unit soil remediation costs. And, as to groundwater remediation costs, Mr. Beltman confessed that there “simply aren’t sufficient environmental contamination data to work with.” 463 In other words, not only did plaintiffs’ consultants fraudulently submit their work as that of Mr. Cabrera, but they also submitted it knowing that it was profoundly defective and contained false statements. The lack of scientific rigor is not surprising, given that the plaintiffs' objective was to submit a "large" damages figure, regardless of whether or not there was any guarantee of the existence of such damage. 464 As Ms. Maest stated in her notes regarding the global report, they felt that "proving damages [is] preferable, but not necessary."465

These admissions are even more incredible in light of the fact that plaintiffs were apparently playing with a stacked deck. Newly discovered evidence indicates that plaintiffs’ team had conducted “preinspection identifications of sites” in advance of the inspections for the global report. 466 Mr. Kamp confirmed that the plaintiffs’ consultants were performing “presampling” of sites—which consisted of identifying areas that “could be impacted by contamination,” “in which contamination . . .was present,” or, more generally, “might be most representative of different types of contamination entering the

(continued…) between a potential settlement and the contamination) (STRATUS-NATIVE048249-58, 048256-58). Plaintiffs' consultants also identified other causes for certain of the alleged cases. For example, with regard to drinking water, the consultants admitted that "a large part of the problem originates in the deficient sanitary conditions," Id. (STRATUS-NATIVE048254).

463 E-mail from Douglas Beltman to Steven Donziger, dated Sep. 23, 2008 at 7:28 p.m., attached as Annex 8 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m. (attaching memoranda regarding a settlement, including one analyzing the potential relationship between a potential settlement and the contamination and reaching a figure for an out-of-court settlement) (STRATUS-NATIVE048256 to 048258). Another of the plaintiffs' consultants had also warned Mr. Donziger in these terms: "I think that we currently don't have enough information regarding the levels of ground water contamination." E-mail from Charles Camp to Steven Donziger et al., dated Mar. 21, 2007, at 10:15 a.m., attached as Annex 17 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m. (attaching a memorandum prepared by Mr. Champ in preparation of a conference call on remediation) (Champ 1106). This consultant, Mr. Champ, stated that he "never ha[d] the data" even to "do a ballpark" of the costs of cleaning up the ground water. Official Transcript of Deposition of Charles Champt, at 130:15-16, dated Sep. 9, 2010, attached as to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m.

464 See, e.g., Chevron's motion filed Oct. 29, 2010 at 5:20 p.m., at 14-15, n. 59 (regarding the pressure exerted by Mr. Donziger on the experts from the beginning for them to provide a "large" damages figure").

465 Ann Maest's notes from the meeting on Mar. 3, 2007, attached as Annex 8 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m. (discussing the plan for the global report) (STRATUS-NATIVE128131 to 128132).

466 Official Transcript of Second Deposition of Mark A. Quarles, at 251:23 to 256:4, dated Oct. 12, 2010, attached as Annex 15 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m.


- 108 -

pathways”–to “recommend that they be included in the global inspection.” 467 Evidently the goal was to identify so-called “best-site pre-inspection[s]” to ensure that the collection of samples during the global assessment would be skewed to show contamination. 468 Mr. Villacreces even prepared a report indicating that “[s]ome 55 to 60 sites with the best conditions for our purposes will be selected” for the global report. 469 Plaintiffs cannot claim that the admittedly insufficient data in the report submitted in Mr. Cabrera’s name reflects an accurate overall picture of the environmental conditions in the Oriente when it is now clear that his sampling was not scientifically designed to discover the truth, but on the contrary, was biased and manipulated. 470

Given the lack of transparency and credibility in what was purportedly Mr. Cabrera’s work, as well as the poor quality of his data and the data of plaintiffs’ nominated experts, his technical conclusions must be considered invalid from a scientific perspective and therefore inadmissible as evidence.

3.4.5 Mr. Cabrera Exceeded the Scope of His Mandate and This Court Refused to Allow His Deposition

Mr. Cabrera’s report, covertly drafted by plaintiffs’ team, supra § 2.2.1, also addressed extraneous issues that exceeded the scope of Mr. Cabrera’s mandate and the scope of the complaint. Ecuadorian law is clear that such issues are not part of the case. See infra Chapter VI. Accordingly, such conduct by an expert invalidates his report, as confirmed by the recent decision of the Provincial Court of Sucumbíos in Case No. 218-2008, Red Amazónica vs. Oleoducto de Crudos Pesados S.A. (“Red Amazónica”), a case in which you, Your Honor, were on the panel.471 The plaintiffs

467 Official Transcript of Deposition of Richard A. Kamp, at 293:4 to 295:14, dated Oct. 7-8, 2010, attached as Annex 11 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m.

468 E-mail from Richard Kamp to Steven Donziger, dated May 11, 2006 at 9:32 p.m., attached as Annex 7 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m. (KAMP-NATIVE000345).

469 Report of Luis Villacreces dated January-February 2008, attached as Annex 8 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m. (which refers to the content of the Cabrera Report) (STRATUS-NATIVE008887a to 008890).

470 Similarly, the evidence shows that the plaintiffs had altered the data used to prepare the draft of the Cabrera Report. See the e-mail from Jennifer Peers to Ann Maest, dated Mar. 6, 2008 at 8:06 a.m., forwarding the e-mail from Ann Maest to Jennifer Peers dated Mar. 4, 2008 at 9:30 a.m., attached as Annex 8 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m. (noting that "Tania and Sophie are correcting Cabrera's data today") (STRATUS-NATIVE017660 to 017663, at 017661); see also the e-mail from Tom Hodgson to Jennifer Peers dated Mar. 4, 2008 at 1:43 p.m., forwarding the e-mail from Tom Hodgson to Jennifer Peers, dated Mar. 4, 2008 at 1:19 p.m., attached as Annex 8 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m. (stating that a consultant had "deleted" the symbol "<," which would alter the detection of results) (STRATUS-NATIVE049997 to 050000, at 049999).

471 Red Amazónica vs. Oleoducto de Crudos Pesados S.A., Judgment of the Superior Court of Justice of Nueva Loja, dated July 29, 2009, Case 218-2008, at numeral XV (rejecting the report of Dr.


- 109 -

themselves recognized this principle when they argued in their 5:43 p.m. filing on November 26, 2009,472 that this Court should strike portions of expert reports “that fail to correspond to” anything beyond “a strict analysis” of “said expert’s core objective,” and this Court has ordered experts to “strictly and expressly adhere to the express wording” of their mandates.473

Because it is not proper (nor is the evidentiary phase of the case designed) for one of the experts to address the extraneous issues that Mr. Cabrera’s report reached, and because the Court did not immediately correct and sanction Mr. Cabrera’s actions, Chevron has not had a fair or adequate opportunity to be defend itself, assert its arguments and submit sufficient evidence on those issues. This denial of due process is compounded by the fact that Mr. Cabrera’s report’s analysis of the extraneous issues was written by plaintiffs’ consultants as directed by Mr. Donziger, resulting in the recommendation of an exorbitant amount of damages.

For instance, health issues were beyond Mr. Cabrera’s mandate. Yet Mr. Cabrera’s ghostwritten report recommended billions of dollars in damages related to alleged health issues, without any basis whatsoever. Moreover, these recommendations lack any basis and bear no relation whatsoever to the reality of the facts.474 First, it did not use the medical and statistical information available from official sources in Ecuador on levels of mortality from cancer;475 second, the conclusions it reached contradict the information in those sources and, in fact, the cancer rate he used was 250 times greater than the official National Statistics and Census Institute cancer mortality rate for the same population;476 and third, Mr. Cabrera’s report’s conclusions are unsupported by any medical records, death certificates, or any other objective and verifiable information. 477 Thus, Mr. Cabrera’s report stretched beyond his mandate and (continued…) Marcelo Muñoz, who was also a court-appointed expert in this case, because he had “exceed[ed] the scope of the task with no legal grounds to do so”).

472 Plaintiffs’ Objections to J. Bermeo Expert Report, filed Nov. 26, 2009 at 5:43 p.m., Record at 159486-89, 159487.

473 Order of Jan. 5, 2010, filed at 3:30 p.m., number 13, Record at 164366-69, 164368. 474 Chevron’s Objections to Expert Cabrera’s Supplemental Report, filed Feb. 10, 2009 at 5:35

p.m., Record at 154322-545, 154328. 475 Chevron’s Objections to Expert Cabrera’s Supplemental Report, filed Apr. 24, 2009 at 2:21

p.m., Record at 156327-79, 156330. 476 See Chevron’s Objections to Expert Cabrera’s Supplemental Report, filed Apr. 24, 2009 at

2:21 p.m., Record at 156327-79, 156330; see also Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008 at 2:14 p.m., Record at 141082-203, 141141.

477 KELSH, Michael, Response to Claims of Mr. Cabrera Concerning Alleged Cancer Cases and other Heath Effects and to His Proposal Concerning New Infrastructure, attached as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008 at 2:14 p.m., Record at 146378-423, 146381; see also Expert Cabrera’s Submission, filed on Oct. 8, 2008 at 10:50 a.m., Record at 151316-27, 151325.


- 110 -

recommended an economic value of billions of dollars in damages for alleged “excess cancer deaths” and other alleged health problems, without presenting a single medical diagnosis of even one affected person. Furthermore, as noted, the complaint does not include, and the forty-eight named plaintiffs have no authority to bring, claims for alleged personal injuries to third parties.

Mr. Cabrera’s report’s conclusions are not supported by the surveys upon which it relies. The surveys themselves were biased, administered by Mr. Fajardo and activists who support the plaintiffs, such as the Frente, Oil Watch International, and Acción Ecológica, as described supra § 2.2.478 Chevron had no input into the survey design, no opportunity to observe the procedures followed by the activists administering the survey, no opportunity to verify how the questions were actually answered, and no way to evaluate the impartiality of either the interviewers or those being interviewed.479 The alleged answers upon which Mr. Cabrera’s report relies are self-serving reports by anonymous members of the communities that hope to benefit from a large judgment against Chevron. Chevron also had no opportunity to test the truthfulness and accuracy of those alleged answers—which were not based upon any medical evidence—as the survey forms were never submitted to this Court.480 Moreover, even assuming that 306 of the people or their family members surveyed in fact had some form of cancer, Mr. Cabrera’s report’s methodology for extrapolating those answers across the area, and its use of the survey to determine the supposed cause of the alleged health problems, was illegitimate and frivolous.481 It is evident that the methodology used did

478 Chevron’s Objections to Expert Cabrera’s Supplemental Report, filed Feb. 2, 2009 at 5:35 p.m., Record at 156327-79, 156329; see also Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008 at 2:14 p.m., Record at 141082-203, 141141.

479 See Chevron’s Request for Expert Cabrera to Answer Questions regarding Surveys Undertaken as Part of Cabrera Global Report, filed Sept. 17, 2008 at 3:00 p.m., Record at 151035-37, 151035.

480 See Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008 at 2:14 p.m., Record at 141082-203, 141141-42; see also Chevron’s Request for Expert Cabrera to Answer Questions regarding Surveys Undertaken as Part of Cabrera Global Report, filed Sept. 17, 2008 at 3:00 p.m., Record at 151035-37, 151035, 151036. Information from investigative organizations in Ecuador (INEC and The Latin American Department of Social Sciences (“FLACSO”)) show that the health of persons living in the oil-producing areas inside the former concession is no different from that of people in other sites in the Oriente region and that there is no increase in deaths from cancer or in miscarriages owing to oil activities in the area of the concession, much less owing to TexPet’s activities. KELSH, Michael, Response to Claims of Mr. Cabrera Concerning Alleged Cancer Cases and other Heath Effects and to His Proposal Concerning New Infrastructure, attached as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008 at 2:14 p.m., Record at 146378-423, 146397.

481 The extensive errors contained in Mr. Cabrera’s purported “excess cancer rate” calculations have been detailed in Chevron’s objections to Mr. Cabrera’s report, which is incorporated herein by reference. See Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008 at 2:14 p.m., Record at 141082-203, 141119-20, 141169-72; see also KELSH, Michael, Response to Claims of Mr. Cabrera Concerning Alleged Cancer Cases and other Heath Effects and to His Proposal Concerning New Infrastructure at 12-16, attached as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008 at 2:14 p.m., Record at 146389-93 (in response to Value of Loss of Life due to Increase in Incidence of Cancer in the Concession at 2-3, attached as Annex Q to Expert Cabrera’s Global Report, filed Apr. 1, 2008 at 8:30 a.m., Record at 139875-81, 139876-77).


- 111 -

not justify the conclusion that billions of dollars should be paid for alleged harms Mr. Cabrera was not appointed to assess, and for which he had no skill to evaluate. In fact, Mr. Cabrera admitted that he was not able to independently assess the validity of the psychosocial survey and, as his resume demonstrates, he lacks any experience or qualifications in the field. His report fails to identify a single individual who prematurely died of cancer, much less establish an exposure pathway or other fundamental proof of causation.

Moreover, Mr. Cabrera’s report neither identified any particular type of cancer, nor evaluated whether or not particular types of cancer could have been caused by environmental factors other than hydrocarbon exposure—such as exposure to pesticides, iodine deficiency, sexual history, or family history—prevalent in the concession.482 On the other hand, Dr. Aguirre, the Director of Grupo Oncologico at the Hospital Metropolitana in Quito, has filed a declaration483 explaining the likely causation of any increased cancer risk in the region;484 and disclaiming any causal relationship of cancer to hydrocarbon exposure.485 Dr. Aguirre issued his report after conducting physical exams and reviewing medical history and records, 486 and supported his conclusions with studies from the scientific community, various governments around the world, and industry research which have failed to demonstrate a link between petroleum and certain cancers.487

482 Mr. San Sebastian himself admits to Mr. Donziger that his study has “certain

methodological . . . limitations,” and that he does not believe science to be the “best judge in these types of cases . . . because it can be manipulated very - very easily.” Transcript of Crude Outtakes, attached as Annex 1 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m. (CRS-375-00-03; CRS-375-00-04). One of plaintiffs’ consultants also acknowledged that “at no time does it [the San Sebastian report] categorically state that there’s a relationship between the oil and the [people’s cancer].” Transcript of Crude Outtakes, attached as Annex 1 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m. (CRS-159-00-10).

483 See Declaration of Dr. Jose M. Aguirre dated Oct. 24, 2007 at 5, in Gonzales v. Texaco Inc., Case No. C-06-02820 WHA (U.S. District Court, N.D. Cal.), submitted as Annex 31 to Chevron's Evidentiary Request No. 3.6 for the Cononaco-06 Essential Error Petition, filed Apr. 30, 2010 at 5:45 p.m., Record at 174968-175032, 174972.

484 Declaration of Dr. Jose M. Aguirre dated Oct. 24, 2007 at 6-7, 12-16, 19-21, in Gonzales v. Texaco Inc., Case No. C-06-02820 WHA (U.S. District Court, N.D. Cal.), submitted as Annex 31 to Chevron's Evidentiary Request No. 3.6 for the Cononaco-06 Essential Error Petition, filed Apr. 30, 2010 at 5:45 p.m., Record at 174968-175032, 174975-76, 174981-85, 174988-90 (noting that Ecuador has the 10th highest rate of cervical cancer in the world, citing a SOLCA report from 2004).

485 Declaration of Dr. Jose M. Aguirre dated Oct. 24, 2007 at 23, in Gonzales v. Texaco Inc., Case No. C-06-02820 WHA (U.S. District Court, N.D. Cal.), submitted as Annex 31 to Chevron's Evidentiary Request No. 3.6 for the Cononaco-06 Essential Error Petition, filed Apr. 30, 2010 at 5:45 p.m., Record at 174968-175032, 174992.

486 Declaration of Dr. Jose M. Aguirre dated Oct. 24, 2007 at 5, 8-23, in Gonzales v. Texaco Inc., Case No. C-06-02820 WHA (U.S. District Court, N.D. Cal.), submitted as Annex 31 to Chevron's Evidentiary Request No. 3.6 for the Cononaco-06 Essential Error Petition, filed Apr. 30, 2010 at 5:45 p.m., Record at 174968-175032, 174974, 174977, 174986.

487 Declaration of Dr. Jose M. Aguirre dated Oct. 24, 2007 at 23-31, in Gonzales v. Texaco Inc., Case No. C-06-02820 WHA (U.S. District Court, N.D. Cal.), submitted as Annex 31 to Chevron's


- 112 -

Chevron also invoked its constitutional right488 to interrogate Mr. Cabrera and requested that he appear in the judge’s chamber to respond to relevant questions on the matter and to produce the underlying, undisclosed source material.489 Mr. Cabrera refused to appear for his first court-ordered deposition or produce the supporting documents. 490 He instead provided a written statement that failed to answer any questions about the survey methodology, about the team that had carried out the survey, or, most notably, about the alleged 306 cancer “victims.”491 The Court then rescheduled Mr. Cabrera’s deposition for 5:00 p.m. on October 29, 2008.492 After Mr. Cabrera and all parties appeared at the appointed time, the Court declared that depositions could not be conducted after 5:00 p.m. Since then, the Court repeatedly has refused to reschedule Mr. Cabrera’s deposition.493 This charade was simply an attempt to obstruct Chevron’s ability to discover that the Frente and other activists conducted the survey and to otherwise present a defense on these matters. This Court’s denial of discovery was prejudicial, as it is now evident—from the discovery obtained in the United States—that Mr. Cabrera was fraudulently colluding with plaintiffs. This Court denied my client the only opportunity it had to obtain discovery directly from Mr. Cabrera, showing that the Ecuadorian judicial system is not capable of ensuring due process.

(continued…) Evidentiary Request No. 3.6 for the Cononaco-06 Essential Error Petition, filed Apr. 30, 2010 at 5:45 p.m., Record at 174968-175032, 174992-175000.

488 Article 76(7)(j) of the Constitution: “Witnesses or experts are obligated to appear before the judge or authority to respond to questions.” Numeral 15 of Article 24 of the 1998 Constitution provides: “In any type of proceeding, the witnesses and experts are required to appear before the judge and to respond to the respective questioning, and the parties shall have the right to access the documents relating to such proceeding." Article 24(15) of the Constitution of 1998: ”In any type of proceeding, witnesses and experts shall be obligated to appear before the judge and respond to the respective interrogatories, and the parties shall have free access to the documents related to those proceedings.”

489 Chevron’s Request for Expert Cabrera to Answer Questions regarding Surveys Undertaken as Part of Cabrera Global Report, filed Sept. 17, 2008 at 3:00 p.m., Record at 151035-37, 151035.

490 See Expert Cabrera’s Submission, filed Oct. 8, 2008 at 10:50 a.m., Record at 151316-27, 151322-23; see also Order of Sept. 30, 2008, filed at 5:00 p.m., Record at 151093-96V, 151094.

491 See Cabrera Response to Chevron’s Deposition Request of Sept. 17, 2008, filed Oct. 8, 2008 at 10:50 a.m., Record at 151316-27, 151322-27; Number 1 of Order of Oct. 23, 2008, filed at 5:00 p.m., Record at 151457-57v, 151457.

492 Order of Oct. 23, 2008 at 5:00 p.m., number 1, Record at 151457-57v, 151457. 493 See, e.g., Chevron’s Request to Schedule Deposition of Expert Cabrera and Allegations of

Judicial Bias, filed Nov. 7, 2008 at 4:58 p.m., Record at 152813-15, 152815; see also Chevron’s Request for Date to be Set for Expert Cabrera to Answer Interrogatories, filed Nov. 12, 2008 at 5:53 p.m., Record at 152829-31, 152831.


- 113 -

3.4.6 The Improper Refusal to Open Summary Proceedings for Proving Material Errors in Mr. Cabrera’s Report

Mr. Cabrera lacked the basic qualifications to perform his assigned tasks, included billions of dollars in non-existent damages that exceeded his mandate and the scope of the plaintiffs’ complaint, conducted much of his work in secret and with the involvement of the plaintiffs’ representatives, and, by failing to provide vital information about his sources and methodologies, deprived Chevron of the ability to meaningfully address his sweeping conclusions. See supra §§ 2.2, 3.4. Accordingly, Chevron alleged the existence of several material errors, and it made four requests494 that Judge Núñez open hearings on these allegations.

Under Ecuadorian law, 495 Judge Núñez had no discretion to deny these requests496 for “essential error” hearings, but he did so anyway. At first, he repeatedly

494 See Chevron’s Objections to Expert Cabrera’s Global Report, filed on Sept. 15, 2008 at 2:14

p.m., Record at 141082-203; Chevron’s Motion to Modify Order of Sept. 30, 2008, filed on Oct. 6, 2008 at 11:45 a.m., Record at 151128-34; Chevron’s Motion regarding Essential Error Petitions Against Expert Cabrera, filed on Oct. 14, 2008 at 11:08 a.m., Record at 151360-61; Chevron’s Objections to control samples taken by Expert Cabrera, filed on Dec. 12, 2008 at 5:30 PM, Record at 153588-705.

495 Article 258 of the Code of Civil Procedure provides: “Once it has been summarily proven that an expert report is tainted with material error, the judge must, at the request of a party or on his own motion, order that the report be corrected by another expert or experts, without prejudice to any liability they may have incurred as a result of fraud or bad faith.”

Article 277 of the Criminal Code provides: “The following people are deemed to commit malfeasance of office and will be punished with one to five years of imprisonment:

1.- Judges in courts of law and legal arbitrators who, out of personal interest, like or dislike for a person or body, or to the detriment of the public good or an individual, rule counter to an express law, or prosecute someone criminally, knowing that he does not deserve it;

2.- Judges or arbitrators who give advice to one of the parties to a lawsuit who are litigating before them, to the detriment of the opposing party;

3.- Judges or arbitrators who intentionally violate express laws while hearing cases, by either doing what the law prohibits or not doing what the law mandates . . . .”

496 It is important to note that in Public Law a judge can only do what the law permits, and Procedural Law is a branch of public law. See Article 226 of the Constitution of Ecuador. Procedural law is “a public, formal, instrumental law and autonomous, of superlative importance and of mandatory compliance”, as set forth in a ruling handed down by the Supreme Court of Justice on Nov. 13, 1981 in the lawsuit filed by Alberto Feliciano Cadena Viteri against Estéfano Farah R., published in the Judicial Gazette, Year LXXXII, Series XIII, No. 13, p. 2977. A judge is not allowed to deny a motion for material error; rather, he must act solely and exclusively as permitted by Article 258 of the Code of Civil Procedure, which is a mandatory rule (the law mandates, prohibits or permits). Such denial of a motion for material error not only pre-judges the merit of a claim of essential error, but it also expressly violates the right to prove it. In this regard, note that Article 277 of the Criminal Code provides that “[t]he employees of the public administration . . . exercising any judicial authority . . . deny, refuse, or retard the administration of justice” will be reprimanded with “five years of prison.”


- 114 -

postponed a decision.497 For instance, in response to one of Chevron’s requests,498 Judge Núñez stated that: “[F]irst we must wait for the results of the control samples in order to determine whether they corroborate the results obtained in the laboratories used by the Expert, Eng. Richard Cabrera, and confirm his conclusions or not, after which the parties may present their opinions and request or not the opening of summary proceedings owing to material errors.”499 But even after the analysis of the control samples became available, the judge denied Chevron’s petitions.500 Because of his bias, he illegally based his decision on Article 257 of the Code of Civil Procedure, stating that Mr. Cabrera had responded to all the clarifications and amendments requested. This clearly was not a legitimate basis for denying Chevron’s request, since Chevron had not sought clarification under Article 257 but, rather, nullification for material error under Article 258. By eliding the true issue, the Court violated basic civil procedure and deprived Chevron of its right to fully respond to the Cabrera Report.501 Despite Judge Núñez’s misconduct, his decisions in this case inexplicably still stand, perpetuating the violations of Chevron’s right to due process.

3.5 The Submissions of September 16, 2010, Fail to Resolve the Due Process Violations That Plagued the Evidentiary Phases of This Case and The Case in its Entirety

It is evident that, not being able to substantiate their claims with transparent, credible, scientific evidence, the plaintiffs attempted to give it the imprimatur of validity through Mr. Cabrera, who they falsely described as being neutral and independent and who signed a report actually authored by plaintiffs. Despite plaintiffs’ misconduct, which reflected both the unethical actions of their attorneys and the lack of merit in their case, this Court arbitrarily and illegally offered them a second and artificial ad hoc opportunity in its order of August 2, 2010 at 9:00 a.m., despite the fact that the evidentiary period and the expert assessment were over. In that order, the judge directed the parties to

497 See Order of Sept. 30, 2008, filed at 5:00 p.m., Record at 151093-96v, 151096v; Number 8 of

the Order of Oct. 8, 2008, filed at 3:30 p.m., Record at 151329-31, 151329v; Number 6 of Order of Oct. 23, 2008, filed at 9:00 a.m., Record at 151454-56, 151454v.

498 Chevron’s Motion to Modify Order of Sept. 30, 2008, number 9, filed Oct. 6, 2008 at 11:45 a.m., Record at 151128-134.

499 Order of Oct. 8, 2008, filed at 3:30 p.m., number 8, Record at 151329-331, 151329v. This criterion was reiterated in number 6 the Order of Oct. 23, 2008, filed at 9:00 a.m., Record at 151454-56, 151454v: “[T]he report on the results of the expert assessment and the report on the control samples must be analyzed jointly, which is why it is necessary to open the envelopes as provided for in the previous ruling . . . .”

500 Order of May 28, 2009, filed at 11:00 a.m., number 9, Record at 156691-93v, 156691-91v. 501 Article 76(7)(l) of the current Constitution states that “[r]easons must be stated for all rulings by

the public authorities. The reasons shall be deemed unstated if the ruling does not set forth rules or legal principles on which it is based and does not explain why they are relevant to the facts. Administrative acts, orders or rulings that do not state the grounds on which they are based shall be deemed null and void.” Because the Court’s reasoning considered neither the facts nor the actual grounds for the petition, it is therefore null and void.


- 115 -

present, by September 16, 2010, a technical filing not contemplated by the law nor requested by the parties at the appropriate time. Those filings, however, do nothing to remedy, and in fact only magnify, the due process violations discussed above.

By authorizing the technical filings on September 16, 2010 at 5:15 p.m., the judge merely substituted one illegal order for another. As discussed above, Mr. Cabrera should never have been appointed as the sole global expert in this case. See supra § 3.4.1. That appointment occurred only after plaintiffs were unable to prove their case through the judicial-inspection process sought by the parties and ordered by the judge within the evidentiary period; plaintiffs then pressured the Court to accept their waiver of 64 of the judicial inspections that they had requested, thus prematurely terminating this stage of taking evidence in this trial and waiving judicial inspections that they attempted to replace with the global expert assessment. The plaintiffs then used this opportunity to obtain an expert they could control, enabling them to commit fraud on a staggering scale in an effort to give credence to their plainly unscientific evidence. Undeterred by the overwhelming evidence of impropriety submitted by my client, this Court afforded plaintiffs yet another opportunity to manufacture a case against Chevron. See supra § 3.1. This was a deus ex machina for a story that should have ended in the legal nullification of the entire proceeding.

But even setting aside the fact that there was no basis in law for this Court to decide as it did, see supra § 3.1, the fact remains that the evidence upon which the report relies was collected during the judicial-inspection process and by Mr. Cabrera.502 Those estimates, therefore, are deficient for all the reasons discussed above. See supra §§ 3.3–3.4. This is confirmed by the testimony of the authors of the reports themselves.503 Several of them have conceded under oath that their reports cannot be relied upon to make any damages calculations. Douglas Allen, for example, agreed that he has no experience assessing costs to remediate sites contaminated by crude oil and that he does not consider himself an expert in remediation of petroleum sites.504 In addition, in many cases, they simply assumed the accuracy of the Cabrera Report, without having been made aware of its fraudulent preparation or Chevron’s rebuttals of it. Dr. Lawrence Barnthouse stated that he was under the impression that Mr. Cabrera “would be neutral” as a court-appointed expert, adding that, had he known the extent to which plaintiffs prepared Mr. Cabrera’s Report, he “might not have wanted to get involved” in the case.505 The authors also acknowledged severe limitations in their conclusions, citing the absence of expertise, questionable methodologies, and reliance upon unrealistic assumptions. Among other things, Jonathan Shefftz admitted that he

502 See infra §§ 7.3-7.4. 503 This testimony is discussed in further detail in my client’s filings of December 21, 2010 at

11:00 a.m. and Dec. 22, 2010 at 5:40 p.m. 504 See Chevron’s Motion Regarding Plaintiffs’ Reports of September 16, 2010, filed Dec. 22,

2010 at 5:40 p.m. 505 See Chevron’s Motion Regarding Report of Lawrence Barnthouse, filed December 21, 2010 at

11:00 a.m.


- 116 -

“was not engaging in any exercise to verify [Mr. Cabrera’s] data series or his cost figures.”506 As the depositions have not yet been completed, I will be filing this new and relevant evidence with the Court as it becomes available.

Indeed, those reports only exacerbate and perpetuate the due process violations to which my client has been subjected. Plaintiffs’ attorneys not only continue to rely on evidence which they know to be flawed, fraudulent, and unscientific, but they also have the audacity to grossly inflate their damages estimates based on that same tainted and unreliable evidence. Accordingly, no court concerned in the least with protecting my client’s constitutional rights could possibly base a damages award on the plaintiffs’ most recent submission of September 16, 2010 at 5:15 p.m. The flaws in these reports have been confirmed by depositions in the United States of the individuals who submitted them. My client will continue filing this new and relevant evidence before you as it becomes available; I hope that in accordance with the obligations imposed on you by law, this Court should carefully consider it before proceeding to judgment.

Additionally, the reports of the "specialists," including the plaintiffs in their submission of September 16, 2010 at 5:15 p.m., are plainly insufficient to meet the plaintiffs' burden of proof. Article 43 of the Environmental Management Act provides that this Court rule “in accordance with the experts’ reports that were ordered.” As plaintiffs have acknowledged, this provision “contains an imperative for the judge, not a mere recommendation, thus showing that the determination of the amount required for remediation of the damage MUST be made by the judge, in accordance with the expert reports ordered.”507 Plaintiffs have further recognized that “the lack of an evaluation may well be grounds for invalidating the trial.”508 The Cabrera Report—nothing more than a fraud and the plaintiffs’ own work product—obviously can no longer serve as the basis for this Court’s judgment. The same is true of evidence collected during the judicial inspection process, which, in addition to being marred by plaintiffs’ fraud, was never completed. See supra §§ 2.1, 3.3.1. And as Chevron argued in its motion of August 5, 2010, at 4:30 p.m., the plaintiffs’ new submissions cannot fill the resulting void in the record. The reports of the plaintiffs' "specialists" are simply not expert proof, as defined by Articles 250 to 263 of the Code of Civil Procedure. For example, contrary to Article 252’s requirement that a judge appoint as an expert “a person of his own choosing,” these individuals are the plaintiffs’ paid consultants, chosen by the plaintiffs alone. Additionally, contrary to Article 256’s requirement that an expert “swear to perform his duties faithfully and lawfully,” these authors have given no such oath to this Court. Any judgment handed down on the basis of these reports, therefore, would violate my client’s due process rights.

506 See Chevron’s Motion Regarding Plaintiffs’ Reports of September 16, 2010, filed Dec. 22,

2010 at 5:40 p.m. 507 Plaintiffs’ Motion, filed Sept. 16, 2008 at 11:30 a.m., § 5.2, at 9, Record at 150878-995,

150886. 508 Id.


- 117 -

My client’s due process rights would be further violated if plaintiffs follow through on their plans to submit additional “economic assessment criteria” in their alegato, as my client would be effectively denied the opportunity to respond and rebut the methodology plaintiffs employ. 509 Depriving my client of its right to a defense constitutes a clear violation of due process.

Moreover, to the extent plaintiffs’ September 16, 2010 filing includes estimates for damages that lie beyond the scope of the complaint, those estimates are extra petita and should not be considered by this Court. For all the reasons discussed infra Chapter VI, my client’s due process rights would also be violated by any award of damages for extra petita claims.

In short, the ad hoc, supplemental, technical filings submitted to this Court by the plaintiffs in so-called "legal briefs" on September 16, 2010 at 5:15 p.m. are not responsive to, and cannot cure, the fundamental problems that nullify, both in terms of substance and procedure, the reports submitted by Mr. Cabrera and the reports by plaintiffs' nominated experts (and we know that both reports were defined and/or prepared and/or supervised by the plaintiffs themselves). The fact that the plaintiffs’ so-called "legal brief" filed on September 16, 2010 at 5:15 p.m. and the technical reports attached to it used the fabricated, fraudulent expert reports from the expert assessment and the judicial inspections to reach damages estimates that can only be described as fanciful, is further proof of plaintiffs’ bad faith and should be deemed not acceptable, and as a result, should be rejected in its entirety.

3.6 Further Evidence of Bias and A Rush to Judgment

In addition to all the procedural irregularities discussed above, this trial has been tainted by a biased rush to judgment against Chevron, particularly after the evidence of plaintiffs’ fraud came to light.

The case has been tried through a summary verbal proceeding, a procedure ordinarily reserved for straightforward commercial or labor disputes. The use of the summary verbal procedure in this factually complex environmental tort case was wholly inappropriate, contrary to law, and deprived my client of its right to due process. Among other things, the procedure has been relied upon by this Court to (i) deny prompt resolution of dispositive legal defenses; (ii) proceed to subsequent stages of the trial despite the failure to fulfill necessary procedural prerequisites; (iii) preclude immediate appeal to correct orders that have injured my client; (iv) prevent the filing of counterclaims and the inclusion of necessary third parties.

For example, violating the procedure for summary verbal proceedings, the Court first proceeded to the evidentiary phase of the case without even determining it had

509 See Plaintiffs’ Motion, filed Sept. 16, 2010 at 5:15 p.m., at 2, 18. Chevron strongly objects to

such submissions by the plaintiffs, as it will deny Chevron its due process right to respond. Accordingly, Chevron reserves the right to file all necessary rebuttals.


- 118 -

jurisdiction over Chevron. Then, as discussed supra § 3.3.1, this Court abandoned its own procedural rulings and allowed the plaintiffs to relinquish more than half of the judicial inspections previously ordered. Once this relinquishment was complete, the Court granted the plaintiffs’ request to proceed to the damages phase without first determining liability. Thus, the Court heard evidence without determining jurisdiction and assessed damage without finding liability.510

The premature termination of environmental assessment and the appointment of a “global” expert has created inconsistent and untenable results as the litigation has progressed. The Court instructed Mr. Cabrera to determine the cause of and damages related to any contamination at Consortium sites. Yet the evidentiary phase that was meant to occur before the appointment of the “global” expert was far from complete. At the time of Mr. Cabrera’s appointment, there were countless outstanding judicial-inspection reports, and not only that, but also in spite of the discrepancies between the reports submitted by the plaintiffs' nominated experts and the reports of the defendant's nominated experts, only one of them was settled. Also, the many allegations of essential error asserted by my client, which affect the probative value and call into question the legality of these reports, have not been ruled on, which means that these reports are incomplete. At least eight locations were subject to judicial inspections well after Mr. Cabrera was appointed: Auca-17 (03/10/09), Auca-19 (03/10/09), Auca Central Production Station (03/11/09), Auca South Production Station (03/12/09), Yulebra Production Station (03/24/09), Culebra Production Station (03/24/09), Yuca Central Production Station (03/25/09), and Guanta Central Production Station (03/26/09). In addition, the Court-appointed expert for these locations (Mr. Muñoz) did not submit his judicial-inspection reports until June 5, 2009, months after the submission of the supplemental Cabrera Report.

In addition to judicial-inspection reports, the Court had not yet appointed a countless number of experts to investigate and submit reports on evidentiary issues identified by Chevron in its requests of October 2003. For example, Chevron requested that the Court appoint an expert to assess the drilling practices and use of “pits” in the Oriente since 1992. This request was directly related, and would serve as a source, to the global assessment because Mr. Cabrera was ordered to specify the source of the environmental damage in the former concession area. However, the Court did not even appoint an expert (Dr. Barros) until May 29, 2009. Given the broad scope of the expert assessment, Dr. Barros was unable to submit an initial report until December 21, 2009,

510 The summary verbal procedure was also manipulated to deprive my client of due process by

curtailing its right to meaningfully respond to and produce evidence. In one instance, Chevron’s final eight judicial inspections were carried out over the course of four weeks by a single expert who was required to complete all eight reports in half the time previously allotted to experts for a single site. And in one particularly egregious example, Chevron originally had only seven days to review and draft a rebuttal to a 4,500-page expert report on Petroecuador’s operational practices. Order of Jan. 5, 2010 at 3:30 p.m., Record at 164366-369, 164368v. The right to review and respond to evidence is at the foundation of due process, and by these actions, this Court has abandoned the most basic notions of that fundamental principle.


- 119 -

almost an entire year after the submission of the final supplemental Cabrera Report on February 5, 2009. Chevron also requested that the Court appoint an expert to evaluate the fishing techniques used by settlers and natives in the rivers of the Oriente. This request was related, and would serve as a source, to the global assessment because Mr. Cabrera was charged with determining whether substances in the environment could constitute a hazard for living beings. The Court did not appoint a fisheries expert (Mr. Bermeo) until May 29, 2009. Chevron also requested the appointment of three agricultural experts to assess: (i) techniques of land management and the erosive impacts of settlement in the Oriente; (ii) contamination caused by the use of fertilizers, herbicides, insecticides, and other agrochemicals; and (iii) the impact of deforestation and soil use/management. These requests directly relate to the Cabrera Report’s fraudulent conclusions on the source of damage to flora and fauna and should have served as a basis for that report, yet the Court did not appoint these experts until late 2009, and the reports themselves were not submitted until May 2010, over a year after the submission of the supplemental Cabrera Report.

Lacking both the information and the experience and professional expertise to develop it, Mr. Cabrera—even if he had written the report submitted in his name—could not have made an accurate assessment of causation and damages on each of these issues. Recommending damages prior to the conclusion of the evidentiary phase put the cart before the horse. He did not and could not determine that Chevron was the responsible party without an assessment of Petroecuador’s operations after TexPet left the region. He could not establish a causal link between Consortium activities and conditions in the former concession without assessments of fishing techniques, land management and settlement practices, or the use of agrochemicals in the region. Although Chevron has repeatedly identified conflicts between the Cabrera Report and the reports of these experts, these conflicts have not been resolved by a competent expert. It is important to note that because these discrepancies are technical matters, and therefore are not part of a judge's role, under Articles 259 and 262 of the Code of Civil Procedure, they cannot and must not be resolved by Your Honor; therefore the evidence and the record are incomplete, as Your Honor lacks the scientific expertise necessary to resolve the discrepancies yourself.

These problems were only compounded by the Court’s response to the compelling and incontrovertible evidence, presented by my client, of fraud on the part of Mr. Cabrera and the plaintiffs. Even after it became clear that all of the plaintiffs’ “evidence” was tainted by fraud, collusion, and deception, and that Mr. Cabrera’s report had in fact been secretly written by plaintiffs’ consultants and then translated into Spanish for submission under Mr. Cabrera’s signature, this Court astonishingly kept pressuring my client to close the taking of evidence, refusing to take the necessary time to deal with Chevron's motion for an investigation of plaintiffs’ pattern of malfeasance, which had tainted the lawsuit since the very filing of the complaint. Instead, this Court proceeded as if nothing had happened, ordering the parties to submit briefs concerning the calculation of alleged environmental remediation damages. But the plaintiffs have not submitted any reliable evidence of damages, and the procedure ordered by this Court on August 2, 2010 at 9:00 a.m. in order to “replace” the Cabrera Report with the so-called "legal brief" was without any basis in law or logic, and was invented solely to


- 120 -

hasten a large judgment against Chevron, heedless of the truth or the facts. Supra § 3.1. This was compounded by the Court’s decision to impose new and ridiculously short time frames for my client to file key submissions and to respond to the allegations of plaintiffs and the experts.511 This obviously hindered my client’s right to present a defense, which was evidently Your Honor’s intention as you went so far as to sanction two of Chevron’s lawyers for seeking redress for the plaintiffs’ fraudulent conduct.512

Finally, this Court declared autos para sentencia in this case while key pieces of evidence were still outstanding and the evidence was incomplete and as further concrete evidence of the plaintiffs’ fraudulent activities was coming to light. Contrary to the order of the law and what was initially decided by this Court, the independent settling experts have yet to resolve the divergent conclusions reached by the parties’ experts during any of the judicial inspections other than Sacha-53.513 Supra § 3.3.1. Hearings have been denied on a number of essential-error petitions filed by Chevron. Supra § 3.3.3. In addition, Chevron is in the process of obtaining and reviewing important evidence from individuals in the United States, pursuant to Section 1782 of Title 28 of the United States Code of Civil Procedure [sic], including, but not limited to, evidence about the activities of Mr. Cabrera in this case.514 See supra §§ 2.1–2.2. Accordingly, Chevron filed a motion asking that you revoke autos para sentencia, but this was denied in an apparent rush to a predetermined result, thus ignoring evidence with regard to the facts at issue.515 It would violate due process for this Court to issue a judgment before the evidence has been fully gathered and confronted by the parties, particularly in the face of concrete evidence of a fraud perpetrated upon the Court by the plaintiffs and Mr. Cabrera.

3.7 The Plaintiffs Intend the Judgment to Be the Result of the Pressure Exerted by them on the Court

The documentary evidence shows that any judgment in this case would be the result of concerted pressure tactics on Ecuadorian courts, planned and executed by the

511 See Orders dated Oct. 27, 2010 at 10:10 a.m. at No. 15, 21; Nov. 9, 2010 at 5:32 p.m. at No.

3; Dec. 1, 2010 at 5:50 p.m. at No. 5; Dec. 3, 2010 at 4:50 512 See Order dated Oct. 27, 2010 at 10:10 a.m. at No. 1, 2, 5 and 7. 513 Mr. Cabrera was not, and was never intended to be, a substitute for the settling experts.

Order of May 30, 2008, filed at 10:30 a.m., Record at 140405-11v, 140405v-06. To treat him as such would be a flagrant violation of my client’s due process rights. My client has presented overwhelming evidence demonstrating that Mr. Cabrera was nothing but a mouthpiece for the plaintiffs. Accordingly, this Court cannot possibly regard him as a disinterested arbiter to resolve conflicts between the evidence submitted by plaintiffs’ and Chevron’s nominated experts.

514 Chevron’s Motion, filed July 9, 2010 at 11:30 a.m. (summarizing evidence of fraud revealed during U.S. proceedings under 28 U.S.C. § 1782).

515 Chevron’s Motion to Revoke Autos Para Sentencia, filed Dec. 22, 2010 at 5:48 p.m.


- 121 -

plaintiffs and their representatives.516 A decision based on external pressure, rather than the law and the facts, violates basic principles of due process.

Many outtakes from the documentary Crude depict Mr. Donziger and the plaintiffs’ representatives discussing the need to add political pressure on this Court in order to secure a favorable judgment. In one such clip, a woman accompanying Mr. Donziger observes that no judge would rule against plaintiffs because “[h]e’ll be killed.” Mr. Donziger agrees, and then comments, “He might not be, but he’ll think—he thinks he will be . . . Which is just as good.” Mr. Donziger then states, “You can solve anything with politics as long as the judges are intelligent enough to understand the politics . . . . [T]hey don’t have to be intelligent enough to understand the law, just as long as they understand the politics.”517

That sentiment is repeated throughout the outtakes. At one point, Mr. Donziger explains that his goal is to “really mobiliz[e] the country, politically, so that no judge can rule against us and feel like he can get away with it in terms of his career.” 518 Mr. Donziger sought to make it “politically and personally impossible [for a judge] to survive” ruling against the plaintiffs.519 Such actions are in accord with Mr. Donziger’s belief that “the only language” that a judge “is gonna understand is one of pressure, intimidation, and humiliation.”520 Or, as Mr. Donziger recorded in his diary, the received wisdom was that “the only way we will win this case is if the judge thinks he will be doused with gasoline and burned if he rules against us.”521

516 One court in the United States aptly described plaintiffs’ scheme: “So the name of the game is,

arguably, to put a lot of pressure on the courts to feed them a record in part false for the purpose of getting a big judgment or threatening a big judgment, which conceivably might be enforceable in the U.S. or in Britain or some other such place, in order to persuade Chevron to come up with some money.” See Hearing Transcript, In re Chevron Corp., No. 10 MC 00002 (LAK) (S.D.N.Y. Sept. 23, 2010), at 23-24, attached as Annex 19 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m. The same court noted that Mr. Donziger’s statements on film are “flat-out admissions . . . that what’s going on in Ecuador is mud wrestling, not bona fide litigation. That’s what he says. Political mud wrestling.” Id. at 13-14.

517 Transcript of Crude Outtakes, attached as Exhibit 2 to Chevron’s Motion filed Sept. 14, 2010 at 11:10 a.m. (CRS 129-00-02).


519 Transcript of Crude Outtakes, attached as Annex 8 to Chevron’s Fourth Supplemental Motion for Terminating Sanctions, filed Dec. 22, 2010 at 5:45 p.m. (CRS 083-00-01).


521 Diary of Steven Donziger, entry dated Mar. 11, 2006, at 10, attached as Annex 1 to Chevron’s Third Supplemental Motion for Terminating Sanctions, filed December 20, 2010 at 4:30 p.m. (DONZ0023089).


- 122 -

Mr. Berlinger recently corroborated what my client has long reported to this Court: “[Mr. Donziger] was organizing people to put pressure on the court.” 522 Other documents, including a Selva Viva action plan and another of the plaintiffs’ internal case planning documents, emphasize the same pressure strategy.523 Thus, in an email from February 2006, Mr. Fajardo suggested to a colleague who was planning to meet with the judge to make clear to judge that the communities were monitoring his actions.524

The plaintiffs’ “pressure” strategy accords with Mr. Donziger’s view that “this is not a legal case, this is a political battle that’s being played out through a legal case.”525 According to Mr. Donziger, the way to win the case is to “talk to influential people who talk to the judge.”526 For example, he recommends having “[President] Correa and important people" speak out, to "put pressure on the judge.” 527 That view was effectively endorsed by a high-ranking officer of the Government, who advised the plaintiffs’ representatives (in an exchange captured on video) that in order to be successful, the plaintiffs should orchestrate “a demonstration . . . that’s how this country works. Close República Street.”528

The clips show that the plaintiffs applied pressure not only in general, but as to specific matters and decisions before this Court. For example, one outtake shows the plaintiffs’ representatives discussing how they need to put pressure on the Court in order to ensure that their request for appointment of a global expert would be accepted. Mr. Fajardo agrees that “political pressure” is necessary, along with pressure “through the media, too, that’s another type of pressure.”529 A subsequent meeting, during which

522 Official Transcript of Deposition of Joseph Berlinger, at 602:8-10, dated Nov. 6, 2010, attached

as Annex 12 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:12 p.m.

523 Document entitled: Action Plan - Selva Viva, dated Jan. 5, 2009, attached as Annex 1 to Chevron’s Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p.m. (DONZ0036220) (“Constant pressure on the judge and the court for a fast decision.”); Document entitled: Timeline for Case Activity Plan, attached as Annex 1 to Chevron’s Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p.m. (DONZ00037146) (listing “political pressure” to include “constantly visit[ing] and watch[ing] the Court to prevent CV from stopping the global assessment”).

524 Attached as Annex 1 to Chevron’s Fourth Supplemental Motion for Terminating Sanctions, filed Dec. 22, 2010 at 5:45 p.m. (DONZ00028223).





529 Transcript of Crude Outtakes, attached as Annex 1 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m. (CRS 158-02-07). For example, plaintiffs’ representatives state that they hope a press release


- 123 -

Mr. Donziger and Mr. Fajardo actually meet ex parte with Judge Yánez and pressure him to appoint the global expert, was actually captured on film.530 Ms. Atossa Soltani, the founder and director of Amazon Watch, is also shown on tape pressing and asking Judge Yánez as to why he has not yet appointed a global expert. 531

In another clip, which depicts a June 6, 2007 meeting, Mr. Donziger states that plaintiffs “were getting, like, everything, for a while, that we wanted. You know, we got the cancellation of the inspections. You know, . . . we’re getting the peritaje global, the final phase.” He then outlines the next steps that need to be taken: “[W]e need to do more, politically, to control the court, to pressure the court. We believe they make decisions based on who they fear the most, not based on what the laws should dictate. So, what we want to do is take over the court with a massive protest . . . .”532

Newly uncovered evidence proves that the plaintiffs’ lawyers and representatives privately met and pressured Your Honor’s predecessors on multiple occasions to accept the plaintiffs’ demands. For example, on January 27, 2006, Mr. Donziger wrote that he was “furious” regarding the inaction of the judge. Mr. Donziger wrote that “[w]ithin minutes, [Yanza] had called the judge and they were meeting for lunch at 1—in an hour. Gave him [Yanza] $40 out of my pocket.”533 On March 11, 2006, Mr. Donziger records another meeting with the judge the “day before SC inspection”: “This was second meeting with the judge—had lunch with him the previous Friday in the Cangrejo Rojo. I love it—this lobbying. I am good at it.” 534 After this meeting, Mr. Donziger also commented that the judges in Ecuador are “not very bright,” and he “took advantage of the situation to explain our theory of the case.”535 On January 19, 2007, Mr. Donziger wrote that he met with Judge Yánez at the judge’s house. After this meeting, Mr. Donziger wrote that despite him previously wanting the judge off the case, “[w]e saved him, and now we are reaping the benefits.” However, Mr. Donziger noted that “Guerra will be the judge to decide the case. We have to start lobbying him, working

(continued…) helps “[p]ut pressure on the judge.” Transcript of Crude Outtakes, attached as Annex 3 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m. (CRS 202-02-01).




533 Diary of Steven Donziger, entry dated Jan. 27, 2006, at 16, attached as Annex 1 to Chevron’s Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p.m. (DONZ0023089).

534 Diary of Steven Donziger, entry dated Mar. 11, 2006, at 10, attached as Annex 1 to Chevron’s Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p.m. (DONZ0023089).

535 Diary of Steven Donziger, entry dated Mar. 11, 2006, at 10, attached as Annex 1 to Chevron’s Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p.m. (DONZ0023089).


- 124 -

with him.”536 The plaintiffs even went so far as to attempt to influence the appointment of presiding judges of this Court; indeed, Mr. Donziger wrote saying that his team was “working to get Alberto Guerra apptd President again in Dec so he can take over case. He told PF (Pablo Fajardo) that he wants to impose the sentence in the case. This means he will push it along and we will end in two years.”537

In furtherance of their strategy of pressuring this Court, the plaintiffs considered some incredible proposals. For example, at the same June 6, 2007 meeting, Mr. Donziger states that plaintiffs need their “own army,” a “specialized group” detailed “to watch over the court.”538 Atossa Soltani, the founder and director of Amazon Watch, asks if “anybody can, uh, subpoena these videos.” Mr. Donziger responds, “We don’t have the power of subpoena in Ecuador.” Ms. Soltani asks, “What about U.S.?” She continues, “I just want you to know that it’s—it’s illegal to conspire to break the law.”539

Also at the same meeting, Mr. Donziger says that the plaintiffs need “a force, a political force that the judges can see. Then, we start with five hundred people at the court and after that—all that, followed by twenty, thirty people, paid by us . . . .” Luis Yanza, the coordinator for plaintiffs and a representative of the Amazon Defense Front, adds that these people would need “minimal training . . . so they do a good job for us. That’s it. And then, if it goes well, and we need, uh, if we need weapons, we can provide weapons.” Mr. Donziger then adds that this project will be expensive and that they “need, like, a hundred grand,” referring to US$100,000. Mr. Donziger then states, “[W]hile we can do all the legal briefs in the world and host all the visitors who want to come, if we don’t show power in the court, we’re not gonna finish this case . . . . The meetings with the judge, like you guys had yesterday, I think, are of minimal effect.” He continues, “The army project is not a new project. I mean, it’s—it’s—it’s an effort to step up the political power we have in the court, at the point of contact, where they’re gonna feel it the most.”540 Other evidence confirms that Mr. Donziger viewed the plaintiffs'

536 Diary of Steven Donziger, entry dated Jan. 19, 2007, at 19, attached as Annex 1 to Chevron’s

Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p.m. (DONZ00027256). 537 Diary of Steven Donziger, entry dated Oct. 5, 2005, at 33, attached as Annex 1. to Chevron’s

Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p.m. (DONZ0023089). 538 Transcript of Crude Outtakes, attached as Exhibit 2 to Chevron’s Motion filed Sept. 14, 2010

at 11:10 a.m. (CRS 350-04-02). Mr. Donziger also notes the need “to organize pressure demonstrations at the court.” Transcript of Crude Outtakes, attached as Exhibit 2 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m. (CRS 346-00-02).




- 125 -

"private ‘army’" as "a critical part of our strategy that is allowing the case to keep progressing."541

Another clip also demonstrates the lengths to which the plaintiffs were willing to go to pressure courts. In that clip, Mr. Donziger and one of his colleagues accuse an Ecuadorian judge in a different proceeding of corruption and claim that “the court is bought” simply because the judge properly enforced a procedural rule.542 Mr. Donziger goes on to suggest that they falsely claim the judge called Mr. Donziger a “gringo.” “We’ll just make it up,” Mr. Donziger says.543 As Mr. Donziger says in an earlier clip, he “could have been a propagandist.”544

The plaintiffs clearly understood how wrong it was to pressure the courts in this way. Mr. Donziger admits on video that “this is something you would never do in the United States . . . this is just out of bounds.”545 In another clip, Mr. Donziger discusses how one court yielded to his tactics (“fight, and yell, and scream, and make a scene”), conceding that “that would never happen in the United States. That would never happen in any judicial system that had integrity.”546 But in Ecuador, “this is how the game is played, it’s dirty,” and so “we have to, occasionally use, um, pressure tactics.”547 Plaintiffs apparently believe that this Court is so “institutionally weak” 548 and lacking “integrity,” 549 that it will continue to succumb to these thuggish tactics. They repeatedly decry the Ecuadorian courts, claiming that “‘there are almost no rules here’”550 and that “the courts are so utterly weak.” 551 According to plaintiffs, Ecuador

541 E-mail from Steven Donziger to Michael Bonfiglio, dated June 27, 2007 at 6:19 p.m., attached

as Annex 4 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m.(MB-STIP0069567).

542 Transcript of Crude Outtakes, attached as Annex 2 to Chevron’s Motion filed Oct. 1, 2010 at 2:30 p.m., (CRS 046-01-03).

543 Transcript of Crude Outtakes, attached as Annex 2 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., (CRS-046-02-01).

544 Transcript of Crude Outtakes, attached as Annex 2 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., (CRS 009-17-01).








- 126 -

has “the most ridiculous legal culture,” “encrusted” with “[h]undreds of years of . . . judicial weakness and corruption.” 552

The plaintiffs’ “pressure tactics” clearly worked as planned. From the Court’s about-face on the question of relinquishing the judicial inspections and cancelling the settling experts; to the Court’s agreement to appoint Mr. Cabrera as the global expert (which Mr. Donziger admitted the judge “never would have done had we not really pushed him”553); to the Court’s order of August 2, 2010, accepting plaintiffs’ lawyers’ proposal for a new round of reports following the exposure of Mr. Cabrera as a fraud, the Court has consistently sided with plaintiffs while ignoring my client’s key arguments. Those prejudicial and biased decisions were the product of intense political and external pressure orchestrated by the plaintiffs, and they have irredeemably tainted the entirety of these proceedings. All of this constitutes a gross violation of my client’s right to due process and a fair trial.

3.8 This Case Has Been Prejudicially Influenced by the Government of Ecuador

The denials of due process that have marred this trial also result from intense political pressure brought to bear on this Court to expedite a ruling in favor of the plaintiffs. That political pressure is part of an apparent quid pro quo in which the Government is, in various respects, supporting the plaintiffs’ suit against Chevron in return for the plaintiffs’ agreement not to sue the Government.554 This is because the

(continued…)

551 Transcript of Crude Outtakes, attached as Annex 2 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m. (CRS 053-02-01). Likewise, plaintiffs had no respect for the evidentiary process before Ecuadorian courts, noting that "[i]t's not like a US court in that respect, things are really loose here. . . . Rules of evidence are, like, not even close to what they are in the US. People can just say whatever the 'f' they want". Transcript of Crude Outtakes, attached as Annex 3 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m. (CRS 042-14-05).



554 The quid pro quo arrangement between the plaintiffs and the State apparently began well before the Lago Agrio complaint was filed. In 1997, the plaintiffs’ then-lead attorney, Cristóbal Bonifaz, publicly stated that “the plaintiffs and their attorneys have agreed—in legal documents—to not sue the State should it be found that the State was jointly responsible with Texaco for causing environmental damage,” Texaco—The Time Has Come, Hoy (Apr. 14, 1997), attached as Annex H to Chevron's Second Rebuttal to the Barros Report, filed Jan. 29, 2010 at 3:30 p.m., Record at 166932-33; Petroecuador will not be harmed, El Comercio (Apr. 22, 1997), attached as Annex I to Chevron's Second Rebuttal to the Barros Report, filed Jan. 29, 2010 at 3:30 p.m., Record at 166935 (noting that the plaintiffs had provided “notarized documents” to the Ecuadorian Attorney General waiving any claims against the State). Less than a year after the Lago Agrio complaint was filed, the Government accepted an offer of free legal services from Mr. Bonifaz (and Terry Collingsworth) to resist Chevron’s assertion of its rights under the settlement in related litigation in the U.S. District Court for the Southern District of New York. See Letter


- 127 -

state-owned oil company, Petroecuador, was the majority owner of the Consortium and has been the sole operator of the former concession area since 1992, in which time it has acquired an atrocious environmental record.555 The pressure exerted by various officials in the Ecuadorian Government violates the fundamental principle of judicial independence, as well as my client’s right to due process.556

The plaintiffs’ strategy has always depended heavily on undue influence and pressure exerted by the Government in their favor. Outtakes from Crude confirm that the plaintiffs—clearly understanding the political influence over judges that can be imposed by the Government—viewed the State’s support as crucially important to their case.557 For example, in one clip, Mr. Donziger explains that the plaintiffs’ “biggest problem right now is we have to pressure the judge and the court.” Particularly effective, he says, would be “the President of the country calling him out, you know. The President of the Supreme Court calling him out, for how slow the case is going.” According to Mr. Donziger, such tactics would be necessary to ensure that the plaintiffs did not “lose control of the judge.”558 Likewise, Mr. Donziger wrote in his diary that “[w]e can have the best proof in the world, and if we don’t have a political plan we will surely lose. On the other hand, we can [have] mediocre proof and a good political plan and stand a good chance of winning.”559

In a similar vein, Mr. Donziger rejoices at the election of the current Government, stating that the plaintiffs gained a “huge . . . leg up” because these new “friends” in the

(continued…) from C. Bonifaz to Hon. L. Sand dated Jan. 26, 2006, attached as Annex 32 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m.

555 Remediation Contract dated May 4, 1995 at 2, filed on July 15, 2004 at 9:10 a.m., Record at 7855-7882v, 7856.

556 Article 167 and Article 168(1) of the Constitution, concordant with Articles 8 and 123 of the Organic Judiciary Code.

557 Indeed, Mr. Donziger worries that if the Bilateral Investment Treaty Arbitration panel orders the State to pay any judgment against Chevron, the Government could put “huge pressure” on the court to rule against the plaintiffs. Transcript of Crude Outtakes, attached as Annex 2 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., (CRS 164-00-01).


559 Diary of Steven Donziger, entry dated May 31, 2009, attached as Annex 1 to Chevron’s Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p.m., at 4 (DONZ00023089).


- 128 -

Government “already [knew] about this case before they came into office.” 561 Mr. Donziger reiterates the point, explaining that “all the politics of Ecuador really turned our way”562 because “we already have connections with” the current administration, and “they love us and they want to help us . . . they’re actually asking us to come and asking what they can do.”563 Mr. Donziger states that “with Correa’s victory, like we’ve never been tighter with the government, you know,”564 and repeats on another occasion that “we are in a significantly improved position . . . because of that election result” because President Correa is “a friend of ours.”565 Mr. Donziger evidently planned to exploit the presence of his new “friend[s]” in government to the advantage of the plaintiffs, remarking “what good is it if a friend gets elected, if he doesn’t do anything for you?”566 Indeed, Mr. Donziger describes his efforts as being “hand-in-hand” with the Government,567 even to the point of collaborating with the Government’s lawyers in responding to a suit against Ecuador in the United States.568

The plaintiffs in fact acted upon their strategy of collusion with the State, as other Crude outtakes confirm, engaging in the “political work at the highest level” that Mr. Donziger says is needed in order “to make things happen.”569 The outtakes, for example, include video of a meeting between the plaintiffs’ attorneys; a high-ranking


4:35 p.m. (CRS 163-02-02). In the weeks before President Correa’s inauguration in January 2007, Mr. Donziger claimed that he had “a very quiet meeting in a coffee shop” in April 2006 with the then-presidential candidate on behalf of the plaintiffs, which led Mr. Donziger to conclude that President Correa “loves us.” Transcript of Crude Outtakes, attached as Annex 1 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m. (CRS 162-03-01).


563 Transcript of Crude Outtakes, attached as Annex 2 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m. (CRS 138-01-01). Mr. Donziger also states the plaintiffs will “take advantage” of the opportunity presented by President Correa’s election by “meet[ing] with ministers” in the Government. Transcript of Crude Outtakes, attached as Annex 2 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m. (CRS 156-00-01). Mr. Donziger has also reiterated that President Correa “loves” the plaintiffs and expressed his desire to “get all [the plaintiffs] can out of that situation.” Transcript of Crude Outtakes, attached as Annex 1 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m. (CRS 162-03-01).








- 129 -

official of the Government; and Monica Mason, a delegate from the Attorney General’s Office.570 The official began the meeting by inquiring “how we can help each other,” and the parties proceeded to discuss how the Republic could assist the plaintiffs in nullifying the Release Agreements that Texaco Petroleum Company and the Republic had executed years earlier, 571 and which stand as a dispositive legal obstacle to the plaintiffs’ case, see infra § 5.2. The plaintiffs’ representatives explain to the official that “although we could mobilize people, the—the official nature of the President could do much more in this case . . . an interest by the Executive Branch—and pressure on the Public Prosecutor’s Office . . . could do a lot on this subject.”572 They described how they, “with [Deputy Attorney General] Mart[h]a Escobar, were . . . working on this subject [undermining the Release Agreements], specifically on the subject of nullity.”573 They confirmed that they had been working with the Attorney General’s Office on “some pretty bold theories to get around the statute of limitations,”574 but the official himself recognized during the meeting that this belated strategy to nullify the Settlement and Release Agreements was not legally “sustainable.”575 As soon as he realized that his remark was caught on film he said: “Why are they filming? That seems to me to be a—completely improper.”576 And the film went dark.577

To be specific, the Republic has tangibly supported the plaintiffs’ case in at least four different respects: (i) vocally, through public statements and representations to this Court, designed to influence the judgment; (ii) financially, through payments and related assistance to the plaintiffs and their affiliates; (iii) strategically, through the bogus use of its power to pursue criminal charges; and (iv) directly, by apparently managing this Court and even assisting in the drafting of the judgment.578

First, openly interfering with this case, the President of the Republic has publicly given the plaintiffs “the National Government’s full support,” including “assistance in

570 Transcript of Crude Outtakes, attached as Annex 3 to Chevron’s Second Supplemental Motion

for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m. (CRS 221-02-01). 571 Id. 572 Id. 573 Id. 574 Id. 575 Id. 576 Id. 577 Id. 578 Documents in the record also hint at other forms of official support. For example, Mr.

Donziger at one point suggested that consultants Mr. Beltman and Ms. Maest “define the norms of clean-up,” and then the team could “propose these norms to the Ministry of Energy which governs these norms and whose Minister is a good friend of ours, so that the Ministry issues them as an official decree before the trial ends.” E-mail from Steven Donziger to Doug Beltman, et al., dated Sept. 19, 2007 at 8:07 p.m., attached as Annex 1 to Chevron’s Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p.m. (DONZ00025160).


- 130 -

gathering evidence” against Chevron.579 Members of the Constituent Assembly also have unequivocally supported the plaintiffs.580 Ecuador’s Attorney General has thus confirmed that “the Correa administration’s position on the case is clear: ‘The pollution is result of Chevron's actions and not of Petroecuador.’” 581 In particular, one of President Correa’s top advisors actually submitted a brief in this case during the presidential campaign. See supra § 3.3.1. Echoing the arguments of the plaintiffs’ representatives, the brief criticized the Court for not moving the case along more quickly and, in particular, for not allowing the plaintiffs to cancel most of the remaining judicial inspections that the Court had ordered at the outset of the case. The Court then, ceding to these pressures and contradicting its previous orders, illegally permitted the plaintiffs’ lawyers’ relinquishment request.582

Second, documentary evidence indicates that government entities have directly supported the plaintiffs’ litigation with financial contributions of hundreds of thousands, if not millions, of dollars.

• Testifying about his own notes taken at the time, one of the plaintiffs’ consultants acknowledged that, at one point, Mr. Donziger was in “communication” with a government official on using US$3.5 million in

579 The Government Backs the Assembly of People Affected by Texaco, Press Release from the

Government of Ecuador (Mar. 20, 2007), attached as Annex G to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008 at 2:14 p.m., Record at 141274-87, 141285; see Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008 at 2:14 p.m., Record at 141082-203, 141092; see also President Correa says he is “furious” about the damages Texaco caused in the Amazon Region, Agencia EFE – Servicio Económico (Apr. 28, 2007), (“Accompanied by attorneys for the plaintiffs, President Correa said that he was ‘furious’ about the damage caused, in his opinion, by the American company Texaco during its 20 years of operations in the Amazon forests, and he labeled the representatives of TexPet who signed the Final Release Document ‘traitors’ . . . ‘who would sell their souls, the country [and] their families for a handful of dollars.’”).

580 For example, Assembly member Manuel Mendoza stated that we “provide frontal support to the unceasing struggle of” the plaintiffs. Noticias TV, Cable Noticias Estelar, Feb. 12, 2008 at 9:56 p.m., attached as Annex G of Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008 at 2:14 p.m., Record at 141274-87, 141277. At the same time, they accused TexPet of being responsible for all the problems in the Oriente region: “The economic, social and cultural damage caused to the Siona, Secoya, Cofán, Kichwa and Huaorani indigenous people, including colonists, is extensive. Concerning these facts, the largest disaster caused or registered in our country is that caused by Texaco.” Ecuador TV, The Assembly from Inside, June 6, 2008 at 12:53 p.m. (quoting Assembly Member Nelson López), attached as Annex G to Chevron’s Objection to Expert Cabrera’s Global Report, filed Sept. 14, 2008 at 2:14 p.m., Record at 141274-87, 141276.

581 ORDONEZ, Isabel, Amazon Oil Row: US-Ecuador Ties Influence Chevron Amazon Dispute, Dow Jones (Aug. 7, 2008).

582 See Order of Jan. 22, 2007 at 9:00 a.m., Record at 125656-59, 125656; see also Transcript of Swearing In of Expert Richard Cabrera, filed June 13, 2007 at 9:45 a.m., Record at 130169-69v, 130169.


- 131 -

funds from Petroecuador and the Ministry of the Environment to obtain evidence that “would be used in [the Lago Agrio] court case.”583

• Shortly before Mr. Cabrera began his work, the Ministry of Environment gave the Frente US$160,000 purportedly in exchange for, among other things, information and laboratory samples.585

• In August 2008, the Ministry of Environment awarded a five year, US$30 million contract to the Frente, pursuant to President Correa’s relocation plan for inhabitants of the former concession area.586 That is a substantial

583 Official Transcript of Deposition of Richard A. Kamp, at 283:5-286:8, Oct. 8, 2010, attached as

Annex 11 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m.; Notes by Richard Kamp dated Nov. 29, 2005, presented as Exhibit No. 72 in the Deposition of Richard Kamp, dated Oct. 7-8, 2010, attached as Annex 18 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m.

584 See Annex 1 of Chevron’s Fourth Supplemental Motion for Terminating Sanctions, filed Dec. 22, 2010 at 5:45 p.m. (DONZ00027285);

see also E-mail from Steven Donziger to Joseph Kohn, dated Jan. 24, 2005 at 2:50 p.m., attached as Annex 1 to Chevron’s Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p.m. (DONZ0027538) (noting that Manuel Pallares “is confident he can extract 250,000 from PetroEcuador to carry out the work” for the “Global inspection”); E-mail from Manuel Pallares to Steven Donziger, dated May 29, 2005 at 10:17 a.m., at 2, attached as Annex 1 to Chevron’s Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p.m. (DONZ0026841) (“Esperanza talked with the Ministro de Finanzas and he is willing to help with this. It could be via Petroecuador, ECORAE or some other or various government institutions. I really see this happening”).

E-mail from Steven Donziger to Joseph Kohn, dated Oct. 26, 2006 at 2:40 p.m., attached as Annex 1 to Chevron’s Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p.m. (DONZ0023743) (reporting “good news” that “we have succeeded in setting up a working technical committee with Petroecuador—this will help us on a number of fronts”).

585 Ministry Agreement No. 164, published in Official Gazette 26, Feb. 22, 2007. 586 See SANDOVAL, María A., Environmental Remediation Plan in Motion, El Telegrafo, Aug. 12,

2008, attached as Annex 19 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m.; see also The Remediation Took a First Step, El Comercio (Dec. 24, 2008),


- 132 -

amount of money, and there are no assurances that the Frente has not used it to pursue this case.

Relatedly, an outtake from the movie Crude shows a meeting between the plaintiffs’ representatives and Ms. Anita Alban, then Ecuador’s Minister of the Environment. She is seen explaining that the Government was “helping” the plaintiffs by, among other things, setting up a corporation with them to manage all of the remediation work flowing from a future (and assumed) Lago Agrio judgment and providing “the support that we can.”587

Third, and even more significantly, the Government is attempting to promote the plaintiffs’ cause through bogus criminal charges. As discussed below, the plaintiffs’ demand for remediation is barred by the Settlement Agreement signed with the Government of Ecuador and the respective local Governments (the municipalities in the concession area and the Provincial Council), which released TexPet from any responsibility for environmental conditions in the former concession area. See infra § 5.2. The plaintiffs and the Government of Ecuador thus attempted from the early stages of the lawsuit to nullify such Settlement Agreement, claiming that they were “fraudulent.” In one email to the Attorney General’s Office, an attorney for the plaintiffs wrote: “If at some point we want the Government and the Attorney General to play for our side, we must give them some ability to maneuver.”588 During the same exchange, Deputy Attorney General Martha Escobar stated:

[T]he Attorney General’s Office and all of us working on the State’s defense were searching for a way to nullify or undermine the value of the remediation contract and the final acta and . . . our greatest difficulty [lies] in the time that has passed . . . . The Attorney General remains resolved . . . to criminally try those who executed the contract (that also seems unlikely to me, since the evidence of criminal liability established by the Comptroller’s Office was rejected by the prosecutor).589

(continued…) attached as Annex 20 to Chevron’s Second Supplemental Motion for Terminating Sanctions, filed Dec. 8, 2010 at 4:21 p.m.; President Correa’s Radio Address, Radio Caravana (Apr. 28, 2007).


588 E-mail from A. Wray dated Aug. 5, 2005 at 4:33 p.m., attached to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008 at 2:14 p.m., Record at 141204-07, 141207.

589 E-mail from M. Escobar dated Aug. 10, 2005 10:58 a.m., attached to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008 at 2:14 p.m., Record at 141204-07, 141206-07. Attempting to conceal the Government’s coordination with and assistance to the Lago Agrio plaintiffs, Deputy Attorney General Escobar falsely testified under oath that she, in her official capacity, had not had any contact with the plaintiffs’ representatives. Before being confronted with the e-mails discussed in the


- 133 -

Consistent with this scheme, and at the express urging of the President of the Republic, Prosecutor General Washington Pesántez pursued baseless criminal prosecutions against two former TexPet representatives for alleged yet unspecified “fraud” with respect to the settlement contracts.590 These charges previously were investigated and rejected not just by the Prosecutor General’s office, but by the very official who ultimately instituted the proceedings, Dr. W. Pesántez.591 In May 2004, based upon a complaint filed by the Comptroller General alleging fraud in the remediation approval process, the Prosecutor General, Dr. Mariana Yepez Andrade, opened two criminal investigations—one for fraud and one for environmental crimes—and assigned two separate prosecutors to each charge.592 In August 2006, the new Prosecutor General, Dr. Cecilia Armas, provided an opinion to the Criminal Court recommending dismissal of the fraud complaint given that “the report by the Office of the Comptroller General does not find any evidence of criminal liability.”593 Likewise, in September 2006, the Public Prosecutor of Pichincha, Marianita Vega Carrera, (continued…) text, she even stated that such contact would be “completely” improper and that the Attorney General “must stay to the side.” Official Transcript of Deposition of Martha Escobar dated Nov. 21, 2006 (“Escobar Dep.”) at 14:21-15:5, 128:21-129:17, 144:12-145:8, attached as Exhibit 6 to Chevron’s Motion filed Sept. 14, 2010 at 11:10 a.m. In addition, the Attorney General referenced in the e-mail—who was “resolved” to bring a criminal prosecution—later admitted under oath that he had no knowledge of evidence supporting an allegation of fraud. Official Transcript of Deposition of José Maria Borja dated Sept. 14, 2006 (“Borja Dep.”) 65:12-66:14; 67:19-24; 73:1-10; 84:17-85:4, attached as Exhibit 7 to Chevron’s Motion filed Sept. 14, 2010 at 11:10 a.m.

590 Office of the Prosecutor General of Ecuador, Notice Reopening Investigation, Mar. 25, 2008 at 4:00 p.m.; Office of the Prosecutor General of Ecuador, Criminal Indictment No. 09-2008 at 6, Aug. 26, 2008, attached as Exhibit 18 to Chevron’s Motion filed Sept. 14, 2010 at 11:10 a.m.; see also Prosecutor General formally charges Chevron attorneys, Hoy (Sept. 13, 2008); Prosecutor General opens new case in Texaco litigation, El Universo (Sept. 16, 2008).

591 District Prosecutor of Pichincha, Opinion of Dr. Washington Pesántez Munoz Ratifying Motion To Dismiss, addressed to the Third Judge of Criminal Judge of Napo, Mar. 13, 2007, at 10, attached as Exhibit 15 to Chevron’s Motion filed Sept. 14, 2010 at 11:10 a.m.

592 See Prosecutor General’s order to initiate preliminary investigations of crimes alleged by the Comptroller General, May 10, 2004, attached as Exhibit 8 to Chevron’s Motion filed Sept. 14, 2010 at 11:10 a.m. On June 20, 2006, the Ecuadorian State sought permission to assert an affirmative defense of fraud in related litigation in the U.S. District Court for the Southern District of New York. On October 10, 2006, the State’s attorneys confirmed their withdrawal of the affirmative fraud defense. See Plaintiffs' Memorandum of Law in Support of their Motion to Amend their Reply to Defendants' Counterclaims in order to Assert One Additional Affirmative Defense, Republic of Ecuador and Petroecuador v. ChevronTexaco and Texaco Petroleum Co., No. 04-CV-8378 (S.D.N.Y. Jun. 20, 2006), attached as Annex 30 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m.; Stipulation and Order re: Plaintiffs' Withdrawal of Affirmative Defense in Their Reply to Defendant's Counterclaims, Republic of Ecuador and Petroecuador v. ChevronTexaco and Texaco Petroleum Co., No. 04-CV-8378 (S.D.N.Y. Oct. 10, 2006), attached as Annex 31 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m.

593 Office of the Prosecutor General of Ecuador, Opinion and Motion To Dismiss the Complaint of the Comptroller General by Dr. Cecilia Armas Erazo de Tobar at 6-7, addressed to the President of the Former Supreme Court of Justice, Aug. 9, 2006 at 5:00 p.m., attached as Exhibit 9 to Chevron’s Motion filed Sept. 14, 2010 at 11:10 a.m.


- 134 -

recommended dismissal of the 2003 criminal complaint’s environmental charges for lack of evidence.594 Shortly thereafter, the Public Prosecutor’s decision was affirmed by her superior, then District Prosecutor of Pichincha, Dr. Washington Pesántez. 595 Dr. Pesántez found that “there was not sufficient evidence to continue with the prosecution of the representatives of the Ministry of Energy and Mines, Petroecuador[,], Petroproducción and Ricardo Reis Veiga and Dr. Rodrigo Pérez Pallares, representatives of TexPet. Therefore, I ratify the dismissal requested by the Prosecutor.”596 The environmental charges were ultimately dismissed and archived by a lower criminal court, based on the prosecutors’ opinions.597

The Code of Criminal Procedure requires archiving the case when the Prosecutor General recommends dismissal. 598 But, despite the opinions of the prosecutors, the former Supreme Court of Justice returned the criminal complaint on the fraud charge to the Comptroller General for further opinion.599 Objecting to this course of action, the new Prosecutor General, Dr. Jorge German, again requested (twice) that the fraud charges be dismissed and archived.600 In so doing, Dr. German contradicted President Correa, who, in April 2007, publicly began to call for a lawsuit and charges against the “corrupt persons and traitors” who “stat[ed] that the remediation was

594 Office of the Prosecutor of Ecuador, Opinion and Motion To Dismiss at 9, Sept. 4, 2006,

attached as Exhibit 10 to Chevron’s Motion filed Sept. 14, 2010 at 11:10 a.m. 595 District Prosecutor of Pichincha, Opinion Ratifying Motion To Dismiss at 10, addressed to the

Third Judge of the Criminal Court of Napo, Mar. 13, 2007, attached as Exhibit 15 to Chevron’s Motion filed Sept. 14, 2010 at 11:10 a.m., ALVARO, Alvaro, Ecuador: Prosecutor Recuses Himself in Chevron Case, Dow Jones (Dec. 16, 2008) (emphasis added) (reporting Dr. Pesántez’s finding that there “were no indications of civil, administrative or criminal liability against the officers of the Ecuadorian Government and the representatives of Texaco in relation to environmental damages which may have taken place in the Amazon region”).

596 District Prosecutor of Pichincha, Opinion of Dr. Washington Pesántez Munoz at 10, addressed to the Third Judge of the Criminal Court of Napo, Ratifying Motion To Dismiss, Mar. 13, 2007, attached as Exhibit 15 to Chevron’s Motion filed Sept. 14, 2010 at 11:10 a.m.

597 Order of the Third Criminal Court of Napo Dismissing Environmental Crimes, filed Mar. 16, 2007 at 10:20 a.m., attached as Exhibit 16 to Chevron’s Motion filed Sept. 14, 2010 at 11:10 a.m.

598 Under Art. 39 of the Code of Criminal Procedure, when the prosecutor recommends dismissal, the judge must either archive the case or send the case to a superior prosecutor. In this case, the Prosecutor General (the state's highest level prosecutor) recommended dismissal. As such, the law required the archiving of this case. See Art. 39 of Code of Criminal Procedure; see also Motion of the Office of the Prosecutor General of Ecuador, addressed to the President of the Supreme Court of Justice, Requesting Dismissal of the Case, filed Mar. 1, 2007 at 9:20 a.m., attached as Exhibit 14 to Chevron’s Motion filed Sept. 14, 2010 at 11:10 a.m.

599 Order of the Supreme Court of Justice of Oct. 27, 2006 at 3:10 p.m., attached as Exhibit 11 to Chevron’s Motion filed Sept. 14, 2010 at 11:10 a.m.; see Comptroller General’s Pleading in Opposition to Dismissal, Nov. 1, 2006, attached as Exhibit 12 to Chevron’s Motion filed Sept. 14, 2010 at 11:10 a.m.; see also Order of the Supreme Court of Justice of Jan. 12, 2007, attached as Exhibit 13 to Chevron’s Motion filed Sept. 14, 2010 at 11:10 a.m.

600 Second Request of the Office of the Prosecutor General of Ecuador to Ratify Dismissal, dated June 14, 2007, attached as Exhibit 17 to Chevron’s Motion filed Sept. 14, 2010 at 11:10 a.m.


- 135 -

complete.” 601 In November 2007, the newly formed Constituent Assembly issued “Mandate 1,” which, among other things, removed Dr. German as Ecuador’s Prosecutor General and replaced him with Dr. Pesántez.602

In March 2008, contrary to his earlier findings as District Prosecutor that no fraud or environmental crimes had been committed in TexPet’s procurement and signing of the settlement and release, Dr. Pesántez reopened the investigation on alleged new evidence.603 In July 2008, the attorneys and sponsors of the plaintiffs held a press conference in Quito about the supposedly sealed criminal investigation, and urged Dr. Pesántez to indict TexPet representatives immediately.604 President Correa followed up in his weekly radio address, praising Dr. Pesántez for “open[ing] an investigation to punish those people [involved in the Settlement and Release].”605 Dr. Pesántez then promptly issued criminal charges against, among others, TexPet’s legal representative in Ecuador, Rodrigo Pérez, and Chevron’s attorney overseeing the Lago Agrio litigation from the United States, Ricardo Reis Veiga. 606 After nearly eighteen months of supposed investigation, on April 29, 2010, Acting Prosecutor General Alfredo Alvear Enriquez issued a Prosecutor’s Accusation against Mr. Reis Veiga and Mr. Pérez, among others, which initiates criminal proceedings.607

This history demonstrates that the criminal charges lack support and are the product of political pressure applied jointly by the plaintiffs and the executive branch. Mr. Donziger actually admitted in deposition testimony that he “ha[d] a strategy of [publicly] asking for a criminal investigation of Texaco’s top managers,” in order to push Chevron

601 Correa declares he is “furious” about the damage Texaco caused in the Amazonian Region, Agencia EFE – Servicio Economico (Apr. 28, 2007), attached as Annex 21 to Chevron’s Motion filed Dec. 8, 2010 at 4:21 p.m.; see also Transcript of Crude Outtakes, attached as Annex 19 to Chevron’s motion filed Dec. 20, 2010 at 5:50 p.m. (CRS 277-02-01) (recording President Correa “ask[ing] the Attorney General to get that report going in the Comptroller’s Office to judge whether . . . [w]hat they accepted . . . [d]efrauded the country”).

602 Mandate 1, published in the supplement to Official Gazette 223, Nov. 30, 2007. 603 Office of the Prosecutor General of Ecuador, Notice Reopening Investigation, Mar. 31, 2008,

attached as Exhibit 19 to Chevron’s Motion filed Sept. 14, 2010 at 11:10 a.m. Dr. Pesántez later acknowledged the inconsistency, but did not offer any explanation for it. He then recused himself from the case, but did not justify his failure to do so before initiating the criminal proceedings, which remain pending. ALVARO, Mercedes, Ecuador: Prosecutor Recuses Himself in Chevron Case, Dow Jones (Dec. 16, 2008).

604 See Press Release of the Frente de Defensa de la Amazonía (FDA) dated July 31, 2008, attached as Annex B to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008 at 2:14 p.m., Record at 141208-211, 141210-11.

605 Weekly Presidential TV and Radio Address, State TV Channel (Aug. 9, 2008), at 10:00 a.m.; see also Office of the Prosecutor General of Ecuador, Criminal complaint No. 09-2008, Aug. 26, 2008 at 11:00 a.m., attached as Exhibit 20 to Chevron’s Motion filed Sept. 14, 2010 at 11:10 a.m.

606 See Office of the Prosecutor General of Ecuador, Criminal complaint No. 09-2008, Aug. 26, 2008, attached as Exhibit 20 to Chevron’s Motion filed Sept. 14, 2010 at 11:10 a.m.

607 Office of the Prosecutor General of Ecuador, Prosecutor’s Opinion, Apr. 29, 2010, attached as Exhibit 21 to Chevron’s Motion filed Sept. 14, 2010 at 11:10 a.m.


- 136 -

to settle the civil case.608 Documents produced by the plaintiffs, along with outtakes from Crude, confirm the plaintiffs’ key role: Indeed, it was Mr. Donziger who first “pitched the criminal case” to Ramiro Avila Santamaria, a member of the Catholic University team of lawyers assisting the plaintiffs’ counsel. “Idea to pressure the company, get major press in U.S. via Lehane, and compel the Ec gov to act against the company legally to nullify the remediation contract.”609 This was followed by meetings between the plaintiffs and senior figures in the Government.610 Further, Mr. Donziger admits in a Crude clip that the plaintiffs had been pushing "for a couple of years . . . to get the Attorney General to do something about [the alleged fraud]” and were working closely with his office.611 And video also shows that the plaintiffs worked directly with President Correa in order to advance the bogus criminal charges. In one clip, Mr. Fajardo describes how he spoke with President Correa about the matter, and that “the President thinks that if we put in a little effort, before getting the public involved, the Prosecutor will yield, and will re-open that investigation into the fraud of—of the contract between Texaco and the Ecuadorian Government.”612 At another point, Mr. Donziger calls it “awesome” that President Correa “said the right things. . . basically calling for the heads of government officials that signed off on the remediation . . . he’s totally with us.”613 He wonders aloud whether “perhaps it is time to ask for the head of Pérez Pallares—given what the President said.”614 Of course, that is just what subsequently transpired.

Tellingly, both the plaintiffs and the Government sought to keep their collaborative relationship a secret. In an email from Julio Prieto, one of the plaintiffs’ attorneys, to Mr. Donziger, Mr. Prieto recounted details of his meeting with the Attorney

608 Transcript of the Deposition of Steven Donziger, dated Dec. 2, 2010, at 551:6-19, 552:14-

554:7, attached as Annex 2 to Chevron’s Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p.m.; see also Transcript of the Deposition of Steven Donziger, dated Dec. 2, 2010, at 453:4-456:19, attached as Annex 2 to Chevron’s Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p.m.

609 Diary of Steven Donziger, entry dated Oct. 4, 2006, attached as Annex 1 to Chevron’s Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p.m. (DONZ00036268).

610 See, e.g., E-mail from Julio Prieto to Steven Donziger, dated Jan. 31, 2006, attached as Annex 1 to Chevron’s Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p.m. (DONZ00028129) (meeting between Julio Prieto and the Attorney General); E-mail from Pablo Fajardo to Steven Donziger, dated June 20, 2008, attached as Annex 1 to Chevron’s Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p.m. (DONZ00026465) (plan for meeting with President Correa).






- 137 -

General concerning the attempts to nullify the settlement. He described how the Attorney General “also told me that he does not want our meetings to be made public until the appropriate time.” 615 Showing a similar fear of exposure, another of the plaintiffs’ lawyers, Juan Pablo Saenz, reported in an email to Mr. Donziger about a mix-up in which “what we have now, is an Amicus presented by purportedly independent institutions, that reproduces, almost verbatim, a document that’s available on our website.”616 Mr. Saenz worried about what this error would reveal: “Dude, if the guys at Jones Day get a hold of this, it’s gonna hurt us. It’s pretty much irrefutable evidence of us collaborating with the fiscalia to get Reis Veiga and Perez convicted.”617 As Mr. Saenz explained: “The problem is that in Ecuador, we’ve maintained that we have NOTHING to do with the proceeding in the prosecutor’s office . . . . What’s more, . . . we had to resort to very sophisticated means to disassociate ourselves from the matter (Amicas Curiae submitted by third parties, etc.). Therefore, to publically say that the discovery comes from one of our collaborators associates us somehow with the prosecutor’s opinion. And we all agree that we don’t want that to happen.”618 Very bluntly: “I don’t understand how you can’t see a problem in that.”619

The criminal proceedings interfere directly with Chevron’s ability to utilize key personnel in defending this case. They also are representative of the political pressure that has infected the entire case and deprived it of any legitimacy. The charges forced Mr. Pérez and his wife to flee their native Ecuador, separating them from their children and grandchildren; they also hindered Mr. Reis Veiga’s primary work of litigating Chevron’s defense in Ecuador, where he could no longer travel, thus interfering with and compromising the integrity of Chevron’s right to mount a counseled defense.

Fourth, additional evidence suggests that the Government has moved beyond attempting to taint this case with illegitimate criminal charges and has directly intervened with this Court on the plaintiffs’ behalf. As discussed above, supra § 2.3, audiovisual recordings of meetings involving Judge Núñez and purported representatives of the Government in May and June 2009 indicate, among other things,

615 E-mail from Julio Prieto to Steven Donziger, dated Jan. 31, 2006, attached as Annex 1 to

Chevron’s Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p.m. (DONZ00028129).

616 E-mail from Juan Pablo Saenz to Steven Donziger, dated Feb. 4, 2009 at 12:39 p.m., attached as Annex 1 to Chevron’s Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p.m. (DONZ00028908).

617 E-mail from Juan Pablo Saenz to Steven Donziger, dated Feb. 4, 2009, attached as Annex 1 to Chevron’s Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p.m. (DONZ00028908).

618 E-mail from Juan Pablo Saenz to Steven Donziger, dated Feb. 4, 2009 at 12:39 p.m., attached as Annex 1 to Chevron’s Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p.m. (DONZ00028908).

619 E-mail from Juan Pablo Saenz to Steven Donziger, dated Feb. 4, 2009, attached as Annex 1 to Chevron’s Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p.m. (DONZ00028908).


- 138 -

that the Government was managing Judge Núñez, had instructed him on how to distribute the money in the judgment, and had provided lawyers to help craft the opinion against Chevron. Incredibly, in immediate response to these recordings, Prosecutor General Pesántez asked Judge Núñez to recuse himself from the case—not because of the improper conduct reflected in the recordings, but rather to “ensure that the ruling will not be delayed any longer” and to “avoid any artful device that may be used by the North American oil company to avoid paying the compensation we believe is more than fair because it caused a lot of damage in our country.”620 And President Correa again confirmed “[o]f course I want our indigenous friends to win.”621

As a whole, the evidence leaves no doubt about the close collaboration between the plaintiffs and the State, or about the central role of the Government in pressuring the Court toward a large and speedy judgment in the plaintiffs’ favor. One outtake from Crude is particularly revealing on this score: During a conversation, Mr. Donziger comments on my client’s allegations of a “conspiracy” between the plaintiffs and the Ecuadorian Government, to which Mr. Kohn—a partner at the U.S. law firm funding the plaintiffs’ litigation—responds: “If only they knew.”622 By virtue of this conspiratorial collusion and pressure, Chevron’s due-process rights were violated and the fairness of the trial was irreparably impaired.

CHAPTER IV. SYSTEMATIC CONSTITUTIONAL VIOLATIONS AND SUBSTANTIAL

PROCEDURAL DEFECTS RENDER THESE PROCEEDINGS A LEGAL NULLITY

For many of the reasons discussed throughout this brief, this case suffers from several insurmountable procedural defects and constitutional irregularities that, in accordance with constitutional and procedural regulations, require you, Your Honor, to declare the entirety of these proceedings to be legally null and void. The most critical violation in these proceedings is, of course, is the fraud perpetrated by the plaintiffs throughout this trial, as shown above in Chapter II. In addition, this trial has been marked by the violation of Chevron’s due process rights, including, among others, the refusal to punish the plaintiffs’ malfeasance and fraud committed throughout this proceeding; and the systematic violation of substantial solemnities required in every proceeding, processing a complaint that was ratified with forged signatures of at least 20 of the alleged plaintiffs and was incomplete (failure by the supposed plaintiffs who could not or did not know how to sign to appear before the Court clerk to stamp their fingerprints), which kept the judge from taking jurisdiction over them, as well as the improper joinder of actions and the inclusion of subject matters that are beyond the

620 Press Conference with Washington Pesántez , Prosecutor General of Ecuador, Sept. 4, 2009, attached as Annex 10 to Chevron’s Motion, filed July 13, 2010 at 8:48 a.m.

621 Citizen Link Number 137, Ecuador TV, Sept. 12, 2009 at 11:40 a.m. (commentary of President Rafael Correa); BRONSTEIN, Hugh, Ecuador Says Had No Role in Alleged Bribery Case, Reuters, Sept. 12, 2009.



- 139 -

complaint and outside the jurisdiction and competence of this Court. These fundamental legal violations render all proceedings in this matter flawed by nullity and therefore render any judgment this Court issues against my client null and void.

As the Constitutional Court has determined in several decisions, due process is “the focal point of procedural validity,” and the absence of due process results in the nullity of a judicial proceeding.623 In the words of Professor Couture, due process is the embodiment of the jurisdictional guarantee in itself: “The right to due process consists, ultimately, of not being deprived of life, liberty or property, without the guarantee entailed in the processing of a case conducted in the manner established by law. . . .”624 Due process includes, among other things, the right to present a defense; sufficient time and means to prepare the defense; public proceedings; the ability to present evidence and to challenge the evidence presented by the other party; the chance to verbally question experts and witnesses; the right to be judged by an independent and impartial judge having competence and jurisdiction; the requirement that grounds be stated for judicial decisions; and the opportunity to appeal judicial decisions.625 To have legal effect, the acts of members of the judiciary626 must conform to these constitutional rights of due process.627 Indeed, one of the principal duties of a judge is to ensure procedural validity628 so as to guarantee that all parties’ due process rights are respected.629

Furthermore, Article 346 of the Code of Civil Procedure lists the minimal common formalities required for a proceeding to comply with due process. These formalities include the right to be heard before a judge possessing competence over the subject matter of the lawsuit and the need for all representatives to have the appropriate legal capacity. The Code of Civil Procedure expressly penalizes the absence of these

623 Judgment of the Constitutional Court at 71-72, Case 003-2009-SEP-CC, May 14, 2009,

published in the supplement to Official Gazette 602, June 1, 2009. The Constitutional Court, in decisions made in extraordinary actions for injunction, has held that the violation of constitutional rules related to due process, results in the nullity of the proceeding from the point in time the violation occurred. See Judgment of the Constitutional Court at 11, Case 388-09-EP, Feb. 24, 2010, Sentence 4-10-SEP-CC. Once the violation is established, everything reverts to the moment of said violation. See Judgment of the Supreme Court of Justice at 11, Second Civil Division, Case 32, published in Official Register 82, May 15, 2003 (“The effect of nullity is to revert back to the status of things prior to the cause of the nullity, by reason of which nullity is declared of the judgment entered by Division Four of the Superior Court of Guayaquil in the ordinary proceeding for nullity of judgment filed by the Municipality of Playas against Inmobiliaria ORS S.A.”).

624 COUTURE, Eduardo, Estudios de Derecho Procesal Civil, Third Edition, Ediciones Depalma, Buenos Aires, 1998, Vol. I, p. 51.

625 See Article 76 of the 2008 Constitution; see also Article 24 of the 1998 Constitution; Article 19(16) of the 1978 Constitution.

626 See Article 129(1) of the Organic Code of the Judiciary (“COFJ”). 627 See Article 424 of the 2008 Constitution. 628 See Article 129(9) of the Organic Code of the Judiciary and Article 349 of the Code of Civil

Procedure. 629 See Article 130(1) of the Organic Code of the Judiciary.


- 140 -

essential formalities with nullity of the proceeding.630 Likewise, in accordance with Article 352 of the Code of Civil Procedure, nullity shall be declared “for failure to comply with any other substantive solemnity” provided that such failure “could influence the decision of the case” and “[n]ullity must have been alleged by one of the parties, at the proper level of jurisdiction.” 631 Thus any proceeding or judgment based on an uncorrected nullity is also null and void and lacks any legal effect whatsoever.

In short, disregard of the guarantees of due process or of the substantial solemnities set forth in the Code of Civil Procedure unavoidably gives rise to the nullity, whether total or partial, of the proceeding. This trial has been characterized by the continual disregard and violation of these guarantees and substantial solemnities, which renders this entire proceeding a nullity.

4.1 Nullities Due to Violations of the Constitutional Right to Due Process

As discussed in more detail above, supra Chapter III, it is evident that this trial was not conducted in accordance with the due process rights established in the Ecuadorian Constitutions that have been in effect and also reflected in international treaties. Thus, any decision against my client would also be a nullity and, pursuant to the authorities listed below, and in accordance with the provisions of Article 352 of the Code of Civil Procedure, this Court has no choice but to declare these proceedings (and therefore the fruits of these proceedings) null and void and revert the trial to the moment before they occurred. Any judgment that does not correct these nullities would itself be null and void. Among other nullities, this case includes the following:

• Nullity for forgery of plaintiffs signatures in the complaint – As clearly demonstrated in the motion filed on December 20, 2010, at 8:50 a.m., twenty plaintiffs signatures were forged when ratifying the complaint and appointing Dr. Alberto Wray as their joint representative. This creates a number of procedural nullities by violation of substantial solemnities such as lack of legitimacy of the appointment of the joint representative, but also absolute nullity of the whole proceeding due to the fraud regarding the complaint.

• Nullity due to unlawful appointment of global expert – The numerous procedural irregularities surrounding Mr. Cabrera’s appointment as global expert are detailed supra § 3.4.1, and they render his appointment and all the subsequent procedural steps that derive from it, a nullity. To purge this nullity, this Court must declare the nullity of these proceedings and revert the case to the moment before the appointment, and it obviously may not rely upon his report when rendering judgment.

630 See Articles 344 and 346 of the Code of Civil Procedure. 631 See Article 352 of the Code of Civil Procedure.


- 141 -

• Nullity due to denial of right to open essential error summary proceedings – As discussed, supra §§ 3.3.3, 3.4.6, Chevron’s right to present a full and fair defense was violated when its right to initiate essential-error investigations of several expert reports was denied, causing a nullity. Among other consequences of this violation, are that Chevron could not depose Mr. Cabrera and review evidence directly from him that would have shown that the report had been ghostwritten by plaintiffs. To purge this nullity, this Court must declare these resolutions null and void and revert to the stage of the case before this, agreeing to open these essential-error proceedings, as requested.

• Nullity due to predetermined liability – As has been irrefutably proven through evidence in the proceedings to date, supra § 2.3, the bias shown by Judge Núñez deprived Chevron of its right under Article 24 (17) of the 1998 Constitution and Article 76 of the 2008 Constitution to an impartial and fair judge. This invalidates all resolutions issued by this judge for said period, and all others which are derived from said proceedings. This party has filed a motion to have this judge’s biased rulings declared null and void632 but it was denied without any legal basis whatsoever.633 Unless Judge Núñez’s rulings and the resolutions derived from them are now declared null and void, and the trial reverts to the stage prior to when they were issued, it will irretrievably render any judgment handed down by this Court null and void.

• Nullity due to ex parte meetings with Judge Yánez– As detailed supra § 2.2.1, the plaintiffs’ attorneys met ex parte with Judge Yánez when he presided over this case to discuss his rulings, including the appointment of Mr. Cabrera as global expert. These meetings plainly show the Judge’s bias. Therefore, unless all of Judge Yánez’s rulings are declared null and void, they will taint any judgment handed down by this Court.

• In general, my client has pointed out order by order, from among those issued in this case, those that were issued without stating the grounds, which, pursuant to Art. 76(7)(l) of the Constitution, consistent with Art. 130(4) of the Organic Code of the Judiciary, suffer from nullity, as do each and every one of the acts taken on the basis of them.

632 See Chevron’s Motion (Requesting the Annulment of All Rulings Entered by Judge Juan

Evangelista Núñez) filed Sept. 11, 2009 at 5:50 p.m., in the Record at pages 158430-438. 633 Order of Oct. 21, 2009, filed at 4:05 p.m., number 13, Record at 159061-63v, 159062.


- 142 -

4.2 Nullity Due to This Court’s Lack of Competence over Non-Environmental Matters

The substantive formalities set forth in Article 346 (2) of the Code of Civil Procedure only permit a Court to hear and rule on matters within its competence.634 Article 76(3) of the current Constitution reiterates that “[i]t shall only be possible to try a person before a judge or authority with jurisdiction and in compliance with the procedures applicable to each legal proceeding.” The complaint not only violated the requirements that it must be clear (which includes lack of precision) and complete, as required by section 3 of Art. 67 of the Code of Civil Procedure, so that it can be classified, and in accordance with Art. 69 of that Code, so that the judge can take jurisdiction over the case, but also, as we will discuss below, the complaint was filed with obvious fraud, as it was ratified with the forged signatures of at least 20 of the plaintiffs, and was also ratified with failure to meet the specific formality provided for in Art. 1010 of the Code of Civil Procedure (six of the alleged plaintiffs who do not know how to or could not write were required to appear before the Court clerk to stamp their fingerprints).

In addition to the foregoing defects, the plaintiffs based their complaint both on the second paragraph of Art. 42 of the Environmental Management Act (the rule governing the jurisdiction of the Presidents of the Provincial Courts to hear environmental lawsuits), and on Art. 43 of that law (the rule governing establishment of the proper procedure–a summary verbal proceeding—for the civil actions for damages), thereby not only committing another act of procedural fraud, in order to avoid suing the party directly obligated to guarantee the diffuse rights related the environment (i.e., the State), and instead suing someone else (i.e., Chevron, a company that has no relationship to the facts covered by the complaint), but also, by filing the lawsuit in this manner, the cause of action provided for in Art. 42 of the EMA, based on the exercise of diffuse rights to the enjoyment and protection of the environment was substituted for the personal action for damages contemplated in Art. 43 of that Act. Finally, as was pointed out in the answer to the complaint, the President of the Provincial Court of Sucumbíos lacks subject-matter jurisdiction over the complaint.635

634 The foregoing is also supported by Article 129(9)(2), of the COFJ, which establishes:

“Article 129.- In addition to the duties of every judicial servant, female and male judges, as may be applicable, have the following general powers and duties:

(. . .)

9. (. . .) If the lack of jurisdiction is because of the subject matter, the judge will declare nullity and will order the case to be referred to the court or judge of competent jurisdiction, for the proceedings to be initiated. . . .”

635 "TWO.- ... Our procedural system, as set forth in Art. 74 (67) of the Code of Civil Procedure, requires among things that the complaint contain the 'factual and legal grounds, stated with clarity and precision'; 'the item, amount or act being demanded.' These indispensable procedural prerequisites are what allow the judge to define the dispute, because only then is he in a position to determine the nature of the legal issue in the case. Moreover, the context of the complaint filed by G., which is incomplete and


- 143 -

There is also another nullity, i.e., the fact that even though the action was filed in the manner described in the paragraphs above, i.e., as a civil action for damages, it does not include any claim for personal injury, which not only results in a lack of standing, i.e., the indispensable requirement is not met that the action be filed by “those directly affected by the wrongful act or omission” (which excludes third parties), but there is also another link in the procedural fraud, which also results in a lack of standing on the defendant's side, because Chevron was sued for acts committed by TexPet as the operator–the agent—of the former Petroecuador–Texaco Consortium, i.e., without all elements of the substantive legal relationship being present, i.e., the concession agreement for the production of petroleum (Petroecuador and the Ecuadorian State), which constitutes another reason why the complaint must be dismissed and why the judge cannot hear the merits of the case, since any judgment that he might issue would be unenforceable636.

For the reasons indicated in the above paragraphs, any judgment that you might hand down, Mr. Subrogate President, that does not declare the nullity of the suit from its inception and/or dismiss the complaint in full would be null and void.

This case presents an improper joinder of actions, which was asserted as a defense when the complaint was answered.637 The plaintiffs have based their complaint

(continued…) irresolute, does not establish the acts at issue that would determine whether the case is an action to recover possession or one to retain possession [in this case it would say "an action for environmental harm or a civil action for damages"], (…) Given this situation, there is not doubt but that the action fails, because failure means that it is not in accordance with the law, and a complaint may not be in accordance with the law in terms of procedure or in terms of substances: either because the right claimed by the plaintiff never existed as a matter of law, or because it has already been extinguished, or because the claim was not filed properly or heard using the proper procedure. In sum, this is a generic concept, equivalent to inadmissible, unlawful, etc., as indicated by Professor Víctor Manuel Peñaherrera". - 31-V-1984 (G.J. S. XIV, No. 6, pp. 1327-8)

636 “it has been said that lack of defendant's standing is grounds for dismissal of a case, because if all the parties to the substantive legal relationship are not present, any judgment on the merits would be unenforceable, because it would be binding on one party without being binding on the others, and would also violate the right to a defense; a judgment on the merits handed down in these circumstances is unenforceable due to the indivisible nature of the substantive legal relationship, and therefore, even though it is not invoked as a defense by the parties when they answered the complaint or counterclaimed, the Judge must declare it on his own motion, for the enforceability of a judgment depends on the having the proper parties, and it is up to the Judge to ensure this. This opinion is shared by the Uruguayan author Enrique Véscovi, who in his book Teoría General del Proceso states: 'standing is a procedural prerequisite (to judgment), and according to the majority view of legal scholars and the courts, the judge himself may raise this issue even if the parties have not pointed it out' (Editorial Temis, Bogotá, 1984, p. 197).” - 20-III-2000 (Res. 139-2000, R.O. 65, 26-IV-2000)

637 See Answer as Read into the Record § IV.3.1, filed Oct. 21, 2003 at 9:10 a.m., Record at 243-67, (page 265) (“[I]nappropriate accumulation of actions, they have presented in the summary verbal


- 144 -

both on the provisions of the Civil Code and on the provisions of the EMA, and this situation generates what legal scholarship refers to as the problem of concurrent rules for determining liability.638 Although it is clear from Chapter VI of the complaint that plaintiffs are only seeking relief for environmental claims,639 to the extent the complaint contains any non-environmental and Civil Code-based claims, this Court is without power to resolve them because any claim under the EMA could not be joined with claims arising under the Civil Code in a summary oral proceeding. As far as it seeks non-environmental damages, this case could only properly be heard in an ordinary proceeding, and this Court therefore lacks both subject-matter jurisdiction and personal jurisdiction to proceed under a summary oral proceeding. Under Article 344 of the Code of Civil Procedure, in correlation with Article 346 (2) of the same code, failure to comply with the substantial formality of competence of the judge or court leads to the nullity of the entire proceeding.

This same Court recently held that environmental claims under the EMA cannot be joined with other civil claims. The plaintiffs, in the case known as Red Amazónica, claimed environmental damages in a summary oral proceeding under the EMA, and also requested civil compensation as owners of certain properties allegedly affected by hydrocarbon operations. The panel hearing the case, of which you, Your Honor, were a member, held that this constituted an inappropriate joinder of environmental and civil actions.640 Article 24 of the Code of Civil Procedure provides: “Every person has the right to not be sued except before the competent judge determined by the law.” Environmental and civil actions, according to the court, defend completely different legal interests, so they must be heard in different proceedings.641 Only environmental, not civil, claims can be heard in a summary oral proceeding, such as were initiated against Oleoducto de Crudos Pesados and in this case against Chevron. The court, in the Red Amazónica case, held that any matter related to civil damages was not admissible in the environmental lawsuit, and that, consequentially, it was without authority to consider any claim related to compensation for civil damages.642

(continued…) proceeding actions that require distinct substantiation and whose knowledge does not correspond to you, Your Honor.”).

638 This issue is generally analyzed by scholars as the “problem of concurrence of liabilities.” See ALONSO TRAVIESA, María Teresa, “The Problem of Concurrent Liability, A Chilean Law Perspective”, LexisNexis, Santiago de Chile, 2d ed., 2007 (containing an extensive study on the subject).

639 See Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a.m., Record at 73-80v, (79-80). 640 Red Amazónica vs. Oleoducto de Crudos Pesados S.A., Judgment of the Superior Court of

Justice of Nueva Loja, dated July 29, 2009, Case 218-2008. 641 Id., at numeral 5. 642 Id. at numeral 10; see also Article 24 of the Code of Civil Procedure provides: “Every person

has the right to not be sued except before the competent judge determined by the law.”


- 145 -

The appropriate remedy here is to declare the entire proceeding null and void. If in this case the court attempts to sever the allegations based on the Civil Code from those based on the EMA, it would be even more clear that applying it is applying the EMA in flagrant violation of non-retroactivity of the law. See infra § 5.3. In other words, to the extent that the lawsuit is based both on the EMA and the Civil Code, this Court is incompetent and therefore the case is null and void, and a judgment that does not declare as such shall also be so; if the lawsuit were only to be based on the EMA, which did not go into effect until 1999,643 the principle of non-retroactivity of the law would also be violated, making the judgment null and void due to error in the application of the law. Consequently, any judgment which is not a declaration of nullity of the proceedings would lead to the nullity of the judgment.

4.3 Nullity of the Complaint Due to Failure to Appear Before the Court Clerk by Those Who Do Not Know How to Read and Write, in Order to Stamp Their Fingerprints as Required by Law

As set forth in my client’s motion of December 22, 2010 at 3:49 p.m., the failure to appear before the Court Clerk by those plaintiffs who did not or could not sign their own names, in order to stamp their fingerprints on the document ratifying the complaint and appointing Dr. Alberto Wray as their joint representative gives rise to the nullity of the entire proceeding because it renders invalid both the complaint and Dr. Wray’s designation as joint representative.

Article 1010 of the Code of Civil Procedure requires, “when a person does not know how or cannot sign his name the first time he appears before the court . . . he will go to the competent clerk to stamp his fingerprint at the bottom of the motion.”

Pursuant to Article 1010, those plaintiffs that could not or did not know how to sign their names were required to appear before the Clerk of this Court to stamp their fingerprints when ratifying the complaint. According to Article 69 of the Code of Civil Procedure, this Court should have refrained from processing the complaint because it did not meet this substantive legal requirements established by Articles 67 and 68 of the same Code in order to be deemed clear and complete. As this is a substantial requirement of the complaint, it cannot be admitted and, pursuant Article 352 of the Code of Civil Procedure, nullifies not only the complaint but the whole case.

The same failure to properly stamp the fingerprints in plaintiffs’ appointment of Dr. Wray as joint representative also violates Article 1010 and Article 40(2) of the Code of Civil Procedure. Therefore, Dr. Wray’s appearance in this case and all his acts are void for lack of legal capacity and must be declared null and void under Article 346(3), in connection with Article 344, of the same Code.

643 Law 99-37 (Official Gazette 245, 30-VII-99).


- 146 -

4.4 Nullity Due to the Lack of Legal Capacity of the Plaintiffs’ Joint Representative

Article 43 of the Code of Civil Procedure, in connection with Art. 346 (3) of that same Code, mandates that all counsel appearing before a court possess and justify their legal capacity to act on behalf of a party from the moment of their appearance.644 The Supreme Court (now the National Court) has categorically stated that nullity must be declared where “one appears as a legal representative without authority [or power of attorney],” where “the authority [or power of attorney] provided by the legal representative is insufficient,” or where “someone intervenes on behalf of another without authority [or power of attorney] but offering a ratification [or authorization] (authorized agent) and whose intervention is not ratified [or authorized].”645 To prevent a nullity, the judge must ensure that all attorneys appearing before him possess appropriate authorization from the parties they claim to represent.

Attorney Pablo Fajardo, who claims to be the joint representative of the plaintiffs, twice disregarded this substantive solemnity, and the Court has not required him to comply with it by proving that all of his clients had consented to (i) being represented by Mr. Pablo Fajardo as joint legal representative and (ii) relinquishing the judicial inspections, though there is no such evidence in the record.

4.4.1 Nullity for Lack of Legal Capacity of the Joint Counsel of Record

Pursuant to Art. 52 of the Code of Civil Procedure, the plaintiffs initially appointed Dr. Alberto Wray, and then Mr. Pablo Fajardo who replaced him, as their alleged joint counsel of record, to represent them in this case. Moreover, under Art. 53 of that same Code, it was the obligation of the alleged joint counsel of record to provide evidence of their right to represent their clients from their first appearance in this lawsuit; additionally, they had to have a sufficient power of attorney to act, such as with respect to relinquishing the judicial inspections, and also had to abide by the terms established by their clients in their powers of attorney, pursuant to Art. 44 of the Code of Civil Procedure. Pursuant to Art. 52 of that Code, the appointments as joint counsel of record had to come from each and every one of the plaintiffs, without any exceptions whatsoever.

These appointments suffer from defects of nullity that render them invalid, and in turn vitiate and invalidate each and every one of the acts of the alleged joint counsel of record in this lawsuit. In the first case, as shown in the filing of December 20, 2010, at 8:50 a.m., Dr. Wray was appointed as joint counsel of record with the forged signatures of at least 20 of the alleged plaintiffs, as well as failure to comply with specific formality

644 Article 346 provides: “The following are essential procedural formalities common to all

proceedings and levels of appeals:… 3. Legitimacy of the right of representation.” See also Article 43 of the Code of Civil Procedure.

645 Judgment of the Supreme Court of Justice, First Civil and Commercial Division, Oct. 25, 2004, Case 245-2004, published in Official Gazette 41, June 17, 2005, at 23.


- 147 -

contemplated in Art. 1010 of the Code of Civil Procedure, i.e., without the appearance before the Court clerk of six of the alleged plaintiffs, who could not or did not know how to sign, so that they could stamp their fingerprint on the document ratifying the complaint and appointing Dr. Alberto Wray as joint counsel of record. Moreover, Mr. Fajardo, who replaced Dr. Wray, was not appointed as joint counsel of record by one of the plaintiffs, i.e., by Mr. Esteban Lusitante Yaiguaje.646 In accordance with Art. 346(3) of the Code of Civil Procedure, these defects and this omission, respectively, mean that each of the alleged joint counsels of record lacked, and in the case of Mr. Fajardo, currently lacks, the right to represent their clients, thereby making all of their acts in this case null and void.

4.4.2 Nullity Due to Lack of Sufficient Authority to Relinquish the Judicial Inspections For Lack of Authorization from Each of the Plaintiffs

This case also suffers from nullity due to a violation of the essential formality provided under Article 346(3) of the Code of Civil Procedure; namely the lack of legal capacity of the representative due to lacking the sufficient authority to relinquish, on behalf of the plaintiffs, 64 of the judicial inspections requested by them and ordered by the judge within the evidentiary period. The fact that Mr. Fajardo relinquished 64 of the judicial inspections on behalf of the 48 plaintiffs, even though there is no such authority within the plaintiffs' motion appointing him as their joint counsel of record, and even though there is no rule authorizing it, and the fact that after such relinquishment, the Court, before accepting it, ordered that it be ratified by each and every one of the plaintiffs, and that such relinquishment has not been ratified by eight of the 48 plaintiffs, shows that attorney Pablo Fajardo lacks legal capacity to make such relinquishment. As discussed supra § 3.3.1, the plaintiffs’ joint counsel of record succeeded in obtaining a waiver of sixty-four of the judicial inspections the plaintiffs had requested.647 Then, in response to Chevron’s objections,648 the Court ordered each of the individual plaintiffs to personally ratify the purported relinquishment.649 However, eight plaintiffs never provided the requisite ratification.650

646 See the submission by Alberto Wray, filed on February 7, 2006 at 10:10 a.m. with attachments,

which is on the record at 92,873 to 92,884v (appointing Pablo Fajardo as Joint Counsel of Record for the plaintiffs and attaching the plaintiffs' signatures granting approval, with the exception of Esteban Lucitante Yaiguaje).

647 See Plaintiffs’ Motion, filed July 21, 2006 at 9:10 a.m., Record at 116431-435, (page 116434); Order of Jan. 22, 2007, filed at 9:00 a.m., Record at 125656-659, 125657.

648 See, e.g., Chevron’s Motion, filed Feb. 7, 2006 at 5:30 p.m., Record at 93007-11, 93010; Chevron’s Motion, filed Feb. 22, 2006 at 9:38 a.m., Record at 95411-21, 95421; Chevron’s Motion, filed Aug. 16, 2006 at 5:40 p.m., Record at 117.234-244, 117243; Chevron’s Motion, filed Aug. 25, 2006 at 5:00 p.m., Record at 118518-26, 118526; Chevron’s Motion, filed Sept. 13, 2006 at 4:00 p.m., Record at 120012-016, 120014-16.

649 Order of Oct. 2, 2006, filed at 3:30 p.m., Record at 120552-54v, 120552v. 650 Chevron’s Motion, filed Feb. 27, 2007 at 5:42 p.m., Record at 126252-53, 126253; see

Plaintiff’s Motion and exhibits, filed Dec. 15, 2006 at 3:00 p.m., Record at 124894-908; see also Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a.m., Record at 73-80v, 73-73v).


- 148 -

The common legal representative’s inability to obtain the ratification of these eight plaintiffs deprives the relinquishment of legal effect and makes the evidence and the record incomplete. As explained above, supra § 3.3.1, once evidence has been requested, it must be produced for the benefit of all parties and the Court. Under Article 44 of the Code of Civil Procedure, for the relinquishment of the inspections proposed by Fajardo as the alleged joint counsel of record for the plaintiffs to be valid, there must not only have been a rule authorizing him to file it, but also, even assuming that it were proper (which is expressly denied, since it was not), to file such relinquishment either he had to have the prior express authorization of each and every one of his clients, or otherwise he had to have a power of attorney authorizing him to do so, or instead, once he filed it, he had to have the ratification of each and every one of his 48 alleged clients.651

Here, the alleged joint counsel of record for the plaintiffs, Pablo Fajardo, did not have any rule authorizing him to relinquish the judicial inspections, nor was he authorized by the plaintiffs to do so, nor did he obtain their ratification once the relinquishment was made. His clients never granted him special authorization, and, to this day, there are eight plaintiffs who have not ratified the relinquishment of judicial inspections. Therefore, unless Cecilia Irene Cusangua, Fermín Piaguaje Ayaguaje, Luisa Delia Tangilla Narváez, Lourdes Beatriz Chimbo Tanquila, Segundo Ángel Amanta Milán, Rosa Teresa Chimbo Tanguila, Esteban Lucitante Yaiguaje, and José Gabriel Revelo Llore ratify the relinquishment of the 64 judicial inspections filed by Pablo Fajardo, said relinquishment suffers from nullity, and the acceptance of it by this Court will cause irreparable harm to my client, because it will affect the final outcome of the case, and therefore, the relinquishment suffers from nullity, as would any judgment against Chevron that fails to declare the entire case null and void for this reason, among other things.

This nullity is also based on the inadmissibility in allowing the record to remain incomplete due to acceptance of the plaintiffs' illegal waiving of the judicial inspections. The absence of evidence whose production had been requested by the plaintiffs and already ordered by the Court prevents you, Your Honor, from issuing a duly-founded and reasoned decision in accordance with Article 76(7) (l) of the 2008 Constitution because it would lack the discussion of necessary elements of the case on facts that had to be covered by your ruling since they are at issue in the case. By unduly consenting to the relinquishment of nearly two-thirds of the inspections ordered by this Court, this Court improperly relieved the plaintiffs of their burden of proof and left the record incomplete. The acceptance of this relinquishment constituted a form of malfeasance of office, because it mean that you prematurely accepted, without any reasons for doing so, the insubstantial argument of the plaintiffs that the already inspected sites were representative of the general condition of the area. The decision on this argument could only be the subject of a judgment and included a decision on the very merits of the case, thereby not only causing irreparable harm to my client, but also

651 See Article 44 of the Code of Civil Procedure.


- 149 -

irremediably preventing you from issuing a valid judgment, and thus in all cases you must declare the nullity of the trial. In addition, this relinquishment was not only with regard to the performance or non-performance of the 64 judicial inspections covered by the non-ratified relinquishment, but it also violates Chevron's right to a defense, since Chevron was not able to examine the plaintiffs' evidence and discuss it, or to present its own evidence to rebut it, since, as indicated above, the evidence regarding the sites covered by the illegal, arbitrary relinquishment of the judicial inspections had already been the subject of the malfeasance of office by a judge, as discussed above.

The only way to remedy this procedural defect is to declare the nullity of the entire proceeding, from the order that granted the plaintiffs’ illegal, non-ratified relinquishment of the judicial inspections and instead issue a new order ordering that each and every inspection be completed, as the Court had ordered during the evidentiary period. Any decision that fails to declare this nullity, among other things, or rules on the merits of the case will not only be based on an incomplete record, i.e., the waived judicial inspections, which were supposed to be discussed, but would also be replacing it with assumptions based on inferences and extrapolations, and would also be a void judgment with no value whatsoever.

4.5 All Acts of Judge Ordóñez in the Case Taken After August 26, 2010 Are Null and Void

Pursuant to Art. 164 of the Organic Code of the Judiciary, which provides that judges' jurisdiction is suspended when a motion for recusal is filed against them (and this suspension takes effect without the need for the motion to be served), it is determined that all orders issued by Judge Leonardo Ordóñez Piña as of August 26, 2010 at 2:45 p.m., when Chevron filed a motion to recuse him with the Office of the Clerk of the President of the Provincial Court of Sucumbíos, were null and void, because he had no jurisdiction to issue them. Any interpretation and application contrary to the rule cited above violates an express rule and constitutes fraud on the law, since it would mean allowing conduct that the legislator has expressly prohibited.

All rulings issued by Judge Ordóñez in this case after that date were taken without jurisdiction and are therefore null and void. As one of the plaintiffs’ representative admitted, these orders were issued despite the fact that Judge Ordóñez “was fully aware that he could not make more rulings.”652 See supra § 3.2. This is also true even if Judge Ordóñez had not been aware of the recusal suit because the law, as we shall see, makes no distinction in this regard.

After a litigant files a motion to recuse a judge, the Code of Civil Procedure makes clear that “[the judges] who are to take the place of the recused judges shall

652 Interview of Luis Yanza, Radio Amazonas, Sept. 25, 2010. By arguing that “[t]he next judge

that takes up the case has to declare autos para sentencia,” Mr. Yanza admitted that Judge Ordóñez’s declaration was invalid. Id.


- 150 -

continue to hear [the case] until the recusal is decided upon.”653 Article 164 of the Organic Code of the Judiciary clarifies the point, providing that the judge’s competence is suspended in the case of a recusal “from the moment that it is requested up to the time that the ruling denying the recusal is enforced.” The Code also expressly prohibits the recused judge from taking further action in the case until the matter is resolved: “Justices, judges and other court employees who were recused shall not participate in the principal case until the recusal is ruled upon in a separate proceeding.”654 Therefore, from the moment Chevron filed its motion to recuse Judge Ordóñez on August 26, 2010, at 2:45 p.m., the judge lacked competence to act on this case. All actions taken by the judge after the filing of the recusal, as per Article 864 of the Code of Civil Procedure, “shall be null and void”.

In violation of these express provisions of the Code of Civil Procedure, Judge Ordóñez proceeded to issue three rulings without jurisdiction to do so, the first dated August 31, 2010, at 4:00 p.m., the second dated September 17, 2010, at 8:05 a.m., which declared autos para sentencia, and the third dated September 23, 2010 at 9:10 a.m.

The fact that these rulings are null and void is consistent with Article 346 of the Code of Civil Procedure, which makes clear that the “[j]urisdiction of the court hearing the case” is an “essential procedural formality,” and Article 344 of the same Code, that states that a proceeding shall be null and void when an “essential procedural formalit[y] . . . has been omitted.” Although Judge Ordóñez’s entry of autos para sentencia was later revoked, as we have seen, this is not the legal penalty under Ecuadorian Law. Therefore, until this Court recognizes the nullity of the rulings by Judge Ordóñez after August 26, 2010, at 2:45 p.m., this case will continue suffering from nullity consisting of court orders which affect my client’s rights. Any ruling which does not declare the nullity of those court orders will also suffer from nullity.

CHAPTER V. THE PLAINTIFFS HAVE NO VIABLE CLAIM

Multiple and independent legal reasons preclude any valid assessment of damages from being issued against my client in this case. First, Chevron is an independent corporation and plaintiffs have provided no basis for holding Chevron liable for the alleged actions of Texaco and TexPet. On the contrary, both Texaco and TePet have their own legal existence and assets and have the legal and financial capacity to defend themselves and/or answer for any outcome in this case, and there is no logical or legal reason for the plaintiffs to have chosen to sue Chevron and not Texaco and TexPet. Second, the lawsuit is barred by res judicata since it brings the same diffuse claims that were already vindicated and settled by the State and the relevant localities in the concession area, on behalf of the entire population of the Republic of Ecuador,

653 Art. 865 of the Code of Civil Procedure. 654 Art. 864 of the Code of Civil Procedure.


- 151 -

including the plaintiffs and those who allegedly represent them. Third, the complaint is premised upon the EMA, which cannot be applied retroactively to conduct that preceded its enactment in 1999.

5.1 Chevron Is Not Liable for the Alleged Actions of Its Subsidiaries

There is no basis in law or fact for this Court to hold Chevron liable for the acts of a third company, TexPet, an indirect subsidiary with which it had no relationship during the time of the alleged activity about which plaintiffs complain. As discussed supra Chapter I, Chevron was never part of the Consortium, nor did it have any connection whatsoever with TexPet’s activities as the operator of the Consortium, which ended eleven years before Texaco became a subsidiary of Chevron.655 Chevron is therefore not the “successor” of Texaco or TexPet, as falsely alleged in the complaint. Even after Chevron acquired Texaco’s stock, the two remained distinct corporate entities, and there is no evidence in the record that would allow this Court to pierce Texaco’s corporate veil or otherwise hold its parent liable for the prior activities of either it or its subsidiary, TexPet. Therefore, even if this Court were to erroneously conclude that it had jurisdiction over Chevron, the fundamental point remains that Chevron, Texaco, and TexPet are all distinct corporate entities, and Chevron is therefore not liable for the actions of TexPet.656

5.2 The Plaintiffs’ Complaint Is Barred by the Res Judicata Effect of the Government Settlements

Even if Chevron could be liable for the long-past actions of TexPet, the plaintiffs still have no cause of action because their claims were asserted by the proper party and then conclusively settled over a decade ago. A conclusive end to litigation, and the corresponding repose of finality, is a basic principle of law—and that is precisely what the Government of the Republic of Ecuador, the municipalities in the former concession area and the Provincial Council granted to TexPet, its predecessors, successors, affiliates, subsidiaries, etc. back in the mid-1990s, after it honored its environmental obligations under the petroleum concession agreement for the area of the former Petroecuador-Texaco concession. Before the EMA, private individuals could not seek damages for a violation causing a direct impact on diffuse rights related to the environment and/or health, as shown infra § 5.3.2. The duty to protect those rights fell exclusively to the State and relevant local governments acting on behalf of their citizens. Here, the forty-eight named plaintiffs invoke diffuse environmental rights that they share with the unnamed thousands whom they purport to represent.657 But, as noted in the answer, the Ecuadorian State and the relevant local governments previously exercised

655 Answer as Read into the Record § I.1.5, filed Oct. 21, 2003 at 9:10 a.m., Record at 243-67, 244; see also Superintendent of Companies Response to RFP, filed Apr. 30, 2004 at 4:15 p.m., Record at 7279.

656 See Answer as Read into the Record §§ 1.1-5, I.7, filed Oct. 21, 2003 at 9:10 a.m., Record at 243-67, 243-43v, 244-44v.

657 Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a.m., Record at 73-80v, 76-77.


- 152 -

the right to bring all indivisible environmental claims based on TexPet’s activities in the former Consortium area—in so doing, they released TexPet and its principals and affiliates from all responsibility for the facts alleged in those complaints.658 In return, the government institutions and those they represented received, among other things, TexPet’s performance of substantial remediation corresponding to its share in the former Consortium. This left Petroecuador, as the majority owner of the Consortium, solely responsible for any remaining remediation, and terminated any liability for TexPet or its affiliates, whether joint or several. The plaintiffs cannot legally recover yet again on the same claims, and their complaint is therefore barred.

5.2.1 The Municipal and Provincial Settlements

In 1994, four municipalities within the former concession area—the municipalities of Joya de los Sachas, Orellana, Shushufindi, and Lago Agrio—brought separate suits against TexPet and Texaco seeking to address alleged “possible ecological damages” arising from the Consortium’s operations.659 These suits were intended to protect “the community at large”660 and the “the health of all citizens, animals, species, flora, fauna, rivers, water sources and soil.”661 Given their character as “local governments . . . in each of their respective jurisdictions,”662 these municipalities sought to fulfill their duties

658 See Answer as Read into the Record § I.9, filed Oct. 21, 2003 at 9:10 a.m., Record at 243-67,

245; Contract for Implementing of Environmental Remedial Work and Release from Obligations, Liability and Claims (“Remediation Contract”), filed July 15, 2004 at 9:10 a.m., Record at 7855-82v, 7862.

659 See Contract of Settlement and Release from Obligations, Responsibilities and Claims, executed between the Municipality of Joya de los Sachas and Texaco Petroleum Company dated May 2, 1996 (“La Joya de los Sachas Municipal Settlement”), filed May 4, 2004 at 10:08 a.m., Record at 7384, 7425v, 7385; Contract of Settlement and Release from Obligations, Responsibilities and Claims, executed between the Municipality of Orellana and Texaco Petroleum Company dated May 2, 1996 (“Orellana Municipal Settlement”), filed May 4, 2004 at 10:09 a.m., Record at 7426-68, 7427; Contract of Settlement and Release from Obligations, Responsibilities and Claims, executed between the Municipality of Lago Agrio and Texaco Petroleum Company dated May 2, 1996 (“Lago Agrio Municipal Settlement”), filed May 4, 2004 at 10:04 a.m., Record at 7300-40v, 7301; Contract of Settlement and Release from Obligations, Responsibilities and Claims, executed between the Municipality of Shushufindi and Texaco Petroleum Company dated May 2, 1996 (“Shushufindi Municipal Settlement”), filed May 4, 2004 at 10:06 a.m., Record at 7341-83v, 7342.

660 Shushufindi Municipal Complaint at 2, attached as Annex 5 to Chevron's Evidentiary Request No. 1.3.1 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p.m., (seeking to vindicate “the rights of the community at large” with respect to environmental pollution); see also Judgment Approving the Settlement, First Court of Civil Matters of Sucumbíos, Nueva Loja, Sept. 19, 1996, attached as Annex 9 to Chevron's Evidentiary Request No. 1.4.2 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p.m., (characterizing the relief sought by the municipality as the “clean-up of the contaminated areas” and “the restoration of health of the affected population, animals and species” when approving the settlement of the action).

661 See La Joya de los Sachas Municipal Complaint at 6, attached as Annex 3 to Chevron's Evidentiary Request No. 1.3.2 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p.m.

662 See, e.g., Shushufindi Municipal Complaint, attached as Annex 6 to Chevron's Evidentiary Request No. 1.3.2 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p.m.


- 153 -

to protect the health and safety of their inhabitants663 and to assist the Ecuadorian Government in meeting its environmental obligations to all Ecuadorians.664

The purpose of the complaints can be ascertained from the Organic Municipal Regime Law cited therein, from which the municipalities derive their governmental authority. Article 1 of that Law states that municipalities have as their primary purpose the “local common weal and, within it and principally, taking care of the requirements of the city, the metropolitan area and the rural parishes.”665 Specifically mentioned in the law is their power, and duty, to “[c]ar[e] for the . . . health of the canton,”666 and “ensur[e] faithful compliance with the legal rules on [the] environment[] . . . and especially those rules related to noise, unpleasant odors, smoke, toxic gases, atmospheric dust, emissions and other factors that may affect the health and well-being of the population.”667 Each municipality also has “the capacity to perform the necessary legal acts to accomplish its purposes.”668 Provinces, too, have the authority to “cooperate with the State and the municipalities” in achieving these objectives.669

663 See Orellana Municipal Complaint at 5, attached as Annex 1 to Chevron's Evidentiary Request

No. 1.1.1 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p.m., (citing Articles 159, 160 and 164 of the Municipal System Law); La Joya de los Sachas Municipal Complaint at 6, attached as Annex 3 to Chevron's Evidentiary Request No. 1.2.1 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p.m.; Lago Agrio Municipal Complaint at 2, attached as Annex 8 to Chevron's Evidentiary Request No. 1.4.1 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p.m.; Shushufindi Amended Municipal Complaint at 1, attached as Annex 6 to Chevron's Evidentiary Request No. 1.3.2 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p.m.

664 See Article 19 of the Organic Municipal Regime Law (discussed in La Joya de los Sachas Municipal Complaint at 6, attached as Annex 3 to Chevron's Evidentiary Request No. 1.2.1 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p.m.; Shushufindi Amended Municipal Complaint at 1, attached as Annex 6 to Chevron's Evidentiary Request No. 1.3.2 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p.m.; Orellana Municipal Complaint at 5, attached as Annex 1 to Chevron's Evidentiary Request No. 1.1.1 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p.m.; Lago Agrio Municipal Complaint at 2, attached as Annex 8 to Chevron's Evidentiary Request No. 1.4.1 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p.m., (mentioning the law in general)).

665 Article 1 of the Organic Municipal Regime Law. 666 Article 164(a) of the Organic Municipal Regime Law. 667 See Article 164(j) of the Organic Municipal Regime Law (discussed in La Joya de los Sachas

Municipal Complaint at 6, attached as Annex 3 to Chevron's Evidentiary Request No. 1.4.1 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p.m.; Shushufindi Amended Municipal Complaint at 1, attached as Annex 6 to Chevron's Evidentiary Request No. 1.3.2 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p.m.; Orellana Municipal Complaint at 5, attached as Annex 1 to Chevron's Evidentiary Request No. 1.1.1 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p.m.; Lago Agrio Municipal Complaint at 2, attached as Annex 8 to Chevron's Evidentiary Request No. 1.4.1 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p.m., (mentioning the law in general)).

668 See Article 2 of the Organic Municipal Regime Law. 669 Article 1 of the Provincial Regime Law provides: “The Provincial Council is a public law

institution enjoying autonomy and representing the province. It has legal capacity and is able to perform


- 154 -

Each municipal suit was settled in 1996 on terms designed to “meet the interests of The Community and of its citizens as to any claims they may have against TEXPET.”670 In return for funding of “social interest works selected in accordance with community interest proposals,” the municipalities “exempt[ed], release[d], exonerate[d] and relieve[d] forever” TexPet and its affiliates “from any responsibility, claim, request, demand or complaint, be it past, present or future, for any and all reasons related to” the Consortium’s operations, “especially concerning damages possibly caused to the environment in said cantonal jurisdiction of the Municipality.”671 Each of the municipal settlement agreements was incorporated into a judgment in each of the different trials672 and stated that, “pursuant to Article 2306 [currently Article 2362] of the Civil Code, this settlement shall have for the parties the effect of res judicata before the highest court.”673 The Province of Sucumbíos executed a similar agreement releasing TexPet (continued…) the necessary acts to accomplish its purposes in the manner and according to the conditions specified in the Constitution and the law. It has legal capacity and its mission is principally to foster the social, cultural and material development of the province, giving special attention to rural areas, and to cooperate with the State and the municipalities in the respective district for a harmonious accomplishment of national expectations.”

670 See, e.g., Affidavit of Raúl Avilés Puente (Lago Agrio – Nueva Loja), May 2, 1996, filed May 25, 2004 at 2:20 p.m., Record at 7708-08v. In addition to the representative of the Municipality of Lago Agrio, an official from each of the other local governments executed an identical affidavit in support of the settlements. See Affidavit of Adolfo Barcenas Mejía (La Joya de los Sachas), May 2, 1996, filed May 25, 2004 at 2:22 p.m., Record at 7711-11v; Affidavit of Daniel David Pauker Gutiérrez (Orellana – Coca), May 2, 1996, filed May 25, 2004 at 2:21 p.m., Record at 7710-10v; Affidavit of Eliceo Azuero (Sucumbíos Province), May 2, 1996, filed May 25, 2004 at 2:19 p.m., Record at 7709, 7709v; Affidavit of Jorge E. Cajas Garzón (Shushufindi), May 2, 1996, filed May 25, 2004, Record at 7712-12v.

671 See, e.g., La Joya de los Sachas Municipal Settlement & Release dated May 2, 1996, filed May 4, 2004 at 10:08 a.m., Record at 7384-7425v, 7386-87. Each municipality settlement contained identical terms. See also Lago Agrio Municipal Settlement & Release, May 2, 1996, filed May 4, 2004 at 10:04 a.m., Record at 7300-40v, 7302-03; Orellana Municipal Settlement & Release, May 2, 1996, filed May 4, 2004 at 10:09 a.m., Record at 7426-68, 7428-29; Shushufindi Municipal Settlement & Release, May 2, 1996, filed May 4, 2004 at 10:06 a.m., Record at 7341-83v, 7343-44.

672 See Judgment Approving the Settlement, Second Court of Civil Matters of Sucumbíos, Shushufindi, May 8, 1996, at 4:55 p.m., attached as Annex 7 to Chevron's Evidentiary Request No. 1.3.3 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p.m.; Judgment Approving the Settlement, Court of Civil Matters of Napo, Joya de los Sachas, June 12, 1996, at 3:20 p.m., attached as Annex 4 to Chevron's Evidentiary Request No. 1.2.2 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p.m.; Judgment Approving the Settlement, Court of Civil Matters of Orellana, June 25, 1996, at 9:35 a.m., attached as Annex 2 to Chevron's Evidentiary Request No. 1.1.2 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p.m.; Judgment Approving the Settlement, First Court of Civil Matters of Sucumbíos, Nueva Loja at 5, Sept. 19, 1996, at 11:00 a.m., attached as Annex 9 to Chevron's Evidentiary Request No. 1.4.2 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p.m.

673 Judgment Approving the Settlement at 5, First Court of Civil Matters of Sucumbíos, Nueva Loja, Sept. 19, 1996, at 11:00 a.m., attached as Annex 9 to Chevron's Evidentiary Request No. 1.4.2 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p.m.; see also Article 2362 of Civil Code (“Settlement shall constitute res judicata determined by a court of last resort, but a declaration of nullity or rescission may be sought, in accordance with the preceding articles.”).


- 155 -

and Texaco from any liability concerning environmental remediation.674 That agreement also had the effect of res judicata675 and was approved by a popular assembly in which all citizens of the province (including many of the purported plaintiffs in this case) were invited to express their views.676

The validity and preclusive force of one of these settlements was subsequently challenged and affirmed in litigation. Shortly after the settlement with the Municipality of Lago Agrio was signed, the (new) mayor of that Municipality sought to have the agreement “rescinded.” The First Court in Civil Matters for the Province of Sucumbíos denied that request pursuant to former Article 2386 (formerly Article 2362) of the Civil Code because “the defendant ha[d] indicated its desire to perform under th[e] agreement” 677 and because the agreement was “legally signed by the litigants” with “no issue in dispute in the case remain[ing] unresolved.”678 The mayor’s request for further review by the Supreme Court was denied.679 This constitutes further evidence of the validity and res judicata effect of the settlements.

Each of the forty-eight named plaintiffs in Lago Agrio, and all of the “affected communities” they purport to represent, reside within these four municipalities and the Province of Sucumbíos.680

5.2.2 The Settlement with the Government of Ecuador and Petroecuador

The settlements with the municipalities and the province supplemented a broader settlement between TexPet, the Government of Ecuador, and Petroecuador in 1995.681

674 See, e.g., Sucumbíos Provincial Settlement & Release, dated May 2, 1996, filed May 4, 2004 at 10:12 a.m., Record at 7469-7510, 7471v, 7507-07v. In addition, a broad release of liability was also given to TexPet by a Consortium of Municipalities in the Province of Napo. See Final Release from Obligations, Liability and Claims from Consortium of Napo Municipalities, dated Apr. 27, 1996, filed Oct. 19, 2004 at 4:15 p.m., Record at 10341.

675 Remediation Contract dated May 4, 1995, filed July 15, 2004 at 9:10 a.m., Record at 7855-82v, 7863-64.

676 See Sucumbíos Provincial Settlement & Release, dated May 2, 1996, filed May 4, 2004 at 10:12 a.m., Record at 7469-510, 7507-08v; Final Release from Obligations, Liability and Claims dated May 2, 1996, filed May 25, 2004 at 2:24 p.m., Record at 7713-13v, 7713.

677 See Judgment of the First Court of Civil Matters of Sucumbíos, Nueva Loja, dated Oct. 10, 1996, at 9:35 a.m., attached as Annex 13 to Chevron's Evidentiary Request No. 1.4.6 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p.m. Article 2362 (formerly Article 2386) of the Civil Code provides: “The settlement shall have the effect of res judicata without any further appeal, but a motion for nullity or rescission may be filed in accordance with the foregoing articles.”

678 Judgment of the First Court of Civil Matters of Sucumbíos, Nueva Loja, dated Oct. 23, 1996, at 8:20 a.m., attached as Annex 14 to Chevron's Evidentiary Request No. 1.4.7 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p.m.

679 See Judgment of the Supreme Court of Justice, First Civil and Commercial Division, May 15, 1997, at 3:00 p.m., attached as Annex 19 to Chevron's Evidentiary Request No. 1.4.12 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p.m.

680 See Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a.m., Record at 73-80v, 73-73v, 76-76v.


- 156 -

Like the local governments, the Government of Ecuador entered into this settlement in its representative capacity to vindicate the diffuse rights of all persons living in the former concession area.

In a 1994 Memorandum of Understanding, the Government of Ecuador agreed that TexPet would “not be responsible for the environmental impacts . . . and shall be released from any liability concerning such impact” arising from the Consortium’s operations.682 The resulting settlement agreement expressly covers “causes of action under Article 19(2) of the [1978] Political Constitution of the Republic of Ecuador,”683 which, as discussed below, infra § 5.3.2, guaranteed all Ecuadorians the “right to live in an environment free of contamination” and placed the “duty [on] the State to assure this right and take responsibility for the protection of nature.”684 Consistent with this duty, the settlement specifically noted that the scope of work for which TexPet was responsible “t[ook] into consideration the inhabitants of the Oriente region.”685

In the settlement with the State, TexPet agreed to perform extensive “Environmental Remedial and Mitigation Work,” as well as to establish various programs and projects “to improve the overall quality of life.”686 The scope of the remediation work comprised the following broad categories: (i) closure of pits at the well locations; (ii) refurbishing equipment within production stations; (iii) abandoned installations; (iv) remediation of soil contaminated with hydrocarbons; (v) re-planting; (vi) building containment dikes; (vii) socio-economic compensation; and (viii) negotiations with the municipalities of Lago Agrio (Nueva Loja), Shushufindi, Joya de los Sachas and Francisco de Orellana (Coca).687 The categories of work performed by TexPet coincide with the claims contained in plaintiffs’ complaint.688

In exchange for TexPet’s promise to perform remedial work at the specified sites, the State and Petroecuador released TexPet and its affiliates from liability at any other (continued…)

681 Scope of Work § VII.c, filed as Annex A to Remediation Contract dated May 4, 1995, filed July 15, 2004 at 9:10 a.m., Record at 7868-82v, 7873-74.

682 Memorandum of Understanding § IV.a dated Dec. 14, 1994, filed May 24, 2004 at 2:18 p.m., Record at 7705-07v, 7705v-06.

683 Remediation Contract dated May 4, 1995, filed July 15, 2004 at 9:10 a.m., Record at 7855-82v, 7862.

684 Article 19 of the Constitution of Ecuador. 685 See Memorandum of Understanding dated Dec. 14, 1994, filed May 24, 2004 at 2:18 p.m.,

Record at 7705-07v, 7706. 686 See Remediation Contract dated May 4, 1995, filed July 15, 2004 at 9:10 a.m., Record at

7855-82v, 7868-79. 687 Scope of Work, filed as Annex A to Remediation Contract dated May 4, 1995, filed July 15,

2004 at 9:10 a.m., Record at 7855-82v, 7868-74. 688 See Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a.m., Record at 73-80v, 79-80.


- 157 -

sites in the former concession area.689 In 1998, the Government of Ecuador certified TexPet’s adequate performance of its remedial obligations and finally “release[d], absolve[d] and discharge[d] TexPet” and its parent companies from “any liability and claims.”690 (Even one of plaintiffs’ own consultants acknowledged internally that he “did not find any clear instances where Texpet did not meet the conditions required in the cleanup.”691) The release left Petroecuador and the Government solely responsible for environmental conditions in the former concession area. This corresponded with its exclusive control over the area after the Consortium ended in 1992.

5.2.3 The Government of Ecuador and the Local Governments Acted on Behalf of Their Citizens

In settling any potential claims for environmental remediation arising out of the Consortium’s operations, the local governments and the State were acting on behalf of their respective citizenries, including the plaintiffs in this action. According to a well settled principle of Ecuadorian legislation that arises from Art. 12 of the Civil Code, laws that regulate specific matters prevail with regard to those matters over the general legislation. At the time when the settlement agreements were signed, the State was exclusively responsible for regulation of the environment and was tasked with redressing any “violation of the respective regulations and technical provisions” of the Law on Prevention and Control of Environmental Contamination.692

The various settlement agreements between TexPet and the municipal governments contained specific provisions expressly intended to benefit the populations of the former concession area.693 Thus, TexPet provided equipment (including an airplane) and money for medical clinics, education centers, and other social services.694

689 See Final Release, dated Sept. 30, 1998, filed May 4, 2004 at 10:02 a.m., Record at 7294-99v,

7298v; Remediation Contract dated May 4, 1995, filed July 15, 2004 at 9:10 a.m., Record at 7855-82v, 7857.

690 Final Release dated Sept. 30, 1998, filed May 4, 2004 at 10:02 a.m., Record at 7294-99v, 7298v.

691 E-mail from Douglas Beltman to Pablo Fajardo and Steven Donziger, dated August 1, 2008 at 4:27 p.m., filed as Annex 10 to Chevron's Motion filed October 29, 2010 at 5:20 p.m. (STRATUS-NATIVE063668).

692 Article 6 of the Hydrocarbons Law gives the Ministry for Industry responsibility for environmental issues relating to the oil industry. This role was reaffirmed in Article 5 of Executive Order 2982 of August 24, 1995, which provided that “[t]he Office of Undersecretary of the Environment (SMA) of the Ministry of Energy and Mines, through the National Environmental Office” will “monitor, evaluate and approve Environmental Studies throughout the Ecuadorian Territory” and will “verify compliance with these Regulations and, in the event of noncompliance, it will require the persons responsible to restore the affected areas and to provide the pertinent compensation to the affected population.”

693 See, e.g., Airplane Sales Contract Between TexPet and Indigenous Groups dated Dec. 9, 1996, filed June 28, 2004 at 4:35 p.m., Record at 7759-62v, 7759v-61; Lago Agrio Municipal Settlement & Release dated May 2, 1996, filed May 4, 2004 at 10:04 a.m., Record at 7300-40v.

694 See, e.g., Acta of Receipt of Equipment from TexPet, Mar. 30, 1998, Record at 7725-29, 7727-28; Release of TexPet upon Receipt of Payment dated June 24, 1998, filed May 25, 2004 at 2:30


- 158 -

These services were to be administered through state entities (the Ministries of Education, Health, and Energy) with direct participation by representatives of the indigenous and colonist populations in the former Consortium areas.695

Related documents, too, demonstrate that the local governments (municipalities and Provincial Council) were acting with the interests of their citizens in mind. For example, an official congressional report on the settlement agreement signed by the Government of Ecuador explained that its purpose was to “indemnify or alleviate the negative environmental affects caused . . . to the Ecuadorian population living in [the] Amazonian region.”696 In addition, various Ecuadorian officials have repeated, under oath, that the negotiations leading to these settlements were “open for all those who wanted to attend,” and members of many environmental organizations, including the Frente, did attend.697 These government officials saw themselves as the “facilitator[s]” of an open dialogue between the communities and Texaco,698 and followed orders from the “National Congress to take into account the problems that the Amazonian groups were having.”699 As a result of this dialogue, the environmental groups were “behind everything that was being done,”700 leading to a final instrument that fully considered and accounted for the interests of individuals and communities in the concession areas.701

The State’s role as a representative of its citizens was particularly clear with respect to the natural resources in the former concession area. Pursuant to the

(continued…) p.m., Record at 7734-38, 7734v; Remediation Agreement between Government of Ecuador and TexPet dated Nov. 13, 1997, filed May 25, 2004 at 2:27 p.m., Record at 7720-24v, 7721-21v.

695 These representatives included FOISE (Federación de Organizaciones Indígenas de Sucumbíos), FCUNAE (Federación de Comunas Unión de Nativos de la Amazonía Ecuatoriana), OPIP (Organización de Pueblos Indígenas de Pastaza), and ONAHE (Organización de la Nacionalidad Huaorani del Ecuador).

696 Report of the Special Permanent Environmental Commission of the National Congress (Nov. 9, 1994), attached as Annex I to Chevron’s Objections to Expert Calmbacher’s Report on Sacha-94, filed May 26, 2005 at 10:00 a.m., Record at 68452-651v, 68639, 68641 (explaining also that settlements were intended “to compensate, actually and rapidly, the inhabitants of the affected areas”).

697 Deposition of Giovanni Rosania Schiavone, dated Oct. 19, 2006 (“Rosania Dep.”) at 73:1-14; 94:1-94:12; 95:9-15; 103:1-10, attached as Annex 115 to Chevron's Motion, filed May 21, 2010 at 4:35 p.m. (“Cabrera Omnibus”); Deposition of Galo Abril Ojeda, dated Oct. 10, 2006 (“Abril Dep.”) at 70:6-22, attached as Annex 114 to Cabrera Omnibus.

698 Rosania Dep. at 78:4-79:3, attached as Annex 115 to Cabrera Omnibus. 699 Abril Dep. at 76:2-77:7, attached as Annex 114 to Cabrera Omnibus. 700 Abril Dep. at 94:13-95:3, attached as Annex 114 to Cabrera Omnibus. 701 Rosania Dep. at 86:6-87:5, 88:21-89:21, 112:5-113:10, attached as Annex 115 to Cabrera

Omnibus.


- 159 -

provisions of Article 605 of the Civil Code,702 the lands used for oil production in the former concession area, for purposes such as the construction of wells, stations, and encampments, were declared to be of public utility and appropriated for this purpose, thereby becoming property of the Ecuadorian State through Petroecuador.703 Likewise, under Article 604 of the Civil Code, the public roads, which were constructed in the former concession area in order to carry out oil production activities, were deemed national assets whose use belongs to all of the inhabitants of the nation. 704 The resource of water has been declared by the current Constitution to be “inalienably and imprescriptibly owned by the State”705 and is also considered a national asset for public use in accordance with Article 2 of the Water Act [Ley de Aguas].706 Indeed, during the negotiation of the settlement agreement, the Government of Ecuador confirmed these points to the court in New York by representing that it was the sole “legal owner of the rivers, streams and natural resources and all public lands where the oil producing operations involved in this litigation are located,” and thus the sole “legal protector of the quality of the air, water, atmosphere and environment within its frontiers.”707 Because the settlements addressed environmental impact on public resources, they plainly were executed by the State on behalf of the People.

702 Article 604 of the Civil Code provides: "All land that is located within the boundaries of

Ecuador and has no other owner is State-owned property.” 703 See JI Acta for Sacha-18, filed Feb. 16, 2005 at 9:30 a.m., Record at 51455-86, 51460. 704 Article 604 of the Civil Code provides: “National assets are those that belong to the Nation as

a whole. If their use also belongs to all the inhabitants of the Nation, such as the streets, plazas, bridges and roadways, the neighboring sea and beaches, they are called public use national assets or public assets . . . .” Article 6 of the Organic Law on Land Transportation, Transit and Road Security provides: “The State is the owner of the public roadways, it shall administer and regulate the use thereof.”

705 Article 318 of the 2008 Constitution of Ecuador. See also the last paragraph of Article 247 of the Constitution of 1998, which provides: “Waters are national assets for public use; their ownership shall be inalienable and not subject to time barring; their use and enjoyment shall belong to the State or to any persons who obtain these rights, in accordance with the law.” Article 12 of the current Constitution relates access to water with human rights and describes it as “a strategic national asset for public use, inalienable, not subject to time barring, not subject to liens or encumbrances, and essential for life,” consistent with Art. 408 of that Constitution, which refers in general to “nonrenewable natural resources.” Constitution, Article 318 provides: “Water is a strategic national patrimony for public use, inalienably and imprescriptibly owned by the State, and constitutes a vital element for nature and for the existence of human beings. All forms of privatization of water are prohibited.”

706 Article 2 of the Water Act provides: “The waters of rivers, lakes, lagoons [and] springs that originate and end within the same property, natural waterfalls and other sources, and subterranean waters, whether or not they emerge, are national assets for the public use, are outside of commerce, and the ownership thereof is inalienable and imprescriptible; they are not susceptible to possession, accession or any other manner of appropriation. There are no rights of ownership thereof that exist or are recognized, and preexisting rights are only limited to the use thereof to the extent that they are efficient and in accordance with this Law.”

707 See Letter from Amb. E. Terán to Hon. J. Rakoff (June 10, 1996), attached as Annex 4 to Chevron’s Motion to Dismiss, filed Oct. 8, 2007 at 8:10 a.m., Record at 132975-77, 132975.


- 160 -

5.2.4 The Settlement Agreements Signed with the Government of Ecuador and the Local Governments Are Res Judicata

By operation of Article 2362 of the Civil Code,708 the settlement agreements have the effect of res judicata.709 Thus, later actions that present (i) the same parties; (ii) the same grounds [causa petendi], and (iii) the same objective, will be barred by the prior settlements.710 The former Supreme Court of Justice of Ecuador (now the National Court) has been very clear on this point: “Pursuant to Art. 297 of the Code of Civil Procedure no new action may be instituted that shares subjective identity, constituted by the same parties participating, and objective identity, meaning that the same thing, sum or act is being claimed, based on the same cause, reason or right.”711 These principles have constitutional magnitude, as Article 24(16) of the 1998 Constitution provides that “no person can be tried more than once for the same cause,” which has its parallel in letter i) of Art. 76(7) of the current Constitution: "No one may be tried more than once for the same cause and subject matter."

Whether the parties are identical turns on the real parties in interest, not the nominal persons involved.712 The environment belongs to the nation as a whole,713 such that all citizens share an indivisible right to a clean environment and public health. The Government of Ecuador had (and still has) the specific and constitutional duty to represent the interests of the community in environmental matters. 714 The local governments, too, were (and still are) obliged to “strive for [the] collective material well-being” of their citizens, 715 “look after the sanitation and health” of the local

708 Article 2362 of the Civil Code provides: “Settlement shall constitute res judicata determined by a court of last resort, but a declaration of nullity or rescission may be sought, in accordance with the preceding articles.”

709 Case Law, Mar. 26, 1990, Prontuario de Resoluciones of the Supreme Court of Justice No. 3, p. 116: “Under the legal scholarship and the case law, a settlement is a civil contract that replaces a judgment because it ends a lawsuit, with the effect of res judicata for the opposing parties. Settlement and arbitration, although different within the procedural area, have analogous objectives with respect to settling the claims of the litigants, without incurring the expense and delay that occurs with a lawsuit.”

710 See VODANOVIC, Antonio, Treatise on Civil Law, Vol. I, Editorial Jurídica de Chile. Santiago, 1996, p. 83.

711 Supreme Court Reporter, Year: CVII. Series XVIII, No. 2, p. 503. 712 DEVIS, Hernando, Compendium of Procedural Rights, General Theory of Procedure, 10th

edition, 1985. Editorial ABC. Bogotá. Vol. I, pp. 325, 504 and 505. 713 Article 604 of the Civil Code provides: “National assets are those that belong to the Nation as

a whole. If their use also belongs to all the inhabitants of the Nation, such as the streets, plazas, bridges and roadways, the neighboring sea and beaches, they are called public use national assets or public assets . . . .”

714 Article 19(2), of the 1993 Constitution of the Republic of Ecuador, Law No. 25, published in Official Gazette 183, May 5, 1993, reads: “the State guarantees [to each citizen] 2. The right to live in an environment free of contamination. It is the duty of the State to ensure that this right is not violated and take charge of the preservation of the environment . . . .”

715 Article 12 of the Organic Municipal Regime Law.


- 161 -

communities,716 and “contribute to the achievement of the State’s goals”717—“whose main purpose is the local common weal.”718 Thus, the “People” were the real parties in interest in these prior settlements, which have erga omnes effect. Here, too, invoking a 1999 law, the forty-eight named plaintiffs admittedly seek to vindicate only “collective rights” 719 in a clean environment that are “shared by the community.” 720 Like the Government of Ecuador and the local governments, the plaintiffs here seek to represent the “People,” which means that the parties are legally identical.

The causa petendi721—or the factual background and legal basis for the claims—is likewise identical between the settlements and this action. A comparison of the settlements and the Lago Agrio complaint shows that they both have the same factual basis and legal grounds: the alleged impacts of the Consortium’s operations on the citizenry’s right to live in a clean environment. The plaintiffs here argue that “environmental damages” were caused by the “methods and procedures introduced, established and applied by TEXACO” during the Consortium. 722 The settlement agreements also aimed “[t]o establish the mechanism whereby Texpet will be released from any claim . . . for environmental impact as a consequence of the operations of the former PETROECUADOR – TEXACO Consortium.”723 Plaintiffs’ legal claim purports to be based on the “collective right” to live in a “healthy, ecologically balanced environment that is free of contamination.”724 The settlement agreements expressly purported to

716 Article 164 of the Organic Municipal Regime Law. 717 Article 19 of the Organic Municipal Regime Law; see also Provincial Regime Law, art. 1 (the

Province’s “mission is to . . . work with the State and the municipalities of the respective area toward the harmonious furtherance of the national interest”).

718 Article 1 of the Provincial Regime Law. 719 Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a.m., Record at 73-80v, 78v-79; see also

Article 12 of the Provincial Regime Law. 720 EMA, Glossary of Definitions (definition of “Collective Environmental Rights”) and Article 41. 721 DEVIS ECHANDÍA, Hernando. General Notions of Civil Procedure. 1966. Editorial

Selecciones Graficas. Madrid, Spain. pp. 218-219 and DEVIS ECHANDÍA, Hernando. Compendium of Procedural Rights, General Theory of Procedure. 10th edition, 1985. Editorial ABC . Bogotá. Vol. I, p. 502.

722 Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a.m., Record at 73-80v, 74. 723 Memorandum of Understanding ¶ I(d) dated Dec. 14, 1994, filed May 24, 2004 at 2:18 p.m.,

Record at 7705-07v, 7705. 724 Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a.m., Record at 73-80v, 78v. In like manner,

the complaints filed by the relevant municipalities against TexPet had, as their factual basis, the alleged “ecological catastrophe which degraded the environment and its forest biodiversity, contaminated its water sources, in streams and rivers which the population use . . . .” Orellana Municipal Complaint at 2, attached as Annex 1 to Chevron's Evidentiary Request No. 1.1.1 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p.m.; see also La Joya de los Sachas Complaint at 2, attached as Annex 3 to Chevron's Evidentiary Request No. 1.2.1 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p.m.; Lago Agrio Complaint at 1, attached as Annex 8 to Chevron's Evidentiary Request No. 1.4.1 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p.m.; Shushufindi Complaint at 1, attached as Annex 5 to Chevron's Evidentiary Request No. 1.3.1 for the Lago Agrio 2 Essential Error Petition, filed July 30, 2010 at 5:52 p.m.


- 162 -

release collective claims based on the citizenry’s right to a healthy and clean environment, “including but not limited to any causes of action under Article 19-2 [] of the Political Constitution of the Republic of Ecuador.”725

Finally, the Government of Ecuador and the local governments (municipalities in the area of the former Concession and the Provincial Council) sought the same objective in settling their claims with TexPet that the plaintiffs seek here; in the words of the former Ecuadorian Supreme Court (now the National Court), they each had the same “final result . . . in mind when filing their claims” or settling them.726 In the complaint in the present case, the plaintiffs demand the remediation of environmental impact, specifically claiming (i) “[t]he elimination or removal of contaminating elements that still threaten the environment and the health of residents,” 727 and (ii) “[t]he remediation of the environmental damage caused.”728 This was the same objective that the Government of Ecuador and the local governments pursued and resolved in the settlements, which secured specific environmental remediation for alleged environmental harm arising out of the Consortium operations and funds for socioeconomic programs. In turn, the Government of Ecuador and the local governments released TexPet and its parent companies, subsidiaries and affiliates, among others, from responsibility for any “environmental impact,” broadly defined as “[a]ny solid, liquid or gaseous substance present or released into the environment in such concentration or condition, the presence or release of which causes, or has the potential to cause harm to human health or the environment.”729 It would be absurd to suggest that the same collective rights, based on the same factual predicate, and seeking the same relief, could be litigated again and again by different members of the same collectivity. As shown in this record, other groups—including members of the “affected communities” purported to be represented by the plaintiffs in this action—have

725 Remediation Contract dated May 4, 1995, filed July 15, 2004 at 9:10 a.m., Record at 7855-82v, 7862. The text of Article 19-2 of the Political Constitution of the Republic of Ecuador, as it was written in 1995, demonstrates that the State had the authority—and indeed, the “duty”—to protect and vindicate the citizenry’s right to a healthy and clean environment. See Article 19-2 of the 1978 Constitution of Ecuador (as codified in 1993) (establishing the citizenry’s “right to live in an environment free from contamination,” but placing the “duty [on] the State to ensure that this right is not abridged.”) The vindication of that constitutional “right” was accomplished through the execution of the settlement contract, which the State was constitutionally authorized, and obligated, to pursue. Any assertion that the State could not settle this constitutional right on behalf of its citizenry runs squarely against the clear text of the then-extant Constitution.

726 Rosa Elena Rey Orozco vs. Arcesio Volívar Morocho Erráez, Judgment of the Supreme Court of Justice, Second Labor and Social Division, June 7, 2004, Case 98-2004, published in Official Gazette 506, Jan. 18, 2005. Similarly, according to Hugo Alsina: “The object of a lawsuit . . . is the thing requested; . . . not in a physical sense but rather the sense of the usefulness or advantage sought.” ALSINA, Hugo, Tratado Teórico Práctico de Derecho Procesal Civil y Comercial, 2d ed., Volume IV, Editorial Ediar, Buenos Aires, 1961, p. 147.

727 Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a.m., Record at 73-80v, 79. 728 Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a.m., Record at 73-80v, 79v. 729 Remediation Contract dated May 4, 1995, filed July 15, 2004 at 9:10 a.m., Record at 7855-82v,

7857.


- 163 -

also filed suit against Chevron for the same alleged indivisible harms to the environment.730 If the settlement agreements signed with the Government of Ecuador and the local governments do not bar this litigation, then there is no principled reason why a judgment in favor of the plaintiffs here would have the effect of res judicata with respect to these other groups who say that they are not represented by the plaintiffs. In the absence of res judicata, this type of litigation would continue indefinitely, and my client would potentially be subject to numerous overlapping and potentially inconsistent judgments without ever having the repose of finality of legitimate court orders and settlements. This would be anathema to due process.

Because the Government of Ecuador and the local governments were acting on behalf of the citizens in their respective jurisdictions, the only claims that survived the settlements were those for personal injury and individual property damage. This is reflected in the carve-out provision of the State’s settlement, which was understood to preserve the rights of third parties to bring claims for alleged individual injuries.731 But the plaintiffs in this case did not allege any individual injuries. As Mr. Donziger admitted, the plaintiffs “did not sue for” “personal damages.” 732 Their complaint demands the removal of alleged contaminants that “threaten the environment and health of the inhabitants,”733 seeks money for the repair of alleged “environmental damages,”734 and thus seeks to redress the same alleged harm covered by the governmental settlements. As we have seen, such claims have been vindicated and released by the Government of Ecuador and the local governments acting on behalf of all Ecuadorian citizens, and the plaintiffs, as Ecuadorian citizens, cannot bring them again.

This conclusion is only reinforced by the fact that the release granted in September 1998 was also an official act of the State, which, under administrative law, “acquires binding force” and is “effective erga omnes.”735 The “immutability of . . . the administrative action is just a part of the stability of legal rules in general (certainty—finality, or order) as a means of achieving certainty and protection.”736 The binding

730 The record includes a written declaration from leaders of the Huaorani and Kichwa indigenous

groups protesting their inclusion in this lawsuit and stating that neither the plaintiffs nor the Frente has been authorized to represent them. Chevron’s Motion regarding Plaintiffs’ Representation of Kichwa and Huaorani Communities, filed Jan. 17, 2007 at 3:00 p.m., Record at 125652-54, 125653.

731 See Memorandum of Understanding dated Dec. 14, 1994, filed May 24, 2004 at 2:18 p.m., Record at 7705-07v, 7706v.

732 Diary of Steven Donziger, entry dated Oct. 27, 2006, at 30, attached as Annex 1 to Chevron’s Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p.m. (DONZ00027256).

733 Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a.m., Record at 73-80v, 79. 734 Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a.m., Record at 73-80v, 79v. 735FRAGA, Gabino, Administrative Law, 38th Edition, Porrúa, México, 1998, pp. 275, 279. 736 LINARES, Juan Francisco, Administrative Res Judicata, Ed. Kraft, 1945 ed., p. 91. See also

MERKL, Adolfo, General Theory of Administrative Law, Ed. Nacional, 1980 ed., p. 263 (“The certainty of legal rulings makes the immutability of administrative actions imperative, even against the exigencies of the public interest”).


- 164 -

effect of administrative acts “is explained and justified by taking into consideration that in administrative law, the State carries out actions to satisfy collective needs, and that objective could hardly be attained if it were required that the actions entrusted to the State could not be binding on all members of the community, regardless of whether they are represented when the action is carried out.”737 In particular, “[t]he unilateral and specific declaration of the executive branch is manifested in the production of legal effects, i.e., in creating, modifying, transmitting, recognizing, declaring, or extinguishing rights and obligations.”738 Here, the Ecuadorian State took official legal action that bars this lawsuit: the release of TexPet and its affiliates from any liability for environmental impacts. As the State then enjoyed exclusive jurisdiction over environmental matters, its decision was tantamount to a final judgment: “[T]he rules and principles of res judicata can be applied to an administrative action when they have jurisdictional content, insofar as they are declarative acts that are similar to judicial decisions, also due to their application of a legal rule to a legal situation.” 739 The release is thus “inherently binding”740 and there is no basis for either the plaintiffs or this Court to ignore its erga omnes effect.741

737 FRAGA, Gabino, Administrative Law, 38th Edition, Porrúa, México, 1998, p. 280. 738 ACEVEDO RAMOS, Jairo. General and Colombian Administrative Law. Ed. Jurídicas Gustavo

Ibáñez. Medellín. 2003. p. 439. 739 RODRIGUEZ, Gustavo H - General Administrative Law - Ed. Ciencia y Derecho, Santa fe de

Bogota, 2nd Edition, p. 265. See also LINARES, Juan Francisco, Administrative Res Judicata, Ed. Kraft, 1945 ed., p. 68 (“Substantive administrative res judicata consists of immutable jurisdictional and administrative validity and effectiveness. And we also see this type of validity and effectiveness in the final decisions of ordinary lawsuits.”).

740 DROMI, Roberto, Administrative Law, Science and Culture, 2001 ed., page 277. 741 The plaintiffs recently conceded that “the 1995 Agreement is in force because it has not been

declared otherwise by an authority with jurisdiction.” Plaintiffs Motion, filed Dec. 6, 2010 at 5:50 p.m. Indeed, the Settlements are valid and they have not and cannot be challenged in this proceeding. According to Ecuadorian law, contracts are valid unless their nullity has been legally declared by a competent court. See Articles 1561, 1699 and 1700 of the Civil Code. Plaintiffs have never filed an action for annulment of the Settlement, which would have had to have been filed before a contentious-administrative court, and not this Court. See Articles 1 and 3 of the Contentious Administrative Law; Article 10 of the Hydrocarbon Law; see also Decision of the Supreme Court of Justice, Administrative Division, Feb. 3, 1997 at 10:00 a.m., Case 33-97, published in Official Register 45, dated April 16, 1997. No basis exists to annul the Settlement and, even if it did, the time period by which a private party could bring such an action has long since passed. See id., Art. 65 of the Administrative Proceedings Act. As the Republic in Ecuador acknowledged in a recent filing before an international arbitral body, “Government representatives advised counsel for the Lago Agrio plaintiffs that, in their view, nullification would be time-barred by the courts under the applicable statute of limitations.” Reply Memorial on Jurisdictional Objections of the Republic of Ecuador, In the Arbitration under the UNCITRAL Arbitration Rules between Chevron Corporation and Texaco Petroleum Company and The Republic of Ecuador (Oct. 6, 2010) at 12, ¶ 19, attached as Annex 9 to Chevron’s Motion filed Dec. 20, 2010 at 5:50 p.m. (citing transcript of CRS-221-02-01 (Mar. 29, 2007) and describing it as follows: “five-year statute of limitation for a Public Contract would be applicable; President Correa’s legal advisor of the opinion that ‘I don’t see [a nullity suit] as a very . . . sustainable issue”). Plaintiffs’ allegation in their complaint that the work performed under the Settlement was somehow insufficient or inadequate (Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a.m., Record at 73-80v, 75) is both erroneous, since the competent evidence establishes


- 165 -

In sum, because TexPet and its affiliates and principals have already been exonerated of blame by the only entity competent to judge environmental matters, Your Honor has no authority to—and therefore cannot—grant the relief that plaintiffs seek in their complaint.

5.3 The Plaintiffs’ Request for Damages Is Also Barred by the Principle of Non-Retroactivity

This Court lacks subject matter jurisdiction because the current lawsuit is the result of a substantive change in the law. The EMA cannot serve as a basis for judging acts by TexPet prior to its enactment, because to do so would mean applying it retroactively. The plaintiffs in these proceedings can only purport to represent the community, and seek damage on its behalf, by invoking the terms of Article 43 of the EMA; otherwise, each of them would have to file the lawsuit individually and separately. The EMA was enacted in 1999, nearly a decade after TexPet stopped serving as the Consortium’s operator. Because of the possibility for "persons directly affected by the wrongful act or omission [may file] … suits for damages and for the deterioration caused to health or the environment, including biodiversity with its constitutive elements," authorized by this law, it marks a substantive (or material) change in the law, and its application to Chevron would violate the principle of non-retroactivity of the law, as argued in the answer.742 Thus, in addition to the fact that these collective claims were settled over a decade ago, the relief for damages sought by the plaintiffs is premised entirely upon the retroactive application of a law enacted after TexPet ceased its operations in Ecuador, and is therefore barred under the principle of non-retroactivity.

5.3.1 The Principle of Non-Retroactivity

Article 7 of the Ecuadorian Civil Code provides that laws are enacted “only for the future: they have no retroactive effect.” Because a party bases its conduct and arranges its affairs in accordance with the law in existence at the time, the party’s legitimate expectations and acquired rights are upset by subsequent changes in the law that create new obligations or increase the scope of potential liabilities for prior conduct.

This is a settled and fundamental principle of the law, as acknowledged by Dr. Wray, the plaintiffs’ former legal representative: “In the writings of legal scholars, the concept alludes to the set of conditions required to anticipate the legal consequences of personal and third-party conduct. Proposed as a constitutional principle, it means that the legal order proscribes any practice in the exercise of power that leads to uncertainty,

(continued…) that TexPet met the applicable standards, and beside the point, since the legal bar to plaintiffs’ claim is the release itself, which is an authorized, valid, and binding act of the State. At bottom, neither plaintiffs nor this Court can ignore the legal effect of the release, which bars plaintiffs’ lawsuit.

742 Answer as Read into the Record §§ II.C.1-II.C.1.3, filed Oct. 21, 2003 at 9:10 a.m., Record at 243-67, 261v.


- 166 -

i.e., to the inability to anticipate or foresee the legal consequences of the conduct.”743 This principle holds such importance that it has been embodied in the Constitution.744

5.3.2 The Plaintiffs’ Claim for Damages Is Based upon the Impermissible Retroactive Application of the EMA

The plaintiffs acknowledge that the principle of non-retroactivity applies to the EMA, but say that they fall within an exception for purely procedural changes to the law. The plaintiffs are wrong: their claim for damages is based on new substantive rules that cannot be given retroactive effect.

Article 7 of the Civil Code provides that new procedural laws can be applied immediately to proceedings that begin after the adoption of the new rule. The legistor's concerns about disruption of settled expectations are not present with mere procedural changes in the law. As explained in the legal scholarship, a procedural rule “arises as a means, as a secondary right, which supposes the existence of pre-existing legal rules that regulate human conduct and that have been violated.”745 “Procedural rules do not have a life of their own, but only by reason of or based on the substantive right whose effectiveness it protects . . . .”746 If the underlying substantive rules remain the same, then no significant uncertainty or unpredictability arises from a change in the procedure for enforcing those substantive rules, so long as the new procedural rule is not applied in a proceeding that began before the rule’s adoption.747

Here, Chapter VI(2) of the complaint requests that Chevron be ordered to pay money to the Frente to repair alleged “environmental damages” caused by TexPet. Plaintiffs are thus relying upon Article 43 of the EMA to give them relief that could not have been obtained under Ecuadorian law at the time of TexPet’s alleged acts and

743 WRAY, Alberto, Due Process in the Constitution, Iuris Dictio, vol. 1, No. 1, Quito, 2000, p. 39,

cited in the Judgment of the Supreme Court of Justice, First Division, May 29, 2002, Case 80-2002, published in Official Gazette 626, July 25, 2002.

744 See Article 24(1) of the 1998 Constitution of Ecuador (“No one may be judged for an act or omission which at the time it was committed was not legally classified as a criminal, administrative, or any other type of violation . . . . Neither shall a person be judged except in accordance with preexisting laws[.]”); Article 76(3) of the 2008 Constitution (materially identical to Article 24(1) of the 1998 Constitution).

745 José Octavio Moncerrate Zambrano Vera vs. Juan Bautista Auhing Medina, Judgment of the Supreme Court of Justice, First Civil and Commercial Division, Mar. 10, 2000, at 3:15 p.m., Decision No. 123, Case No. 62-2000, published in Official Gazette 66, April 26, 2000 (citing VÉSCOVI, Enrique, Teoría General del Proceso, Editorial Temis, Bogotá, 1984, p. 11).

746 José Alfredo Cóndor vs. Héctor Hugo Irigoyen Jurado y otros, Judgment of the Supreme Court of Justice, First Civil and Commercial Division, Sept. 7, 1999, Decision 473-99, published in Official Gazette 332, Dec. 3, 1999.

747 Article 7(20) of the Civil Code provides: “Laws related to the proceedings and rituals of trials prevail over the previous ones from the moment they enter into force. But terms that have already started, and procedural steps that have already been initiated, shall be governed by the law which was valid at that moment.”


- 167 -

omissions. This retroactive application of a substantive change in the law is not permitted by Ecuadorian law.

Chapter V of the complaint sets forth several statutory and constitutional bases that purportedly give rise to the plaintiffs’ claims. These legal bases are set forth chronologically in order to demonstrate the substantive change in Ecuadorian law wrought by the EMA.

5.3.2.1 Pre-1990 Causes of Action

The following causes of action existed in Ecuador before TexPet ceased its operations there on June 30, 1990:

i. Before 1990, private plaintiffs could bring individual claims for damages to their persons or property. Current Articles 2214 and 2229 of the Ecuadorian Civil Code provide entitlement to individualized damages against “[a] person who has committed an intentional tort or an unintentional tort that causes damage to another.”748 A plaintiff under these articles must allege and prove749 the existence of personal harm and/or harm to their property, as well as a causal nexus between such harm and an action or omission on the part of the defendant.750 Because claims for alleged indivisible and diffuse injuries cannot be pursued under Articles 2214 and 2229, a plaintiff who has not suffered divisible and individualized injury lacks standing to bring this cause of action. Furthermore, Ecuadorian law does not permit joinder of individual claims in a “class action.”751

748 Article 2214 provides: “A person who has committed an intentional tort or an unintentional tort

that causes damage to another is obligated to make compensation; notwithstanding any penalties imposed on him by the laws for the intentional or unintentional tort.” See also Article 2229 of the Civil Code, which provides: “As a general rule, any harm that may be attributed to another person’s intentional misconduct or negligence must be repaired by that person.”

749 “[H]arm that is possible, hypothetical, [or] based on assumptions or conjectures, no matter how seemingly well-founded, whether present or future, does not give the right to compensation.” Angel Isaac Gutierrez vs. Molinos Champion S.A., Judgment of the Supreme Court of Justice, Civil and Commercial Division, Sept. 29, 1993, published in Judicial Gazette, year XCIV, series XVI, no. 1, pág. 11 (dissenting opinion of Drs. Miguel Macias Hurtado and René Bustamante Muñoz).

750 “[T]he existence of an unintentional tort gives rise to civil obligations based on responsibility, subject to the conditions of the existence of a harm, of negligence, of a relationship of causality between the negligence and the harm, and the capacity of the active subject. As regards harm, we should add from the conceptual point of view ‘all loss that an individual experiences in their person or property, the loss of a pecuniary or non-pecuniary benefit, whether material or moral.' Ramón Meza Barros, Civil Law Handbook.” Miguel Macías Hurtado vs. Inchalela Cia. Ltda. y Constructora Chalela Cia. Ltda., Judgment of the Court, Nov. 12, 1990, published in Judicial Gazette, year XCI, series XV, no. 10, p. 3048, Nov. 12, 1990 (emphasis added).

751 “[T]he so-called ‘class actions’ are still not recognized in our system of positive law.” Comité Delfina Torres vda. De Concha vs. Petroecuador y otros, Judgment of the Supreme Court of Justice, First


- 168 -

This was expressly acknowledged by the plaintiffs’ counsel in the New York case. Dr. Wray, then-lead attorney for the plaintiffs, explained in an affidavit that, under Ecuadorian law, “nothing exists that can be compared to the United States’ ‘class action.’”752

ii. Before 1990, private plaintiffs could only report alleged violations of an environmental rule or precept to the State, which had the exclusive power and duty to seek remediation and take other appropriate actions (e.g., fines and sanctions). Pursuant to the 1978 Constitution, individuals in Ecuador had a constitutional right “to live in an environment free from contamination.” 753 However, that constitutional right was not directly enforceable by private individuals; rather, it was the “duty of the State to ensure that this right is not abridged.”754 This provision confirmed the substance of Ecuadorian law at the time: the State is the owner of all subsurface mineral and natural resources, as well as virtually all of the land and waters in the oil-producing region of the Ecuadorian Amazon, and thus only it could bring a claim for damage to that environment. See supra § 5.2.3. Individuals had only the right to denounce environmental violations and request an official investigation by the State.

This was also expressly acknowledged by the plaintiffs’ counsel in the New York Aguinda case. Dr. Wray explained in an affidavit that, under Ecuadorian law, “[t]he application of laws regarding the prevention and control of environmental contamination falls within the purview of the administrative agencies of the executive [branch],” such that “if a person feels harmed by environmental infractions, he must file a complaint in front of those officials and not in front of judges.”755

iii. Before 1990, private plaintiffs could file a lawsuit seeking the intervention of an authority to eliminate an imminent threat to indeterminate persons. In fact, current Article 2236 of the Civil Code entitles these plaintiffs to give notice of a threatening condition and seek, through a “popular action,” an

(continued…) Civil and Commercial Division, Oct. 29, 2002, Case 31-2002, published in the Official Gazette 43, Mar. 19, 2003.

752 Affidavit of Alberto Wray (Mar. 8, 1994), attached as Annex 1-A to Chevron’s Motion to Dismiss, filed Oct. 8, 2007 at 8:10 a.m., Record at 132897-996, 132948.

753 Article 19(2) of the 1978 Constitution of Ecuador (as codified in 1993). 754 Article 19(2) of the 1978 Constitution of Ecuador (as codified in 1993). 755 See Affidavit of Alberto Wray (Mar. 8, 1994), attached as Annex 1-A to Chevron’s Motion to

Dismiss, filed Oct. 8, 2007 at 8:10 a.m., Record at 132946-954, 132953; see also Aguinda v. Texaco Inc., 142 F. Supp. 2d 534 (S.D.N.Y. 2001), aff’d, 303 F.3d 470 (2d Cir. 2002), attached to Texaco Inc.’s Response to RFP, Record at 9521-66, 9535.


- 169 -

appropriate injunctive order from the Court to eliminate it.756 This Article applies exclusively to “contingent” harm, that is, harm that has not yet occurred, and it gives individuals a mechanism to prevent the harm, by means of a suit against the party that is negligent in failing to remove the threat. Article 2237 entitles plaintiffs to be reimbursed for the expenses they have incurred in their preventive lawsuit under Article 2236,757 but it does not otherwise permit the recovery of any monetary damages. Repeated decisions of the former Constitutional Tribunal (now the Constitutional Court) confirm this principle in a similar context dealing with injunctive relief (amparo): “[I]t is inappropriate to request compensation by means of a claim for constitutional relief [amparo].”758

5.3.2.2 Post-1990 Causes of Action

The plaintiffs cite several legal provisions that post-date TexPet’s operations in Ecuador:

i. In 1998, Ecuador adopted a new Constitution. Articles 23 and 86, cited in the complaint, reiterated each citizen’s right to live in a clean environment, with the State having the obligation to “protect” this right. This is equivalent to the provision in the prior Constitution, which is discussed in the preceding section. The plaintiffs also allege that, under Chapter 5, Title III of the 1998 Constitution, a person may file a claim for violation of this right and may demand reparation. But this provision does not itself create a cause of action for private parties; one must instead be provided by law. This did not occur until the enactment of the EMA in 1999. To the extent that the changes in the 1998 Constitution allowed an environmental action by a private party, it would only authorize injunctive relief necessary to “protect[]” the environment, and not the recovery of alleged damages.759 Moreover, even if the 1998 Constitution otherwise provided a basis for the

756 Article 2236 of the Civil Code provides: “As a general rule, a ‘public action’ is granted in all

cases of contingent harm that threatens indeterminate persons because of imprudence or negligence. However, if the harm only threatens determinate persons, only one of them may file the action.”

757 Article 2237 of the Civil Code provides: “If the public actions granted by the preceding articles seem well founded, the plaintiff shall be compensated for all the costs of the action, and he shall be paid for the value of the time and energy spent on them, without prejudice to the specific remuneration granted by the law in specific cases.”

758 Judgment of the Constitutional Tribunal, Third Chamber, Mar. 18, 2003, Decision No. 0334-2003-RA, published in Official Gazette 195, Oct. 22, 2003. Regarding this issue, an illustrative judgment states that “popular actions, although they sort out the judicial protection of these concrete interests and collective rights, cannot be established or exercised to obtain subjective or plural remedy of the possible damages that may be caused to them by the action or omission of the public authority or of the individual.” Judgment of the Council of the State, Administrative Division, Third Section, dated April 25, 2002, Filing No. 05001-23-31-000-2001-2012-01 (AP-0388) (citing Decision No. T-508 of 1992).

759 Article 91 of the 1998 Constitution references “Without prejudice to the rights of those directly affected . . . [an individual] may file the suits provided for in the law for protection of the environment .”


- 170 -

plaintiffs’ alleged claims, it could not be applied retroactively to authorize claims that did not previously exist, for alleged conduct that pre-dated its adoption.

ii. In 1999, Ecuador enacted the “Indigenous and Tribal Peoples Convention.”760 Article 15 of the Convention creates a cause of action for indigenous peoples against the Government. Because the plaintiffs include numerous colonists who have no standing under the Convention, and because the defendant in this case is Chevron rather than the Government, the Convention may not serve as a legitimate basis for a judgment in the plaintiffs’ favor. As with the 1998 Constitution, moreover, new causes of actions under the Convention could not be applied retroactively.

iii. In 1999, Ecuador enacted the EMA. Article 43 of the EMA expressly provides a statutory right of action for a private person to seek damages based upon a diffuse harm to the environment as a whole, as opposed to the violation of an individual right. As explained below, the creation of this cause of action marked a major change in Ecuador’s substantive law.

5.3.2.3 The Plaintiffs’ Request for Damages Necessarily Is Premised upon the 1999 EMA

Given the nature of their allegations, it is plain that the plaintiffs’ request for monetary damages in Chapter VI of the complaint does not proceed under any law that was in effect when TexPet operated in Ecuador. See supra § 5.3.2.1. Indeed, in their submission of September 16, 2010 at 5:15 p.m., plaintiffs themselves concede that "Article 43 of the Environmental Management Act establishes the faculties of the judge when the time comes to render judgment, with respect to what payments he can sentence the defendant to make in this type of lawsuit."761

First, Chapter VI(2) of the plaintiffs’ complaint seeks monetary damages, and the only pre-1990 law cited by the plaintiffs that provides for monetary damages is Article 2214 of the Civil Code.762 But Article 2214 is plainly inapplicable to this case since the

760 Convention 169 on Indigenous and Tribal Peoples Convention, 1989, Conference of the National Organization of Labor, published in Official Gazette 206, June 7, 1999.

761 Plaintiffs’ Motion, filed Sept. 16, 2010 at 5:15 p.m., at 5; see also id. at 8 ("[I]n the complaint we request that environmental damage be repaired in accordance with the provisions of Article 43 of the EMA.").

762 Given that the EMA cannot be applied retroactively to facts that allegedly occurred years before its promulgation, the plaintiffs have claimed that their right to sue is based on the Civil Code and not the EMA. See, e.g., Affidavit of Alejandro Ponce-Villacis, dated Dec. 18, 2006, attached as Annex 5 to Chevron’s Motion to Dismiss, filed Oct. 8, 2007 at 8:10 a.m., Record at 132897-996, 132978, 132985 (speaking as "one of the counsel for the [Lago Agrio] plaintiffs," and representing that the lawsuit is "primarily based on preexisting civil law concepts" including the "core Ecuadorian civil law extra-contractual duty" contained in Article 2214).


- 171 -

plaintiffs have not alleged, and have not proven, the existence of any individualized harm to any particular individual or legally cognizable entity. The complaint alleges harm to “communities” that the plaintiffs purport to represent, but these communities are only vaguely defined. There is, furthermore, no proof that the plaintiffs have been duly authorized to represent them with respect to any claims for divisible injuries.763 In all events, although Chapter III of the complaint 764 contains general and imprecise allegations of environmental effects, in the operative part of the complaint (Chapter VI) the plaintiffs do not request damages for specific injuries—either to individuals or to the vaguely defined communities.765 Thus, their request for damages cannot be premised on any relevant provision of the Civil Code; it necessarily is premised on the 1999 EMA instead.

The absence of any basis in the Civil Code for the plaintiffs’ damages claim is further confirmed by the fact that any such claim under the Civil Code plainly is time barred.766 The concept of a statute of limitations has been defined legally as the “manner of extinguishing a right as a result of failure to exercise such right during the time period established by law.”767 Section 1583(11) of the Civil Code generally refers to the statute of limitations as a means of extinguishing obligations, whereas Section 2392 of the Civil Code refers to it as means of extinguishing “causes of action.” As Ecuador’s former Supreme Court (now the National Court) has stated: “The defense of the statute of limitations is a way to extinguish the substantive aspects of a cause of action, and if it is found to apply, then the Judge cannot rule on the claims set forth in

763 It is unclear from the complaint and the evidence who is included in the supposed 30,000

persons that the plaintiffs purport to represent. Their identities and addresses are unknown, so it is impossible to know whether they belong to the communities that the plaintiffs say they represent, whether they are located within or outside of the former concession area, and whether they were affected by the oil operations.

764 Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a.m., Record at 73-80v, 76-77. 765 See Plaintiffs’ Complaint, filed May 7, 2007 at 11:30 a.m., Record at 73-80v, 79-80. This case

therefore contrasts with Delfina Torres case, Comité Delfina Torres Vda. de Concha vs. Petroecuador y otros, Judgment of the Supreme Court of Justice, First Civil and Commercial Division, Oct. 29, 2002, Case 229, published in Official Gazette 43, Mar. 19, 2003, where the named plaintiff—proceeding under the Civil Code (Article 2214) in an ordinary proceeding—appeared in “the capacity of legal representative of a private law legal entity” to redress the direct injuries to that entity that were pleaded and proved with particularity and specificity. (Nos. 5, 15 and 27) Indeed, the Supreme Court expressly noted that “[i]f the action had been brought as a legal representative of the ‘public interest’ or of society in general, doubtless this would have been procedurally barred, or there would be no standing to sue according to the terminology adopted by our Code of Civil Procedure.” (No. 5)

766 This defense was expressly raised by my client when it answered the complaint, based on Section 2259 (currently 2235) of the Civil Code. See Answer as Read into the Record § IV.3.4, filed Oct. 21, 2003 at 9:10 a.m., Record at 243-67, 265. The assertion of the defense cannot be interpreted as a recognition that the plaintiffs have a cause of action of any kind. The statute of limitations would bar the alleged causes of action if they existed, which they do not.

767 Dictionary of the Spanish Language, Royal Spanish Academy, Madrid, Spain (22nd ed. 2001).


- 172 -

the complaint.” 768 Accordingly, even if the plaintiffs at one time had causes of action against Chevron (which they did not), those claims would have been extinguished by the passage of time, as described above, and they cannot now be raised by the plaintiffs or adjudicated by this Court. The complaint in this case is based on TexPet’s alleged acts and omissions as operator of the Consortium. In Chapter I of the complaint, the plaintiffs admit that TexPet served as operator from January 1, 1965, until June 30, 1990 (and also that its participation in the Consortium ended in June 1992).769 The complaint, however, was not filed until 2003. Thus, the plaintiffs seek payment for acts and omissions that allegedly occurred between thirteen and thirty-eight years before they filed their complaint. The lawsuit plainly is time-barred.

Specifically, any claim under Article 2214 of the Civil Code is subject to the four year statute of limitations established under Article 2235 of the same Code for intentional and unintentional tort actions. According to Article 2235,770 the four year statute-of-limitations period would run as of the date of TexPet’s allegedly wrongful acts.771 As noted above, TexPet’s alleged acts and omissions as operator occurred

768 Edgar Antonio Mite Salas v. Miguel Arostegui, Judgment of the Supreme Court of Justice,

First Civil and Commercial Division, Mar. 27, 2006, Case 110-06, published in Official Gazette 379, Oct. 18, 2006. The Supreme Court explained: “Case law equally considers that the defense based on the time-barring of the action by the statute of limitations extinguished the action and the right of the party and that, upon it being alleged, the judge must establish whether it is pertinent and if so, order the termination of the proceedings, without delving in the issues at stake in the proceedings. From a legal scholarship point of view, the purpose of the statute of limitations is to consider a right as extinguished where it has not been timely exercised, since the authority of the owner is not, and cannot be, indefinite in time and it is necessary to establish a deadline for it to be exercised and enforced under applicable legal formulae. This legal defense is, all in all, a means to annihilate the action in its substantive aspects. Thus, its declaration entails an issue of substance that requires to be stated in the judgment. (GJ XIV-No. 2 p. 324).”

769 Plaintiffs’ Complaint, filed May 7, 2009 at 11:30 a.m., Record at 73-80v, 73v-74. 770 Article 2235 prevails over the general statute of limitations that applies where no specific

limitations period is established for a particular cause of action. Article 2235 provides: “The causes of action provided for in this chapter for damages or intentional misconduct are time barred in four years, counted from the date on which the act was perpetrated.” Ecuadorian courts thus apply Article 2235’s four-year statute of limitations to claims for intentional or unintentional torts: “The plaintiff bases its complaint on the provisions of Book Four, Title XXIII, on intentional and unintentional torts, in its Sections 2241, 2242 [currently 2214, 2215] et seq. of the Civil Code currently in force, and on those grounds the complaint is admitted in both instances. By virtue of the above, even if the plaintiff’s claim to damages in tort were granted, Section 2439 [2415] of the Civil Code would not apply, but instead Section 2259 [2235] would apply . . . .” Medardo Alfredo Luna Narváez v. Compañía Aérea Servicios Aéreos Ecuatorianos C.A., Case 20-2004, First Chamber, published in Official Gazette 411, Sept. 1, 2004.

771 An important Chilean legal scholar who is renowned throughout Latin America, has explained the rule contained in Article 2235 of the Ecuadorian Civil Code, which is identical to Article 2332 of the Chilean code: “The cause of action to obtain relief for damage caused by an intentional or unintentional tort is extinguished by the statute of limitations in four years, counted from the perpetration of the act, that is, from the day on which the intentional or negligent act was committed (5) and not from the day when the damage arises, if that day and the act are not contemporaneous (art. 2332).” ALESSANDRI RODRÍGUEZ, Arturo, Tort Liability Under Chilean Civil Law, Editorial Ediar, Santiago, Chile, 1983, No. 432, p. 522.


- 173 -

before July 1990. Thus, any claims regarding operations in the Consortium area—including any alleged acts or omissions concerning the condition of the area—from that point forward would have had to be brought against Petroecuador.

As a condition of dismissal of the Aguinda case in New York, Texaco agreed to toll the statute of limitations between the time that a claim was filed against it before the New York court (which occurred in November 1993) and any re-filing of the same claim against it in Ecuador within a year after the completion of the Aguinda case in New York (that is, until late 2003).772 As demonstrated supra §§ 1.2, 1.4, this agreement is inapplicable because the complaint in this lawsuit is against Chevron, not Texaco, and asserts different claims than the New York case. Even if the tolling agreement applied, it would not revive claims that already were barred before the New York case was filed in November 1993. Under the four-year statute of limitations, the only claims not barred by November 1993 were for alleged acts or omissions beginning in November 1989—less than eight months before TexPet’s role as operator ended.

Second, the only pre-1990 claim that would allow a private party to plead a violation of the laws regarding the prevention and control of environmental contamination is an action in front of administrative agencies of the executive branch.773 These bodies were the only authorities that could provide any sort of relief when an individual or a group of individuals “fe[lt] harmed by environmental infractions” untethered to specific allegations of personal injury or property damages.774 This is because the citizenry’s constitutional right to a clean and pollution-free environment was entrusted to the Ecuadorian State, in article 19(2) of the Constitution, “to ensure that th[at] right is not abridged.”775 In 1998, when a new constitution came into force, that State duty was moved to Article 86, which stated even more clearly that:

The State shall protect the peoples’ right to live in a healthy and ecologically balanced environment . . . . It [the State] shall see that this right is not affected and shall guarantee the preservation of nature. The following is declared to be of public interest to be regulated in accordance with the law: 1. Preservation of the environment, conservation of the ecosystems, the biodiversity and the integrity of the country’s genetic heritage; [and] 2. Prevention of environmental pollution, reclamation of degraded natural areas, sustainable

772 Aguinda v. Texaco Inc., 303 F.3d 470 (2d Cir. 2002), attached to Texaco Inc.’s Response to

Request for Production, Record at 9567-84, 9581. 773 See Affidavit of Alberto Wray (Mar. 8, 1994), attached as Annex 1-A to Chevron’s Motion to

Dismiss, filed Oct. 8, 2007 at 8:10 a.m., Record at 132946-54, 132953. 774 Affidavit of Alberto Wray (Mar. 8, 1994), attached as Annex 1-A to Chevron’s Motion to

Dismiss, filed Oct. 8, 2007 at 8:10 a.m., Record at 132946-54, 132953. 775 Article 19(2) of the 1978 Constitution of Ecuador (as codified in 1993).


- 174 -

management of natural resources, and requirements to be met by public and private activities for that purpose . . . .776

Plaintiffs have filed neither an action before the Executive, nor against the Executive, to denounce a specific environmental infraction that infringed their constitutional right to a clean environment.

Finally, Chapter VI(1) of plaintiffs’ complaint seeks certain injunctive relief, but the only pre-1990 legal basis for this claim—Article 2236 of the Civil Code—is plainly inapplicable to this case. Article 2236 allows a “popular action . . . in all cases of contingent damages that threaten unspecified persons because of the negligence or imprudence of another. But if the damage only threatens specified persons, only they will be able to initiate proceedings.” By its terms, it applies only to “contingent” harm that has not yet occurred, and the only proper defendant is the party that can address the contingency and is negligent in failing to do so.

Plaintiffs’ complaint effectively concedes that there are no “contingent” damages that they can plead here. Presumably attempting to draw a parallel to Article 2236—though opting not to cite it—they request “[t]he elimination or removal of the contaminating materials that still threaten the environment and the health of residents.”777 The alleged existence of “contaminating materials,” however, presumes the existence of actual, present harm—not potential, future harm. In their submission of September 16, 2010, at 5:15 p.m., they argue that "the immediate presence of contaminating substances in given points in the ecosystem.”778 But the allegation of actual damage is not the province of Article 2236; it can be addressed only through an action for personal injury or individualized property damages (e.g., under Article 2214) 779 or through a specific environmental claim (e.g., EMA Article 43). 780 The obvious overlap between plaintiffs’ specific claims in Chapters VI(1) and VI(2) demonstrate this point: the request for “removal” in VI(1) is subsumed by the request for “repair”—under the EMA—in VI(2). If, for instance, the plaintiffs prove an entitlement to monetary damages for the “conditions [of] the soil of [the] surrounding environment”781 of “the pits opened by Texaco,”782 there is no need for an injunctive order for “the treatment and disposal of the contamination wastes and materials that are still in the pits opened by Texaco.”783 If the plaintiffs had proven, which they have not,

776 Article 86 of the 1998 Constitution of Ecuador. 777 Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a.m., Record at 73-80v, 79. 778 Plaintiffs’ Motion, filed Sept. 16, 2010 at 5:15p.m., at 5. 779 Article 2214 of the Civil Code. 780 Article 43 of the Environmental Management Act. 781 Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a.m., Record at 73-80v, 79v. 782 Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a.m., Record at 73-80v, 79v. 783 Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a.m., Record at 73-80v, 79v.


- 175 -

an entitlement to monetary damages for “a plan to regenerate aquatic life,” 784 an injunctive order for the “cleanup of rivers, streams, lakes, marshes and natural and manmade waterways”785 is superfluous. Because plaintiffs have not even attempted to prove an action for individualized damages under the provisions Article 2214, the only legal basis for the claims asserted here is—as is expressly pled in Chapter VI(2)—the EMA.

In any event, for any injunctive claim brought under these facts for contingent damages, Petroecuador is the only proper defendant. An action to prevent potential future harm must be brought against either the owner of the property or the party currently engaged in the activity that causes the threat or contingent harm, since they are the only ones who can prevent the challenged activity and the threatened harm. Such an action cannot logically be brought against a third party who has no control over the activity or the property. That is the case here with respect to Chevron. First, Petroecuador alone has operated the former Consortium fields for almost twenty years. It is thus responsible for any threatening condition that presently exists in the area—as the current owner and operator, it alone is “negligent” under Article 2236 of Civil Code in failing to remove any threat to unspecified persons. Second, the nature of the claim is injunctive, in that it requires the elimination of the threatening condition. The current operator and holder of rights over the area where the allegedly threatening condition exists (here, Petroecuador) is the only party that is capable of fulfilling the terms of the requested injunction. 786 Third, as discussed above, supra § 5.2.2, Petroecuador released TexPet and itself assumed all remaining responsibility for environmental impact in the former Consortium area. The structure of the settlement, under which TexPet performed remediation commensurate with its minority share of the Consortium, reflected the parties’ understanding that Petroecuador would have to answer for any continued environmental threats in the former concession area, where it continues to operate today. Because Petroecuador is the proper defendant, the plaintiffs have no cause of action against Chevron for the injunctive relief they seek.

5.3.3 The Cause of Action Granted by the EMA Constitutes a Substantive Change in the Law and Thus Cannot Be Applied Retroactively

Because no pre-existing provision of the law authorized an equivalent cause of action, Article 43 of the 1999 EMA substantively changed the law. As demonstrated above, such provisions cannot be applied retroactively to conduct that occurred prior to the change in the law, especially in the face of the settlement agreement releasing TexPet and its affiliates from any liability for environmental impacts in the area of the former Petroecuador-TexPet concession.

784 Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a.m., Record at 73-80v, 80. 785 Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a.m., Record at 73-80v, 79v. 786 Article 1569 of the Civil Code is not applicable because the defendant is not currently in

default. Chevron has not failed to perform any preexisting legal obligation; to the contrary, the Government of Ecuador certified that TexPet fulfilled all of its contractual remediation responsibilities.


- 176 -

Article 43 created a new course [sic] of action that did not previously exist, i.e., the right of those directly affected by a wrongful act or omission to file a civil suit, individually or collectively, for damages resulting from a harmful act or omission against the environment and/or health. Before this law was enacted, private individuals had no right to file a civil suit for damages for direct harm to them as persons, or for an injury to health or the environment, originating in the wrongful act or omission against the environment or health; what existed was an action for identifiable harm to a specific individual or his property. By authorizing claims for damage to the environment in general, the EMA went beyond Article 2236 of the Civil Code, which authorizes only injunctive relief to eliminate possible future threats to indeterminate persons. Clearly, therefore, the EMA did not merely change the procedure for litigating a pre-existing cause of action.787 It instead gave a cause of action to persons who never before had one, and entitled them to relief that they could not previously request or receive. As it creates new liabilities, the EMA constitutes a substantive change in the law that cannot be retroactively applied.

The fact that the EMA substantively changed Ecuadorian law is confirmed in the legislative debate leading to its enactment. For example, Representative Vela Puga explained that “[t]his law establishes very important modifications to the Ecuadorian legal system” because “[t]he possibility is established that any civil, natural or artificial person may file an action for damages against any other person, including the Ecuadorian State, in order to claim the effect of a violated right which is not his own and this is indeed a modification which totally changes the bases of the Ecuadorian legal system.”788 Representative Saltos Galarza viewed the EMA as “a historic step,” and he argued that “we must not only proceed through individual rights, as it is established now, but we must give way to a different conception, which other countries are already adopting.”789 One legislator, Representative Fernando Rosero, opposed enactment of the new law, saying it was outrageous that “with no previous recourse or previous background, all of the sudden twelve and a half million Ecuadorians would be able to be heard in an administrative criminal proceeding.”790

787 The EMA also contains procedural provisions that may be applied to a case properly

proceeding under a preexisting cause of action. For example, in the Calva case, Case 286-2001, the plaintiff based his complaint upon Article 2214 of the Civil Code and—unlike the plaintiffs here—proved individualized injury in the form of damage to his cattle and crops. To the extent that the EMA provided procedures for the plaintiffs’ claim under preexisting law, therefore, no retroactivity problem existed. See Alfonso Calva Castillo vs. Petroproduccion, Judgment of the Supreme Court of Justice, Second Civil and Commercial Division, Mar. 12, 2008, Case No. 286-2001.

788 Acta No. 8, Ordinary Evening Session of Congress, Aug. 19, 1996, “Continuation of First Debate on the Environmental Management Act,” p. 39.

789 Acta No 8., Ordinary Evening Session of Congress, Aug. 19, 1996, “Continuation of First Debate on the Environmental Management Act,” p. 40.

790 Acta No. 105, Ordinary Morning Session, June 10, 1999, “Continuation of Second Debate on the Project of the Environmental Management Act,” p. 32.


- 177 -

It is legally impermissible for the plaintiffs to rely upon this fundamental legal change in their effort to obtain monetary damages for TexPet’s alleged conduct many years earlier, particularly where TexPet entered into comprehensive settlements to resolve all environmental claims with the only parties, at the time, capable of bringing them.

In fact, the plaintiffs’ attorneys themselves recognized years ago that several judges had already ruled that the EMA “can not be applied to cases based on contamination which occurred before 1999.”791 In their words, that ruling implies that “this case is moving inexorably towards dismissal.”792 The plaintiffs in that respect were correct; this case must be dismissed.

CHAPTER VI. THIS COURT IS LIMITED TO THE CLAIMS MADE BY THE PLAINTIFFS

6.1 The Principle of Congruency

As noted at the outset of this brief, the principle of congruency limits the jurisdiction of the judge, who can only decide matters raised by the plaintiffs in their complaint. Furthermore, neither the plaintiffs, nor their conduit Mr. Cabrera, nor the judge may amend the complaint after it has been filed. Yet the plaintiffs and their conduit, Mr. Cabrera, have ignored the complaint and requested a series of damages that sweep far beyond the original claims asserted by them when they filed suit. Under Ecuadorian law, basing a judgment on claims that were not pled in the complaint constitutes a basis for nullity of the judgment.

Section 273 of the Code of Civil Procedure provides that “[t]he judgment shall decide only the issues regarding which the case was filed and answered and any collateral issues arising during the trial that may have been saved for decision in the judgment, without causing any harm to the parties.” Consequently, “it is only in the complaint and in the answer to the complaint that the terms of the debate and the scope of the judgment are definitively established.”793

Furthermore, Section 834 of the Code of Civil Procedure provides that in oral summary proceedings, “once the complaint has been filed in this proceeding, the

791 E-mail from Cristobal Bonifaz to Alejandro Ponce Villacis, et al., dated Jun. 4, 2006 at 1:27

p.m., at 2, attached as Annex 1 to Chevron’s Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p.m. (DONZ00028557).

792 E-mail from Cristobal Bonifaz to Alejandro Ponce Villacis, et al., dated Jun. 4, 2006 at 1:27 p.m., at 2, attached as Annex 1 to Chevron’s Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p.m. (DONZ00028557).

793 Mentor Eliecer Chico Villacrés y otra vs. Alba Chamba Quevedo, Judgment of the Supreme Court of Justice, First Civil and Commercial Division, Oct. 11, 1999, Resolution 509-99, Case 38-98, published in Official Gazette 334, Dec. 8, 1999.


- 178 -

plaintiff shall not amend it, nor shall any counterclaim be filed, although this shall not affect the right to file the related action separately.”794

The principle of congruency therefore imposes “the requirement that court decisions should actually respond to all claims submitted by the parties in the prescribed manner and within the prescribed period for hearing by the courts.” 795 Furthermore, the principle “delimits the contents of the judgment, since the judgment must be rendered in accordance with the meaning and scope of the claims or challenges and the defenses duly asserted in order for what was requested and what is resolved to be legally identical.”796 Incongruence exists in the form of ultra petita, “[w]hen what is granted is more than what was requested,” and extra petita, “[w]hen something other than what was requested is granted.” 797 This same principle of congruence is violated when the court resolves something other than the specific claims brought before it.

On this point, the Supreme Court of Justice has held that

when rendering judgment, the judge must limit himself to the matters at issue in the lawsuit, that is, the specific claims brought by the plaintiff in the complaint and the explicit points raised as defenses by the defendant. The judge may not diverge from the matters at issue as raised in either the complaint or the answer to the complaint; infringing this prohibition leads to one of the defects set forth in premise

794 Ecuadorian law leaves no doubt that the principle of congruency applies to both evidence and

expert reports. Article 116 of the Code of Civil Procedure, consistent with Article 273 of that Code, provides that “the evidence [such as the expert examination] must be limited to the matter at issue and the facts submitted for the court’s decision.” In addition, under Article 117 of the Code of Civil Procedure, “only evidence that has been properly taken, i.e., that has been requested, presented and produced in accordance with the law, shall be valid in court.”

795 “The parties establish the purpose of the case, and it is within those limits that the Judge must decide . . . . Consequently, the Court must enter a judgment in accordance with what was argued and proven by the parties . . . its judgment must be limited by Plaintiffs’ petitions and what the Defendant has admitted or contradicted. . . . This is the principle called congruency of judgments; according to which, the Court must resolve what the parties request, but nothing more; in other words, according to (congruently) the parties’ requests.” VÉSCOVI ENRIQUE, Teoría General Del Proceso, Temis, II Edición, Bogotá p. 44-45.

796 Alberto Vásconez Gavilanez vs. Manuel Tobar Mayorga, Judgment of the Supreme Court of Justice, First Civil and Commercial Division, Resolution 246-2000, Case 150-97, published in Official Gazette 133, Aug. 2, 2000.

797 Alberto Vásconez Gavilanez vs. Manuel Tobar Mayorga, Judgment of the Supreme Court of Justice, First Civil and Commercial Division, Resolution 246-2000, Case 150-97, published in Official Gazette 133, Aug. 2, 2000.


- 179 -

four of article 3 of the Cassation Law, called the doctrine of incongruence . . . .798

An Argentinean court similarly has held that “[t]he dispositive principle establishes the rule that it is the parties who determine the thema decidendum, and judgments must perforce be congruent with the manner in which the issues were raised or risk nullity.”799

Therefore, in any proceeding, and particularly in an oral summary proceeding such as this one, the principle of congruency limits judgment to those facts with respect to which the litigation or controversy was brought, that is, to the claims contained in the complaint and answer as originally filed.

A comparison of the plaintiffs’ specific claims in their complaint with the exorbitant damages requested in their September 16, 2010 filing at 5:15 p.m. and proposed (by them) in Mr. Cabrera’s fraudulent reports shows that Mr. Cabrera greatly exceeded his mandate, in such an absurd manner as to clearly demonstrate his manifest bias, and that the plaintiffs have strayed far from their complaint.800 Indeed, Mr. Cabrera’s assertions with respect to the alleged damages track almost identically those identified by the plaintiffs’ counsel on a Crude outtake filmed several months before Mr. Cabrera’s appointment; this is not surprising in light of the revelations that plaintiffs’ lawyers, consultants, and affiliated activists secretly wrote Mr. Cabrera’s report for him and simply sent it to him for signature and filing, supra § 2.2.1. In that clip, the plaintiffs’ Ecuadorian counsel acknowledge that by virtue of the doctrine of “extra petita,” they cannot request “anything more than what has been petitioned in the lawsuit.”801

798 Judgment of the Supreme Court of Justice, Second Civil and Commercial Division, Case 398-06 published in Official Gazette E-17, Feb. 21, 2008; see also Judgment of the Supreme Court of Justice, First Division, Case 273-2000, published in R.O. 134, Aug. 3, 2000, citing a judgment issued by the same Chamber that was published in the Judicial Gazette, Series VII, No. 5, on page 1486, which stated: “in light of the dispositive principle, the judge cannot grant the plaintiff what was not asked in the complaint; and in virtue of the principle of congruency, which requires a juridical identity between what is resolved in any sense, by the judge in the judgment, and the requests for relief and the exceptions filed by the parties, which form the basis of the controversy (suit), the judge cannot go ahead with an action that has not been filed, nor resolve anything beyond what has been the subject of the controversy, otherwise it would fall under the vice of ultra petita.”

799 Sosa, Liliana et al. vs. Novacovsky, Alejandro, Judgment of the Court, CCCom. De Mar del Plata, First Division, Nov. 19, 2002, (cited by ENDERLE, Guillermo Jorge, Procedural Congruency, Editorial Rubinzal – Culzoni Editors. 2007, p. 35.).

800 All the activities of the Expert acting on behalf of the Court, must by necessity be related to the assignment entrusted to him by the Judge. He does not have any discretionary capacity to do what was not ordered or to not perform the work ordered. "The decision of the experts cannot be spontaneous . . .; it is indispensable that it be preceded by a legal assignment by means of a ruling issued and notified in a legal manner." DEVIS ECHANDÍA, Hernando. Compendium of Judicial Evidence. Editorial Rubinzal - Culzoni. Buenos Aires. 2007. Volume II. pp. 103 and 107.

801 Transcript of Crude Outtakes, attached as Annex 1 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., (CRS-159-00-10).


- 180 -

Because the complaint sought compensation only for environmental remediation and health improvement, the plaintiffs acknowledged in internal discussions that they could not subsequently request “damages to the affected individuals” or money representing supposed “immoral profit.”802 Nonetheless, the plaintiffs insist on requesting these types of damages anyway on the cynical theory that if Chevron “say[s] that in a, in their response,” and this Court lowered the amount, it would appear to be giving Chevron a “huge victory.”803

6.2 The Plaintiffs Asserted Specific and Limited Claims in Their Complaint

Chapter VI of the complaint includes the plaintiffs’ specific requests for relief. Those specific requests fall within three categories: (i) prevention of threatened harm to the environment; (ii) damages to repair harm to the environment and for health improvement and monitoring; and (iii) a ten percent bounty.

Specifically, in Chapter VI.1 of their complaint, they first seek:

[T]he elimination or removal of the contaminant elements that still threaten the environment and health of the inhabitants. Consequently, the sentence shall dispose:

a. Removal and adequate treatment and disposal of waste and contaminant materials still existing in pits or ditches opened by TEXACO . . .

b. Sanitation of rivers, lakes, swamps wetlands and natural and artificial streams . . .

c. Removal of all the structural elements and machinery that stand out in wells, facilities . . .

d. In general, cleaning of lands, crop fields, crops, streets, roads and buildings . . . .804


4:35 p.m., (CRS-159-00-09); Transcript of Crude Outtakes, attached as Exhibit 5 to Chevron’s Supplemental Motion for Terminating Sanctions filed Sept. 14, 2010 at 11:10 a.m., (CRS-159-00-06). As Mr. Donziger admits, plaintiffs are “only asking for . . . clean-up"; two of plaintiffs’ attorneys candidly affirm "[c]ompensation [for damages] is not admissible here.” Transcript of Crude Outtakes, attached as Annex 1 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., (CRS-159-00-09). Nonetheless, Luis Yanza wanted the damages award "to be big-time" and to "cause[] a huge impact." Id.

803 Transcript of Crude Outtakes, attached as Annex 1 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., (CRS 159-00-10; CRS-159-00-06a); Transcript of Crude Outtakes, attached as Exhibit 5 to Chevron’s Supplemental Motion for Terminating Sanctions filed Sept. 14, 2010 at 11:10 a.m., (CRS-196-01-01).

804 Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a.m., Record at 73-80v, 79-79v.


- 181 -

Then, in Chapter VI.2, the plaintiffs seek:

[T]he reparation of environmental damages according to article 43 of the Ley de Gestión Ambiental [Environmental Management Act]. Consequently, the sentence shall order:

a. Execution of necessary works in the pits opened by TEXACO, in order to recover the natural characteristics and conditions of the soil and the surroundings . . .

b. Contract on charge of the defendant, specialized persons or institutions in order to design and carry out a recuperation plan for the native fauna and flora . . .

c. Contract on charge of the defendant, specialized persons or institutions in order to design and carry out a plan for the regeneration of aquatic life;

d. Contract on charge of the defendant, specialized persons or institutions in order to design and carry out a plan for the health improvement and medical monitoring . . .

The resources necessary to cover the cost of activities whose execution is demanded, in the amount that shall be determined by an expert, as according to the penultimate clause of article 43 of the Ley de Gestión Ambiental [Environmental Management Act], shall be delivered to the Amazon Defense Front (Frente de Defensa de la Amazonia), with the purpose of using them exclusively for the ends determined in the sentence, with the concourse and assessment of specialized international institutions.805

Under the doctrine of extra petita, no award of damages in this case could go beyond the scope of those claims, a fact recognized by the plaintiffs’ lawyers themselves. As noted, in outtakes from the film Crude, the plaintiffs' lawyers admit that “in the beginning we always felt like the case was only for, to get money to do a proper cleanup.”806 At that time, even Mr. Donziger stated that there were “no damages other than cleanup.”807 They only belatedly decided to expand the case to include “every

805 Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a.m., Record at 73-80v, 79v-80v. 806 Transcript of Crude Outtakes, attached as Exhibit 2 to Chevron’s Motion for Terminating

Sanctions, filed Aug. 6, 2010 at 2:50 p.m. (CRS-269-00-01). 807 Transcript of Crude Outtakes, attached as Annex 8 to Chevron’s Fourth Supplemental Motion

for Terminating Sanctions, filed Dec. 22, 2010 at 5:45 p.m. (CRS 076-05-1A).


- 182 -

category of damages we possibly can.”808 The Crude outtakes make clear that this was part of a concerted strategy to so inflate the monetary amount of asserted damages that a necessarily reduced judgment would appear reasonable by comparison. As Mr. Donziger put it, “[w]e ask for much more than we expect”—mentioning as much as “eighteen billion”—so that the judge can award “three billion” and say “‘I can give Texaco about 80 percent of what they want.’”809

6.3 Improper Attempts to Amend and Expand the Complaint in Violation of the Code of Civil Procedure

The plaintiffs, both through their conduit, Mr. Cabrera, and through their own brief dated September 16, 2010 at 5:15 p.m., willfully ignore that their complaint fixed the parameters of this lawsuit. In a cynical attempt to grossly inflate the requested damages so that any reduced award by this Court appears to be a “victory” for Chevron,810 the plaintiffs have attempted to add myriad claims, which they never pled in their complaint, for huge damage amounts, which run contrary to logic. These claims, aside from being unproven and based on fraudulent evidence, should therefore be rejected out of hand as extra petita.

The plaintiffs first attempted to introduce extra petita claims by conspiring with the supposedly “neutral” court-appointed expert, Mr. Cabrera. This Court ordered Mr. Cabrera to perform a broad but nonetheless circumscribed investigation:

• To assess “the environmental damage, if any, sustained by primary resources; the soil, water resources, plant cover, fauna and other elements of the environment, and to describe the characteristics thereof” (letter a);

• To specify “if possible, the source of such damage, both causally and chronologically” (letter b);

• To determine “the possible current existence of substances affecting the environment and which constitute or may constitute a hazard for living beings or a threat to their survival and way of life” (letter c);

• To specify “the works, activities and technical measures that should be put into practice first, to remediate the environment, and to restore it, to the

808 Transcript of Crude Outtakes, attached as Exhibit 2 to Chevron’s Motion for Terminating

Sanctions, filed Aug. 6, 2010 at 2:50 p.m. (CRS-269-00-01). 809 Transcript of Crude Outtakes, attached as Exhibit 5 to Chevron’s Supplemental Motion for

Terminating Sanctions filed Sept. 14, 2010 at 11:10 a.m., (CRS-159-00-06). 810 Transcript of Crude Outtakes, attached as Exhibit 5 to Chevron’s Supplemental Motion for

Terminating Sanctions filed Sept. 14, 2010 at 11:10 a.m., (CRS-196-01-01); see also Transcript of Crude Outtakes, attached as Annex 1 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., (CRS-159-00-06a).


- 183 -

extent technically possible, to the state it was in prior to sustaining the damage” (letter d); and

• To determine “the methodological parameters of the restoration and the environmental standards or targets to be achieved, depending on the features of each environment” (letter e).811

Despite this clear guidance from the Court and despite Chevron’s objections, Mr. Cabrera’s report absurdly addressed a litany of additional topics, ranging from compensation for excess deaths allegedly caused by cancer, to improvements to Petroecuador’s infrastructure, to drinking water systems. 812 Although Chevron repeatedly objected to the inclusion of claims outside those in the complaint,813 and denounced Mr. Cabrera’s report as a fraud, the plaintiffs have refused to disavow any of his damages claims, including those that are plainly extra petita. Instead, in their brief of September 16, 2010 at 5:15 p.m., the plaintiffs continued, and exacerbated, their fraud by significantly increasing the already unsustainable figure from Mr. Cabrera’s report which was itself absurd and contrary to logic.

Specifically, through Mr. Cabrera and their ad hoc submissions, the plaintiffs request at least six categories of damages that they never pled in their complaint:

i. “Compensation for excessive deaths from cancer”– The report attributed to Mr. Cabrera estimated US$9.527 billion, 814 which the plaintiffs increased in their submission of September 16, 2010, at 5:15 p.m., to between US$12.1 and US$69.7 billion. 815 No claim in the complaint relates to compensation for individual cancer deaths, which the plaintiffs’ representatives have repeatedly acknowledged.816 Furthermore, the only party that has standing to bring such a claim would be the allegedly injured individual or his heirs, and neither the plaintiffs nor their counsel can bring claims on behalf of unnamed third parties. Moreover, any

811 Transcript of Swearing In of Expert Cabrera, filed June 13, 2007 at 9:45 a.m., Record at

130169-69v, 130169. 812 Expert Cabrera’s Response to Plaintiffs’ Questions regarding Global Report, filed Nov. 17,

2008 at 8:25 a.m., Record at 152949-153000, 153000. 813 See, e.g., Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008 at

2:14 p.m., Record at 141082-203, 141112-16; Chevron’s Objections to Expert Cabrera’s Supplemental Report, filed Feb. 10, 2009 at 5:35 p.m., Record at 154322-360, 154353-54.

814 Expert Cabrera’s Response to Plaintiffs’ Questions regarding Global Report, filed Nov. 17, 2008 at 8:25 a.m., Record at 152949-153000, 152986.

815 Plaintiffs’ Motion, filed Sept. 16, 2010 at 5:15 p.m., at 13. 816 See Transcript of Crude Outtakes, attached as Annex 1 to Chevron’s Motion filed Sept. 16,

2010 at 4:35 p.m., (CRS-027-18-01) (Mr. Donziger stating that allegations of cancer is “not that relevant legally . . . because we’re only suing for environmental clean-up”); see also YANZA, Luis, Clarification, La Hora, Oct. 2, 2009; see also Radio Cristal, Informative Cristalino, Sept. 11, 2009, at 10:33 a.m.; BOLTON, Clare, Rumble in the Jungle: Interview with Steven Donziger, Latin Lawyer Online, Mar. 28, 2008.


- 184 -

recovery for such a claim must go directly to the injured person or his heirs, not a third party that is not authorized to act on behalf of any specific individual, who allegedly died of cancer, as would be the case here with the Frente. Indeed, the plaintiffs have admitted through their attorneys that no evidence links individual cases of cancer to the Consortium’s operations: “‘It’s true that the exact correlation cannot be proved.’” 817 Instead, the plaintiffs base their absurd US$69.700 billion figure on a convoluted and illogical combination of flawed studies and inapposite valuations taken from unrelated litigation which occurred in the United States.

ii. “Unlawful profit” and “Punitive damages” – The report attributed to Mr. Cabrera estimated US$8.420 billion,818 which the plaintiffs increased in their so-called "legal brief" of September 16, 2010, at 5:15 p.m. to between US$4.570 and US$37.860 billion.819 No claim in the complaint relates to this proposal of the plaintiffs and Mr. Cabrera’s report. The plaintiffs through their counsel, Julio Prieto, have even acknowledged that “unfair profits” damages were “not demanded” in the complaint.820 In addition, without basis in Ecuadorian law for such damages, the plaintiffs have improperly imported this concept from the U.S. legal system. Indeed, as shown in the Crude outtakes, this claim originated with plaintiffs’ lead U.S. attorney, who described it as a “creative” way to “punish the company.”821 In all events, the calculation of such damages is factually baseless, as shown, infra § 7.4.6, and in Chevron’s rebuttal to Mr. Cabrera’s report.822

817 MCCOWAN, Karen, Ecuadorian Lawyer Battles Big Oil, The (Eugene, OR) Register-Guard,

Aug. 27, 2009. See Transcript of Crude Outtakes, attached as Annex 1 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m. (CRS-159-00-10) (plaintiffs’ representative conceding that “it cannot be determined with certainty that the people who fell ill with cancer fell ill due to the oil”); Radio Quito, Ecuadoradio News, Sept. 4, 2009, at 7:34 a.m. (“Never, never in this life will it be possible to demonstrate that a cancer case has been caused by Chevron or by a product produced or exploited by Chevron.”); Radio Cristal, Informative Cristalino, Sept. 11, 2009, at 10:33 a.m. (Julio Prieto, counsel for the plaintiffs, stating that “[w]hat we are claiming in this lawsuit has never been indemnification for damages to individuals due to health reasons, or for the death of a particular person”; “[d]amages to public health cannot be proved with medical certificates”; “[w]e are not suing for millions as indemnifications for sick persons, but rather we are demanding a compensation system for public health: monitoring, treatment and all this type of measure”).

818 Expert Cabrera Response to Plaintiffs’ Questions regarding Global Report, filed Nov. 17, 2008 at 8:25 a.m., Record at 152949-153000, 152978.

819 Plaintiffs’ Motion, filed Sept. 16, 2010 at 5:15 p.m., at 17. 820 Radio Cristal, Informative Cristalino, Sept. 11, 2009, at 10:33 a.m. 821 Transcript of Crude Outtakes, attached as Exhibit 2 to Chevron’s Motion for Terminating

Sanctions, filed Aug. 6, 2010 at 2:50 p.m., (CRS-193-00-01). 822 See Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008 at 2:14 p.m.,

Record at 141082-203, 141125-26.


- 185 -

iii. “Improvement of the oil infrastructure of Petroecuador” – The report attributed to Mr. Cabrera estimated US$375 million,823 and the plaintiffs apparently abandon this claim in their submission of September 16, 2010, at 5:15 p.m. No claim in the complaint covers this proposal from Mr. Cabrera’s report, nor, like the others, was it a matter he was asked to assess. The Frente certainly cannot bring a claim on behalf of Petroecuador, which is not a party to the complaint and which reached a comprehensive settlement with TexPet with respect to all potential environmental liabilities. In apparent recognition of the impropriety of this claim, the plaintiffs failed to raise it in their "legal brief" of September 16, 2010, at 5:15 p.m. and therefore appear to have abandoned it.

iv. “Provi[sion] of potable water” – The report attributed to Mr. Cabrera estimated US$428.000 million,824 which the plaintiffs increased in their submission of September 16, 2010, at 5:15 p.m. to between US$326.000 and US$541.500 million. 825 No claim in the complaint relates to compensation for the construction of drinking water systems. This is completely different from the plaintiffs’ request in Chapter VI.1.b of the complaint for the “sanitation of rivers, lakes, swamps wetlands and natural and artificial water streams.” 826 Mr. Cabrera’s proposal includes the construction of three water supply systems,827 but such in-kind damages go beyond this Court’s order, which required Mr. Cabrera to specify “the works, activities and technical measures that should be put into practice first, to clean up the environment, and to restore it, to the extent technically possible, to the state it was in prior to sustaining the damage.” 828 The plaintiffs’ new figure simply adjusts Mr. Cabrera’s estimation to account for increased population and inflation, while leaving all his flawed assumptions unchanged. Notably, neither the ECORAE, the Inter-American Development Bank, the National Development Plan of the Sector for Drinking Water and Basic Sanitation, nor any other relevant entity has ever proposed such a preposterous approach to supplying potable water to the residents of Sucumbíos and Orellana provinces.829

823 Expert Cabrera’s Global Report, filed Apr. 1, 2008 at 8:30 a.m., Record at 134228-89, 134234. 824 Expert Cabrera’s Global Report, filed Apr. 1, 2008 at 8:30 a.m., Record at 134228-89, 134234. 825 Plaintiffs’ Motion, filed Sept. 16, 2010 at 5:15 p.m., at 12. 826 Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a.m., Record at 73-80v, 79v. 827 Evaluation of Costs for the Provision of Water in the Provinces of Sucumbíos and Orellana

Ecuador at 9-19, attached as Annex R to Expert Cabrera’s Global Report, Sucumbíos, filed Apr. 1, 2008 at 8:30 a.m., Record at 139882-906, 139893-903.

828 Transcript of Swearing In of Expert Cabrera at letter (d), filed June 13, 2007 at 9:45 a.m., Record at 130169, 130169v, 130169.

829 See Chevron’s Objections to Expert Cabrera’s Global Report at 81-82, filed Sept. 15, 2008 at 2:14 p.m., Record at 141082-203, 141162-63.


- 186 -

v. “Recovery of the land and culture of indigenous communities” – The report attributed to Mr. Cabrera estimated US$430.000 million, 830 which the plaintiffs increased in their submission of September 16, 2010, at 5:15 p.m. to at least US$481.500 million.831 No claim in the complaint relates to this proposal by the plaintiffs and Mr. Cabrera’s report. In response to the Cabrera Report, Chevron submitted evidence establishing that the alleged loss of territory of the indigenous population and the alleged cultural changes thereof are due to the policies and sovereign decisions of the Ecuadorian Government, which has encouraged the colonization of the Ecuadorian Oriente since the middle of the twentieth century.832 This process runs parallel, but is not caused by independent Consortium activities, which lawfully occupied only a minimal fraction (one percent) of the approximately 440,000 hectares of what became the former concession area.833

vi. “Compensation for loss of ecosystem” – The report attributed to Mr. Cabrera estimated US$1.697 billion, 834 but the plaintiffs changed this figure in their submission of September 16, 2010, at 5:15 p.m. to between US$874.000 million and US$1.700 billion.835 No claim in the complaint relates to compensation calculated on the basis of the areas that had to be cleared by the Consortium to develop the oil infrastructure, such as platform stations, wells, and access roads.836 This same area is still in use by Petroecuador and has in fact been expanded by this government

830 Expert Cabrera’s Response to Plaintiffs’ Questions regarding Global Report, filed Nov. 17,

2008 at 8:25 a.m., Record at 152949-153000, 153000; see Evaluation of Damages Suffered By Indigenous Peoples and Remediation Plan for Affected Indigenous Peoples, attached as Annex M to Expert Cabrera’s Global Report, filed Apr. 1, 2008 at 8:30 a.m., Record at 139752-70, 139770; see also Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008 at 2:14 p.m., Record at 141082-203, 141144-46.

831 Plaintiffs’ Motion, filed Sept. 16, 2010 at 5:15 p.m., at 14. 832 SOUTHGATE, Douglas, Response to the Assertions of Mr. Cabrera Regarding Supposed

Damages to the Indigenous Communities, included in Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008 at 2:14 p.m., Record at 146888-991v, 146892-895. The law on the Colonization of the Ecuadorian Amazon Region, promulgated in 1978, had a special nature given that it promoted the colonization of the Amazon as a national priority, and it was situated above any other law.

833 SOUTHGATE, Douglas, Response to the Assertions of Mr. Cabrera Regarding Supposed Damages to the Indigenous Communities, included in Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008 at 2:14 p.m., Record at 146888-991v, 146892

834 Value of Losses to Tropical Forest Ecosystems, filed as Annex O to Expert Cabrera’s Global Report, filed Apr. 1, 2008 at 8:30 a.m., Record at 139781-96, 139795.

835 Plaintiffs’ Motion, filed Sept. 16, 2010 at 5:15 p.m., at 9-10. 836 See Value of Losses to Tropical Forest Ecosystems at 15, filed as Annex O to Expert

Cabrera’s Global Report, filed Apr. 1, 2008 at 8:30 a.m., Record at 139781-96, 139795; see also Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a.m., Record at 73-80v, 79-79v.


- 187 -

company to more than double the number of oil wells in the former concession area. 837 Despite any superficial similarity to the plaintiffs’ allegations of environmental damage, this claim cannot be related to this litigation because an activity promoted, authorized, and supervised by the Ecuadorian Government cannot be considered damage unless this Court is to declare all hydrocarbon production illegal. And this hypothesis certainly cannot be compensation for the Frente, which does not own the lands in question and has not suffered any specific damages. Yet it would receive nearly US$1.7 billion for this item under the judgment expected by the plaintiffs, their attorneys, and their financial backers.

Any judgment based on the six claims discussed above—or any judgment which sweeps beyond the plaintiffs’ claims in their complaint—would flagrantly violate the principle of congruency, and therefore, in addition to its possible nullity, should be revoked. Your Honor recently applied this principle in the Red Amazónica case, which stated: “Summary oral hearing proceedings do not admit amendments to the lawsuit, . . . consequently, the decision issued may touch only on the plaintiffs’ petitions, i.e. compensation for the damage mentioned in the lawsuit.” 838 As clips from the documentary Crude show, plaintiffs’ lawyers themselves realized that damages not requested in the complaint would be barred because they did not “ask for [them] from the beginning.”839

The plaintiffs attempt to justify these extra petita claims in their September 16, 2010 filing at 5:15 p.m. by arguing that they constitute “indirect impacts” to the “environment,” which they define, citing a single dictionary, as “the compendium of natural, social and cultural values existing in a place at a given moment, which influence the physical and psychological life of man.”840 The plaintiffs more recently attempted to buttress this capacious definition by citing the 1999 EMA and the 2008 Political Constitution, contending that “all the elements that make up an ecosystem” and “each and every component interrelated with the environment” necessarily “form part of the environment.”841 According to the plaintiffs, then, everything that is “interrelated” to the earth’s ecosystem or “affect[ed]” by it, including the “life, diet and economy” 842 of anyone living within it, is encompassed within Chapter VI.2 of their Complaint.

837 See Annex A of Environmental Impacts Associated with the Deficient Operational Practices of

Petroecuador, filed as part of Appendix A to Chevron’s Rebuttal to the Barros Report, filed on Jan. 14, 2010 at 5:55 p.m., Record at 164461-69.

838 Red Amazónica vs. Oleoducto de Crudos Pesados S.A., Judgment of the Superior Court of Justice of Nueva Loja, July 29, 2009, Case 218-2008 (in the twelfth paragraph).

839 Transcript of Crude Outtakes, attached as Exhibit 5 to Chevron’s Supplemental Motion for Terminating Sanctions, filed Sept. 14, 2010 at 11:10 a.m., (CRS-159-00-06).

840 Plaintiffs’ Motion, filed Sept. 16, 2010 at 5:15 p.m., at 3, 6. 841 Plaintiffs’ Motion, filed Nov. 12, 2010 at 5:22 p.m., at 2. 842 Id. at 3.


- 188 -

Plaintiffs’ argument is wrong on multiple levels. Many of the damages categories now claimed by plaintiffs were not pled in the Complaint—Chapter VI.2 of the complaint contains four specific requests for relief that bear no resemblance to the amorphous definition of “environment” that plaintiffs now offer in a transparent attempt to increase damages. It is, of course, those specific requests for relief that govern under the doctrine of congruency. They have defined the contours of this litigation since its inception, and it would be grossly inequitable and unfair and would violate the right to a defense to substantially expand the scope of this litigation on the eve of judgment. To do so would deny my client its due-process rights to notice and the opportunity to defend itself. Despite the plaintiffs’ illegal effort to expand their claims by cherry-picking a broad and capricious dictionary definition of “environment,” it remains that none of the six damage categories discussed above are encompassed in the specific terms of the complaint.

Furthermore, plaintiffs’ broad definition of the “environment” is not even supported by the text of the EMA, which cabins its scope to physical and tangible objects like water, air and soil, and not intangible and highly personal matters that might be “interrelated” or “affected” by their contamination. The EMA’s Glossary of Terms defines “environmental damage” as harm to “pre-existing environmental conditions or any of its components.” The term “component” refers to something which is “part” of the environment,843 and not, as plaintiffs suggest, things that might be merely “interrelated” to the environment—like the inhabitants’ “life, diet and economy.” Indeed, the “Institutional Framework” that defines the scope of the Act limits “environmental management” to policies designed to “conserv[e] . . . natural heritage and . . . natural resources,” and not the intangible and highly personal elements that plaintiffs would include.844 Indeed, consonant with plaintiffs’ complaint, but contrary to their current assertions, the EMA even treats “human health” and “the environment” separately, which confirms that the former is not included within the definition of the latter.845

843 See Royal Spanish Academy Dictionary (22d ed. 2001) 844 EMA, art. 7. 845 See id. art. 43 (creating a cause of action for “damages . . . caused to health or the

environment”); see also EMA, Glossary of Terms (defining “environmental quality” as aiming to monitor “activities causing harmful or dangerous effects for human health or degrading the environment and natural resources”). The natural consequence of the plaintiffs’ argument that an action under the EMA can include compensation for things like heath, diet and economy is that individual causes of action under the Civil Code—like, for instance, a tort claim under Article 2214—could be entirely supplanted by the action of a diffuse group. Under plaintiffs’ formulation of the present lawsuit, the latter would deprive the former of any recovery whatsoever. But this Court obviously cannot negate large swaths of the Civil Code and twist the EMA for the plaintiffs’ purposes, swallowing a myriad of other personal torts. As Your Honor previously held, “[i]t is contrary to law and a violation of law to use environmental suits to bring claims for ordinary civil compensation. Consequently, when deciding [environmental] case[s], the Court should analyze only the presence or absence of environmental damage, considering that any matter related to civil damages is not admissible in the environmental lawsuit, leaving the parties at liberty to exercise those rights through civil channels,” Red Amazónica vs. Oleoducto de Crudos Pesados S.A., Judgment of the Superior Court of Justice of Nueva Loja, July 29, 2009, Case 218-2008, at ¶ 14.


- 189 -

Your Honor has recently articulated that the EMA “signals the elements that should be evaluated in determining environmental impact,” namely “biodiversity, soil, air, water, landscape . . . odors . . .[and] temperature changes.”846 In an “environmental lawsuit” like this case, the Court is “incompetent to judge anything related to the damage that could have been caused to the plaintiffs’ assets, particularly the loss of infrastructure, commercial value of the land, plantations, . . . houses, ponds or agro-fishing infrastructure, fences, crops or domestic animals,” because those matters “are covered by Civil Law, not Environmental Law.”847 This reading is also confirmed by the same Constitutional provisions cited by the plaintiffs. Article 66 of the 2008 Constitution guarantees the right to a “balanced environment, free of pollution,” which suggests that the “environment” is limited to physical things, like the water, soil and air, that can actually be “polluted.” If there were any remaining doubt, Article 276(4) refers to a “healthy and sustainable environment” as one that provides “quality access to water, air and soil.”848 Plaintiffs' limitless definition of environmental damage under the EMA, in addition to being erroneous, demonstrates that their claims violate Ecuador's clear rule against retroactive application of substantive law. Plaintiffs do not even attempt to suggest that, during the time the Consortium operated, there was any legal basis for them to claim the types of expansive damages they now seek. (Indeed, as my client has demonstrated in multiple prior submissions, the law did not previously allow any of plaintiffs' claims.) Thus, even if the 1999 EMA and the 2008 Constitution heralded a new definition of the “environment” and “environmental damage” to encompass intangible aspects of indigenous life, diet and economy, Chevron cannot—consonant with Ecuadorian law and fundamental notions of due process—be held accountable for alleged damages to those objects. Article 7 of the Civil Code establishes clearly that “the law . . . does not have any retroactive effect.” This rule is a basic component of fairness and due process; according to plaintiffs’ own counsel, “the legal order proscribes any practice exercising a power that leads to uncertainty, i.e., to the inability to anticipate or foresee the legal consequences of the conduct.849 By broadening the definition of the “environment” to cover a broad array of intangible and highly personal objects that were not protected under the rubric of environmental laws and regulations in the past, this Court would impose new liability, and expose the defendant to new

846 Red Amazónica vs. Oleoducto de Crudos Pesados S.A., Judgment of the Superior Court of Justice of Nueva Loja, July 29, 2009, Case 218-2008, at ¶ 13; see also Article 23 of the EMA.

847 Id. at ¶¶ 13-14. 848 Plaintiffs' claim that "all elements that make up an ecosystem form part of the environment" is

wrong. In fact, the opposite is true: The environment is part of an ecosystem. See also EMA, Glossary of Terms (defining the “ecosystem” as “[t]he basic . . . integration between organisms and the environment”). So, while the pollution of water, air and soil may conceivably affect the broader ecosystem, those interrelated effects do not themselves constitute “environmental damage.”

849 Alberto Wray, ‘El debido proceso en la Constitución’, en Iuris Dictio, revista del Colegio de Jurisprudencia de la Universidad San Francisco de Quito, vol. 1, No. 1, January 2000, p. 39), cited in the decision of May 29, 2002, Decision No. 80-2002, First Chamber of the Supreme Court of Justice, Official Gazette 626, July 25, 2002.


- 190 -

damages, based on conduct preceding the enactment of that new statutory definition. Such a change is plainly a matter of substantive concern, which cannot be retroactively applied.

In sum, the principle of congruency is fundamental to the Ecuadorian procedural system, and if the Court were to include matters in its judgment beyond those in the complaint, then the judgment would be null and must be revoked under the provisions of Article 273 of the Code of Civil Procedure. The judge may not amend the complaint itself because if it were to do so, it would become a party to the case rather than a neutral arbiter. Impartiality of a judge is the essence of the judicial function and the basis for society’s respect for the rule of law. Indeed, such impartiality gives the Court the moral authority needed to settle the disputes submitted to it by the parties. Therefore, any judgment which accepts the claims in Mr. Cabrera’s report or the plaintiffs’ so-called "legal brief" of September 16, 2010, at 5:15 p.m., which greatly exceed the specific claims pled in the complaint, violates the principle of congruence and constitutes extra petita, which would permit revocation and nullity of the judgment. This Court must rule according to the law and cannot consider the plaintiffs’ interests to be its own.

CHAPTER VII. THE PLAINTIFFS HAVE NOT PROVEN ESSENTIAL FACTUAL ELEMENTS OF

THEIR TORT CLAIM

Even assuming, contrary to the law and facts, that the Court had jurisdiction over Chevron, that plaintiffs had not committed fraud and had their own lawyers and paid consultants draft the Cabrera Report, that Chevron’s due process rights had not been systematically violated, and that the plaintiffs had stated a viable claim, the complaint must be rejected because the plaintiffs have not proven their tort claim.850

7.1 The Plaintiffs Have Failed to Prove Negligence, Damage, and Causation

The plaintiffs seek to prove alleged damage that occurred and to prove alleged contingent damage to the environment and public health based upon alleged “acts or omissions . . . directly imputable to [Texaco’s] wrongful intention or to its negligence.”851 The plaintiffs’ claims for alleged environmental damage are contained in Chapters VI.1, VI.2.a, VI.2.b, and VI.2.c of their complaint.852 Under Ecuadorian law, environmental rights are “diffuse” or “collective” rights or interests. See supra § 1.4.853 Therefore, the

850 My client reserves the right to supplement this filing with additional evidence as it becomes

available. 851 Plaintiffs’ Complaint, filed May 7, 2003, at 11:30 a.m., Record at 73-80v, 78v. 852 See Plaintiffs’ Complaint, filed May 7, 2003, at 11:30 a.m., Record at 73-80v, 78-80. 853 The final part of Article 397 of the current Constitution classifies the right to live in a healthy,

ecologically balanced environment, as both an individual and a collective right: “To guarantee the individual and collective right to live in a healthy and ecologically balanced environment, the State is committed . . . .” Article 86 of the prior Constitution, in effect until October 2008, described the right to live


- 191 -

plaintiffs must prove that my client was negligent and caused specific harm to a diffuse right.

The plaintiffs’ claim for damages related to the public health is contained in Chapter VI.2.d of their complaint. This claim seeks the hiring, at the defendant’s expense, of “specialized persons or institutions in order to design and carry out a plan for the health improvement and medical monitoring.”854 Unlike the “diffuse” interest in the environment, claims for harm to health typically seek to vindicate individual rights, which when claimed by a group are referred to as “individual homogenous rights” that are both “individual” and “divisible,”855 yet it is clear that the plaintiffs have neither pled nor proved any such personal injuries. To the extent that the plaintiffs are claiming some generalized interest in public health, they cite no authority for bringing such claims and, in all events, must prove that my client caused such harm.

Given that plaintiffs are seeking compensation for tort liability, they must, under Ecuadorian law, prove (i) negligence or intent; (ii) damage; and (iii) a causal nexus between Chevron’s conduct and the alleged damage.856 The Supreme Court (now the National Court) has held that for there to be civil liability, especially tort liability, these elements must exist and be proven.857 As discussed below, the plaintiffs have not established these elements with respect to their claims for environmental remediation or healthcare costs.858 The remainder of their requested damages are extra petita and, in all events, baseless.

(continued…) in a healthy environment free from pollution as a collective right, a distinction not contained in the current Constitution.

854 Plaintiffs’ Complaint, filed May 7, 2003, at 11:30 a.m., Record at 73-80v, 80. 855 GIDI, Antonio. Collective Actions and Protection of the Collective and Individual General

Rights in Brazil: A Model for Civil Law Countries, Universidad Nacional Autónoma de México, Instituto de Investigaciones Jurídicas, Doctrina Jurídica Núm. 151. Mexico, 2004. p. 52.

856 Plaintiffs themselves admit they bear the burden of proof. They argued that “the assertions in the complaint are to be proven only and exclusively by the Plaintiffs . . . and therefore, if the Plaintiffs consider the practice of certain evidentiary proceedings to be adequate and others to be unnecessary, this will should prevail.” Plaintiffs’ Filing, Feb. 15, 2006, at 5:45 p.m., Record at 93628-30, 93628; see also Judgment of the Supreme Court of Justice, First Civil and Commercial Division, Aug. 29, 2001, published in Judicial Gazette, series XVII, no. 7, p. 1853.

857 See Judgment of the Supreme Court of Justice, First Civil and Commercial Division, Aug. 29, 2001, published in Judicial Gazette, series XVII, no. 7, p. 1853 (“There must be a causal link between such misdeeds and the damage.”).

858 The monetary award that the plaintiffs are seeking further illustrates their failure to prove an actionable tort. While the typical remedy in cases of diffuse harm is to order the defendant to perform a specific actions to remedy the proven damage—such as remedial work to the public lands—or to revert money to a government-run fund that would apportion such work, the plaintiffs’ complaint instead seeks to deliver those funds to a third-party private entity that has not suffered any alleged harm.


- 192 -

7.2 Plaintiffs Have Failed to Prove Negligence or Intent

With respect to all of their legal claims, the plaintiffs allege that TexPet’s operational practices were negligent.859 But this bald allegation fails as a matter of law: all of TexPet’s work was overseen and approved by the State, and it complied with the regulations and standards in force during the Consortium’s existence.860 In fact, the same operating practices that TexPet used when it was the operator of the Consortium were used in other countries at the time,861 and many of those practices and standards are still authorized in Ecuador and around the world. The TexPet remediation, too, complied with the remediation standards established by the Ecuadorian State in the remediation agreement signed by both parties, and were consistent with standards and practices in comparable regions at the time.862

Still, plaintiffs, with the complicity of Mr. Cabrera, insist on holding Chevron to a standard that far exceeds even the strictest Ecuadorian environmental standards today. Premising liability on this basis would violate the principle of the non-retroactive application of the law. See supra § 5.3. First, the Cabrera Report purports to apply the standards of Decrees 3516 and 1215, both of which were published years after TexPet transferred the operations of the former Consortium to Petroecuador and the remediation work was completed. Then, when applying those regulations, it disregards the authority of the National Environmental Protection Agency (“DINAPA”), which has determined that the remediation of the concession areas (currently being carried out by the Unit for Mitigation and Remediation (“UMR”) project, see infra §§ 7.3.1, 7.5) need only comply with the standards suggested for soils for “agricultural use,” and not those designated for “sensitive ecosystems,” as are arbitrarily included in Table 3.2 of the Cabrera Report.863 Yet the supplemental Cabrera Report goes even further, using an

859 See Plaintiffs’ Complaint, filed May 7, 2003, at 11:30 a.m., § IV.9, Record at 73-80v, 78v

(“Because the acts and omissions described above are directly imputed to its manifest intention or to its negligence, TEXACO Inc. made itself civilly responsible for the damages caused, and acquired the obligation to repair them.”).

860 Answer as Read into the Record §§ II.A.1.2-3, II.A.1.15, II.B.1, filed Oct. 21, 2003 at 9:10 a.m., Record at 243-67, 246, 247-47v, 253-53v. See also Hydrocarbons Law, Art. 29(t) (stating that the standard that TexPet needed to fulfill since this article was enacted in 1982 was to “[c]onduct the petroleum operations in accordance with the laws and regulations of environmental protection and security of the country and in relation to international practice in the preservation of the rich on fish and agricultural industry.”).

861 Chevron’s Objections to Expert Bianchi’s Judicial Inspection Report on Sacha-13, filed Nov. 29, 2005, at 3:20 p.m., Record at 86002-14, 86011; Chevron’s Objections to Expert Robalino’s Judicial Inspection Report on Shushufindi-13, filed Apr. 17, 2006, at 2:50 p.m., Record at 103678-104083, 103737.

862 See Woodward-Clyde International, Remedial Action Project, Oriente Region, Ecuador, Final Report, Volume I, dated May 2000, attached as Annex 44 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., at ES-1; see also, Evidence submitted at JI of Sacha-6: Remediation Contract dated May 5, 1995, filed Aug. 18, 2004, at 9:10 a.m., Record at 8579-8607, 8585; Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 141082-203, 141134-35.

863 Plaintiffs’ own consultant admitted the impropriety of the “sensitive ecosystems” standard, explaining that he was searching for ways to “justify” its use. See Email from Douglas Beltman to Juan


- 193 -

unprecedented 100 ppm standard for TPH, and it is only on the basis of this retroactive and arbitrary application of soil-use tolerance limits that the Cabrera Report improperly concludes that the remediation carried out by TexPet was “insufficient.” This Court cannot justify damages against Chevron based upon the illegal retroactive application of entirely new and inapplicable environmental standards.864

7.3 Plaintiffs Have Not Proven the Allegations of Damages Pled in Their Complaint

The complaint includes only two claims for which plaintiffs now request damages: (i) soil and groundwater remediation and (ii) healthcare costs.865 Plaintiffs, in their submission of September 16, 2010, at 5:15 p.m., asserted that Chevron is responsible for performing up to US$1.86 billion in soil and groundwater remediation. Although astronomical, this figure marks a reduction from recommendation in the Cabrera Report for damages of over US$6 billion for soil and groundwater remediation. However, on the subject of healthcare costs, the plaintiffs—without submitting any new evidence— (continued…) Pablo Sáenz dated Mar. 04, 2008, at 9:25 a.m. (STRATUS-NATIVE066073), attached as Annex 16 to Chevron’s Motion filed Dec. 20, 2010 at 5:50 p.m. (“Thanks for the info on the ‘ecosistemas sensibles.’ Somewhere along the line someone decided that the 1,000 mg/kg TPH standard for ‘ecosistemas sensibles’ is the one to use for our case, and I’m trying to write up a justification for it. Since the area isn’t officially a Patrimonio Nacional de Areas Naturales, we need to find a way to still justify using the 1,000 mg/kg. Would you be able to ask Pablo or Luis about their thoughts as to how we can justify using the 1,000 mg/kg?”).

864 In a telling indication that they cannot prove their allegation of negligence, the plaintiffs floated the notion that Chevron could be held liable “even in the event that Texaco had acted with diligence, without guilt or fraud.” Plaintiffs Motion, filed Sept. 16, 2008 at 11:30 a.m., § 5.7.2.1, at 24, Record at 150878-995, 150901. But the source for this argument, a 2002 decision of the Supreme Court, is not the law and does not and cannot be applied to this case. According to the Ecuadorian legal system, to change the current legal structure of civil liability it is necessary to enact a new law abrogating the provisions of the Civil Code on negligence and enacting new ones regarding strict liability. Pursuant to Article 3 of the Civil Code, a judicial decision is only binding in the case in which it was issued. The only exception to this would be that this ruling is cited three times in other Supreme Court rulings, which has not happened, and even if it happens, the decision is not applicable here as it refers only to personal injury claims brought under the Civil Code, and not diffuse environmental claims brought under the EMA. See Comité Delfina Torres Vda. de Concha vs. Petroecuador y otros, Judgment of the Supreme Court of Justice, First Civil and Commercial Division, Oct. 29, 2002, published in Official Gazette 43, Mar. 19, 2003. In all events, the application of this admittedly “new” theory in the Ecuadorian Law cannot be applied retroactively to conduct that ended in 1990 as it would violate my client’s right to a defense. See supra § 7.7.

865 Plaintiffs’ complaint also pled other claims for which the plaintiffs have presented no evidence and requested no damages. For example, in Chapter VI.II.c of the complaint, the plaintiffs request the hiring, at the defendant’s expense, of “specialized persons or institutions in order to design and carry out a plan for the regeneration of aquatic life.” Plaintiffs’ Complaint, filed May 7, 2003, at 11:30 a.m., Record at 73-80v, 80. Yet plaintiffs present no specific evidence of any specific damage to aquatic life. The plaintiffs also purport to reserve the right to submit additional damage estimates. Chevron strongly objects to such submissions by the plaintiffs, as it will deny Chevron its due process right to respond. Accordingly, Chevron reserves the right to file all necessary rebuttals.


- 194 -

tripled the requested damages from US$480 million to US$1.4 billion. None of these bloated figures can be justified by the fraudulent, unreliable, and incomplete data submitted by the plaintiffs.

For the reasons given above, supra Chapters II-III, neither the evidence submitted by the plaintiffs’ nominated experts nor the Cabrera Report is credible or trustworthy, and there is therefore no competent evidence upon which Your Honor could base judgment against Chevron. For example, the plaintiffs in an acknowledgment that they are unable to prove their case with scientific evidence falsified at least two expert reports.866 See supra § 2.1. And even if its fraudulent nature could somehow be ignored, the plaintiffs’ evidence lacks both credibility and evidentiary value. During the truncated judicial-inspection process, the plaintiffs’ nominated experts failed to abide by the sampling and analytical protocols established by this Court in performing their fieldwork. See supra § 3.3. For example, much of their sample analysis was done at the then-unaccredited867 HAVOC laboratory, to which the Court was repeatedly denied access.868 Other analyses were done at the “Selva Viva” lab, which one of the plaintiffs’ nominated experts, Charles Calmbacher, has since testified was actually a hotel room that plaintiffs’ technical team used as a makeshift testing area.869

The fabricated Cabrera Report, of course, was a complete fraud, as it was in reality drafted by plaintiffs’ attorneys, paid consultants, and affiliated activists. See supra § 2.2. Moreover, Mr. Cabrera’s fieldwork during the global-assessment process was even less probative than the work of plaintiffs’ nominated experts during the judicial-inspection process. See supra § 3.4.3-3.4.6. In addition to his conflict of interests, his undisclosed work with the plaintiffs’ representatives, and his clear bias against my client, see supra § 3.4, Mr. Cabrera performed only limited sampling at forty-five of the 335 well and 19 production sites in the former concession area.870 In violation of this Court’s orders871 and basic scientific protocol, half of the samples were collected in secret so that Chevron could not observe either the sampling process or the

866 Chevron’s Motion to Strike Dr. Calmbacher’s Judicial Inspection Reports, filed Apr. 14, 2010, at 3:42 p.m., Record at 168681-99, 168681; see also Official Transcript of Deposition of Dr. Charles W. Calmbacher at 112:1-8, 116:3-18, dated Mar. 29, 2010, filed as Annex 5 to Chevron’s Motion to Strike Dr. Calmbacher’s Judicial Inspection Reports, filed Apr. 14, 2010, at 3:42 p.m., Record at 168970-169158v, 169028, 169030 (the Spanish translation is included at Record at 169072-157, 169127v, 169129v).

867 See Ecuadorian Accreditation COAE Letter filed July 12, 2006, at 5:50 p.m., Record at 114413-14.

868 See Chevron’s Motion Regarding Collusion between Plaintiffs and HAVOC Laboratory, filed Sept. 18, 2007, at 3:05 p.m., Record at 132637-40, 132637.

869 Official Transcript of Deposition of Dr. Charles W. Calmbacher at 133:15-19, dated Mar. 29, 2010, filed as Annex 5 to Chevron’s Motion to Strike Dr. Calmbacher’s Judicial Inspection Reports, filed Apr. 14, 2010, at 3:42 p.m., Record at 168970-169158v, 169038v (the Spanish translation is included at Record at 169072-157, 169138).

870 Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 141082-203, 141088.

871 See, e.g., Order of Oct. 3, 2007, filed at 11:00 a.m., Record at 132846-55v, 132847.


- 195 -

methodology used.872 Indeed, over US$1 billion of the soil-remediation damages in the initial Cabrera recommendation would go towards sites Cabrera never visited, and the Cabrera Report made no attempt to establish that any observed hydrocarbon impacts were the result of Consortium activities, as opposed to subsequent activities by Petroecuador or third-party operators.873 Additionally, while the relevant hydrocarbon compounds for surface water are benzene, toluene, ethylbenzene, and xylene (“BTEX”) and polycyclic aromatic hydrocarbons (“PAHs”), the Cabrera Report included no testing for BTEX and only two water samples for PAHs, all of which fell below the permissible drinking water limits established by the World Health Organization (“WHO”) and the U.S. EPA for hydrocarbons and metals.874

While plaintiffs have attempted to present their September 16, 2010 filing at 5:15 p.m. as a panacea, it is in fact an audacious extension of their fraudulent conduct, as shown in my client’s submission of October 29, 2010, at 5:20 p.m. Without providing new evidence, the plaintiffs recommended a four-fold increase in the amount alleged in damages.875 Even if their fraud could somehow be ignored, plaintiffs have not proven their case against my client. The specialist reports the plaintiffs presented in this filing lack a reliable foundation and do not follow a scientific method. As discussed below, and as has been shown previously in my client’s submissions of September 16, 2010 at 4:35 p.m. and October 29, 2010 at 5:20 p.m., the plaintiffs' new reports by alleged specialists should be accorded no weight because, as confirmed under oath by the authors themselves,876 they (i) are premised largely on the fraudulent and unreliable Cabrera Report and the judicial-inspection experts nominated by plaintiffs; (ii) do not employ methodologies that are generally accepted in the field, that are controlled by scientific standards, or that can be replicated by independent experts; and (iii) contain obvious and essential errors. Reports with these fatal flaws should not be considered and cannot possibly have any relevance to this Court’s determination of liability or

872 DOUGLAS, Gregory S., Rebuttal of Mr. Cabrera’s Analytical Data and Evaluation of the Validity of his Sampling Program and Analytical Program, attached as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 148180-267, 148199.

873 See Chevron’s Objections to Expert Cabrera’s Global Report at 44-45, filed Sept. 15, 2008, at 2:14 p.m., Record at 141082-203, 141089 141095, 141096; see Expert Cabrera’s Global Report, filed Apr. 1, 2008, at 8:30 a.m., Record at 134228-89, 134236, 134277; see also Costs of Soil Remediation, attached as Annex N to Expert Cabrera’s Global Report, filed Apr. 1, 2008, at 8:30 a.m., Record at 134771-80, 134771.

874 See DOUGLAS, Gregory S., Rebuttal of Mr. Cabrera’s Analytical Data and Evaluation of the Validity of his Sampling Program and Analytical Program, attached as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 148180-267, 148192-193.

875 Indeed, the procedure allowing the plaintiffs’ submission was invented by the prior presiding judge and is contrary to both the Civil Code and the EMA. See supra § 3.1. Because it merely repackaged the flawed material previously drafted by their consultants and fraudulently submitted as the work of Mr. Cabrera, this Court should strike the plaintiffs’ September 16, 2010 submission, including the accompanying “specialist” reports, from the record and disclaim any reliance on these unreliable and irrelevant materials.

876 This testimony is discussed in further detail in my client’s filings of Dec. 21, 2010 at 11:00 a.m. and Dec. 22, 2010 at 5:40 p.m.


- 196 -

damages. Moreover, the new reports of the specialists hired by the plaintiffs have limited utility because they offer a vast range of damages that spans tens of billions of dollars; as this Court lacks the requisite technical expertise, any figure that it might select from this vast range would be arbitrary and illegal.

7.3.1 Plaintiffs Have Failed to Prove That Chevron Is Responsible for Environmental Remediation

The plaintiffs’ US$1.86 billion claim for soil and groundwater remediation has no factual basis. First, audits conducted at the end of the Consortium indicated limited environmental impact, and TexPet successfully remediated its share of this limited impact based on the Remediation Agreement signed with the Ecuadorian Government. Second, TexPet’s remediation was certified by the Ecuadorian Government and met the standards applicable at the time of its performance. Third, any further remediation in the former concession area became the sole responsibility of Petroecuador, and since that time there has been no joint and several liability that could have existed with TexPet. These and other grounds for rejecting the plaintiffs’ demand for damages are further explained below.

Contemporaneous audits of the Oriente showed limited and manageable environmental impacts arising from the Consortium’s operations: As shown in Chevron’s filings of September 16, 2010 at 4:35 p.m. and October 29, 2010 at 5:20 p.m., the first reliable data related to the environmental conditions in the former concession area comes from the audits that were conducted in the early 1990s at the time when the Consortium’s operations had just come to an end.877

In 1992, TexPet and Petroecuador hired HBT AGRA Limited (“HBT AGRA”), an independent environmental consulting firm, to identify, assess, and estimate the cost of any necessary remediation, and to help allocate responsibility for the Consortium’s environmental liabilities. 878 TexPet, Ecuador, and Petroecuador also formed an Environmental Audit Technical Committee composed of representatives from Petroecuador, TexPet, Petroamazonas, and Ecuador’s Ministry of Energy. This committee established HBT AGRA’s Scope of Work and the environmental audit scope, oversaw the technical aspects of HBT AGRA’s environmental fieldwork, and had final approval authority to accept or reject HBT AGRA’s reports. 879 TexPet also independently hired a second environmental audit company, Fugro-McClelland (West),

877 Chevron’s Motion filed Sept. 16, 2010, at 4:35 p.m., at 62. 878 HBT Agra Contract of Environmental Investigation Services for the Oilfields of the CEPE-

Texaco Consortium, dated April 15, 1992, attached as Annex 46 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., at 1-6.

879 HBT AGRA Limited, Environmental Assessment of the Petroecuador-Texaco Consortium Oilfields, Volume I: Environmental Audit Report, dated October 1993, at § 1.2, Record at 10784v-11029 (10793v).


- 197 -

Inc. (“Fugro-McClelland”)880 to obtain an independent assessment of the environmental conditions in the former concession area. Taken together, the HBT AGRA and Fugro-McClelland audits provide the most accurate assessment of the environmental impacts that may have resulted from TexPet’s operations.

In October 1993, after completing its fieldwork, HBT AGRA prepared a two-volume draft Environmental Assessment Report. It concluded that there was little evidence of widespread or unconfined contamination either in the surface or subsurface soil.881 It also found little evidence of subsurface contamination migration beyond the boundaries of the production stations and wellsites, because the impervious clayey soil of the area largely prevented contamination from moving away from the pits and ponds.882 With respect to water, HBT AGRA found little evidence of contamination of groundwater (i.e., subsurface water) that might serve as a drinking water supply.883 Furthermore, HBT AGRA found that, as the Consortium’s Operator, TexPet had adhered to standard industry practices of the time related to environmental management.884 In the end, it estimated a cost of US$13,274,000 to remediate spills and pits at the 22 production stations and 163 well sites that it had assessed.885

In 1992, Fugro-McClelland performed both a quality assurance/quality control (“QA/QC”) assessment of HBT AGRA’s work886 and a parallel audit of environmental

880 Fugro-McClelland (West), Inc. is part of Fugro N.V., an international company based in The

Netherlands that provides geotechnical, engineering and other services to various industries, including the oil and gas industry.

881 HBT AGRA Limited, Environmental Assessment of the Petroecuador-Texaco Consortium Oilfields, Volume I: Environmental Audit Report, dated October 1993, at § 8.6, Record at 10784v-11029 (10860, 10861v).

882 HBT AGRA Limited, Environmental Assessment of the Petroecuador-Texaco Consortium Oilfields, Volume I: Environmental Audit Report, dated October 1993, at § 8.6, Record at 10784v-11029 (10861v).

883 Indeed, HBT AGRA found “groundwater samples from domestic water wells and springs . . . to be near or below the assessment criteria standards.” HBT AGRA Limited, Environmental Assessment of the Petroecuador-Texaco Consortium Oilfields, Volume I: Environmental Audit Report, dated October 1993, at § 8.6, Record at 10784v-11029 (10861v).

884 HBT AGRA Limited, Environmental Assessment of the Petroecuador-Texaco Consortium Oilfields, Volume I: Environmental Audit Report, dated October 1993, at § 5.6.2, Record at 10784v-11029 (10819v-20v).

885 HBT AGRA Limited, Environmental Assessment of the Petroecuador-Texaco Consortium Oilfields, Volume II: Environmental Management Plan, dated Oct. 1993, at § 4.3.2, Record at 11032-99, 11067-67v.

886 Fugro-McClelland (West), Inc., Final Joint Environmental Field Audit of Petroecuador-Texaco Consortium, Quality Assurance/Quality Control (QA/QC) HBT AGRA Ltd. Fieldwork Oriente Ecuador dated September 1993, attached as Annex 45 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., at 4, .


- 198 -

conditions and liabilities within the Consortium’s oilfields. 887 Fugro-McClelland concluded that HBT AGRA’s environmental assessment practices were generally acceptable, but that TexPet was responsible for only a portion of the identified hydrocarbon contamination because of the presence of new contamination that had occurred after Petroecuador took over operations in 1990.888 Fugro-McClelland also found no evidence of any groundwater contamination. 889 Fugro-McClelland recommended certain remediation and restoration measures, including cleanup of spills associated with residential base camp activities, well site activities, production stations, and pipeline leaks; proper closure of pits; and modification of produced water management practices.890 The estimated cost of the remediation recommended by Fugro-McClelland was US$8,482,000.891

These two contemporaneous audits performed shortly after TexPet completely ceased operations in the Consortium thus found that the environmental impacts in the former Consortium area were manageable and were the normal result of oil operations at the time. Indeed, they found that remediating the entire concession area would cost only a fraction of the amount claimed by the plaintiffs in this litigation, and less than what TexPet actually spent remediating forty percent of the area in exchange for a full release of all environmental claims. In sum, these reports demonstrate that there was no widespread environmental disaster and that any contamination existing today is not Chevron's responsibility.

TexPet fulfilled its remedial obligations arising from the Consortium’s operations:892 As detailed in Chevron’s filings of September 16, 2010 at 4:35 p.m. and October 29, 2010 at 5:20 p.m., based upon the findings of the contemporaneous audits, TexPet entered into a series of settlement agreements with several local governments, Petroecuador, and the Republic of Ecuador.

887 Fugro-McClelland (West), Inc., Final Environmental Field Audit For Practices 1964-1990

Petroecuador-Texaco Consortium, Oriente, Ecuador, dated October 1992, at § 1.2.1, Record at 10642v-10782 (10649).

888 Fugro-McClelland (West), Inc., Final Environmental Field Audit for Practices 1964-1990 Petroecuador-Texaco Consortium, Oriente, Ecuador, dated October 1992, at § 7.1, Record at 10642v-10782 (10726-10727v).

889 Fugro-McClelland (West), Inc., Final Environmental Field Audit for Practices 1964-1990 Petroecuador-Texaco Consortium, Oriente, Ecuador, dated October 1992, at § 6.4.4, Record at 10642v-10782 (10697).

890 Fugro-McClelland (West), Inc., Final Environmental Field Audit for Practices 1964-1990 Petroecuador-Texaco Consortium, Oriente, Ecuador, dated October 1992, at § 7.1, Record at 10642v-10782 (10726).

891 Fugro-McClelland (West), Inc., Final Environmental Field Audit for Practices 1964-1990 Petroecuador-Texaco Consortium, Oriente, Ecuador, dated October 1992, at § 7.3, Record at 10642v-10782 (10731-10732).

892 For additional discussion of remediation requirements, see Chevron’s Motion filed Sept. 16, 2010, at 4:35 p.m., § II.B.3.b, at 69-85.


- 199 -

The 1995 Settlement and Release Agreement required TexPet to prepare a Remedial Action Plan (“RAP”) to implement the Scope of Work (“SOW”).893 TexPet hired a contractor to prepare the RAP from a list of independent environmental engineering companies approved by the Ministry of Energy and Mines on behalf of Ecuador and Petroecuador. The company TexPet hired was Woodward-Clyde International, Inc. (“Woodward-Clyde”).

In July 1995, Woodward-Clyde conducted an environmental investigation of the specific sites and facilities listed in the SOW in order to develop the RAP. After reviewing and amending the draft RAP submitted by Woodward-Clyde, Petroecuador, the Minister of Energy and Mines (acting on behalf of Ecuador), and TexPet signed and accepted the RAP on September 8, 1995. In addition, the Minister of Energy and Mines issued a letter to TexPet’s legal representative confirming that Ecuador accepted the RAP and agreeing that the RAP met Ecuador’s requirements.

The RAP set out specific and detailed requirements governing sampling measures, testing procedures, and numerical acceptance criteria that the parties agreed were to be used to determine what, if any, remediation would be required at a particular location and whether completed remediation work had been successful. For those pits requiring remediation, the RAP set forth a physical process required to remediate a particular pit.894 The standard applicable to TexPet’s remediation for these pits was to

893 Remediation Contract dated May 4, 1995, filed July 15, 2004, at 9:10 a.m., at 3-5, Record at

7855-82v, 7857-59. 894 Woodward-Clyde International, Remedial Action Project, Oriente Region, Ecuador, Final

Report, Volume I, dated May 2000, attached as Annex 44 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., § 3.3, at 3-4 to 3-10.

Remediation consists of eight steps:

1. Prepare the pit by clearing vegetation to gain access to the pit;

2. Remove, clean, and burn or landfill the pit’s debris;

3. Remove and process pumpable crude oil prior to injection in Petroecuador’s pipeline and remove non-pumpable (asphalt-like) crude oil and dispose of it in concrete vaults;

4. Treat water using filtration, flocculation, or aeration to remove solids, introduce oxygen into the water, and discharge it to a water body when post-treatment testing showed compliance with the applicable Ecuadorian water discharge standards;

5. Treat soil and sludge by performing bioremediation, stabilization, encapsulation, or surfactant-enhanced recovery (washing to remove oil) on soil removed from pits and spill zones;

6. Sample remediated soils to ensure compliance with applicable cleanup standards;

7. Backfill and grade the remediated pits; and

8. Revegetate and regrade pits with native plants appropriate for the region and the identified land use.

The RAP also required Woodward-Clyde to wash, burn or transport to a landfill any trash in the area.


- 200 -

bring them below 1,000 mg TCLP-TPH per liter.895 The RAP’s remediation process was consistent with methods used by the industry for pit remediation at the time, and remains so today.

The RAP also required environmental remediation for identified areas of soil contamination, likely from spills, not contained within pits. As to these identified areas, TexPet was required to remediate the areas presumed to pre-date June 30, 1990, with soil contamination that tested above 5,000 mg/kg TPH.896 In such cases, Woodward-Clyde treated the soil and backfilled and regraded the treated area. In addition, Ecuador made TexPet responsible for helping to change designated produced-water-management systems from surface-treatment-and-discharge systems to underground-injection systems. Furthermore, the RAP required that secondary containment dikes around above-ground storage tanks be built at three designated sites. It specified the size of the required dikes and the dike construction materials.

In March 1997, when the remediation was well underway, the Government requested an additional cleanup criterion. For a pit to be considered closed after that date, it had to meet the existing 1,000 mg TCLP-TPH standard and also not exceed a TPH standard of 5,000 mg/kg of soil.897 TexPet agreed to use these dual cleanup standards going forward, but the Government and TexPet agreed that TexPet would not be required to re-remediate any of the pits that had already been remediated and closed.898

After remediating each site, consistent with the RAP’s specifications (including amendments thereto),899 Woodward-Clyde collected multi-point composite soil samples to confirm that the cleanup was successful. Moreover, the responsible Government ministries and agencies oversaw, inspected, and approved all of the environmental remediation work that Woodward-Clyde performed on TexPet’s behalf, and they fully documented their activities in a series of Actas. Specifically, auditors from the Ministry

895 Woodward-Clyde International, Remedial Action Project, Oriente Region, Ecuador, Final

Report, Volume I, dated May 2000, attached as Annex 44 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., § 3.3.5, at 3-8, .

896 Woodward-Clyde International and Smith Environmental Technologies Corporation, Remedial Action Plan for the Former Petroecuador-TexPet Consortium, dated Sept. 8, 1995, attached to Chevron’s Motion filed Sept. 15, 2008, at 2:14 p.m., § 3.4, at 20, Record at 148626-148694, 148669.

897 Woodward-Clyde International, Remedial Action Project, Oriente Region, Ecuador, Final Report, Volume I, dated May 2000, attached as Annex 44 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., § 3.3.5, at 3-8.

898 Chevron’s Motion filed Sept. 16, 2010, at 4:35 p.m., § II.B.3.b,ii, at 76; Chevron’s Motion filed Apr. 15, 2010 at 10:14 a.m., Record at 170226-170250, 170235; Acta dated Mar. 20, 1997, Record at 11560-11562. Woodward-Clyde International, Remedial Action Project, Oriente Region, Ecuador, Final Report, Volume I, dated May 2000, attached as Annex 44 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., § 3.3.5, at 3-8.

899 For a detailed discussion of TexPet’s remediation, see Chevron’s Motion filed Sept. 16, 2010, at 4:35 p.m., § II.B.3.b.ii, at 74-85.


- 201 -

of Energy and Mines, Petroecuador, and Petroproducción monitored and reported to senior Government officials on Woodward-Clyde’s field work, and auditors certified and approved whether a pit was declared an NFA or COC pit. In fact, one of plaintiffs’ consultants has acknowledged that “[t]he Woodward Clyde report was very comprehensive in identifying the well fields and identifying wells that had pits associated with the closure, and I think there was some description about whether or not, you know, they were TexPet operations.”900

The auditors prepared fifty-two inspection Actas (inspection reports or work certificates) detailing their observations and conclusions. The reports summarized the auditors’: (i) personal inspections of the TexPet remediation sites; (ii) review of the site-specific sampling and laboratory analytical data; (iii) assessment of Woodward-Clyde’s cleanup work; and (iv) confirmation that TexPet had complied with its equipment donation, cash contribution, and other socio-economic obligations under the parties’ agreements. From October 1995 to September 1998, Ecuador issued more than fifteen approval Actas documenting its acceptance of Woodward-Clyde’s cleanup work and TexPet’s other remedial actions. Nine approval Actas addressed specific lists of pits and other areas, described the work that had been performed, and certified Ecuador’s agreement that TexPet had remediated the identified areas in accordance with the parties’ agreement. Each of these approval Actas was supported by test data collected from the remediated sites, photographs, and other documentation.

In the end, TexPet fully complied with its remediation obligations by completing the remediation and re-vegetation of 162 pits and six oil spill areas at eighty-eight wellsites, bringing those sites in compliance with the parties agreed-upon 1,000 mg per liter TCLP-TPH standard. Pits remediated after March 1997 not only met this standard, they also conformed to the government’s additional 5,000 mg/kg TPH standard. The 1998 Final Release Agreement certified that TexPet had performed all of its obligations under the 1995 Settlement Agreement and fully released TexPet from any and all environmental liability arising from the Consortium’s operations.901

900 Official Transcript of Second Deposition of Mark A. Quarles at 257:22-258:1, dated Oct. 12,

2010, attached as Annex 11 to Chevron Motion, filed Oct. 29, 2010 at 5:20 p.m.. 901 See Final Compliance Document of the Contract for Implementing of Environmental Remedial

Work and Release from Obligations, Liability and Claims, dated Sept. 30, 1998, filed May 4, 2004, at 10:02 a.m., Record at 7294-99v, 7298v; Remediation Contract dated May 4, 1995, filed July 15, 2004, at 9:10 a.m., Record at 7855-82v, 7857. In exchange for TexPet’s completion of the agreed tasks, the parties agreed to “negotiate the full and complete release of TexPet’s obligations for environmental impacts arising from the operations of the Consortium.” TexPet and its affiliates would therefore receive a two-fold release. First, TexPet would immediately be released from all environmental impacts or effects not expressly included in the SOW. Second, TexPet would be released and discharged from any responsibility for the remediation of those tasks allocated to it in the SOW once TexPet completed that work. Memorandum of Understanding dated Dec. 14, 1994, filed Aug. 19, 2004, at 9:10 a.m., Record at 8930-34v, 8931-8932; see also Remediation Contract dated May 4, 1995, filed July 15, 2004, at 9:10 a.m., Record at 7855-82v, 7857.


- 202 -

The areas remediated by TexPet require no further remediation: As explained at length in Chevron’s filings of September 16, 2010 at 4:35 p.m. and October 29, 2010 at 5:20 p.m., TexPet satisfied its remediation and socio-economic responsibilities under the various settlement agreements and was thus released from any and all further remediation responsibilities. Responsibility for any remaining environmental impact and remediation work was assumed by the State and Petroecuador. Nonetheless, plaintiffs assert that Chevron should pay damages to remediate the areas that are Petroecuador’s responsibility. However, this claim has no factual merit for the following reasons.

First, the data collected by experts nominated by both Chevron and the plaintiffs during the judicial-inspection process supports the conclusion that the remediation performed by Woodward-Clyde was proper. Soil test results conducted during the judicial-inspection process by all experts show no exceedance of the applicable remediation criteria for all but one RAP pit.902 Second, the settling experts’ opinion supports Chevron’s position that there is no need for remediation at the RAP site Sacha-53. Specifically, the settling experts found that the available data showed that TexPet’s remediated pits posed a low risk to nearby residents and water supplies. Third, peer-reviewed studies support the conclusions reached by experts nominated by Chevron. For example, a 2010 scientific study of the impact of weathering on Ecuadorian crude oil in soils, conducted by Kirk O’Reilly and Waverly Thorsen and published in the scientific journal Soil and Sediment Contamination, supports the findings of the experts nominated by Chevron, concluding that soils in Ecuador are unlikely to result in groundwater contamination.903

In sum, the evidence gathered during the judicial-inspection process demonstrates that the RAP sites were properly remediated. The evidence shows full completion of RAP work items at RAP sites and compliance with applicable cleanup criteria for RAP pits. However, despite this overwhelming evidence, plaintiffs now seek damages for remediation of soils (i) at RAP sites that were already properly remediated, (ii) at non-RAP sites that were not TexPet’s responsibility; and (iii) applying incorrect remediation standards—resulting in wildly inflated remediation estimates. Plaintiffs’ position cannot withstand serious scrutiny.

902 As detailed more fully in Chevron’s Motion filed September 16, 2010, none of the experts

involved in the judicial-inspection process found any evidence of the need for further remediation of either soil or groundwater at RAP sites previously remediated by TexPet except for one pit (Pit 4 at well site SSF-48) identified by experts nominated by Chevron for which the soil test results indicated an exceedance of applicable RAP criteria. And for this one pit, it is important to note that the soil test results obtained at the time of the TexPet remediation (August 1997), as well as the more recent soil test results obtained by experts nominated by plaintiffs during the judicial inspection (September 2004), indicated no exceedance of the TPH limit (i.e., TPH < 5000 mg/kg on a composite soil sample). See Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., at 95.

903 For additional details, see Chevron’s Motion filed Sept. 16, 2010, at 4:35 p.m., § II.B.3.c.vi, at 106-109.


- 203 -

Mr. Cabrera—in a fraudulent report authored by the plaintiffs’ attorneys and paid consultants—initially estimated that the cost of soil remediation in the former concession area would be US$1.7 billion. The plaintiffs inflated this gross miscalculation to US$2.743 billion (or US$3.08 million per pit) in the supplemental Cabrera Report, by arbitrarily applying a more stringent remediation standard (100 ppm TPH) that does not exist in Ecuadorian law. Both of these estimates are based on incorrect assumptions leading to fatally flawed conclusions.

The errors in approach in the Cabrera Report are enormous.904 For example, the Cabrera Report fails to account for TexPet’s previously completed environmental remediation work in the former concession area and Petroecuador’s responsibility to remediate sites that did not fall within the scope of TexPet’s obligations—remediation that it has recently started to perform. The Cabrera Report also does not rely on field data to determine the number, dimensions, or even the existence of pits but instead bases its findings solely on incompetent and error-filled interpretations of aerial photographs. The Cabrera Report also arbitrarily assumes that there is an additional area around the pits requiring remediation, with an estimated span of an additional fifty percent of the total area of the pits themselves. This assumption is completely unfounded, as there is no evidence that any alleged contamination migrated beyond the pits. These errors resulted in gross over-estimations of the number of pits and volume of soil to be remediated. Additionally, the supplemental Cabrera Report utilizes an incorrect and unnecessarily stringent cleanup standard (100 ppm TPH) that is not based on Ecuadorian law, that is not applicable to upstream oil pit remediation, and that is contrary to the standard utilized in Petroecuador’s remediation efforts.

The plaintiffs also rely on the flawed report of Douglas C. Allen, submitted with their filing of September 16, 2010 at 5:15 p.m. Mr. Allen does not attempt to support the exorbitant recommendations of the Cabrera Report and his report has no evidentiary value. As detailed in Chevron’s filing of December 22, 2010 at 5:40 p.m., Mr. Allen’s report fails to establish that Chevron is responsible for any further remediation of the former concession area; fails to account for both TexPet’s past remediation and Petroecuador’s recent remediation efforts; and relies solely on the Cabrera Report for an inflated estimate of the number of pits, an overestimate of the volume of soil requiring remediation, and improper cleanup standards. As a result, Mr. Allen’s report relies exclusively on pre-remediation field audits and data supplied by the plaintiffs, ignoring all other relevant data. As a result of these fundamental errors, Mr. Allen estimates the cost of soil remediation in the former TexPet concession area to be between US$487 million and US$949 million. These cost estimates are not only unwarranted, but are also greatly exaggerated for the following reasons:

First, Mr. Allen fails to follow appropriate cost estimation procedures. The most appropriate and most reasonable basis for estimating the cost of remediation is to examine the actual cost of remediation currently being incurred by Petroecuador in the

904 For a full discussion, see Chevron’s Motion filed Sept. 16, 2010, at 4:35 p.m., § II.B.3.c.iv, at 100-104.


- 204 -

cleanup of the very sites in question; Mr. Allen ignores this. Although he purports to use the ASTM E2137-06 Standard Guide for Estimating Monetary Costs and Liabilities for Environmental Liabilities “range of values method” for cost estimation, this procedure should be used when the “expected value” approach is not practicable or feasible. In the Oriente, the ongoing Petroecuador remediation activities provide the basis for the more comprehensive and robust expected value approach, which should therefore be used if properly applying ASTM E2137-06. The ASTM E2137-06 expected value approach is very feasible and appropriate for this case since sites have been remediated by Petroecuador at an estimated average cost of US$85,000 per pit site.905

Second, Mr. Allen also appears to rely on the U.S. Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) or Superfund process in support of cost estimates. This is inappropriate as the Oriente sites could have been eventually affected predominately with crude oil and not with the more toxic and more difficult to remove or remediate hazardous materials typically found at U.S. Superfund sites. Mr. Allen could not identify a single oil field site in the U.S. that has been classified as a Superfund site. Moreover, if the Oriente oil fields were under U.S. jurisdiction, they would not be classified as Superfund sites.906

Third, to arrive at cost estimates, Mr. Allen appears to rely on almost twenty-year-old U.S. data for estimating bioremediation and thermal desorption rather than using the documented, publicly available, and current cost data for remediation of the sites in question. He then applies U.S.-based costs from a basic engineering cost manual to estimate cost items such as excavation, trucking, and heavy equipment usage. Mr. Allen, however, ignores the more appropriate and more reliable publicly available current local costs.907 Moreover, it does not appear that Mr. Allen considered or was even aware of all of the reports filed with the Court. Although they contain significant amounts of relevant information, none of the judicial inspection reports and none of the reports of Chevron’s nominated experts were cited; in fact, none of the rebuttal briefs by Chevron were given to him.908

905 ALVAREZ, Pedro J., MACKAY, Douglas M., and HINCHEE, Robert E., Expert Report on

Remedial Cost: Rebuttal to Environmental Damages Valuation – Texpet-Ecuador Concession Area Authored by Douglas C. Allen, dated September 2010, at 9, attached as Annex 2 to Chevron Motion, filed Oct. 29, 2010 at 5:20 p.m.

906 ALVAREZ, Pedro J., MACKAY, Douglas M., and HINCHEE, Robert E., Expert Report on Remedial Cost: Rebuttal to Environmental Damages Valuation – Texpet-Ecuador Concession Area Authored by Douglas C. Allen, dated September 2010, at 9, attached as Annex 2 to Chevron Motion, filed Oct. 29, 2010 at 5:20 p.m.

907 ALVAREZ, Pedro J., MACKAY, Douglas M., and HINCHEE, Robert E., Expert Report on Remedial Cost: Rebuttal to Environmental Damages Valuation – Texpet-Ecuador Concession Area Authored by Douglas C. Allen, dated September 2010, at 10, attached as Annex 2 to Chevron Motion, filed Oct. 29, 2010 at 5:20 p.m.

908 Astoundingly, rather than relying on his own independent search of the factual record in this case for his assertion that “more than 100 expert reports and . . . tens of thousands of chemical sampling results [are] now before the court,” Mr. Allen cites a third party publication. See ALLEN, Douglas C.,


- 205 -

In summary, Mr. Allen’s soil remediation estimate is inaccurate because he used plaintiffs’ incorrect values for remedial standards, overestimated the number of pits requiring remediation, overestimated the volume of soil requiring remediation, and overestimated of the unit cost of remediation—all without doing any of his own research on these topics. Mr. Allen’s conclusions regarding the costs of soil remediation are wholly erroneous and this Court should not award any such damages against Chevron.909

There is also no reliable evidence of groundwater contamination in the former concession area: A comprehensive risk evaluation performed by Chevron’s nominated experts indicates that there is no groundwater contamination in the former concession area that could pose any petroleum-related health risks to local residents or workers.910 During the judicial-inspection process, Chevron’s nominated experts collected a total of 458 water samples at RAP sites and analyzed them for petroleum-related chemicals. Ninety-six percent (or 440) of the water samples taken at RAP sites were found to contain no petroleum-related chemicals at concentrations in excess of health-based screening levels based on daily consumption of the water as a drinking water supply. Of the eighteen water samples found to exceed health-based levels, only ten were from locations (i.e., surface water streams) that could be considered as a potential future (continued…) Environmental Damages Valuation, attached as Annex A to Plaintiffs’ Motion, filed Sept. 16, 2010 at 5:15 p.m., at 1, (citing Energy & Ecology Business (2010)).

909 Although Mr. Allen’s proposed remediation costs are far too high, his upper limit of US$1.86 is US$4.1 billion lower than Mr. Cabrera’s wholly outrageous assessment. No matter what number plaintiffs advocate, their assertions regarding the costs of the soil and groundwater remediation as well as the impacts on the ecosystem are egregious when considered in light of the February 14, 2006 letter from David L. Russell to Steven Donziger. Mr. Russell, who at one time worked for the plaintiffs, writes in his capacity as president and sole employee of Global Environmental Operations, Inc. In that letter, Mr. Russell urges Mr. Donziger to “[c]ease and [d]esist” from using the remediation cost estimate prepared by that company in 2003 for the plaintiffs. After observing that he had “deliberately chose[n] the most expensive remedial options available and applicable to the work in Ecuador because [Mr. Donziger] wanted a ‘large’ number,” Mr. Russell ultimately concludes that “the 2003 cost estimate is too high by a substantial margin, perhaps by a factor of ten, or more” (emphasis in original). In his letter, Mr. Russell clearly expresses his conviction that his more recent assessment of the costs is based on “hard evidence that [he] cannot ignore” based on his attendance at “several technical conferences, both inside and outside the US” where he met “individuals who [had] convinced [him] that alternative remedial techniques applicable to Ecuador are just as effective as those [he] proposed, and are far less costly.” Mr. Russell further states that he had “seen no data which would indicate that there is any significant surface or groundwater contamination caused by petroleum sources in Ecuador.” Letter from David L. Russell to Steven Donziger, February 14, 2006, attached as Annex 20 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m. This letter stands as further, documented proof not only that the remediation costs proposed by plaintiffs are wildly inflated, but also that plaintiffs’ lawyers are fully aware of the true costs, yet have persisted in perpetrating a fraud on this Court, through their own submissions and the report they wrote for Mr. Cabrera’s signature. See also Official Transcript of the Second Deposition of Mark A. Quarles at 338:5-23, dated Oct. 12, 2010, attached as Annex 11 to Chevron Motion, filed Oct. 29, 2010 at 5:20 p.m.

910 For additional details, see Chevron’s Motion filed Sept. 16, 2010, at 4:35 p.m., § II.B.3.c.v, at 104-106.


- 206 -

water resource, under any hypothetical scenario. All ten of these sampling locations are within streams that, at the time of sample collection, were impacted due to ongoing leaks or discharges by Petroecuador, which has undertaken actions to terminate these leaks. Local residents in those areas stated that the affected portions of these streams are not used for drinking water. Consequently, the water at these locations would not reasonably result in a measurable health risk.

For its part, the Cabrera Report excluded groundwater from its damages recommendation, stating that “sufficient information [wa]s not available” to assess the costs groundwater cleanup.911 Indeed, Mr. Cabrera collected only six “groundwater” samples that complied with the administrative procedures established by the Court (such as advance notification, presence of observers for the defendants, chain of custody forms signed by Mr. Cabrera). Those six samples were collected from boreholes located within oilfield pits and therefore are not representative of groundwater conditions in the vicinity of the pits. Those samples contained no petroleum or produced water constituents exceeding the most stringent drinking water standards or guidelines established by the WHO or the U.S. EPA at the time of TexPet’s operations. In fact, sampling results in the Cabrera Report confirmed that the pits are not a source of groundwater contamination.

Yet, at the plaintiffs’ direction, the supplemental Cabrera Report attributed an astounding figure of over US$3.236 billion for such clean-up efforts. However, this analysis is flawed and contradictory for the following reasons:912

First, the supplemental Cabrera Report’s cost assessment stands in direct contradiction to the unequivocal statement in the same supplemental report that the report was unable to define the cost of cleaning up the groundwater because it “will require a substantial effort over an extensive period and will cost millions of dollars for collecting the data needed for developing the groundwater clean-up plan.”913 Notably, Mr. Cabrera did no additional field work between the original and supplemental reports (nor did he author either of his reports). Second, the supplemental Cabrera Report’s US$3.2 billion figure was not accompanied by an actual groundwater remediation plan, and his “methodology” is absurd. As stated above, Mr. Cabrera collected a handful of muddy water samples from open boreholes inside pits and improperly called them “groundwater samples.”914 That supplemental report then assumed, without basis, that 100 percent of the wellsites and production stations will require groundwater

911 Expert Cabrera’s Global Report, filed Apr. 1, 2008, at 8:30 a.m., Record at 134228-89, 134234. 912 For additional details, see Chevron’s Motion filed Sept. 16, 2010, at 4:35 p.m., § II.B.3.c.viii, at

111-114. 913 Expert Cabrera Supplemental Report, filed Nov. 17, 2008, at 8:25 a.m., Record at 152949-

153167, 152961-62. 914 ALVAREZ, Pedro J., MACKAY, Douglas M., and HINCHEE, Robert E., Expert Report on

Remedial Cost: Rebuttal to Environmental Damages Valuation – Texpet-Ecuador Concession Area Authored by Douglas C. Allen, dated September 2010, at 22, attached as Annex 2 to Chevron’s motion, filed Oct. 29, 2010, at 5:20 p.m.


- 207 -

remediation because of petroleum operations. Third, the supplemental Cabrera Report was founded on incorrect assumptions in assessing the costs of cleaning up groundwater in the Oriente region. The report derived its US$8.45 million per site estimate by averaging the costs of four groundwater cleanup projects in the United States and assuming (with no justification) that remediation would take twenty years. But no petroleum operations had occurred at those sites. And those sites involved remediation that was unrelated to crude oil production and that was considerably more complex.

For his part, Mr. Allen, hired by the plaintiffs for their September 16, 2010 filing, at 5:15 p.m., erroneously assesses US$396 million to US$911 million to remediate groundwater when in fact there is no evidence that groundwater contamination exists due to TexPet’s operations, and there is no basis for assuming any groundwater remediation is required.915 Mr. Allen’s report makes the same assumptions as the fraudulent Cabrera Report, and therefore, his damage estimates suffer the same flaws as the Cabrera estimates. Likewise, his groundwater remediation estimates are flawed for the same reasons as his soil remediation estimates, discussed immediately above. Ignoring more reliable groundwater analyses, and experience elsewhere in similar oil field settings, Mr. Allen assumes that groundwater contamination exists, when in actuality it does not, and then estimates the cost to remediate this fictitious contamination.916

In contrast to these assertions of damages related to groundwater contamination, evidence collected from the outtakes to the documentary Crude clearly show that the plaintiffs’ attorneys were well aware of the fact that there is no evidence to support the need for groundwater remediation. For example, one of the plaintiffs’ nominated experts admits that “what we know we don’t have is the extent of the [groundwater] contamination.”917 And, under oath, plaintiffs’ consultant Mr. Charles Champ confirmed that, to this day, he has not seen any data that indicates the extent or existence of groundwater contamination in the former concession area. 918 Further, Mr. Champ testified that other consultants agreed with his assessment that there was not sufficient data showing the extent of alleged groundwater contamination away from the pits.919

915 See ALLEN, Douglas C., Environmental Damages Valuation, attached as Annex A to Plaintiffs’ Motion, filed Sept. 16, 2010 at 5:15 p.m., at 19. See also Section 7.4.5 below, which addresses the complete lack of data showing the contamination of water supplies by petroleum hydrocarbons.

916 ALVAREZ, Pedro J., MACKAY, Douglas M., and HINCHEE, Robert E., Expert Report on Remedial Cost: Rebuttal to Environmental Damages Valuation – Texpet-Ecuador Concession Area Authored by Douglas C. Allen, dated September 2010, at 21-23, attached as Annex 2 to Chevron’s Motion, filed Oct. 29, 2010 at 5:20 p.m.

917 Transcript of Crude Outtakes, attached as Exhibit 2 to Chevron’s Motion for Terminating Sanctions, filed Aug. 6, 2010, at 2:50 p.m. (CRS 195-05-01); see also Chevron’s Motion for Terminating Sanctions, filed Aug. 6, 2010, at 2:50 p.m., at 21.

918 See Deposition of Charles Champ at 193:19-24, Sept. 9, 2010, attached as Exhibit 35 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m.

919 See id. at 264:14-22.


- 208 -

None of this could have been a surprise to the plaintiffs, whose former counsel, Mr. Bonifaz, reminded the plaintiffs’ team in an email in 2004 that “[w]e all agreed that there is no scientific valid way that we are willing to use to determine the value of reparation of underground water because there is no scientific way of attributing groundwater contamination to Texaco without a multimillion dollar study that could cost millions and result in nothing.”920

In a particularly egregious outtake, Mr. Donziger discusses the evidence of groundwater contamination with others on his team. Ms. Maest tells Mr. Donziger that the only samples that show any evidence of contamination are those collected from the actual pits, and that “nothing has spread anywhere at all.” Mr. Donziger, undaunted by this simple truth, states, “The reports are saying the ground water is contaminated because we’ve taken samples from ground water.” When Ms. Maest replies, “That’s just right under the pits,” Mr. Donziger tells her, “Yeah, but, that is evidence.” Another consultant replies, “Well, you need more.” At this point, Mr. Donziger states,

Hold on a second, you know, this is Ecuador, okay . . . You can say whatever you want and at the end of the day, there’s a thousand people around the courthouse, you’re going to get what you want. Sorry, but it’s true. . . . Therefore, if we take our existing evidence on groundwater contamination which admittedly is right below the source . . . [a]nd we wanted to extrapolate based on nothing other than our, um, theory that it is, they all, we average out to going 300 meters in a radius, depending on the . . . gradient . . . [w]e can do it. And we can get money for it.921

Following further discussion, Mr. Donziger states, that “at the end of the day, this is all for the Court just a bunch of smoke and mirrors and bullshit. It really is. We have enough, to get money, to win.”922 This alarming exchange among members of plaintiffs’ team not only further exposes the fraud perpetrated on this Court, but also clearly shows that the plaintiffs’ lawyers were well aware that there is insufficient evidence to show the need for groundwater remediation in the former concession area.

920 E-mail from Cristobal Bonifaz to Alberto Wray, et al., dated Dec. 12, 2004 at 2:34 p.m.,


921 See Transcript of Crude Outtakes, attached as Annex 2 to Chevron’s Motion for Terminating Sanctions, filed Aug. 6, 2010, at 2:50 p.m., (CRS 195-05-01). As one of the plaintiffs’ consultants, Mr. Champ, recently testified, such an extrapolation is baseless and completely unscientific. Deposition of Charles Champ, Sept. 9, 2010, attached as Annex 35 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., at 265:6-16.

922 See Transcript of Crude Outtakes, attached as Annex 2 to Chevron’s Motion for Terminating Sanctions, filed Aug. 6, 2010, at 2:50 p.m., (CRS 195-05-01).


- 209 -

All remaining remediation is the sole responsibility of the State and Petroecuador: As shown above, all pits for which TexPet was responsible were remediated in compliance with the RAP. According to the terms of the Settlement Agreement, the duty to remediate the remaining pits fell to Petroecuador.923 In explicit recognition of this continuing duty, Petroecuador has engaged in efforts to remediate oil field pits, both within and outside the former concession area, in a state-sanctioned, pit-remediation program called Project for the Elimination of Pits in the Amazon District (“PEPDA”), now called UMR. In testimony before Ecuador’s Congress in May 2006, Ecuador’s National Director of Environmental Protection Management (“DINAPA”), Manuel Muñoz, confirmed that TexPet “completed the remediation of the pits that were their responsibility . . . but Petroecuador, during more than three decades, ha[s] done absolutely nothing with regard to those that were the [state-owned] company’s responsibility to remediate.”924

Specifically, in October 2002, and in compliance with the regulations set forth in Article 59 of Decree 1215, Petroecuador created PEPDA to carry out remedial activities in Petroecuador oilfields, including the former Consortium fields.925 PEPDA’s objective is to “eliminate all of the pits” in Petroecuador’s area of operation.926 When publicly announcing the program on October 5, 2006, Petroecuador published a special supplement in El Comercio explaining that the project was aimed in part at remediating Petroecuador’s share of the Consortium pits as required by the settlement and release

923 See Petroproducción eliminará 264 piscinas con desechos en la Amazonia, El Comercio, Oct.

5, 2006, attached as Annex D to Chevron’s Rebuttal to the Barros Report, filed Jan. 14, 2010, at 5:55 p.m., Record at 165381-82, 165382; see also Chevron’s Motion regarding Petroecuador’s Responsibilities and TexPet’s Release under the PEPDA Remediation Plan, filed Dec. 5, 2007, at 5:46 p.m., Record at 133840-43, 133840-42; Ministerial Accord No. 164, published in Official Gazette 26, Feb. 22, 2007.

924 Testimony of Manuel Muñoz, before the National Congress, Extraordinary Session of the Permanent Specialized Commission on Health, Environment and Ecological Protection, May 10, 2006, appearance of Congress, submitted as evidence during the judicial inspection of Auca 1, filed Nov. 15, 2006, at 9:30 a.m., Record at 122947-65, 122955.

925 As noted above, PEPDA’s work has since been taken over by a new entity within Petroecuador’s Vice Presidency for the Environment, Social Responsibility, Security and Health, which has created the Unit for Mediation and Remediation. Despite the name change and restructuring, the objective remains the same: to clean up Petroecuador’s Oriente oilfields. See Petroecuador: Report of the Vice-President, dated Oct. 21, 2009, attached as Annex 5 to Attachment I of Appendix A to Chevron’s Rebuttal to the Barros Report, filed on Jan. 14, 2010, at 5:55 p.m., Record at 164742-47, 164743; see also Official Letter No. 674-SPA-DINAPA-CSA-0705769, filed Nov. 16, 2007, at 10:02 a.m., Record at 133651-52, 133651.

926 Official Letter No. 674-SPA-DINAPA-CSA-0705769, filed Nov. 16, 2007, at 10:02 a.m., Record at 133651-52, 133651: “The objective of the PEPDA is to eliminate all of the contaminated pits within their areas of operation . . . . [T]he project has two basic components, which are: the elimination of the sources of contamination and the recovery of [weathered] crude. The first case deals with the pits with crude and other contaminants, which have been catalogued as Environmental Liabilities that form a part of the environmental policy of the National Government . . . .”


- 210 -

with TexPet. 927 In September 2007, Petroecuador requested funding from the InterAmerican Development Bank for, among other things, US$24 million for equipment to be used in remediating some 360 pits associated with forty years of operations, which can only be understood to include the former Consortium pits. 928 Petroecuador’s responsibility has also been confirmed by the Ministry of the Environment, which in 2007 assigned its Unit for Project Coordination with the administrative and financial execution of social and environmental remediation projects that included cleaning up pits and spills at former Consortium fields.929

Ironically, plaintiffs, who publicly claim to be champions of the environment, repeatedly sought to halt PEPDA’s remediation efforts. Mr. Donziger, recognizing that Petroecuador’s remediation “is about fulfilling their contract, their cleanup contract, with Texaco," worries aloud in the Crude outtakes that these cleanup efforts will “undermine our legal position.”930 In October 2006, the plaintiffs’ counsel criticized the PEPDA program as destroying evidence and thus “tamper[ing]” with the lawsuit.931 In June 2007, Mr. Donziger and Mr. Fajardo met with Petroecuador to “confront” them regarding the remediation, explaining that they were only able to get the meeting because “there’s a new government and they’re forcing the meeting on Petroecuador.”932 Mr. Donziger’s stated goal at that meeting was “to get some sort of control over what they [PEPDA are] doing . . . maybe even stop them . . . from doing their cleanup operation.”933 Within weeks of this meeting, Mr. Cabrera asked the Court to suspend all PEPDA remediation at 120 specified sites,934 and the Court complied on October 3, 2007.935 The plaintiffs expressed support for the Court’s order, stating that “the plaintiffs believe, as does Expert Cabrera, that the sites that were going to be the subject of the judicial test should not be altered.”936 The plaintiffs thereafter renewed their request to halt the PEPDA

927 See Petroproducción eliminára 264 piscinas con desechos en la Amazonia, El Comercio (Oct.

2, 2006), attached as Annex D to Chevron’s Objections to Expert Villacreces’s Report on GU 7, filed Jan. 14, 2010, at 5:55 p.m., Record at 165381-82, 165382.

928 Petroecuador Impacts Report, Attachment G, attached as part of Appendix A to Chevron’s Rebuttal to the Barros Report, filed on Jan. 14, 2010 at 5:55 p.m., Record at 164502-19, 164515.

929 See Ministerial Accord No. 164, published in Official Gazette 26, Feb. 22, 2007. The resolution specifically mentioned the following fields: Sacha, Auca, Lago Agrio, and Shushufindi.

930 See Transcript of Crude Outtakes, attached as Exhibit 1 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., (CRS-162-03-01).

931 Petroecuador Is Set to Clean 230 Pits, DIARIO LA HORA, Oct. 20, 2006. 932 Transcript of Crude Outtakes, attached as Annex 1 to Chevron’s Motion filed Oct. 1, 2010 at

2:30 p.m., (CRS-355-28-01). 933 Transcript of Crude Outtakes, attached as Annex 1 to Chevron’s Motion filed Oct. 1, 2010 at

2:30 p.m., (CRS-355-28-02). 934 Expert Cabrera’s request to halt Petroecuador remediation, filed on July 12, 2007 at 10:15

a.m., Record at 131336-37. 935 Order of Oct. 3, 2007, filed at 11:00 a.m., Record at 132846-56, 132849v. 936 Plaintiffs’ motion, filed Oct. 29, 2007, at 5:46 p.m., Record at 133434.


- 211 -

program, evidencing their continuing efforts to terminate the very remediation they have demanded from Chevron.937

In 2008, PEPDA was replaced by UMR, which continues remediation efforts to this day, albeit at a much slower pace than promised by Petroecuador in 2007. And on June 21, 2009, Ecuador’s Ministry of the Environment announced an expansion of this plan, focusing on all areas in Ecuador impacted by petroleum production, again including former Consortium sites. 938 President Correa, in his November 7, 2009 weekly broadcast, likewise confirmed the Government’s responsibility, explaining that “[the Government] will not only clean new spills, but will remediate all environmental liabilities.”939

Notably, the PEPDA/UMR program appears to involve generally the same steps that Woodward-Clyde employed when carrying out its remediation work for TexPet.940 After all steps are completed at a particular site, the owner of the remediated land signs an Acta Entrega—Recepción (Remediated Pit Acknowledgement Certificate) together with the PEPDA/UMR coordinator and representatives from DINAPA and Petroproducción.941 This document certifies that pit remediation was completed to the satisfaction of all interested and competent parties.942

Petroecuador’s remediation costs are substantially lower than the enormous amounts suggested by the plaintiffs:943 Mr. Cabrera, in “his” supplemental report dated November 26, 2008, estimates US$3.08 million per site, and in their submission of September 16, 2010, the plaintiffs request from US$531,080 to US$1,034,896 per pit.944 However, as shown in my client’s filings of September 16, 2010 at 4:35 p.m. and October 29, 2010 at 5:20 p.m., these astronomical remediation cost estimates are far in

937 Plaintiffs’ motion, filed June 4, 2008, Record at 140460-62. 938 See State Assumes Environmental Remediation, El Universo, June 21, 2009, attached as

Annex E to Chevron’s Rebuttal to the Barros Report, filed on Jan. 14, 2010, at 5:55 p.m., Record at 165383-84, 165384.

939 See Transcript, President Rafael Correa’s Broadcast, at Joya de Los Sachas (Sucumbíos) (Nov. 7, 2009), attached as Annex C to Chevron’s Rebuttal to the Barros Report, filed on Jan. 14, 2010, at 5:55 p.m., Record at 165378-380, 165379.

940 See Woodward-Clyde International, Remediation Action Project, Oriente Region, Ecuador, Final Report, Vol. I, May 2000, attached as Annex 44 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., at 3-4 through 3-10.

941 BACA, Ernesto, Response to Mr. Cabrera Regarding his Evaluation of Petroecuador’s Pit Remediation Program (PEPDA), attached as an appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 146992-148128, 147043.

942 See id. 943 For a more detailed discussion of the costs associated with the remediation of sites in the

former concession area, see Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., § IV, at 213-23. 944 Plaintiffs’ Motion filed Sept. 16, 2010 at 5:15 p.m., § 4.1.1, at 8.


- 212 -

excess of what any similar remediation has ever cost, are without technical basis, and are not realistic estimates of the actual cost of remediation.

Oilfield pit-remediation costs are well known and well understood by everyone in the oil industry. This is because the approved cleanup processes are well established and have been employed at many sites worldwide. Information on many of these sites and the associated cleanup costs are publicly available. For example, Petroecuador has remediated oilfield pits both within the former concession and in other areas where Petroecuador operates, through the PEPDA/UMR program. According to Petroecuador’s 2007 Annual Report, the average remediation cost per pit is US$85,000 and the approximate cost of PEPDA’s pit remediation project is expected to be US$46.75 million (through 2010) for the 550 pits located within and outside the former concession area.

For the pits within the former concession area, PEPDA/UMR estimated the total remediation cost to be US$31.45 million in 2007.945 On June 21, 2009, the Ministry of the Environment announced that a comprehensive remediation plan for all areas in Ecuador affected by petroleum production, including sites formerly operated by the Consortium, will cost a total of US$97 million and will be conducted from 2009 to 2013. Furthermore, as part of the PEPDA/UMR remediation process, Petroecuador publicly revealed bids from four Ecuadorian remediation companies that sought to do soil remediation work. These bids ranged from US$29 per cubic meter to US$45 per cubic meter. These costs are similar to the costs incurred by PEPDA/UMR, and are less than ten percent of amount suggested by the Cabrera Report, as discussed below. 946 Dr.

945 Similarly, one of plaintiffs’ consultants internally estimated in 2004 that remediation would cost

about US$30 million. See Annex 1 to Chevron’s Fourth Supplemental Motion for Terminating Sanctions, filed Dec. 22, 2010 at 5:45 p.m. (DONZ00027273).

946 Petroecuador’s own costs are reported to be only US$22 per cubic meter of treated soil and water, and its remediation, as shown at Shushufindi 17, has been independently confirmed to meet applicable standards. See Petroecuador Report, “Applications of Biotechnology for Bioremediation of Soil and Water Contaminated by Oil Spills,” attached as Annex 12 to Chevron’s Fourth Supplemental Motion for Terminating Sanctions, filed Dec. 22, 2010 at 5:45 p.m.; see also Freire Acosta, Franklin, “Environmental Remediation Techniques for Soil Contaminated by Hydrocarbons in the Area of Influence of Petroproducción’s Operations in the Ecuadorian Northeast at the Shushufindi 17-1 Pit (PEPDA),” attached as Annex 14 to Chevron’s Fourth Supplemental Motion for Terminating Sanctions, filed Dec. 22, 2010 at 5:45 p.m. Another region where remediation costs are well known is in the U.S. states of Texas and Louisiana, where significant oil production activity occurs and where remediation of old wellsites occurs under “Orphan Well” programs. Compliance with those programs is documented, and the costs are publicly available. In Louisiana, for example, where thousands of wellsites have been remediated, the Louisiana Office of Conservation database shows 774 sites as of 2008 (most of these sites are old abandoned oil wells containing one or more pits) where final closure has been achieved. The total remediation cost has ranged from US$100 to US$242,000 per site, with an average cost of approximately US$20,000 per site. Another study conducted an analysis of approximately 210 pits at these sites remediated between the years 2003 and 2008, and found that the cost of remediation of those contaminated pits ranged between approximately US$10,000 and US$37,000 per pit at a unit cost of between US$13 and US$99 per cubic meter of contaminated soil. Finally, a detailed cost analysis of the closure and cleanup of an oilfield in the Netherlands that the oil company Schoonebeek operated between the years 1943 and 1996 indicates that the cost of remediating oil-contaminated soil averaged


- 213 -

Robert Hinchee, an environmental expert specializing in petroleum remediation, agrees that PEPDA’s remediation costs and estimates are reasonable.947

7.3.2 Plaintiffs Have Failed to Prove That Chevron Is Responsible for Public Costs of Healthcare in the Oriente.

Plaintiffs, through the Cabrera Report and Carlos E. Picone,948 have requested funding for a “comprehensive public health infrastructure and health/environmental monitoring.”949 As extensively discussed in Chevron’s filings of September 16, 2010 at 4:35 p.m. and October 29, 2010 at 5:20 p.m., this claim for damages, however, is unsupported by the evidence presented in this case.

First, ordinarily, such a claim would seek to vindicate the “individual homogenous rights” that belong to the “residents” of the allegedly affected communities. Yet no individualized proof has been offered of any harm or threat of harm to the health of such residents. To the extent that the plaintiffs seek relief for alleged harm to the “public health,” not to any particular individual, they have offered no legal basis (or, once again, evidence) for doing so. Second, there is no reliable scientific evidence showing that any alleged adverse health impacts are attributable to petroleum activities. As Chevron has repeatedly explained, the health studies and health surveys claiming to find a causal link between various ailments and petroleum operations are riddled with methodological errors and biases and cannot form the basis of an inference of causation.950 Third, the (continued…) between US$32 and US$81 per cubic meter of soil. See Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., at 218-19.

947 See ALVAREZ, Pedro J., MACKAY, Douglas M., and HINCHEE, Robert E., Expert Report on Remedial Cost: Rebuttal to Environmental Damages Valuation – Texpet-Ecuador Concession Area Authored by Douglas C. Allen, dated September 2010, at 15-16, attached as Annex 2 to Chevron’s Motion, filed Oct. 29, 2010 at 5:20 p.m. And it is, of course, the State and Petroecuador which bear exclusive responsibility for alleged environmental impacts in the former concession area, and any injunction against them would have to be narrowly tailored to address the specific items requested by the plaintiffs and any damages award against them would have to be tethered to a concrete work plan that identifies, among other things, the companies that would perform the remediation and their actual costs. The EMA, even when it applies, authorizes an award only in the amount required to repair the alleged environmental damage. Yet neither Mr. Cabrera nor the plaintiffs has offered anything even approaching a viable work plan, and their remediation estimates are grossly exorbitant.

948 See PICONE, Carlos E., Estimated Cost of Delivering Health Care to the Affected Population of the Concession Area of Ecuador, attached as Annex C to Plaintiffs’ Motion filed Sept. 16, 2010 at 5:15 p.m.

949 See KELSH, Michael A., Rebuttal to Mr. Cabrera’s Excess Cancer Death and Other Health Effects Claims, and His Proposal for a New Health Infrastructure, filed as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 146378-423, 146382.

950 See discussion of plaintiffs’ claimed damages for excess cancer deaths in Chevron’s Motion filed Sep. 16, 2010 at 4:35 p.m., § II.B.4.c., at 149-164, including but not limited to all references cited therein.


- 214 -

plaintiffs’ proposed plans to institute a healthcare program to address the purported health impacts allegedly attributable to the Consortium are baseless and logically unsound.

Chevron has already (and repeatedly) addressed the Cabrera Report’s proposed plan,951 noting, for example, that the report upon which he based the alleged harm to health is plainly deficient.952 Among other things, because the report does not identify any specific individuals, it is impossible to confirm or disprove whether any individual’s health has been affected by the Consortium’s conduct.953

For his part, Dr. Picone states that there is “minimal existing health care infrastructure” and what does exist is “inadequate for meeting the needs” of the population.954 He goes on to note that “[t]here are insufficiencies at all levels of health care, including basic sanitary and preventive services.”955 Dr. Picone, however, provides no justification whatsoever for why Chevron should fund any needed reform—particularly when there is no reliable evidence of adverse health impacts as a result of the Consortium’s operations.956 Dr. Picone, for example, suggests funding for the prevention of communicable diseases, such as tuberculosis and HIV.957 Neither of these ailments, however, could even theoretically be attributable to petroleum exposure. Indeed, many of

951 See discussion of plaintiffs’ claimed damages for funding of a health care plan in Chevron’s

Motion filed Sept. 16, 2010 at 4:35 p.m., at 181-89, including but not limited to all references cited therein. 952 See KELSH, Michael A., Rebuttal to Mr. Cabrera’s Excess Cancer Death and Other Health

Effects Claims, and His Proposal for a New Health Infrastructure at 4-7, filed as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 146378-423, 146381-84.

953 See Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 141082-203, 141134; see also Proposed Comprehensive Health Program in Response to Oil Operations in Sucumbios and Orellana, attached as Annex P to Expert Cabrera’s Global Report, filed Apr. 1, 2008, at 8:30 a.m., Record at 139797-874, 139805.

954 PICONE, Carlos E., Estimated Cost of Delivering Health Care to the Affected Population of the Concession Area of Ecuador, attached as Annex C to Plaintiffs’ Motion filed Sept. 16, 2010 at 5:15 p.m., at 3.


956 See, generally, LEAMER, Edward, Evaluation of Economic Analysis Contained in Summary Report of Expert Examination and Answers to the Plaintiffs’ Questions About the Expert Report in the Case of Maria Aguinda y otros v. Chevron Corporation, No. 002-2003, attached as Annex 11 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., at 38; KELSH, Michael A., Cancer Risk and Oil Production in the Amazon Region of Ecuador - A Review of the Epidemiologic Evidence, attached as Annex 8 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., ¶ 73, at 40-41; CHRISTOPHER, John P., Evaluation of the Scientific Value of the Published Work of Plaintiffs’ Experts, Dr. Miguel San Sebastian and Colleagues, attached as Annex 10 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m.



- 215 -

the health conditions in the Amazon region relate to socioeconomic issues: malnutrition, sanitation, access to preventive care, prenatal care, economic resources, and other factors unrelated to petroleum operations and that are common to all of rural Ecuador.958

Nevertheless, Dr. Picone calculates that Chevron should pay a total cost of approximately US$1.4 billion for providing comprehensive health care and public health services to the people of the Amazon region over an arbitrary period of thirty years.959 Further, he justifies the amount by comparing it to the costs associated with providing health care services to individuals exposed to contaminants as a result of the World Trade Center disaster and the clean-up that followed.960 However, Dr. Picone identifies no similarities that would justify the comparison.961

In sum, this Court should not order Chevron to pay to fund allegedly necessary improvements to a healthcare system not proven to be burdened by petroleum operations in the former concession area, and that are the sole responsibility of the Government of Ecuador.

7.4 The Damages Sought by Plaintiffs Apart from Those Pled in the Complaint Are Extra Petita and Unsupported by Both the Law and the Evidence

Aside from claims for soil and groundwater remediation and healthcare costs, all the plaintiffs’ damage claims—now totaling over US$100 billion—were not included in their original complaint. As explained in my client’s filings of September 16, 2010 at 4:35 p.m. and October 29, 2010 at 5:20 p.m., these claims are extra petita, and this Court should reject them on that basis alone. See supra Chapter VI. However, even if the plaintiffs had included these claims in their complaint, they have no underlying merit. Indeed, their inclusion in the plaintiffs’ damage requests of September 16, 2010 at 5:15 p.m. is baseless and libelous, as they are founded on fraudulent evidence.

7.4.1 There Is No Credible Evidence of Excessive Cancer Deaths in the Oriente

Plaintiffs have not pled any personal injury claims and therefore have no standing to seek damages for “excessive” cancer deaths. For the same reason, this claim is also

958 KELSH, Michael, Response to Reports of Dr. Daniel Rourke and Dr. Carlos Picone, dated Oct. 5, 2010, at 18, attached as Annex 6 to Chevron’s motion, filed Oct. 29, 2010 at 5:20 p.m.

959 See PICONE, Carlos E., Estimated Cost of Delivering Health Care to the Affected Population of the Concession Area of Ecuador, attached as Annex C to Plaintiffs’ Motion, filed Sept. 16, 2010 at 5:15 p.m., at 8. Dr. Picone’s estimate is derived by taking multiplying the Ecuadorian average annual per capita health-care expenditure in 2008 of US$231 per person by his estimates of the combined population of Sucumbios and Orellana over a 30-year period (to 2039). Id. at 5-6.

960 See PICONE, Carlos E., Estimated Cost of Delivering Health Care to the Affected Population of the Concession Area of Ecuador, attached as Annex C to Plaintiffs’ Motion, filed Sept. 16, 2010 at 5:15 p.m., at 6-8.

961 KELSH, Michael, Response to Reports of Dr. Daniel Rourke and Dr. Carlos Picone, dated Oct. 5, 2010, at 18, attached as Annex 6 to Chevron’s motion, filed Oct. 29, 2010 at 5:20 p.m.


- 216 -

extra petita. In all events, any such claim should not be compensated because, as discussed more fully in Chevron’s filings of September 16, 2010 at 5:15 p.m. [sic] and October 29, 2010 at 5:20 p.m., 962 there is no scientific evidence to support the conclusion that people in the former concession area suffer from excess cancer attributable to petroleum exposure. Accordingly, this Court should not award any damages based on such alleged injury, and certainly not to the plaintiffs, none of whom has the authority to bring personal claims on behalf of third parties.

The only known facts about the claim for damages resulting from alleged excess cancer deaths are that it is based solely on misused or incorrect statistics and not, as a claim for personal injury must be, on the actual experience of the specific individuals making the claim. In fact, plaintiffs cannot even agree on the number of claimed excess cancer deaths: the Cabrera Report arrives at an ultimate figure of 1,401 alleged excess cancer deaths, while Daniel Rourke’s report, submitted with the plaintiffs’ September 16, 2010 filing at 5:15 p.m., arrives at an ultimate figure of 9,950 alleged excess cancer deaths.

Astonishingly, these figures include claims for personal injuries to unidentified individuals that have not yet even allegedly occurred. For example, Dr. Rourke assumes that the cancer rate increased shortly after commencement of petroleum exploration in 1967 and that the last excess cancer death allegedly resulting from the former Consortium’s historic operations will not occur until 2080—seventy (70) years from today. Under this methodology, the individual suffering the last alleged excess cancer death has, as of October 2010, likely not been born. Chevron cannot exercise its fundamental right to defend itself against such amorphous claims.

Regardless, there is no valid scientific evidence to support the conclusion that people in the former concession area suffer from excess cancer attributable to petroleum exposure. The three main studies claiming to find an increased cancer risk in the Oriente, all of which were conducted in undisclosed conjunction with the FDA, are biased and flawed, and thus cannot be used to form the basis of plaintiffs’ damage calculation. The three studies are: (i) a cluster investigation of cancer in the town of San Carlos (San Sebastián et al. 2001); (ii) ecologic studies of adult and childhood cancer that compared estimated cancer incidence rates in oil production regions versus non-oil production regions (Hurtig and San Sebastián 2002); and (iii) a “study” by the Frente, Acción Ecológica, and Oil Watch International presented in the Cabrera

962 Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., at 149-164; Chevron’s Motion, filed Oct. 29,

2010 at 5:20 p.m., § 2.3.1, at 19-30; see generally, KELSH, Michael A. Kelsh, Cancer Risk and Oil Production in the Amazon Region of Ecuador - A Review of the Epidemiologic Evidence, attached as Annex 8 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., ¶¶ 10, 34, 35, 60, 73, at 4, 17, 34, 40-41; LEAMER, Edward, Evaluation of Economic Analysis Contained in Summary Report of Expert Examination and Answers to the Plaintiffs’ Questions About the Expert Report in the Case of Maria Aguinda y Otros v. Chevron Corporation, No. 002-2003, at 29-37, attached as Annex 11 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m.; CHRISTOPHER John P., Evaluation of the Scientific Value of the Published Work of Plaintiffs’ Experts, Dr. Miguel San Sebastián and Colleagues, attached as Annex 10 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m.


- 217 -

Report.963 None of these studies are reliable due to limitations in study design, data quality, and potential biases.

First, the San Carlos study, which purportedly found an increased cancer risk in the town of San Carlos associated with petroleum exploration and production activities, suffers from a number of methodological errors. 964 For example, the study underestimates the population of San Carlos by about half and, as a result, overestimates the occurrence of cancer in the town. Second, the 2002 Hurtig and San Sebastián study, which compared the incidence of cancers occurring in “exposed” cantons (i.e., cantons that had petroleum activities) to the incidence of cancers in “unexposed” cantons, also suffers from significant errors, biases, and limitations. For example, the study did not provide any exposure assessment, did not control for potentially important confounding factors, and even the study’s own authors acknowledge that it cannot be used to establish a causal link between exposure and disease. And third, the Cabrera survey results are not only tainted by fraud but are also fundamentally flawed and wholly unreliable; they are based on self-reported, rather than medically diagnosed, cancer. 965 The Cabrera Report’s claim rests on mere circumstantial evidence of “excess” cancer deaths and is largely the result of egregious calculation errors that increase the measure of excess deaths exponentially.966

Indeed, Chevron continues to discover evidence that the plaintiffs’ cancer studies were tainted by fraud. As shown by new documents produced by the plaintiffs’ consultants at Stratus, portions of the original Cabrera Report relating to excess cancer deaths were actually secretly drafted by, among other people, Adolfo Maldonado, a

963 See KELSH, Michael A., Cancer Risk and Oil Production in the Amazon Region of Ecuador, A

Review of the Epidemiologic Evidence, attached as Annex 8 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., ¶¶ 3-10, at 2-4; KELSH, Michael, MORIMOTO, Libby & LAU, Edmund, Cancer mortality and oil production in the Amazon Region of Ecuador, 1990-2005, attached as Annex 29 to Chevron’s Motion filed Apr. 30, 2010 at 5:45 p.m., at 2, Record at 174923-48, 174924; KELSH, Michael, Rebuttal to Mr. Cabrera’s Excess Cancer Death and Other Health Effects Claims, and His Proposal for a New Health Infrastructure, attached to Chevron’s Motion filed Sept. 15, 2008 at 2:14 p.m., at 18, Record at 146371-146482, 146395; KELSH, Michael, Rebuttal to Mr. Cabrera’s Responses to Health-Related Questions, attached as Annex 4 to Chevron’s Motion filed Feb. 10, 2009 at 5:35 p.m., at 16, Record at 154475-502, 154491.

964 A critical analysis of San Sebastián’s doctoral thesis, on which the San Carlos study was based, shows that his work suffers from several errors and inaccuracies. See CHRISTOPHER, John P., Evaluation of the Doctoral Thesis of Plaintiffs’ Expert Dr. Miguel San Sebastian, dated Sept. 29, 2010, at 3-6, attached as Annex 4 to Chevron’s motion, filed Oct. 29, 2010 at 5:20 p.m.

965 Even plaintiffs have distanced themselves from Mr. Cabrera’s analysis. Dr. Rourke, for example, does not even reference the faulty survey conducted by Dr. Beristain and plaintiffs appear to have abandoned the survey results altogether. See supra § 2.2.1.

966 LEAMER, Edward., Evaluation of Economic Analysis Contained in Summary Report of Expert Examination and Answers to the Plaintiffs’ Questions About the Expert Report in the Case of Maria Aguinda et al v. Chevron Corporation, attached as Annex 11 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., at 30.


- 218 -

representative of the Frente—the named beneficiary of this lawsuit. 967 Mr. San Sebastián himself criticized the way in which Stratus, the plaintiffs’ paid consulting firm secretly drafting Mr. Cabrera’s report, was evaluating excess cancer deaths. In a newly discovered email, he said that the data Stratus was using had “little validity”; that Stratus’s analysis relied on “irrelevant” statistics; and that Stratus was “incorrect[ly]” assuming that “all potential cancer cases were due to the oil exposure,” among other serious flaws.968 Yet the plaintiffs pushed ahead anyway.

However, even if the deeply flawed studies cited by the plaintiffs showed an increase in cancer rates and/or cancer deaths in the Amazon region, plaintiffs fail to show a causal connection between that alleged increase and petroleum-related activities generally, much less TexPet’s petroleum operations. The San Carlos study and the Hurtig and San Sebastián study, for example, did not include any particularized identification of a potentially toxic hazard and dose, exposure response assessment, or risk characterization analyses, and all the studies improperly lump all types of cancer together.969 Moreover, a number of occupational studies among petroleum workers have examined the risk of cancer incidence or cancer mortality associated with exposure to crude oil, benzene, or non-specific exposures associated with drilling, pumping, transporting, and refining crude oil or its products, and those studies do not support a causal relationship between exposure and increased risk for cancer outcomes.970 Indeed, in one study specific to the Northeast region of Ecuador, no association was found between cancer mortality rates among people living in oil-producing regions and the oil-production activities in that region.971

In all events, plaintiffs’ damages estimates for alleged excess cancer deaths are marred by fraud and methodological errors. Plaintiffs have submitted two estimates for alleged excess cancer deaths: (i) the Cabrera Report’s estimate of approximately US$9.5 billion in damages and, (ii) Dr. Rourke’s estimate, attached to plaintiffs’

967 E-mail from Douglas Beltman to Steven Donziger, dated March 11, 2008, at 2:22 p.m.

(STRATUS-NATIVE067410, 067413, 067417) (attaching outline of report), attached as Annex 10 to Chevron’s motion filed Oct. 29, 2010 at 5:20 p.m.

968 E-mail from Miguel San Sebastián to Dave Mills, dated Aug. 25, 2008, at 12:20 p.m. (STRATUS-NATIVE052295, 052296), attached as Annex 10 to Chevron’s motion filed Oct. 29, 2010 at 5:20 p.m.

969 CHRISTOPHER, John, Evaluation of the Scientific Value of the Published Work of Plaintiffs’ Experts, Dr. Miguel San Sebastián and Colleagues, attached as Annex 10 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., at 9-12.

970 KELSH, Michael, Cancer Risk and Oil Production in the Amazon Region of Ecuador, A Review of the Epidemiologic Evidence, attached as Annex 8 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., ¶ 57, at 31-32.

971 See KELSH, Michael, Cancer Risk and Oil Production in the Amazon Region of Ecuador, A Review of the Epidemiologic Evidence, attached as Annex 8 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., ¶¶ 46-48, at 25-27; KELSH, Michael, MORIMOTO, Libby & LAU, Edmund, Cancer mortality and oil production in the Amazon Region of Ecuador, 1990-2005, attached as Annex 29 to Chevron’s Motion filed Apr. 30, 2010 at 5:45 p.m., Record at 174923-48, 174923.


- 219 -

September 16, 2010 submission, of a range of damages between US$12.1 billion and US$69.7 billion.972 Neither of these enormous estimates is in any way reliable.973

The Cabrera damage request (which was initially US$2.9 billion but increased at plaintiffs’ request without any rational justification), is based not on a valid epidemiological study, but, as noted, on an informal, anecdotal, unscientific survey paid for and conducted by the plaintiffs, with self-reported, medically unverified, and unverifiable information obtained from Frente-selected nearby residents, all of whom stand to gain from a monetary award in the plaintiffs’ favor.974 Indeed, the survey failed to identify even one of the supposed victims or produce any valid evidence whatsoever, such as a death certificate, medical report, or hospital record—while assessing US$9.5 billion in damages payable to the plaintiffs for “excessive” cancer deaths.975 Moreover, the Cabrera Report compounds the inherent mistakes and biases from Maldonado and Beristain’s “study” by vastly overestimating the population at risk.976

As discussed in Chevron’s submission of October 29, 2010 at 5:20 p.m., Dr. Rourke’s report, which recommends between US$9.5 billion and US$69.7 billion in damages on this basis, is also fundamentally flawed. Like the Cabrera Report, Dr. Rourke’s report neither identifies a single specific cancer death nor makes any effort to

972 Expert Cabrera’s Supplemental Report, filed Nov. 17, 2008, at 8:25 a.m., at 18, Record at

152949-153167, 152986; ROURKE, Daniel, Addendum to Estimate of the Number and Costs of Excess Cancer deaths Associated with Residence in the Oil-producing Areas of the Sucumbios and Orellana Provinces of Ecuador, attached as Annex D to Plaintiffs’ Motion, filed Sept. 16, 2010, at 5:15 p.m., at 7.

973 In calculating his damage estimates, Dr. Rourke relies on some of the same erroneous assumptions as Mr. Cabrera, namely that there is an excess risk of cancer among populations in the former concession area, that exposure to toxic levels of environmental contaminants have occurred, and that it is biologically plausible that potential contaminants from oil production activities are capable of causing all types of cancer. See ROURKE, Daniel, Estimate of the Number and Costs of Excess Cancer Deaths Associated with Residence in the Oil-producing Areas of the Sucumbios and Orellana Provinces of Ecuador, attached as Annex D to Plaintiffs’ Motion, filed Sept. 16, 2010, at 5:15 p.m. Chevron has previously addressed each of these assumptions in its Motion filed September 16, 2010 and, therefore, incorporates by reference Section II.B.4.c. of that Motion, including all references cited therein. See Chevron’s Motion, filed Sept. 16, 2010 at 4:35 p.m., at 149-164.

974 KELSH, Michael, Rebuttal to Mr. Cabrera’s Excess Cancer Death and Other Health Effects Claims, and His Proposal for a New Health Infrastructure, attached as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 146378-423, 146387-89. The survey did not measure whether the survey participants were ever exposed to petroleum compounds of potential concern. Participants were affected by recall bias because the survey sought information about events from many years in the past. Survey questions were worded in a biased manner – with the obvious purpose of linking TexPet to negative occurrences and adverse outcomes. Id.

975 Expert Cabrera’s Supplemental Report, filed Nov. 17, 2008, at 8:25 a.m., Record at 152949-153167, 152986; KELSH, Michael, Cancer Risk and Oil Production in the Amazon Region of Ecuador--A Review of the Epidemiologic Evidence, attached as Annex 8 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., at 36-38.

976 For a more in depth discussion of the deficiencies in Mr. Cabrera’s damage estimate, see Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., at 149-164.


- 220 -

establish a causal connection between alleged deaths and TexPet’s activities. Dr. Rourke’s other errors include:

• Dr. Rourke relies on a flawed Hurtig and San Sebastían study, done in conjunction with the Frente, for increased cancer risk but ignores other relevant evidence, including a study based on information from the Ecuador’s Instituto Nacional del Estadistica y Censos (Institute of Census and Statistical Information (“INEC”)) that showed no excess cancer mortality among populations living in the former concession area of the Amazon region in Ecuador.977

• Dr. Rourke’s actuarial methods are flawed. For example, Dr. Rourke applies country-wide cancer mortality rates to the allegedly affected population rather than cancer mortality rates for the Amazon region. Studies have shown that national-level cancer mortality rates are consistently higher than the rates observed in the Amazon region.978 Thus, Dr. Rourke’s use of country-wide data grossly exaggerates the number of alleged “excess” cancer deaths in the Amazon region.979

• Dr. Rourke makes several critical errors in his assumptions regarding cancer latency. For example, Dr. Rourke began counting cancer events in 1967, the same year, according to Dr. Rourke, that commercially viable reserves were found in the former concession area, and he continues counting cancer events through 2080, up to seventy years after exposure and ninety years after TexPet ceased operating the oilfields.980

• Dr. Rourke’s assumption that exposure to petroleum will result in an increase in all types of cancers is not biologically plausible. There is no scientific evidence indicating that crude oil, acting as an environmental agent, can cause all types of cancers.981

977 KELSH, Michael, MORIMOTO, Libby & LAU, Edmund, Cancer mortality and oil production in

the Amazon Region of Ecuador, 1990-2005, attached as Annex 29 to Chevron’s Motion filed Apr. 30, 2010 at 5:45 p.m., at 15, 23, Record at 174923-48, 174937, 174945.

978 See KELSH, Michael, Response to Reports of Dr. Daniel Rourke and Dr. Carlos Picone, dated Oct. 5, 2010, at 3, attached as Annex 6 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

979 See KELSH, Michael, Response to Reports of Dr. Daniel Rourke and Dr. Carlos Picone, dated Oct. 5, 2010, at 3, attached as Annex 6 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

980 ROURKE, Daniel, Estimate of the Number and Costs of Excess Cancer Deaths Associated with Residence in the Oil-producing Areas of the Sucumbios and Orellana Provinces of Ecuador, at 4, 19-20, attached as Annex D to Plaintiffs’ Motion, filed Sept. 16, 2010 at 5:15 p.m.

981 KELSH, Michael, Response to Reports of Dr. Daniel Rourke and Dr. Carlos Picone, dated Oct. 5, 2010, at 7, attached as Annex 6 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.


- 221 -

• Dr. Rourke makes the unfounded assumption that exposure to toxic levels of contaminants has occurred. In fact, however, there is no evidence that such exposure has occurred.982

Additionally, both the Cabrera Report and Dr. Rourke rely on the U.S.-based concept of a “Value of a Statistical Life” (“VSL”) for a “unit” value per alleged excess cancer death. 983 This VSL, however, is not an appropriate method with which to measure damages resulting from alleged excess cancer deaths for a number of reasons.

First, a VSL estimate is typically used to gauge the potential benefits of proposed environmental regulations in the United States and weigh the expected life savings against the financial costs of the regulation.984 It was not designed to be used in a U.S. court to determine wrongful death damages.985 Second, a U.S.-based VSL is a wholly inappropriate measure for the case at hand and must be adjusted to apply to the economic realities of Ecuador in general, and the Amazon region in particular. Because VSL is ultimately used to measure the benefit of a risk-reducing investment, it stands to reason that the VSL in the United States, which has a per capita GDP (2009) of US$46,381, would be significantly higher than Ecuador, which has a per capita income of US$4,059.986 This, of course, is not to say that a life in the U.S. is inherently “worth” more than in Ecuador: it is simply a measurement of the countries’ respective ability to invest in risk-reducing projects. Accordingly, a more appropriate VSL for Ecuador, although the concept is inapplicable in this case, would be about US$0.5 million.987

982 See KELSH, Michael, Response to Reports of Dr. Daniel Rourke and Dr. Carlos Picone, dated

Oct. 5, 2010, at 7, attached as Annex 6 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m. 983 Expert Cabrera’s Global Report, filed on Apr. 1, 2008, at 8:30 a.m., Record at 139875-139881,

139875; ROURKE, Daniel, Estimate of the Number and Costs of Excess Cancer Deaths Associated with Residence in the Oil-producing Areas of the Sucumbios and Orellana Provinces of Ecuador, attached as Annex D to Plaintiffs’ Motion, filed Sept. 16, 2010, at 5:15 p.m., at 20-22.

984 LEAMER, Edward, Evaluation of Economic Analysis Contained in Summary Report of Expert Examination and Answers to the Plaintiffs’ Questions About the Expert Report in the Case of Maria Aguinda et al v. Chevron Corporation, No. 002-2003, at 40, attached as Annex 11 to Chevron’s Motion filed Sep. 16, 2010 at 4:35 p.m.

985 See LEAMER, Edward, Evaluation of Economic Analysis Contained in Summary Report of Expert Examination and Answers to the Plaintiffs’ Questions About the Expert Report in the Case of Maria Aguinda et al v. Chevron Corporation, No. 002-2003, at 44-45, attached as Annex 11 to Chevron’s Motion filed Sep. 16, 2010 at 4:35 p.m.

986 LEAMER, Edward, Evaluation of Economic Analysis Contained in Summary Report of Expert Examination and Answers to the Plaintiffs’ Questions About the Expert Report in the Case of Maria Aguinda et al v. Chevron Corporation, No. 002-2003, at 40-41, attached as Annex 11 to Chevron’s Motion filed Sep. 16, 2010 at 4:35 p.m.

987 LEAMER, Edward, Evaluation of Economic Analysis Contained in Summary Report of Expert Examination and Answers to the Plaintiffs’ Questions About the Expert Report in the Case of Maria Aguinda et al v. Chevron Corporation, No. 002-2003, at 40-41, attached as Annex 11 to Chevron’s Motion filed Sep. 16, 2010 at 4:35 p.m.


- 222 -

Stratus, the paid consultants hired by plaintiffs to draft Mr. Cabrera’s report, recognized many of these same issues with the use of VSL in the context of wrongful death damages. Indeed, Stratus’s own economists argued that VSL was an inappropriate measure of damage in wrongful death suits because it is a measure of what society is willing to pay to reduce risk whereas courts only allow damages in the form of specific losses suffered by a specific family as a result of death.988 Stratus also acknowledged that the US measure of VSL may be inapplicable to the residents of the Oriente.989

Dr. Rourke also cites U.S. wrongful death verdicts stemming from asbestos-related lung cancers and benzene-related leukemias. These awards from U.S. juries, however, bear no relation to plaintiffs’ claims. Damage awards for survival claims in the United States are highly individualized and dependent on the specific circumstances of the decedent. Accordingly, one cannot, as Dr. Rourke has done, translate a “mean” award in the United States to plaintiffs’ claims for alleged excess cancer deaths in Ecuador.

In summary, there is no credible evidence of increased incidence of cancer in the Amazon region of Ecuador, and there is no evidence of any causal connection between the alleged increase and exposure to petroleum-related contaminants. Thus, both the Cabrera Report’s and Dr. Rourke’s estimates of cancer-related damages are unreliable and cannot be used to support a judgment in this matter.

Notably, in a related case against Chevron brought by plaintiffs’ former lead lawyer, Mr. Bonifaz, similar allegations regarding cancer were proven fraudulent. Mr. Bonifaz brought suit in the Northern District of California in 2006 on behalf of “nine Oriente residents” who alleged they had developed cancer, or developed an increased risk of cancer, as a result of TexPet’s former operations in Ecuador.990 Like Mr. Cabrera here, Mr. Bonifaz initially fought to avoid disclosure of the names of any of the alleged cancer victims.991 Unlike this Court, however, the U.S. district court ordered that the alleged victims be identified.992 During later interviews, several admitted that they had

988 E-mail from Douglas Beltman to Juan Pablo Sáenz, dated Feb. 08, 2008, at 2:27 p.m.

(STRATUS-NATIVE066693), attached as Annex 10 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m. 989 See E-mail from Douglas Beltman to Juan Pablo Sáenz, dated Feb. 08, 2008, at 2:27 p.m.

(STRATUS-NATIVE066693), attached as Annex 10 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m. 990 Chevron's Supplementary Evidentiary Request for the Cononaco-6 Essential Error Petition at

1, filed July 30, 2010, at 5:49 p.m.; see Complaint, Doe v. Texaco, Inc., Texaco Petroleum Co., and Chevron Corp., (N.D. Cal. Apr. 25, 2006), attached to Chevron’s Supplementary Evidentiary Request No. 1 for the Cononaco-6 Essential Error Petition, filed July 30, 2010, at 5:49 p.m.

991 Plaintiffs’ Ex Parte Motion to Commence and Proceed With Action Using Pseudonyms, Doe v. Texaco, Inc., (N.D. Cal. Apr. 25, 2006), attached to Chevron’s Supplementary Evidentiary Request No. 2 for the Cononaco-6 Essential Error Petition, filed July 30, 2010, at 5:49 p.m.

992 Order, Gonzales v. Texaco, Inc. (N.D. Cal. Oct. 5, 2006), attached to Chevron’s Supplementary Evidentiary Request No. 3 for the Cononaco-6 Essential Error Petition, filed July 30, 2010, at 5:49 p.m.


- 223 -

never been diagnosed with cancer, and some denied ever telling Mr. Bonifaz that they had cancer.993 The district court sanctioned Mr. Bonifaz US$45,000 for bringing the fabricated claims,994 noting that “[t]his is not the first evidence of possible misconduct by plaintiffs’ counsel in this case.” 995 “It is clear to the Court that this case was manufactured by plaintiffs’ counsel for reasons other than to seek a recovery on these plaintiffs’ behalf. This litigation is likely a smaller piece of some larger scheme against [Chevron].”996

7.4.2 There Is No Credible Evidence That Chevron Is Liable for Damage to Indigenous Territory and Culture

As my client demonstrated in its filings of September 16, 2010 at 4:35 p.m. and October 29, 2010 at 5:20 p.m., plaintiffs’ request to obtain funding for projects to recover indigenous territory and culture must fail, not only because it is extra petita, see supra Chapter VI, but also because there is no scientific evidence demonstrating that TexPet’s petroleum exploration and production activities in the former concession caused the purported harm to indigenous communities.997 The contrary conclusion can only be

993 Gonzales v. Texaco, Inc., No. C 06-02820 WHA, 2007 WL 2255217, at 2-5 (N.D. Cal. Aug. 3,

2007), attached as Annex 9 to Evidentiary Request No. 22.1 for the Sacha South Essential Error Petition, filed May 3, 2010, at 10:20 a.m.

994 Rule 11 Sanction and Award of Attorney’s Fees and Expenses and Judgment Lien, Gonzales v. Texaco, Inc., 2007 WL 3036093, at 25 (N.D. Cal. Oct. 16, 2007), attached as Annex 9 to Evidentiary Request No. 22.2 for the Sacha South Essential Error Petition, filed May 3, 2010, at 10:20 a.m.

995 Gonzales v. Texaco, Inc., 2007 WL 2255217, at 6 (N.D. Cal. Aug. 3, 2007), attached as Annex 9 to Evidentiary Request No. 22.1 for the Sacha South Essential Error Petition, filed May 3, 2010, at 10:20 a.m.

996 Gonzales v. Texaco, Inc., 2007 WL 2255217, at 6 (N.D. Cal. Aug. 3, 2007), attached as Annex 9 to Evidentiary Request No. 22.1 for the Sacha South Essential Error Petition, filed May 3, 2010, at 10:20 a.m.

997 Chevron’s Motion filed Sept. 16, 2010, at 4:35 p.m., at 174-81; see also WASSERSTROM, Robert, Agricultural Settlement, Deforestation and Indigenous People in Ecuador, 1964-1994, attached as Annex 7 to Chevron’s Motion filed Sept. 16, 2010, at 4:35 p.m.; Chevron’s Objections to Expert Cabrera’s Global Report, filed on Sept. 15, 2008, at 2:14 p.m., Record at 141082-203, 141120, 141144-46. See generally BJORKMAN, Bjorn, SOUTHGATE, Douglas and WASSERSTROM, Robert, Response to Mr. Cabrera’s Declarations about Alleged Harm to Indigenous Communities in the Petroecuador-Texaco Concession Area, attached as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 146888-97; SOUTHGATE, Douglas and WASSERSTROM, Robert, Response to Mr. Cabrera’s Claims about Deforestation and Alleged Violations of Indigenous Territorial Rights in the Ecuadorian Amazon, attached as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 146898-926; WASSERSTROM, Robert, Response to Mr. Cabrera’s Errors Concerning Indigenous Populations in the Petroecuador-Texaco Concession Area, attached as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 146927-949; BJORKMAN, Bjorn, Response to Claims by Mr. Cabrera Concerning Alleged Harm to Traditional Food Production Systems and to Claims About their Restoration, attached as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 146950-62; WASSERSTROM, Robert, Response to Mr. Cabrera’s Claims about Alleged Harm to Indigenous Communities Regarding Their Cultural Traditions,


- 224 -

reached by disregarding the data provided by historical, anthropological, economic, and demographic research. 998 Such research demonstrates that the alleged loss of indigenous culture and deforestation is a direct result of colonization and education programs promoted by the Ecuadorian Government.999 To the extent such impacts can be attributed to the Consortium’s activities, those impacts were confined and negligible.

Plaintiffs’ request of US$481.5 million (which they claim could be increased by more than US$200 million) in their filing of September 16, 2010 at 5:15 p.m. is similarly unwarranted and unfounded.1000 In support of their request, plaintiffs simply submit an unsigned report, repackaging the Cabrera Report’s flawed recommendations to lay the blame for alleged harm to indigenous communities at the feet of my client. Their efforts demonstrate an appalling ignorance of both the history of Ecuador in general and of this region in particular.1001

My client has previously recounted this history in great detail,1002 but for now, it suffices to say that since the nineteenth century, Ecuador has adopted a policy of occupying what it deemed to be “vacant lands,” and converting them into productive agricultural regions to achieve “national integration.”1003 The Government has made (continued…) attached as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 146963-84.

998 WASSERSTROM, Robert, Disputing the Statements Made on Alleged Cultural Damages Caused to Indigenous Peoples by the Petroecuador-Texaco Consortium, § I.6, at 3, attached as Annex 9 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

999 REIDER, Susan, Challenging the Standard Narrative: Myth-making accountability in Ecuadorian Environmental and Indigenous Politics, attached as Annex 15 to Chevron’s Motion filed Sept. 16, 2010, at 4:35 p.m., at 2-3; SOUTHGATE, Douglas, National Interests, Multinational Actors and Petroleum in the Ecuadorian Amazon, attached as Annex 16 to Chevron’s Motion filed Sept. 16, 2010, at 4:35 p.m, at 3-6; WASSERSTROM, Robert, Roads, Oil and Native People: A Controlled Comparison on the Ecuadorian Frontier, attached as Annex 17 to Chevron’s Motion filed Sept. 16, 2010, at 4:35 p.m., at 16-18. See generally WASSERSTROM, Robert, Disputing the Statements Made on Alleged Cultural Damages Caused to Indigenous Peoples by the Petroecuador-Texaco Consortium, attached as Annex 9 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

1000 See Plaintiffs’ Motion, filed Sept. 16, 2010 at 5:15 p.m., at 14; see also Cultural Damages Caused to Indigenous Communities of the Ecuadorian Amazon, attached as Annex G to Plaintiffs’ Motion, filed Sept. 16, 2010 at 5:15 p.m., at 11.

1001 See Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008 at 2:14 p.m., at 63-65, Record at 141,082-203, 141,144-46.

1002 See, e.g., WASSERSTROM, Robert, Agricultural Settlement, Deforestation and Indigenous People in Ecuador, 1964-1994, attached as Annex 7 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m.

1003 BJORKMAN, Bjorn, SOUTHGATE, Douglas, and WASSERSTROM, Robert, Response to Mr. Cabrera’s Declarations about Alleged Harm to Indigenous Communities in the Petroecuador-Texaco Concession Area, included in Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 146888-991v, at 146893, 146900, 146903, 146928, 146966-67; see also WASSERSTROM, Robert, Agricultural Settlement, Deforestation and Indigenous People in Ecuador, 1964-1994, attached as Annex 7 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., at 41-43;


- 225 -

Amazonian colonization a “national task of urgent priority,” 1004 given free title to fifty hectares of “unoccupied” land to settlers who cleared a portion of that land as proof of “productive occupation,”1005 and made road construction a major part of an overall strategy to colonize the Amazon rainforest.1006

Indeed, TexPet’s very presence in the Oriente was due to the sovereign choice of the Ecuadorian State to exploit the hydrocarbons in that region.1007 The Ecuadorian Government has long used petroleum activities to further its colonization efforts.1008 Accordingly, as a condition of the concession contract, the Ecuadorian Government required TexPet to construct an infrastructure network, composed principally of highways open to the public, aimed at improving access to the Oriente.1009 These projects included an airport in Lago Agrio, bridges, highways, and “twenty million American dollars (US$ 20,000,000) in access roads” (unrelated to oil exploration).1010

(continued…) WASSERSTROM, Robert, Disputing the Statements Made on Alleged Cultural Damages Caused to Indigenous Peoples by the Petroecuador-Texaco Consortium, § V, at 8-10, attached as Annex 9 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

1004 WASSERSTROM, Robert, Agricultural Settlement, Deforestation and Indigenous People in Ecuador, 1964-1994 (citing Guillaume Fontaine, El precio del petróleo, Quito: FLACSO, IFEA y Ediciones Abya-Yala, 2007, p. 275), attached as Annex 7 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., at 13. The Government’s views are outlined in many documents from that period, including various National Development Plans. Id. (citing IERAC, La regionalización; and Oswaldo Barsky et al., Políticas agrarias, colonización y desarrollo rural en Ecuador, Quito: OEA, 1982).

1005 BJORKMAN, Bjorn, SOUTHGATE, Douglas, and WASSERSTROM, Robert, Response to Mr. Cabrera’s Declarations about Alleged Harm to Indigenous Communities in the Petroecuador-Texaco Concession Area, included in Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 146888-991v, 146893.

1006 BJORKMAN, Bjorn, SOUTHGATE, Douglas, and WASSERSTROM, Robert, Response to Mr. Cabrera’s Declarations about Alleged Harm to Indigenous Communities in the Petroecuador-Texaco Concession Area, included in Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 146888-991v, 146893, 146.900.

1007 Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., at 64, Record at 141082-203, at 141145.

1008 WASSERSTROM, Robert, Agricultural Settlement, Deforestation and Indigenous People in Ecuador, 1964-1994, attached as Annex 7 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., at 11.

1009 Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., at 85-86, Record at 141082-203, 141166-67; see Official Transcript of Deposition of Robert M. Bischoff at 192:18-193:1, dated Aug. 17, 1995, attached as Annex 37 to Chevron’s Motion, filed Sept. 16, 2010, at 4:35 p.m.; WASSERSTROM, Robert, Agricultural Settlement, Deforestation and Indigenous People in Ecuador, 1964-1994, attached as Annex 7 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., at 12; see also WASSERSTROM, Robert, Disputing the Statements Made on Alleged Cultural Damages Caused to Indigenous Peoples by the Petroecuador-Texaco Consortium, § V.33, at 10, attached as Annex 9 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

1010 1973 Concession Contract dated Aug. 6, 1973, filed on Apr. 27, 2004, at 2:30 p.m., Record at 7089-7136, 7121v; SOUTHGATE, Douglas and WASSERSTROM, Robert, Response to Mr. Cabrera’s


- 226 -

As the Government had intended, colonists used those roads to migrate to the Oriente in large numbers. 1011 In total, between 1964 and 1992, the Government disregarded any claims the indigenous communities had to the Oriente and increased land grants to colonists in the region from approximately fifty-five thousand hectares to well over a million hectares.1012 Meanwhile, the population in the Oriente grew by a factor of six.1013 The result of the Government’s colonization policies was deforestation. Satellite imagery confirms that the Consortium cleared about one percent of the former concession area to build roads and install infrastructure, while by 2000, the colonization activities directed, approved, or promoted by the Ecuadorian Government resulted in 54.4 percent of the former concession area being deforested.1014

In addition to impacting indigenous populations through its colonization efforts, the Ecuadorian Government has previously focused its educational policy on “integrating” and “assimilating” these communities.1015 The Government’s decisions to make Spanish the primary language for the education of all children, to require all

(continued…) Claims about Deforestation and Alleged Violations of Indigenous Territorial Rights in the Ecuadorian Amazon, attached as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., at 10, Record at 146898-926, 146907; see also WASSERSTROM, Robert, Disputing the Statements Made on Alleged Cultural Damages Caused to Indigenous Peoples by the Petroecuador-Texaco Consortium, § V.31, at 9, attached as Annex 9 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

1011 WASSERSTROM, Robert, Agricultural Settlement, Deforestation and Indigenous People in Ecuador, 1964-1994, attached as Annex 7 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., at 3-4, 15; BJORKMAN, Bjorn, SOUTHGATE, Douglas, and WASSERSTROM, Robert, Response to Mr. Cabrera’s Declarations about Alleged Harm to Indigenous Communities in the Petroecuador-Texaco Concession Area, included in Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 146,888-991v, 146,907-08, 146,914; Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., at 178-179.

1012 WASSERSTROM, Robert, Disputing the Statements Made on Alleged Cultural Damages Caused to Indigenous Peoples by the Petroecuador-Texaco Consortium, § V.32, at 9, attached as Annex 9 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

1013 Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., at 179; WASSERSTROM, Robert, Disputing the Statements Made on Alleged Cultural Damages Caused to Indigenous Peoples by the Petroecuador-Texaco Consortium, § V.32, at 9, attached as Annex 9 to Chevron’s motion filed [ ] at [ ].

1014 BJORKMAN, Bjorn, SOUTHGATE, Douglas, and WASSERSTROM, Robert, Response to Mr. Cabrera’s Declarations about Alleged Harm to Indigenous Communities in the Petroecuador-Texaco Concession Area, included in Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 146888-991v, 146892-93. Moreover, in another case, Mr. Cabrera has opined that similar damages to the northern portion of the former Consortium area were actually due to spraying of pesticides in nearby Colombia due to drug interdiction activities. See Expert Report of Mr. Cabrera and Others in Arias, et al. v. DynCorp., No. 1:07-cv-01042-RWR-DAR (D.C. Cir.), dated January 2008, attached as Annex 15 to Chevron’s Motion filed on May 21, 2010 at 4:35 p.m.

1015 WASSERSTROM, Robert, Disputing the Statements Made on Alleged Cultural Damages Caused to Indigenous Peoples by the Petroecuador-Texaco Consortium, § IV.19, at 6, attached as Annex 9 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.


- 227 -

Ecuadorians to speak the same language, and, perhaps most significantly, to permit foreign missionaries to provide education and healthcare in the Oriente have greatly affected the traditional cultures of indigenous communities. 1016 The “forced acculturation” of which plaintiffs speak resulted from these polices, not TexPet’s limited interaction with the indigenous communities.1017

Thus, any change to the culture of indigenous communities is the direct result of official policies of the Ecuadorian State—policies which my client had no role in formulating. Moreover, cultural change is not uncommon among indigenous groups in the Amazon, who have long been influenced by interaction with their neighbors and the outside world.1018 In spite of these changes, indigenous populations are growing, not disappearing.1019 Indigenous populations in the former concession area have increased since the mid-twentieth century, and are growing at approximately the same rate as Ecuador’s overall population.1020

Even if Your Honor were to ignore the evidence detailed above and hold my client responsible for the actions of the Ecuadorian Government, plaintiffs’ damages requests, like those of their conduit Mr. Cabrera, are wildly exorbitant and wholly unsubstantiated. In fact, plaintiffs’ requests suffer the same flaws as the Cabrera Report, which my client has previously refuted in detail, and are duplicative of other

1016 Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., at

87, Record at 141082-203, 141168. See BJORKMAN, Bjorn, SOUTHGATE, Douglas, and WASSERSTROM, Robert, Response to Mr. Cabrera’s Declarations about Alleged Harm to Indigenous Communities in the Petroecuador-Texaco Concession Area, submitted as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 146888-991v, 146896-97; WASSERSTROM, Robert, Disputing the Statements Made on Alleged Cultural Damages Caused to Indigenous Peoples by the Petroecuador-Texaco Consortium, § IV, at 6-8, attached as Annex 9 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

1017 WASSERSTROM, Robert, Disputing the Statements Made on Alleged Cultural Damages Caused to Indigenous Peoples by the Petroecuador-Texaco Consortium, § VII, at 12, attached as Annex 9 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

1018 WASSERSTROM, Robert, Disputing the Statements Made on Alleged Cultural Damages Caused to Indigenous Peoples by the Petroecuador-Texaco Consortium, § III, at 4-6, attached as Annex 9 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

1019 WASSERSTROM, Robert, Disputing the Statements Made on Alleged Cultural Damages Caused to Indigenous Peoples by the Petroecuador-Texaco Consortium, § VI, at 10-11, attached as Annex 9 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

1020 See WASSERSTROM, Robert, Response to Mr. Cabrera’s Errors Concerning Indigenous Populations in the Petroecuador-Texaco Concession Area, attached as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 146927-49; WASSERSTROM, Robert, Agricultural Settlement, Deforestation and Indigenous People in Ecuador, 1964-1994, attached as Annex 7 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., at 28-39; WASSERSTROM, Robert, Disputing the Statements Made on Alleged Cultural Damages Caused to Indigenous Peoples by the Petroecuador-Texaco Consortium, § VI, at 10-11, attached as Annex 9 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.


- 228 -

requests for damages.1021 For example, plaintiffs propose the award of hundreds of millions of dollars for “territorial recovery,” ignoring the fact that TexPet never owned any of the land in the former concession, and that the land to be “recovered” is the property of colonists, deeded to them by the Ecuadorian Government.1022 Plaintiffs similarly request damages for a “restoration of food resources” program which, like the plan proposed in the Cabrera Report, is unworkable and contains seriously exaggerated costs.1023

In the end, this request is yet another example of plaintiffs seeking excessive damages for claims they failed to include in their complaint. This request is particularly egregious because the evidence demonstrates that any loss of indigenous culture and deforestation is a consequence of the Ecuadorian Government’s actions. Because TexPet’s activities in the former concession were completely lawful and in fact authorized by the Ecuadorian State, the claim that Chevron should pay damages for loss of indigenous culture is ludicrous and unsustainable.

7.4.3 There Is No Credible Evidence of Natural Resource Damages

Any claim for damage to natural resources would likewise be extra petita. See supra Chapter VI. Moreover, such a claim must fail because the only calculation in the record, the Cabrera Report’s recommendation of US$1.697 billion in damages,1024 is fundamentally flawed and grossly inflated.1025 While plaintiffs also submit the report of Lawrence Barnthouse to support the existence and valuation of alleged natural resource

1021 See WASSERSTROM, Robert, Disputing the Statements Made on Alleged Cultural Damages Caused to Indigenous Peoples by the Petroecuador-Texaco Consortium, at 2-3, attached as Annex 9 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

1022 Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., at 87, Record at 141082-203, 141167.

1023 See BJORKMAN, Bjorn, Response to Claims by Mr. Cabrera Concerning Alleged Harm to Traditional Food Production Systems and to Claims About Their Restoration, attached as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 146950-62, 146958-962; Expert Cabrera’s Global Report, filed Apr. 1, 2008, at 8:30 a.m., Record at 134228-89, 134234.

1024 Mr. Cabrera conducted two alternative analyses of damages resulting from alleged loss of ecosystem. For the first, which was based on restoration costs of the affected acreage, Mr. Cabrera estimated damages of US$0.875 billion. Alternatively, he estimated US$1.697 billion as a result of his analyses based on lost ecological services of the rainforest. Both analyses are flawed, as discussed more fully in Chevron’s Motion filed Sept. 16, 2010, at 4:35 p.m., § II.B.4.d, at 165-174, and, specifically, LEAMER, Edward, Evaluation of Economic Analysis Contained in Summary Report of Expert Examination and Answers to the Plaintiffs’ Questions About the Expert Report in the Case of Maria Aguinda et al. v. Chevron Corporation, attached as Annex 11 to Chevron’s Motion filed Sept. 16, 2010, at 4:35 p.m., at 14-29.

1025 TOMASI, Theodore, Rebuttal to the Calculation of Supposed Economic Damages Due to Ecosystem Losses by Mr. Richard Cabrera Vega, attached as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 146650-146728, 146664-146665; see also discussion of plaintiffs’ claimed damages for loss of ecosystem in Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., § II.B.4.d., at 165, including but not limited to all references cited therein.


- 229 -

damage, Dr. Barnthouse simply regurgitates the Cabrera Report’s initial, flawed analysis and, therefore, fails for many of the same reasons.1026 As has recently been revealed, Mr. Cabrera did not even write his own initial analysis; rather, the portions of the Cabrera Report dealing with harm to the ecosystem were covertly drafted by, among other people, Lorena Gamboa of an activist group supporting plaintiffs and Stratus, and thus obviously lack any credibility.1027 Dr. Barnthouse’s analysis must also be disregarded because it contradicts his own prior opinions and conclusions.

As discussed in Chevron’s submission of December 21, 2010 at 11:00 a.m., the most basic flaw in both the Cabrera Report and Dr. Barnthouse’s report is that they do not identify the allegedly contaminated area as that which requires restoration. However, these reports include myriad other fundamental errors:

• Neither the Cabrera Report nor Dr. Barnthouse’s analysis identifies any ecological services lost as a result of TexPet’s activities. This, standing alone, renders both of their respective “analyses” worthless because they are valuing something they have not identified.1028 And although neither the Cabrera Report nor Dr. Barnthouse identifies any services lost as a result of TexPet’s activities, they nevertheless attempt to calculate the purported decrease of these phantom services—and do so over a greatly exaggerated area that bears no relation to the area allegedly affected by the former Consortium’s operations.1029

• By adopting and affirming the Cabrera Report’s conclusions, Dr. Barnthouse contradicts his own positions on the appropriate methodologies for assessing and valuing lost ecological services. In his report, Dr. Barnthouse simply equates exceedances of some environmental screening levels with service losses. But Dr. Barnthouse has previously stated that “elevated chemical concentrations are not, by themselves, reliable indicators of adverse natural resource effects” and has concluded that “one cannot categorically presume that elevated levels

1026 See generally, BARNTHOUSE, Lawrence, Evaluation of Natural Resource Service Losses

Related to Oil Field Development in the Concession, attached as Annex E to Plaintiffs’ Motion filed Sept. 16, 2010 at 5:15 p.m.

1027 E-mail from Douglas Beltman to Steven Donziger, dated March 11, 2008, at 2:22 p.m. (attaching outline of report) (STRATUS-NATIVE067410, 067413, 067417), attached as Annex 10 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

1028 See discussion of plaintiffs’ claimed damages for loss of ecosystem in Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., § II.B.4.d.i., at 166, including but not limited to all references cited therein.

1029 See discussion of plaintiffs’ claimed damages for loss of ecosystem in Chevron’s Motion filed Sep. 16, 2010 at 4:35 p.m., § II.B.4.d.ii-iii, at 170-172, including but not limited to all references cited therein.


- 230 -

of a particular hazardous substance equate to injuries or service losses.”1030 Yet that is precisely what Dr. Barnthouse does in his report.

• Dr. Barnthouse inexplicably identifies the area lost to roads and other essential functions of petroleum operations (e.g., stations, well pads, pits, etc.) for which he contends that compensation should be granted. However, as Dr. Barnthouse himself recognizes, natural resource damages are only compensable for unpermitted activities.1031 TexPet’s construction of roads and other essential facilities was authorized and mandated by the concession agreement. The Government of Ecuador specifically required TexPet to build roads into the former concession area and sanctioned the building of operational facilities as a necessary consequence of petroleum exploration and production activities.1032

• Those roads and essential facilities should have been included in Dr. Barnthouse’s analysis of “baseline” conditions and, therefore, excluded from the damages assessment. 1033 The determination of baseline conditions is a critical component of assessing natural resource damages because it establishes a standard against which current conditions are measured.

• Not only does Dr. Barnthouse assume service losses from both legal construction activities and as a result of alleged exceedances of some environmental screening levels, but he also assumes the alleged exceedances and attributes those alleged exceedances to TexPet alone. Dr. Barnthouse completely ignores both TexPet’s remediation efforts in the mid-1990s as well as the fact that Petroecuador has been the sole operator of oil production facilities in the former concession area since

1030 DESVOUSGES, William, Critique of Dr. Barnthouse’s Report: Estimation of Natural Resource

Losses Related to Oil Field Development in the Concession, at 6, attached as Annex 5 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m., (citing Barnthouse and Stahl 2002).

1031 DESVOUSGES, William, Critique of Dr. Barnthouse’s Report: Estimation of Natural Resource Losses Related to Oil Field Development in the Concession, at 5, attached as Annex 5 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

1032 See TOMASI, Theodore D., Rebuttal to “Evaluation of Natural Resource Service Losses Related to Oil Field Development in the Concession” by Dr. Lawrence W. Barnthouse, at 3, 7, attached as Annex 8 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

1033 See DESVOUSGES, William, Critique of Dr. Barnthouse’s Report: Estimation of Natural Resource Losses Related to Oil Field Development in the Concession, at 9, attached as Annex 5 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m., (citing Leamer 2010); TOMASI, Theodore D., Rebuttal to “Evaluation of Natural Resource Service Losses Related to Oil Field Development in the Concession” by Dr. Lawrence W. Barnthouse, at 7, attached as Annex 8 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.


- 231 -

1992, during which time it has amassed a notoriously poor safety record.1034

• Dr. Barnthouse adopts the Cabrera Report’s proposed cost per hectare for rainforest restoration, US$29,180.00 per hectare, without considering that this is thirteen and a half times higher than the Ecuadorian Forestry Law, which provides a range of restoration costs from US$2,101.29 per hectare to US$2,160.43 per hectare, depending on whether the forests to be restored are “native” or “secondary native.”1035

In summary, both the Cabrera Report and Dr. Barnthouse’s analysis are fundamentally and irreparably flawed and cannot form the basis of a judgment against Chevron.

7.4.4 There Is No Credible Evidence That Would Require Chevron to Pay for Improvements to Petroecuador’s Petroleum Operations Infrastructure

The Cabrera Report recommended an estimated US$375 million in damages for improvements to Petroecuador’s petroleum operations infrastructure.1036 While plaintiffs apparently abandon this claim in their September 16, 2010 filing, at 5:15 p.m., this request, in addition to being extra petita, see supra Chapter VI, is patently absurd.

To start, Petroecuador has been the sole operator of the former concession area since 1990. Well before that time (since 1976), the Ecuadorian Government (first through CEPE and then through Petroecuador) was the majority owner of the rights and shares in the Consortium, determined how the Consortium was operated, and had a decisive influence in the Consortium’s administration. Since 1992, Petroecuador has been the exclusive owner of the oilfield equipment.1037 Additionally, in the 1995 Remediation



1036 Expert Cabrera’s Global Report, filed Apr. 1, 2008, at 8:30 a.m., Record at 134228-89, 134280.

1037 TexPet’s sole contractual obligation regarding the transfer of its equipment and facilities was to deliver them “in good condition” at the termination of the concession—there was no guarantee regarding Petroecuador’s future use. See 1973 Concession Contract, Clause 51.1, filed Apr. 27, 2004 at 2:30 p.m., Record at 7089-7177, 7175. This is consistent with what it is stated in Art. 29 of the Hydrocarbons Law: “At the end of an exploration and exploitation contract . . . the contractor must deliver to PETROECUADOR, with no cost and in good condition of production, the wells that in that moment are in activity; and, in good conditions, all the equipments, tools, machines, installations and other goods and real state that were acquired for the scope of the contract.” TexPet met this obligation at the termination of the concession, and the responsibility to maintain the equipment shifted to Petroecuador. Moreover, to the extent that the plaintiffs base their claim in the concession contracts, they do not have standing to claim breach of a contract to which they were not a party.


- 232 -

Agreement, Scope of Work, and RAP, the Ecuadorian Government and Petroecuador acknowledged that TexPet was responsible for only its pro rata share of the environmental liability (37.5 percent). As part of the settlement agreement signed with the State and Petroecuador, TexPet already paid for equipment upgrades allocated to TexPet as part of its responsibilities for the Consortium’s liabilities. It defies common sense, therefore, to assert that someone other than the party that has been responsible for maintaining, upgrading and replacing the oilfield equipment as necessary, and that has received all related earnings and economic benefits (i.e., Petroecuador), should be wholly responsible for the maintenance, upgrade, and expansion of the equipment it owns.1038 It makes even less sense to award such damages to plaintiffs in a case to which Petroecuador is not even a party.

Furthermore, the costs presented in the Cabrera Report—(i) US$124 million for improvements to produced water injection systems and (ii) US$251 million for the capture of forty million cubic feet per day of natural gas at wellsites—are erroneous and inconsistent with the actual costs associated with development of this oilfield. First, the Cabrera proposal that Chevron pay US$124 million for improvements to produced water injection systems ignores the fact that the increased use of such equipment, and the additional costs associated with its use, are related exclusively to Petroecuador’s operation since 1992 and not to the historical operations of TexPet.1039 Second, the Cabrera Report ignores the fact that Petroecuador already has the infrastructure to inject all of its produced water.1040 Third, the Cabrera cost estimate presented to upgrade the existing produced water reinjection system is erroneous and exaggerates the costs of the existing injection systems by a factor of at least three, in part because he includes costs for equipment outside the former concession area.1041 Fourth, the Cabrera proposal that Chevron pay US$251 million for the capture of forty million cubic

1038 Today, many former Consortium facilities “are showing age-related damage” and “have

exceeded the useful life guaranteed by the manufacturers….” Report of Expert Gerardo P. Barros, at 17, filed Dec. 21, 2009, at 2:50 p.m., Record at 159913-164360, 159929-30. Petroecuador’s top executives have confirmed that after 1992, the Government assumed control of the state oil company’s budget and failed to allocate sufficient funds to maintain oil infrastructure. Petroecuador is Experiencing Its Second Crisis, Hoy, Feb. 6, 2007, submitted as Annex 7 to Attachment I of Appendix A, to Chevron’s Rebuttal to the Barros Report, filed on Jan. 14, 2010, at 5:55 p.m., Record at 164795-96, 164796 (presenting statements by former vice presidents of Petroecuador and Petroproducción).

1039 CONNOR, John & HUTTON, William, Response to the Proposal of Mr. Cabrera Regarding Improvement of the Infrastructure in the Former Petroecuador-TexPet Concession, attached as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 146726-146887, 146733.

1040 See CONNOR, John & HUTTON, William, Response to the Proposal of Mr. Cabrera Regarding Improvement of the Infrastructure in the Former Petroecuador-TexPet Concession, attached as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 146726-146887, 146735.

1041 CONNOR, John & HUTTON, William, Response to the Proposal of Mr. Cabrera Regarding Improvement of the Infrastructure in the Former Petroecuador-TexPet Concession, attached as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 146726-146887, 146733-34.


- 233 -

feet per day of natural gas is absurd, because it proposes to capture a volume of gas that official records confirm does not exist, and because it presents no economic analysis to demonstrate the profitability of capturing quantities of gas other than at the Shushufindi field, where gas-capture plants currently exist.1042 Fifth, the Cabrera Report also fails to consider that Petroecuador is obligated to and fully capable of updating and improving its own equipment, and that any claim for its failure to have done so must be directed to Petroecuador

There simply is no basis in fact or law for any damage recommendation on this basis, and this Court should not order Chevron to pay for petroleum infrastructure improvements that are rightfully the responsibility of Petroecuador and the Ecuadorian Government.

7.4.5 There Is No Credible Evidence That Would Require Chevron to Fund a New Potable Water System

Secretly acting on behalf of plaintiffs, Mr. Cabrera also recommended that Chevron be forced to pay US$428 million for a new potable water system in the Oriente. In his report in support of plaintiffs’ September 16, 2010 submission at 5:15 p.m., Paolo Scardina increased this estimate to US$541.5 million. Neither recommendation has any basis in fact, logic, science, or law. As detailed in Chevron’s filings of September 16, 2010 at 4:35 p.m. and October 29, 2010 at 5:20 p.m., the results of over 7,000 analyses from 253 drinking water sampling events in the Oriente region show no indication of public health concerns related to drinking water as a result of petroleum exploration and production activities in the former concession area, and Chevron should not be forced to pay for improvements that are solely the Government of Ecuador’s responsibility to undertake.

Because there are no impacts to water resources as a result of TexPet’s operations in the former concession area, there is obviously no need for Chevron to finance a new potable water system in the Oriente. The only drinking water samples in the record (almost all collected by Chevron’s nominated experts) did not show any adverse impacts associated with petroleum operations.

The drinking water findings in the record include 2,759 analytical results for the thirteen petroleum-related compounds for which the U.S. EPA has assigned Maximum Contaminant Levels (“MCLs”), i.e., compounds that pose a possible public health threat. Of these 2,759 results, only one sample concentration was greater than its MCL (containing 0.010 mg/L lead, exceeding the MCL of 0.03 mg/L). Among the 4,865 analyses performed for compounds with secondary standards and compounds for which no public health standards exist, only five exceedances of applicable criteria were

1042 CONNOR, John & HUTTON, William, Response to the Proposal of Mr. Cabrera Regarding

Improvement of the Infrastructure in the Former Petroecuador-TexPet Concession, attached as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 146726-146887, 146734.


- 234 -

detected. However, none of these compounds pose a public health risk. Consequently, there is no evidence of human health impacts associated with petroleum in drinking water in the former concession area.

In arriving at his recommendation on a potable water system, Mr. Cabrera failed to collect a single drinking water sample. By contrast, Chevron’s nominated experts sampled household wells at twenty-eight sites, and concluded, based on scientific data, that all of them were free of impacts from petroleum operations. The few water samples Mr. Cabrera did collect were from boreholes dug in oilfield pits, and are therefore not representative of the conditions of water that would be used for drinking in the vicinity of those sites. Even so, none of those samples contains contaminants above even the most stringent drinking standards set by the U.S. EPA and the WHO.

In his September 2010 report, Dr. Scardina relies on the same invalid arguments asserted in the Cabrera Report and asserts only one new theory, which is equally as assailable. Specifically, Dr. Scardina suggests that past activities may cause future contamination, meaning that chemical-specific concentrations may occur at levels that would pose a public health threat in drinking water. However, as explained in Dr. William D. Bellamy’s September 27, 2010 report, submitted by Chevron, there are no data indicating that this is likely to occur.

Future contamination of a drinking water source from petroleum activities cannot occur without the transport of the contaminant from the source area to the drinking water supply.1043 As reported by Dr. Bellamy, transport of sufficient concentrations of health related contaminants from oil-impacted soils or pits was unlikely to result in concentrations that exceed health-based drinking water goals. This conclusion was supported by the analysis of weathering effects on petroleum-related chemical fate and transport.1044

Additionally, Dr. Kirk O’Reilly and Dr. Waverly Thorsen studied the weathering effect on Ecuadorian crude oil in soil to determine the possible impact on drinking water supplies in the former concession area.1045 The weathering index and concentration

1043 BELLAMY, William D., Relationship Between Petroleum Activities and the Need for Drinking Water Treatment in the Oriente Region of Ecuador, at 2-3, attached as Annex 3 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

1044 BELLAMY, William D., Relationship Between Petroleum Activities and the Need for Drinking Water Treatment in the Oriente Region of Ecuador, at 3, attached as Annex 3 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

1045 As Dr. Bellamy reports, the public health risk associated with crude oil contamination of drinking water is limited to a few specific compounds. The potential for contamination of drinking water from one of these compounds is determined by the effective solubility of the compound, and the oil-phase concentration ratio of the compound, which is measured as milligrams of compound per kilogram of oil. A change in the oil-phase concentration ratio can result from weathering of the crude oil and its constituents in the contaminant source area. Common modes of weathering include volatilization, biodegradation, and dissolution. BELLAMY, William D., Relationship Between Petroleum Activities and the Need for Drinking Water Treatment in the Oriente Region of Ecuador, at 3-4, attached as Annex 3 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.


- 235 -

factor was determined for 107 soil samples containing crude oil. This evaluation found that the effective solubilities of the compounds in crude oil samples, with the exception of benzene and toluene, were below those which would pose a public health issue in drinking water. Weathering was shown to reduce the risk of exposure to benzene and toluene, because as reported by O’Reilly and Thorsen, “these compounds were significantly or completely depleted in all of the soil samples.” In fact, approximately ninety-nine percent of the soil samples had calculated effective solubilities for benzene that did not exceed health-based goals, and all of these were collected at production stations (none were collected from wellsites). Overall, O’Reilly and Thorsen concluded: “These results indicate that because of rapid weathering of the more soluble aromatics and the low effective solubility of larger PAHs, Ecuadorian crude oil impacted soil is unlikely to result in dissolved concentrations that exceed health-based drinking water goals.”1046

In contrast to any alleged “findings” that the plaintiffs may have in this case, the evidence indicates that there is no need to treat drinking water to remove petroleum compounds. However, there is a demonstrated need for water treatment due to fecal contamination and the inferred risk from human pathogens, which is not the result of petroleum activities in the area. For example, eighty-nine percent of the water samples from the area were positive for E. coli.1047 And in his December 2010 deposition, Mr. Beltman admitted that while “the quality of the water available to the people in the region for drinking and bathing is very poor . . . much of the problem is caused by poor sanitation.”1048

Simply put, the Government of Ecuador, not Chevron, is responsible for maintaining and updating the nation’s potable water systems. In fact, the government is involved in such efforts.1049 Since 2001, over US$20 million has been expended in providing clean drinking water to the Ecuadorian populace, but tellingly, none of the water treatment systems being installed are designed to remove petroleum contamination in the former concession area—because there has been no such

1046 BELLAMY, William D., Relationship Between Petroleum Activities and the Need for Drinking

Water Treatment in the Oriente Region of Ecuador, at 4, attached as Annex 3 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m., (citing O’Reilly & Thorsen (2010)).

1047 BELLAMY, William D., Relationship Between Petroleum Activities and the Need for Drinking Water Treatment in the Oriente Region of Ecuador, at 4, attached as Annex 3 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

1048 Official transcript of deposition of Douglas John Beltman, dated December 16, 2010, at 130:12-13; 142:5-13, attached as Annex 7 to Chevron Motion, filed Dec. 22, 2010 at 5:45 p.m.

1049 BELLAMY, William D., Relationship Between Petroleum Activities and the Need for Drinking Water Treatment in the Oriente Region of Ecuador, at 5-6, attached as Annex 3 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.


- 236 -

contamination.1050 This Court should not require Chevron to pay any damages for the installation of potable water systems in the Oriente.

7.4.6 Any Request for Punitive Damages Based on an Unjust Enrichment Theory Is Baseless

Plaintiffs, in their submission of September 16, 2010, at 5:15 p.m., and through Mr. Cabrera, request a multi-billion-dollar award of punitive damages for what they call “unjust enrichment.” 1051 The Cabrera Report recommends damages of US$8.42 billion1052 on this basis, and the plaintiffs increase this figure in their filing of September 16, 2010 at 5:15 p.m. to as much as US$37.86 billion.1053 In addition to being extra petita, see supra Chapter VI, this request runs directly contrary to settled Ecuadorian law and stems entirely from inapposite foreign law. Therefore, it must be rejected.

Pursuant to the Ecuadorian Civil Code, actions for torts give rise only to compensatory damages to make the plaintiff whole. Article 1572 of the Civil Code specifically limits tort damages to the plaintiffs’ direct consequential damages and lost profit:

Art. 1572.- [Compensation for damages].– Damages include consequential damages and lost profit, regardless of whether they result from failure to comply with the obligation, or improper performance of the obligation or delay in the performance.

The Ecuadorian Supreme Court (now the National Court) recently confirmed that punitive damages are not authorized under Ecuadorian law:

Remember that our legal system has accepted a system of redress through compensation or damages—understood as that sufficient to remedy the damage and to allow the injured party to return to the previous state he was in before suffering the harm—and not a punitive one, typical of legal systems such as common law, in which, as appropriate, the courts not only accept the claim for damages, but also and very often condemn those who have caused the harm to a

1050 BELLAMY, William D., Relationship Between Petroleum Activities and the Need for Drinking

Water Treatment in the Oriente Region of Ecuador, at 6, attached as Annex 3 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

1051 Cabrera Global Report, filed on Apr. 1, 2008 at 8:30 a.m., § 7.3, at 55-56, Record at 134228-289, 134284-85; Plaintiffs’ Motion filed Sept. 16, 2010 at 5:15 p.m., § 1.3, at 16-18.

1052 Expert Cabrera Response to Plaintiffs’ Questions regarding Global Report, filed Nov. 17, 2008, at 8:25 a.m., Record at 152949-153000, 152978.

1053 Plaintiffs’ Motion filed Sept. 16, 2010 at 5:15 p.m., at 17.


- 237 -

remedy as punishment to prevent the future occurrence of similar behaviors or omissions.1054

Even Mr. Donziger privately admitted that “[p]unitive [damages] [have] no basis in Ecuadorian law,” adding that “we could push it and seek it anyway.”1055 In addition, Ecuadorian civil courts are barred from imposing penalties. In general, penalties can only be imposed in criminal proceedings that respect the constitutional guarantee of nullum crimen, nulla poena sine lege [there is no crime and no penalty without a law] and the presumption of innocence, among others. Under article 132 No. 2 of the 2008 Ecuadorian Constitution, furthermore a penalty can only be established by law, and it must precisely define the action that will be punished. Thus, the imposition by a civil court of punitive damages without any law in force directly allowing it to do so would violate the Ecuadorian Constitution.1056

Ecuador’s antipathy towards punitive damages is shared in other Civil Law countries. In Mexico, “neither the American precedent of evolving case law for moral damages nor punitive damages exists.”1057 The Civil Codes of Peru1058 and Chile1059 clearly provide that plaintiffs are entitled to only direct consequential damages and lost profits.1060 For these and other Civil Law countries, punitive damages contravene the longstanding tenet that a plaintiff should be compensated but not unduly enriched. This reflects the view that it is unjust to award greater damages than the damage itself.1061 As the Colombian Constitutional Court explained, “compensation for damage should be directly commensurate with the magnitude of damage caused, but can not exceed that limit.” “[I]f the damage is compensated above that actually caused, there is an unjust

1054 Asociación de Negros del Ecuador (ASONE) y otro vs. Petroecuador y sus filiales, Judgment

of the Supreme Court of Justice, First Civil and Commercial Division, March 30, 2006, Case 120-06, published in Official Gazette 381, Oct. 20, 2006.

1055 E-mail from Steven Donziger to Josh Lipton, dated Apr. 22, 2007, at 2, attached as Annex 1 to Chevron’s Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p.m. (DONZ00038322).

1056 ÁLVAREZ, Agustín, Rethinking the Incorporation of Punitive Damages, http://www.acaderc.org.ar/doctrina/articulos/repensando-la-incorporacion-de-los-danos-punitivos, at 2 (citing PICASSO, Sebastián, New Categories of Damages in Consumer Defense Law, Sup. Esp. Reform of Consumer Defense Law. Ed. La Ley, Buenos Aires, 2008 and also Regarding So-called Punitive Damages, LL 2007-F-1154).

1057 Mexico Falls Behind, El Norte - Monterrey, November 2004, http://vlex.com/vid/78611048. 1058 Article 1985 of the Civil Code of Peru. 1059 See Articles 1556 and 2314 of the Civil Code of Chile. 1060 The modern doctrine in Civil Law countries, including Ecuador, also provides compensation

for moral damages, but such damages are limited to the injury caused and they have not been requested in this case.

1061 PICAZO-DÍEZ, Luis. Law of Damages. Editorial Civitas. Madrid. 1999. p. 46.


- 238 -

enrichment for the victim.”1062 For this reason, most Civil Law countries will not enforce foreign judgments awarding punitive damages.1063

Since punitive damages are not possible under Ecuadorian law, the sole source for plaintiffs’ request is the writings of Argentinean author Ramon Pizarro. This authority is entirely misplaced. This author only analyzes punitive damages as they are considered in the common law; he does not purport to claim that they are applicable under the Civil Law.1064 Indeed, punitive damages cannot be awarded in Argentina. The Argentinean Supreme Court has categorically stated: “in our legal system punitive damages cannot be awarded . . . [p]unitive damages are foreign to our system of civil liability.”1065

Completely ignoring Ecuadorian law, and Civil Law more generally, plaintiffs attempt to justify their request for punitive damages with reference to U.S. law. However, punitive damages have been significantly—and constitutionally—restricted in recent years, and any award of punitive damages in this case would violate U.S. principles of due process. Under U.S. law, “the most important indicium of the reasonableness of a punitive damages award is the degree of reprehensibility of the defendant’s conduct.” 1066 This is largely because due process demands that a “penalty be reasonably predictable,” such that an actor can “look ahead with some ability to know what the stakes are in choosing one course of action or another.” 1067 These factors preclude an award of punitive damages here because TexPet’s work was overseen and approved by the Ecuadorian State, and it complied with the regulations and standards in force during the Consortium’s existence.1068 This leaves plaintiffs to try to justify an award of punitive damages by reference to Chevron’s alleged assets, but U.S. courts have roundly criticized using the defendant's wealth as a proxy for determining punitive damages.1069 More fundamentally, unjust enrichment is not among

1062 GARCÍA, Laura and HERRERA, María, The Concept of Daños Punitivos or Punitive

Damages, Revista Estudios Socio-Juridicos, Vol. 5, No. 001, Universidad del Rosario, Bogotá, Colombia, at 213 (citing HENAO, Juan, “Damages. Comparative Analysis of extracontractual responsibility of the state in Colombian and French Law,” Universidad Externado de Colombia, Bogotá, at 45).

1063 LIPTAK, Adam, Courts Outside U.S. Wary of Punitive Damages, N.Y. Times, Mar. 26, 2008. 1064 See PICAZO-DÍEZ, Luis. Law of Damages. Editorial Civitas. Madrid. 1999. p. 45. 1065 Asociación Civil Club Atlético Boca Juniors v. Julian Martinez, National Court of Appeals for

Civil and Federal Commercial Matters, Second Division, Oct. 27, 2005, Case 4.808/98 (citing BUSTAMANTE ALSINA, J. LL. 1994-B, 860).

1066 BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 575 (1996), attached as Annex 15 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

1067 Exxon Shipping Co. v. Baker, 128 S.Ct. 2605, 2627 (2008), attached as Annex 16 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

1068 Answer as Read into the Record §§ II.A.1.2-3, II.A.1.15, II.B.1, filed Oct. 21, 2003 at 9:10 a.m., Record at 243-67, 246, 247-47v, 253-53v.

1069 See State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 427-28 (2003), attached as Annex 17 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m., (“The wealth of a defendant cannot justify


- 239 -

the recognized criteria that U.S. courts will apply to measure punitive damages.1070 Thus, the report prepared by Jonathan S. Shefftz is irrelevant to any determination of punitive damages—even if such damages were available under Ecuadorian law (which they are not).

There is likewise no provision of Ecuadorian law that authorizes recovery for unjust enrichment in the circumstances of this case. According to the Ecuadorian Supreme Court (now the National Court), the concept of unjust enrichment “involves the idea of monetary damage resulting from an unlawful, unjust conveyance, without any legal basis, of an asset to the benefit of one person and the detriment of another.”1071 For a viable claim of unjust enrichment to lie:

a) there must be enrichment, or conveyance of assets from one person to another; b) in the opposite direction, there must be an impoverishment; "it is therefore necessary that an enrichment be matched by an impoverishment of another person, in terms of quality, not quantity"; c) there must be a causal nexus between the enrichment and the impoverishment, i.e., both the enrichment and the impoverishment must simultaneously be the cause and effect of each other; d) there must not be any other available lawsuit.1072

With respect to this final point, jurist Oramas Gross says: "The subsidiary nature of the claim means that [the claim] may only be asserted when no other legal means are available for reestablishing the equilibrium of economic positions. Therefore, it is important to note that the enrichment produced must not violate any specific legal rule, because if it did, then the injured party could sue on the basis of the rule that had been violated and would not be able to assert unjust enrichment.”1073 Chilean jurists are in (continued…) an otherwise unconstitutional punitive damages award.”); Gore, 517 U.S. at 585 ("The fact that BMW is a large corporation rather than an impecunious individual does not diminish its entitlement to fair notice” of its exposure to punitive damages); see also id., at 591 (Breyer, J., concurring) ("[Wealth] provides an open-ended basis for inflating awards when the defendant is wealthy . . . . That does not make its use unlawful or inappropriate; it simply means that this factor cannot make up for the failure of other factors, such as 'reprehensibility,' to constrain significantly an award that purports to punish a defendant's conduct").

1070 See State Farm, 538 U.S. at 424 (using defendants’ "wrongfully obtained competitive advantages" or “illicit . . . practices [which] increased profits” to calculate punitive damages "is unconvincing" as a matter of due process).

1071 Judgment of the Supreme Court of Justice, Fourth Division, Oct. 22, 1991, published in Judicial Gazette No. 13, Year XCII, Series XV, p. 3933.

1072 Judgment of the Supreme Court of Justice, First Civil and Commercial Division, Sept. 29, 2000, No. 391-2000, published in Official Gazette 205, Nov. 16, 2000.

1073 Id.


- 240 -

accord, and acknowledge that a claim for unjust enrichment will lie only “when there is no other action that can reestablish the economic equilibrium that has been destroyed without lawful justification.”1074 The plaintiffs’ cited authorities recognize this element, too, when they state that the “principle of unjust enrichment is a general source of obligations . . . [that] is possible in unlegislated cases.”1075

Plaintiffs’ claim for unjust enrichment does not satisfy these basic standards.

First, as discussed above, see supra Chapter VI, the principle of congruency limits the Court’s jurisdiction to deciding those matters raised in the complaint, and plaintiffs’ complaint makes no reference to the restitution of money from the defendant to the plaintiffs, which is the basis of a claim for unjust enrichment.

Second, TexPet’s actions were not “unjustified” or “unlawful,” so any conveyance was not an “unjust conveyance.” An action is deemed to be just, justified or to have a just cause when the legal system authorizes the beneficiary to receive and keep the benefits from it, which may occur when there is an express legal provision or a valid agreement.1076 This rule is expressed in article 1483 of the Civil Code, which provides that all obligations must have a legal and licit cause. As noted, TexPet’s actions as operator were fully authorized under Ecuadorian law and were approved by the State. In fact, the same operating practices that TexPet used when it was in charge of the former Consortium were used in other countries at the time,1077 and many of those practices and standards are still authorized in Ecuador and around the world. TexPet’s remediation, too, complied with the remediation standards established by the Ecuadorian State in the remediation agreement signed by both parties, which were even more demanding than those existing in other oil-producing countries at the time.1078

Third, there is no “conveyance of assets from one person to another” and no direct “causal nexus between the [alleged] enrichment and the [alleged] impoverishment.”1079 Neither Chevron nor TexPet obtained something that the plaintiffs

1074 ALESSANDRI, Arturo, SOMARRIVA, Manuel and VODANOVIC, Antonio, Treatise on Obligations, 2nd ed., Editorial Juridica de Chile, Santiago, 2001, p. 61.

1075 Plaintiffs’ Motion, filed Sept. 16, 2010 at 5:15 p.m., at 16, (citing Teran Narvaez vs. Narvaez Rosero, Judgment of the Supreme Court of Justice, June 28, 2000, No. 273-2000, published in R.O. 134, August 3, 2000).

1076 DIEZ-PICAZO, Luis and GULLÓN, Antonio, System of Civil Law, Vol. II, 9th ed., Editorial Tecnos, 2001, p. 525.

1077 Chevron’s Approval of Expert Bianchi’s Judicial Inspection Report on Sacha-13, filed Nov. 29, 2005 at 3:20 p.m., Record at 86002-14, 86011; Chevron’s Objections to Expert Robalino’s Judicial Inspection Report on Shushufindi-13, filed Apr. 17, 2006 at 2:50 p.m., Record at 103678-104083, 103737.

1078 Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008 at 2:14 p.m., Record at 141082-203, 141134-35.

1079 See Judgment of the Supreme Court of Justice, First Civil and Commercial Division, Sept. 29, 2000, No. 391-2000, published in Official Gazette 205, Nov. 16, 2000.


- 241 -

(or any other person in Ecuador) concomitantly lost.1080 An example of the requisite causal nexus for an unjust enrichment claim is when one party improperly obtains property or services from another without incurring an enforceable legal obligation to provide something in return. Plaintiffs’ attempt to label their alleged environmental damages as unjust enrichment for TexPet fails because, under their own theory, any enrichment derived from TexPet’s own cost savings, not from plaintiffs.

Fourth, the only losses that Plaintiffs have alleged in their complaint can all be addressed through “other available lawsuit[s].” Their claim for “environmental damages” are, according to Plaintiffs, supported by “Article 43 of the Environmental Management Act.”1081 Plaintiffs could have also reported alleged violations of the environmental law to the State, which had the exclusive power and duty to seek remediation and take other appropriate actions (e.g., fines and sanctions). See supra § 5.3.2.1. Or, they could have filed a lawsuit against the current operator or owner—here, Petroecuador—seeking elimination of an imminent threat to indeterminate persons under current Article 2236 of the Civil Code. See supra § 5.3.2.1. The existence of these alternative claims is fatal to plaintiffs’ claim for unjust enrichment.1082 Indeed, Plaintiffs’ unjust enrichment claim is particularly absurd because they ask for both reparation of alleged damages and payment for unjust enrichment. Even if Plaintiffs’ claims were not entirely illegitimate, such a double recovery plainly would be impermissible and would be directly contrary to the limited unjust enrichment doctrine under Ecuadorian law.

1080 This point is fatal to Plaintiffs’ claims for unjust enrichment under both Ecuadorian and U.S.

law. Indeed, a case filed in California based on the same legal theory was summarily dismissed in 2006 because: “The plaintiffs do not state a valid claim for unjust enrichment.” Jane Doe I-V and John Doe I-IV v. Texaco, Inc., Texaco Petroleum Co. and Chevron Corp., Case No. C 06-02820 WHA in the U.S. District Court for the Northern District of California, July 21, 2006, attached as Annex 14 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m., (holding that any “extra profits that defendants gained” by their allegedly substandard practices “were not conferred upon them by plaintiffs. Plaintiffs do not cite to any decision addressing—much less upholding—a complaint that stretched a personal-injury tort claim into a claim of unjust enrichment simply because the alleged tortfeasor got a benefit that was incidental to the injury.”)

1081 Plaintiffs’ Complaint, filed May 7, 2003 at 11:30 a.m., Record at 73-80v, 78v-80. As shown above, however, supra § 5.3, this cause of action could not be retroactively applied to sue Chevron for TexPet’s conduct before the statute was enacted.

1082 This point also renders Plaintiffs’ legal theory non-viable as a matter of U.S. law. A similar suit filed in U.S. court espousing this same legal theory was summarily dismissed. See Jane Doe I-V and John Doe I-IV v. Texaco, Inc., Texaco Petroleum Co. and Chevron Corp., Case No. C 06-02820 WHA in the U.S. District Court for the Northern District of California, July 21, 2006, attached as Annex 14 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m., (holding that “[t]he inability of cash to [remedy the alleged harm] does not make damages an inadequate remedy. If it did, many people who suffered a personal injury would be able to seek disgorgement of profits rather than compensatory damages. . . . [T]he mere fact plaintiffs might prefer the equitable remedy over the legal remedy does not make the legal remedy inadequate as a matter of law.” Thus, “[t]he plaintiffs do not state a valid claim for unjust enrichment.”)


- 242 -

In any event, even if an unjust enrichment claim were both cognizable under Ecuadorian law and included in the plaintiffs’ complaint, the claim would be wholly without merit for the following reasons:

First, TexPet’s operations never violated the extant regulatory standards of Ecuador or international norms. In jurisdictions such as the United States where the theory of unjust enrichment is recognized, the legitimacy of any accusation of unjust enrichment related to environmental damage depends on demonstrating that the responsible party violated applicable environmental norms or regulations. In this case, the indisputable evidence shows that Consortium management of the three byproducts from oilfield production—(i) produced water; (ii) oilfield pits; and (iii) natural gas—was consistent with Ecuadorian and international norms for the corresponding time period.

Produced Water: In the decades of the 1960s, 1970s, and 1980s, management of produced water by means of treatment in separation pits and subsequent discharge to the environment was a common practice, not only in Ecuador, but also around the world. 1083 In Ecuador, relevant regulations were not issued until after TexPet transferred the operation of the Consortium from TexPet to Petroecuador, 1084 and surface discharges of produced water persist under Petroecuador’s management due to operating and maintenance problems.1085

Oilfield Pits: From the 1970s to today, unlined earthen pits have been commonly used in oilfields in both Latin America and the United States. 1086 In Ecuador, Agreement 621, issued in 1992 (two years after termination of operations by TexPet), established the first regulations addressing the design and construction of oilfield pits. 1087 Notably, this and subsequent regulations specifically allow for the use of

1083 Chevron’s Motion filed Sept. 16, 2010, at 4:35 p.m., § II.B.4.b.ii.1, at 130. 1084 Ministerial Agreement No. 621, “Environmental Regulations for Hydrocarbon Activities in

Ecuador,” issued March 6, 1992, established, for the first time in Ecuador, numerical limits for produced water discharge. These same limits were reconfirmed in Decree No. 2982, published in R.O. 766 on Aug. 24, 1995. CONNOR, John A., Regarding Remediation Activities and Environmental Conditions in the Former Petroecuador-Texaco Concession, Oriente Region, Ecuador, at 27, attached as Annex 4A to Chevron’s Motion, filed Sept. 16, 2010, at 4:35 p.m.

1085 SOUTHGATE, Douglas, CONNOR, John A., Response to the Report of Mr. J. S. Shefftz with Regard to “Analysis of Unjust Enrichment,” issued 13 September 2010, in the Matter of Maria Aguinda et al. vs. Chevron, at 5, attached as Annex 1 to Chevron’s Motion, filed Oct. 29, 2010 at 5:20 p.m.

1086 Chevron’s Motion filed Sept. 16, 2010, at 4:35 p.m., § II.B.4.b.ii.2, at 132-134. 1087 CONNOR, John A., Regarding Remediation Activities and Environmental Conditions in the

Former Petroecuador-Texaco Concession, Oriente Region, Ecuador, attached as Annex 4A to Chevron’s Motion, filed Sept. 16, 2010, at 4:35 p.m., at 22. Specifically, for earthen oilfield pits used to contain drilling mud, cuttings, or oilfield wastes, the soils on the pit walls and base were to be compacted to achieve low-permeability conditions (Agreement 621, Article 13). Ecuador Decree 2982, which superseded Agreement 621 in August 1995, first established the general procedures for closure of oilfield pits; however, numerical criteria for remediation of soils in oilfield pits (i.e., soil TPH and TCLP limits) were not established until February 2001, when Ecuador Decree 1215 was issued. Id.


- 243 -

earthen pits, and Petroecuador continues to construct and use unlined earthen pits in the former concession today.1088

Natural gas: The International Association of Oil and Gas Producers (OGP) has recognized that “the option to release gas to the atmosphere by flaring and venting is an essential practice in oil and gas production, primarily for safety reasons.” 1089 Not surprisingly, therefore, significant volumes of gas are still being burned in all of the principal oil-producing regions of the world.1090 In Ecuador, gas flaring continues today. The natural gas in the former concession was the exclusive property of the Ecuadorian State, which retained exclusive rights over the use and/or disposal of gas for the full period of TexPet’s operations. In this capacity, the State made a decision that it was not economically feasible to capture all of the natural gas in the Oriente produced in connection with crude oil, or in the other oilfields of this country, and therefore, it burned the gas. Although flaring has subsequently been regulated in Ecuador and Petroecuador has built at least one gas capture facility in the Oriente, in 2006 nearly half of all natural gas in Ecuador was still flared.1091 In fact, no oil company in Ecuador has ever achieved 100 percent recovery of natural gas from any oilfield.1092

Since TexPet’s operations fully complied with applicable regulations in Ecuador, it cannot be possibly said that TexPet gained some “unjust profit.”

1088 See Petroecuador Impacts Report, Attachment I of Appendix A to Chevron’s Rebuttal to the

Barros Report, filed on Jan. 14, 2010 at 5:55 p.m., Record at 164527-33; see also Chevron’s Motion filed Sept. 16, 2010, at 4:35 p.m., § II.B.4.b.ii.2, at 135; CONNOR, John A., Regarding Remediation Activities and Environmental Conditions in the Former Petroecuador-Texaco Concession, Oriente Region, Ecuador, attached as Annex 4A to Chevron’s Motion, filed Sept. 16, 2010, at 4:35 p.m., at 22 (of Spanish), 20 (of English).

1089 CONNOR, John A., Regarding Remediation Activities and Environmental Conditions in the Former Petroecuador-Texaco Concession, Oriente Region, Ecuador, attached as Annex 4A to Chevron’s Motion, filed Sept. 16, 2010, at 4:35 p.m., at 30 (of Spanish) 27 (of English).

1090 CONNOR, John A., Regarding Remediation Activities and Environmental Conditions in the Former Petroecuador-Texaco Concession, Oriente Region, Ecuador, attached as Annex 4A to Chevron’s Motion, filed Sept. 16, 2010, at 4:35 p.m., at 29 (of Spanish) 27 (of English).

1091 CONNOR, John & HUTTON, William, Response to the Proposal of Mr. Cabrera Regarding Improvement of the Infrastructure in the Former Petroecuador-TexPet Concession, attached as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 146726-146887, 146738; Chevron’s Motion, filed Sept. 16, 2010, at 4:35 p.m., at 137-38; see also CONNOR, John A., Regarding Remediation Activities and Environmental Conditions in the Former Petroecuador-Texaco Concession, Oriente Region, Ecuador, attached as Annex 4A to Chevron’s Motion, filed Sept. 16, 2010, at 4:35 p.m., at 31.

1092 SOUTHGATE, Douglas, CONNOR, John A., Response to the Report of Mr. J. S. Shefftz with Regard to “Analysis of Unjust Enrichment,” issued 13 September 2010, in the Matter of Maria Aguinda et al. vs. Chevron, at 6, attached as Annex 1 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.


- 244 -

Second, since TexPet already undertook remediation, any compensation to the plaintiffs for unjust enrichment would be to ask the company to pay twice for the same alleged environmental damage.1093

Third, the unjust enrichment damages requested by both the plaintiffs in their September 16, 2010 submission at 5:15 p.m. and through Mr. Cabrera suffer from the same fatal mistakes. Both are based on data gathered in the Cabrera Report, which is tainted by fraud and fundamentally flawed. Willfully ignoring Ecuadorian law, the Cabrera Report recommends that Chevron pay US$8.31 billion for unjust enrichment because TexPet allegedly obtained profits “by not having invested sufficient money in appropriate environmental controls during its operation of the Concession.”1094 While the Cabrera Report does not provide enough information to replicate its calculations of supposed unjust enrichment, 1095 it is clear that the calculations are exaggerated, erroneous, or both. Serious errors in the Cabrera Report, and the plaintiffs’ submission of September 16, 2010 at 5:15 p.m. that was based on its data, include, but are not limited to:

• Neither the Cabrera Report nor the report of Jonathan Shefftz, submitted by the plaintiffs with their September 16, 2010 filing at 5:15 p.m., recognizes two factors that should have been taken into account in the calculation of the supposed unjust enrichment: (1) the minority status of TexPet in the Consortium, and (2) income tax paid by the Consortium. Taking into account these factors, TexPet would be liable for only 2.1 percent of any unjust enrichment claim. 1096 All told, TexPet received

1093 See Chevron’s Motion filed Sept. 16, 2010, at 4:35 p.m., § II.B.4.b.iii, at 138; SOUTHGATE,

Douglas, CONNOR, John & MACNAIR, Douglas, Response to the Allegations of Mr. Cabrera Regarding Supposed Unjust Enrichment of Texpet, attached as an appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 146342-370, 146349. See also LEAMER, Edward, Ph.D., Evaluation of Economic Analysis Contained in Summary Report of Expert Examination and Answers to the Plaintiffs’ Questions About the Expert Report in the Case of Maria Aguinda et al. v. Chevron Corporation, No. 002-2003, dated Sept. 8, 2010, attached as Annex 11 to Chevron’s Motion filed Sept. 16, 2010, at 4:35 p.m., at 49.

1094 SOUTHGATE, Douglas, CONNOR, John & MACNAIR, Douglas, Response to the Allegations of Mr. Cabrera Regarding Supposed Unjust Enrichment of Texpet, attached as an appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 146342-370, 146345 (citing Expert Cabrera’s Global Report, filed Apr. 1, 2008, at 8:30 a.m., at 55, Record at 134228-134289, 134284).

1095 Mr. Cabrera failed to record dates and sources of information that are indispensable for reproducing his calculations. See Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 141082-203, 141176; see also Chevron’s Motion filed Sept. 16, 2010, at 4:35 p.m., § II.B.4.b.iv.5, at 146.

1096 See SOUTHGATE, Douglas, CONNOR, John A., Response to the Report of Mr. J. S. Shefftz with Regard to “Analysis of Unjust Enrichment,” issued 13 September 2010, in the Matter of Maria Aguinda et al. vs. Chevron, at 10, attached as Annex 1 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.; Chevron’s Motion filed Sept. 16, 2010, at 4:35 p.m., § II.B.4.b.iv.2, at 142-43.


- 245 -

approximately US$500 million, a sum that is very far from those proposed by the plaintiffs.1097

• The Cabrera Report claims to calculate alleged past savings in nominal dollars and that these savings equaled US$879 million. However, all the values in the spreadsheet included in that expert report are expressed in 2007 dollars. These calculations exaggerate the values from past years due to the inflation that occurred between those years and 2007. 1098 Although the Cabrera Report states that all of the calculations have been adjusted for inflation and exchange rate, the methodology used to perform these adjustments is not explained. 1099 While Mr. Shefftz’s report recognizes this error, his attempts to “deflate[]” the Cabrera Report’s cost estimates to 1990 values are inadequate, and he uses too high a discount rate to establish present day values.1100

• Both Mr. Shefftz’s and the Cabrera Report’s calculations are based on exaggerated measurements of the costs of appropriate environmental management.1101 For example, Mr. Shefftz overestimates the “avoided cost” of produced water management by a factor of seven due to serious errors in the Cabrera Report. 1102 Additionally, the Cabrera Report assumes that all costs are variable, which is incorrect. The Report should have distinguished between investment costs and annual costs.1103 The Cabrera Report also vastly overstates remediation costs because he erroneously inflates both the number of pits and their surface area.1104 Since Mr. Shefftz’s report is based on the Cabrera Report’s data, both their reports suffer from the same errors.

1097 Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008 at 2:14 p.m.,

Record at 141082-203, 141176. 1098 Chevron’s Motion filed Sept. 16, 2010, at 4:35 p.m., § II.B.4.b.iv.5, at 146. 1099 Id. 1100 See SOUTHGATE, Douglas, CONNOR, John A., Response to the Report of Mr. J. S. Shefftz

with Regard to “Analysis of Unjust Enrichment,” issued 13 September 2010, in the Matter of Maria Aguinda et al. vs. Chevron, at 10, attached as Annex 1 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.; SHEFFTZ, Jonathan S., Analysis of Unjust Enrichment in Maria Aguinda et al. v. Chevron Corporation, attached as Annex B to Plaintiffs’ Motion, filed Sept. 16, 2010, at 5:15 p.m., at 7, 12.

1101 See Chevron’s Motion filed Sept. 16, 2010, at 4:35 p.m., § II.B.4.b.iv.4, at 144. 1102 SOUTHGATE, Douglas, CONNOR, John A., Response to the Report of Mr. J. S. Shefftz with

Regard to “Analysis of Unjust Enrichment,” issued 13 September 2010, in the Matter of Maria Aguinda et al. vs. Chevron, at 6-8, attached as Annex 1 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

1103 See Chevron’s Motion filed Sept. 16, 2010, at 4:35 p.m., § II.B.4.b.iv.5, at 147. 1104 See Chevron’s Motion filed Sept. 16, 2010, at 4:35 p.m., § II.B.4.b.iv.4, at 145.


- 246 -

• With regard to pit remediation,1105 both the Cabrera Report and the report of Mr. Shefftz ignore that the Ecuadorian Government accepted responsibility for remediation with the PEPDA program, and 156 pits have already been remediated through this process at the cost of US$85,000 per pit.1106

• As previously discussed, natural gas should never have been included in the Cabrera Report’s estimates because it was and is the property of the Ecuadorian State. However, even if it is included, the Cabrera Report’s analysis failed to subtract the income on the sale of gas from the costs of capture.1107 Furthermore, it overestimated the volume of gas by 3,400% due to the fact that it did not correctly convert the gas volumes from cubic feet to cubic meters.1108 Again, since Mr. Shefftz relies upon the data, including the associated unit costs, presented in the Cabrera Report, his report does nothing to correct these errors.1109

Mr. Shefftz’s report merely repackages the Cabrera Report without any new evidence. Relying exclusively on data in the Cabrera Report, Mr. Shefftz apparently performed no investigation of the associated facts or the significant deficiencies in the Cabrera Report, despite those deficiencies having been identified by Chevron on multiple occasions.1110 In fact, Mr. Shefftz not only fails to correct the Cabrera Report’s most serious errors, but he also compounds them by multiplying his calculations by four, purportedly to account for an arbitrarily chosen twenty-five percent chance that TexPet’s activities would be detected.1111 This damage multiplication is foreign to Ecuadorian law,

1105 SOUTHGATE, Douglas, CONNOR, John & MACNAIR, Douglas, Response to the Allegations of Mr. Cabrera Regarding Supposed Unjust Enrichment of Texpet, attached as an appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 146342-370, 146358 (citing HINCHEE, R., Rebuttal of the Method Used by Mr. Cabrera to Determine the Supposed Necessity and Cost of Remediation, 2008).

1106 See Chevron’s Motion filed Sept. 16, 2010, at 4:35 p.m., § II.B.4.b.iv.5 and § IV.A, at 148, 216-17.


1108 Id. 1109 See SHEFFTZ, Jonathan S., Analysis of Unjust Enrichment in Maria Aguinda et al. v.

Chevron Corporation, attached as Annex B to Plaintiffs’ Motion, filed Sept. 16, 2010, at 5:15 p.m., at 5-6, (Shefftz explains “Exhibits 1, 2, and 3 are my versions of the Cabrera report’s Tables 1, 2, and 3.”).

1110 See SOUTHGATE, Douglas, CONNOR, John A., Response to the Report of Mr. J. S. Shefftz with Regard to “Analysis of Unjust Enrichment,” issued 13 September 2010, in the Matter of Maria Aguinda et al. vs. Chevron, at 12-13, attached as Annex 1 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

1111 See SHEFFTZ, Jonathan S., Analysis of Unjust Enrichment in Maria Aguinda et al. v. Chevron Corporation, at 7-8, attached as Annex B to Plaintiffs’ Motion, filed Sept. 16, 2010, at 5:15 p.m.; see also SOUTHGATE, Douglas, CONNOR, John A., Response to the Report of Mr. J. S. Shefftz with Regard to “Analysis of Unjust Enrichment,” issued 13 September 2010, in the Matter of Maria Aguinda et al. vs. Chevron, at 4, attached as Annex 1 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.; see


- 247 -

and was evaluated by the United States Environmental Protection Agency but rejected.1112 Further, the multiplier concept would only theoretically apply as a part of a disincentive to future violations of regulations, not as a punitive measure.1113 As noted by Professor Clifford Russell, who was part of the advisory panel evaluating this concept for the United States Environmental Protection Agency, “[i]n the context of a post-detection damages action claiming to seek to recoup avoided costs, there is no basis for a detection/prosecution probability adjustment.” 1114 Application of this multiplier concept here is inappropriate since detection of the supposed violation has already occurred. 1115 Therefore, Mr. Shefftz’s analysis compounds the error-ridden report putatively authored by Mr. Cabrera by inappropriately applying an arbitrary damages multiplier.1116

Furthermore, documents produced by Mr. Donziger suggest that the unjust enrichment figures were massively inflated due to pressure from the plaintiffs’ lawyers. On November 17, 2007, plaintiffs’ consultant Douglas Beltman advised that Stratus had put together an analysis of the unjust enrichment from avoided costs, which came to a total of $530 million. Mr. Donziger was unhappy with this sum: “sounds awfully low.” He warned the team to “make sure you don’t say or even suggest anything that backs

(continued…) generally RUSSELL, Clifford S., Evaluation of Jonathan Shefftz’s Analysis of Damages to be Claimed from Chevron in Connection with Oil Field Operations in Ecuador and his use of the Report of the US EPA Science Advisory Board’s Advisory Panel on “Illegal Competitive Advantage,” attached as Annex 7 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

1112 SOUTHGATE, Douglas, CONNOR, John A., Response to the Report of Mr. J. S. Shefftz with Regard to “Analysis of Unjust Enrichment,” issued 13 September 2010, in the Matter of Maria Aguinda et al. vs. Chevron, at 10-11, attached as Annex 1 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

1113 See RUSSELL, Clifford S., Evaluation of Jonathan Shefftz’s Analysis of Damages to be Claimed from Chevron in Connection with Oil Field Operations in Ecuador and his use of the Report of the US EPA Science Advisory Board’s Advisory Panel on “Illegal Competitive Advantage”, at 1, attached as Annex 7 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

1114 RUSSELL, Clifford S., Evaluation of Jonathan Shefftz’s Analysis of Damages to be Claimed from Chevron in Connection with Oil Field Operations in Ecuador and his use of the Report of the US EPA Science Advisory Board’s Advisory Panel on “Illegal Competitive Advantage”, at 3, attached as Annex 7 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

1115 See RUSSELL, Clifford S., Evaluation of Jonathan Shefftz’s Analysis of Damages to be Claimed from Chevron in Connection with Oil Field Operations in Ecuador1115 and his use of the Report of the US EPA Science Advisory Board’s Advisory Panel on “Illegal Competitive Advantage,” at 1, attached as Annex 7 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.

1116 See SOUTHGATE, Douglas, CONNOR, John A., Response to the Report of Mr. J. S. Shefftz with Regard to “Analysis of Unjust Enrichment,” issued 13 September 2010, in the Matter of Maria Aguinda et al. vs. Chevron, at 11, attached as Annex 1 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.; see also RUSSELL, Clifford S., Evaluation of Jonathan Shefftz’s Analysis of Damages to be Claimed from Chevron in Connection with Oil Field Operations in Ecuador and his use of the Report of the US EPA Science Advisory Board’s Advisory Panel on “Illegal Competitive Advantage,” at 1, attached as Annex 7 to Chevron’s Motion filed Oct. 29, 2010 at 5:20 p.m.


- 248 -

away from the figures” in the plaintiffs’ “submission,” which said “that the unjust enrichment would be on the order of billions of dollars.”1117 Given this history, this Court should attribute no credibility to the plaintiffs’ estimates, which are indeed in the billions of dollars as Mr. Donziger demanded.

Fourth, even if TexPet did derive unfair profits during Consortium operations, Chevron is not the successor of TexPet in any way whatsoever, see supra Chapter I, and it cannot be held liable for TexPet’s actions.

7.5 The Plaintiffs Have Not Even Attempted to Link the Alleged Harms or Threats of Harm to the Consortium’s Operations

The plaintiffs have offered no evidence to link their alleged (but unproven) harms to the Consortium’s operations, which is fatal to their claims given the numerous other potential sources for the alleged harms.

It is public knowledge that the pits, wells, and production stations located in the former concession area have been under the sole control and responsibility of Petroecuador since 1992, when the Consortium ended. 1118 And several court-appointed experts found that Petroecuador was responsible for contamination and spills in the region.1119 Indeed, even one of the experts nominated by plaintiffs admitted that Petroecuador’s operations caused contamination. 1120 Yet neither plaintiffs in their September 16, 2010 filing at 5:15 p.m., nor the Cabrera Report make any effort to specify and trace chronologically whether the alleged damages were due to Consortium activities or post-Consortium activities. Though Mr. Cabrera had been ordered to make this distinction, instead, the Cabrera Report presented the preposterous legal theory that Chevron is responsible for the volitional acts of Petroecuador, a State entity, over the past eighteen years.1121 In addition to being fed to him by plaintiffs’ counsel, this suggestion is a reflection of Mr. Cabrera’s undisclosed conflict of interest, since an award absolving Petroecuador of any liability would put Mr. Cabrera and the environmental remediation company in which he has an interest in the good graces of Petroecuador. See supra § 3.4.2. And this is no small matter given Petroecuador’s

1117 E-mail from Steven Donziger to Doug Beltman, et al., dated Nov. 16, 2007 at 5:51 p.m., at 1,

3, attached as Annex 1 to Chevron’s Third Supplemental Motion for Terminating Sanctions, filed Dec. 20, 2010 at 4:30 p.m. (DONZ0025512).

1118 Acta de Entrega Recepcion de las Operaciones del Consorcio Petroecuador-Texaco, dated Nov. 25, 1992, filed Apr. 27, 2004, Record at 7227-56v, 7234.

1119 See, e.g., Expert Report of Adriana Enriquez on Palanda Production Station, filed June 24, 2007, at 8:15 a.m., Record at 130605-39, 130616, 130627; Expert Report of Adriana Enriquez on Shushufindi Refinery, filed Sept. 24, 2007, at 5:00 p.m., Record at 132684-791, 132717.

1120 Expert Report of Luis Alberto Villacreces Carvajal on Lago Agrio Central, filed Sept. 6, 2006, at 4:40 p.m., Record at 119320-503, 119327.

1121 Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 141082-203, 141164; see Expert Cabrera’s Global Report at 27, filed Apr. 1, 2008, at 8:30 a.m., Record at 134228-89, 134256.


- 249 -

history. 1122 Even one of the plaintiffs’ Ecuadorian attorneys recognized, in a conversation captured on video, that it is “inconceivable to me that we can blame Texaco for everything that Petroecuador has been doing to this date.” Another of plaintiffs’ attorneys responds: “Oh, I agree.”1123

The truth is that Petroecuador has aggressively developed its oil exploitation activities in the former concession area during the nearly twenty years since TexPet ceased to be a member of the Consortium. It has more than doubled the number of oil wells in the former concession, drilling more than 414 new wells since 1990 at a cost of more than US$1.2 billion.1124 To support expanded drilling activity in the past three years, Petroecuador has constructed more than 277 pits in the former concession area. 1125 Nearly ninety percent of these new pits have been constructed at the platforms of former Consortium operated wells rather than at the platforms of newly drilled wells.1126 Petroecuador has used these pits to bury large volumes of drilling muds and other oilfield wastes produced by its activities, mainly in the Guanta, Shushufindi, and Sacha fields. 1127 In addition to building new wells and facilities, Petroecuador has actively exploited the existing fields and facilities of the former concession area. In 2009 alone, Petroecuador repaired or reconditioned approximately 250 wells. In total, Petroecuador spent an estimated US$46 million to increase oil production by 87,000 barrels per day.1128

Despite its investment in new infrastructure, Petroecuador has made little investment in improved environmental practices or in the basic maintenance of their oilfield equipment, resulting in frequent spills of crude oil from outdated, badly

1122 See Ecuador’s Pathetic Tactics, Latin American Bus. Chron. (Sept. 15, 2008), (noting that

Petroecuador caused 1,000 oil spills between 2002 and 2007, including 168 in 2007, accounting for 90% of all oil spills in Ecuador).

1123 Transcript of Crude Outtakes, attached as Exhibit 1 to Chevron’s Motion filed Sept. 16, 2010 at 4:35 p.m., (CRS 040-27-04).

1124 Annex B of Environmental Impacts Associated with the Deficient Operational Practices of Petroecuador at 3, filed as part of Appendix A to Chevron’s Rebuttal to the Barros Report, filed on Jan. 14, 2010, at 5:55 p.m., Record at 164471-73, 164473.

1125 Petroecuador Impacts Report, Attachment I, attached as part of Appendix A to Chevron’s Rebuttal to the Barros Report, filed on Jan. 14, 2010, at 5:55 p.m., Record at 164528-33, 164532-33.

1126 Petroecuador Impacts Report, Attachment I, attached as part of Appendix A to Chevron’s Rebuttal to the Barros Report, filed on Jan. 14, 2010, at 5:55 p.m., Record at 164528-33, 164529; see also id., Attachment G, Record at 164502-19, 164510 (photos of Petroecuador discharging drilling wastes into unlined pits at former consortium sites).

1127 See Petroecuador Impacts Report, Attachment I, attached as part of Appendix A to Chevron’s Rebuttal to the Barros Report, filed on Jan. 14, 2010, at 5:55 p.m., Record at 164528-33, 164529-33.

1128 Chevron’s Rebuttal to the Barros Report, filed on Jan. 14, 2010, at 5:55 p.m., Record at 164528-164533, 164445, see Summary of Petroecuador Data Regarding Workovers in the Eastern Region of Ecuador, attached as Attachment E to Appendix A of Chevron’s Rebuttal to the Barros Report, filed on Jan. 14, 2010, at 5:55 p.m., Record at 164495-97, 164497.


- 250 -

maintained, and corroded pipelines.1129 Some of the highest ranking executives of the state-run company have confirmed that, after 1992, when the concession passed to the sole ownership of Petroecuador, the Government assumed control of the budget and ceased to allocate sufficient funds to maintenance of the oilfield infrastructure.1130 In fact, between 1993 and 2003, Petroecuador spent less than one percent of its budget on environmental, health, and safety issues.1131 That early figure has persisted in more recent budgets.1132

From 1992 to 2009, independent media reports from around the country identified approximately 4.6 million gallons of crude oil spills attributable to Petroecuador, 1133 which have impacted rivers and streams throughout the region. Indeed, on March 15, 2010, Petroecuador took out an ad in several mainstream newspapers showing that between 2005–2008, the company was responsible for over 175 spills. Its own records show that of the 1,415 significant oil spills Petroecuador recorded from 2000 to 2008 alone, 565 (forty percent) were caused by corrosion, 128 (nine percent) by operator error, and an additional 240 (seventeen percent) by equipment failure, meaning that approximately sixty-six percent of these spills could have been prevented by improved equipment maintenance and personnel training.1134 Similarly, during the period from 1990 to 2007, over 394 million barrels of formation water generated as a result of the exclusive operations of Petroecuador have been discharged to rivers and streams, including discharge of over 300 million barrels after those discharges were first regulated under Ecuadorian law in 1993.1135 Nearly eighty-

1129 See Petroecuador Impacts Report, Attachment H, attached as part of Appendix A to

Chevron’s Rebuttal to the Barros Report, filed on Jan. 14, 2010, at 5:55 p.m., Record at 164521-26, 164522-26 (register of spills in the former Concession area from 1992 to 2009).

1130 Petroecuador is Experiencing Its Second Crisis, Hoy, Feb. 6, 2007, submitted as Annex 7 to Attachment I of Appendix A, to Chevron’s Rebuttal to the Barros Report, filed on Jan. 14, 2010, at 5:55 p.m., Record at 164795-96, 164796 (reporting declarations by former vice presidents of Petroecuador and Petroproducción); see also Affidavit of Ricardo Reis Veiga, dated Dec. 23, 1998 at ¶ 10, submitted as Annex A to Chevron’s Rebuttal to the Barros Report, filed on Jan. 14, 2010, at 5:55 p.m., Record at 164828-32, 164831.

1131 Chevron’s Rebuttal to the Barros Report, filed on Jan. 14, 2010, at 5:55 p.m., Record at 164426-59, 164446 (citing reports by Petroecuador (2007) and the Comptroller General’s Office (2005)).

1132 Chevron’s Rebuttal to the Barros Report, filed on Jan. 14, 2010, at 5:55 p.m., Record at 164426-59, 164446 (citing reports by Petroecuador (2007) and the Comptroller General’s Office (2005)).

1133 See Petroecuador Impacts Report, Attachment H, attached as part of Appendix A to Chevron’s Rebuttal to the Barros Report, filed on Jan. 14, 2010, at 5:55 p.m., Record at 164521-26, 164526 (register of spills in the former Concession area from 1992 to 2009).

1134 See Petroecuador evaluates environmental damages caused by crude, El Universo, Feb. 28, 2009, submitted as Annex 8 of Attachment I of Appendix A; Chevron’s Rebuttal to the Barros Report, filed on Jan. 14, 2010, at 5:55 p.m., Record at 164797-98, 164798.

1135 See Petroecuador Impacts Report Attachment D, attached as part of Appendix A to Chevron’s Rebuttal to the Barros Report, filed on Jan. 14, 2010, at 5:55 p.m., Record at 164479-94, 164480-81 (Temporal Analysis of Production Water Management in the Former CEPE-TexPet Concession).


- 251 -

four million barrels of produced water were discharged into the environment from June 2000 to June 2004 alone, due to inadequate construction and maintenance of re-injection facilities.1136

Even the plaintiff’s attempt through the Cabrera Report to foist responsibility for Petroecuador’s conduct upon Chevron has been publicly rejected by the plaintiffs’ lead attorney. In a radio interview, Mr. Fajardo stated that “[t]he latest damages caused by Petroecuador during the last 15 or 16 years, for example, are not included in this lawsuit because they are different things.”1137 Mr. Fajardo then asserted that it is “false” that the plaintiffs “ask Chevron to pay for or repair all the damage caused, even the one caused by Petroecuador.”1138

The existence of PEPDA and Petroecuador’s implicit acknowledgment of responsibility conflict with the Cabrera Report’s absurd recommendation that this Court should hold Chevron responsible for Petroecuador’s unilateral conduct since the Consortium ended. The costs of the PEPDA program also prove that the Cabrera Report’s estimates are baseless and grossly inflated. For example, the Cabrera Report’s US$2.7 billion figure was over twenty-five times higher than the US$96.74 million budget for the PEPDA remedial program set in June 2009, which the State and Petroecuador believe sufficient to fully remediate the entirety of the former concession area and more.1139 The Cabrera Report’s sweeping conclusions bear no resemblance to the actual remedial work that would be implemented to address the alleged harms to the environment.

The failure to prove a causal link is not only fatal to plaintiffs’ environmental claims, but it undercuts their claims regarding public health as well. The plaintiffs simply assume that living in one of the towns located within or near the former concession area establishes—a priori and without need of proof—harm or poses a “risk” to health. But there is no proof that the Consortium even operated in five of the communities where the forty-eight named plaintiffs live: Ávila, Unión Milagreña, Tarapoa, San Roque, and Aguas Negras. Four of the allegedly “affected communities”—El Dorado de Cascales, Palma Roja, Villa Secoya and San Pablo— are clearly outside the boundary of the former concession. The plaintiffs also assume, without foundation, that the alleged health effects were caused by exposure to potentially toxic components of petroleum in such a dosage and with such frequency that this exposure is capable of affecting health.1140 Moreover, plaintiffs fail to account for potential alternative causes of many of

1136 Chevron’s Rebuttal to the Barros Report, filed on Jan. 14, 2010, at 5:55 p.m., Record at 164426-59, 164446-47 (citing report by the Comptroller General’s Office).

1137 The Power of Words, Ecuador Inmediato Radio, Mar. 15, 2010. 1138 The Power of Words, Ecuador Inmediato Radio, Mar. 15, 2010. 1139 See State Assumes Environmental Remediation, El Universo, June 21, 2009, attached as

Annex E to Chevron’s Rebuttal to the Barros Report, filed on Jan. 14, 2010, at 5:55 p.m., Record at 165383-84, 165384; Cabrera's Supplemental Report, filed Nov. 17, 2008, at 8:25 a.m., Record at 152950-153000, 152966-967.

1140 See, e.g., Plaintiffs’ Motion, filed Aug. 31, 2005, at 5:20 p.m., Record at 79274-366, 79274.


- 252 -

the claimed health effects they allege, such as the documented presence of fecal matter in the water, malnutrition, lack of pre-natal care, and Petroecuador’s exclusive operations in the former concession area since 1990.1141

7.6 Although Chevron Bears No Duty to Offer Evidence, It Has Proven That the Plaintiffs’ Case Is Devoid of Merit

Although Chevron bears no burden of proof in this case, the evidence it has presented makes clear that the plaintiffs’ claims are devoid of merit and that the plaintiffs cannot meet their burden of proof. In fact, the only competent scientific evidence in the record is that submitted by Chevron, which was prepared by recognized experts following rigorous protocols and working with accredited laboratories.

My client’s evidence is more fully detailed in the prior portions of this Chapter, but among other things, Chevron’s nominated experts concluded that ninety-eight percent of the pits remediated by TexPet met the RAP standards.1142 They also established that there is no significant risk to human health at the remediated sites.1143 This was confirmed by the independent settling experts in the case of Sacha-53, who found that TexPet met its remediation requirements under its contracts with the Government of Ecuador and that chemical substances were present in quantities “below the permissible limits” for hydrocarbon activities.1144 In addition, ninety-eight percent of the pits remediated by TexPet still comply with the standards set by the Government of Ecuador in the Settlement Agreement and the Final Acta,1145 and a comprehensive risk evaluation performed by Chevron’s nominated experts indicates that groundwater in the former concession area does not pose any petroleum-related health risks to local residents or workers.1146 In the face of this evidence, plaintiffs have been forced to

1141 See KELSH, Michael A., McHugh, Thomas E., and Tomasi Theodore D., Rebuttal to Mr.

Cabrera’s Excess Cancer Death and Other Health Effects Claims, and His Proposal for a New Health Infrastructure, attached as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 02:14 p.m., Record at 146371-146649, 146410-13, 146529-46; CONNOR, John and LANDAZURI, Roberto, Response to Statements by Mr. Cabrera Regarding Alleged Impacts to Water Resources in the Petroecuador-Texaco Concession Area, attached as Appendix to Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008, at 2:14 p.m., Record at 148352-478, 148365, 148364-65, 148428-37; SANTACRUZ, Silvia, The other L.A., Forbes (Nov. 20, 2009) (Between 2000 and 2008, Petroecuador caused 1415 oil spills—which equates to an accident every two days).



1144 Settling Expert’s Report on Sacha-53, filed Feb. 1, 2006, at 5:00 p.m., Record at 92492-587, 92522.

1145 Chevron’s Objections to Expert Cabrera’s Global Report, filed Sept. 15, 2008 ,at 2:14 p.m., Record at 141082-203, 141090.

1146 For additional details, see Chevron’s Motion filed Sept. 16, 2010, at 4:35 p.m., § II.B.3.c.v, at 104-106.


- 253 -

resort to flawed methods and fraudulent evidence in an unlawful attempt to meet their evidentiary burden.

7.7 Application of New Constitutional Provisions Is Improper and Would Deny Chevron Due Process

Having failed to offer competent evidence of injury, negligence, or causation, at the tail-end of this case the plaintiffs, their amici, and Judge Núñez have sought to shift the burden of proof to Chevron under provisions from the new 2008 Constitution. Articles 396 and 397 of the current Constitution contain a series of new provisions related to environmental claims that (i) shift the burden of proof in environmental actions,1147 (ii) exempt such claims from any statute of limitations,1148 and (iii) provide strict liability against plaintiffs [sic].1149

These fundamental alterations took effect in October 2008, more than eighteen years after TexPet transferred operation of the former Consortium to Petroecuador and more than five years after the initiation of this trial, and there is no indication in the new Constitution that these provisions are to apply retroactively. As discussed above, supra § 5.3, the principle of non-retroactivity bars the application of these new provisions to alleged acts or omissions by TexPet. Strict liability in this particular case imposes a higher standard of conduct on a defendant than the standard duty of care in force during the Consortium operations. As a consequence, its imposition constitutes a substantive, rather than a mere procedural, change in the law. The retroactive elimination of the statute of limitations for environmental lawsuits also constitutes a substantive change where, as here, it purports to revive a cause of action that has previously been vindicated or has been extinguished due to the passage of time. Similarly, reversing the burden of proof is a substantive change because it imposes liability in circumstances where, under the law that existed at the time of the alleged acts, liability could not have been imposed. In sum, the 2008 Constitution wrought a sea change in Ecuadorian civil liability standards. Any judgment in this trial based on the new provisions of the 2008 Constitution would therefore violate Chevron’s due process rights.

Additionally, even if any of these changes were somehow deemed procedural, they could not be applied where—as here—the proceeding began prior to their adoption.

1147 Article 397(1) provides: “The burden of proof about the inexistence of a potential or real

damage shall fall on the executor of the activity or on the defendant . . . .” 1148 Article 396 provides: “Legal actions to prosecute and penalize environmental damage shall

not be subject to any statute of limitations.” 1149 Article 396 provides: “There is strict liability for damage to the environment . . .”

Article 397 provides: “In cases of environmental damage, the State shall act immediately and secondarily to guarantee the health and restoration of the ecosystems. In addition to the corresponding sanctions, the State shall bring an action against the operator of the activity that caused the damage to force such operator to assume obligations related to total remediation, on the terms and in accordance with the procedures set forth in the law. Civil servants responsible for oversight of the environment shall also be held liable.”


- 254 -

Article 7(20) of the Civil Code provides: “Laws related to the proceedings and rituals of trials prevail over the previous ones from the moment they enter into force. But terms that have already started, and procedural steps that have already been initiated, shall be governed by the law which was valid at that moment.”

For example, shifting the burden of proof violates the fundamental principle of the “unity” of evidence. This principle forbids a court from hearing one part of the evidence on the basis of one rule while hearing another part of the evidence on the basis of a different, contrary rule. If this Court allows the burden to shift at this late date, that is exactly what will have occurred in this case: this Court will have heard the first part of the evidence based on Article 114 of the Code of Civil Procedure, which provides that each party is required to prove the facts that it alleges, and the second part of the evidence based on Article 397 of the current Constitution, which provides that the burden of proving that damages did not exist shall be borne by the defendant. To do this would be contrary to Ecuadorian law and would violate Chevron’s right to due process.

The legal commentary echoes these principles, explaining that

[p]rocedure, by rule, must subject itself to the law in effect at the time it is applied, except for the exception established by our Code, and which is justified by the fact that a time period, an act, a proceeding constitute a unit, an individuality that cannot and must not be divided so that the prior law applies to one part of it and the new law applies to another part of it.1150

The Constitutional Court has recognized these principles in applying the current Constitution. Indeed, the Court explained on November 13, 2008, in the Rules of Procedure for the Exercise of Jurisdiction by the Constitutional Court for the Transition Period that “[c]ases that are waiting to be heard in actions and appeals provided for by the Constitution of 1998 and the Law of Constitutional Review shall continue being heard and shall conclude in accordance with the rules in effect when they began being heard.”1151

These rules are in force to prevent the deprivation of vested rights and to protect the right of legal certainty, which,- as acknowledged in Article 82 of the current Constitution, is based in respect for previous legal provisions. Once the proceeding had

1150 LOVATO, Juan Issac, Analytical Program of Ecuadorian Civil Procedural Rights, Vol. I, 2d ed.,

p. 150 (cited in Mario Villegas vs. Mario Novoa Merino, Judgment of the Supreme Court of Justice, First Civil and Commercial Division, June 12, 1998, Case 430-98, published in Official Gazette 84, Dec. 9, 1998.

1151 Rules of Procedure for the Exercise of Jurisdiction of the Constitutional Court for the Transition Period, Second Temporary Regulation, published in Official Gazette 466 Supplement, dated Nov. 13, 2008, at 13.


- 255 -

started, my client presented evidence to this Court pursuant to the provisions at that time on burden of proof, standard for liability, and prescription. Thus, before the current Constitution went into effect, my client acquired rights in the application of the extant legal provisions. Also on the basis of that same rule, the parties put together their respective procedural strategies, and they also asked for and contributed evidence. Neither the evidence ordered nor the evidence in part taken before the current Constitution became effective constitutes a mere expectancy, but rather a vested right. Because of their possible effect on these rights, “[l]aws normally have no retroactive effect because if they did so, they would no longer be a rational rule that must be previously known.”1152

Fundamentally changing the rules at the end of the trial’s evidentiary phase would cause this case to be governed by two different principles in two different periods. Not only would it be impermissibly retroactive, but it would also violate the guarantee of due process by depriving Chevron of its basic right to defend itself against the plaintiffs’ claims. Therefore, as I noted in my filing of September 2, 2009, at 5:30 p.m., if this Court alters the rules at this late stage, this trial will be null and void.1153

PRAYER FOR RELIEF

1. Your Honor, based on the foregoing I ask that you declare the nullity of the proceedings due to the many defects that fully invalidate it and that have been argued throughout the entire case, starting with the improper filing of the complaint itself and those other unlawful procedures such as the forging of evidence, the failure to comply with essential and specific formalities that are described throughout this pleading and specifically in Chapter IV. These procedural defects require that Your Honor declare nullity and moreover order criminal prosecutions in accordance with Article 292 of the Criminal Code and Article 129 of the Organic Code of the Judiciary.

Specifically relative to criminal prosecution, it is important to take into account the fraud by the plaintiffs from the time they filed the complaint, the forging of evidence, the willful misrepresentation (distorted presentation) of such evidence, as well as the intimidation of the judges, Clerks of Court, and other assistants of the court, such as experts, and even my client's attorneys, and we must further emphasize the creation of false expectations in the general public.

2. In addition to the criminal nature, the temerity and malice of the plaintiffs and their attorneys must be taken into account with all of their effects, among other things so as to order the plaintiffs to pay the court costs.

1152 Judgment of the Supreme Court of Justice, Third Civil and Commercial Division, Division of

Permanent Judges, Sept. 25, 2003, published in Judicial Gazette, year CIV. Series XVII, No. 12, p. 3838. 1153 See Chevron’s Brief on Retroactive Application of the Law and Burden of Proof, filed Sept. 2,

2009, at 5:30 p.m., Record at 158142-48, 158147.


- 256 -

3. As Your Honor is aware since it is public and common knowledge, my client continues to uncover new evidence in U.S. courts of the plaintiffs' fraud, which affects the validity of this trial; therefore, in the exercise of my right of self-defense, I will file this new evidence in the future, which I will summarize in one or more provisions of this brief, and I also expressly reserve the right to present such evidence; wherefore in view of the foregoing, I respectfully ask that you not hand down a judgment until such new evidence is received, added to the record, investigated and considered by you, Your Honor.

4. In the unlikely event that the Court denies the motion for nullity (there is one motion but several grounds), which would be unlawful and improper, the defenses asserted in the answer to the complaint must be considered, and in particular, the following:

4.1 The lack of jurisdiction over Chevron Corporation, which is a company that has never been domiciled in Ecuador, much less has it operated here. Chevron is not the appropriate respondent in this case. You only have authority to administer justice on the facts of the case that have occurred in Ecuador and regarding the persons involved in such facts, and not regarding third parties uninvolved in the operation of the former Petroecuador – Texaco Consortium, as in the case of my client.

4.2 The plaintiffs do not have the right to sue Chevron, not only because it is not a party to the legal relationship that is the subject of the facts claimed in the complaint, but also because at the time when the facts occurred, there was no cause of action for claiming them.

4.3 Even if a right had existed, it was extinguished along with the action to claim it, since it was exercised by the municipalities of the various cantons of the area of the former concession, as well as by the Ecuadorian State, which acted on behalf of the residents of the country, including the plaintiffs themselves, in the settlement between Texpet, Petroecuador and the Ecuadorian State, in order to terminate all environmental obligations stemming from the Concession agreement. This release and the court-approved settlement in the final judgment with the municipalities, determine the existence of res judicata, and therefore, preclude the filing of new actions for the same cause.

4.4 It has been demonstrated that the action filed by the plaintiffs constitutes a bold and malicious attempt to have Your Honor apply in an illegal, improper and retroactive manner, provisions that were not valid at the time when the facts underlying the complaint occurred, which renders the claims made in the complaint inadmissible.

4.5 In particular, I have demonstrated that it is improper to apply the Environmental Management Act, as it did not take effect until 1999.


- 257 -

4.6 The fraud committed in these proceedings by the plaintiffs and the expert appointed by former Judge Dr. German Yánez to conduct the global expert assessment is obvious. The evidence presented using this fraud is null and lacks any probative value, which requires that the complaint be rejected in its entirety for lack of legitimate evidence. It also means that Your Honor must forward the record of the acts of the experts and the previous judges who have heard this case, so that the Public Prosecutor may investigate the possible crimes committed.

4.7 Your Honor must correct the violation of due process in this case and in relation to my client, which occurred, inter alias, due to the following reasons:

a) The legal and constitutional provisions were not complied with, nor were the judicial decisions handed down within the present case, including the approval of the procedural agreement (procedural contract), for the judicial inspections and for performance of the work of the experts. Final judicial rulings were violated, thus violating the statute of limitations and the effects thereof;

b) The procedure adopted by the Court at the plaintiffs' request has left unresolved the conflicts (contradictions and discrepancies) between the different expert reports on the judicial inspections conducted in these proceedings, which not only means that such reports lack probative value, but also that the record itself is incomplete;

c) In the same way, my clients' motions to investigate and correct the essential errors were not ruled upon, thus further violating the procedure provided for by law;

d) Moreover, not one but several rulings expressly allowed the plaintiffs' unlawful waiver of the judicial inspections, thereby violating the principles of the "unity" and "community" of the evidence, and consequently producing an unjustified release from the burden of proof and a gap in the record (incomplete record);

e) Blatant partiality by the judges who heard this case and by the experts nominated by the plaintiffs and/or appointed by the Court. Such bias is also evident in the unsubstantiated rejection of requests made by my client, in explicit violation of constitutional and legal rules, which has obstructed my client's exercise of its right to defend itself;

f) As a consequence of the foregoing, my client’s right to legal certainty was violated;


- 258 -

g) Total lack of effective and timely protection by the Court of Chevron’s rights as one of the parties to the suit, which resulted in clear violation of its right to exercise its self-defense and to a fair and impartial trial;

h) Repeated and sustained violations of several explicit provisions of the Constitution, the Organic Code of the Judicial Branch and the Code of Civil Procedure by various judicial authorities.

4.8 Moreover, even if there were any action that could have been filed by the plaintiffs, the action filed was statute barred in accordance with the foregoing.

4.9 Violation of the principle of procedural congruency by allowing the investigations, expert report, clarifications and supplements thereto filed by Mr. Cabrera to go beyond both the specific claims of the complaint and the objective of the global expert assessment, as well as the express instructions that the judge gave for such purpose.

4.10 Violation of the principle of the publicity of the evidence by allowing the clandestine work of the experts (including Cabrera) and by not notifying the parties that the others' work was starting (Barros and biologist Bermeo), which further caused violation of the principle of being able to challenge the evidence and the exercise of the right to self-defense.

4.11 Furthermore, based on the foregoing, it is evident that the plaintiffs have not proven any of the statements made in their complaint.

In view of the foregoing, I request that Your Honor declare the nullity of all proceedings in this case, and alternatively, in the event that Your Honor fails to do so, I request that you reject the complaint in full, by accepting one or more of the defenses made, and which I have legally and properly proven.

For the petitioner, duly authorized and as its Attorney of Record.

DR. IVAN ALBERTO RACINES E. ATTORNEY

REGISTRATION NO. 6459 – PICHINCHA BAR ASSOCIATION
