Judge Socks Ecuador Indigenous Groups With Huge Bills

Just when you thought Judge Lewis A. Kaplan’s maneuverings in favor of Chevron in the Ecuador case could not get any worse, they just did.

The controversial judge, who was unanimously reversed by an appellate court in an earlier phase of the case when he tried to impose an illegal injunction blocking the Ecuador judgment, now appears to be openly running a “pay-to-play” courtroom right in the heart of Manhattan.

The latest evidence: Judge Kaplan has socked impoverished indigenous groups in Ecuador with the exorbitant and secret bills of two “Special Masters” he appointed to oversee depositions in the case. The Special Masters, Max Gitter and Theodore Katz, are longtime friends and professional colleagues of Kaplan. Gitter was his former law partner and Katz served for many years as the chief magistrate judge on the court where Kaplan sits before opening a lucrative private mediation practice.

Hang on to your seats for this one.

When Judge Kaplan floated the idea several months ago of appointing Gitter and Katz at Chevron’s request, the Ecuadorians and their longtime U.S. lawyer, Steven Donziger, objected strenuously. See this letter from famed trial lawyer John Keker for details. Not only did Gitter have a track record of blatant bias against Donziger, the fees were way behind what the Ecuadorians and Donziger could afford. Further, there was no need for the Special Masters.

True to form, Judge Kaplan appointed Gitter and Katz anyway. He then ordered Donziger and the Ecuadorians to split the fees of these high-end lawyers with Chevron. Chevron grossed $247 billion last year; company CEO John Watson received about $30 million in compensation. Mr. Donziger is a human rights lawyer who works out of his small apartment in Manhattan; the Ecuadorians live in the rainforest and in a good year might make $1,000 in income.

That should give you a good feel for Judge Kaplan’s personal notion of fairness: a canoe operator in the Amazon rainforest (one of the Ecuadorian defendants) and the nation’s third largest corporation should split the fees of high-priced U.S. Special Masters evenly.

Things then went from the bizarre to the surreal. Gitter informed the parties that he would bring along his young associate from Cleary Gottlieb to all of the depositions and bill him out at a “discounted” rate of $630 per hour. The associate, Justin Ormand, recently was spotted sipping drinks with Katz in the first class cabin on a flight from Newark to Peru after Judge Kaplan ordered Ecuadorian witnesses to be deposed in the U.S. embassy in Lima.

(Judge Kaplan’s decision to force Ecuadorians to travel to Peru to be deposed because of fake “security” concerns is yet another illustration of his xenophobia and disdain for the country of Ecuador. See here for details.)

Later, something very curious happened. Both Gitter and Katz refused to send the bills for their time and expenses to the Ecuadorians and Donziger. Instead, without disclosing the amount of their bills, they asked Judge Kaplan for “guidance” about what they should do in light of the defendants stated refusal to not be able to pay. See this letter.

Julio Gomez, a solo practitioner from New Jersey who now represents Messrs. Camacho and Piaguaje after their previous counsel withdrew in May, asked the Special Masters for a copy of their invoices so he could respond to the letter to the court. Ormand, no doubt billing at his “discounted” rate of $630 per hour, wrote back a cryptic email asserting that the Special Masters were refusing to turn over the bills to Donziger and the Ecuadorians. See that email exchange here.

Gomez and Donziger then filed a complaint with Judge Kaplan about how the entire situation seemed at least a tad bit improper. No, make that dreadfully improper if not downright unethical. This is where it really gets interesting.

Rather than order Gitter and Katz to disclose their secret bills to the defendants, Judge Kaplan concocted a plan to get them paid in full while at the same time allowing Chevron to exert added leverage over the Ecuadorians and Donziger in the underlying case. This plan is so dazzling that only a judge as smart as Kaplan could possibly come up with it.

Judge Kaplan’s extraordinary order, which can be read here, requires Chevron to pay 100% of the fees of the Special Masters. It refuses to order Gitter and Katz to disclose their secret bills. And, amazingly, it invites Chevron to sue the Ecuadorians and Donziger so he can enter a judgment for the oil giant for 50% of the amount of the bills that are supposedly their responsibility.

In other words, Judge Kaplan’s scheme guarantees his friends will get paid what are surely exorbitant bills. And it cleverly leaves Chevron the option of not suing Donziger and the Ecuadorians if it concludes it would be too embarrassing for Judge Kaplan, the Special Masters, or the oil company for the amounts of the bills to be disclosed. This is one way that pay-to-play justice goes down in Judge Kaplan’s courtroom.

There is precedent for how fancy Manhattan lawyers can exploit the plight of the Ecuadorian rainforest villagers to generate enormous billings for their law firms. It has been reported that Gibson Dunn & Crutcher is using at least 114 lawyers and billing Chevron an estimated $400 million annually to help the company evade the $19 billion judgment in Ecuador. This has caused all sorts of problems for Chevron shareholders, who have asked the SEC to investigate company management for failing to properly disclose the risk related to the Ecuador liability. It also has put intense pressure on CEO Watson, who recently was forced to testify under oath about the litigation and answer questions from Donziger.

As for Gitter and his secret bills, we have seen the same script before.

In 2011, Judge Kaplan appointed Gitter as Special Master to oversee depositions in several discovery actions initiated by Chevron related to the Ecuador case, including that of Donziger. Gitter mistreated Donziger to such an extent that he forced him to testify for 16 days – a likely record for an active lawyer on a case – and often tag-teamed with Chevron’s lawyers when posing hostile questions. Donziger said at times it felt like being a defendant in the Salem witch trials.

During the marathon 16-day deposition spanning 2011 and 2012, Judge Kaplan ordered Donziger to pay one-third of the fees of Gitter and Ormand. (Given Gitter’s hostile behavior, that’s like ordering someone to pay for the bullet of his executioner.) Yet Gitter never sent Donziger a bill for his “services”. Why wouldn’t a high-end corporate lawyer like Gitter try his best to get paid?

We suspect it’s the same reason Gitter won’t disclose his bills to the defendants now. He likely was embarrassed for the world to know how much he was making from Chevron to help crush impoverished rainforest residents under the guise of being a neutral “Special Master”. We suppose Gitter did send out his earlier bill to Chevron and the company paid it. It is indisputable he never copied Donziger nor asked that he pay his portion as ordered by Judge Kaplan.

A few weeks ago Donziger’s counsel asked Gitter for a copy of that old bill. The idea was to use it as possible evidence to argue Gitter should not be appointed because of his liberal billing habits, lack of transparency, and obvious sympathies for Chevron. Gitter never provided the bill to Donziger, which remains secret to this day.

The sordid story of the billings of Gitter and Katz and the behind-the-scenes puppeteer role of Judge Kaplan is part of a larger and disturbing pattern. Judge Kaplan is trying to rig Chevron’s retaliatory “fraud” case such that the truth cannot come out and Chevron will cruise to victory in a show trial. Chevron hopes to use any judgment to try to block lawsuits targeting its assets that are pending in countries around the world.

We have reported for weeks how Judge Kaplan is encouraging Chevron to use its overwhelming resources to win by might what it cannot win through merit. See this powerful letter exposing Judge Kaplan’s efforts sent by Craig Smyser, a prominent Houston lawyer who formerly represented the Ecuadorians. The oil giant has used at least 60 law firms, 2,000 legal personnel, and 180 investigators to help it evade the Ecuador judgment.

We now understand better why over the course of weeks of depositions in May and June Gitter and Katz often delighted in making rulings limiting questioning of Chevron witnesses so as to hide the company’s attempts to corrupt the Ecuador trial and spy on adversary counsel. See these complaints filed by Donziger for details.

It is well-documented that Kaplan has made what appear to be xenophobic comments while presiding over the case. He has called the Ecuadorians the “so-called plaintiffs” who are “said to reside” in the rainforest. He also famously said the Ecuador case was not “bona fide” litigation and was part of a “giant game” designed to by U.S. lawyers to rectify the balance of payments deficit. All in all, these comments do not reflect the kind of temperament that Americans expect from their judges.

We also reported how Judge Kaplan has jumped through hoops to block the Ecuadorians from being able to mount a meaningful defense. He ruled that they cannot mention the overwhelming scientific evidence used to find Chevron liable for massive contamination. He also ruled that Chevron’s illegal spying operation that has targeted Donziger and his family is off limits, as are company videos that show Chevron scientists laughing at the pollution left in the rainforest and discussing ways to hide it from the court. Kaplan also has allowed Chevron to bury embarrassing documents by designating them “confidential” -- including emails outlining a long-term strategy to “demonize” Donziger and to bribe Ecuador’s government to illegally quash the environmental case.

Donziger has protested repeatedly and asked Judge Kaplan for all sorts of procedural protections, but to no avail.

Donziger also accused Chevron of interfering with his right to counsel by suing numerous lawyers for the Ecuadorians and one of their funders for “fraud” so as to discourage lawyers from entering the case. Judge Kaplan did nothing to allow Donziger the necessary time to secure new counsel after Keker’s withdrawal in May. Judge Kaplan also has refused to allow Donziger to proceed with counterclaims against Chevron that outline a chilling picture of the oil giant’s illicit dumping in Ecuador, obstruction of justice, attempts to bribe the government, commit fraud on the court, and lie about the context of video outtakes. See here for a copy of the counterclaims.

“Judge Kaplan has made it abundantly clear that he will not allow me nor my Ecuadorian colleagues a fair trial in his courtroom,” Donziger said in a statement in early May.

Well said and abundantly true. The way Judge Kaplan has been using the Special Masters is just one more damning piece of evidence to support Donziger’s view.

ENDS

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