Closing The Loop

An environmental attorney in New York could be stuck covering nearly $19 million in discovery costs for one of the world’s largest oil companies, a massive shifting of fees in a sprawling legal battle that has lasted more than 24 years. The (potentially) unlucky lawyer is Steven R. Donziger, a New York attorney who has been in a long running dispute with Chevron over the contamination of the Ecuadorian Amazon rainforest.

Donziger won a $17.3 billion verdict from an Ecuadorian court on behalf of thousands of Amazonian villagers in 2011, but has so far been unable to collect. Chevron vowed never to pay. Instead, it sued Donziger under the Racketeer Influenced and Corrupt Organizations Act, accusing him of coercion, fraud, and bribery. Chevron won and on Monday, the Supreme Court refused to take up his case, sealing Chevron’s RICO victory. Finally, the little guy wins!

Now Chevron wants Judge Lewis A. Kaplan, of the Southern District of New York, to award it attorneys’ fees under 18 U.S.C. § 1964(c). The total: $32 million, $18,930,757 of which is attorneys’ fees connected to discovery in its RICO suit.

 

The Long-Running, Ongoing Battle Over the “Amazon Chernobyl”

In November of 1993, residents of Ecuador’s Amazon filed a putative class action in federal court in Manhattan, alleging that the environment surrounding the Lago Agrio oil field had been contaminated and their livelihoods jeopardized by what they referred to as the Amazon’s Chernobyl -- massive pollution caused by an American oil company's drilling and exploration between 1960 and 1990. That company was Texaco, which became a Chevron subsidiary in 2001.

The ensuing battle has spanned two continents, several countries, and involved dozens of lawyers. The Second Circuit has described the legal fight as “among the most extensively [chronicled] in the history of the American federal judiciary.”

There was even a movie made about it—a movie Donziger commissioned and which itself became an important part of the litigation.

 

In 2003, the New York case was dismissed on a theory of forum non conveniens, subject to Texaco’s agreement to submit to jurisdiction in Ecuador. When Chevron was then sued in Ecuador, on behalf of 30,000 indigenous residents, the complaint requested that all monetary awards be paid to the Frente de la Defensa de la Amazonia, or Amazon Defense Front, an organization founded in 1993 by Donziger and his friend, Luis Yanza.

Donziger eventually won a massive award in Ecuador; $8.646 billion in compensatory damages, with an additional $8.646 billion in punitive damages, should Chevron not issue an apology. Ecuador's National Court of Justice upheld the verdict in 2013, though it cut the award in half. 

When Donziger won his multi-billion-dollar verdict, Chevron accused him of egregious misconduct. They backed that conduct up with the RICO suit at issue here. Following a bench trial, Judge Kaplan ruled that Donziger’s Ecuadorian judgement had been procured through fraud, bribery, and coercion, warranting relief under RICO. The Donzinger and his team's ends did not justify the means, the court found, writing that "'this-is-the-way-it-is-done-in-Ecuador' excuses—actually a remarkable insult to the people of Ecuador—do not help them.” 

Last August, the Second Circuit upheld that finding, a decision the Supreme Court declined to review.  

That cert denial lead Chevron to renew its motion for attorneys’ fees, which can be recovered by the prevailing party in a RICO suit. “In view of the Supreme Court’s order," the company wrote, "Chevron respectfully requests that the Court reactivate Chevron’s motion for attorneys’ fees and bill of costs, which the Court previously deferred”.

 

How the Bill Breaks Down

Chevron is seeking more than $32 million in total, almost $19 million, or 60 percent, of which stems from discovery matters. And that number is probably low.

It’s important to note that these are just the attorneys’ fees. Vendor costs are not included. As we’ve seen in other cases, those costs can quickly skyrocket, depending on the vendors and technology used. Those costs could add hundreds of thousands, even millions, of dollars to the total as data ingestion fees, $400 hard drives, and “hibernated subcollection fees,” whatever those are, pile up. (We break down those million-dollar vendor bills here.)

These numbers also only represent a small segment of the long-running dispute. That is, the discovery costs Chevron seeks to recover relate only to discovery in its RICO case, not the years of litigation connected to the Lago Agrio pollution that preceded this suit. 

Despite years of earlier proceedings, discovery in this case seemed to be anything but straightforward. According to Chevron's memo in support of its attorneys' fees motion, the discovery process involved everything from the historical oil operations in Ecuador to Chevron's purchase of Texaco. As Chevron explains it:

In order to identify responsive documents [requested by Donzinger] and review them for privilege, Chevron had to review approximately one million documents, some decades old, held both by the compnay in the United States and by its outside counsel in Ecuador. Many of thse documents were in Spanish. This review requir[ed] the time of dozens of attorneys.

Chevron is asking for exactly $18,930,757 in attorneys’ fees connected to discovery. The oil company breaks this total into four categories: attorneys’ fees connected to its offensive discovery, fees connected to its defensive discovery, and the cost of defensive discovery review through two contract document review agencies, Merrill Communications and Huron Consulting.

  • Offensive Discovery, 2,295.6 hours, $1,622,983.89
  • Defensive Discovery, 16,682.4 hours, $7,334,941.93
  • Merrill Communications, 79,936.55 hours, $6,384,188.96
  • Huron Consulting, 59,810.7 hours, $3,588,642.00

All told, that’s 158,725.25 billable hours spent on discovery—over 6,613 full days, or 220 months, or 18 years. Yes, if Chevron’s discovery bill were a person, it would be old enough to vote.

On average, each hour was billed at about $119, though costs ranged from $60 an hour for contract document reviewers to $1021.25 hour for partners at Chevron’s outside counsel. 

Chevron’s 18 collective years of discovery were divided among a host of tasks. Document review made up the vast majority of those hours, though the occasional $900 conference call and $2,000 discovery request reviews were also present. Here’s a glimpse sample of the billing records from Chevron’s outside counsel, with names removed:

Chevron Discovery Bill.png

(Chevron's exhibits supporting its attorneys' fees calucation can be found here.)

It remains to be seen whether Chevron will recover every nickle and dime paid to its attorneys for discovery. Donziger tells Bloomberg that, since Chevron’s RICO suit didn’t seek money damages and wasn’t decided by a jury, there’s “no legal basis under RICO to collect such fees.”

He’s also still seeking to obtain his billion-dollar award against the company. Though he’s foreclosed from trying to enforce the Ecuadorian judgment in the United States, Donziger has pursued separate enforcement actions across the globe, in Canada, Argentina, and Brazil.

 

This post was authored by Casey C. Sullivan, Esq., who leads education and awareness efforts at Logikcull. You can reach him at [email protected] or on Twitter at @caseycsull.

 

New Call-to-action

Subscribe To Our Blog

New Call-to-action

Let us know what you thought about this post.

Put your comment below.