NEW YORK (Legal Newsline) -- A U.S. magistrate judge last week ordered lawyers for the Lago Agrio plaintiffs suing Chevron Corp. to produce documents under a discovery request by the oil company.
The discovery request relates to Count 9 of Chevron's RICO claim.
In February, after an eight-year trial, an Ecuadorian court found Chevron liable for dumping billions of gallons of toxic waste into the Amazon, causing an outbreak of disease and decimating indigenous groups. Damages were found to be up to $18 billion.
Chevron, which has vowed never to pay the judgment, filed a racketeering lawsuit, alleging that the Ecuador suit has been used to threaten the oil company, mislead U.S. government officials, and harass and intimidate its employees -- all to extort a financial settlement from the company.
In March, U.S. District Judge Lewis Kaplan issued an injunction blocking worldwide enforcement of the judgment. That ruling is under an expedited appeal before the Second Circuit Court of Appeals in New York, with arguments set for September.
Last week, Chevron complained that the Lago Agrio plaintiffs have withheld thousands of documents.
The company served subpoenas on attorneys involved in the representation of the Lago Agrio plaintiffs, including Laura Garr, Andrew Woods, Joseph C. Kohn and the firm of Kohn, Swift & Graf PC.
The attorneys objected to the subpoenas, asserted the attorney-client privilege and the work product doctrine, and provided privilege logs.
Chevron contends that none of the documents at issue may be withheld because, among other reasons, any discovery immunity was forfeited by the lead attorney in the litigation, Steven Donziger, when he failed to provide a timely privilege log; and the crime-fraud exception to the attorney-client privilege and the work product doctrine apply to the documents at issue.
James C. Francis IV, who was assigned to sort out discovery for trial, said the Lago Agrio plaintiffs failed to identify any specific documents from the privilege logs that do not fall within the subject matter descriptions contained in a subpoena served on Donziger but are within the document categories sought by the subpoenas served on the other attorneys.
Therefore, Francis said he had "no basis for concluding that such documents exist."
He also wrote in his 48-page order Wednesday that "because Mr. Donziger had the practical ability to obtain documents from each" of the lawyers, "any documents within their possession that he had failed to log in a timely manner were subject to the forfeiture of the privilege he was deemed to have committed."
The Lago Agrio plaintiffs, who opposed the application of the crime-fraud exception, refute allegations that they themselves were "engaged in a fraudulent effort."
However, Chevron alleges wrongdoing by the Lago Agrio plaintiffs and by their attorneys.
Francis said wrongdoing by either group is "sufficient" for the exception to apply.
Francis also noted that Kaplan had already "effectively found" a reasonable basis to suspect that the judgment in the Lago Agrio litigation was procured by fraud.
In his order Wednesday, Francis ordered Garr to produce each of the documents on her privilege log.
The judge also overruled Woods' objections "except to the extent that they relate to documents that were created after Oct. 20, 2010 but that are not encompassed by the crime-fraud exception."
Francis ordered Woods to produce "all documents for which his objections have been overruled" and ordered him to submit for in camera review by Monday all other documents identified in his privilege log.
The judge also overruled Kohn's objections, ordering him to produce the requested documents "except for those inadvertently identified in their privilege logs that were not, in fact, responsive to Chevron's subpoena."
Chevron spokesman Kent Robertson said the discovery order is "very significant."
"Joe Kohn's privilege logs indicate that the firm has many documents Donziger failed to produce," he said in a statement Friday. "Discovery so far has shown a light on the fraud that has occurred in Ecuador. We expect the additional discovery will provide equally illuminating evidence."
Francis' crime-fraud finding also cannot be overlooked, Robertson said.
"This is the sixth judge to make such a ruling and it illustrates the illegitimate nature of the proceeding in Ecuador and further highlights the plaintiffs' lawyers' misconduct," he said.
Also, on Tuesday, Kaplan granted Chevron's proposed order to show cause as to why the plaintiffs and their lawyers should not be found in contempt and sanctioned for their failure to comply with other RICO Count 9 discovery requests.
Kaplan said the Ecuadorians may be held in contempt if they do not comply and turn over all of the requested documents in one week.
"The Lago Agrio plaintiffs' lawyers' case has been undermined by their own documents," Robertson said.
"They know that with each subsequent production, it only gets worse for them. Accordingly, they've tried to do everything to resist the orders of courts but they are only delaying the inevitable."
He added, "They continue to provide the evidence that shows the Lago Agrio judgment is unenforceable in any system that respects the rule of law."
Karen Hinton, spokeswoman for the Ecuadorians, said Chevron's motion seeking sanctions against the lawyers is "without merit" and "an attempt to distract attention from the legal liability the company is facing for destroying the Ecuadorian rainforest."
"What really matters is that Chevron now faces potential enforcement of an $18 billion judgment in dozens of countries around the world where it operates," Hinton said in a statement Friday.
"To evade paying the judgment, Chevron now is trying to use U.S. courts to harass lawyers who represent the impoverished Ecuadorians trying to hold the company accountable."
As the losses on the issues that "really matter" pile up for Chevron, Hinton said the company's behavior has become even more abusive and unethical.
"The plaintiffs intend to lawfully collect every dollar of any final judgment in Ecuador and to hold Chevron officials personally accountable for their unlawful actions," she said.
The plaintiffs, the Ecuadorian government and various international legal scholars have repeatedly tried to have Kaplan removed from the case, pointing to his "belittlement" of their country's court system.
The trial on the enforceability of the $18 billion judgment is set for November.
From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.