Wednesday, September 10, 2014
Professor Neal Katyal (Georgetown) and Theodore Olson (Gibson Dunn) take part in a Federalist Society panel on class action reform and the BP Deepwater Horizon case; the panel is moderated by Stuart Taylor (Brookings Institution).
Monday, August 4, 2014
Professor Linda Mullenix has posted a new article titled "Designing Compensatory Funds: In Search of First Principles" on SSRN. It takes on several high-profile compensation funds and may have something of interest to say about how GM is designing its own compensation fund. Here's the abstract:
The World Trade Center Victims’ Compensation Fund of 2001 ushered in a new age of fund approaches to resolving claims for mass disasters in the United States. Since then, numerous funds have been created following several mass events injuring large numbers of claimants. The Gulf Coast Claims Facility, created in the immediate aftermath of the BP Deepwater Horizon oil platform explosion, represented a further expansion of fund design and operation. The funds that have been implemented since 2001, including the World Trade Center Fund, have been the object of both praise as well as criticism. Notably, all these funds have been designed and implemented after the events giving rise to a universe of mass claimants. This article suggests that the policy recommendations for future fund design largely fail to address antecedent threshold questions about the nature of the events giving rise to possible recourse to a fund for compensation of claims. Although such compensation funds have been intended to provide an alternative to the tort compensation system and to operate largely outside the purview of the judicial system, instead most fund designs have relied on tort notions of corrective justice that mimic the tort system. However, many funds have in practice entailed mixed theories of corrective and distributive justice, confusing the purpose, utility, and goals of such funds. This article asks fundamental questions about the goals of such funds and whether and to what extent disaster compensation funds comport with theories of justice. It suggests that certain types of mass disaster events ought not to be resolved through fund auspices at all, while only a limited universe of communitarian harms should give rise to such a response. Finally, a communitarian fund designed ex-ante might more fairly be based on theories of distributive justice based on an egalitarian social welfare norm.
Thursday, April 17, 2014
The Stanford Journal of Complex Litigation is hosting a symposium, "A Complicated Cleanup: The BP Oil Spill Litigation," on Thursday, May 8, 2014 and Friday, May 9, 2014, at Stanford Law School. The keynote address speaker is Kenneth Feinberg, the Gulf Coast Claims Administrator. Other symposium speakers will include Elizabeth Cabraser of Lieff Cabraser, Professor Francis McGovern (Duke), Professor Linda Mullenix (Texas), Professor Maya Stenitz (Iowa), and myself. Panel moderators will include Stanford Law Professors Nora Engstrom, Deborah Hensler, and Janet Alexander.
Sunday, March 23, 2014
I'm serving as Co-Director of Southwestern Law School's 2014 Vancouver Summer Law Program, which is offered in collaboration with the University of British Columbia Faculty of Law and the International Centre for Criminal Law Reform and Criminal Justice Policy. All classes will take place at the University of British Columbia's new Allard Hall, which was completed in 2011 at a cost of $56 million. On-campus housing at St. Andrew's Hall next to the law school may also be arranged through the summer law program. The program will run from May 25 to June 25, 2014. Here is the brochure.
One of the courses offered will be a course on Global Tort Litigation, which I'll be co-teaching with Professor Jasminka Kalajdzic of the University of Windsor. Other courses include comparative criminal procedure, international environmental law, and comparative sexual orientation law; students may elect to take two courses for four units, or three courses for six units.
We welcome applications from students in good standing at an ABA-approved or state-accredited American law school or accredited Canadian law school. Special reduced tuition rates are available for Canadian law students. Come join us in beautiful Vancouver, Canada!
Friday, March 14, 2014
In a decision issued on March 3, the Fifth Circuit held that BP must stick to the settlement it signed on to, even if it doesn't like any longer the broad approach to compensation it once agreed to. As Professor and former Soliciter General Charles Fried said, in sum and substance, a contract is a promise. Here is an excerpt from the Fifth Circuit opinion:
There is nothing fundamentally unreasonable about what BP accepted but now wishes it had not. One event during negotiations in the fall of 2012 suggests reasons for just requiring a certification [instead of proof of causation]. The claims administrator, in working through how the proposed claims processing would apply in specific situations, submitted a hypothetical to BP and others. It posited three accountants being partners in a small firm located in a relevant geographic region. One of the three partners takes medical leave in the period immediately following the disaster, thus reducing profits in that period because that partner is not performing services for the firm. At least some of the firm's loss, then, would have resulted from the absence of the partner during his medical leave. BP responded that such a claim should be paid.
We raise this not for the purpose of analyzing an issue we conclude is not relevant to our decision, namely, whether BP is estopped from its current arguments. Instead, we mention it in order to identify the practical problem mass processing of claims such as these presents, a problem that supports the logic of the terms of the Settlement Agreement. These are business loss claims. Why businesses fail or, why one year is less or more profitable than another, are questions often rigorously analyzed by highly-paid consultants, who may still reach mistaken conclusions. There may be multiple causes for a loss. ... The difficulties of a claimant's providing evidentiary support and the claims administrator's investigating the existence and degree of nexus between the loss and the disaster in the Gulf could be overwhelming. The inherent limitations in mass claims processing may have suggested substituting certification for evidence, just as proof of loss substituted for proof of causation. ...
In re Deepwater Horizon, --- F.3d ----, 2014 WL 841313, *5 (5th Cir. 2014).
Readers may also be interested in a Bloomberg News article by Laura Calkins and Jeff Feeley entitled BP Must Live with $9.2 Billion Oil Spill Deal, Court Says. In other BP news, looks like it can drill in the Gulf of Mexico again, according to the NYTimes.
Tuesday, March 4, 2014
Judge Lewis Kaplan entered judgment today in favor of Chevron in the long-running dispute concerning environmental liability for oil pollution in the Oriente region of Ecuador. The court, after a bench trial, found that plaintiffs' attorney Steven Donziger and his team engaged in fraud and corruption in obtaining a $9.5 billion judgment in Ecuador. Judge Kaplan ruled that the Ecuador judgment is unenforceable in the United States and that Donziger may not benefit from the judgment. Undoubtedly, this dispute isn't over, as Donziger surely will appeal to the Second Circuit. And the outcome cannot have been much of a suprise to the parties, given the clarity of Judge Kaplan's views based on his past rulings in this dispute. But by any measure, today's judgment is a huge moment in the Chevron-Ecuador litigation.
Judge Kaplan's opinion -- all 485 pages and 1842 footnotes of it -- is attached here (Download ChevronSDNYopinion030414). And the judgment, which spells out exactly what the court ordered, is here (Download ChevronSDNYjudgment030414). Judge Kaplan found that Donziger and his team submitted fraudulent evidence, used a partisan as a supposedly impartial expert, and offered to bribe the judge. The opinion does not mince words:
Upon consideration of all of the evidence, including the credibility of the witnesses – though several of the most important declined to testify – the Court finds that Donziger began his involvement in this controversy with a desire to improve conditions in the area in which his Ecuadorian clients live. To be sure, he sought also to do well for himself while doing good for others, but there was nothing wrong with that. In the end, however, he and the Ecuadorian lawyers he led corrupted the Lago Agrio case. They submitted fraudulent evidence. They coerced one judge, first to use a court-appointed, supposedly impartial, “global expert” to make an overall damages assessment and, then, to appoint to that important role a man whom Donziger hand-picked and paid to “totally play ball” with the [Lago Agrio plaintiffs]. They then paid a Colorado consulting firm secretly to write all or most of the global expert’s report, falsely presented the report as the work of the court-appointed and supposedly impartial expert, and told half-truths or worse to U.S. courts in attempts to prevent exposure of that and other wrongdoing. Ultimately, the [Lago Agrio plaintiff] team wrote the Lago Agrio court’s Judgment themselves and promised $500,000 to the Ecuadorian judge to rule in their favor and sign their judgment. If ever there were a case warranting equitable relief with respect to a judgment procured by fraud, this is it.
The ruling does not purport to bar enforcement of the judgment outside the United States. Rather, it bars enforcement of the judgment in any U.S. court, and in Judge Kaplan's words, it "prevent[s] Donziger and the two LAP Representatives ... from profiting in any way from the egregious fraud that occurred here." The plaintiffs have sought to enforce the Ecuadorean judgment in Canada, Brazil, and Argentina; it will be interesting to see what effect the SDNY decision might have on enforcement of the judgment in those countries.
In the SDNY litigation, Chevron asked the court to focus on the conduct of the plaintiffs' lawyers, while Donziger wanted to focus on the company's environmental liability for harm in the Oriente region of Ecuador. Judge Kaplan, in ringing language about the integrity of the judicial process, made it clear where he stands:
The issue here is not what happened in the Orienté more than twenty years ago and who, if anyone, now is responsible for any wrongs then done. It instead is whether a court decision was procured by corrupt means, regardless of whether the cause was just. An innocent defendant is no more entitled to submit false evidence, to coopt and pay off a court-appointed expert, or to coerce or bribe a judge or jury than a guilty one. So even if Donziger and his clients had a just cause – and the Court expresses no opinion on that – they were not entitled to corrupt the process to achieve their goal.
The painful irony of the Chevron-Ecuador litigation is this: The plaintiffs originally brought their claims in the United States -- in the Southern District of New York. They were dismissed on grounds of forum non conveniens. In other words, the U.S. legal system told the plaintiffs that they should litigate this dispute in Ecuador. Which is exactly what they did. And they won big. And today the Southern District of New York has told the plaintiffs that their Ecuador judgment is corrupt and unenforceable. As I have written elsewhere, the forum non conveniens dismissal made sense in this case. And parties must be able to challenge the enforceability of judgments on grounds of fraud and corruption. But if this is how the Chevron-Ecuador litigation ends (which remains to be seen), isn't there something deeply unsatisfying and mind-blowingly inefficient about such an ending to a two-decade litigation over serious environmental claims?
Tuesday, January 14, 2014
The Fifth Circuit issued a decision on January 10th affirming the class action settlement in the In re Deepwater Horizon litigation. You can find the opinion here.
This opinion is the result of objections to the settlement, but BP intervened to argue that there was an Article III standing problem with the way the settlement agreement had been interpreted. That interpretation was very generous to claimants in its interpretation of how they must prove economic loss to collect. The problem BP faces now is that it didn't cap the settlement amount in the agreement (yes, you read that right, and furthermore this was a selling point of the settlement). As a result, BP has a classic "if you build it, they will come" problem and is trying to upend the settlement as a result. At the moment, the Fifth Circuit in a separate opinion by a separate panel has stayed the settlement adminsitration as it considers the interpretation of the agreement. In that separate opinion, the panel (which couln't quite agree) indicated that the agreement interpretation may be too generous and remanded for reconsideration. You can find that opinion here.
In the opinion issued on Friday, this panel indicated the interpretation may be just fine, and sent a strong hint to the District Judge about what he should do.
So here's the question, why did BP agree to these terms? It was an open ended settlement with a broad geographic reach and a flexible standard for compensation - that was clear from the start. I'm sure BP's excellent counsel knew this was a risk. So what happened? Were the economists predictions dead wrong? Is this just a case of buyer's remorse?
The WSJ has some coverage, here.
Tuesday, November 26, 2013
The Wall Street Journal has an article on the ongoing asbestos cleanup by W.R. Grace in Libby, Montana: In Montana Town, a Shut Mine Leaves an Open Wound, by Dionne Searcey. The Journali also has a related slideshow. The cost of the cleanup has so far been approximately $400 million.
Thursday, November 14, 2013
As the trial continues to unfold in New York in Chevron's RICO lawsuit against plaintiffs' lawyer Stephen Donziger -- amid accusations of judicial bribes, ghostwritten opinions, and sex scandals -- it is worth noting what happened in Ecuador this week.
On Tuesday, Ecuador's high court, the National Court of Justice, affirmed the underlying judgment against Chevron but reduced the amount from about $19 billion to $9.5 billion. The court eliminated the portion of damages that had been imposed as punishment for Chevron's failure to apologize. Here are news accounts from the Wall Street Journal and Reuters. Chevron's suit against Donziger contends that he engaged in fraud and other misconduct to obtain the massive judgment in the Lago Agrio environmental litigation.
Tuesday, October 15, 2013
Wednesday, October 2, 2013
The New York Times reports that an appellate panel has remanded the BP settlement appeal for "clarification" of the settlement in response to BP's allegations that the settlement adminstrator was paying claims to non-injured claimants and engaging in other wasteful conduct.
Update: Here's the Fifth Circuit decision in the case.
Friday, August 30, 2013
According to a news report, BP today asked the Fifth Circuit to reverse the district court's approval of the Gulf oil spill settlement. I have not seen the court filing, but according to this AP report as published by the NY Times, "BP is trying to persuade a federal appeals court that it should throw out a judge's approval of the company's multibillion-dollar settlement with Gulf Coast residents and businesses. Last year, BP PLC joined plaintiffs' attorneys in urging U.S. District Judge Carl Barbier to give the deal his final approval. On Friday, however, the company's lawyers argued in a court filing that Barbier's more recent interpretation of settlement terms have allowed businesses to receive hundreds of millions of dollars for inflated or fictitious claims." As told in the Houston Chronicle, BP would still support the settlement if the Fifth Circuit were to decide in BP's favor on its earlier appeal challenging Judge Barbier's rulings on the generosity of payouts.
BP's decision to ask for reversal of its settlement class action (a deal that BP had negotiated and agreed to, and for which BP had previously argued in favor of judicial approval), is a fascinating turn of events in light of the history of the Gulf Oil Spill litigation and settlement. Shortly after the Deepwater Horizon explosion, BP established a compensation fund to pay claims. Kenneth Feinberg was named administrator of the fund, which came to be knows as the Gulf Coast Claims Facility (GCCF), and the GCCF proceeded to settle thousands of claims. But BP later joined with a group of plaintiffs' lawyers to negotiate a settlement class action that would replace the GCCF as settlement mechanism. For BP, a settlement class action offered a greater prospect of finality because it could bind all class members who fail to opt out, whereas the GCCF settlement program could bind only those claimants who chose to accept their compensation offers. In other words, even though the claims systems strongly resembled each other, a key difference is that a settlement class action uses the adjudicative power of the court to bind class members, in contrast to the claims facility, which depended upon the consent of individual claimants to settle their claims.
I've argued elsewhere that settlement class actions should be impermissible because they use the power of the courts to disadvantage claimants. But the BP news drives home the point that the opposite problem can occur -- a defendant may feel disadvantaged by a settlement class action because it deprives the defendant of control over the settlement process.
Wednesday, August 21, 2013
Adam Abelkop (Graduate Student, Indiana U., Bloomington, School of Public & Environmental Affairs) has posted to SSRN his article, Tort Law as an Environmental Policy Instrument, 92 Or. L. Rev. (forthcoming 2013). Here's the abstract:
Policymakers aiming to tackle any environmental problem have a diverse tool chest of policy instruments at their disposal, including command and control regulations, taxes, marketable allowance, and liability entitlements. Scholars of public health and safety have been debating the effectiveness of tort law as a regulatory tool for decades. The legal literature on this topic, though, is muddled because the field has failed to adopt a set of criteria by which to compare tort law to public regulation. Heightened clarity on the usefulness of tort law as a complementary policy instrument to public regulations may have legal and policy implications. This article therefore adopts evaluation criteria from the policy analysis and public policy fields — equity, legitimacy, efficiency, organizational competence, effectiveness, and cost-effectiveness — to evaluate the strengths and weaknesses of tort law as an environmental policy instrument relative to public regulation.
Saturday, April 6, 2013
For those who were unable to attend the "Lessons from Chevron" symposium at Stanford Law School in February, the conference website now has links to videotapes of the panels. Some of the panels focused directly on the Chevron-Ecuador environmental litigation itself, while others used that litigation as a springboard to consider such issues as litigation financing, transnational legal ethics, forum non conveniens, judgment enforcement, international discovery, and international arbitration. The participants included a mix of players in the litigation, journalists who have followed the litigation, and scholars interested in various aspects of transnational litigation: Deborah Hensler, Graham Erion, Theodore Boutros, Judith Kimerling, Burt Neuborne, Martin Redish, Maya Steinitz, Nora Freeman Engstrom, Morris Ratner, Catherine Rogers, Patrick Keefe, Jenny Martinez, Howard Erichson, Manuel Gomez, Christopher Whytock, Janet Martinez, Michael Goldhaber, Richard Marcus, and S.I. Strong.
Friday, April 5, 2013
I have posted a new paper on SSRN entitled The Chevron-Ecuador Dispute, Forum Non Conveniens, and the Problem of Ex Ante Inadequacy. Here is the abstract:
This essay, written for the 2013 Stanford Journal of Complex Litigation symposium on lessons from the Chevron-Ecuador environmental litigation, urges that we not take the wrong lesson concerning the doctrine of forum non conveniens. The paper highlights the irony of the forum battles in the litigation. The plaintiffs sued in the United States, the defendants won dismissal on grounds of forum non conveniens (arguing that the dispute should be adjudicated by the courts of Ecuador), the plaintiffs obtained a massive judgment in Ecuador, and the defendants challenged the judgment on grounds of fraud and corruption in the Ecuadorian proceedings. Despite the temptation to see the Chevron-Ecuador litigation as a cautionary tale about forum non conveniens, this essay argues that the “adequate alternative forum” standard for forum non conveniens should remain exceedingly low. Ex ante, deference to foreign legal systems should prevail, even as we permit ex post challenges to recognition of judgments on grounds of fraud and corruption.
The essay was prepared for the Stanford Lessons from Chevron symposium, which took place in February. On this blog, the long-running environmental dispute has come up a number of times, including a recent reference to Michael Goldhaber's work and earlier reports here, here and here.
Friday, March 22, 2013
At Corporate Counsel, there's an interesting piece by journalist Michael Goldhaber entitled Kindergarten Lessons from Chevron in Ecuador. Goldhaber, who has been following this massive and messy litigation for years, offers what he sees as some of the true and false lessons from the ongoing litigation concerning Texaco-Chevron's involvement in oil drilling in Ecuador.
In a nutshell, the litigation involves claims that a Texaco subsidiary caused environmental damage to the Oriente region of Ecuador. Plaintiffs originally sued in the Southern District of New York, but their suit was dismissed on grounds of forum non conveniens. Plaintiffs then filed a lawsuit in Ecuador and won an $18 billion judgment. Chevron contends that the Ecuadorian judgment was obtained by fraud and corruption, and has resisted enforcement of the judgment. Chevron sued plaintiffs' attorney Stephen Donziger and others, asserting RICO and fraud claims. An international arbitration tribunal weighed in pursuant to the Ecuador-US bilateral investment treaty. Plaintiffs are seeking to enforce the judgment in Canada, Argentina, Brazil and elsewhere. This mess of a litigation has been going on for nearly 20 years.
Goldhaber, in prior work, has articulated a strong view that the Ecuadorian judgment was the product of fraud and corruption. In the new article, Goldhaber takes as his starting point the Stanford Journal of Complex Litigation symposium that took place in February. He goes through the basic lessons offered by the participants -- plaintiffs' lawyer Graham Erion, defense lawyer Theodore Boutros, and a host of scholars including myself.
The strongest lesson (and here I am in complete agreement with Goldhaber): "Be careful what you wish for." The irony of this litigation is overwhelming. Texaco fought to have the case dismissed on grounds of forum non conveniens, arguing that Ecuador was a more appropriate forum. The plaintiffs argued that the Ecuadorian courts could not handle the case and that it should remain in the U.S. Ever since the massive judgment, however, the positions have been flipped -- with the plaintiffs insisting that the judgment deserves respect and the defendant contending that the Ecuadorian courts were corrupt. Goldhaber has referred to this as "forum shopper's remorse."
But I do not agree with Goldhaber's next step. Noting that "the abuse of transnational litigation would never have happened had the U.S. held on to the case," he suggests that the doctrine of forum non conveniens be altered to take into account the stakes and political significance of a case:
The great blunder in this dispute was to ship it to Ecuador in the name of forum non conveniens. The U.S. courts could have saved everyone a lot of grief had they recognized that a case is more prone to abuse when the issues are (a) high-stakes or (b) politicized. I learned from Russia's Yukos affair that, even if a weak judicial system has made significant progress, it does not deserve trust in a hot-button case of great magnitude. It was reckless to expect Ecuador (even if it had just adopted a new set of corruption reforms) to handle a huge case pitting gringo oil companies against indigenous rights. My modest suggestion is to incorporate these factors into the FNC analysis.
The adequate alternative forum prong of the forum non conveniens analysis is a low threshold, and deliberately so. A lawsuit alleging environmental harm to Ecuadorian land and medical harm to Ecuadorian citizens, and involving control over Ecuadorian natural resources, belongs in Ecuador. That is the very point of forum non conveniens. A U.S. court should be loath to say that it will hear the case in the U.S. because it thinks the Ecuadorian courts just cannot handle it. A judgment obtained by fraud should not be enforceable elsewhere, but this is better addressed ex post, which is exactly what the current litigation -- albeit in a rather ugly fashion -- is doing. But to have said, ex ante, that the case should be heard in the United States despite all of the public and private interest factors that pointed to Ecuador, would have been a mistake.
Wednesday, January 30, 2013
CNN.com has a photo essay by Hiroko Tanaka showing deformed Vietnamese children whose conditions may stem from Agent Orange herbicide sprayed by the United States during the Vietnamese War. The story accompanying the photos discusses the difficulties in tracing causation. For more on the diseases potentially caused by Agent Orange, see the U.S. Department of Veteran Affairs' webpage on Veterans' Diseases Associated with Agent Orange.
Should scholars be thinking about inter-generational mass torts as a distinct subfield, perhaps not only including Agent Orange, but also DES? Will increasingly global mass tort litigation enable new claims based on the spraying of Agent Orange decades ago?
Monday, January 21, 2013
The Stanford Journal of Complex Litigation is hosting a symposium on the Chevron Litigation on February 8, 2013. Our own Howard Erichson will be speaking on the ethics of transnational litigation.
Here is a description:
The ongoing litigation between Chevron and the people of Lago Agrio, Ecuador regarding alleged environmental harms dating from Texaco’s oil exploration and extraction in Ecuador now spans three continents and nearly twenty years; and concerns the largest judgment ever awarded in an environmental lawsuit, eighteen billion dollars. The litigation has been called both “a shakedown,” and “a landmark victory,” yet it continues to be litigated around the world and divide both the bar and the academy. What are the consequences of this case? With complex litigation becoming increasingly transnational, what general lessons can be drawn from this case? These questions are at the heart of SJCL’s inaugural symposium.
Saturday, October 20, 2012
The conference will take place on October 24, 2012 in Washington, D.C., and includes panels on third-party litigation financing and global litigation (including the Chevron Ecuadoran litigation and the adoption of class actions in other countries).
Monday, October 15, 2012
On October 12, 2012, the New York Times reported on several decisions holding that Taishan Gypsum, the Chinese manufacturer of questionable drywall, was subject to personal jurisdiction in the United States. Specifically, Judge Fallon in the federal MDL (located in Louisiana) and Judge Farina in the Miami Dade Circuit Court both ruled that Taishan Gypsum targeted the Florida market by "courting Florida companies, mailing drywall samples to Florida, [and] selling large amounts of drywall to Florida-based companies."
Even Congress has gotten involved and some members have introduced the Contaminated Drywall Safety Act that would insist the Chinese government force manufacturers to acquiesce to American jurisdiction. So far, however, the bill has been passed only in the House.
The NY Times article is available here.