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.
Friday, October 12, 2012
Two Wall Street Journal articles in recent days have tracked recent settlements talks between BP and the federal government regarding civil and criminal liability in connection with the Deepwater Horizon oil spill in the Gulf. On Wednesday, the Journal reported, BP Close to Spill Settlement: Multibillion-Dollar Deal With U.S. Would Combine Civil, Criminal Liabilities. But on Thursday, the Journal noted in Slick Complicates BP Liability Talks that a new thin oil slick determined to be related to the prior Deepwater Horizon spill has appeared.
Thursday, August 2, 2012
The saga continues with a 97 page opinion by Judge Kaplan denying the plaintiff Chevron's motion for partial summary judgment with leave to refile. I haven't read the opinion yet but the table of contents promises a lot of fodder for civil procedure mavens, especially summary judgment and personal jurisdiction.
You can find a copy of the opinon here.
You can find coverage of the opinion at these locations:
And a great story about this piece of the long-standing litigation at the New Yorker last year.
Wednesday, July 18, 2012
Thomas J. Donahue, President and CEO of the U.S. Chamber of Commerce, has an op-ed entitled, U.S. Firms Prone To 'Tort Tourism' In Foreign Courts, in Investor's Business Daily. The op-ed particularly discusses the Chevron case in Ecuador.
Tuesday, May 15, 2012
In yesterday's Wall Street Journal, Mary Anastasia O'Grady has an article, Chevron's Ecuador Morass: The U.S. oil company charges that the $18 billion judgment against it was secured by fraud, which discusses Chevron's attempts in federal district court in Miami to obtain records to show bribery of a court expert.
Another article in today's Wall Street Journal discusses recent decisions from the Southern District of New York. In one opinion, the court allowed certain claims by Chevron, including RICO claims, to proceed against attorney Steven Donziger in connection with Donziger's alleged role as advisor in the Ecuadoran lawsuit, but in the other opinion, the court denied Chevron's motion to attach various assets.
Wednesday, May 2, 2012
In June, the Association of American Law Schools will host a major conference in Berkeley, CA, on environmental disasters. The sessions include such cheery topics as "History of Disaster," "Psychology of Disaster," "Disaster Federalism," and "Disaster Justice." Along the way, there will be sessions on tort law, environmental law, and regulatory perspectives on environmental disasters. The disputes arising out of 9/11, Katrina, and the Gulf oil spill leave no doubt that environmental catastrophes present some of the most challenging problems of mass tort litigation in the 21st century.
The speakers include many of the leading scholars in torts, environmental law, complex litigation, and related fields, including Tom Baker, David Dana, Daniel Farber, Sheila Foster, Myriam Gilles, Michael Green, Laura Hines, Keith Hylton, Gregory Keating, Douglas Kysar, Jonathan Masur, John Nagle, Adam Scales, Peter Schuck, Anthony Sebok, Catherine Sharkey, Jed Shugerman, Stephen Sugarman, and many others (and me!). I will speak on a panel about principles for compensation programs and mass settlements.
Monday, April 23, 2012
George Conk has the links to the BP settlement class action. A quote from the complaint: "The principle was two-fold: to design claims frameworks that fit a wide array of damage categories, and, within each category, to treat like claims alike, so as to proceed with both fairness and predictability."
Conk also notes that the settlement offers a "risk transfer premium" for future injuries/losses. You can find more posts here.
Interesting to think how the court will treat this high profile settlement class action, whether there will be objectors and appeals.
Sunday, March 4, 2012
As I've been sifting through news report on the BP class action settlement, I've noticed that it's hard to find information on the actual settlement terms. From what reporters are describing, it sounds like the parties are requesting that Judge Barbier certify two Rule 23(b)(3) classes. The most comprehensive information comes from the BP Press release. Here are a few of the most notable passages on the settlement's terms and conditions:
The proposed settlement is comprised of two separate agreements, one to resolve economic loss claims and another to resolve medical claims. Each proposed agreement provides that class members would be compensated for their claims on a claims-made basis, according to agreed compensation protocols in separate court-supervised claims processes. The proposed agreement to resolve economic loss claims includes the financial commitment for the Gulf seafood industry and a fund to support continued advertising that promotes Gulf Coast tourism.
The proposed agreement to resolve medical claims involves payments based on a matrix for certain currently manifested physical conditions, as well as a 21-year medical consultation program for qualifying class members. It also provides that class members claiming later-manifested physical conditions may pursue their claims through a mediation/litigation process. Consistent with its commitment to the Gulf, BP would also provide $105 million to improve the availability, scope and quality of healthcare in Gulf communities. This healthcare outreach program would be available to all individuals in those communities, regardless of whether they are class members. It would include expanding capacity to address community health needs, including primary care, mental health services and access to environmental health specialists, as well as enhanced training and education related to Gulf Coast health issues.Under the proposed settlement, class members would release and dismiss their claims against BP. The proposed settlement is not an admission of liability by BP.
The proposed settlement also provides that, to the extent permitted by law, BP will assign to the PSC certain of its claims, rights and recoveries against Transocean and Halliburton for damages not recoverable from BP.
The proposed settlement is subject to reaching definitive and fully-documented agreements within 45 days, and if those agreements are not reached, either party has the right to terminate the proposed settlement. Once there are definitive and fully-documented agreements, BP and the PSC would then seek the Court’s preliminary approval of the settlement. Under federal law, there is an established procedure for determining the fairness, reasonableness and adequacy of class action settlements. Pursuant to this procedure, and subject to the Court granting preliminary approval of both agreements, there would be extensive outreach to the public, including through advertisements and direct mail, to explain the settlement agreements, class members’ rights, including the right to “opt out” of the classes, and the processes for making claims. The Court would then conduct fairness hearings at which class members and various other parties would have an opportunity to be heard and present evidence. The Court would then decide whether or not to approve each proposed settlement agreement.The proposed economic loss settlement provides for a transition from the Gulf Coast Claims Facility (GCCF) administered by Kenneth Feinberg. "Ken Feinberg has overseen the GCCF since it began operating in August 2010, and we thank him and his team for their dedication and professionalism," said Mr. Dudley. "During Mr. Feinberg's tenure, BP has paid approximately $6.1 billion to resolve more than 220,000 claims from individuals and businesses through the GCCF."
A court-supervised transitional claims process for economic loss claims will be in operation while the infrastructure for the new settlement claims process is put in place. During this transitional period, the processing of claims that have been submitted to the GCCF will continue, and new claimants may submit their claims.
Payments in class action settlements typically are not made until after final approval of a settlement, but BP has agreed not to wait for final approval of the economic loss settlement before claims are paid. The economic loss claims process will continue under court supervision before final approval of the settlement, first under the transitional claims process, and then through the settlement claims process established by the proposed economic loss agreement.