Chevron Corp. v. Donziger
2013 U.S. Dist. LEXIS 146934
S.D.N.Y.2013Background
- Chevron alleges the Lago Agrio Judgment (Ecuador) was procured by fraud and RICO-based misconduct orchestrated in part from the U.S. by Steven Donziger and Ecuadorian counsel/agents, seeking discovery of documents held by Ecuador-based lawyers and organizations (Fajardo, Sáenz, Prieto, Luis Yanza, ADF, Selva Viva).
- Defendants largely defaulted except Donziger and two LAP representatives; many requested Ecuadorian documents were not produced despite repeated court orders and discovery requests.
- During litigation, Ecuadorian counsel (at suggestion of U.S. lawyers) prompted a collusive Ecuadorian suit (Córdova) obtaining an injunction barring disclosure to this U.S. court; defendants concealed that suit’s existence from Chevron and the court while arguing Ecuadorian law barred production.
- The Southern District of New York found (after briefing and an evidentiary hearing) that Donziger and the LAP representatives had practical control over Ecuadorian counsel/records, that the Córdova injunction did not immunize them from sanctions, and that defendants acted in bad faith in withholding documents.
- The Court granted Chevron’s motion to compel production (Feb. 11, 2013) and, while declining the most severe sanctions sought (e.g., default), imposed targeted sanctions: struck LAPs’ personal jurisdiction defense unless compliance, endorsed adverse-inference remedies, and reserved rulings on document admissibility at trial.
Issues
| Issue | Plaintiff's Argument (Chevron) | Defendant's Argument | Held |
|---|---|---|---|
| Whether Donziger and LAP reps have control over documents held by Ecuadorian counsel/agents | Donziger and LAPs exercised practical and contractual control (managed strategy, funding, instructed local counsel), so Rule 34 control exists | Donziger / LAPs: Ecuadorian counsel are not their agents; Donziger lacks practical ability to obtain files; Ecuadorian law forbids disclosure | Court: Donziger and LAP reps have practical ability/control; Ecuadorian actors are agents or under practical control — produce documents |
| Whether U.S. court may compel production despite foreign law blocking disclosure | U.S. interest in full discovery and proving RICO/fraud outweighs Ecuadorian assertion; comity factors favor production | Defendants: Ecuadorian law (client community / secrecy, constitutional protections) and Córdova injunction forbid production; court lacks personal jurisdiction over LAP reps | Court: Personal-jurisdiction defense waived for discovery; even assuming conflict, comity analysis favors ordering production (comity factors weighed in favor of U.S. discovery) |
| Whether Córdova injunction and Ecuadorian law preclude sanctions for noncompliance | Chevron: injunction is collusive and does not excuse noncompliance or shield bad faith; sanctions appropriate | Defendants: compliance impossible under Ecuadorian law; sanctions inappropriate | Court: Córdova action was collusive; Ecuadorian law does not excuse failure to comply; sanctions for bad-faith noncompliance appropriate (but tailored, not default) |
| Appropriate sanctions for willful nonproduction of Ecuadorian documents | Broad sanctions including contempt, default, striking defenses, adverse findings, and adverse-inference instructions | Defendants urge no sanctions or limited relief given supposed impossibility of compliance | Court: Denied most extreme sanctions; struck LAP reps’ personal-jurisdiction defense unless compliance by set date; authorized adverse-inference instructions and will consider excluding unproduced Ecuadorian documents at trial on a document-by-document basis |
Key Cases Cited
- Société Nationale Industrielle Aérospatiale v. United States Dist. Court for S. Dist. of Iowa, 482 U.S. 522 (U.S. 1987) (foreign blocking statutes do not deprive U.S. courts of power to order discovery; comity balancing required)
- Insurance Corp. of Ireland v. Compagnie des Bauxites de Guinée, 456 U.S. 694 (U.S. 1982) (court may require discovery to resolve jurisdictional objections; sanctions can follow refusal to produce jurisdictional discovery)
- Shcherbakovskiy v. Seitz, 490 F.3d 130 (2d Cir. 2007) (foreign law is relevant to discovery disputes; court should consider its effect in sanctions context)
- Société Internationale pour Participations Industrielles et Commerciales, S.A. v. Rogers, 357 U.S. 197 (U.S. 1958) (control over documents may exist despite foreign-law objections)
- Kronisch v. United States, 150 F.3d 112 (2d Cir. 1998) (destruction or nonproduction of evidence can support adverse inference; sanction standards explained)
- Linde v. Arab Bank, PLC, 706 F.3d 92 (2d Cir. 2013) (applies Restatement §442 comity factors and recognizes U.S. interests in compelling foreign-held discovery in certain circumstances)