Full opinion text
OPINION LEWIS A. KAPLAN, District Judge. Editor Note: The paragraphs related to headnotes 1-105 are found on the supplemental pieces of this opinion on Westlaw. Part 1 is 2014 WL 815553; Part 2 is 2014 WL 815613; Part 3 is 2014 WL 815715; Part 4 is 2014 WL 815869 [Head-notes 1-2]; Part 5 is 2014 WL 815923 [Headnotes 3-51]; Part 6 is 2014 WL 815961 [Headnotes 52-87]; Part 7 is 2014 WL 816086 [Headnotes 88-105] Prior Proceedings in this Litigation................................................544 The Pleadings...................................................................544 The Amended Complaint.........................................................544 The Answers....................................................................544 Discovery and Motion Practice....................................................545 Discovery and Discovery Sanctions ................................................545 The Partial Summary Judgment Motions................................... 545 Attempts to Recuse the Judge or Require Reassignment of the Case 302 The Trial.....546 The Trial...............................■........................................546 Post-Trial Briefing..............................................................547 Discussion and Additional Findings................................................547 I. This Court Has Subject Matter Jurisdiction............................548 A. This Case Is Not Moot..........................................549 B. This Court Had Subject Matter Jurisdiction When the Action Was Brought................................................550 C. The Court Would Have Subject Matter Jurisdiction Even on Defendants’ Erroneous Premise................................552 II.The Non-Statutory Claims for Equitable Relief With Respect to the Judgment.......................................................555 A. Equitable Relief With Respect to Fraudulent Judgments Generally...................................... 555 B. Fraud on the Court — Corruption and Coercion of Judges and Judicial Official..............................................557 1. The Bribery of Zambrano....................................558 2. The Coercion of Judge Yáñez ................................558 3. The Corruption of Cabrera...................................559 C. Fraud — Ghostwriting and Deception..............................560 1. The LAPs’ Ghostwriting of All or Part of the Judgment and Zambrano’s Adoption of Their Product Was Fraud Warranting Equitable Relief Even Absent Bribery............560 2. The Deception of the Lago Agrio Court By The Misrepresentations that Cabrera Was Independent and Impartial and By the Passing Off of the Ghostwritten Report as His Work Was Fraud Warranting Equitable Relief Even Absent Bribery................................561 D. The Other Requirements for Relief Have Been Satisfied.............564 E. Conclusion....................................................566 III. The RICO Statute Applies Here......................................567 A. RICO Applies to Prohibited Conduct Regardless of Whether a Defendant Is a Member of Organized Crime.....................567 B. Equitable Relief Is Available in Private RICO Actions ..............568 IV. The Section 1962(c) Claim...........................................575 A. The Elements of a Section 1962(c) Violation........................575 B. The Enterprise ................................................575 C. Donziger Conducted and Participated in the Conduct of the Affairs of the Enterprise......................................576 D. The Predicate Acts.............................................576 1. Extortion..................................................576 a. The Elements of Extortion and Their Application Here.....577 b. Much of Donziger’s Conduct Was Not Protected............578 i. Donziger’s Entitlement Argument Is Without Merit.........................................579 ii. Donziger’s Conduct is Not Protected Petitioning Activity .......................................580 c. Donziger’s Extortionate Conduct..........................581 i. Donziger’s Misconduct in the Litigation..............581 ii. Donziger Made Representations He Knew Were Materially False in Order to Exert Pressure on Chevron.......................................582 (A) Donziger Repeatedly Used Damages Estimate s He Knew Were False or the Truth of Which He Doubted..............583 (B) Donziger Sought to Pressure Chevron by Causing Third Parties to Act on His Misrepresentations..........................584 (C) Donziger Pressed the Republic of Ecuador to File Criminal Charges Against Chevron Attorneys in Order to Pressure Chevron into Settlement.............................586 d. Application of the Hobbs Act to This Conduct Is Consistent With Morrison ...................................587 2. Wire Fraud................................................588 a. The Elements of Wire Fraud.............................588 b. The Conduct...........................................589 3. Money Laundering .........................................591 4. Obstruction of Justice and Witness Tampering.................593 a. Obstruction of Justice...................................593 i. The Elements of Obstruction of Justice..............593 ii. Donziger Obstructed Justice.......................594 b. Witness Tampering.....................................594 i. The Elements of Witness Tampering................594 ii. Donziger Tampered with the Testimony of Mark Quarles........................................595 5. Violation of the Travel Act Through Furtherance of Violation of the Foreign Corrupt Practices Act........................595 a. The Elements..........................................596 b. The Conduct...........................................596 i. Donziger Was a “Domestic Concern”................596 ii. Donziger Used Instrumentalities of Interstate Commerce in Furtherance of the Payments.....596 iii. Donziger’s Use of the Wires Was Corrupt and Intended to Influence Official Action..............597 iv. The Offers, Promises, and Payments to Cabrera Were of Value..................................597 v. Donziger Facilitated the Payments Knowing They Would Be Given to Cabrera, a Foreign Official........................................598 vi. The Payments Were for a Business Purpose .........598 E. There Is A Related, Continuous and Domestic Pattern..............599 F. Chevron Was Injured by the Pattern of Racketeering Activity and, Absent Equitable Relief, Will Continue to be Injured.....600 V.Donziger Conspired to Conduct the Affairs of the Enterprise Through a Pattern of Racketeering Activity in Violation of Section 1962(d)..........................................................603 VI.Chevron’s Other State Law Claims ...................................603 VII.Neither the Judgment Nor the Appellate Decisions in Ecuador Foreclose Liability................................................604 A. The Ecuadorian Decisions and Rulings Are Not Admissible for the Truth of the Matters Asserted Therein......................605 B. The Appellate Decisions in Ecuador Do Not Break the Chain of Causation................-...................................606 1. The Intermediate Decision...................................606 2. National Court of Justice....................................608 C. In Any Case, the Ecuadorian Decisions May Not Be Afforded Comity or Other Recognition Because They Were Rendered In a Judicial System That Does Not Provide Impartial Tribunals or Procedures Compatible -with Due Process in Cases of this Nature........................................608 1. The 2004 and 2005 Judicial Purges............................610 2. The Election of President Correa.............................611 3. The 2011 Judicial “Reorganization” ...........................612 4. U.S. Department of State Reports............................614 5. Donziger and His Colleagues Admitted the Weakness, Politicization, and Corrupt Nature of the Ecuadorian Judiciary.....615 6. President Correa’s Influence in the Lago Agrio Litigation........616 VIII.This Court Has Personal Jurisdiction Over the LAP Representatives.....617 A. The Personal Jurisdiction Defense Has Been Stricken...............617 B. In Any Case, This Court Would Have Personal Jurisdiction At Least Under N.Y. CPLR 302(a)(1)..............................617 1. Relevant Facts.............................................617 2. Section 302 — Specific Jurisdiction.............................622 a. Legal Standard.........................................622 i. Transacting Business ................... 622 ii. “Arising Out of ’..................................624 b. Discussion.............................................624 i. The LAP Representatives Transacted Business in New York...................................624 ii. The Claims in This Suit Arise Out of the Transaction of Business in New York..............626 3. Due Process...............................................627 IX. The Other Affirmative Defenses......................................628 A. The Judicial Estoppel Defense is Without Merit....................628 B. Defendants Have Abandoned All Other Pleaded Affirmative Defenses, Which in Any Case Lacked Merit.....................632 1. Rule 9(b)..................................................632 2. Unclean Hands.............................................633 X. Relief.............................................................636 A. Chevron Has No Adequate Remedy at Law and is Threatened With Irreparable Injury.......................................636 1. Further Proceedings in Ecuador, If Any Even Theoretically Were Available, Would Offer No Adequate Remedy...........636 2. Defense of Multiple Enforcement Actions Would Not Provide An Adequate Remedy at Law.......................637 3. Money Damages Are Not, and Could Not Have Been, an Adequate Remedy........................................638 B. Chevron Is Entitled to Equitable Relief Preventing These Three Defendants From Benefitting From the Fraud on the Court and Donziger From Profiting From the RICO Violations..........639 1. Constructive Trust..........................................639 2. Other Equitable Relief to Prevent These Defendants From Benefitting from the Fraud................................641 C. Injunction Against Enforcement in the United States...............641 D. This Relief Is Consistent with Naranjo............................642 Conclusion......................................................................644 Appendices (in separately bound volume) .....................................645 Introduction Steven Donziger, a New York City lawyer, led a group of American and Ecuadorian lawyers who brought an action in Ecuador (the “Lago Agrio” case) in the names of 47 plaintiffs (the “Lago Agrio Plaintiffs” or “LAPs”), on behalf of thousands of indigenous peoples of the Orienté region of Ecuador, against Chevron Corporation (“Chevron”). They claimed that Chevron was responsible for extensive environmental damage caused by oil activities of Texaco, Inc. (“Texaco”), that ended more than twenty years ago and long before Chevron acquired Texaco’s stock. After years of pressuring Chevron to settle by a variety of both legitimate and illegitimate means, Donziger and his clients obtained a multibillion dollar judgment (the “Judgment”) in the Ecuadorian courts and now seek to enforce it around the world. Chevron then brought this action, contending among other things that the Judgment was procured by fraud. Following a full trial, it now seeks equitable relief against Donziger and the two of his Ecuadorian clients who defended this case in order to prevent any of them from profiting from the alleged fraud or from seeking to enforce the Judgment in the United States. This case is extraordinary. The facts are many and sometimes complex. They include things that normally come only out of Hollywood — coded emails among Donziger and his colleagues describing their private interactions with and machinations directed at judges and a court appointed expert, their payments to a supposedly neutral expert out of a secret account, a lawyer who invited a film crew to innumerable private strategy meetings and even to ex parte meetings with judges, an Ecuadorian judge who claims to have written the multibillion dollar decision but who was so inexperienced and uncomfortable with civil cases that he had someone else (a former judge who had been removed from the bench) draft some civil decisions for him, an 18-year old typist who supposedly did Internet research in American, English, and French law for the same judge, who knew only Spanish, and much more. The evidence is voluminous. The transnational elements of the case make it sensitive and challenging. Nevertheless, the Court has had the benefit of a lengthy trial. It has heard 31 witnesses in person and considered deposition and/or other sworn or, in one instance, stipulated testimony of 37 others. It has considered thousands of exhibits. It has made its findings, which of necessity are lengthy and detailed. 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 LAPs. 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 LAP 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 defendants seek to avoid responsibility for their actions by emphasizing that the Lago Agrio case took place in Ecuador and by invoking the principle of comity. But that warrants no different conclusion. Comity and respect for other nations are important. But comity does not command blind acquiescence in injustice, least of all acquiescence within the bounds of our own nation. Courts of equity long have granted relief against fraudulent judgments entered in other states and, though less frequently, other countries. Moreover, the United States has important interests here. The misconduct at issue was planned, supervised, financed and executed in important (but not all) respects by Americans in the United States in order to extract money from a U.S. victim. That said, considerations of comity and the avoidance of any misunderstanding have shaped the relief sought here. Chevron no longer seeks, and this Court does not grant, an injunction barring enforcement of the Lago Agrio Judgment anywhere in the world. What this Court does do is to prevent Donziger and the two LAP Representatives, who are subject to this Court’s personal jurisdiction, from profiting in any way from the egregious fraud that occurred here. That is quite a different matter. Indeed, the LAP Representatives’ lawyer recently conceded before the Second Circuit that the defendants “would not have a problem” with “the alternative relief that [Chevron] would be seeking, such as enjoining the person who paid the bribe from benefitting from it,” assuming that the judge was bribed. Defendants thus have acknowledged the propriety of equitable relief to prevent individuals subject to the Court’s jurisdiction from benefitting from misdeeds for which they are responsible. And while the Court does enjoin enforcement of the Judgment by these defendants in the United States, that limited injunction raises no issues of comity or international relations. It is the prerogative of American courts to determine whether foreign judgments may be enforced in this country. Donziger is intelligent, resourceful, and a master of public and media relations. An extensive public relations and media campaign has been part of his strategy from early days, and it continues. Among its objectives has been to shift the focus from the fraud on Chevron and the Lago Agrio court to the environmental harm that Donziger and the LAPs claim was done in the Orienté. Indeed, that was a principal focus of defendants’ case at trial and of their post-trial briefing. But one should not be distracted from the issues actually presented in this case. The Court assumes that there is pollution in the Orienté. On that assumption, Texaco and perhaps even Chevron— though it never drilled for oil in Ecuador— might bear some responsibility. In any case, improvement of conditions for the residents of the Orienté appears to be both desirable and overdue. But the defendants’ effort to change the subject to the Orienté, understandable as it is as a tactic, misses the point of this case. 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. Justice is not served by inflicting injustice. The ends do not justify the means. There is no “Robin Hood” defense to illegal and wrongful conduct. And the defendants’ “this-is-the-way-it-is-done-in-Ecuador” excuses — actually a remarkable insult to the people of Ecuador — do not help them. The wrongful actions of Donziger and his Ecuadorian legal team would be offensive to the laws of any nation that aspires to the rule of law, including Ecuador — and they knew it. Indeed, one Ecuadorian legal team member, in a moment of panicky candor, admitted that if documents exposing just part of what they had done were to come to light, “apart from destroying the proceeding, all of us, your attorneys, might go to jail.” It is time to face the facts. Facts 1. The Background The events at issue in this case took place in law offices in New York, Philadelphia, and elsewhere in the United States, a consulting firm in Colorado, a public relations firm in Washington, the Orienté, courthouses in Ecuador and all over the United States, the offices of a New York documentary film maker, news media throughout the world, and government offices in Ecuador and the United States, and other places. They involved an array of lawyers, financial backers, scientists, judges, celebrities, media consultants, nongovernmental organizations, politicians, and law school interns. But despite the case’s complex history, reach and its large cast of players, the events ultimately center on one man — Steven Donziger — and his team of Ecuadorian lawyers and U.S. and European backers. We begin with the backdrop against which these events took place. A. Texaco’s Operations in Ecuador In 1964, the Republic of Ecuador (“ROE”) granted to a Gulf Oil subsidiary and to TexPet, an indirect subsidiary of Texaco, a concession to explore for and produce oil in the Orienté. The GulfTexPet joint venture, of which TexPet was the sole operator, became known as the Consortium. In 1973, however, Ecuador’s state-owned oil company, now known as PetroEcuador, acquired a 25 percent interest in the Consortium, 12.5 percent from each of TexPet and Gulf. Shortly thereafter, PetroEcuador acquired Gulfs remaining equity and thus became the majority owner of the Consortium. TexPet continued to hold a 37.5 percent interest. TexPet operated for the Consortium until June 1992, when the Concession expired. TexPet’s 37.5 percent interest reverted to PetroEcuador, and TexPet began the process of winding down its operations. In connection with the termination of TexPet’s Ecuadorian operations, TexPet and Texaco in 1993 entered into a Memorandum of Understanding with the ROE that provided that TexPet would be released from any potential claim for environmental harm once TexPet performed an agreed-upon remediation in the area in which it had operated. In the Spring of 1995, the parties executed a Settlement Agreement and Scope of Work agreement (the “Settlement Agreement”) that laid out specific tasks TexPet was required to complete before its remediation and wind down were complete, whereupon it would be entitled to a release. From 1995 through 1998, ROE inspectors issued 52 actas in which they confirmed TexPet’s completion of each task. The final acta — the 52nd Certificate — -was issued in September 1998 and stated that TexPet had complied with its obligations under the Settlement Agreement. The final release was signed on September 30, 1998. It stated that TexPet had fully performed its obligations under the MOU and Settlement Agreement and that TexPet was released from all potential claims by the ROE and PetroEcuador. B. Aguinda While TexPet was winding down its operations in Ecuador, a group of Ecuadorian plaintiffs brought a class action against Texaco in the Southern District of New York (“Aguinda ”) seeking billions of dollars of damages for alleged injury to the environment and health of the plaintiffs as well as certain equitable relief within Ecuador. The principal lawyers for the plaintiffs were Cristobal Bonifaz, Joseph Kohn, and Steven Donziger. As all three figured in the story that is at the heart of this case, we pause to identify them. 1. The Principal Plaintiffs’ Lawyers in Aguinda a. Cristobal Bonifaz Cristobal Bonifaz, grandson of a former Ecuadorian president, practiced law in Amherst, Massachusetts in the early 1990s. His son attended law school with Steven Donziger. In 1998, Bonifaz accepted an invitation to travel to Ecuador to meet with residents of the Orienté concerning complaints about pollution in the region and the possibility of a lawsuit. He took a small group of lawyers, including Donziger, and others with him. In June of that year, Bonifaz entered into a retention agreement with various individuals who soon became plaintiffs in Aguinda. b. Steven Donziger Donziger’s interest in Latin America began when he worked as a journalist for the United Press International in Nicaragua from 1984 to 1987 during which he covered events in several Latin American countries. He also became fluent in Spanish. After his return from Nicaragua, Donziger graduated from Harvard Law School in 1991. He then worked as a public defender for two years before he accompanied Bonifaz on his trip to Ecuador. While on that trip, Donziger traveled widely in the Napo Concession area and met Maria Aguinda, who later became the first-named plaintiff in Aguinda. Although Donziger’s name appears on the Aguinda complaint, he was not a lead lawyer when it began. Nevertheless, he did much of the groundwork in Ecuador, took a “handful of trips” to the area from 1993 to 2002 “to meet with clients in the Amazon rainforest, to attend meetings of local community groups ..., and to take care of lawsuit-related issues.” During those trips and through case-related discovery from Texaco, Donziger made “significant headway on the factual development of the case.” c. Joseph Kohn Bonifaz knew that he needed an experienced trial lawyer to assist him. He needed money as well. He therefore got in touch with Joseph Kohn, a Philadelphia attorney and partner at Kohn, Swift & Graf, P.C. (the “Kohn firm” or “Kohn”). Kohn too was retained by the Aguinda plaintiffs. Kohn and Bonifaz were co-lead counsel in Aguinda at its outset, and Kohn provided much of the funding. 2. Key Events During Aguinda The details of Aguinda are largely unimportant at this stage but several points are significant. a. Forum Non Conveniens — The Aguinda Plaintiffs Attack Ecuadorian Courts as Corrupt While Texaco Defends Them Texaco sought dismissal of Aguinda on the grounds inter alia oí forum non conveniens and the failure to join the ROE and PetroEcuador, which it argued were indispensable because (1) the requested equitable relief within Ecuador could not otherwise be ordered, and (2) PetroEcuador’s own actions would be at issue in the case. The Aguinda plaintiffs argued that New York was the appropriate forum because Texaco was headquartered here. They contended also that the case could not be brought in Ecuador because Ecuador did not permit class actions or pretrial discovery. On November 12, 1996, Judge Rakoff— to whom that case was assigned — dismissed the complaint on the grounds of forum non conveniens and international comity and because PetroEcuador and the ROE had not been joined as plaintiffs. The plaintiffs appealed the ruling and persuaded the ROE to move to intervene in the case, a motion that Judge Rakoff denied. In 1998, the Court of Appeals reversed the dismissal of Aguinda on the ground that the district court had failed to obtain a commitment by Texaco to submit to the jurisdiction of the Ecuadorian courts. It remanded with instructions to require “Texaco’s consent to Ecuadoran jurisdiction ... [and to] independently reweigh the factors relevant to a forum non conveniens dismissal.” Following remand, Texaco provided the missing commitment and then renewed its motion to dismiss on forum non conveniens grounds. As part of its argument that the case belonged in Ecuador and not the United States — and, as will be seen, a great irony — Texaco argued that Ecuador would be an adequate alternative forum because it had an independent judiciary that provided fair trials. With equal irony, the plaintiffs contended that Ecuador would not be an adequate forum because the Ecuadorian judiciary was weak and corrupt and did not provide impartial tribunals. Judge Rakoff granted the motion and was affirmed on appeal. b. The Start of the LAPs’ Alliance With the ROE — The LAPs Agree Not to Sue PetroEcuador or the ROE A second point to be made about Aguinda is that it provided the impetus for an arrangement whereby the LAPs in substance granted PetroEcuador and the ROE immunity from suit in exchange for assistance in Aguinda, an alliance that has strengthened over time. The Aguinda plaintiffs were concerned by Texaco’s argument that the ROE was an indispensable party in view of the complaint’s prayer for an equitable decree requiring environmental remediation in Ecuadorian territory. They obtained the ROE’s agreement to seek to intervene in the case and to advise this Court that it consented to the “execution in its territory of any environmental cleanup measures that the [Southern District] Court may order [Texaco] to perform.” But there was a quid pro quo. The Aguinda plaintiffs gave the ROE and PetroEcuador a judgment reduction agreement to protect them against any award of contribution that Texaco might obtain against them. c. The Aguinda Plaintiffs Seek to Recuse, and Attack, Judge Rakoff Aguinda was marked also by a challenge to Judge Rakoffs impartiality and an attack on his integrity. After the reversal of Judge Rakoffs initial forum non conveniens dismissal, the plaintiffs moved to recuse him, claiming that his attendance at a seminar on environmental issues created an appearance of partiality because Texaco had contributed general funding to the organization that sponsored the seminar. Judge Rakoff denied the motion. The Second Circuit then denied the Aquinda plaintiffs’ mandamus petition, holding that no reasonable person knowledgeable of the facts would doubt Judge Rakoffs impartiality. Some time later, Donziger — in a video recorded for possible use in a documentary film— attacked Judge Rakoff. He stated that Judge Rakoff “was corrupt too, brother. He was — totally biased against us.” As will appear, these events foreshadowed what became a pattern by the LAP team of seeking to intimidate and threaten judges by pressure tactics including ad hominem attacks. d. The Environmental Management Act is Passed in Ecuador The pendency of Texaco’s dismissal motion and then the risk that the Court of Appeals would affirm Judge Rakoffs initial forum non conveniens dismissal prompted other actions by the Aguinda plaintiffs’ lawyers. As Bonifaz later suggested, “his team” had “worked with Ecuadorian legislators to draft a law similar to U.S. superfund law,” in preparation “for a possible move from U.S. courts.” The legislation in question became Ecuador’s Environmental Management Act of 1999 (the “EMA”), which among other things created a private right of action for damages for the cost of remediation of environmental harms generally, as distinct from personal injuries or property damages to specific plaintiffs. e. Texaco Merges with a Chevron Subsidiary and Survives the Merger The final event of note that occurred during Aguinda was the merger of a wholly owned subsidiary of Chevron with and into Texaco, with Texaco emerging as the surviving entity. Chevron thereby became the indirect owner of all of Texaco’s common stock. Chevron, however, did not acquire any of Texaco’s assets or assume any of its liabilities by operation of the merger. II. The Lago Agrio Litigation Begins In May 2003, about one year after the Second Circuit affirmed the dismissal of Aguinda, the LAPs sued Chevron (but not Texaco) for damages and for remediation of environmental harm said to have been caused by Texaco. The case was brought for the benefit of some 30,000 indigenous residents of the Concession area. Significantly, however, the complaint asked that any funds awarded to perform the requested remediation, plus an additional ten percent, be delivered to the Frente de la Defensa de la Amazonia (the “ADF”) for use in performing any remediation ordered by the court. Thus, the LAPs sought to have the ADF placed in complete control of any and all sums recovered. As will appear, this is significant because Donziger and some of his Ecuadorian associates controlled and still control the ADF. The case initially was assigned to Judge Alberto Guerra Bastidas (“Guerra”), who then was the president of the Lago Agrio court and who became an important witness at trial. Before turning to the events of the Lago Agrio proceedings, however, three subjects are important to an understanding of what transpired later: (1) Donziger’s attitudes and beliefs concerning the Ecuadorian courts, (2) the many Ecuadorian judges who were assigned to the case for varying periods during the years of its existence, and (3) a brief description of the plaintiffs, their lawyers, and the structure of the LAPs’ team. As someone once said, “you can’t tell the players without a scorecard.” A Donziger’s Attitudes and Beliefs About the Ecuadorian Courts and the Conduct of Lawyers in Ecuador Donziger’s attitudes and beliefs about the capability, fairness, and integrity of the Ecuadorian legal system are no secret. During Aguinda, he argued strenuously that Ecuador was not an adequate forum because the Ecuadorian judiciary was weak and corrupt and did not provide impartial tribunals. After the Lago Agrio case began, he made repeated statements — many on camera — in which he amplified this view. For example: • “They’re all [i.e., the Ecuadorian judges] corrupt! It’s — it’s their birthright to be corrupt.” • “These judges are really not very bright — it is like a vocational job to them, they deal with resolving disputes at a very basic level[;] there is little or no intellectual component to the law.” • “Uh, in a year from now, we’re not cornin’ down here anymore. The case is over. All we’re doin’ is writing reports and preparing for final submissions of papers. And, really mobilizing the country, politically, so that no judge can rule against us and feel like he can get away with it in terms of his career.” • “[T]his is not a legal case, this is a political battle that’s being played out through a legal case and all the evidence is in. * * * So, what we need to do is get the politics in order in a country that doesn’t favor people from the rainforest.” • “It’s incredible that a judge can— you can just walk in his office, with all the media, and it’s obvious what we’re doing, and he doesn’t have the power to say, ‘get the fuck out of my office,’ like at least to the press. I mean, I’ve never seen such utter weakness. It’s the same kind of weakness that leads to corruption. * * * These people [iethe judges] have no power. * * * They don’t think they can do anything.” • “You know, what ... just happened with this judge, um, is sort of sad to me because it represents the fact that the judicial system here is so utterly weak — like the only way you can secure a fair trial is if you do things like that, like go in and confront the judge with media around, and fight and yell and scream and make a scene, and, you know, that would never happen in the United States. That would never happen in any judicial system that had integrity. And it’s that very weakness that, you know, let people do that. That is also — lets people corrupt the process.” • [To a colleague] “Please prepare a detailed plan with the necessary steps to attack the judge through legal, institutional channels and through any other channel you can think of. Send it to me today.” • “[I]t’s a problem of institutional weakness in the judiciary, generally, and of this court, in particular. We have concluded that we need to do more, politically, to control the court, to pressure the court. We believe they make decisions based on who they fear the most, not based on what the laws should dictate. * * * [I]t’s a critically important moment, because we want to send a message to the court that, ‘don’t fuck with us anymore — not now, and not — not later, and never.’ ” • “You can solve anything with politics as long as the judges are intelligent enough to understand the politics. [T]hey don’t have to be intelligent enough to understand the law, just as long as they understand the politics.” Though Donziger’s statements are remarkably disrespectful to the judicial system he now so vehemently defends, it will be seen that they are not unlike President Correa’s views of the Ecuadorian judiciary. The Crude outtakes depicted also Donziger’s beliefs on the role of lawyers and evidence in litigation • “I once worked for a lawyer who said something I’ve never forgotten. He said, ‘Facts do not exist. Facts are created.’ And ever since that day, I realized how the law works.” • “Science has to serve the law practice; the law practice doesn’t serve science.” • “[A]ll this bullshit about the law and facts but in the end of the day it is about brute force ...” • “[A]t the end of the day, this [ie., the lack of evidence on a key point] is all for the Court just a bunch of smoke and mirrors and bullshit. It really is.” In considering these and other statements, not to mention Donziger’s conduct, it is relevant to note that Donziger is a member of the New York Bar. His conduct, whether in the United States or in Ecuador, was subject in every respect to the New York rules governing the conduct of lawyers. Finally, it is relevant to note that Donziger and his Ecuadorian associates assumed that it would be impossible to obtain evidence of their actions. This 2007 exchange with Atossa Soltani, the head of Amazon Watch, a non-governmental organization (“NGO”) supporter of Donziger and the LAPs, during a videotaped conversation about arguably questionable planned activities in Ecuador, is revealing “SOLTANI: Do you guys know if anybody can, uh, subpoena these videos? That is a — how do you [unintelligible] “DONZIGER: We don’t have the power of subpoena in Ecuador.” B. The Ecuadorian Judges A total of six judges presided over the Lago Agrio Chevron case from the time it was filed in 2003 until the Judgment was issued in February 2011. In general, the president of the Provincial Court of Nueva Loja — an election for which, it appears, was held every two years — was to preside over the case. When a new president was selected, the case would be transferred either to the newly-elected president, who would keep the case for two years or to another judge in the court, who would keep it for four months. But the fact that six judges — two of whom presided over the case more than once — presided over the Lago Agrio case in the eight years it was pending reveals that the assignment system did not always work exactly as expected. When the Lago Agrio case was filed in May 2003, Alberto Guerra was the president of the court and so the case was assigned to him. Guerra’s term as president ended in January 2004, and the case was reassigned to the newly-elected president, Judge Efraín Novillo. Judge Novillo presided over the case for two years. When his term was up in January 2006, the case was transferred to Judge Germán Yáñez. Judge Yánez’s term on the case lasted until October 2007, when Judge Novillo took over again. In August 2008, Judge Juan Núñez became president and the Lago Agrio case was transferred to him. Nuñez’s term was cut short in September 2009, however, when he recused himself. The case then fell to Nicolás Zambrano, who first had joined the Lago Agrio court on July 30, 2008 directly from a career as a prosecutor and whose term was four months because he was not the president of the court. The case then went to Judge Leonardo Ordóñez, who had just been elected president, in February 2010. Although, as president, Judge Ordóñez was to have presided over the case for two years, he was removed from the case when Chevron successfully moved to recuse him in 2010. Judge Zambrano took over again in October 2010 and issued the Judgment four months later. C. The LAP s’ Team 1. The American Lawyers The lawyers for the Aguinda plaintiffs had laid groundwork for suing in Ecuador if the New York case were dismissed by working toward the enactment in Ecuador of the EMA. At the outset of the Ecuadorian case, the same three American lawyers — Bonifaz, Kohn, and Donziger— played the key roles, using Ecuadorian counsel, the first of whom was Dr. Alberto Wray, 'to appear of record. By the time the Lago Agrio case began, however, the respective roles of the American lawyers had changed. Kohn, who had a lead role in the United States in Aguinda, had no ties to Ecuador and did not speak Spanish. While he provided most of the funding for the Lago Agrio case and related public relations activities from its inception until 2009, he had little direct role in the litigation. He mainly stayed abreast of some developments through Bonifaz and Donziger, although, as discussed below, he sought unsuccessfully to become more involved when the case began to run into difficulty in 2009. Bonifaz’s role also changed. While he was involved in selecting and briefing the lead Ecuadorian counsel, tensions subsequently arose between Bonifaz and Donziger. Bonifaz’s role quickly faded, and he left the case in 2005 for reasons that are neither clear nor material. Although Bonifaz still was involved when the Ecuadorian lawsuit began, he no longer was in charge. Donziger had taken over. In 2006, Donziger wrote that he had been the “lead counsel on the [Lago Agrio] lawsuit for the last three years,” — ie., since it began. He explained further that he was and had been: “at the epicenter of the legal, political, and media activity surrounding the case both in Ecuador and in the U.S. I have close ties with almost all of the important characters in the story, including Amazon indigenous leaders, high-ranking Ecuadorian government officials, the world’s leading scientists who deal with oil remediation, environmental activists, and many of Chevron’s key players.” He stated that he was the individual who had put together and supervised the team that was pursing the case and related activities and that his role was “to be the lawyer and manage the Ecuadorian legal team, while Kohn provide[d] overall guidance and money.” He described himself as the “lead lawyer in the class-action trial.” There is no substantial doubt that Donziger was in charge of the important aspects of the Ecuadorian case. He referred to the Ecuadorian lawyers as his “local counsel.” They often referred to him as the “cabeza,” or head, of the team. From the time the case was filed in Lago Agrio until at least quite recently, and perhaps even until today, Donziger has supervised the Ecuadorian legal team, set deadlines, was involved in setting the lawyers’ salaries, reviewed their court filings, directed the legal strategy, and coordinated the work between the lawyers in Ecuador and the scientists, experts, lawyers, litigation funders, politicians, and media consultants throughout the world. In addition, he communicates extensively with the press, and he has made tactical and strategic decisions. He largely has controlled the money. Hence, the Court finds that it has been Donziger who, from the very beginning of the Lago Agrio case, has called the important shots. The main exception to this general conclusion for the period 2003-09, during which Kohn was the principal financial backer, was that Donziger on occasion sought Kohn’s acquiescence with respect to activities that required additional funds. As will appear, .however, Donziger did not always tell Kohn the whole truth about what he was doing. 2. The ADF, Selva Viva, and Luis Yanza Luis Yanza is Donziger’s closest friend in Ecuador. Although he is not a lawyer, he has been and remains a central figure in the LAP team. He has long served as “the coordinator of the case for the affected communities.” He has been paid throughout from funds raised to finance the case. Donziger even purchased a residence for him out of personal funds, though this expense ultimately was reimbursed to Donziger by the Kohn firm. Yanza has been involved in some of the legal team’s biggest strategic decisions, including, according to Donziger, the decision to replace the first Ecuadorian lead lawyer, Alberto Wray. He was copied on nearly every important email sent among the Ecuadorian lawyers and Donziger, and has been the liaison between the lawyers and their clients. He serves also as a major point of contact between the LAP team and various Ecuadorian government officials including President Correa. Donziger and Yanza formed two entities that figure in the events that followed. The first was the ADF, which was formed in 1993, shortly after the Aguinda complaint was filed, to support the case. Yanza functions as its executive director and representative with respect to the Lago Agrio case. The second was Selva Viva CIA, Ltda. (“Selva Viva”), “an entity created under ... the corporate law of Ecuador that served as a funding vehicle [in the Lago Agrio] case ... to pay people in Ecuador who worked on the case.” It was founded in 2004, also by Yanza and at the direction of Donziger, who was and still may be its president. Yanza controls the Selva Viva bank accounts, which have been used primarily as a “pass thr[ough] mechanism to administer the case funds....” For many years, when the Ecuadorian team needed money, Yanza contacted Donziger and Donziger in turn requested the funds from Kohn. The Kohn firm then wired the money either directly to Selva Viva or to Donziger, who then passed it on to Selva Viva. It is undisputed that the ADF, which is controlled by Yanza and Donziger, controls Selva Viva. The ADF, Yanza, and Selva Viva all are defaulted defendants in this case. S. The Ecuadorian Lawyers When the Lago Agrio litigation commenced, the American lawyers — who were not licensed to practice law in Ecuador— hired Ecuadorian attorneys to represent the LAPs in court. The composition and leadership of the Ecuadorian legal team changed through the years — although, as will become evident, it always has been managed and overseen by Donziger. Pablo Estenio Fajardo Mendoza (“Fajardo”) graduated from law school in 2000 and, for a time, worked for the ADF helping residents of the Orienté bring claims against oil companies. After the Lago Agrio complaint was filed in 2003, he became one of the junior lawyers on the Ecuadorian team. His role was relatively minor until Donziger recommended that he replace Dr. Wray, which occurred in 2005. From then on, Fajardo has been the procurador común — lead counsel before the courts in Ecuador — for the LAPs. And, as will be seen, Fajardo has represented the plaintiffs in court, filed briefs on their behalf, signed retention agreements with investment firms, and given interviews with the international press as their representative. He has traveled to the United States a number of times in connection with the Lago Agrio case. Fajardo is a defendant in this case and, as is discussed below, appeared pro se in its early days. He never answered the complaint, and a certificate of default has been entered against him. A number of other Ecuadorian lawyers has been involved in the Lago Agrio case on behalf of the LAPs. The most significant have been Alejandro Ponce Villacis (“Ponce”), Juan Pablo Sáenz, and Julio Prieto. Yanza recruited Ponce, a lawyer based in Quito, shortly after the Lago Agrio case was filed to “provide advice on the strategy as well as draft pleadings” and consult on matters of Ecuadorian law. Although Ponce was involved in “design[ing] the strategy of the case,” he left the team in 2008 when he became a partner in his firm. Juan Pablo Sáenz and Julio Prieto report to Donziger and Fajardo, who often have called upon them to research and answer questions of Ecuadorian law, translate documents (Sáenz is fluent in English), write briefs, and handle daily litigation tasks. J. The Assembly In 2001, a grass roots organization called the Asamblea was formed in the Orienté. Humberto Piaguaje, the current leader, explained that associations were formed in each oil field. Each association designated delegates to participate in a larger council, and leaders of each indigenous group and one representative of settlers in each province formed an executive committee. The executive committee has met approximately once a month, often with members of the Ecuadorian plaintiffs’ legal team. Minutes of these meetings have been taken and kept since 2001. Although the Asamblea “existed informally as a de-facto organization” since 2001, it changed its name in 2012 to the Union of the Assembly of those Affected by Texaco (“UDAPT” or the “Assembly”). In each of its incarnations, it has worked closely with the ADF in connection with the Lago Agrio case. III. The Beginnings of Donziger’s Pressure Campaign A. Donziger’s Strategy Donziger’s assumption of control over the litigation resulted in a fundamental change in approach. The new approach is a lens through which virtually everything that happened after the Lago Agrio case began in 2003 must be viewed. Donziger believed that the court of public opinion was as important as any other. Once he took control of the case, the effort became “a campaign with various fronts active simultaneously,” including the media and the U.S. and Ecuadorian political spheres. He adopted an aggressive media strategy. The importance of Donziger’s media and public relations strategy is evident from the manner in which Donziger spent the millions of dollars that were obtained from investors. He outlined the campaign in a memorandum he wrote to his team in late 2003. He explained that the team would initiate and/or utilize celebrities; non-governmental organization “pressure;” the “Ecuador government — executive, and Congress;” national, international, and Ecuadorian press; a “divestment campaign” in which the team would seek to convince institutional investors to sell Chevron stock, and even a criminal case in Ecuador in its effort to obtain money from Chevron. Just as important as the pressure campaign directed at Chevron was an analogous campaign directed at the Ecuadorian courts. As we have seen already, Donziger viewed the Ecuadorian courts as corrupt, weak and responsive to pressure — as institutions that, at best, “make decisions based on who they fear the most, not based on what the laws should dictate.” In a particularly revealing comment, made in his personal notebook, he wrote that “the only way the court will respect us is if they fear us — and that the only way they will fear us is if they think we have ... control over their careers, their jobs, their reputations — that is to say, their ability to earn a livelihood.” “[I]n the end of the day,” he said, “it is about brute force” rather than “all this bullshit about the law and facts.” As we shall see, he and his associates directly coerced at least one judge and mobilized demonstrations to intimidate others. And the object always included ratcheting the pressure up on Chevron in order to extract money from it. This focus on the media had at least one unintended effect. Hoping to promote the LAPs’ cause in the court of public opinion, Donziger in 2005 recruited a film maker to follow him and his team around in Ecuador and the United States, filming scenes for use in documentary. That film eventually become the documentary Crude, which prompted extensive U.S. discovery efforts by Chevron that led to the disclosure of outtakes from the film. Many of Donziger’s statements on camera made to the Crude film makers, some of which are quite revealing, are in evidence in this case. B. Donziger’s Public Relations Team and NGO Allies 1. The Public Relations and Lobbying Team As Donziger viewed (and views) his efforts to force Chevron into settlement as “a political-style campaign driven by a legal case,” it is not surprising that he spent a significant part of the resources he raised for the Lago Agrio case on these efforts, and hired several public relations professionals and lobbyists with extensive political experience to work on the LAPs’ behalf. He involved also, and at times financially contributed to, NGOs to support his efforts. These individuals and organizations often were mere mouthpieces, however. Donziger at all times controlled the content and timing of the LAPs’ public relations. Until quite recently, Karen Hinton was the public face of the litigation’s public relations efforts. She was the “United States press coordinator” and handled media relations efforts from May 2008 to March 2013. During that period, Hinton issued press releases and blog posts to generate media interest in the case, selected materials to submit to public officials, responded to media inquiries, and, eventually, handled media requests related to the discovery proceedings Chevron launched in the United States. As Hinton understood it at the time of her retention, the objective of her communications efforts was to “facilitate the stated goal of pushing ChevronTexaco to settle the lawsuit in the near future.” Hinton did not have ultimate control over the content of her work, however. The substance of her press releases always was subject to Donziger’s approval. Chris Lehane likewise worked to develop the LAPs’ media and public relations strategy as an “advisor” to Donziger using “strategies and tactics ... employed in political campaigns____” After first discussing Donziger’s objectives with him, Lehane proposed to Donziger a strategy to target shareholders, Congress, and “high level media” in order to “inflict[ ] real economic pain on the company” and “bring[] Chevron Texaco to the negotiation table.” The plan was to “fully leverage” events in Ecuador, with a view to “apply[ing] shareholder pressure on Chevron.” Donziger hired him, and, in exchange for his work on the case, arranged for Lehane to be given a percentage of any eventual monetary recovery. 2. Amazon Watch Another central player in Donziger’s publicity campaign was Amazon Watch, an NGO that declares a dedication to protecting the rainforest and the indigenous groups that inhabit it. Amazon Watch and various of its staff — including Atossa Soltani, its founder and executive director, and Mitchell Anderson, a “field consultant” — worked with Donziger and others on the LAP team to support and publicize the lawsuit and to pressure Chevron. To that end, the organization collaborated with the LAPs to lobby regulatory agencies and elected officials, sought support among Chevron shareholders for a settlement, and sought media attention through press releases. Although Amazon Watch’s public materials did not bear Donziger’s name, Donziger himself drafted many Amazon Watch materials related to the Lago Agrio litigation. Donziger not only controlled the content of Amazon Watch press releases pertaining to the litigation, he drafted also complaints that Amazon Watch submitted to the SEC and memoranda to be sent to elected officials regarding Chevron. Despite Donziger’s authorship, the materials bore no outward indication of his involvement — documents drafted in whole or in substantial part by Donziger were sent on Amazon Watch letterhead and signed by Amazon Watch personnel. In addition, in April 2005 Amazon Watch used funding from the LAPs to launch a website that was a key conduit for Donziger’s campaign. Dubbed “ChevronToxico,” the website posted information about the litigation as well as materials written by Donziger, Hinton, and others, some of which included deliberately misleading statements. Hinton, Lehane, Soltani, and others at Amazon Watch became important figures in Donziger’s pressure campaign against Chevron, and their names appear throughout this case. Among the campaign’s first real tasks, however, was the use of a flawed $6 billion figure to attempt to convince Chevron that it was facing multibillion dollar exposure in Ecuador and that the time had come to settle. C. The Pressure Begins — The LAPs’ First Scientist and the $6 Billion “Drive By” Damages Estimate Soon after the complaint was filed in Lago Agrio in 2003, Donziger hired David Russell, an environmental 'engineer, to generate an initial cost estimate for remediation of the Concession area. Among the purposes of the estimate was to subject Chevron to the threat of a very-large recovery. In the fall of 2003, at Donziger’s direction, Russell went to the Orienté to work on his damages estimate. There are three notable points about this estimate. First, Russell visited only about 45 of the hundreds of oil pits in the region, and based his calculations on an extrapolation of what he observed at those sites. But he did not analyze any soil or water samples at any of the sites he visited. And his visits to some of those sites, he acknowledged at trial, were no more searching than driving past them at 40 or 50 miles per hour. Second, Russell testified, and the Court finds, that Donziger instructed him to make certain assumptions in calculating costs. Among them was the assumption that Texaco was fully liable for all of the contamination in the region, even that caused by PetroEcuador after it took over operation of the Consortium properties when TexPet left in 1992. Third, as the report itself made clear, Russell’s “cost projections [w]ere very rough.” He testified that this was due to “the amount of unknowns and the lack of information [he] had with regard to not only levels of contamination but the extent of those levels of contamination.” And he informed Donziger and other members of the LAP team as early as December 2004 that his estimates were “best guesses based upon a week of looking at the sites, without any scientific data,” and encouraged the team not to “rush to judgment” based on a “guesstimate.” He was entirely candid at trial on the consequences of this lack of data — the quantities he used in generating the $6 billion figure were, he said, were “SWAG,” an acronym for a “scientific wild ass guess.” D. Donziger Touts Russell’s “SWAG” and Other Misleading Descriptions of Conditions in the Orienté to Put Pressure on Chevron Russell’s $6 billion SWAG figure quickly became a key weapon in Donziger’s effort to exert pressure on Chevron and convince the company — and the world — that the damages in the Orienté were substantial and the threat of an enormous judgment against it was real. As we shall see, Donziger and his public relations operation avidly used Russell’s $6 billion figure in the media to generate leverage despite the fact that they knew that it could not withstand serious analysis. David Russell left the LAP team in early 2005 because, among other reasons, the LAP team owed him money and refused to pay it. By that time he had made explicit to Donziger that his cost estimate had been “wildly inaccurate and that it should not be used.” But that did not stop Donziger and his public relations team from using the number, over Russell’s protests, to pressure Chevron through the media. E. False and Misleading Representations to Incite Governmental Action Against Chevron The press was not the only intended audience for Russell’s disavowed $6 billion figure and other false and misleading comparisons. Donziger and his public relations team employed both in efforts to instigate action and put pressure on Chevron from federal and state officials and agencies. One aim was to create the perception that the litigation threatened serious harm to the company, was material to Chevron’s bottom line, and would result in a lower share price and lower profits for Chevron shareholders. In Lehane’s words, “the Ecuadorian Amazon Chevron-Texaco project can be reduced, in the end, to a single strategic imperative: ‘Bringing ChevronTexaco to the negotiation table by inflicting real economic pain on the company.’ ” To that end, Donziger in late 2005 drafted a letter that ultimately was sent by Amazon Watch to the Securities and Exchange Commission (“SEC”). The letter “request[ed] that [it] open an investigation into the Chevron Corporation (CVX) for violating SEC regulations governing disclosure obligations. The letter promoted Russell’s SWAG remediation estimate, stating that “[o]ne environmental remediation expert estimated that a basic clean-up would cost at least $6 billion” despite the fact that Donziger knew when he wrote it that Russell had told him that it was wildly inaccurate. The letter asserted also that Chevron had “creat[ed] toxic contamination over 30 times larger than the Exxon Valdez” and decried Chevron’s alleged failure to disclose its “potential liability” to its shareholders. He used the same figure, despite subsequent confirmation that it was exaggerated, in later testimony before a Congressional commission on human rights, and in press releases. The day after the SEC letter was sent, Donziger wrote to Soltani of Amazon Watch: “[n]ow that the SEC ltr is filed, it is key we come up with a coherent strategy to build pressure for the April shareholder’s [sic] meeting.” Donziger called on Amazon Watch and others — including Chevron shareholders (whom Amazon Watch was to address at an upcoming shareholder meeting) — to send letters to the SEC calling for investigation into Chevron’s conduct in Ecuador. Donziger suggested that Amazon Watch “seek a meeting with [SEC chairman Christopher] Cox or one of his deputies” in order “to press for them to open a real investigation.” He insisted that Amazon Watch could “get a lot o