Showing posts with label Steven Donziger. Show all posts
Showing posts with label Steven Donziger. Show all posts

Tuesday, February 23, 2021

Big Oil deploys slick strategy to stay ahead of liability

Image by Ucheke CC BY-SA 4.0
On February 12, the UK Supreme Court allowed a claim of environmental catastrophe by 40,000 to 50,000 Nigerian farmers to proceed in English courts against defendant Royal Dutch Shell.  The ruling came just two weeks after farmers prevailed in a significant but more limited case against Shell's Nigerian subsidiary in a Dutch appellate court in The Hague, after 13 years of litigation, and eerily echoes the still unfolding saga of the Chevron-Ecuador battle over Lago Agrio in the Amazon.

I'm compelled to mention the UK case, though it has been covered exhaustively in the media (e.g., N.Y. Times), because I wrote just last week on the controversial scope of "alien tort" liability in U.S. courts.  The case against Royal Dutch Shell ("Shell"), for devastating oil pollution in the Rivers State of the Niger Delta, is a kind of alien tort case in UK and Dutch courts.  In the UK, no specific statutory authorization is required to sue Shell, which is incorporated in the UK and headquartered in The Hague.  Rather, jurisdiction may be invoked upon the plaintiffs' demonstration of a duty in common law tort owed by the defendant company.

UK Supreme Court
(photo by M. Zhu CC BY-NC-ND 2.0)
The UK ruling is preliminary only; the court held that the plaintiffs demonstrated a "real issue to be tried," the preliminary standard, over the role of Shell in the pollution. The nub of the problem for the plaintiffs is that operations in Nigeria were run by, and not exclusively owned by, a subsidiary corporation of Shell, the foreign-registered Shell Petroleum Development Company of Nigeria Ltd. (SPDC).

The corporate shell is designed specifically to insulate the parent company against liability for the conduct of the subsidiary.  To penetrate the shell and reach the parent, the plaintiffs must show that Shell, the parent company, directed the conduct of SPDC, the Nigerian subsidiary, or worked jointly with SPDC.  The court in The Hague allowed jurisdiction upon a comparable control theory in 2015, though ultimately entered a monetary judgment only against SPDC.

The preliminary ruling from the UK Supreme Court does not yet establish direction or joint control, but says that the plaintiffs have made a sufficient showing to serve their lawsuit on Shell.  Rather than digging into the facts, the Supreme Court faulted the courts below, both the majority that had rejected the plaintiffs' claim and the dissent, for looking too closely at the plaintiffs' evidence and effecting a sort of "mini-trial" on the question of Shell control before the case has even been pleaded properly.

Nchanga Copper Mine, Zambia, 2008
(photo by BlueSalo CC BY-SA 3.0)
Environmental damage and human toll in the developing world as a result of resource extraction by western corporations is, sadly, not a new problem, and the UK Supreme Court invoked its experience in a prior case.  In 2015, plaintiffs in Zambia won the right to sue UK-based Vedanta Resources upon allegations that copper smelting had poisoned the water supply with "rivers of acid," containing sulfuric acid and other dangerous toxins.  The cooper operation in Zambia was owned by a Vedanta subsidiary, Konkola Copper Mines.  After the Supreme Court allowed suit in England, Vedanta settled with more than 2,500 Zambian claimants.

Vedanta was decided in the spring of 2019, and only then, after the lower courts had rejected the claims against Shell, did the Supreme Court admonish judicial restraint on questions of fact in preliminary proceedings and set out an approach to analyze parent-company duty: "depend[ing] on the extent to which, and the way in which, the parent availed itself of the opportunity to take over, intervene in, control, supervise or advise the management of the relevant operations (including land use) of the subsidiary."

Niger Delta, Nigeria
(ESA photo CC BY-SA 3.0)
In pleadings and on appeal, the plaintiffs asserted a dozen bases in fact to demonstrate Shell control of SPDC, including mandatory compliance standards for subsidiaries on health, security, safety, and environment; business principles; and best practices for assets, facilities, and infrastructure.  According to the plaintiffs, "[Shell's] executive remuneration scheme depended to a significant degree on the sustainable development performance of SPDC."  The plaintiffs alleged that Shell "for many years had detailed knowledge about widespread pollution in the Niger Delta caused by spillages and leakages of oil from infrastructure operated by SPDC, including knowledge of the frequency, location and size of oil spills, including its failure to protect its oil infrastructure against the risk of damage caused by the criminal acts of third parties."

According to the New York Times report on the case, Shell is retreating from investments in the Niger Delta and other sites near human habitation, preferring to drill offshore.  Meanwhile, disputes endure over responsibility to clean up the pollution left behind by extraction and over the efficacy of cleanup efforts.  In this way, the Nigeria case is strikingly similar to others in the world, notably, the long-running dispute between rain-forest communities in Ecuador and oil giant Chevron, successor to Texaco.

In the case against Chevron, an Ecuadorean court in 2011 ordered Chevron to pay $9.5bn to residents of Lago Agrio, a community in the Amazon, for catastrophic oil pollution there.  In 2014, a U.S. federal court ruled that the judgment was procured through fraud, and the plaintiffs' champion U.S. attorney, Steven Donziger, was disbarred in 2020.  The plaintiffs' efforts to collect on the award in courts with jurisdiction over Chevron assets in other countries, such as Canada and Argentina, have failed so far.  Donziger is appealing his disbarment while also facing contempt prosecution in New York.  Celebrity environmentalists continue to hail him as a hero, railroaded by Big Oil.  Meanwhile a district court in The Hague has demanded (subscription), pursuant to arbitration, that Ecuador nullify the judgment, and the matter continues to haunt Ecuador's destabilizing presidential elections.

For the third time, I'm having my comparative law class read Paul M. Barrett's Law of the Jungle, which chronicles the Chevron-Ecuador matter until the book's 2015 publication.  For my money, Barrett's is the most even-handed account out there.  (See also coverage by Michael I. Krauss for Forbes.)  And it's not flattering of Donziger.  But it's also not flattering of Texaco.

The complicated truth of what happened at Lago Agrio is a tragedy in multiple dimensions, generating plenty of blame to go around.  Donziger might have played fast and loose with the law in Ecuador, after being rebuffed in the United States, but he was navigating the outstretched hands of a sorely corrupt judiciary.  The devastation at Lago Agrio is real, and no one, oil firms or government, has ameliorated it.  At the same time, much, if not most, of the pollution can be traced directly to the national oil company of the Ecuadorean government, which at various relevant times bore exclusive or joint responsibility for Lago Agrio.  Even insofar as Texaco controlled the site, government regulators, also riddled with corruption, were utterly derelict in their duty to protect fundamental human rights and enforce industry norms.  To date, the people of Lago Agrio, maybe the only innocent actors in the whole story, have been left to struggle with the horrific health consequences and daily challenges of water and land contaminated by lethal toxins.

In Nigeria, Shell and SPDC also lay blame on the Nigerian government, a partner of SPDC in the extraction operation through the state-owned Nigerian National Petroleum Company.  I have no doubt that the government bears responsibility both for what it did as an owner and what it did not do as a regulator.  I wager that Shell and SPDC, like Texaco and Chevron, are guilty of conscienceless exploitation, but also behaved as rational corporate actors, splitting the difference between the costs of malfeasance and the benefits of non-regulation.  Like in Lago Agrio, the people of the Niger delta are left to endure the consequences of symbiotic opportunism, while the perpetrators point their fingers at each other.

Shell corporate building in The Hague
(photo by Mr. Documents Uploader CC BY-SA 4.0)
Maybe the concept of "alien tort" in the UK is turning the tide at last.  One might expect Shell to follow Vedanta's example and settle, for public relations reasons, if nothing else.  Reuters reported that Shell settled another Niger Delta pollution claim in British courts in 2015 for €70m.  Shell has consistently pledged to clean up Niger Delta pollution, even while disavowing responsibility.  But Shell did not settle the case in the Netherlands, where the company has been able to postpone liability for 13 years to date.  The AP reported that two of four farmer-plaintiffs died since the case there was filed in 2008.  An appeal to the Dutch Supreme Court may yet be filed, and Big Oil might be emboldened by Chevron's experience.

Rivers State, Nigeria
(image by Jaimz height-field CC BY-SA 3.0)
If Shell digs in its heels in the UK, the plaintiffs have an uphill battle ahead.  They will have to produce clearer evidence to persuade the trial court that Shell exercised control at the local level, and then to link Shell oversight to the pollution in proximate causation.  Shell, fairly, will seek to muddle the chain of causation with the intervening actions of venture partners, private and public, and the third-party actions of criminals who sabotaged and burglarized the oil pipeline.  The Dutch appellate court mitigated the plaintiff-farmers' win there by nullifying defense liability in part for the actions of saboteurs, even while recognizing with regard to one claim that SPDC made nefarious access to the pipeline too easy.

If ever there is a settlement or award for plaintiffs that turns ripe for enforcement, it will remain to be determined how effectively money can be converted into remediation in a legal regime whose wavering commitment to the rule of law has been complicit in damage to the Niger Delta environment for the six-decade duration of the nation's independence.  To the plaintiffs' favor, for now, in the UK, their case is informed by their experience in The Hague, where the trial court afforded plaintiffs latitude to probe Shell files for evidence of corporate control.

The case in the UK Supreme Court is Okpabi v. Royal Dutch Shell Plc, [2021] UKSC 3 (Feb. 12, 2021).  Lord Nicholas Hamblen delivered the opinion, with which Lord Hodge, Lady Black, and Lord Briggs agreed.

Friday, April 24, 2020

Report from a Social Distance Week 5: A Birthday, a Flood, and a Fire


April snow (RJ Peltz-Steele CC BY-SA 4.0)
My plan-B return to Africa in June was just canceled.  I kind of expected that.  Here in New England, it remains unseasonably chilly, lows this week at the freezing point, and highs usually in the low 50sºF, 12ºC give or take, and a mean wind chill.  One morning even brought a light snow.  The long-range forecast shows no warming for the remainder of the month.  We’re getting deeply anxious for the transition to spring, even as the names of the days have become arbitrary.  At least in this week 5 of isolation, we had occasion to celebrate a calendared milestone, my wife’s birthday.


What I’m Celebrating…
It was a Quarantine Birthday!

For my wife, I made a birthday cake!: a classic pound cake with hazelnut buttercream frosting.  I won no points on aesthetics, but the sweet taste was spot on.  I also made our dinner of vegetable pasta with mozzarella garlic bread, heavy on the garlic.  We had my wife’s favorite wine, Gazela vinho verde (she’s a cheap date).  And from her Amazon WishList, she received some admittedly non-essential but long desired Yuxier BBQ gloves (Spider-Man-style, but not really, because a Chinese maker wouldn’t dare test trademark).  Our daughter sent our favorite flavored honeys from the Savannah Bee Company, and there were lots of lovely cards: thanks, family and friends.

What I’m Reading
The Atlantic (May 2020).  The latest issue of my favorite magazine, The Atlantic, hit my doorstep this week, and I’ve never been happier to see it.  This month has the usual plenty of enthralling content, from an assessment of the fractured right in American politics (Robert P. Saldin and Steven M. Telles), to a photo study of social distance (Amy Weiss-Meyer), to an exploration of the everlasting allure of Scooby Doo (Christopher Orr)—this year’s May movie Scoob! will skip theaters.  Most-interesting-item honors go to MacDowell Colony fellow Francesca Mari’s “The Shark and the Shrimpers” for breaking down the legal system’s obscene exploitation of the BP disaster with faked compensation claimants.  The conduct of key plaintiff’s lawyer Mikal Watts, acquitted, I found frighteningly reminiscent of Ecuador v. Chevron's fallen star, Steven Donziger.  According to Mari, Watts even commissioned a documentary about himself; cf. Donziger’s PR panache.  Somehow, despite the well reasoned fury of U.S. District Judge Lewis Kaplan, Donziger last week wrangled the validation of 30 Nobel laureates.  That’s more Bizarro than the “liberate” tweets.

🙏 Our ongoing Bible reading has proceeded from First to Second Kings, and we’ve begun a Sunday Zoom study of my favorite book, James.  If you feel in need, or wish to support others, in these strange times, you are welcome to visit our church’s new virtual prayer wall, as well as Sunday service at 0930 US EDT.

What I’m Listening To

Floodlines (2020).  This eight-part audio series by Vann R. Newkirk II represents a first foray into podcasting for The Atlantic.  It’s a fascinating deep dive into the Hurricane Katrina disaster, exploring all angles, especially race and socioeconomic implications.  Newkirk skillfully weaves a narrative that traces New Orleans history from its roots in slavery to its contemporary demography.  A lot of what’s here wasn’t new to me, because, for work, I’ve done a more-than-normal amount of reading about Katrina, and I'm personally familiar with NOLA.  (The audio pacing is slow, and you can nudge up the speed if you use an intermediary such as Google rather than streaming from the home page.)  There’s still plenty here, though, for anyone, and maybe a lot for some: Katrina was 15 years ago, so young adults might not even remember it.  For my part, I had never heard of the case of Ivor van Heerden, who lost his academic post at LSU Baton Rouge in suspicious subsequence to his criticism of the Army Corps levees.  That one nugget from Floodlines part 3 sent me down a depressing rabbit-hole-reading of van Heerden’s ultimately unsuccessful litigation.  Academics, even with tenure, almost always lose to judges’ sycophantic deference to university bureaucrats, while a 2011 AAUP report had no trouble seeing through LSU’s pretext.  FIRE wrote about the importance of the van Heerden case just this week.

What I’m Watching

Code 8 (2019).  Eh.  It killed a couple of hours.  Did you know that Stephen Amell (Arrow) and Robbie Amell (The Tomorrow People) are first cousins?

For All Mankind s1 (2019).  A pandemic gift on free Apple TV+, I’m loving this series.  It’s not what I expected, and I don’t want to give away too much.  The premise of the show is an alternate history in which the Soviets won the moon race; that much was in the trailers.  Unexpected was the clever imagining of an alternatively unfolding history of American civil rights as a consequence of that pivotal national shame.  The title of the show turns out to have much greater significance than a fleeting reference to the Lunar Plaque or an innocent homage to Neil Armstrong’s famed phrase.  Joel Kinnaman returns to earth from Altered Carbon s1 to deliver a credible old-school astronaut struggling to find his place in a changing NASA, while Sonya Walger, as America’s top female astronaut, shines among an extraordinary cast of leading women.

KN Aloysh (Apr. 19).  My friend Komlan Aloysh launched his YouTube channel of interviews with African changemakers by sitting down to Zoom with Rhode Island-residing, Liberian tech entrepreneur Jacob Roland, founder and CEO of West Africa-serving Pygmy Technologies.  Their wide-ranging conversation reached from the transnational tech sector to Liberian food and culture.  Roland well observed, in whatever area one might wish to create, the Liberian market is ripe and ready.  And he tipped viewers off to top unspoilt beaches in Liberia, though I suggest you get there before Chinese developers do.  The show made me conscious of how much I am missing West Africa just now.

What I’m Eating

Bluewater Bar + Grill. This week's self-sacrifice (sarcasm) to #Save­Our­Restaurants went to a local institution and its generous and hard-working staff.  Our bounty included R.I. calamari, battered cauliflower, chili broccoli, burgers and truffle fries, and the pièce de résistance, cinnamon beignets worthy of their Louisiana heritage.

Bread machine.  “While you're watching Ozark and baking bread ... ,” Trevor Noah began a bit this week.  He had my number.  Ozark s3 is on the to-do list, and already I had dragged the bread machine up from the basement.  My aim was to save from waste the remaining brine from a finished jar of pickles.  For reasons unknown, my pickle-juice bread didn’t rise properly.  I got over the initial disappointment.  Though it was dense and a touch chewy, my undersized loaf was delicious, and I ate it up in the course of the week.

What I’m Drinking

New Orleans Blend.  My wife doesn’t usually care for dark roasts, but even she fell for this offering from Community Coffee.  Its rich texture kicks off your day with a Bourbon Street party in your mouth.  Maybe that’s the cabin fever talking, but laissez le bon temps rouler.

Bombay Sapphire East.  This geo-themed gin in classic Bombay blue boasts of Thai lemongrass and Vietnamese peppercorns.  I’m not sure I could distinguish it from straight Sapphire in a taste test, but I’m willing to pay for a foreign feel while stuck in the States.

Veiner Nössliqueur von Pitz-Schweitzer.  A yummy sample of hazelnut liqueur I picked up in Luxembourg: I used it in the icing for the birthday cake.  And maybe I sampled some according to the one-for-the-cup-one-for-the-cook rule.  The drinking policy at my work-from-home-place is super chill.

What I’m Doing to Stay Sane

Burn this.  Our town has suspended yard-waste pickup, so I collected from the yard and burned in the fireplace the winter season’s accumulated kindling.  We had a nice, hot fire for the birthday celebration.  Though I always worry whether the trees outside are alarmed by the smell of smoke from their fallen limbs.


This is the matrix.  Ramadan Mubarak to our Muslim friends, and blessed weekend to all.

Photos in Celebrating, Eating, Drinking, and Staying Sane are mine, CC BY-SA 4.0.

Wednesday, May 22, 2019

Human life, human rights are the losers in unraveling Chevron-Ecuador litigation

Crude contaminates an open toxic pool in the the Ecuadorean Amazon
rainforest near Lago Agrio.  Photo by Caroline Bennett / Rainforest
Action Network, CC BY-NC 2.0.
[UPDATE, May 24, 2019: SDNY Judge Kaplan yesterday held Donziger in civil contempt.  Read more from Michael I. Krauss at Forbes.]
 
Court rulings are stacking up against the plaintiffs in the global Chevron-Ecuador litigation.  About a month ago, the Dutch Supreme Court, affirming arbitral orders, refused enforcement of the $9.5bn judgment that Ecuadorean courts entered against Chevron, successor to Texaco, for oil pollution at Lago Agrio, feeding into the Amazon River (e.g., AP).  Plaintiffs’ appeals have fared poorly since Canadian courts rejected enforcement earlier in April (e.g., Reuters), piling on adverse outcomes in the United States, Brazil, and Argentina.

Now an opinion headline in Oakland News Now—if atop a column authored by a self-professed “influencer” who decidedly favors Chevron—trumpets that plaintiffs’ attorney “Steven Donziger, … Once The Toast Of Hollywood, Is Now Simply Toast.”  Notwithstanding that dry, I mean wry, assessment, it is true that Donziger was ordered in March 2018 to reimburse Chevron for more than $800,000 in legal fees as part of equitable relief in a private RICO action in the Second Circuit, and subsequently he was pressed to defend his bar license.  He maintains that he and his allies are being victimized in a political-hit orchestrated by Big Oil.

If you’re new to the Chevron-Ecuador case, beware the rabbit hole.  It’s almost impossible to summarize how we’ve come to this point in the course of a quarter century.  The quickly dated 2015 book Law of the Jungle by Paul M. Barrett is still an excellent and objective port of entry (Amazon).  (My co-instructor/spouse and I plan to assign it in our comparative law class in the fall semester.)  You also can read about the case through the columns of George Mason Law Professor Michael I. Krauss at Forbes; he’s followed developments closely over the years.

In short, there was some awful pollution in remote oil fields in Ecuador, reckless extraction and vacant regulation in the 1970s and 1980s wreaking devastating, long-term, far-reaching, and literally downstream consequences to human life and the environment.  That part is hardly in dispute.  What has been less clear and is hotly contested is whom should be blamed.

Enter the polarizing personality of Donziger, Harvard Law ’91, who, it must be said, is a genius for having designed a new model of global environmental litigation.  He solicited wealthy and famous, like, Sting famous, investors to raise money for the high costs of litigating against transnational Big Oil behemoths in an effort to tame them with the rule of domestic law.  At what point Donziger’s litigation lost the moral high ground—somewhere between the get-go and never—is the subject of much speculation.  However, that corruption was rampant in Ecuadorean courts is beyond dispute, and the role of the lawyer when justice might require, say, cash prepayment of a new “court fee,” raises some thorny questions in ethics and cultural relativism.  What is for sure is that when you start talking about Big Oil as occupying the moral high ground, something already has gone terribly wrong.

One can only make an informed guess about where liability for Lago Agrio should land.  Texaco/Chevron probably bears a slice of moral, if not legal, responsibility, at least in a strict-liability, “Superfund” sense.  But through an unascertainable and poisonous mix of lax regulation, corruption, foolhardy assumption of responsibility, and their own recklessness practices, the state of Ecuador and its state-owned enterprises (SOEs) in oil extraction were vastly enriched and probably bear principal responsibility for the disaster, morally and legally.  Arguable then is how thoroughly moral responsibility should flow back to the industrialized world along the pipeline of oil demand; I won’t step into those inky depths.

Donziger and the Ecuador litigation is a capstone course for law school, so I’m not here to state a thorough explication.  I mention the case because it strikes me that it exemplifies two serious problems in contemporary tort law, intersecting on this unusual tangent.

The first problem is that both state actors and transnational corporations operate above domestic law and without accountability to private claimants in international law, and that portends a disastrous end to life on earth.  What ought not be forgotten about the Chevron-Ecuador legal fiasco is that underneath all of the legal finger-pointing, there remains an unmitigated environmental catastrophe.  And what’s worse, it’s ongoing.  Ecuadorean operations in the area still use reckless extraction processes such as unlined oil pits, and Big Oil is bidding to reclaim a piece of the action.  People are still being poisoned, and the Amazon is still being polluted.

Meanwhile, follow the oil downstream, and Hasan Minhaj will show you (embedded below) how Brazil is newly doubling down on rain forest destruction.  I’m talking about the good old-fashioned, small-animals-fleeing-for-their-lives-from-set-fires-and-bulldozers kind of destruction that was the stuff of my childhood nightmares in the dark age before we recycled.  Human civilization and our rule of law on earth have not yet figured a way to attack this problem on the international level, much less to protect the human rights of local citizens within an offending country.  Our own alien tort statute was recently defanged vis-à-vis transnational corporations—in a case about Big Oil, by the way—and it’s not clear that the law’s landmark 1980 application in Filártiga v. Peña-Irala, bringing a foreign state torturer to justice, would even be upheld in federal court today.


The second problem is that in places where we do observe the rule of law, namely, here in the United States, legal transaction costs have spiraled so high that our courts have become available only as playgrounds for the rich and powerful, whether to settle disputes among themselves, subsidized by us, or to quash the claims that we, the little people, might dare to file in our puny arrogance.  We know this problem on the mundane, ground level as “access to justice.”  I suggest that this is the same problem that Donziger—giving him the benefit of the doubt at the get-go, for the moment, assuming reasonably that his multitude of motives must at least have included compassion for victims of pollution among the world’s poorest people—was up against in trying to take on Big Oil.  Documents in the RICO case contain tidbits about Donziger’s financing, such as a rock star’s “two equity positions in the case, one for 0.076 percent and 0.025 percent.”  It turns my stomach to read about human rights litigation as an investment opportunity, perhaps ripe for an initial public offering.  (“Call now for your free report; first time callers can get a free tenth-ounce Silver Walking Liberty Coin!”)  If that’s how we’re setting legal norms around human rights and deterring threats to human life, then that says more about us than it does about Steven Donziger.

These are the days that I want to give up on the human experiment and hunker down in willful ignorance to marshal my resources and plan for a contented retirement.

Though I’m a little short on resources.  Can I still buy shares in that Roundup litigation?