Chevron Corp. v. Naranjo

667 F.3d 232

CHEVRON CORPORATION, Plaintiff–Appellee,

v.Hugo Gerardo Camacho NARANJO, Javier Piaguaje Payaguaje, Steven R. Donziger, The Law Offices of Steven R. Donziger, Defendants–Appellants,Pablo Fajardo Mendoza, Luis Yanza, Frente De Defensa De La Amazonia, Aka Amazon Defense Front, Selva Viva Selviva Cia, Ltda, Stratus Consulting, Inc., Douglas Beltman, Ann Maest, Maria Aguinda Salazar, Carlos Grefa Huatatoca, Catalina Antonia Aguinda Salazar, Lidia Alexandra Aguin Aguinda, Patricio Alberto Chimbo Yumbo, Clide Ramiro Aguinda Aguinda, Beatriz Mercedes Grefa Tanguila, Patricio Wilson Aguinda Aguinda, Celia Irene Viveros Cusangua, Francisco Matias Alvarado Yumbo, Francisco Alvarado Yumbo, Olga Gloria Grefa Cerda, Lorenzo Jose Alvarado Yumbo, Narcisa Aida Tanguila Narvaez, Bertha Antonia Yumbo Tanguila, Gloria Lucrecia Tangui Grefa, Francisco Victor Tanguill Grefa, Rosa Teresa Chimbo Tanguila, Jose Gabriel Revelo Llore, Maria Clelia Reascos Revelo, Maria Magdalena Rodri Barcenes, Jose Miguel Ipiales Chicaiza, Heleodoro Pataron Guaraca, Luisa Delia Tanguila Narvaez, Lourdes Beatriz Chimbo Tanguil, Maria Hortencia Viver Cusangua, Segundo Angel Amanta Milan, Octavio Ismael Cordova Huanca, Elias Roberto Piyahua Payahuaje, Daniel Carlos Lusitand Yaiguaje, Benancio Fredy Chimbo Grefa, Guillermo Vicente Payagu Lusitante, Delfin Leonidas Payagu Payaguaje, Alfredo Donaldo Payagua Payaguaje, Miguel Mario Payaguaje Payaguaje, Teodoro Gonzalo Piaguaj Payaguaje, Fermin Piaguaje Payaguaje, Reinaldo Lusitande Yaiguaje, Luis Agustin Payagua Piaguaje, Emilio Martin Lusitande Yaiguaje, Simon Lusitande Yaiguaje, Armando Wilfrido Piagua Payaguaje, Angel Justino Piaguag Lucitande, Defendants.*

Docket Nos. 11–1150–cv(L)

11–1264–cv(CON).

United States Court of Appeals, Second Circuit.

Argued: Sept. 16, 2011.Decided: Jan. 26, 2012.

James E. Tyrrell, Jr. (Eric S. Westenberger, Jason W. Rockwell, John J. Zefutie, Brendan M. Walsh, Edward M. Yennock, Patton Boggs LLP, Newark, NJ; Julio C. Gomez, Gomez LLC, New York, NY; Carlos A. Zelaya, II, F. Gerald Maples, PA, New Orleans, LA, on the brief), Patton Boggs LLP, Newark, NJ, for Defendants–Appellants Naranjo et. al. John W. Keker (Elliot R. Peters, Jan N. Little, Steven A. Hirsch, Matthew M. Werdegar, on the brief), Keker & Van Nest LLP, San Francisco, CA, for Defendants–Appellants Steven R. Donziger and the Law Offices of Steven R. Donziger.

Randy M. Mastro (Andrea E. Neuman, Irvine, CA; William E. Thomson, Los Angeles, CA; Scott A. Edelman, Los Angeles, CA, on the brief), Gibson, Dunn & Crutcher LLP, New York, NY, for Plaintiff–Appellee.

Before: POOLER, WESLEY, and LYNCH, Circuit Judges.

GERARD E. LYNCH, Circuit Judge:

This appeal represents the latest chapter in the ongoing litigation between plaintiff-appellee Chevron Corp. (“Chevron”) and the defendants-appellants, elsewhere known as the Lago Agrio Plaintiffs (“LAPs” or “Ecuadorians”) and their American attorney Steven Donziger. Chevron brought the present action in part under New York's Uniform Foreign Country Money–Judgments Recognition Act (“the Recognition Act”), N.Y. C.P.L.R. §§ 5301–5309, which allows judgment-creditors to enforce foreign judgments in New York courts, subject to several exceptions. Chevron, a potential judgment-debtor, sought a global anti-enforcement injunction against the LAPs and Donziger prohibiting the latter from attempting to enforce an allegedly fraudulent judgment entered by an Ecuadorian court against Chevron.

On March 7, 2011, the Southern District of New York (Kaplan, J.) granted the global injunction, which the defendants-appellants now challenge. Chevron Corp. v. Donziger, 768 F.Supp.2d 581 (S.D.N.Y.2011) (“ Donziger ”). In an earlier order, we vacated that injunction and stayed the district court's proceedings pending the present opinion. Chevron Corp. v. Naranjo, No. 11–1150–cv(L), 2011 WL 4375022 (2d Cir. Sept. 19, 2011). We conclude that the district court erred in construing the Recognition Act to grant putative judgment-debtors a cause of action to challenge foreign judgments before enforcement of those judgments is sought. Judgment-debtors can challenge a foreign judgment's validity under the Recognition Act only defensively, in response to an attempted enforcement—an effort that the defendants-appellees have not yet undertaken anywhere, and might never undertake in New York. Consistent with our earlier order, we therefore reverse the district court's decision, vacate the injunction, and remand to the district court with instructions to dismiss Chevron's declaratory judgment claim in its entirety.

BACKGROUND

The story of the conflict between Chevron and residents of the Lago Agrio region of the Ecuadorian Amazon must be among the most extensively told in the history of the American federal judiciary.¹ We and other courts have previously described in detail the parties' underlying dispute, which concerns allegations that Chevron's predecessor extensively polluted the Lago Agrio region of Ecuador and claims that Chevron is liable for the resulting damages. See, e.g., Chevron Corp. v. Berlinger, 629 F.3d 297 (2d Cir.2011) ( “ Berlinger ”); Republic of Ecuador v. Chevron Corp., 638 F.3d 384 (2d Cir.2011) (“ Republic of Ecuador ”); Aguinda v. Texaco, Inc., 303 F.3d 470 (2d Cir.2002); Jota v. Texaco, Inc., 157 F.3d 153 (2d Cir.1998). The merits of that dispute are not now before us. We therefore summarize the details of the underlying conflict only where necessary.

I. Facts

From 1964 through 1992, Texaco and its subsidiary, Texaco Petroleum, or TexPet ²—with various partners, including the Ecuadorian government—engaged in oil extraction in the Lago Agrio region of the Ecuadorian Amazon. Jota, 157 F.3d at 155. In 1992, Texaco withdrew from the extraction efforts. Aguinda, 303 F.3d at 473. The next year, the LAPs filed suit in the Southern District of New York, alleging a variety of environmental, health, and other tort claims related to the extraction activities.³ The district court (Rakoff, J.) dismissed the plaintiffs' claims on grounds of international comity and forum non conveniens, stating that the case had “everything to do with Ecuador, and nothing to do with the United States.” Aguinda v. Texaco, Inc., 142 F.Supp.2d 534, 537 (S.D.N.Y.2001).⁴

We initially disagreed with the district court, requiring that Texaco make “a commitment ... to submit to the jurisdiction of the Ecuadorian courts” before a forum non conveniens dismissal was appropriate. Jota, 157 F.3d at 159; see also Aguinda, 303 F.3d at 475. After several more years of legal wrangling, Texaco accepted the condition established by this Court, but reserved, in its words, “its right to contest [the] validity [of an Ecuadorian judgment] only in the limited circumstances permitted by New York's Recognition of Foreign Country Judgments Act.”

In 1994, while the litigation was ongoing in the Southern District of New York, Texaco entered into a settlement with the Ecuadorian government and its government-owned oil company, Petroecuador (“the GOE settlement”). Under the settlement, as Chevron has previously characterized it before this Court, “TexPet funded certain environmental remediation projects in exchange for ... a release from liability for environmental impact falling outside the scope of that settlement.” Republic of Ecuador, 638 F.3d at 390. The settlement was finalized in 1998, after Chevron—which had acquired Texaco in 2001, see Berlinger, 629 F.3d at 300—spent roughly $40 million on the remediation. Ecuador and Chevron continue to litigate the validity and effect of the settlement before a Bilateral Investment Treaty arbitration panel. See Republic of Ecuador, 638 F.3d at 390.

After the dismissal of the New York action, the LAPs initiated a lawsuit against Chevron in Ecuador, the GOE settlement notwithstanding. After seven years of litigation, on February 14, 2011, the trial court issued its decision, finding Chevron liable for $8.6 billion of damages, with a $8.6 billion punitive damages award to be added unless Chevron apologized within fourteen days of the opinion's issuance. Chevron did not apologize; the pending judgment is thus for $17.2 billion.

Chevron alleges that the LAPs and their lawyers pursued that litigation by a variety of unethical, corrupt, and illegal means, including exercising undue influence in the process by which the Ecuadorian court selected Richard Cabrera Vega, its designated independent expert,⁵ and by controlling the subsequent production of Cabrera's supposedly neutral damages assessment. In re Application of Chevron Corp., 709 F.Supp.2d 283, 289 (S.D.N.Y.2010) ( “ Chevron I ”). Chevron also alleges that Donziger engaged in other threats against the Ecuadorian judiciary, by mobilizing protesters to intimidate the court by surrounding it on the dates of key hearings, and by enlisting political pressure from elected officials, including the President of Ecuador.

In 2005, Donziger contacted Joseph Berlinger, a prominent New York documentary filmmaker, and solicited him to make a film “to tell his clients' story.” See Berlinger, 629 F.3d at 302–03. Berlinger agreed, and the documentary he eventually produced, Crude: The Real Price of Oil, is presented as an insider's account of the entire epic, including details of the plaintiffs' various legal and political strategies in Ecuador, principally from Donziger's own unfiltered point of view. The version of Crude initially released in the United States, available for online streaming from Netflix, included footage suggesting that Cabrera, the purportedly independent expert, worked hand-in-glove with the plaintiffs in his investigations. Berlinger, 629 F.3d at 303–04. After Donziger discovered that footage, he insisted that Berlinger remove it from the version of the version of the film given theatrical release. Berlinger complied, but not before Chevron had seen, on Netflix, the scenes in question.

After discovering that footage,...