U.S. Judge Kaplan Approved Secret Chevron Payments to Court Official Who Swayed RICO Case for Company

Allegations That Judge Lewis A. Kaplan Engaged in Cronyism With a Court Official Who Billed $1,330 Per Hour to Help Chevron Undermine Ecuador Environmental Judgment

NEW YORK, - Chevron secretly paid at least $245,000 – and likely well over $1 million – by transferring funds to the private account of a court official who made pivotal decisions in favor of the oil giant during the lead-up to its now-discredited civil “racketeering” case against Ecuadorian indigenous villagers, according to new evidence recently produced as part of a court order.

The evidence demonstrates that Chevron sent the funds in 2013 to the account of Max Gitter, a court-appointed Special Master who at the time was working as Senior Counsel at the high-profile corporate law firm Cleary Gottlieb. Gitter is a personal friend and former law partner of Lewis A. Kaplan, the controversial federal judge who presided over the Chevron “racketeering” (or RICO) case and who repeatedly has been accused of bias in favor of the oil giant in its multiyear attempt to try to taint a $9.5 billion environmental judgment against it handed down by Ecuadorian courts.  

Gitter and an associate were secretly billing Chevron a total of $1,330 per hour for their work sitting in weeks of depositions leading up to the civil RICO trial, which began in October 2013. That amount is more than many of the indigenous peoples in Ecuador who won the judgment make in one year, said Patricio Salazar, the Ecuadorian lawyer for the Front for the Defense of the Amazon (FDA), the group that represents the affected communities.

News that Chevron secretly paid Gitter based on a threadbare bill (see here) follow a stunning admission by the company that it paid its star witness in the RICO case – held without a jury -- at least $2 million in cash and other benefits. That Chevron witness, a former Ecuadorian judge named Alberto Guerra, later admitted under oath in a separate proceeding that he lied repeatedly about key facts Kaplan cited for findings in favor of the company. Kaplan’s findings have been rejected in whole or in part in five different unanimous decisions by appellate courts in Canada and Ecuador, including the entire Supreme Courts of both countries.

(For general background, see this blog on the bias of Gitter and Judge Kaplan during the RICO case. Here is a summary of the overwhelming evidence that led to the judgment against Chevron in Ecuador, where the company accepted jurisdiction. Ecuador’s Supreme Court affirmed the judgment against Chevron in a unanimous opinion in 2013.)

Steven R. Donziger, a solo practitioner and the longtime U.S. legal advisor to the Ecuadorians who Chevron sued under RICO for $60 billion before the company dropped all damages claims to avoid a jury, said it is unethical and a sign of potential corruption for a court-appointed Special Master to receive secret payments from one party in a litigation without disclosure to the adversary party. This is particularly true when the adversary party – in this case the Ecuadorian villagers -- was alleging bias on the part of the trial judge and the Special Master and seeking the removal of both, said Donziger.

The fact the payments were transferred to Gitter directly without disclosure and were not paid through his law firm is “highly suspicious and suggests consciousness by Gitter and Chevron that what they were doing was unethical, as it clearly was,” said Donziger. The lawyer has demanded Judge Kaplan allow him and his Ecuadorian clients to depose Gitter under oath, but Kaplan has yet to rule on the request.

“These secret payments from Chevron to a powerful court official are extremely worrisome,” said Donziger. “They suggest Chevron and Gitter knew they had something to cover up. Chevron was secretly paying huge sums to a man who was an extension of the judge and who exercised enormous power over the litigation and who did so consistently in favor of the company. The secret payments were encouraged by Judge Kaplan which further discredits his deeply flawed handling of the case. This is yet another example of why Chevron’s RICO judgment, obtained without a jury of impartial fact finders and based largely on fabricated witness testimony, has now been rejected in whole or in part by no fewer than 21 appellate judges around the world. 

“Another disturbing aspect of this affair is that Special Master Gitter clearly used a seminal human rights case involving vulnerable indigenous groups to personally enrich himself, no doubt believing that he would never have to disclose his bills or the amount he was paid,” added Donziger. “It is clear that Gitter billed $1,330 per hour for his work and that of an associate. One can understand just how revolting that must be to the indigenous peoples of Ecuador whose ancestral lands were almost completely destroyed by Chevron's pollution."

Some of the facts surrounding the Chevron payments to Gitter emerged only recently when he finally disclosed some of his billing documents, almost four years after the end of the RICO proceeding. They include:

  • Gitter was working as Senior Counsel at Clearly Gottlieb at the time he was Special Master but he never used the firm’s billing software. Instead, he simply sent Chevron the threadbare bill for a fixed sum ($245,425) for payment. Apparently without asking questions, the company sent Gitter a check for the full amount to his home address in upper Manhattan. Normally, such fees are paid to a lawyer’s firm. Even more unusual, another Cleary Gottlieb lawyer who worked with Gitter on the case used the firm's billing software and was paid by Chevron via the law firm.
  • When in the lead-up to the RICO trial in 2013 the Ecuadorians insisted that Gitter -- who was facing credible allegations of bias -- disclose his bills and who was paying his fees, he continually refused. Only years later, when Chevron filed a highly aggressive motion insisting that Donziger personally reimburse the oil giant a whopping $33 million for legal fees, did Gitter finally disclose the secret payments.
  • Gitter only released his back-up time sheets (see here) -- which seem to have been created hastily -- after Donziger insisted he be able to review them. Donziger recently filed a motion asking Kaplan to order Gitter to produce any metadata to determine when the time sheets were created.
  • As part of its fee application, Chevron also is asking Kaplan to order Donziger to reimburse the company for 100% of its secret payments to a second Special Master, former state court judge Theodore Katz, and a law associate from Gitter’s firm, Justin Ormand. Both worked alongside Gitter on the RICO matter. The fees of Gitter and his two colleagues total almost $900,000, with Ormand charging roughly $420,000 and Katz roughly $213,000. Donziger claims the Chevron fee motion is another SLAPP-style intimidation effort designed to silence his advocacy and threaten him with bankruptcy.
  • The bills also disclose that Ormand, the young associate at Cleary whom Gitter brought to most of the depositions, billed his time at $630 per hour. For Ormand’s work, Chevron paid Cleary roughly $394,000 without time sheets being provided (see here). Some of that total likely was distributed to Gitter as a senior lawyer in the firm. Unlike Gitter, Ormand used the firm’s billing software. (His completed time sheets, disclosed after Chevron paid his firm, are here.)
  • Ormand also billed for the work of several staff members at Cleary as well as his own first-class air travel and other perks, including roughly $800 for meals in Peru over four days after Kaplan ordered depositions of certain Ecuadorians to take place in the U.S. embassy in Lima. A typical meal in Peru usually costs no more than $10, said Salazar.
  • Gitter and Kaplan thus far have failed to act on multiple requests that they disclose the still-secret Chevron payments related to a separate portion of Gitter’s work in 2011 overseeing at least 20 days of depositions of Donziger and the filmmaker Joe Berlinger, who made a critically-acclaimed documentary about the case.  Those depositions were conducted by a team of approximately 20 Chevron lawyers with Gitter often taking over the questioning from Chevron. Chevron likely paid Gitter at least another $1 million for that portion of his work, which is directly related to the RICO matter, said Donziger.

Neither Kaplan nor Gitter has offered a defense to the secret payments, which Kaplan authorized after the Ecuadorians and Donziger stated they would not pay the bills of the Special Masters because of a paucity of funds. Separately, Donziger and his clients had objected to Gitter's appointment given evidence of his pro-Chevron bias and because of a conflict stemming from his long friendship with Kaplan. (See here for the objections.)

Donziger, a human rights lawyer who has advised the Ecuadorian communities since 1993 (see here for Donziger bio), has called for Kaplan’s recusal from ruling on the few remaining issues in the RICO case given his various conflicts and other problems as outlined in this legal filing. Donziger also said he plans to file a complaint about Judge Kaplan’s conduct under the federal Judicial Conduct and Disability Act, which governs ethical issues involving federal judges.

Separately, Donziger has referred Chevron officials and certain of its outside lawyers from the Gibson Dunn firm involved in the fabrication of evidence – including Randy Mastro, Avi Weitzman, and Andrea Neumann -- to the U.S. Department of Justice and the offices of three U.S. Attorneys for a possible criminal probe.  (See here for referral letter.)  Chevron’s main outside law firm, Gibson Dunn already has been sanctioned by the High Court of London for fabricating evidence to frame an innocent man who had run afoul of one of the firm’s clients. Chevron’s lawyers at Gibson Dunn coached Guerra for 53 days before he testified falsely in the RICO proceeding to try to frame Donziger in a fake fraud in Ecuador, according to this report.

Salazar, the Ecuadorian lawyer for the affected communities, said he was “astonished” to hear of the secret payments. “It is clear that Chevron was more than happy to pay 100% of the bills of Gitter because it knew he was a key part of the company’s scheme to help move the RICO case, despite massive legal and factual obstacles including outright witness bribery,” Salazar said. “News of these long-hidden payments and the circumstances around them are extremely disturbing to anybody who believes in the rule of law.”

As Special Master overseeing depositions in the RICO matter of several high-level Chevron officials, including then-CEO John Watson, Gitter continually tried to limit questioning that was likely to damage the company’s litigation position. For example, Gitter struck most questions about Chevron’s environmental contamination in Ecuador on which the court decision against Chevron was based. He also refused to permit questions about Chevron's fraudulent attempt to remediate the environmental damage in Ecuador and he ruled that any inquiries about the political pressure Chevron applied to Ecuador’s government to quash the case were off-limits. Kaplan backed virtually all of Gitter’s rulings when they were challenged.

Kaplan – who held undisclosed investments in Chevron during the trial -- also denied Donziger the right to litigate his extensive counterclaims alleging the company committed criminal violations and fraud in Ecuador and the United States. Kaplan made a number of intemperate remarks in favor of Chevron during the RICO proceeding, calling the Ecuadorian villagers the "so-called plaintiffs" and said "I got it from the beginning" regarding Chevron's allegations prior to holding even an evidentiary hearing, much less a trial. On two occasions, the federal appellate court overseeing Kaplan held extraordinarily rare hearings to consider his recusal from the case.

Donziger’s full statement in response to the news of Chevron’s secret payments to Gitter is here:

“Chevron’s secret payments to Special Master Gitter during the RICO trial are no more shocking than Judge Kaplan failing to throw out his clearly erroneous findings in the case, as proven by Chevron’s witness bribery and other fabricated evidence documented in our report Chevron’s RICO Fraud. The Chevron payments to Mr. Gitter can be added to the growing pile of unethical conduct by the oil company that has led to worldwide skepticism both of Judge’s Kaplan’s bizarre and inappropriate behavior and his flawed pro-Chevron factual findings based largely on fabricated evidence. The secret Chevron payments also suggest that Judge Kaplan and Mr. Gitter ran what looks like a pay-to-play scheme for Chevron in a taxpayer-funded U.S. federal court taking advantage of a human rights case brought by impoverished indigenous groups. This scheme was designed to help a powerful U.S. company evade its liability to the indigenous peoples it harmed in Ecuador, with the added benefit that Gitter could personally enrich himself. This is a very bad look for the federal judiciary and in my view it creates the perception, if not the reality, of official corruption. We will continue to draw the attention of the U.S. Department of Justice and foreign courts to these facts as the Ecuadorians enforce their environmental judgment. We also will continue to take all steps necessary to hold the U.S. lawyers working for Chevron at the Gibson Dunn firm, the Chevron executives who orchestrated their work, and relevant court officials involved in this abuse of power fully accountable for their unethical and possibly criminal misconduct. Ultimately, these efforts are about ensuring that the rule of law applies to Chevron and that the company will be held accountable to the people it continues to harm in Ecuador. ”

(For more background, see here for a legal brief outlining Kaplan’s bias; here for a report on how Chevron committed fraud during the RICO matter; here for comments by prominent attorney John Keker calling the RICO case a “Dickensian farce”. See this essay by Harvard lawyer Marissa Vahlsing for an insider’s view of Kaplan’s animus toward the Ecuadorians.)

For more information, please contact:

Karen Hinton
Phone: 703-798-3109

Steven Donziger