Chevron Loses Discovery Access to Penn. Lawyer

PHILADELPHIA (CN) - A Pennsylvania lawyer and his firm did not forfeit their attorney-client privilege rights by letting a documentary crew film strategy sessions in the multibillion environmental litigation against Chevron, the 3rd Circuit ruled.

In tossing the overbroad discovery ruling, a three-judge appellate panel noted that Chevron may still use the crime-fraud exception on remand to get a hold of the disputed materials.

U.S. District Judge Jan DuBois had given the Delaware-based oil giant sweeping discretion in its bid to subpoena Joseph Kohn and Kohn, Swift & Graf, attorneys for a group of Ecuadorean natives suing Chevron over damage to their community from 30 years of drilling in the country conducted by Texaco, which became a Chevron subsidiary in 2001. That lawsuit is on appeal after a judge in Lago Agrio, Ecuador, ordered Chevron to pay $18.2 billion.

While the trial was ongoing however, the Ecuadoreans' team launched a massive media campaign to draw international attention to the case and mount pressure on Chevron. Vanity Fair, "60 Minutes" and a documentary film crew led by director Joseph Berlinger all descended on the tiny country to publicize the case.

Ultimately, Berlinger's 2009 documentary, "Crude," inspired Chevron to launch an assault of discovery against the various players behind the Ecuadoreans' case.

As well as providing a wrenching look at the environmental devastation wrought in the Amazon by oil drilling, "Crude" also gives audiences a front-row access to the contentious legal battle.

Chevron claimed that the film hinted at judicial misconduct, and claimed Berlinger's outtakes contained even more evidence. Since the lawyers let Berlinger into these questionable strategy sessions, they had waived attorney-client privilege, according to Chevron.

Several judges around the country agreed, granting Chevron's discovery requests. Kohn's case was a prominent example.

"To allow the Lago Agrio plaintiffs to waive privilege expansively for favorable documents and information as part of a calculated public relations campaign and then shield related documents behind the screen of privilege would be to permit the use of privilege and the work-product doctrine as both sword and shield, an abuse that courts have discouraged," DuBois wrote.

The judge declined to look at the question of crime-fraud exception for that same reason.

Claiming that he had nothing to do with any alleged fraud in the Lago Agrio courts, Kohn did not object to producing the discovery Chevron requested. Weeks before DuBois ruled to grant discovery, Kohn and his firm produced an 833-page privilege log, which the lawyers said required hundreds of man hours, reviewing and cataloging more than 15,000 emails, about 40,000 pages of hard-copy documents and nearly 5,000 electronically stored documents.

Kohn took a neutral position, but the Ecuadorean plaintiffs and the Republic of Ecuador intervened to challenge the subpoena and ultimately appealed.

In the wake of DuBois' order, the 3rd Circuit granted a temporary and then permanent stay pending appeal. Chevron's opponents in Ecuador claim that attorney-client privilege could never had attached to the filmed meetings since "strangers" were present, and thus privilege could not have been waived.

On Wednesday, the Philadelphia-based federal appeals court agreed.

"Because the communications were not made 'in confidence' due to the presence of the 'Crude' filmmakers, they were not privileged to begin with, and there was no privilege to waive by their disclosure," Judge Morton Greenberg wrote for a three-judge panel. "Accordingly, there is no justification for finding any waiver of the attorney-client privilege for Kohn's communications relating to the Lago Agrio litigation on the basis of disclosures made during the filming of Crude and its outtakes, even if those disclosures were selective, given that the communications disclosed were not privileged when made."

The possibility of crime-fraud exception to such privilege must be determined on remand, the 44-page ruling states.

A spokeswoman for the Ecuadorean plaintiffs praised the ruling and called upon the federal judge in Manhattan, who has dealt with the bulk of Chevron's litigation efforts, to take note. U.S. District Judge Lewis Kaplan in New York has ruled on about a year's worth of litigation in this case, and most of his rulings have found merit in Chevron's claims.

Karen Hinton, spokeswoman for the Ecuadoreans, said the 3rd Circuit's "decision once again illustrates how Judge Kaplan ... has become more and more of an extremist in the federal judiciary given his rulings on the Ecuador case."

Chevron, for its part, seems unconcerned that this discovery has not yet panned out in its favor.

"The Lago Agrio plaintiffs' lawyers, including Joseph Kohn, have admitted the criminal and fraudulent nature of dealings with Ecuadorian court officials," spokesman Kent Robertson said in a statement. "Meanwhile, several other U.S. federal courts already have found that the crime-fraud exception applies. Chevron will continue its efforts to expose the full extent of the plaintiffs' lawyers' criminal and fraudulent conduct."

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