PHILADELPHIA (CN) - An environmental consulting firm must comply with a subpoena from Chevron that the oil giant hopes will root out evidence of fraud in an ongoing trial it faces in Ecuador.
Chevron, a Delaware company, has claimed that it has not faced a fair trial in Lago Agrio, Ecuador, where it is being sued for $113 billion in damages to remedy contamination allegedly caused by its subsidiary, Texaco, during 30 years of drilling in the country.
"It is an understatement to characterize the Lago Agrio litigation as contentious, as both sides of the litigation vigorously have opposed nearly every move by the other, and have accused the other side of criminal or fraudulent conduct in the course of the litigation," Judge Morton Greenberg wrote for the court's three-judge panel on Feb. 3.
Over the last several months, Chevron has filed discovery motions across the country to turn up evidence that might nullify a verdict for the Ecuadorians. The oil company claims that the lawyers representing the Ecuadorians, aided by teams of consultants and a corrupt Ecuadorian judiciary, have perpetrated a fraud.
To bolster this claim, Chevron has subpoenaed many of the law and consulting firms involved in the case. Over the firms' protests of attorney-client and work-product privileges, many courts have granted Chevron at least limited discovery.
Several judges have pointed to an implicit waiver of privilege because the Ecuadorians' legal team invited a documentary crew to film typically confidential strategy sessions. Judges who have looked at the filmmaker's footage or the e-mails that Chevron's discovery has uncovered have also pointed to the crime-fraud exception to ongoing privilege claims.
One of the firms Chevron has subpoenaed is the New Jersey-based consultancy Uhl, Baron, Rana & Associates. The oil giant claims that the firm colluded with a supposedly neutral expert appointed by the Lago Agrio court to craft a damages assessment for the environmental devastation caused by oil drilling in Ecuador.
After a District Court ordered UBR to produce all documents requested by Chevron, the firm appealed, lobbing the customary privilege claims, as well as casting doubt as to whether Chevron will use the subpoenaed documents in the manner it has suggested to the court.
The three-judge panel dismissed most of the claims but found that Chevron did not prove application of the crime-fraud exception. To ensure that the attorney-client privilege waiver was not "too sweeping," the panel said the lower court should review the relevant documents in camera.
Greenberg noted that the lower court's finding has "the potential to pierce the attorney-client privilege for documents that were not created or used in furtherance of the alleged fraud and thus are not subject to disclosure through the application of the exception."
Chevron claims that UBR had hired and was paying a technical staffer named Juan Cristóbal Villao Yepez who was also worked on the independent expert's team and helped prepare the global damages assessment report.
While the District Court found that evidence of this claim supported the crime-fraud exception, the appellate panel disagreed.
"Evidence of a crime or fraud, no matter how compelling, does not by itself satisfy both elements of the crime-fraud exception to the attorney-client privilege because to establish the second element of the exception the party seeking to circumvent the privilege by invoking the exception bears the burden of making a prima facie showing that there were communications between the client and attorney in furtherance of that fraud," Greenberg wrote. "We believe that the evidence in the record is simply too sparse for us to conclude that Chevron has met that burden."
The appellate judges overturned Chevron's request for UBR to turn over documents related to Villao, who is not a New Jersey resident, for lack of jurisdiction.
The ruling also notes that the court cannot order Villao, the technical expert, to turn over any relevant documents because it does not have jurisdiction over the non-New Jersey resident.