Secret witnesses in Chevron's RICO trial raise constitutional concerns

October 20, 2013: 1:59 PM ET

Questions arise about due process clause, sixth amendment.

By Roger Parloff, senior editor

FORTUNE -- In Chevron's (CVX) civil racketeering suit in Manhattan against environmental lawyer Steven Donziger, Chevron is seeking to call two Ecuadorian witnesses to testify in a courtroom closed to the public and to Donziger himself, in order to protect the witnesses from reprisals for their testimony.

Donziger's attorneys would be permitted to participate at the hearing, under the proposal articulated by Chevron's attorneys at Gibson, Dunn & Crutcher, but would not be permitted to reveal the witnesses' identities to Donziger. After the testimony, redacted transcripts could  be made public, according to the proposal.

U.S. District Judge Lewis Kaplan has not yet ruled on the closed-courtroom proposal, whose details and logistics are all subject to further modification and could, indeed, become moot if the witnesses back out.

At least one of the witnesses would offer testimony that, if believed, would corroborate Chevron's claim that Donziger bribed an Ecuadorian judge to allow Donziger's colleagues to ghostwrite the entire 188-page, $19 billion environmental judgment against the oil company that was handed down in Lago Agrio, Ecuador, in February 2011, according to a memorandum filed last May by Chevron's lead lawyer, Randy Mastro.

MORE: Chevron's RICO trial against Donziger begins

Late last week Judge Kaplan ordered the witnesses' sealed affidavits to be turned over to Donziger's lawyers, Richard Friedman and Zoe Littlepage, subject to a protective order forbidding them from sharing their content with their client. He then invited further input from the defense lawyers before ruling on Chevron's proposal. Kaplan has previously ruled that these witnesses, known as John Does 3 and 4, do have well-founded fears of economic and physical reprisals in Ecuador, where they still live and where President Rafael Correa has been an outspoken and, lately, overtly menacing champion of Donziger's case.

The closed-courtroom procedures, which Donziger's legal team has previously likened to "the Spanish Inquisition or the Star Chamber," would raise sensitive constitutional questions under the Due Process Clause.

In a criminal case, such procedures would also violate the Sixth Amendment, which guarantees defendants the right "to be confronted with the witnesses against him." But Chevron's case against Donziger is civil, not criminal, and the law is fairly clear that the Sixth Amendment does not apply.

MORE: Chevron asks judge to review mystery documents in Ecuador case

Donziger attorney Richard Friedman has so far refused to agree to any variant of the procedure. In email exchanges with Chevron's counsel, which have been filed in court, he has argued that Donziger "knows more about this case than anyone on our side. Insulating us from him on this very important issue obviously has a direct and negative effect on our ability to do our jobs."

Friedman has also argued that while the case is formally civil, it is in practice quasi-criminal and, therefore, should be subject to the Sixth Amendment confrontation clause. He stresses that Chevron is suing under the Racketeer Influenced Corrupt Organizations Act (RICO), which incorporates criminal law concepts and carries the potential for inflicting criminal-like stigma, Friedman contends, even when applied civilly.

In its suit Chevron alleges that Donziger and his colleagues with the Quito-based Amazon Defense Front won the Ecuadorian judgment by means of extortion, bribery, mail and wire fraud, witness tampering, obstruction of justice, and money laundering. The Ecuadorian judgment was the culmination of a suit brought in Lago Agrio by Donziger and the Front in 2003, seeking damages for contamination allegedly left behind by Texaco from its drilling there between 1964 to 1990. Texaco was acquired by Chevron in 2001.

It has been known since January that Chevron would call as a witness (publicly) a former Ecuadorian judge, Alberto Guerra Bastidas, who will testify that he acted as an intermediary in striking the alleged bribery deal whereby Donziger and two Front leaders promised to give Nicolás Zambrano, the then presiding judge in the Lago Agrio case, $500,000 from any recovery in exchange for letting the Front's team write the judgment.

Former judge Zambrano has submitted an affidavit denying Guerra's claims, and Donziger has said he will call Zambrano as a defense witness in the RICO case. (In a statement filed last April Donziger wrote, "I have never sought to pay any money in exchange for a favorable verdict in the Lago Agrio litigation, nor have I ever encouraged or solicited anyone else to discuss or pursue paying money for a favorable verdict.")

Donziger also argues that Guerra's testimony should not be credited because Chevron paid him $38,000 for various forms of physical evidence he provided (computers, phones, hard drives, and banking, courier, and phone records); provided him with financial support to relocate his and his son's families to the United States; and has committed to paying him a $12,000 per month stipend for living expenses and attorneys fees for two years, while he seeks political asylum and his family gets its footing in this country. Chevron maintains that Guerra reasonably feared for his safety and security had he stayed in Ecuador, justifying the expenditures on his relocation to the U.S. (Front lawyer Pablo Fajardo did, in fact, file a criminal complaint against Guerra in February and Ecuador has commenced a criminal inquiry. Zambrano, in contrast, is not known to be the subject of any Ecuadorian criminal inquiry and this past July landed a well-paying job as a legal assistant for a state-owned oil joint venture, according to Chevron. This was so notwithstanding Zambrano's having been dismissed from the Ecuadorian bench in February 2012 for alleged improprieties in his handling of a narcotics case. According to disciplinary records and newspaper accounts, Zambrano released an accused drug trafficker -- arrested in connection with a 500-kilo cocaine bust -- on his own recognizance, never to be seen again.)

The two Doe witnesses could potentially provide important corroborating evidence of Guerra's account. John Doe 3's sealed affidavit, Chevron wrote in May, "corroborates Guerra's testimony and undermines Zambrano's. In particular, Doe 3 makes clear that Zambrano lacks credibility, attesting to the fact that he had financial interests in civil cases pending before him, that others ghostwrote his opinions in civil cases, and that he was particularly close to Guerra. … And Doe 3 also responds to various false statements in the Zambrano declaration."

Doe 4, according to a Chevron filing in August, "corroborates Chevron's evidence of improper and corrupt dealings with the government of Ecuador in connection with the [Front leaders'] prosecution of the Lago Agrio case and the pressure campaign against Chevron."

Last January Chevron submitted sealed affidavits from two other secret witnesses, John Does 1 and 2, whose affidavits Kaplan also allowed to be viewed only by the RICO defendants' attorneys, not by the defendants themselves. (The other defendants besides Donziger are two individuals who served as plaintiffs in the Lago Agrio case, who are represented by Julio Gomez of Westfield, New Jersey.) Does 1 and 2 were also said to corroborate Guerra's account, but Chevron has since indicated that they will not be testifying at trial.

In finding that Does 3 and 4 need protection, Judge Kaplan has relied in part on a ruling he made in February regarding the need to protect the identities of Does 1 and 2. There he emphasized, among other considerations, the fact that Front leaders Pablo Fajardo and Luis Yanza have publicly threatened Guerra and a second Chevron witness with slander suits and criminal prosecution in Ecuador "based on their submission of evidence in New York"; evidence showing that Front leaders instigated the prosecution of two Chevron in-house lawyers to advance the Front's prospects in its civil litigations; and "ample evidence" that Donziger, the Front, and their allies "deliberately pursued a strategy of intimidation and coercion aimed at the judiciary at least until the point at which they are alleged to have bribed the trial judge, thus perhaps making further intimidation unnecessary."

The evidence of danger to Ecuadorian witnesses has, if anything, grown more acute since Judge Kaplan's ruling last February, Chevron contends, because President Correa has, since February, waged an aggressive campaign of denouncing Ecuadorian attorneys and witnesses who cooperate with Chevron's case against Donziger, branding them "traitors," "criminals," "collaborators," and "enem[ies] of the country," and warning that "We will not let this go unpunished." A web site entitled Los Vendepatria (The Homeland-Sellers) recently launched listing the identities of Ecuadorians who actions are alleged to have aided Chevron in any way, including attorneys, experts, witnesses, public officials, and journalists.

(These might not be idle threats. In 2011 Correa famously brought criminal libel charges against an El Universo columnist, the paper, and three of its directors after it published what he considered to be unwarranted criticism. Less than 33 hours after his appointment to hear the case, a magistrate issued a 156-page ruling imposing a $42 million fines and assessing each individual a three-year prison term. "A subsequent independent investigation," according to the Washington Post, "later determined that [the magistrate] did not write [the ruling], and that the author was probably Correa's attorney." The magistrate and Correa's attorney denied the ghostwriting charges. The individual defendants were later pardoned.)

Finally, it appears to be undisputed that at least three confidential Chevron documents, which, under protective orders issued by Judge Kaplan, were not supposed to be viewed by anyone other than counsel working on the RICO case, have turned up, respectively, on the Front's web site, in an article in a state-owned Ecuadorian newspaper, and as an attachment to emails sent to and from a top legal advisor to President Correa.

Trial advocacy expert Paul Zwier II, an Emory law school professor and the director of its Program for International Advocacy and Dispute Resolution, says that the Federal Rules of Evidence "give the judge the ability to control the 'mode and order' of proof in civil cases, with lots of discretion, so the judge can decide what's necessary to prevent harassment of witnesses." He adds that there are precedents holding that the Sixth Amendment confrontation clause does not apply in civil RICO cases.

"It does seem to me," he continues, "that in this context Kaplan could easily say, 'It's my judgment that this is what's necessary here to protect the witnesses.' "

At the same time, he acknowledges, "civil RICO sits on the edge of having confrontation clause problems," and "this is always is one of those things that makes you really uncomfortable."

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