Opinion ID: 758333
Heading Depth: 1
Heading Rank: 1

Heading: facts

Text: 3 Understanding the issues requires a detailed outline of the procedural history of the litigation. 1. The Complaints 4 This case involves consolidated appeals from two actions filed on behalf of two putative classes. In one action, Aguinda v. Texaco Inc., Dkt. No. 93 Civ. 7527, 1994 WL 142006 (S.D.N.Y. April 11, 1994), certain residents of the Oriente region of Ecuador--primarily members of indigenous tribes--sued Texaco for environmental and personal injuries that allegedly resulted from Texaco's exploitation of the region's oil fields. In the other action, Ashanga v. Texaco Inc., S.D.N.Y. Dkt. No. 94 Civ. 9266, certain residents of Peru, who live downstream from Ecuador's Oriente region, assert similar injuries resulting from these activities. 5 Both complaints allege that Texaco polluted the rain forests and rivers in Ecuador and Peru during oil exploitation activities in Ecuador between 1964 and 1992. In particular, they allege that Texaco improperly dumped large quantities of toxic by-products of the drilling process into the local rivers, contrary to prevailing industry practice of pumping these substances back into the emptied wells. Additionally, they allege that Texaco used other improper means of eliminating toxic substances, such as burning them, dumping them directly into landfills, and spreading them on the local dirt roads. They also allege that the Trans-Ecuadoran Pipeline, constructed by Texaco, has leaked large quantities of petroleum into the environment. The named plaintiffs allege that they and their families have experienced various physical injuries, including poisoning and the development of pre-cancerous growths. 6 The complaints sought money damages under theories of negligence, public nuisance, private nuisance, strict liability, medical monitoring, 1 trespass, civil conspiracy, and violations actionable under the Alien Tort Act, 28 U.S.C. § 1350 (ATA). The plaintiffs also sought equitable relief to remedy the contamination and spoliation of their properties, water supplies and environment. 2 2. Texaco's Motion to Dismiss 7 In December 1993, Texaco moved to dismiss on the grounds of (i) failure to join an indispensable party--the Republic of Ecuador, (ii) international comity, and (iii) forum non conveniens. Inherent in all three defenses was the close participation of the Ecuadoran government in the activities for which Texaco was sought to be held liable. Elaborating its grounds for dismissal, Texaco submitted an affidavit by the president of a Texaco subsidiary, averring the following facts. Texaco had participated in oil drilling in Ecuador exclusively through its fourth-level subsidiary, Texaco Petroleum Company (TexPet). Beginning in 1965, TexPet operated a petroleum concession for a consortium (the Consortium) owned in equal shares by TexPet and Gulf Oil. 3 Oil was first discovered in the Oriente in 1969, and was extracted thereafter by the Consortium. In 1974, the Ecuadoran government, through its state-owned oil agency, currently known as PetroEcuador, obtained a 25 percent share of the Consortium. By 1992, PetroEcuador had become the sole owner of the Consortium. 4 8 In addition to evidence presented by Texaco suggesting that the Republic had been heavily involved in the drilling operations and had eventually become the sole operator, Texaco submitted a copy of a letter written by Ecuador's ambassador to the United States and addressed to the United States Department of State. In that letter, Ambassador Edgar Teran asserted that the Republic considered this action (as well as a similar case brought by other plaintiffs in the Southern District of Texas, Sequihua v. Texaco, Inc., 847 F.Supp. 61 (S.D.Tex. 1994), an affront to Ecuador's national sovereignty). Ambassador Teran stated that Ecuador had a paramount interest in formulating its own environmental and industrial policies, and that Ecuador's courts were open to adjudicate such disputes. 3. District Court's Initial Decision 9 In an order filed in April 1994, the District Court (Vincent L. Broderick, District Judge), reserved decision on Texaco's motion. See Aguinda v. Texaco, Inc., No. 93 Civ. 7527, 1994 WL 142006 (S.D.N.Y.1994). The Court acknowledged that forum non conveniens dismissal might be appropriate as to the claims seeking money damages. Judge Broderick reasoned that [d]isputes over class membership, determination of individualized or common damages, and the need for large amounts of testimony with interpreters, perhaps often in local dialects, would make effective adjudication in New York problematic at best. Id. at  2. However, he stated, any dismissal on this ground would be contingent on Texaco's first agreeing to submit to personal jurisdiction in the courts of Ecuador. The Court further suggested that even if Texaco filed such a stipulation, the Court might retain jurisdiction over the injunctive portions of the action. 10 The Court also reserved decision as to dismissal on the basis of international comity, but noted that there appeared to be no conflict between the laws of Ecuador and the United States. Finally, the Court declined to consider dismissal for failure to join Ecuador and PetroEcuador, reasoning that the parties had yet to develop a sufficient record. 11 4. District Court's Grant of Texaco's Motion to Dismiss 12 Following Judge Broderick's death, the case was reassigned, ultimately to Judge Rakoff. After a significant period of discovery, Texaco renewed its motion to dismiss. Counsel for the Republic submitted an amicus brief, supporting Texaco's motion to dismiss, once again informing the Court that the Republic objected to United States jurisdiction over the case. That brief was accompanied by an affidavit to the same effect signed by Ambassador Teran, again expressing the Republic's position. 13 In response, the plaintiffs submitted three documents signed by representatives of the Ecuadoran National Congress, indicating their support for the plaintiffs' action. In one, the President of the Congress and four committee presidents wrote to Ecuador's President and Foreign Minister expressing their concern over the position that Ambassador Teran had taken. They stated that [i]n our judgment the Ecuadorian government should not intervene in the development of this trial, much less show bias openly in a way that benefits the interests of the Texaco company. In the second document, Dr. Isauro Puente Davila, a legislator who served as the President of the Special Permanent Commission on Environmental Defense, issued an official announcement that 14 only the adjudication of jurisdiction in the claim filed by Ecuadorians ... in a federal court of N.Y. against the Texaco Company, will bring to those affected the possibility of finding just treatment and a solution to the serious situation that they are going through.... 15 In the third document, Dr. Puente wrote Judge Rakoff and enclosed a resolution of the Special Permanent Commission on Environmental Defense supporting the litigation. This resolution was stamped with the seal of the General Secretaryship of the National Congress. 16 In November 1996, the District Court granted Texaco's motion to dismiss, as it related to the Aguinda plaintiffs. See Aquinda [ 5 ] v. Texaco, Inc., 945 F.Supp. 625 (S.D.N.Y.1996). Judge Rakoff stated that he found persuasive the forum non conveniens and international comity holdings made by the Southern District of Texas in the Sequihua litigation. See Sequihua v. Texaco, Inc., 847 F.Supp. 61 (S.D.Tex.1994). [T]he Court finds itself obliged to dismiss this action on the same grounds of international comity and forum non conveniens so well stated in Sequihua, to which this Court can add little. Aquinda, 945 F.Supp. at 627. 17 The Court also dismissed for the independently-sufficient reason of failure to join indispensable parties, namely, PetroEcuador and the Republic of Ecuador. See id. Judge Rakoff reasoned that without these parties, it would be impossible to achieve the extensive equitable relief sought by the plaintiffs: 18 In the absence of Petroecuador and the Republic of Ecuador, any order of this Court granting any material part of the Ecuador-directed equitable relief demanded by plaintiffs would be unenforceable on its face, prejudicial to both present and absent parties, and an open invitation to an international political debacle. 19 Id. at 628. 20 Judgment was entered in the Aguinda case on November 13, 1996. The Court directed the parties in the Ashanga case to submit memoranda of law as to whether that case should be controlled by the dismissal in Aguinda. 21 5. District Court's Denial of Motions (i) to Reconsider Judgment and (ii) to Intervene 22 The plaintiffs in the Aguinda action moved for reconsideration, representing that the Republic was now willing to participate in that action as an intervenor. Thereafter, the Republic filed a motion to intervene. In an affidavit accompanying that motion, Ecuador's Attorney General stated that he was summariz[ing] the official judicial position of the Republic of Ecuador, and concluded that 23 [t]he intervention ... does not under any concept damage the sovereignty of the Republic of Ecuador, instead it looks to protect the interests of the indigenous citizens of the Ecuadorian Amazon who were seriously affected by the environmental contamination attributed to the defendant company.... 24 In March 1997, the District Court ruled that the Republic's motion to intervene was not sufficiently precise. Plaintiffs' counsel had represented that due to an Ecuadoran election, and a subsequent change of administration, the Republic was now willing to waive sovereign immunity and consent to the jurisdiction of the District Court. However, the Court ruled, the intervention motion filed by the Republic had not expressly and unequivocally state[d] that [it] was prepared to waive sovereign immunity. The Court requested that the Republic 25 provide fresh written assurances ... that the Republic of Ecuador, if it still desires to intervene in this law suit, is expressly prepared to waive sovereign immunity and submit fully to the jurisdiction of this Court (including jurisdiction over any counterclaims and cross-claims that may be filed against Ecuador in connection with this action). 26 In response, the Attorney General of Ecuador again wrote the District Court, but stopped short of agreeing to the conditions required by the Court. The Attorney General explained that Ecuador ratifies it[s] participation in this lawsuit in support of said persons in order to procure the necessary indemnization in order to alleviate the environmental damages caused by Texaco. While the Attorney General agreed, somewhat obliquely, to allot the entire value of the indemnization to the projects and works of remediation which might be necessary, he made clear that the Republic did not agree to waive its sovereign immunity defense as to any claims made by parties other than the Aguinda plaintiffs. Thus, the Republic appeared unwilling to defend claims presented either by Texaco or by the Ashanga plaintiffs. 27 In August 1997, the District Court denied both the Aguinda plaintiffs' motion for reconsideration and the Republic's motion to intervene. See Aquinda v. Texaco, Inc., 175 F.R.D. 50 (S.D.N.Y.1997). The Court characterized the Republic's motion as patently, and prejudicially, untimely. Id. at 51. In Judge Rakoff's view, Ecuador had not shown any reason why the Court should consider its post-judgment change of position in now supporting the Court's jurisdiction over the case. Additionally, the Court ruled that Ecuador was not entitled to place limitations on its participation in the case, and would have to be willing to subject itself to possible counterclaims and cross-claims in order to intervene. 28 Thereafter, on August 13, 1997, the Court entered judgment dismissing the complaint in the Ashanga case.