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Will Email Threads Uncover Fraud in an $18 Billion International Case?

Posted on April 24th, 2013

As email threads are now critical evidence in most civil litigation, it should be no surprise that email might be the key to determining whether massive fraud is at play in a very interesting case out of the Southern District of New York.

Chevron Corp. v. Steven Donzinger, et al., No. 11 Civ. 0691 (LAK)(S.D.N.Y. March 15, 2013) has an extremely long and sordid history. Prior to this American case, the underlying case concerned 47 Ecuadorian residents who, along with their American attorney and defendant to the present action, Steven Donzinger, filed a lawsuit in the Ecuadorian courts against Chevron. The underlying lawsuit alleged Chevron engaged in environmental torts in contrivance of Ecuadorian law. The Ecuadorian court entered a judgment against Chevron in the staggering amount of $18.2 billion.

Chevron filed the present suit Chevron v. Donzinger in the U.S. federal courts, alleging that this foreign judgment was the result of fraud and racketeering, among other claims. In the memorandum opinion dated March 15, 2013, the district court ruled on a Motion to Compel a third-party discovery subpoena, served on an American law firm (“PB”) whom Chevron alleges has critical email communications concerning the claims of fraud and racketeering.  Chevron could not get the information from the defendants, as they obtained an order from the Ecuadorian court, forbidding them from complying with the U.S. subpoenas.

The U.S. court ordered PB to produce responsive documents and data, including email communications, for the present case. PB alleged, among other objections, that it would take between 30 and 40 weeks to produce the documents and data, including privilege logging all email and electronically stored information (ESI).

In ruling that PB overstated its burden of production, the court noted it previously had suggested predictive coding to cull the production and ease the burden. As PB failed to address this point in their current arguments, “The logical inference is that PB failed to address the subject [predictive coding] because it would not have aided its argument.” The court also chastised PB for claiming their top attorneys would have to review the data, “But this Court sees no legitimate reason why…far less costly contract attorneys could not do all or most of the review, as is common in the legal community today…” The court went on to say that there was no “persuasive evidence” that these production costs were atypical for complex commercial litigation.

Indeed, although PB estimated its discovery costs at over one million dollars, the court noted that PB had over $300 million in gross revenues for 2012. Considering they also have a stake in the $18 billion pending Ecuadorian judgment, the costs of production was insufficient to impose an undue burden on PB.

ILS – Plaintiff Electronic Discovery Experts

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