An $8 billion decision against Chevron – what does it mean?

As David and Goliath stories go, it would be tough to match the struggle between poor, marginalized communities and one of the most powerful companies in the world, Texaco (now merged with Chevron), facing off in the Ecuadorian Amazon. That those communities just won a record-breaking $8.6 billion decision against the company is remarkable. The case is far from over – Chevron will continue to “fight until hell freezes over, and then skate on the ice” (in the words of its prior General Counsel) – but some initial reflections are in order.

I made my first trip to the region in 1993 as part of a rag-tag team of lawyers searching for potential plaintiffs for this quixotic case against Texaco. At the time, Texaco had just departed Ecuador, leaving over 900 open waste pits scattered through the jungle and an estimated 18.5 billion gallons of toxic waste dumped into surrounding rivers and streams over a 25-year period. The company, with annual earnings three times the GDP of Ecuador, had been given free rein to open up the Amazon and dispensed with any efforts to protect the environment or population.

We had no trouble finding plaintiffs – people were surrounded by the waste and contamination, which was openly seeping into their only sources of water. An estimated 30,000 people were affected by Texaco’s operations (one group of indigenous peoples disappeared). When the company finished it simply walked away.

Cutting through the background noise and legal wrangling, there should be little doubt about Texaco’s (and now Chevron’s) culpability. Yes, the state oil company has since done additional damage to that area and yes, under pressure, the company came back and did superficial remedial work, consisting largely of filling a portion of the pits with dirt, but neither absolves the company for the extensive environmental damages and harm suffered by communities.

Legal liability is a different matter. Chevron-Texaco has gone to extraordinary lengths to fight the charges and the initial suit has spawned litigation across a dozen courts. Despite the very heartening decision by the Ecuadorian judge, the plaintiffs may never ultimately prevail. The case reflects a broader pattern of corporate impunity. As companies seek resources and markets in ever more remote corners of the world, over-burdened, under-resourced, often corrupt governments and courts, with limited jurisdiction, pose little threat. This case is an anomaly in how much legal attention it’s received; a tiny sliver of the other 80,000 multinational corporations operating around the world can expect to face serious legal challenges. Some high profile and worthy efforts to bring these cases to the United States under the Alien Tort Statute have yet to yield a single final legal victory.

That’s not to dismiss the importance of litigation. Even a losing case, can do much good; but it has to be part of a broader strategy. The lawsuit against Texaco joined nascent local organizing; it injected critical energy, attention, and focus to help mobilize communities, NGOs, and social movements (indigenous, environmental, religious). They formed a network – the Amazon Defense Front – around the case, which continues to be a major local and national actor on oil issues. With media attention, ministers and congressional representatives were moved to visit the area and passed new laws and policies to govern the oil industry. The case put other companies on notice and it became common to hear oil representatives defend themselves by declaring – “we aren’t Texaco”. When the case was moved from a US court to Ecuador, it forced constructive reforms in the national judicial system and the local courts to meet the unprecedented demands of a class action toxic tort case.

Working with grassroots communities and social movements does not come easy to litigators. It inevitably complicates and politicizes cases and requires much more time and resources. But the alternative risks doing damage to environmental or human rights causes. Cases can provoke and mobilize, but they can just as easily remove critical energy and initiative from local actors to lawyers and distant courtrooms. The rare legal victories won’t get to the roots of problems. Dealing with corporate perfidy in a place like Ecuador requires long-term engagement by local actors; the utility of litigation should be measured against that broader aim.

In that vein, the Chevron-Texaco case prompts one additional reflection: the need for systemic approaches. While Texaco built the roads, dug the wells, dumped the wastes, a compliant Ecuadorian government, weak regulators, a failing judiciary, a complicit state oil company, and pressure from the US government and international financial institutions allowed it to happen. A sustainable solution to destruction in the Amazon requires attention to all of these actors as part of a larger system. That underscores the importance of strengthening local civil society actors, building alliances and leverage at the international level and using new communications tools to connect efforts. It also calls for new legal instruments capable of covering all relevant actors across national boundaries, along the lines of the UN Ruggie Framework and the recently passed Dodd-Frank Financial Reform Legislation.