Expert Report- George Priest
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Transcript of Expert Report- George Priest
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
CHEVRON CORPORATION, Plaintiff, -against- Case No. 11-CV-3718 (LAK) STEVEN DONZIGER, et al., Defendants. ________________________________
EXPERT REPORT OF PROFESSOR GEORGE L. PRIEST
I. Initial Statement of Qualifications
1. I am the Edward J. Phelps Professor of Law and Economics at Yale Law
School, teaching courses in torts, insurance, insurance regulation, antitrust, regulated
industries, civil procedure, contracts, and commercial law, among other subjects. I have
served as a professor at Yale Law School since 1980. I served as the John M. Olin
Professor of Law and Economics at Yale Law School from 1986 through 2008.
2. I received a Bachelor of Arts degree from Yale in 1969 and a law degree
from the University of Chicago in 1973.
3. Throughout my career, my research has been in the field of law and
economics. I have published numerous articles in the areas of law and economics.
4. My background includes both the study and knowledge of remedies,
including both compensatory and punitive damages remedies. I have taught and
published about compensatory and punitive damages for many years. I have conducted
extensive empirical research projects regarding damages remedies, again of both
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compensatory and punitive damages. Since 1980, I have served as a consultant to the
Rand Corporation's Institute for Civil Justice in Santa Monica, California. With the
support of the Rand Corporation, I organized and directed empirical studies of civil jury
verdicts in the Chicago and San Francisco courts, the first major trial court studies of
their kind. See Peterson & Priest, The Civil Jury, Trends in Trials and Verdicts, Cook
County, Illinois, 1960-1979, Rand Corp., R-2881-ICJ (1982). The many important and
influential studies of civil jury verdicts by Rand Corporation scholars over the past
decade and a half all derive from this data source. I have also published several articles
discussing punitive damages with respect to the economic theory of punitive damages,
the economic effects of punitive damages verdicts, and articles presenting empirical
studies of punitive damages verdicts. I published an empirical study of punitive damages
verdicts using the trial court data described above in 1982, perhaps the first published
empirical study of punitive damages. Priest, Punitive Damages and Enterprise Liability,
56 So. Cal. L. Rev. 123 (1982).
5. Over the course of my career, I have published articles in the following
peer-reviewed economics journals: Journal of Law & Economics, Journal of Legal
Studies, Research in Law and Economics, Journal of Law, Economics & Organization,
Journal of Economic Perspectives, Journal of Risk & Uncertainty, Geneva Papers on Risk
and Insurance, the Italian journal Mercado, concorrenza, regale (Market, competition,
regulation), Journal of Reprints for Antitrust Law and Economics and, most recently,
Journal of Labor Economics and Supreme Court Economic Review.
6. I have served as a peer-review referee for the following economics
journals: American Economic Review, Economic Inquiry, Journal of Political Economy,
Review of Economics and Statistics, Rand Journal of Economics, Journal of Law &
3
Economics, Journal of Legal Studies, and Journal of Law, Economics & Organization. I
have also served as a peer-review referee for the National Science Foundation, Law and
Social Science, Economics Division, for Law & Society Review, and for the journal
Science.
7. I have held appointments as a Visiting Professor in the Department of
Economics, University of Miami and the Department of Economics, University of
Toronto.
8. In 1991, I was elected the first President of the American Law and
Economics Association by the Association's members.
9. I have testified many times before Congress, before many state
legislatures, and before state and national regulatory commissions on civil judgment
damages issues, among other issues.
10. I have been invited numerous times to present lectures on economics-
related issues to state legislators, regulators, and state and federal appellate judges. For
many years, I have conducted a regular course on economics subjects, including
damages, for federal appellate judges and federal bankruptcy judges in a federal judicial
instruction program managed by George Mason University. I have also conducted
courses on economic subjects in an instructional program for state court judges managed
by the University of Kansas School of Law. I have lectured abroad on civil justice issues,
including damages, on many occasions. For the past 18 years, I have attended an annual
seminar on legal issues conducted by Yale Law School, chiefly addressing Latin
American legal issues, attended by law professors from most Latin American countries.
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11. From 1987 to 1989, I served on the American Bar Association President's
Commission to Improve the Liability Insurance System.
12. My experience extends beyond the academic. For the past twenty-one
years, I have served as a Special Master in the United States District Court for the District
of New Jersey in the litigation, McLendon v. The Continental Group, Inc., upon reference
by the Honorable H. Lee Sarokin and, subsequently, under the Honorable Dickinson R.
Debevoise. The McLendon case is a nationwide class action comprising over 7,000
settlement participants which was settled in 1990 for the sum of $415 million, and the
monitoring of this settlement continues today.
13. I have presented testimony on economics subjects, including damages,
either at trial, in deposition or by expert report in the following federal courts: the
Northern, Middle and Southern Districts of Alabama, Central and Northern Districts of
California, District of Connecticut, Middle and Southern Districts of Florida, Northern
District of Illinois, District of Maryland, District of Nevada, District of New Jersey,
Eastern District of New York, Northern District of Ohio, Northern District of Oklahoma,
Eastern and Western Districts of Pennsylvania, Middle District of Tennessee, Eastern
District of Texas, and the Court of Federal Claims; in federal Bankruptcy Courts for the
District of Delaware, Eastern District of Louisiana, the Southern District of New York
and the Western District of Pennsylvania; in state courts in the following states:
Alabama, Alaska, Arizona, California, Colorado, Connecticut, Florida, Iowa, Kansas,
Massachusetts, Michigan, Minnesota, Montana, New Jersey, New Mexico, New York,
Ohio, Tennessee, Texas, and West Virginia; and also in Ontario, Canada and Barcelona,
Spain.
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14. I view my expertise on the issues raised in this litigation to be based
upon the following:
a) my study and research for over 38 years of the economic principles of the operation of damages judgments;
b) my study over the same period, both theoretical and
empirical, of the application of damages judgments in civil litigation; and
c) my years of teaching the economic principles underlying
civil damages judgments and of the effects of such judgments.
15. My publications are listed in my current resume which is attached as
Appendix I. A list of previous testimony and my rate of compensation appear as
Appendix II. The materials I have reviewed appear as Appendix III.
II. Question Presented and Initial Statement of Opinions
16. I have been asked to address, from the standpoint of economic analysis,
the characterization and understanding of the judgment issued in the case Maria Aguinda,
et al. v. Chevron Corp. by the Ecuador Court on February 14, 2011 as clarified on March
4, 2011. As issued in Ecuador, the judgment is different in important respects from
judgments typically entered in civil litigation in the United States. (The judgment may
also be different than typical judgments in Ecuador courts, a subject I do not address.) I
have been asked to discuss differences between that judgment and judgments in civil
litigation in the United States. I will discuss these differences from an economic
perspective, intending to render no legal opinion on any issue before the Court.
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17. In the United States and in other nations with developed legal systems,
there is a general distinction between compensatory damages judgments—judgments that
seek to provide monies directly related to a specific victim’s injuries—and regulatory or
punitive damages judgments—judgments that seek to achieve, not compensation for a
specific victim’s loss, but broader social or regulatory goals, including deterrence of
harmful actions. Although sometimes the term “compensation” is used interchangeably
with respect to such judgments, there is a clear economic distinction between judgments
that provide direct compensation for an identified and measurable loss to a specific
individual and judgments that seek broader societal goals through the levy of the
judgments themselves and through the deterrent signal sent to other economic actors in
the society concerning the implications of their future activities.
18. For reasons I shall explain, the judgment issued by the Ecuador Court in
Maria Aguinda, et al. v. Chevron Corp. is clearly a regulatory or punitive damages
judgment, rather than a compensatory damages judgment. The judgment purportedly
seeks to effect broader societal goals, such as the promotion of indigenous culture, in
order to influence —deter—corporate activities in the future that might lead to cultural
assimilation in the allegedly affected areas or in other areas of Ecuador. The Judgment,
on its face, does not pretend to provide specific compensation to Ms. Aguinda or to other
named Plaintiffs in the litigation; indeed, any losses that they themselves may have
suffered from the allegedly harmful behavior are not mentioned or discussed. The central
purpose of the Judgment—as expressed by the Court—is to punish Chevron for the acts
of predecessor companies and to impose a regulatory penalty on Chevron to achieve
broader societal goals of remediation, health coverage, water treatment and the
7
restoration of the habitat and culture of indigenous peoples, among other goals, allegedly
harmed by the acts of Chevron’s predecessors.
III. The Economic Distinction between Compensatory and Punitive or Regulatory Damages
19. In the United States and in the legal systems of most other nations, there is
a distinction between damages judgments that seek to compensate a victim for a
particular loss and damages judgments that seek to attain larger societal goals.
Compensatory damages—pure compensatory damages—seek to award a victim an
amount that represents the direct loss that the victim suffered from the harm caused by
the tortfeasor. The United States’ legal system is perhaps the most advanced in defining
compensatory damages of this nature (I have studied extensively U.S. versus other
nations’ measurement of compensatory damages) and, in general, calculates
compensatory damages as the sum of medical expenses that the injured victim will face
(including projected medical expenses for that person into the future), the wages or
earnings that the individual lost as a consequence of the injury (again, projected into the
future for that person with precision, including expected interest estimates, and the like),
and an amount representing the pain and suffering that the individual suffered (a less
precise category, but with well defined limits). Of course, no personal injury loss can
ever be perfectly compensated (except, perhaps, where the harm is solely pecuniary), but
the compensatory damages measures adopted by U.S. courts—and most other nations’
courts—attempt to achieve just compensation for the injured individual as best as can be
done given the injury.
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20. It is well established as an economic principle that the award of
compensatory damages will achieve two complementary goals: first, as discussed, it will
provide specific compensation to the injured victim; second, as an economic matter, it
will lead tortfeasors and potential tortfeasors to take into account the effect of their
actions on other parties as they conduct their affairs. According to economic analysis,
optimal deterrence of harmful actions is achieved by the full internalization of accident
costs, which can be generally achieved with the levy of full compensatory damages
alone.
21. A second and distinct set of remedies consists of regulatory orders or
punitive damages judgments whose intent is not to provide specific compensation equal
to losses suffered by identifiable persons, but to achieve some broader, societal end.
Often orders or judgments of this nature are issued directly by governmental regulatory
agencies, pursuant to a state’s police power or to some broader legal authority.
Nevertheless, there are contexts in which such remedies derive from individual civil
litigation. Punitive damages judgments are an example. In some set of cases, courts in
the U.S. award punitive damages judgments against defendants to achieve a deterrent
effect broader than the effect that follows from a compensatory damages judgment. For
example, where there is some reason to believe that the character of the defendant’s
actions was so heinous as to require further punishment beyond compelling the specific
compensatory damages award, courts may enter a punitive damages judgment. Even
under U.S. law and practice, however, punitive damages awards are peculiar because they
are paid to an individual plaintiff, while they are recognized to serve no compensatory
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function. The U.S. is unusual in this respect; most countries do not award punitive
damages judgments.
22. There is an ancient basis for the distinction between damages judgments
that are purely compensatory and damages judgments (or other judicial remedies) that
seek to attain broader public goals, often based upon the police power of the state.
Blackstone, who brought many of these instincts to bear in his treatise on English law,
summarized this history:
Wrongs are divisible into two sorts or species: private wrongs and public wrongs. The former are an infringement or privation of the private or civil rights belonging to individuals, considered as individuals, and are thereupon frequently termed “civil injuries;” the latter are a breach and violation of public rights and duties, which affect the whole community, and are distinguished by the harsher appellation of “crimes and misdemeanors.” [3 Blackstone Commentaries on the Law at 2 (1776)]
Perhaps it is expansive for economists to claim that Blackstone’s insights are economic in
nature, but there is a clear economic cast to Blackstone’s analysis.1 Of course, the
distinction that Blackstone delineates as between redress for purely private wrongs and
redress for the violation of public rights and duties is the basis for modern law. But this
distinction possesses an economic basis as well, distinguishing damages remedies that are
purely compensatory—designed to compensate specific individuals according to the
precise harm that they have suffered—versus damages remedies that are penal or
regulatory, like punitive damages, designed to achieve some broader societal goal.
1 But see, Richard A. Posner, Blackstone and Bentham, 19 J. L. Econ. 569 (1976) (explaining the inherent economic logic of Blackstone’s points.)
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23. Civil judgment damages awards of a regulatory or punitive nature may
enhance societal welfare in some contexts. From an economic standpoint, two central
questions arise: First, is the amount of the award measured properly to achieve the
broader societal end? Secondly, will the amounts awarded be appropriately invested to
achieve that end? Typically, implementation of a regulatory damages award will be
delegated to an appropriate regulatory agency to determine the measure of the award and
to supervise its execution. Again, this is to be distinguished from a compensatory
damages award, even where that award can be seen to serve some broader societal goal.
As an example, imagine that a first property owner sues a second for alleged
contamination. In the context of compensatory damages, the first property owner will
have established that he or she owns the specific land contaminated and will have
provided careful documentation of the expected costs of the remediation. Because the
first owner is in custody of the land, he or she can be presumed to expend the damages
amount appropriately to remediate the contamination. In the context of a broader
regulatory award, the regulatory agency with expertise over the subject at question will
be charged with those tasks. In the context of a punitive damages award, the sole
ambition is punishment, which is achieved by the levy of the award itself. How the
monies are spent is irrelevant.
IV. The Economic Analysis Applied to the Judgment in this Case
24. On February 14, 2011, the Ecuador Court in this litigation awarded a
judgment to the Plaintiffs. The Court awarded:
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a) $600 million for groundwater remediation;2
b) $5.396 billion for soil cleanup;3
c) $200 million for habitat and services reconstruction;4
d) $150 million for construction of new water supply;5
e) $1.4 billion for the development of a Health Improvement Plan;6
f) $100 million to restore the culture of the indigenous peoples;7
g) $800 million for the alleged increased risk of cancer on account of the alleged contamination;8 and
h) An additional 10 percent of the totals above to be directed to the Amazon Defense Front.9
25. It is evident that none of these elements of damages awarded by the
Ecuador Court are specifically compensatory to any named Plaintiff. Each of these
elements of damages are regulatory or punitive (the 10 percent figure is openly punitive)
in that they seek to achieve broader societal goals, including the deterrence of harm-
2 Judgment, Sentencia, Callejas R. Adolfo, Lawsuit No. 2003-0002 at 179. 3 Id. at 181. 4 Id. at 182. 5 Id. at 182-83. 6 Id. at 183. 7 Id. at 183. 8 Id. at 184.
12
causing activity in the future, rather than to achieve specific compensation for the losses
suffered by any affected person. In fact, the Court acknowledges that fact in its
judgment, stating, “[a]ny person, entity or human group can be heard in criminal, civil or
administrative proceedings filed for violations of an environmental nature, even though
their own rights have not been violated, together with the fact that the complaint has been
signed by 42 citizens, the plaintiffs, who have not requested personal compensation for
any harm, but rather have demanded the protection of a collective right in accordance
with the formalities provided by the EMA, the redress of environmental harm, which as
has been alleged in this lawsuit, affects more than 30000 people, these supposedly being
undetermined.”10
26. This is not a surprising outcome. Although the litigation was nominally
brought by a specific set of Plaintiffs against Chevron—“MARIA AGUINDA
SALAZAR, widow, 54 years old; CARLOS GREFA HUATOTOCA, married, 42 years
old; CATALINA ANTONIA AGUINDA SALAZAR, married, 53 years old; etc.”—there
are no references in the Complaint, in the three Alegatos submitted by the Plaintiffs to the
Court, in the Court’s Judgment of February 14, 2011, nor in the Court’s Clarification of
Judgment of March 4, 2011, to any details of the alleged losses of the named Plaintiffs.
Some of the named Plaintiffs are purportedly members of those indigenous peoples
alleged to have been generally harmed by actions of Chevron’s predecessors, while
others are “colonos” or immigrants from other parts of Ecuador. But the specific harms
that they suffered as individuals were never a significant element of the litigation. As an
9 Id. at 187. There is an additional potential punitive damages element, essentially doubling all other damages elements, discussed below. 10 Id. at 33.
13
example, in Part III of the Complaint, describing “Damages and Injured Population”, the
Complaint does not mention Ms. Aguinda, Mr. Grefa, or any other named Plaintiff. To
the contrary, it recites that “nearly 83% of the population has suffered illness due to
contamination” (¶ 2); and “[n]early 75% of the population who lives in areas next to
wells and facilities has been affected by total or partial loss of crops.” (¶ 3). Similarly, in
none of the three of the Plaintiffs’ Alegatos is there a reference to any loss specifically
suffered by any named Plaintiff; the Alegatos, instead, recount the aggregate estimates of
the Plaintiffs’ experts as to the gross award amounts that they are seeking. Finally, the
Ecuador Court, in its Judgment of February 14, 2011 does refer in small part to some
individuals who testified as to losses that they suffered: i.e., Silvio Albarracin, Miguel
Zumba, at p. 139. But these gentlemen are not named Plaintiffs and there is no careful
attempt to document their individual losses nor to measure them for purposes of a
damages award.
27. This is not meant necessarily as a criticism, but simply an explanation of
the procedure followed in this litigation in Ecuador. Litigation proceeds much differently
in the United States, and in other jurisdictions, even in the context of class litigation
seeking broader forms of recovery. In the United States, in class proceedings, the named
class plaintiffs are subjected to judicial scrutiny because, among other things, the named
class plaintiffs’ losses are meant to be representative of the losses of absent members of
the class. In such litigation, the losses suffered by each representative class member are
clearly delineated in order to allow a court to determine specific compensatory damages
for them. The individual class representatives’ damages then will serve as damages for
the absent members of the class to the extent that the evidence shows the named
14
plaintiffs’ losses are in fact representative of those of the absent class members. Where
the evidence shows that the losses of the named and absent class members are likely to
vary considerably, this will bear significantly on whether class treatment is even
permissible at all.
28. There is nothing comparable in this litigation in Ecuador. There are no
individual losses detailed for any Plaintiff named in the case. The history of the person’s
involvement with the alleged contamination by the predecessors of Chevron is, at most,
merely assumed as part of larger, societal harms alleged to have been suffered. In fact,
from the Judgment, it does not appear that the named Plaintiffs were required to have
themselves suffered any injuries at all or even to live within the former Concession. As
far as can be determined from the Judgment, it does not appear that the named Plaintiffs
were subjected to any sort of “typicality” scrutiny.
29. As a consequence, the damages measures awarded by the Ecuador Court
bear no relation to any demonstrable or measured harm suffered by any of the named
Plaintiffs in the litigation, nor even more remotely, to unnamed persons who might
benefit from the awards in the case.
30. The damages awards, therefore, according to economic analysis, are
punitive or regulatory, aimed at achieving ends other than compensation.
31. There are other peculiarities in the Court’s Judgment. As an example, the
Court awards $150 million for the construction of a new water supply,11 but there was no
11 Judgment at 182-183.
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demand in the Plaintiffs’ Complaint with respect to a new water supply and there is no
assertion that any of the named Plaintiffs lacks potable water. A new water supply for
the region may be a good idea—the world aspires to clean water—but what is the
authority of the Court to enter such an order? The award of such a system is not
compensatory. The awards also are inconsistent with the regulatory standards in
Ecuadorian law, further demonstrating that they are penal in nature. The award for soil
remediation, for example, is based on a remediation standard (100 parts per million of
hydrocarbons in soil) that is an order of magnitude lower than even the most stringent
current Ecuadorian cleanup standard (1000 parts per million hydrocarbons in soil) and the
standard currently being used by Petroecuador with Ecuadorian government approval
(2,500 parts per million hydrocarbons in soil) to remediate these same pits in the former
concession area.12
32. Also obviously penal is the Court’s award of a ten percent add-on to the
preceding Judgment amounts to be given to the Amazon Defense Front.13 The economic
or legal basis for this element of the award remains unclear. There is no allegation or
proof that the Plaintiffs incurred any legal fees or litigation costs, much less $846 million
worth. It might be characterized as a punitive damages element. But, from an economic
standpoint, and from a legal standpoint in the U.S., punitive damages are meant to be
calibrated according to the maliciousness of the defendant’s actions which is not directly
related at all to the measure of the harm suffered by the victim. Here, the 10 percent add-
on resembles a tax levied against Chevron to support the Amazon Defense Front. (Note
12 Hinchee Expert Report, at 3-4. 13 Id. at 187.
16
that there is an additional add-on for the Amazon Defense Front, equal to $8.46 billion,
discussed later.)
33. Note the peculiarity of regulatory damages awards of the nature of those
of the Ecuador Court in this litigation. Unlike regulatory orders implemented by a
government regulatory agency, or governmental fines, imposed for alleged wrongdoing
by a governmental body, the civil awards in this case are denominated as “civil
damages”, to be awarded to the individual Plaintiffs in the case. Thus, it is the purport of
this litigation to award Maria Aguinda and her co-Plaintiffs $1.4 billion for establishing a
health care system; $800 million, on account of excess cancers; $5.6 billion to repair soil
damage, and the like. The Court provides that these monies are to be administered by a
commercial trust in Ecuador, under the control of the Amazon Defense Front, an activist
organization purportedly representing indigenous people. But there is no specification of
the particular ways these monies are to be invested in order to achieve the purported
ends; surely, there are no contracts quoted nor entered with, say, soil remediation services
or water supply contractors to assure the dedication of these funds to these purposes. The
Amazon Defense Front is not alleged or shown to possess the expertise to design and
administer 1) groundwater remediation programs ($600 million); 2) soil cleanup ($5.396
billion); habitat reconstruction ($200 million); construction of a new water supply ($150
million); a comprehensive Health Improvement Plan ($1.4 billion); plus distribute?,
award? compensate? for increased risk of cancer ($800 million). That it would receive a
10 percent add-on and perhaps an $8.46 billion add-on, extends beyond any remedial
order in the U.S. or the history of the world. In the U.S. and other developed nations, any
one of these tasks would require extensive federal and state regulatory discussion and
17
administration. Multiple state and federal regulatory agencies—agencies whose business
and expertise is, separately, in groundwater remediation; soil remediation; habitat
reconstruction; water supply construction; health care; and the like—would need to be
involved. According to the Judgment of the Ecuador Court, all of these tasks are to be
administered by a activist organization, the Amazon Defense Front.
34. Put in more simple terms, and ignoring the extraordinary scope of the
Court’s Judgment, it is impossible to regard these damages awards as directly
compensatory. In the context of the award of compensatory damages in the U.S. and in
other jurisdictions, a court will carefully measure the losses suffered by the victim and
award damages based upon those expected losses. The damages judgment is awarded to
the victim without constraint, imagining that the victim will choose the best means to
recover from the loss he or she has suffered as the condition of the victim may change
over time. The Judgment of the Ecuador Court is not compensatory in this sense. If this
Judgment were affirmed and executed, the Amazon Defense Front would receive custody
of billions of dollars to be spent as they please. There is no indication that the Court
possesses the authority or technical facility to supervise the expenditure of these monies:
the Court’s Judgment implicates extensive and disparate forms of environmental
remediation, infrastructure development and cultural intervention. There is no indication
that, at this moment, the Amazon Defense Front possesses the legal authority to engage in
massive soil remediation (of whose property? and with what permission?) or to
implement an improved water supply system (involving whose wells or water rights?)
This Judgment is not compensatory as the term is employed in the U.S.
18
35. Two other features make the Ecuador Judgment most unusual even as a
punitive or regulatory action. Again, it is well established in economic analysis that the
purpose of a punitive or regulatory action is to create deterrence: applied to this case, to
inform for the future parties in the position of Chevron’s predecessors of the penal
implications of committing acts similar to those alleged to have been committed in the
past. It is well established in economic analysis, however, and a central feature of U.S.
law dealing with punitive damages and other penal sanctions that parties affected by
these potential judgments should be on notice of the potential fines, penalties and
regulatory actions that they might face given particular forms of behavior. Lawyers often
refer to this point as “due process”; in economics, it represents only sensible
administration designed to achieve a positive societal end. A person or firm will not be
deterred unless it is aware of the potential implications of its actions.
36. To my knowledge, this action is the first action of this nature litigated to
judgment in Ecuador; the Judgment is the first Judgment. There is no possible way that
any firm—predecessor of Chevron or not—could have been aware of the implications
imposed by the penal sanctions in this Judgment.
37. Moreover, and most peculiarly, the Court in its Judgment of February 14,
2011 awarded, in addition to the individual penal and regulatory elements listed above, a
further penal damages award equal to the sum total of all other damages elements—i.e.,
an additional $8.46 billion—if Chevron did not issue a public apology within 15 days of
the Judgment.14 In my many years of study of compensatory and punitive damages
judgments, I have never observed any similar award. From an economic standpoint,
19
there is no basis for it: a punitive damages judgment is based upon the maliciousness of
the defendant’s action, not on whether the current defendant (of questionable relation to
the parties who engaged in the allegedly harmful practices) has issued a public apology
years subsequent to the allegedly wrongful actions. The Judgment and the procedure
leading to the Judgment violates deeply the economic principle of advance notice of
potential penalties, as well of the rights of a defendant to challenge and seek review of a
lower court judgment.
V. Conclusion
38. For all of the economic reasons explained above, without rendering any
legal conclusion, it is my opinion that:
1) There is an important distinction between damages awards that are compensatory, in the sense of providing specifically defined damages amounts to individuals who have suffered clearly identified injuries, and regulatory or punitive damages awards that seek to achieve broader societal goals;
2) The Judgment of the Ecuador Court of February 14, 2011, as
clarified by Judgment of March 4, 2011, cannot realistically be viewed as implicating compensatory damages, as opposed to achieving some regulatory or punitive end;
3) There is no reference in any of the legal materials attending the
litigation—the Complaint, the Plaintiffs’ Alegatos, or in the Judgment itself—of any careful attempt to indentify or measure specific losses to any person, whether named Plaintiff or not;
4) The specific damages amounts as awarded by the Court appear to
be awarded to the custody of the Amazon Defense Front, but without any serious consideration of how that organization might spend the monies to achieve the ends desired by the Court. These damages awards are not compensatory in any sense known in the U.S.;
14 Id. at 184-86.