Case: 12-20122 Document: 00512142522 Page: 1 Date Filed: 02/13/2013
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
February 13, 2013
No. 12-20122 Lyle W. Cayce
cons. w/ Clerk
No. 12-20123
REPUBLIC OF ECUADOR; DIEGO GARCIA CARRION,
Plaintiffs-Appellants
v.
JOHN A. CONNOR,
Defendant-Appellee
CHEVRON CORPORATION,
Intervenor-Appellee
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REPUBLIC OF ECUADOR; DIEGO GARCIA CARRION,
Plaintiffs-Appellants
v.
GSI ENVIRONMENTAL, INCORPORATED,
Defendant-Appellee
CHEVRON CORPORATION,
Intervenor-Appellee
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Appeals from the United States District Court
for the Southern District of Texas
USDC No. 4:11-MC-516
Before DAVIS, JONES and SMITH, Circuit Judges.
EDITH H. JONES, Circuit Judge:
The Republic of Ecuador (“Appellant”) seeks discovery from Appellees John
Connor and GSI Environmental, his company, for use in a foreign arbitration
against Chevron. See 28 U.S.C. § 1782. During the course of extended litigation
with Ecuador, Chevron,1 an intervenor in the district court, has benefitted
repeatedly by arguing against Ecuador and others that the arbitration is a
“foreign or international tribunal.” Because Chevron’s previous positions are
inconsistent with its current argument, judicial estoppel is appropriate to make
discovery under § 1782 available to Ecuador. The district court’s order is
REVERSED and REMANDED for determination of the scope of discovery.
INTRODUCTION
Chevron, as successor to Texaco, became embroiled in litigation over the
alleged environmental contamination of oil fields in Ecuador. The litigation
spans nearly two decades and dozens of courts. A court in Lago Agrio, Ecuador
finally issued a multi-billion dollar judgment against Chevron. During the Lago
Agrio litigation, Chevron filed for arbitration under the rules of UNCITRAL, as
allowed by the US-Ecuador Bilateral Investment Treaty (“BIT”). Chevron
1
Appellees here are deemed to be in privity with Chevron.
2
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charged that miscarriages of justice in the Ecuadorian courts and participation
by Ecuador in the plaintiffs’ fraud violated its rights. Ecuador applied to the
district court for ancillary discovery from Appellees for use in the arbitration and
Chevron intervened to protect its interests.
In connection with the BIT arbitration and ongoing Lago Agrio litigation
in Ecuador, both parties have repeatedly sought discovery through United States
courts pursuant to §1782. At least twenty such orders have been issued on
behalf of Chevron. No previous discovery request has been denied on the
grounds raised in the district court here—that the BIT arbitration is not an
“international tribunal.” The district court, however, felt compelled by prior
Fifth Circuit decisions to deny Ecuador’s discovery request. Following those
cases, the court concluded, the BIT arbitration represents a bilateral investment
dispute that is not pending in a “foreign or international tribunal” as the statute
requires. See Republic of Kazakhstan v. Biedermann Int’l, 168 F.3d 880 (5th Cir
1999); El Paso Corp. v. La Comision Ejecutiva Hidroelectrica del Rio Lempa,
341 F.App’x 31 (5th Cir. 2009).
DISCUSSION
On appeal from the denial of its discovery request, Ecuador asserts that
the BIT arbitration is indeed a foreign proceeding covered by the statute but, in
the alternative, that Chevron, having benefitted repeatedly from agreeing to this
assertion, should be judicially estopped to deny it now when discovery would aid
its bitter opponent. Because the underlying facts are not in dispute, we review
the district court’s order de novo. Biedermann, 168 F.3d at 881.
3
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Judicial estoppel is an equitable doctrine designed to protect the integrity
of judicial proceedings by preventing litigants from asserting contradictory
positions for tactical gain. The precise rationale for and consequences of the
doctrine vary. 18B CHARLES ALAN WRIGHT, ARTHUR R. MILLER & EDWARD H.
COOPER, FEDERAL PRACTICE AND PROCEDURE § 4477 (2d ed. 2002 & Supp. 2012)
[hereinafter “WRIGHT & MILLER”]. Recognizing this, the Supreme Court
examined the doctrine extensively in New Hampshire v. Maine, 532 U.S. 742,
121 S. Ct. 1808 (2001), but in the end refused to establish an “inflexible
formula.” Relying instead on several factors that often indicate the propriety of
the sanction, the Court held that a party may be estopped from asserting a
position in a judicial proceeding where it has previously persuaded a court to
adopt a clearly contrary position to the disadvantage of an opponent. See also
Reed v. City of Arlington, 650 F.3d 571 (5th Cir. 2011) (en banc). Reed also
notes, “Because judicial estoppel is an equitable doctrine, courts may apply it
flexibly to achieve substantial justice.” Id. at 576.
The predicate for the exercise of judicial estoppel against Chevron is easily
described. To promote international dispute resolution and comity, § 1782
authorizes federal district courts to issue discovery orders ancillary to
proceedings in “foreign or international tribunals.”2 In numerous district courts,
and on appeal in other circuits, Chevron asserted that the BIT arbitration is an
international proceeding. Chevron explicitly distinguished this court’s
2
28 U.S.C. § 1782(a) provides in pertinent part: “The district court of the district in
which a person resides . . . may order him to give his testimony or statement or to produce a
document or other thing for use in a proceeding in a foreign or international tribunal. . . .”
4
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Biedermann decision as involving a purely “private” international arbitration
between the Republic of Kazakhstan and an investor company. Chevron denies
neither that it made these assertions, nor that its current position on the
arbitration’s status is precisely contrary, nor that it successfully obtained § 1782
discovery orders over Ecuador’s opposition.3 Why shouldn’t sauce for Chevron’s
goose be sauce for the Ecuador gander as well?
Chevron challenges the basis for equitable estoppel, however, on numerous
grounds. First, it contends, asserting contrary positions on a question of
law—whether the BIT arbitration pends in an “international tribunal”—is not
amenable to judicial estoppel under Supreme Court and binding Fifth Circuit
authority. Second, and relatedly, the Biedermann decision afforded Chevron a
basis in this circuit alone for a justifiable contrary legal argument. Third,
Chevron did not “profit” unfairly from its contrary position in other courts
because § 1782 discovery was sought, and allowed, on the separate basis that it
was for use in the Ecuadorian Lago Agrio litigation before a “foreign tribunal.”
Chevron’s final argument asserts that the nature of the tribunal is a
“jurisdictional” element of § 1782 that cannot or should not be settled by
estoppel.4 We address each of these arguments.
Because federal courts may only act according to constitutional and
statutory delegations of authority, we are constrained to consider Chevron’s
3
The opposition centered not on the availability of § 1782 but on various conventional
privileges against discovery.
4
Chevron also contends § 1782 discovery should be denied because it could be
compelled by the arbitration panel. We leave this question for resolution on remand.
5
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jurisdictional argument at the outset despite its being an afterthought in the
company’s brief. Chevron notes that “principles of estoppel do not apply” to
issues of subject matter jurisdiction. Ins. Corp. of Ireland v. Compagnie des
Bauxites de Guinee, 456 US 694, 702, 102 S. Ct. 2099, 2104 (1982).5 Chevron
then asserts, without supporting authority, that if the BIT arbitration is not
before a “foreign or international tribunal,” then federal courts lacked the power
to order ancillary discovery.
Whether Chevron’s premise applies here is questionable, and in any event
its proposed conclusion does not follow from the premise. Describing a federal
court’s authority under § 1782 as “jurisdictional” fits awkwardly with
conventional Article III terminology. Normally, federal court jurisdiction reflects
the courts’ power to decide cases or controversies between contending parties.
Significantly, a § 1782 application may or may not be adversarial. The federal
court addresses an interlocutory discovery application that is ancillary to a non-
domestic proceeding. Its § 1782 order “adjudicates” nothing else. Perhaps in
recognition that Congress delegated a quasi-administrative role to the courts in
§ 1782, the Supreme Court discussed the scope of a court’s “authority”—not its
5
See In re Sw. Bell Tel. Co., 535 F.2d 859, 861 (5th Cir. 1976), modified by, 542 F.2d
297 (5th Cir. 1976) (en banc), rev’d on other grounds sub nom. Gravitt v. Sw. Bell Tel. Co.,
430 U.S. 723, 97 S. Ct. 1439 (1977); see also Int’l Union of Operating Eng’rs v. Cnty. of Plumas,
559 F.3d 1041, 1044 (9th Cir. 2009) (“[E]ven though the County asserted subject matter
jurisdiction in its removal notice, it is not precluded from challenging subject matter
jurisdiction on appeal.”); Creaciones Con Idea, S.A. de C.V. v. Mashreqbank PSC, 232 F.3d 79,
82 (2d Cir. 2000) (“[A]ssertions . . . in unrelated cases therefore could not preclude . . . the
defendant from arguing . . . that diversity jurisdiction was absent in this case.”). But cf. Lydon
v. Boston Sand & Gravel Co., 175 F.3d 6, 12–14 (1st Cir. 1999) (holding party that prevailed
after entering stipulation before labor arbitrator estopped from asserting exclusive federal
jurisdiction).
6
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“jurisdiction”— under the statute. Intel Corp. v. Advanced Micro Devices, Inc.,
542 U.S. 241, 246, 124 S. Ct. 2466, 2472 (2004). Intel, like this case, required
statutory construction to interpret § 1782's terms, the identity of the “interested
person” who may apply for discovery and the status of the foreign “proceeding.”
Further, Chevron cites no case that has identified the criteria for hearing a
§ 1782 application as “jurisdictional.”6
Not only does the unusual role of a federal court under § 1782 suggest that
“jurisdictional” thinking is misplaced, but even if “jurisdiction” is at issue, the
best approach is to treat jurisdiction as conflated with the merits of the
application. A helpful analogy may be drawn to Bell v. Hood, 327 U.S. 678,
66 S. Ct. 773 (1946), and its progeny.7 Such cases explain that when a claim
facially seeks relief “arising under” the Constitution, it confers federal court
§ 1331 jurisdiction even though the claim may later be denied. The federal court
has jurisdiction to determine whether the claim is cognizable. So, here, the court
has “jurisdiction” over an application that alleges a non-frivolous “claim” for
§ 1782 discovery, and the court must have power to interpret the statutory terms
relevant to its power. We reject the contention that the status of the BIT
6
Chevron did not cite Al Fayed v. CIA, 229 F.3d 272, 273 (D.C. Cir. 2000), an appeal
from a district court’s decision that it “lacked jurisdiction” to issue a § 1782 subpoena. The
D.C. Circuit affirmed quashing the subpoena without approving the jurisdictional language.
Paradoxically, if the BIT arbitration is, contrary to Chevron’s earlier assertions, a private
arbitration, and if this determination is “jurisdictional,” discovery orders Chevron obtained
in other jurisdictions might well be void. See Da Silva v. Kinsho Int’l Corp., 229 F.3d 358, 362
(2d Cir. 2000).
7
See, e.g., Williamson v. Tucker, 645 F.2d 404, 415–16 (5th Cir. 1981) (noting the “strict
standard for dismissals for lack of subject matter jurisdiction when the basis of jurisdiction
is also an element in the plaintiff’s federal cause of action”).
7
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arbitration under § 1782 raises an issue of jurisdiction to which judicial estoppel
may not apply.
Invoking a footnote in a Fifth Circuit case, and a century-old Supreme
Court case, Chevron next contends that judicial estoppel may never be applied
to issues of law. In Sturm v. Boker, 150 U.S. 312, 14 S. Ct. 99 (1893), the
Supreme Court held that a party’s testimony concerning the extent of his legal
ownership of goods, in a case controlled by contract language, was no more than
a “statement of opinion upon a question of law” that may not act as an estoppel
against the declarant. Id. at 336, 14 S. Ct. at 107. Sturm was cited by this court
in a footnote, which states in full: “As Royal properly argues, a statement of
opinion on the law does not create a judicial estoppel.” Royal Ins. Co. of Am. v.
Quinn-L Capital Corp., 3 F.3d 877, 885 n.6 (5th Cir. 1993) (citing Sturm). These
decisions are inapposite.
Notwithstanding our subordination to Supreme Court authority, we are
convinced that Sturm is not controlling. The application of estoppel in Sturm
was both fact-specific and case-specific. Sturm’s discussion of estoppel is
sufficiently ambiguous that it does not clearly reach judicial estoppel—perhaps
this is why New Hampshire v. Maine does not cite Sturm. To hold that Sturm
prevents judicial estoppel from being applied to any question of law goes too far,
just as the Court itself said, “it would be pressing [the complainant’s] language
too far to hold that he made any positive statement to the effect that he was the
absolute owner of the goods . . . .” Sturm, 150 U.S. at 334, 14 S. Ct. at 106.
Indeed, the Court’s holding may be better explained on the principle that
estoppel may only apply where an offending party’s positions were “clearly”
8
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contradictory. New Hampshire, 532 U.S. at 750, 121 S. Ct. at 1815. Even more
pertinent here, the Supreme Court did not limit judicial estoppel in New
Hampshire, which refers to contrary “positions,” not to contrary “factual
positions,” as the foundation of the doctrine. Id., 121 S. Ct. at 1814.
As for Royal, the footnote may be understood to note that, by themselves,
a party’s contrary statements of opinion on the law are insufficient for judicial
estoppel. There is no indication that the party persuaded a court to adopt its
contrary position or that, in so doing, it gained an inequitable advantage.8
Moreover, two of this court’s decisions after Royal held a party estopped by its
previous litigating positions from taking advantage of an opponent by a tactical
legal shift. See Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan
Gas Bumi Negara, 364 F.3d 274, 293–94 (5th Cir. 2004) (imposing judicial
estoppel to preclude Pertamina from arguing against the application of Swiss
procedural law); Bogle v. Phillips Petroleum Co., 24 F.3d 758, 762 (5th Cir. 1994)
(noting availability of judicial estoppel to prevent plaintiffs from resurrecting
claims in state court that were nonsuited by plaintiffs’ motion in federal court).
From the standpoint of equity, as most federal courts recognize, a change of legal
position can be just as abusive of court processes and an opposing party as
deliberate factual flip-flopping. WRIGHT & MILLER urges “thoughtful inquiry”
8
WRIGHT & MILLER observes that only a minority of circuit courts seem to resist
applying judicial estoppel to a party’s legal positions. WRIGHT & MILLER § 4477 n.76, at 595
& Supp. at 198–99 (citing United States v. Villagrana-Flores, 467 F.3d 1269, 1278–79 (10th
Cir. 2006); Emergency One, Inc. v. Am. Fire Eagle Engine Co., 332 F.3d 264, 274 (4th Cir.
2003); Pittston Co. v. United States, 199 F.3d 694, 701 n.4 (4th Cir. 1999); Tenneco Chems., Inc.
v. William T. Burnett & Co., 691 F.2d 658, 664–65 (4th Cir. 1982)).
9
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because contrary legal positions may be defensible, for instance, when driven by
an intervening change in governing law or by underlying differences in the
applicable bodies of law. WRIGHT & MILLER § 4477 n.82 and accompanying text,
at 598–99. Because there is no compelling reason to conclude that judicial
estoppel is never allowed to sanction a party’s unfair change of legal positions,
we cannot accept Chevron’s argument.
More narrowly, Chevron contends that “there is nothing inconsistent about
following the law of the circuit—even if the law may be different in another
circuit.” None of the cases it cites stand for this proposition, and our research
has found no support. It is true that parties may, without fear of judicial
estoppel, adopt different technical positions based on the existence of different
applicable bodies of law (e.g., state versus federal tax law). See Folio v. City of
Clarksburg, 134 F.3d 1211, 1217–18 (4th Cir. 1998) (recognizing the
appropriateness of classifying a fee as a “tax” for purposes of the Tax Injunction
Act and a “fee” for state-law purposes). What Chevron did was pursue a strategy
of obtaining § 1782 discovery in multiple jurisdictions on the basis, in part, that
the BIT arbitration is an “international tribunal” and this circuit’s Biedermann
decision is distinguishable, only to disavow that position entirely when Ecuador
sought discovery in this circuit. The facts have not changed and, as Chevron
itself admits, the legal standard under § 1782, a federal statute construed in a
federal court system, must ultimately be uniform. Chevron’s brief acknowledges
the existence, in the prior applications for discovery, of “the same underlying
legal question: whether or not § 1782 should be construed to authorize discovery
for use in arbitration.” Notwithstanding the potential for circuit conflicts, the
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interpretive issue here is not governed by two distinct bodies of law. Following
the “law of the circuit” is not, in this case, an antidote to judicial estoppel where
the doctrinal criteria otherwise apply.
The only remaining doubt about the availability of judicial estoppel is that
Chevron’s inconsistent argument may have been “irrelevant” to the discovery
orders in prior cases. Because the parties’ disputes have involved both
Ecuadorian court litigation (unquestionably, a “foreign tribunal”) and the BIT
arbitration (arguably, an “international tribunal”), Chevron’s § 1782 discovery
requests were often premised on twin grounds. We have found no authority
suggesting that “harmless error,” or some variety thereof, is not among the
equitable considerations underlying judicial estoppel, but we do not reach the
question here. A review of many of the courts’ orders shows that they rested on
the twin § 1782 grounds for authorizing discovery, in part because Ecuador
never challenged that the BIT arbitration is an “international tribunal.” A
recent Third Circuit decision, in particular, notes repeatedly that although
certain of Ecuador’s objections to discovery might be meritorious if related to the
Lago Agrio litigation alone, “Chevron seeks the § 1782 discovery for use in both
the Lago Agrio litigation and the BIT arbitration.” In re Application of Chevron
Corp., 633 F.3d 153, 161, 163 (3d Cir. 2011). Chevron profited from being able
to assert mutually reinforcing grounds under § 1782 to support its discovery
requests; the courts were persuaded that whether “for use” in the Ecuadorian
court proceedings or the arbitral tribunal, Chevron’s requests satisfied § 1782.
The status of the BIT arbitration was not irrelevant to Chevron’s success.
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The result of rejecting these objections is clear. Chevron has deliberately
taken inconsistent positions on the availability of § 1782 discovery for use in
“international tribunals.” Chevron successfully obtained such discovery by
persuading courts to reject Ecuadorian (and related parties’) objections and by
contending, opposite to its current position, that the BIT arbitration is an
“international tribunal.” Finally, if Chevron is permitted to shield itself under
Biedermann against Ecuador’s current discovery request, it will have gained an
unfair advantage over its adversary. Chevron should be judicially estopped from
asserting its legally contrary position here. Consequently, we need not and do
not opine on whether the BIT arbitration is in an “international tribunal.” On
remand, the district court should proceed in its discretion to evaluate Ecuador’s
request for discovery pursuant to § 1782.
CONCLUSION
The order of the district court is REVERSED and the appeal
REMANDED for further proceedings consistent herewith.
12