Did Unocal profit from slave labor in Burma ?

What does the secret evidence show?

July, 2002: The Yankee Trader

By Greg Rushford

Published in the Rushford Report

On June 10, Los Angeles Superior Court Judge Victoria Chaney ruled that Unocal Corp. must stand a civil trial in September for allegedly benefiting from inhumane treatment of laborers by Burmese military forces during construction of the $1.2 billion Yadana natural gas pipeline in the mid-1990s. The business community felt the tremor. “For the first time in any place, we are holding an American corporation liable for human rights abuses committed abroad,” Dan Stormer, one of Unocal’s lawyers, told the Associated Press.

            As the Unocal-Burma litigation unfolds, it is sure to be watched closely by a corporate community worried about the potential for future liability exposure for other U.S.-based multinationals with investments in undemocratic Third World countries.

            In a 15-page ruling, Judge Chaney denied Unocal’s summary-judgment motion that sought the dismissal of a lawsuit brought on behalf of 15 Burmese “John Doe” plaintiffs. The Burmese claim that they were treated brutally by the Burmese military, which provided security for the Yadana joint venture involving Unocal and Total, the French oil-company. Unocal and Total signed a 30-year contract in 1995 to supply natural gas to Thailand via a pipeline through Burma from the Yadana gas field, which is offshore Burma in the Andaman Sea . The venture was estimated to bring some $200 million in annual revenues to the Burmese government.

            Burma — also known as Myanmar — is, like Fidel Castro’s Cuba, one of those little countries that attracts considerable international attention beyond its size. Like Cuba , Burma is economically isolated and politically repressive. The Yadana pipeline attracted adverse publicity from the onset, as human rights advocates sounded alarms about the likelihood of human rights abuses.

            The issue before Judge Chaney was not whether Unocal deliberately set out to commit human rights abuses; she found no such evidence “from which this court may draw an inference that Unocal intended to facilitate the tortuous conduct” by the Burmese military. Rather, the issue to be decided at trial is whether vicarious liability can be imputed to the California-based oil Unocal because of the actions of its military agent.

             “Because Plaintiffs’ evidence would allow a reasonable trier of fact to find that the military was contractually responsible for security, or that the military was an agent or independent contractor hired by the joint venture, sufficient evidence exists to allow plaintiffs to proceed on their independent contractor and agency theories,” Judge Chaney found.

            Los Angeles ’ legal sources report that Chaney, a specialist in complex litigation, is regarded as one of the best judges in California . But this is little help to anyone interested in the Unocal case, as the documents that lay out the basic facts that the judge based her ruling on are under seal. The entire summary-judgment pleadings are secret, except for the slim published analyses that have surfaced from Chaney and other jurists as the case has wended its way through the courts.

            Such extreme secrecy is highly unusual. Summary judgment proceedings are almost automatically always considered to be basic public-record materials. This is because such proceedings are likened to public trials, which can dispose of litigation. “The law is extremely clear that there is a powerful presumption in favor of public access to summary judgments”, explains Arthur Bryant, the executive director for the West Coast branch of Trial Lawyers for Public Justice, which is headquartered in Washington, D.C.  “Such secrecy can be justified only when there is a compelling argument that it is needed and would outweigh the public interest.” 

            When I called her chambers to inquire if she had found any such compelling argument requiring the entire pleadings to be sealed, Judge Chaney declined comment, saying through a court spokeswoman that she could not discuss pending litigation.

            Bryant says that he has not been following the Unocal litigation and has not been in touch with either party’s lawyers. But Bryant’s trial lawyers have often shown up in similar cases, filing motions to persuade judges to unseal improperly-sealed records.

            As a reporter for Legal Times in 1991, I wrote an article about eyebrow-raising secrecy in a case that now sounds familiar in the present Unocal context. A federal magistrate in Newark, New Jersey had sealed the entire summary judgment pleadings in civil litigation brought by the government of the Philippines against Westinghouse Corp. Philippine President Corazon Aquino was accusing Westinghouse of having bribed former Philippine strongman Ferdinand Marcos to build a $2.1 billion nuclear power plant in the 1970s (see, Marcos Bribe Allegations Hounding Westinghouse, Legal Times, June 3, 1991). 

            In the Philippine lawsuit, famed advocate David Boies represented Westinghouse. Boies had persuaded the magistrate that every document in the case contained information that was proprietary to Westinghouse. Boise was at the time best known for having defended CBS in a libel action brought by Gen. William Westmoreland over his conduct in the Vietnam War. In that litigation, Boise had argued successfully that classified government intelligence documents should be made part of the public record. Bryant intervened, and persuaded U.S. Judge Dickenson Debevoise to unseal the Westinghouse pleadings. While some of the documents were embarrassing for Westinghouse, Boise went on to win his case anyway when it came to trial.

            In the current California litigation over the Yadana pipeline construction, like the Westinghouse-Philippines case, both Unocal and the Burmese plaintiffs are represented by experienced litigators — who blame each other for the secrecy.

            The Burmese John Does are represented by Terry Collingsworth, who was general counsel of the International Labor Rights Fund from 1989 until September 2001, when he became the non-profit’s executive director. Collingsworth has also sued other major American corporations, including Coca-Cola and Exxon Mobil. Coca-Cola is accused of allowing murder and torture at bottling plants in Colombia , and Exxon Mobil is being sued for alleged human rights violations in Indonesia . Collingsworth’s board includes Jesse De Witt, the president of the United Methodist Church; Sen. Tom Harkin (D-Iowa); Ray Marshall, who was President Jimmy Carter’s secretary of labor; and Father Robert Drinan, a Georgetown University law professor and a former U.S. congressman.

            Unocal’s leading counsel is Edwin Woodsome, a partner in the Los Angeles office of Howrey Simon Arnold & White who is co-chairman of the firm’s commercial trial practice group. Earlier this year, Woodsome and Jerrold Ganzfried, a partner in Howrey Simon’s D.C. office, celebrated a decision by the U.S. Court of Appeals for the Ninth Circuit that reversed a $114 million judgment against DHL. In that case, the international air express firm had been accused of misapplying various tax regulations in the sale of foreign trademark rights.

            How did the entire summary judgment pleadings in a case with such a strong public interest as John Doe v. Unocal end up sealed away from public view?

            According to Collingsworth, the extreme secrecy is associated with Unocal’s litigation strategy — keeping the facts behind the corporation’s conduct away from the public’s view — that began when the case was initially filed before U.S. Judge Richard Paez in federal district court in Los Angeles . “We signed a protective order saying that documents containing Unocal’s commercial secrets would not be disclosed,” Collingsworth relates. While the labor-rights lawyer acknowledges that some of the sealed documents protect legitimate Unocal proprietary information, he insists it is ludicrous that the entire record has become sealed. “Every document that was in any way critical of Unocal became a commercial secret,” he declares. “Their stamping of documents was extreme.”

            The sealing continued after Judge Paez was promoted to the Ninth Circuit, and U.S. Judge Richard Lew took over the case. In September 2000, Lew granted Unocal summary judgment regarding federal claims under the Alien Tort Claims Act, saying that the matter was for California courts to determine pursuant to state law. But in his ruling, Judge Lew publicly referred to still-sealed documents that appeared to undermine Unocal’s case. In the current proceedings before Judge Chaney, the secrecy has been grandfathered in.

            Unocal’s side of the story is that it is merely defending its public reputation. On its internet site, Unocal maintains that the lawsuits “became grist for a publicity campaign against the company, even though actions by Unocal or Total (the project operator) were not at issue in either case.” Unocal counsel Edwin Woodsome says that the original protective order “was not Unocal’s idea, but the idea of the plaintiffs.” The Howrey Simon litigators refers to Collingsworth’s support for a protective order that has the plaintiffs’ identities secret. (Collingsworth says he has sought to protect his clients from retaliation from Burmese strongmen.) “It isn’t as if we are trying to conceal anything,” Woodsome maintains.

            What little of what the public knows about what actually happened during the Yadana pipeline construction mostly is gleaned from Judge Lew’s ruling two years ago.

            In 1992, as the project was being planned by Unocal and Total, Unocal’s consultants reported that “the government habitually makes use of forced labour to construct roads,” and that the local community “is already terrorized,” Lew found. Both Unocal and Total made it clear to Burmese authorities that they would “insist upon western style-construction practices including fair labor rates and the use of an internationally recognized contractor,” according to a Unocal 1994 report cited by the judge. The two western multinationals agreed that it would be “unacceptable” to allow impressed labor, Lew determined.

            However, a letter to Unocal from a Total official in February, 1996 privately acknowledged more than the companies were telling the press: “About forced labour used by the troops assigned to provide security on our pipeline project, let us admit between Unocal and Total that we might be in a grey zone.” 

            Lew — noting that the rules of summary judgment proceedings where all evidence must be construed in a favorable light to the plaintiffs — determined that Unocal may well have known what was going on with the pipeline. “Here, Plaintiffs present evidence demonstrating that before joining the Project, Unocal knew that the military had a record of committing human rights abuses; that the Project hired the military to provide security for the Project, a military that forced villagers to work and entire villages to relocate for the benefit of the Project; that the military, while forcing villagers to work and relocate, committed numerous acts of violence; and that Unocal knew or should have known that the military did commit, was committing, and would continue to commit these tortuous acts.”

            Responding when I asked him about this last year, Unocal spokesman Barry Lane didn’t really try to dispute Judge Lew (although lawyer Woodsome says he will do so at the trial). But Lane insisted that Unocal’s knowledge came from Total. “We can’t state in the absolute that we have direct knowledge of those actions. We were not there on the ground.”

            Whatever the Burmese military did during the Yadana construction, Unocal also argues that its much-criticized project has brought schools, farms, electricity, a hospital and other benefits to the 13 communities that are located along the pipeline. More than 7,000 Burmese children are receiving an education, thanks to Unocal. When Burma ’s dictators closed all the schools in the country, Unocal’s schools remained open.

            While the key documents remain under court seal, the public has no way of determining what actually happened while the Yadana pipeline was being built, and who was responsible for what precise human rights abuses.

            Meanwhile, one of Unocal’s critics may have come up with a better way for other multinationals considering doing business with the world’s dicey regimes. The Boston Globe noted in an editorial last month that was written after Judge Chaney’s ruling was made public, that respected organizations like Amnesty International and Human Rights Watch had wanted to “keep an eye on the Burmese military” during the Yadana construction.

            “If Unocal had accepted the presence of monitors, chances are that the villagers would not have been brutalized as they were and Unocal would not have exposed itself to the humiliating publicity likely to follow the villagers’ testimony,” the Globe concluded.

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