For years, Chevron Corp. has insisted a sprawling environmental-pollution lawsuit in Ecuador initiated by a Philadelphia law firm that resulted in a $19 billion judgment was riddled with fraud.
Now, the company is trying to prove its case in a closely watched civil trial in federal district court in New York that could establish new limits on when and where U.S. companies can be sued over claims they caused environmental harm in foreign jurisdictions.
Chevron has sued some of the lawyers and others on the plaintiffs' team, saying they doctored one expert-witness report, surreptitiously authored the findings of a court-appointed expert awarding their clients billions, and bribed a judge, among other improper and illegal acts. The company seeks a court order barring enforcement of the judgment.
The trial, which began Oct. 15, is expected to last at least a month.
The Chevron lawsuit names plaintiffs' lawyer Steven Donziger, a onetime classmate of President Obama at Harvard Law School, and his clients as defendants.
It also names as co-conspirators, but not defendants, Center City plaintiffs' lawyer Joseph Kohn and his firm, Kohn, Swift & Graf, which financed the case, spending a total of $7 million, and which did some of the legal work until it pulled out in late 2009.
Donziger was not a member of Kohn, Swift & Graf, but the firm paid him a $150,000-a-year stipend until it withdrew from the case.
In an August 2010 letter to members of the plaintiffs' team in Ecuador, Kohn charged that Donziger had engaged in improper conduct and concealed it from the law firm. Once allegations of misconduct began to emerge, Kohn said he repeatedly asked for key documents and proposed an outside lawyer be brought in to review the case but was rebuffed by Donziger.
Through his lawyer, Patricia Hamill, Kohn has said he had no knowledge of the alleged improper activities of Donziger and others on the plaintiffs' team.
In August 2011, U.S. Magistrate Judge James C. Francis, in a hearing on a motion by Chevron to gain access to Kohn's e-mails and other documents, said he saw no evidence of fraud by Kohn while also ordering Kohn to turn over e-mails relating to the case.
Randy Mastro, Chevron's lead lawyer and an adjunct professor at the University of Pennsylvania Law School, said last week he intended to call Kohn as a witness for Chevron. Hamill said Friday that Kohn was on the witness list but that she didn't know when he would testify.
"Steven Donziger . . . fabricated evidence, ghostwrote court reports, and even bribed a judge to influence the judgment against Chevron in Ecuador," said Chevron spokesman Morgan Crinklaw. "Throughout this trial, we intend to hold him accountable for his actions and prevent him from profiting from a fraudulent judgment."
Donziger's defense team, many of whom are volunteering their time or working at reduced rates, accuse Chevron of trumping up fraud charges as a way to discourage others from suing the company. In his opening statement, Richard Friedman, the lead lawyer, even compared Donziger to the late Supreme Court justice and civil rights leader Thurgood Marshall for standing up to Chevron and seeking to redress the environmental harms allegedly caused by the company.
"I personally and the team are just so completely disgusted by the abuse of the legal process that Chevron and their lawyers have undertaken that we have never been more motivated to fight a case in our lives," said Christopher Gowen, a Washington lawyer and Bryn Mawr native who is serving as Donziger's spokesman. "What you have here is that instead of defending your [Chevron's] case, you go out and attack people for even daring to bring a lawsuit. They are trying to send a message that if you bring a lawsuit against a company like Chevron, they are going to come after you."
Kohn, Donziger, and others initially filed their lawsuit in federal district court in New York in 1993, alleging that Texaco, which later merged with Chevron, had polluted a Rhode Island-sized swath of the Amazon rain forest in Ecuador through its oil-exploration and extraction activities. The case was eventually dismissed after the court concluded it would be better heard in Ecuador.
Refiled in Ecuador in 2003, the lawsuit alleges that Texaco discharged billions of gallons of contaminants into the waters and streams of the Amazon rain forest, ruining the environment and causing a spike in cancer rates. An Ecuadoran trial judge issued the $19 billion judgment against the company in February 2011.
Chevron sued Donziger in New York under the federal Racketeer Influenced and Corrupt Organizations Act a short time later, alleging the judgment was the product of fraud.
Since then, Donziger and his team have suffered a series of reversals.
Long before the trial began this month, U.S. District Judge Lewis Kaplan made it clear he believed Chevron had produced evidence of fraud by Donziger and his team. In a March 15 opinion on a discovery motion by Chevron, Kaplan said there was evidence that Donziger and his team in Ecuador had ghostwritten the court-appointed expert's report awarding their clients about $27 billion in damages (later reduced to $19 billion by the trial judge), bribed one judge, and threatened another with a judicial-misconduct complaint unless he ruled in their favor.
The expert's report, Kaplan said, "was not entirely or even predominantly his own work, or that of any assistants or consultants working only for him. There is no genuine issue with respect to the facts that the [plaintiffs' team] secretly prepared his work plan, worked closely with him in carrying it out, and drafted most of the report and annexes."
So far, the trial has generated testimony from a former Ecuadoran judge, Alberto Guerra, who last week described a convoluted scheme in which he agreed, for a sum of $1,000 a month, to write opinions favoring the plaintiffs' case, handing them off to the presiding judge, Nicolas Zambrano, who then issued them as though they were his own. Guerra testified that Zambrano also told him the plaintiffs had agreed to pay him $500,000 in exchange for a favorable verdict.
Donziger's lawyers say Guerra, who admitted to accepting bribes and paying them, is not a credible witness, and they maintained he had changed his account of his actions several times. Moreover, they charge that Guerra has an incentive to lie because Chevron agreed to move Guerra and his family to the United States and pay him more than $300,000 over two years.
The payments violate professional ethics rules, Donziger's lawyers said Friday, adding that they would move to have his testimony stricken.
Chevron said it was necessary to move Guerra to the United States because, by testifying on the company's behalf, he faced possible harm in Ecuador.