Trial Opens for Chevron to Unravel $19B Verdict
MANHATTAN (CN) - A cryptic passage from the journal of a lawyer who engineered a $19 billion judgment against Chevron in Ecuador caught attention from both sides at the opening of a trial to invalidate that award.
While litigating in the Amazon, New York attorney Steven Donziger mused in his notebook that he was on the cusp creating a "new paradigm, of not only a case but how to do a case."
His clients' lawsuit sought billions in damages against Chevron to repair environmental damage and public health issues in the rainforest region of Lago Agrio, where Texaco drilled for decades. Chevron inherited the lawsuit by acquiring Texaco in 2001.
For Chevron's lead attorney Randy Mastro, who prosecuted mob cases in between stints at Gibson, Dunn & Crutcher, the tactics Donziger employed in that trial amounted to "a familiar story of a racketeer targeting a deep pocket on a big score."
Donziger and his colleagues pressured a scientific firm to skew their results, offered the presiding judge with a $500,000 cut of any judgment against Chevron, and then planned to strong-arm a settlement with an international political and public relations campaign, Mastro said in his opening statement Tuesday.
Allowing the Ecuadorean judgment to stand would allow trial lawyers to declare "open season" on major companies operating in "corrupt, foreign jurisdictions," the animated Chevron attorney warned.
He urged U.S. District Judge Lewis Kaplan, who is hearing the case without a jury, to declare the award illegitimate, thereby helping Chevron fight off collections actions it faces so far in Brazil, Argentina and Canada.
Of those original Ecuadorean plaintiffs, all but two - Hugo Gerardo Camacho and Javier Piaguaje - boycotted Chevron's new round of litigation in New York. The pair are represented by New Jersey-based lawyer Julio Gomez.
Donziger's new attorney Richard Friedman countered that having a New York judge overturn the outcome of court proceedings that took place a continent away and language barrier apart would be a "new paradigm" of its own.
Friedman, of Friedman Rubin in Seattle, noted at the beginning of his statement that Chevron's preference for New York was a dramatic departure from where the case originally began.
Though the Ecuadoreans had initially sued Texaco in Manhattan, Chevron "begged, bargained, and did everything that it could" to bring the lawsuit to Ecuador, he said.
The rainforest residents fought at the time to keep their then-8-year-old lawsuit in New York because they belonged to a "disfavored minority" back at home, Friedman said, comparing their status to blacks in the "South in the 1960s."
Both parties agree that, once Chevron succeeded in moving the case to Ecuador in 2001, Donziger's litigation strategy looked far different from that of a typical U.S. court case.
Friedman compared Donziger's judicial philosophy to those of consumer advocate Ralph Nader and legendary Supreme Court Justice Thurgood Marshall, who "understood" that "social change" had to accompany legal action.
Fighting the case outside of the courtroom, Donziger's campaign included political lobbying in the United States and Ecuador, celebrity profile from the likes of Sting, and finding financial backers to bankroll the lawsuit in exchange for a portion of a potential judgment. Donziger also brought the case to the attention of "60 Minutes," Vanity Fair and documentary filmmaker Joseph Berlinger. Footage that Berlinger left out of his 2009 film "Crude" depicted Donziger rallying protesters inside a judge's chambers in Lago Agrio.
Chevron gained access to this clip, and others, during discovery, and the company touted the footage as evidence of their adversaries' intimidation of the Ecuadorean judiciary. Friedman pointed out Tuesday, however, that the same footage showed the protesters barging in on Chevron lawyers "haranguing the judge."
Donziger's lawyer conceded that aspects of the Ecuadorean judiciary might appear "odd" or "maybe suspicious."
Four Ecuadorean judges were recused from the case amid accusations of misconduct or corruption. The first judge, Alberto Guerra, recently signed up as Chevron's star witness, claiming that Donziger bribed him to ghostwrite the final judgment for the fifth, Judge Nicolas Zambrano. Both of those judges have been disciplined in the past for freeing narcotics traffickers.
Chevron claims that forensic analysis supports Guerra's contention that the judgment was ghostwritten. Mastro said that strings of 150 words from the Donziger team's case file appear "word-for-word" in Zambrano's judgment, including misquoted and wrongly cited cases appearing "error-for-error."
Assuming the bench in late 2009, Zambrano spent less than two years on the trial before summarizing the more than 236,000-page case file in a 138-page, single-spaced ruling, Mastro said, ridiculing the judge's "speed-reading" and "speed-writing" ability.
Chevron contends that that the disputed portions come from a report by court-appointed environmental expert Richard Cabrera, who they say shunned neutrality in favor of colluding against Chevron. Stratus Consulting, a Colorado-based scientific firm hired by the plaintiffs in Ecuador, actually wrote a portion of Cabrera's report, Chevron says.
Top executives at Stratus have since renounced those findings, joining other former associates of Donziger, including former co-counsel, employees and financial backer Burford Capital, who have signed up against the lawyer.
Friedman insisted that Chevron's allegation about the "Cabrera report" led to a dead end because Zambrano wrote in his judgment that he disregarded it and relied only on Chevron's data.
Displaying a slide titled "What Chevron Paid It's [sic] Witnesses," Friedman said that Guerra collected tens of thousands of dollars, a ticket to the United States with his family, the services of an immigration lawyer, and other perks in exchange for his testimony.
Chevron has long defended those payments as transparent, and said that Guerra's testimony came with forensic evidence corroborating his tale. Friedman characterized it as the story of a "con man" who knows "that the easiest way to con people is by telling people what they want to believe."
Kaplan at that point interrupted opening statements for the first time that day to warn Friedman not to make another remark like that.
Friedman, who only joined the case a few weeks ago, appeared confused by the judge's reaction and he said he did not realize what caused the offense.
"Think carefully, then," Kaplan replied.
The implication was obvious to long-time observers of the case: In multiple recusal motions and statements by lawyers and spokespeople for the Donziger team, Kaplan has been repeatedly called biased and told that his rulings smack of "judicial imperialism."
Though it overturned two of his rulings, the 2nd Circuit has generally rejected such insinuation and defended Kaplan's handling of the case.
Unlike previous lawyers for Donziger, Friedman affected a highly deferential, polite and even shy courtroom demeanor before Kaplan, perhaps hoping to smooth over this fractured history come trial time.
Gomez, the lawyer for the indigenous Ecuadoreans, took a far less conciliatory approach. He panned what he called the "CSI-type" analysis and "perfectly scripted" testimony that Chevron promised, and mocked the notion that the oil giant "is the victim of a farmer, a canoer and a couple of attorneys, who like Donziger was working out of an apartment."
Chevron secured its sudden rush of witnesses by threatening their opponents with "economic annihilation," he added.
As the evidence phase of trial began, Gomez objected to Kaplan's requirement that the parties submit the direct testimony of witnesses on paper. He said that this procedure put the defense at an "enormous disadvantage" by taxing his team with paperwork that only Chevron had the resources to handle.
Brushing aside this objection as "so poorly taken," Kaplan suggested that Gomez was "allegedly" working on his own because "those who are calling the shots on your side" decided not to fund the New York case, which they called a "sideshow" in official statements.
The judge called it a matter of public record that Donziger's team fundraised up to $15 million for the litigation and secured representation from powerful law firms.
How the litigation team used those resources is a "great terra incognita" of the case, Kaplan said.
After Kaplan overruled Gomez's objection, Chevron submitted the direct testimony of their first witness, Ricardo Reis Veiga, who served as one of the company's lawyers in Lago Agrio. Ecuadorean prosecutors sought to bring him up on criminal charges, which were later dropped. Chevron cites the incident as evidence of political interference in Ecuador's judiciary, but Donziger's attorneys claim the aborted prosecution had merit.
Vega's cross-examination by Friedman started in the afternoon and will continue on Wednesday morning.