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Week Six Highlights – Chevron vs. Donziger

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Donziger Takes the Stand

In federal court this week, attorney Steven Donziger admitted to: Paying a supposedly independent court-appointed expert in Ecuador out of a secret account; altering the expert’s report hours before it was submitted to the court; and receiving an e-mail  from his co-counsel soon after a new judge was assigned to his multibillion-dollar pollution lawsuit against Chevron, saying “the puppeteer won’t move his puppet unless the audience pays.” A few days later, $1,000 was removed from the bank account of a group controlled by the plaintiff lawyers and given to Alberto Guerra, a former judge who has testified he helped write the $19 billion judgment – since cut to $9 billion by Ecuador’s highest court – against Chevron.

In multiple depositions and hours of cross-examination this week, Randy Mastro, a Yale Law grad who worked as a federal prosecutor in New York before joining Gibson, Dunn, has meticulously assembled the bits of evidence he thinks he needs to prove Donziger engaged in a conspiracy to defraud Chevron with the Ecuador judgment.

In hours of cross-examination, Mastro confronted Donziger with a collection of e-mails, internal documents and witness statements that painted a picture of a lawyer who coordinated an international scheme to win a judgment in Ecuador based on evidence the plaintiffs supplied to the court.  [Donziger] admitted to paying the Colorado firm Stratus Consulting to produce much of the evidence that appeared under the name of a court-appointed expert, Richard Cabrera, and fighting hard against Chevron’s efforts to uncover that relationship.

Mastro went on to get Donziger to acknowledge forging a signature is wrong, obviously hoping the judge will connect the dots to Chevron’s claims that plaintiff lawyers forged the signatures of Ecuadorean villagers and scientific documents submitted to the court.  (Forbes)

In an trial that has already lasted more than a month, Chevron has presented a series of witnesses, several of them former allies of Donziger’s, who have testified that he used deception, bribery, and coercion to secure a liability finding that Ecuador’s top court last week upheld, even as it halved the damages from $19 billion to $9.5 billion.

Under the civil provisions of the Racketeer Influenced and Corrupt Organizations Act, known as RICO, Mastro is attempting to show that Donziger was the kingpin in an illegal “enterprise” designed to extort an enormous settlement from Chevron.

To erode Donziger’s professions of self-sacrifice, Mastro quizzed the plaintiffs’ attorney about his potential compensation. Even under the reduced $9.5 billion damage amount, Donziger acknowledged, he would stand to collect more than $600 million in contingency fees. In response to Mastro’s questions, Donziger also acknowledged that he and the financiers of his lawsuit had arranged to route their winnings to a trust in Gibraltar, a Mediterranean tax haven.  (Bloomberg BusinessWeek)

A Manhattan lawyer who’s spent his career battling Chevron Corp. over pollution in Ecuador said he may collect as much $600 million in fees if his court victory in the South American nation is enforced.  “You expect to get paid,” Randy Mastro, the lawyer for the oil company, said while asking Donziger what he meant in previous comments about trying to get a “juicy check” from Chevron. “It was a joke,” Donziger said.

Mastro attacked Donziger’s allegation that he was an employee of the villagers, asking why the lead litigator in Ecuador, Pablo Fajardo, referred to him as the “comandante,” or commander in Spanish. “He used the term comandante as a term of affection, more as a buddy or something,” Donziger said yesterday.  In one year during the case, Fajardo was also paid just $24,000 while Donziger received $150,000, Mastro said.

Chevron built its racketeering case against Donziger after pre-trial information exchanges produced hundreds of hours of outtakes from “Crude,” and a sporadic journal Donziger kept.  The journal, which Donziger described as “personal notes,” was intended to help remind him of details if he wrote a book, he said in his draft testimony.  Chevron contended the material showed Donziger discussing ways to take advantage of Ecuador’s weak judiciary and pressure judges. Donziger said the outtakes were edited by Chevron and that some of his statements were taken out of context. (Bloomberg)

New York lawyer Steven Donziger was the mastermind behind a litigation team that spent more than $21.4 million to allegedly extort billions from Chevron Corp. CVX +0.42% over environmental damage claims in Ecuador’s Amazon Basin, a lawyer for the oil giant said Monday. 

During his cross-examination of Mr. Donziger on Monday afternoon, Randy Mastro, a lawyer for Chevron, portrayed him as a mercenary who stands to gain the largest share of the money from a 2003 pollution lawsuit filed in Ecuador on behalf of villagers in a remote corner of that country’s rainforest.  “This isn’t a pro bono case for you, is it?” said Mr. Mastro. He went on to quote an email exchange between Mr. Donziger and another lawyer that referenced “juicy checks,” as well as an entry from Mr. Donziger’s diary that described “billions of dollars on the table.”

In a written statement submitted to the court this week, Mr. Donziger downplayed his role in the case, saying that while he did play a “significant” role as an advisor to the litigation team, another attorney, Pablo Fajardo, represented the plaintiffs in court and has been the lead lawyer on the case since 2005.  But Mr. Fajardo, who was several years his junior, referred to his American counterpart as the “Comandante” and made far less money, Mr. Mastro said. For example, under the terms of their retention agreement, the plaintiffs’ team is entitled to 20% of the judgment, but Mr. Donziger would get the lion’s share—nearly one-third of that portion, or 31.5%, according to Mr. Mastro. (Wall Street Journal)

Instead, Chevron spent most of Donziger’s first hour on the stand establishing his outsize role in the Ecuadorian pollution case. As his starting point, Mastro took on Donziger’s insistence that he “served on the case at the pleasure of the plaintiffs and their representative [Pablo Fajardo]. I work for them; they do not work for me.”

Drawing from a dizzying range of sources, Mastro showed that Donziger or his colleagues have referred to him as the cabeza or commander-in-chief, while Donziger once called Fajardo his “young field lawyer in Lago Agrio.” Donziger’s contract gave him “overall responsibility for the strategic direction of the Litigation and [its] day-to-day management.” As Donziger once put it, “I am at the epicenter of the media, political, and legal activity surrounding the case both in Ecuador and the U.S.” Despite claiming to effectively work for Fajardo, Chevron established that Donziger made more than six times Fajardo’s salary, and that Donziger’s allotted contingency fee is over three times larger.

“You must have a very generous boss Mr. Donziger,” said Mastro sarcastically.  Specifically, Mastro established that Donziger is entitled to 31.5 percent of the 20 percent of the Ecuadorian judgment allocated to fees. That came to roughly $1.2 billion when the judgment stood at $19 billion. Now that Ecuador’s highest court has lopped off the penal component and halved the verdict to $9.5 billion, Donziger stands to earn about $600 million.

The remainder of the day was devoted to Chevron’s cross-examination of one of Donziger’s co-defendants, Javier Piaguaje, who was a plaintiff in the Amazon environmental case. Most notably, Piaguaje was unaware that as a plaintiff he had ceded all of his rights in the judgment to the Amazon Defense Front, despite having been a member of the “Assembly of los Affectados,” and despite having certified as much in an interrogatory response. Piaguaje was also unaware that Fajardo has been allotted 2 percent of any recovery. And, he admitted that he could attribute the pollution at the Tarapoa oil well near his childhood home to Chevron predecessor Texaco only on the basis of rumor. (According to the book Amazon Crude, that well was drilled by Clyde Petroleum).  (American Lawyer, Litigation Daily)

Donziger was less clear in response to specific questions from Chevron counsel Randy Mastro of Gibson, Dunn & Crutcher—especially on the allegation that Donziger’s team bribed ex-judge Alberto Guerra to ghostwrite orders unfavorable to Chevron for another Ecuadorian judge, Nicolas Zambrano.

Mastro introduced documents showing that in September 2009, Fajardo emailed Donziger, “The puppeteer is pulling the string and the puppet is returning the package.” About a week later, according to a bank deposit slip that Chevron is trying to move into evidence, a plaintiffs’ employee deposited $1000 into Guerra’s account. In October 2009, Fajardo emailed Donziger, “The puppeteer won’t move his puppet until the audience [pays] him something,” and within days $1000 was withdrawn from the plaintiffs’ Ecuadorian account. As a general matter, Donziger said that Fajardo was not using codewords, but jokey nicknames.

Isn’t it true, Mastro asked, “the puppeteer was Guerra?” “That’s not my recollection,” said Donziger.  Isn’t it true, Mastro asked, “the puppet was Judge Zambrano?”  “I have no recollection,” said Donziger.

Mastro also brought up the 2007 Power Point meeting where Cabrera was caught taking instructions from the Ecuadorian plaintiffs on a film outtake. “The cameras were rolling,” Donziger said. “It was not a secret.” Mastro responded that Cabrera showed up on film for less than five seconds in the course of a seven-hour meeting, because Donziger had instructed the camera crew not to film Cabrera. Donziger said he didn’t recall that. Moreover, Mastro noted, when a scientist said on camera the next morning that it was weird for Cabrera to have been there, Donziger told him not to talk about it, and told the cameraman it was off the record.

When the Cabrera affair began coming to light in U.S. discovery proceedings in 2010, a junior lawyer in Ecuador voiced the fear that “all of us, your attorneys, might go to jail.” Donziger said this was only one view. During the same period, Donziger wrote a memo stating that from a traditional Ecuadorian law perspective the Cabrera process was improper and violated court rules. He testified that he was at times confused about Ecuadorian law.  (American Lawyer, Litigation Daily)

Chevron, on the other hand, claims that Donziger got Cabrera into his position by blackmailing Ecuadorean Judge German Yanez who was embroiled in a sex scandal during that period.  Mastro alleged that an entry from Donziger’s litigation notes showed that Ecuadorean lawyers threatened to file a complaint against the judge if their demands were not met. The passage he displayed in court started: “We wrote up a complaint against Yanez, but never filed it while letting him know we might file it if he does not adhere to the law and what we need.”

After Yanez ruled in their favor, the judge told Donziger’s co-counsel Luis Yanza that “we needed to back him now as he fights to survive in the court,” according to the notebook.  (Courthouse News Service)

In one of the more dramatic moments in a legal battle that has stretched for 20 years, a lawyer for Chevron questioned Mr. Donziger over a string of emails that he received from an Ecuadorean colleague that included words like “puppet” and “puppeteer.” The words, the company maintains, were references to two judges involved in bribes that it says Mr. Donziger and his associates arranged.

“ ‘The puppet will finish the entire matter tomorrow’ — do you recall that, Mr. Donziger?” asked the lawyer, Randy M. Mastro, quoting from the emails. “The puppeteer is pulling the string and the puppet is returning the package.”

Days after Judge Zambrano took over the Lago Agrio case, an Ecuadorean lawyer sent an email to Mr. Donziger reading, “The puppeteer won’t move his puppet unless the audience pays him,” Mr. Mastro said in court on Tuesday. Mr. Mastro then cited payments to Mr. Guerra that he said followed that message, which Chevron has claimed were bribes. (New York Times)


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