From 2003 to 2009, Kohn Swift & Graf P.C., based in Center City, spent more than $6 million financing the lawsuit in Ecuador, and pursued settlement negotiations with Chevron in the United States.
Kohn's onetime clients, thousands of indigenous tribesmen and settlers who said oil exploration and drilling had damaged the jungle, won an $18.2 billion judgment in an Ecuadoran court in February 2011. Texaco, which drilled hundreds of wells in the region from 1964 through 1992, was the original target of the litigation. Chevron became the defendant after it merged with Texaco in 2001.
By the time of the court decision, Kohn had withdrawn from the lawsuit and renounced his fees. Among his reasons, Kohn said, were allegations by Chevron of improper contacts between the legal team in Ecuador and court officials there.
According to Kohn, the source of the problems was Steven Donziger, a New York lawyer working with Kohn to manage the case in Ecuador.
Now, Chevron is suing members of the Ecuadoran legal team, including Donziger. Kohn, who is not a defendant, testified as a witness for the multinational oil giant. In its opening statement in the case, Chevron said that Kohn, too, had been a victim of fraud by Donziger.
In a sworn statement made public as Kohn began his testimony last week, Kohn accused Donziger of a string of improprieties. Kohn said that when Chevron began to make allegations that the plaintiffs team in Ecuador was working behind the scenes with court officials to ensure a favorable verdict, he attempted to get to the bottom of the charges.
But he said Donziger refused to cooperate.
"Since KSG ceased representing the Ecuadoran plaintiffs, I have come to learn from various public filings, e-mails, declarations, depositions, videos, and reports that Mr. Donziger lied to me about a number of aspects of the litigation," Kohn said in his statement.
Chevron filed its lawsuit against Donziger, Ecuador-based lawyer Pablo Fajardo, community activists there, and others in February 2011. Chevron is seeking an order banning enforcement of the $18.2 billion judgment, alleging it was obtained through fraud and bribery. The nonjury trial began Oct. 15 and is expected to conclude by the end of the month.
Donziger has denied the allegations.
Kohn, Donziger, and several other lawyers filed the original pollution lawsuit in the same federal court in New York in 1993 against Texaco.
The case was refiled in Ecuador after the U.S. District Judge Jed Rakoff ruled in 2001 that the case would be better heard there.
In one highly unusual aspect of last week's testimony, Donziger himself spent several hours cross-examining Kohn.
Kohn said that as allegations emerged in 2008 and 2009 that Donziger and other members of the team in Ecuador had engaged in improprieties, he sought to hire an outside attorney, former Philadelphia city solicitor and assistant U.S. Attorney Kenneth Trujillo, to determine whether the allegations were true.
The case has gained attention from legal observers in large measure because Chevron won court orders compelling the plaintiffs team to disclose huge volumes of normally confidential attorney-client communications and other privileged documents, including hundreds of e-mails between the lawyers, their consultants, and others.
In addition to his e-mails, Donziger was required to turn over a personal journal and a book proposal outlining his ideas about the case. Chevron succeeded as well in compelling documentary filmmaker Joseph Berlinger, who followed Donziger and his team in Ecuador and also briefly filmed Kohn in Philadelphia for a movie about the case (titled Crude), to release hundreds of hours of video outtakes.
As part of its lawsuit, Chevron charges that Donziger and his team surreptitiously authored the report of a court-appointed expert, or special master, who recommended Chevron be hit with a $18.2 billion judgment. Kohn said that as evidence emerged of collusion between Donziger and Ecuadoran court officials, he became convinced he and his firm had been defrauded.
Of the more than $6 million that his firm spent on the pollution lawsuit from 2003 through 2009, Kohn said, about $1.1 million was paid directly to Donziger in fees and expenses.
Kohn's relationship with Donziger began to deteriorate in 2008 when he sought to play a more active role in the lawsuit against Chevron, Kohn said. He said Donziger resisted his efforts.
"He refused to provide us with copies of his files, including all the court filings we had requested," Kohn testified. "He cancelled or postponed meetings at the last minute, and generally he refused to substantively engage with KSG."
Kohn said that when Donziger informed him in November 2009 that KSG's primary responsibility was to pay for the case, while Donziger's was to manage it, "I told Mr. Donziger that his position left us no choice but to discontinue funding the case and paying his monthly invoices."
Since then, Kohn said, he has come to learn that he and his firm were the victims of a costly deception.
"I relied on Mr. Donziger to tell me the truth about what was going on in the Ecuador litigation," he testified. "I now know that Mr. Donziger did not tell me the truth. It is now clear that Mr. Donziger deceived and defrauded me and that as a result we continued to pay millions of dollars to that litigation that we would have never paid had we known the truth."