Judge: Kohn unaware of fraud in Chevron case

New York lawyer Steven Donziger assailed the ruling, saying it had been clear the judge would rule against him.
New York lawyer Steven Donziger assailed the ruling, saying it had been clear the judge would rule against him.
Posted: March 06, 2014

In a case that has cost tens of millions in legal fees and riveted the attention of legal experts nationwide, a federal judge in New York on Tuesday found that an $18 billion judgment against energy giant Chevron Corp. for polluting a wide swath of the rain forest in Ecuador was procured through fraud, including bribery and doctored experts' reports.

In an exhaustive, 485-page opinion, U.S. District Judge Lewis Kaplan found that lead plaintiffs' lawyer Steven Donziger initiated the fraud in 2006, after it appeared that the case in Ecuador had begun to go against him. Kaplan found that Donziger, who is based in New York, had concealed the fraud from Kohn Swift & Graf, a Philadelphia plaintiffs firm that financed the case until it pulled out in 2009 over concern that Donziger and his team had acted improperly.

"The court finds that Donziger began his involvement in this controversy with a desire to improve conditions in the area in which his Ecuadoran clients live," Kaplan wrote. "In the end, however, he and the Ecuadoran lawyers he led corrupted the . . . case."

Kaplan barred Donziger and his team from seeking to enforce the judgment in the United States or collect any fees from enforcement outside the U.S.

Donziger and groups allied with him sharply criticized the ruling Tuesday.

"Well before the trial began, Judge Kaplan made clear he would rule against us," Donziger said in a statement. "Through this decision, we now have the spectacle of a Manhattan trial judge purporting to overrule Ecuador's Supreme Court on questions of Ecuador law."

Kaplan's ruling follows a six-week trial in which dozens of witnesses testified. Kaplan said the litigation included things "that normally come only out of Hollywood," including coded e-mails and secret accounts used by the plaintiffs' team.

The litigation stretches back to 1993, when a handful of lawyers, including Kohn and Donziger, sued Texaco, alleging its oil drilling operations had ruined a large swath of eastern Ecuador. Chevron, which denies any wrongdoing, became the defendant after it merged with Texaco.

An Ecuadoran trial court issued an $18 billion judgment in favor of Donziger and his clients, thousands of indigenous people and settlers in eastern Ecuador, in 2011. Chevron sued Donziger in federal district court in New York a short time later, alleging fraud.

Kaplan said that Donziger went to great lengths to conceal the fraud of the plaintiffs team from lawyer Joseph Kohn of Kohn, Swift & Graf. When, in 2009, Kohn voiced concern about reports that the plaintiffs team in Ecuador had colluded with court officials to obtain a favorable verdict, Kohn proposed hiring former Philadelphia Assistant U.S. Attorney Kenneth Trujillo. But the idea was dropped after Donziger e-mailed Kohn a few days later to tell him the team in Ecuador would not cooperate.

Kaplan rejected arguments by the plaintiffs that the trial was unfair because it focused only on Chevron's allegations, and not on evidence that the oil company was responsible for pollution in the rain forest.

"The court assumes there is pollution in the Oriente," the Amazon rain forest region of Ecuador, Kaplan wrote. "The issue here is not what happened in the Oriente 20 years ago. It is instead whether a court decision was procured by corrupt means."

Kaplan found that the plaintiffs colluded with Ecuadoran officials, including President Rafael Correa, to push criminal charges against Chevron executives as a means of pressuring the company into a settlement.

When the first of a series of "judicial inspections" of a drilling site failed to show the pollution that Donziger and his team had hoped for, Donziger then sought the appointment of an expert allied with his team to issue a finding favorable to the plaintiffs, Kaplan found.

Kaplan said that consultants for the plaintiffs team wrote most of the experts' report recommending that the plaintiffs be awarded billions in damages. Kaplan also found that the plaintiffs "probably" wrote much of the Ecuadoran trial judge's opinion finding in their favor.


cmondics@phillynews.com

215-854-5957

@cmondics

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