Chevron v. Donziger: Joe Kohn's Warnings
(Editor's Note: The American Lawyer's Michael Goldhaber is filing regular dispatches from the Manhattan federal district court bench trial in Chevron Corp. v. Donziger. Please click here for background on the case—and scroll down for an expanded collection of American Lawyer coverage.)
On Monday, 20 years and one day after teaming up to file the original complaint against Texaco for polluting Ecuador's Amazon jungle, Steven Donziger and Joseph Kohn faced off in a bizarre cross-examination in the fraud trial unfolding against Donziger in New York. Texaco's successor, Chevron Corporation, accuses Donziger of manufacturing a $19 billion judgment against the oil giant in Ecuador. Kohn, who poured some $7 million into the underlying environmental litigation, testified for Chevron that he warned Donziger early on that his actions were undermining the Amazon pollution case.
In late 2010 Kohn, Swift & Graf renounced its role in Donziger's case—relinquishing an interest in the litigation that would be worth up to $1 billion if the Ecuadorians ever recover their award in full. But under cross-examination by Donziger himself on Monday, Kohn acknowledged that he has sued Donziger in Pennsylvania to claw back over $1 million in legal expenses, in an action that has been temporarily tolled. The federal trial judge in New York, Lewis Kaplan, had to repeatedly admonish the unhappy couple to fight one lawsuit at a time.
A subdued Donziger and Kohn broke no china. But the morning featured a few exchanges that sounded less like a tough cross-examination than a strained divorce mediation. Question: "I was mindful that you had limited resources." Answer: "I don't know what you were mindful of."
In his written testimony and on redirect, Kohn said that Donziger induced him in August 2007 to wire funds into a segregated bank account that, unbeknownst to Kohn, was used to pay the purportedly independent court-appointed expert Richard Cabrera. Two years later, Kohn said, he tried to retain the former prosecutor Kenneth Trujillo of Philadelphia's Trujillo Rodriguez & Richards to investigate Chevron's allegations of impropriety, including those involving Cabrera. On Sept. 4, 2009, Donziger blocked the internal inquiry, emailing Kohn: "Neither I, nor the legal team in Quito, will cooperate with such an investigation nor continue working with a firm that insists on doing such an investigation." Kohn said he stopped insisting, as attempting an investigation without cooperation would be futile.
On Nov. 10, 2009, Kohn urged the Ecuadorian legal team to negotiate a settlement that year with an end goal of $700 million to $1.2 billion. A settlement at the low end, he argued in his letter, would pay for a full cleanup and much else besides, and stand as "one of the most outstanding humanitarian achievements ever obtained in a court of law." After disagreements with Donziger over funding escalated, Kohn halted his funding on Nov. 19, 2009, and says that he withdrew at that time from the litigation (although there is room for interpretation).
After learning more from Constantine Cannon about Cabrera's allegedly fraudulent ties to the plaintiffs in April 2010, Kohn told the Ecuadorian team leaders that they were driving the case "over a cliff." Kohn recalled telling Donziger to "come clean" and resign, while Donziger equivocated and "looked down at his shoes."
Judge Kaplan took special interest in a letter from Donziger to cocounsel, dated April 16, 2010, according to Chevron, that gave an account of the Cabrera episode far less innocent than the one that was introduced soon afterward in multiple U.S. courts in the name of Ecuadorian counsel Pablo Fajardo. "Our side believes it can weather the storm with good advocacy in both the court[s] and the media," Donziger wrote.
Finally, in summer 2010, the Ecuadorian legal team wrote a letter to Kohn that it characterized as a termination. Kohn responded on Aug. 10 of that year with a memorable screed accusing Donziger of telling "blatant lies" to induce Kohn to fund the case. "I have come to realize that my firm and I were deceived," he wrote, and that the "dangerous combination" of "Donziger's conceit and naivete … is leading the case rapidly toward disaster."
On cross, Donziger tried to show that Kohn believed in the Amazon case, and had only turned against Donziger because he feared that Chevron would promote him from coconspirator to RICO defendant. But Kohn said fear of Chevron reprisals had nothing to do with it, since he knew the oil giant wouldn't name him once it learned the facts. Kaplan, meanwhile, warned Donziger against using the exchange to rehash claims of oil fouling the rainforest: "We ruled that you can't try the Ecuador pollution case, and you won't get it in the back door now."
Christopher Gowen, a spokesman for Donziger, emailed this statement: "I believe that Mr. Kohn as much as anyone who has been to Lago Agrio knows that Texaco/Chevron deliberately committed environmental damage in the region and that Chevron is liable to the people of Ecuador for their actions. I am certain that Mr. Kohn would be very pleased if Chevron, instead of spending the billions they are spending on legal costs, directed that money to the cleanup in Ecuador for Mr. Kohn's former clients."
In advocating a pretrial settlement, Kohn had warned that "no amount of public pressure or press coverage will convince Chevron to pay" if it wins in court at any point after the Ecuadorian judgment. When this statement was highlighted during his second cross-examination, Kohn stood by this advice. You could have all the favorable press coverage in the world, he said—but "at bottom, this was a lawsuit."
Donziger noted with satisfaction that he won a judgment for $19 billion a bit over a year after Kohn's advice to settle for $1 billion. He seemed to miss Kohn's point that a judgment would only be the starting gun for years of litigation that is highly uncertain to end in his favor (and seems less so with each passing day of trial). And so Joe Kohn punctuated the 20th anniversary of the Ecuador case with the lawyer's refrain: "I stand by my advice."
Please click here and scroll down for our expanded Chevron archive—including ten of the film outtakes that "sent shockwaves through the nation's legal communities."