Chevron v. Donziger: The Goat on the Stick

, The Litigation Daily

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(Editor's Note: The American Lawyer's Michael D. Goldhaber is filing regular dispatches from the Manhattan federal 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.)

During his brief stint representing attorney Steven Donziger, John Keker of Keker & Van Nest once predicted that Donziger would be "tethered to a stick like a goat" when he finally took the stand to face claims that he orchestrated a multibillion-dollar fraud against Chevron Corporation in Ecuador.

In a Manhattan federal courtroom on Monday afternoon, Chevron began its grilling.

Having virtually stripped Donziger of attorney-client privilege over four years of discovery, Chevron attorney Randy Mastro brought enough lighter fluid to set the courthouse ablaze. The pit master's assistants at Gibson, Dunn & Crutcher can roast Donziger with his diary entries, film outtakes, financial records, legal correspondence and 19 full days of deposition testimony. "We meet again Mr. Donziger," began Mastro ominously.

Chevron refused to engage with Donziger on the merits or conduct of the underlying Ecuadorian environmental litigation that sparked the New York fraud case. For while this material dominates Donziger's direct witness statement, Chevron has filed a motion to strike it.

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 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.

Among those watching Donziger's grilling on Monday were the rock musician Sting and his wife, Trudie Styler, who has sponsored a water project to improve the health of residents in the Ecuadorian Amazon.

Sting said in an interview with The American Lawyer: "This is a noisy distraction from the real life and death issue, which is the contamination that compromises their and their children's health. That has nothing to do with the minutia we've heard in court today. The money spent on this very expensive exercise could be better spent on some remedy for the situation in Ecuador."

Chevron representative Morgan Crinklaw responded: "It is unfortunate that Steven Donziger continues to mislead well-intentioned people. Overwhelming evidence presented in this trial proves that Donziger and his collaborators fabricated evidence, bribed judges and committed fraud."

The remainder of the day was devoted to Chevron's cross-examination of one of Donziger's codefendants, 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).

Donziger's testimony will continue on Tuesday.

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