These are trying times for the former DC-based lobbying powerhouse and law firm, Patton Boggs. In 2014, the law firm combined with Cleveland-based Squire Sanders in a last-ditch effort to form a new lobbying juggernaut following the fall-out from Patton Boggs’ Ecuador Oil Scandal and GetFugu Stock Scandal. Now the firm still cannot shake the ghosts from its past, even as part of the new law firm, as its attorneys face a lawsuit from Getfugu and its officers and directors. Worse, following its $15 million dollar settlement with Chevron Corporation after being exposed in the Ecuador Oil Scandal, the outcome of the GetFugu stock scandal could be the same. In the words of Chevron’s general counsel, R. Hewitt Pate: “We are pleased that Patton Boggs is ending its association with the fraudulent and extortionate Ecuadorian litigation scheme.” Similar words could be uttered from the Plaintiffs in the GetFugu case should they, too, prove malfeasance on the part of Patton Boggs.
In 2011, GetFugu filed claims showing that the law firm, Patton Boggs, and some of its clients cost the mobile technology company more than $500 million by filing a frivolous civil lawsuit “as a pretext to tell would-be customers and investors that GetFugu and its officers and directors were being sued for racketeering.” In the filing by GetFugu, the company stated that Patton Boggs’ frivolous civil “lawsuit and attendant publicity caused GetFugu’s stock value to plunge 99 percent, representing a loss in market capitalization of $500 million, and forced GetFugu to spend $700,000 on legal fees.” As a result, GetFugu’s stock fell from $3.20 per share to $.003 per share, according to the complaint.
Carl Freer, who was GetFugu’s president at the time of Patton Boggs’ frivolous racketeering lawsuit, along with GetFugu and its other officers and directors demanded $500 million in damages from Patton Boggs and Cummins & White, claiming the firms and lawyers Richard Oparil and Iman Reza conspired to damage GetFugu by filing the frivolous lawsuit.
In 2010, to defend itself, Patton Boggs filed a motion to dismiss GetFugu’s countersuit under the California anti-SLAPP statute, arguing that it’s alleged misconduct arose from protected, legal activity and that GetFugu was unable to show that it would prevail on either defamation or malicious prosecution claims. At first, the trial court agreed and granted the motion. But Freer and GetFugu immediately appealed the dismissal of the defamation cause of action. The court was presented with evidence that showed Patton Boggs conducted a “shock and awe” campaign to discredit Freer and GetFugu by tweeting “buyer beware” and planting stories about FBI investigations in the Danish media. In 2013, the California Court of Appeals reversed the dismissal of GetFugu’s case for the defamation cause of action against lawyers Oparil and Reza, is still pending.
What is now known as the GetFugu Stock Scandal wasn’t Patton Boggs’ first. At the height of its life, Patton Boggs grew with an ever-expanding Federal Government, with officials moving from government service to serve as lobbyists or partners at Patton Boggs. In the wake of the Great Recession, however, Patton Boggs met business challenges on two fronts. First, many corporations, a good number of which had been Patton Boggs clients in a lobbying capacity, opened their own stand-alone lobbying offices. At the same time Patton Boggs grew fat and happy with a staff that peaked at over 550 attorneys and hundreds of other paid staff. To keep the good times rolling, one prominent Patton Boggs partner at the time, James Tyrrell, introduced the idea of a quick but very lucrative hit from a case against Chevron– which had found itself in trouble in Ecuador. Tyrrell’s overtures found a mostly receptive audience among Patton Boggs’ partnership ranks despite some level of hesitation from other partners who were leery about getting involved with a risk-taking gambler in the plaintiffs’ attorney who led the Chevron case.
Patton Boggs first got involved in the Ecuador Oil Scandal in 2009. Tyrrell tipped off Patton Boggs’ D.C.-based executive committee on an opportunity to enforce a multibillion-dollar judgment against Chevron in Ecuador. Tyrrell detailed to the committee that a New York-based hedge fund, Burford Capital, could invest in the plaintiffs’ pollution litigation against Chevron in Ecuador. Burford Capital, in turn, asked Patton Boggs to take on the case so that in the event the plaintiffs prevailed Patton Boggs would earn itself a quarter of the payout.
At first, everything went according to plan. In early 2011, the Ecuadorian judge presiding over the Chevron pollution case found the company liable for environmental harm, harm to Ecuadorian citizens, and ordered damages of over $18 billion that included a $9 billion penalty on top of the $9 billion real damages. Chevron didn’t fold, and instead filed a civil lawsuit in federal court in New York the lead plaintiffs in the Ecuadorian case. Chevron went on to allege that the entire Ecuadorian lawsuit was a fabrication of fake data, coerced government officials and ghostwritten court documents. Further, Chevron claimed that its subsidiary, Texaco, had already cleaned up its portion of the pollution and had received a liability release from the Ecuadorian government.
What had sounded like a sweet deal to Patton Boggs’ executive committee started to sour. In the fall of 2011, Burford Capital accused the lead plaintiff of conducting “a multi-month scheme to deceive and defraud in order to secure desperately needed funding.” Chevron launched its counterattack. Based in part on outtakes from Crude, the documentary film the plaintiffs in the Ecuador oil case created, Chevron exposed the plaintiffs intimidated the Ecuadorian judge. In the film outtakes, one lawyer for the plaintiffs said: “This is how the game is played. It’s dirty.” Chevron pinned Patton Boggs as a co-conspirator its alleged racketeering ploy. Patton Boggs allegedly had helped cover up the plaintiffs’ “dirty” methods to win the $18 billion judgment.
Patton Boggs’ situation worsened. In 2013, Buford Capital, after selling off its investment that backed the case, accused Patton Boggs of producing “false and misleading advice.” Next, Stratus, the consulting firm that ran the environmental study that impugned Chevron-Texaco, invalidated its findings and claimed that the plaintiffs misled the firm. Other dominoes fell under Chevron’s pressure to ferret out the facts that underpinned the case. In June 2013, the Washington Post penned a scathing report that outlined Patton Boggs’ wrongdoing.
In late 2013, Patton Boggs was U.S. District Judge Lewis Kaplan held a bench trial in Manhattan on Chevron’s racketeering allegations against Donziger. In March 2014, the U.S. District Judge Lewis Kaplan ruled that the plaintiff’s lawyer in the Ecuador case violated federal anti-racketeering laws. From there, the trouble for Patton Boggs continued. Judge Kaplan established that Chevron could pursue fraud claims against Patton Boggs for its involvement in allegedly covering up the plaintiffs’ misconduct. Patton Boggs claimed the allegations were “baseless and unlikely ever to proceed to litigation on the merits.” But in May 2014, the firm conceded, and settled its dispute with Chevron for $15 million. At that point Patton Boggs conceded to its desperation, saying that it “regrets its involvement in this matter.” Of course, the Ecuadorian plaintiffs, too, turned on Patton Boggs, and issued a statement decrying “this sad and unethical betrayal” by the law firm. As a capstone, the much more nimble and stable firm of Squire Sanders announced its merger with the ailing Patton Boggs.
Patton Boggs’ experience filing frivolous claims in the Ecuador Oil Scandal is eerily familiar, with parallels to the GetFugu Stock Scandal. James Tyrrell said in court: “If someone seriously suggests that the 50-year-old law firm of Patton Boggs would wreck, would risk its professional reputation for a group of Ecuadorians whose case we feel strongly about, that we would be involved in a broad fraud, I suggest [to] whoever might believe that: I have a bridge in New York I might like to try to sell them.” Randy Mastro, a partner with Gibson, Dunn & Crutcher and Chevron’s lead outside counsel, responded: “The answer, unfortunately, from their own documents, is yes. The answer is: A firm getting a contingency fee on $18.2 billion will do a lot of things that shock the conscience, and what they did here shocks the conscience.” It may be that through GetFugu, Patton Boggs’ attorney have not one, but two bridges it might like to sell.