Industry Lawsuits Try to Paint Environmental Activism as Illegal Racket

By Nicholas Kusnetz, InsideClimate News

06 October 17

Logging and pipeline companies are using a new legal tactic to seek damages from Greenpeace and other groups. The long-shot cases are having a chilling effect.

n a bright afternoon in May 2016, two men in a silver SUV pulled into Kelly Martin's driveway. One of them, tall and beefy with a crew cut, walked up to her front door.

"The guy said, 'Is Joshua Martin home?' and I said, 'No, who are you?" recalled Kelly. "He said, 'I'm with a company that's talking to current and former employees of ForestEthics, and I'm wondering if he still works there'."

Joshua had left ForestEthics, renamed Stand last year, to run the Environmental Paper Network. Kelly asked to see the stranger's ID and to snap a picture on her phone. Instead, the man retreated to the SUV and "they literally peeled out of the driveway."

Around the same time, Aaron Sanger, another former employee of Stand, also received a visit from two men asking similar questions. So did others, some of them former employees of Greenpeace.

Then, on the last day of that month, Greenpeace and Stand were hit with an unusual lawsuit brought by Resolute Forest Products, one of Canada's largest logging and paper companies, that could cost the groups hundreds of millions of dollars if Resolute wins.

The timber company said the organizations, which for years had campaigned against Resolute's logging in Canada's boreal forest, were conspiring illegally to extort the company's customers and defraud their own donors.

Invoking the Racketeer Influenced and Corrupt Organizations Act, or RICO, a federal conspiracy law devised to ensnare mobsters, the suit accuses the organizations, as well as several green campaigners individually and numerous unidentified "co-conspirators," of running what amounts to a giant racket.

"Maximizing donations, not saving the environment, is Greenpeace's true objective," the complaint says. "Its campaigns are consistently based on sensational misinformation untethered to facts or science, but crafted instead to induce strong emotions and, thereby, donations." Dozens of the group's campaign emails and tweets, it said, constituted wire fraud.

"As an NGO, that is a deeply chilling argument," said Carroll Muffett, president of the Center for International Environmental Law (CIEL), which joined eight other groups to file an amici curiae brief supporting a move to dismiss Resolute's case.

The far-reaching lawsuit has seized attention across the environmental advocacy and legal communities. Arguments are to be heard in court next week.

The Resolute lawsuit was unprecedented. Then several months ago, former employees of Greenpeace and the environmental advocacy group 350.org were similarly visited by investigators. In August, the company behind the Dakota Access Pipeline filed a separate RICO suit against Greenpeace and two smaller groups, Banktrack and Earth First!. The complaint echoes Resolute's claims: a broad conspiracy against a major company, advocacy groups running an illegal "enterprise" to further their own interests while damaging the company, Energy Transfer Partners. It even alleges support for eco-terrorism, a violation of the Patriot Act, and drug trafficking.

It was filed by the same lawyer who represents Resolute—Michael J. Bowe, of the firm Kasowitz Benson Torres LLP, who is also a member of President Donald Trump's personal legal team.

"The Energy Transfer Partners lawsuit against Greenpeace is perhaps the most aggressive SLAPP-type suit that I've ever seen," said Michael Gerrard, faculty director of the Sabin Center for Climate Change Law at Columbia University, using the acronym for a lawsuit that aims to silence political advocacy. "The paper practically bursts into flames in your hands."

While the second lawsuit names only three defendants, together with unnamed "co-conspirators," it also accuses many of the nation's leading environmental groups, including the Sierra Club, Earthjustice and 350.org, of participating in a sprawling enterprise to disrupt business and defraud donors.

"This was precisely what we were concerned we would see," said Muffett of CIEL. Dozens of organizations, American Indian tribes and countless individuals were involved in the protests against the Dakota Access Pipeline. By naming a handful of them and unnamed co-conspirators, the suit may cause anyone with any ties to the movement to think twice before sending the next campaign email or launching a new effort, Muffett said.

"Those groups will be looking at this and trying to decide on how to respond and what it means for their campaigns going forward, not only on Dakota Access but other campaigns as well. And that is, in all likelihood, a core strategy of a case like this."

A Powerful Message

Kasowitz Benson Torres has earned a reputation as a particularly brash New York law firm. The waiting room of its Manhattan offices displays a brochure of media mentions, including several about the firm's close relationship with Trump. When Timothy O'Brien reported in his 2005 book, "TrumpNation: The Art of Being the Donald," that the future president was worth between $150 million and $250 million, not the billions he boasted, Trump hired Kasowitz to sue O'Brien for $5 billion. The case dragged on for five years before being dismissed.

It may have been the firm's work for a Canadian insurance company, however, that captured the attention of Resolute.

In 2006, Fairfax Financial Holdings Limited hired Bowe and Kasowitz to sue several hedge funds, accusing them of operating a criminal enterprise to drive down the company's share price and boost their short-sale profits. The case relied on New Jersey's RICO statute, and while it was dismissed in 2012, Fairfax appealed and in April won a ruling saying it could proceed with some of its claims. Bradley Martin, Fairfax's vice president of strategic investments, is chairman of Resolute's board of directors.

Bowe said that while his clients suffered damages, "defamation cases also typically involve an element of restoring your reputation. In fact, sometimes plaintiffs who don't have substantial damages sue primarily to clear their reputations," he said. Behind Bowe's desk hangs an American flag from the battle of Fallujah, among the bloodiest of the Iraq War. "I think the filing of a suit in court sends the most credible message that what they're saying about you is not true."

The Resolute case has its origins in a long-running environmental campaign focusing on Canada's boreal forest, a thick green stripe across much of the country. It's one of the world's largest stores of carbon, and environmental groups say it's under increasing pressure from logging operations. In 2012, Greenpeace Canada released a report purporting to show that Resolute was operating in parts of the forest it had agreed to stay out of. It turned out, however, that the area in question was not part of the protected forest. Greenpeace later issued an apology and said it would retract any material that drew on the assessment.

There's some disagreement on whether Resolute's logging practices stand out from its peers—many environmentalists say they do, but some people familiar with its work dismiss the claim. What everyone interviewed for this article agreed on is that unlike many of its peers, Resolute has resisted settling with environmentalists. In 2013, it sued Greenpeace Canada in an ongoing Canadian defamation suit over the boreal campaign. And after Greenpeace continued its work, and targeted many of Resolute's American customers, Resolute eventually filed its U.S. RICO claim, targeting the organization's U.S. and international arms, as well.

In 124 pages of detailed and passionate language, the complaint alleges not only that the defendants lied in order to harm Resolute's business, but that their primary objective is not to protect the environment but to raise money. It describes a "blitzkrieg attack" of threats against the company's customers unless they dropped Resolute. Some, like Kimberly-Clark, UPM, Best Buy and News Corp have either ended contracts or requested the contracts be altered to alleviate concerns, according to the complaint.

The lawsuit says the groups impersonated company employees to gain proprietary information and suggests Greenpeace was associated with a hack of the websites of Resolute and Best Buy. Beyond the 2012 error that Greenpeace retracted, the lawsuit says Greenpeace defamed the company by, among other things, calling it a "forest destroyer." In addition to Greenpeace and Stand, the lawsuit names several of the organizations' employees personally as defendants. The co-conspirators—or John and Jane Does—it says, are people of unknown identity who assisted Greenpeace's work, including "cyber-hacktivists, environmental activists, and certain foundations directing funds to the defendants." The suit seeks damages to be determined in a trial, but cites a claim by Greenpeace to have cost the company at least $80 million. RICO claims entitle plaintiffs to recover triple damages, in this case potentially more than $240 million.

On Oct. 10, Greenpeace will ask a federal judge in California to dismiss the case. The group submitted a similar motion last year in Georgia, where the suit was originally filed. The Georgia judge later moved the case to California, where two of the defendants are based, saying Resolute had not provided any "factual basis from which to infer that defendants committed fraud or extortion" in Georgia. "Rather, the allegations in the complaint, at best, support the inference that the defendants organized and held a protest in Augusta."

"It is very alarming that you can have plaintiffs like this, representing corporate interests attacking legitimate critics doing advocacy work by just drafting a complaint, throwing whatever in there, stretching racketeering law and going after constitutionally protected free speech by throwing labels out there basically trying to criminalize legitimate advocacy work," said Tom Wetterer, Greenpeace's general counsel.

Changing the Conversation

Over the past year, several energy corporations have filed lawsuits against critics. Murray Energy Corp., an Ohio-based coal company, filed a libel claim against The New York Times in May after it published an editorial critical of the company, and the following month filed another suit against comedian John Oliver, HBO, Time Warner and some staff members of his show, "Last Week Tonight." In August, Cabot Oil & Gas Corp., which has been accused of polluting residential water wells in Pennsylvania, sued one of the residents and his lawyers, saying they had harmed the company by filing a lawsuit, later withdrawn, that Cabot considered frivolous. The same month, a mining company run by the son of West Virginia Gov. Jim Justice sued two Kentucky regulators—personally—alleging that they interfered with the company's business.

The suits against Greenpeace, however, are broader in scope, and because of their use of racketeering law, potentially much more damaging. "They can change the tenor of the debate," said Joshua Galperin, who runs the Environmental Protection Clinic at Yale Law School. The cases, he said, are not simply legal acts, but political too.

"Now wouldn't be a bad time for certain industries to follow Resolute's lead and say, 'let's try to change the conversation. Let's see if we can get the Trump administration to intervene in these lawsuits, to get behind us, to bring perhaps even criminal RICO charges against groups like Greenpeace," he said. "Now wouldn't be a bad time to try these aggressive tactics, unfortunately."

The day the Resolute lawsuit was filed, Jonathan Adler, a conservative legal scholar at Case Western Reserve University of Law, wrote about it in a blog published by the Washington Post. The Wall Street Journal's editorial board offered conditional support. Others, including Steve Forbes, welcomed the lawsuit in Investor's Business Daily and the National Review.

Brandon Phillips, of the National Fisheries Institute, an industry group, wrote a letter published in the Wall Street Journal saying, "Bravo to Resolute Forest Products and here's hoping the discovery process in the litigation shines a light on the misconduct that environmental journalists have apparently ignored for far too long."

Marita Noon, in a column for Breitbart and the American Spectator, said: "Hopefully other companies will now tune into the public's change in attitude and with firmness and determination also fight back to protect shareholders and workers." She placed Resolute's fight in the political context of growing support for Trump's presidential campaign.

H. Sterling Burnett, of the conservative Heartland Institute, well known for its denial of mainstream climate science, said in an interview that other companies have been too quick to cave to the demands of environmentalists, and that the RICO suits may change that. "The Resolute case is one small thread," he said, "but you can take a thread and unravel a whole sweater."

Adler, a contributing editor to the National Review Online, spent years at the conservative Competitive Enterprise Institute, whose litigation has marked climate policy debates. "There is a view in the free market community that corporations don't fight back enough and are too quick to write the terms of their own surrender," he said.

Adler said he's not a fan of using RICO in the way that Kasowitz Benson Torres has, but that he has little sympathy for Greenpeace. And he has little doubt that companies are watching. "If weapons are lying around, someone's going to pick them up."

Bowe said he's spoken with several other companies interested in filing similar lawsuits—both before and after Energy Transfer Partners filed its case in August—though he would not disclose any details about the companies or potential targets. Speaking from his office, with plate glass windows looking over midtown Manhattan, he said his firm is not shopping the case to potential clients, that he's not allowed to do so.

A Perfect Boogeyman

In December 2014, as negotiators from around the world gathered in Lima, Peru, for the United Nations-sponsored climate change talks, a group of Greenpeace activists laid out a pro-renewable energy message in giant yellow fabric letters next to some of the nation's famous Nazca Lines, an archeological site, and photographed the episode from above. Many Peruvians, as well as diplomats at the talks, were outraged by the stunt, and the Peruvian government said the activists damaged the site.

Since its founding in 1971, Greenpeace has embraced this type of high-profile antics that self-consciously skirt the edges of legality and politesse. They also make Greenpeace the perfect boogeyman for conservatives and corporate leaders who have long pushed back against environmentalists, considering them out-of-touch radicals bent on crippling economic growth. (The Nazca Lines episode, for which Greenpeace later apologized, is listed in Resolute's complaint as evidence that the organization does more harm than good.)

Greenpeace is international in reach, nipping at corporate heels no matter where they tread, and in recent decades it has become one of the most effective groups at pressing companies to reform. For any practice that Greenpeace wants changed—clearing Amazonian forests for soy or Indonesian ones for palm oil—the group searches the supply chain for a major consumer brand, asks it to change suppliers, and threatens to paint the brand as complicit in environmental pillage if it refuses. The group has sent protesters dressed as chickens to McDonald's franchises in London to protest logging in the Amazon, deftly mimicked a Dove soap public service announcement in Canada to link its parent company, Unilever, to deforestation in Indonesia, and dropped banners across the front of Procter & Gamble's corporate headquarters for its sourcing of palm oil. The rhetoric is blunt and hyperbolic. And it's been remarkably effective, winning concessions, cooperation and even grudging respect from some of the world's best-known corporations.

Kimberly-Clark agreed to boost its use of recycled and environmentally certified wood fiber in 2009 after a years-long Greenpeace campaign. McDonald's agreed to work with the group to reduce deforestation in the Amazon.

The case brought by Energy Transfer Partners is an explicit attack not just on Greenpeace and the other defendants, but on this method, which it calls the "Greenpeace Model."

The pipeline company says the groups damaged its business through their protests against the pipeline, and also through their campaigns to pressure banks to cut off funding. It says they lied about the company's practices—claiming it hadn't consulted with Indian tribes and that the project hadn't received a thorough environmental review. (In December, the Obama administration ordered a more comprehensive environmental review of alternative routes, but the Trump administration later approved the pipeline before the review was finished.) The suit also names nine other groups, including the Sierra Club, Earthjustice and 350.org, as members of this "criminal enterprise," though most are not included as defendants. Together with the Resolute suit, which names Stand, the cases go after much of this uncompromising wing of environmentalism.

"An attack against Greenpeace and Stand, two groups that have been really at the forefront of corporate campaigns, is not just an attack on those groups but is an attack on the strategy that NGOs have used to really bring corporations back under control in terms of their social and environmental behavior," said Michael Marx, who runs CorpEthics, an environmental consulting firm that works with several of the named groups. The two complaints list other campaigns that Greenpeace has engaged in, including its work against genetically modified crops, Canada's tar sands and a campaign on sustainable fishing. "If Resolute is successful in a case like this, they're basically taking away what's become what I think is the real driver in the social responsibility movement."

The lawsuits make extraordinary claims, comparing the named environmental organizations to "parasites" and a "predatory pack preying on legitimate businesses."

Many legal experts and environmentalists say it's too soon to say whether the suits will pose a serious threat to the groups or to the advocacy community more broadly. Several, including Galperin, say the cases are unlikely to prevail in court. They may not need to.

Revealing the Whole Iceberg

The Resolute suit has now been running for nearly a year and a half, requiring Greenpeace and Stand to spend money and time filing briefs, responding to motions and traveling to court. Defendants in the Energy Transfer Partners case face a similar road ahead, with the filing of motions scheduled to last into March.

"We're confident they're not going to win, we're confident they're going to spend probably 10 times as much money as we're going to spend defending it, but this is definitely a difficult thing to deal with," said Todd Paglia, Stand's executive director, who was also named as a defendant. Paglia said the group has already lost support from one funder who was wary of being dragged into a lawsuit, accounting for about a quarter of the funding for its boreal campaign. "If we weren't really aggressive in trying to control costs, in trying to maintain our focus on our campaigns and revenue, it would be very easy for this lawsuit to turn into not just harassment but a death threat."

Greenpeace is much larger, with nearly $400 million in revenue from all its international branches last year. If it lost in court, the payout could be substantial. (Energy Transfer Partners didn't specify a figure, saying it had lost hundreds of millions.) But Tom Wetterer, Greenpeace's general counsel, said that's not the goal, or the danger, of the cases. "I don't think it's really about the money," he said. "I think they have to realize that their claims are not strong, that it's the process that they're really focused on, regardless of the end. It's really a means to drag us through the legal process."

The groups have tried to capitalize on the lawsuits, too. Greenpeace launched a new campaign asking authors and publishers—whom Resolute supplies with paper—to denounce the company's tactics, while Stand has asked supporters to rally behind it, adding an appeal for donations at the bottom of the message.

Energy Transfer Partners declined to comment, referring questions to Bowe. In an interview in August, Kelcy Warren, the company's chief executive, told a North Dakota television station that "We've created this kind of tolerance where, oh my gosh, you can't challenge these people in fear that someone is going to say you're not a friend of the environment. That's nonsense," he said. "Could we get some monetary damages out of this thing, and probably will we? Yeah, sure. Is that my primary objective? Absolutely not. It's to send a message, you can't do this, this is unlawful and it's not going to be tolerated in the United States."

Seth Kursman, Resolute's vice president for corporate communications, said in a written statement to InsideClimate News that "we decided to draw the line, unapologetically and forcefully defending our integrity."

The case has already provided a document trail that's proved useful to the company and its allies. In a January filing, Greenpeace wrote that some of its statements were "heated rhetoric" and opinion, and not actionable. Richard Garneau, the company's chief executive, drew on the quote in a column in the National Review, calling it an admission of lying. The cry was echoed in the Daily Caller, the oil and gas industry website Energy in Depth, and a site run by the prominent corporate public relations consultant Richard Berman, whose firm's tagline is "Change the Debate." Energy Transfer Partners cited the filing in its complaint.

A dozen media and advocacy organizations, in a second amici curiae brief supporting Greenpeace and Stand, warned that using RICO was "clearly an attempt at an end-run around the protections of the First Amendment." For a more common defamation case to proceed, plaintiffs must prove a defendant acted with "actual malice," meaning they either knew what they said was false or they should have known. It's unclear, some legal experts say, whether the same standard would apply under RICO, potentially making it easier for the case to proceed to discovery.

Among those who signed the brief was the First Amendment Coalition, which until January was led by Peter Scheer. He said he doubts Resolute will win the RICO case, but that if it drags on long enough, it could provide a model for silencing defendants, particularly smaller groups.

"It is something that is greatly subject to abuse because it gives the plaintiff so much leverage that it can force the defendant to settle," he said. "It's like an extortion law."

Bowe, the lawyer representing the companies, dismissed the idea that RICO would weaken First Amendment protections.

"Certain elements of the statute allow you to hold people accountable who might not be held accountable in a defamation case," he said. "If you're dealing with a group acting in concert, you want to hold accountable those who are directing and funding and calling the shots, not just the people doing the acts."

Enter the John and Jane Does. "When you get to discovery, the whole iceberg becomes revealed," Bowe said. "There might be people there who you weren't aware were involved. It could be funders, it could be foundations." A foundation could be implicated, he said, if it was closely involved in the campaign and its messaging.

Marx, of CorpEthics, worries that the suits have already intimidated some of his peers. "Even the threat that companies might do it could have a chilling effect both on the foundations that fund this work and on the groups that do these kinds of campaigns," he said.

Several people interviewed for this article said that threat quietly murmurs in the back of their mind. One of them is Joshua Martin, among the targets of the private investigators. The investigators never identified themselves as working for the Kasowitz firm; Bowe would not confirm or deny that he sent them.

"As soon as that lawsuit came out, I read the whole thing and I looked for my name," Martin said. "I just think that psychologically that's interesting in terms of the potentially intimidating impact that the visits have."