Thread by @Amy_K_Nelson

REPORT: Today is pretty “legal” but it’s super interesting. Amazon tells the court they paid to build data centers to get an injunction against a defendant. They didn’t. So they slid unnoticed edits into their proposed order. Look at the magic here. /1 bit.ly/31aSRqe

Northstar partnered with Zuckerberg’s IPI to build 9 buildings for Amazon to lease. IPI owned 86% of the buildings, Northstar 14%. Amazon owned no %. It’s a tenant, like a tenant in an apartment building. Northstar & IPI formed a joint venture & paid to build the buildings. /2

Amazon was only ever responsible for monthly rent. Like you pay apartment rent. Obviously, they didn’t pay to build the buildings. Why would you pay to build an apartment and then pay someone to lease the apartment you owned/built? You wouldn’t. /3

Also impt: Amazon agreed to a rent price *before* IPI/Northstar built the buildings. If there were any cost overruns, Amazon wasn’t responsible for the money. They got to stick to their agreed upon rent price. /4

And: Amazon still leases these exact buildings they saying are a crime. They lease them from IPI only & not the joint venture. Amazon only pays rent & doesn’t allege that it pays LESS in rent now. And! They make billions selling cloud computing there. /5 bloom.bg/3HE25uX

So...what was the damage to Amazon? Why are they spending millions in legal fees and lobbying the federal government to put people in jail? /6

politi.co/3eBZmWo

Amazon & IPI entered into a “Lease Continuity Agreement’ in Feb 2020 - when they called up the FBI (but months before they sued). If Amazon was overcharged by Northstar, surely IPI would reduce the monthly rent by whatever amount Amazon was overcharged - right? /7

But Amazon doesn’t allege it was overcharged. (Also, 2 years in, Amazon hasn’t produced the lease continuity agreement!) Amazon DOES allege that Northstar paid kickbacks to Amazon employees in order to win the leases. That’s what the lawsuit & criminal allegations are about. /8

Amazon alleges that referral fees Northstar paid to an entity called Villanova Trust - which were paid because VT “referred” Northstar to Amazon - were illegal kickbacks and that Villanova Trust"funneled" money to Amazon employees. /9

Now: The referral fees at issue didn’t come from Amazon’s money. Northstar paid the referral fees with Northstar's $. Because, remember, Amazon only pays rent for the buildings. They didn't pay to build the buildings. /10

Incredulously, though, Amazon’s lawyers at Gibson Dunn *did* tell the federal judge that Amazon paid to build the buildings & that they paid the referral fees. They did this in a May 21, 2020 hearing when they sought a $20M+ injunction from Northstar. /11

For nonlawyers: An injunction is an "extraordinary" judicial order that, here, requires Northstar to set aside $$ for potential restitution *to Amazon.* That is, set it aside before the facts are disputed or a verdict reached. /12

Gibson Dunn lawyer Elizabeth Papez (a former Clarence Thomas clerk) said in the May ‘20 hearing that an Amazon employee was “taking a share of the payments that Amazon paid Northstar, and Northstar then passed on to Villanova Trust.” /13

Papez further said to Judge O’Grady that the $21M Amazon sought was “narrowly tailored” to “evidence we have . . . of payments that we, Amazon, made to the defendants, Northstar and Mr. Watson.” /14

Papez also argued to Judge O’Grady that the $21M Amazon could “tie directly to fees that we paid Northstar and Northstar paid to Villanova.” But, again, Amazon paid no “fees” ever, and certainly not referral fees. /15

I mean, actually, Amazon hadn’t even taken tenancy in 5 of the 9 buildings at issue in their lawsuit. Like, Amazon had paid NO money at all in rent for 5 of the 9 buildings. /16

Judge O’Grady awarded the preliminary injunction - which is an extraordinary remedy and essentially sets aside a potential future award before any discovery or chance to defend oneself - because the $21M “represents the fees that the defendants received” from Amazon. /17

Indeed, the language in the injunction order that Amazon proposed via Gibson Dunn attorney Travis Andrews & O'Grady granted on May 21, 202 read that the $21M “represent[s] the fees that these Defendants received FROM AMAZON”! /18

But then! On June 3, 2020, Andrews slid in an edit for Amazon. And not a small one; a massive one. Northstar had asked to edit the injunction language so that he could post a bond instead of actual $. (Because 21M is *a lot* for a business that isn’t Amazon.) /19

Amazon told the court that day of the change. But Amazon made *another, unexplained change*: It *deleted* the words saying the injunction $ was $ Northstar “received from Amazon.” They instead talked about what they claim the $ was for - not who it was from. /20

Amazon did this because if the original language had stood, it would've been a lie. The $ at issue - the alleged "kickbacks" didn’t come from Amazon. So, Amazon got an injunction for tens of millions of dollars against a party that it NEVER PAID tens of millions. /21

Now, Northstar HAD paid tens of millions (along with IPI) to build the buildings. So Northstar was OUT the money spent to build the buildings…and then kicked out of the 15 year leases, where it would have made that money back. And then some. /22

But you know who wasn't out? IPI. They got a windfall. They get ALL the rent now! Lucky IPI. (Weird coincidence they accused Northstar.) /23 bit.ly/3eEgzhU

Back to Northstar: When Amazon filed its lawsuit it had only paid a total of $1.5M in rent that reached Northstar. (This # is from Amazon’s exhibit here - showing lease start dates & monthly rent - and then multiplying by .14 bc Northstar only owned 14% of the buildings.) /24

(As a side note: This exhibit seems crazy to me. Amazon has filed a ton of stuff under seal & redacted some stuff here. But here they’re like, look! This is what we pay in monthly rent we pay for data centers! Here are the yields - ie rate of return - our landlords earn!) /25

Neat trick, right? The neatest part about it is that Amazon has relied on this injunction for 21 months to say over & over & over again that crimes were committed. 21 months. They’ve not sought to move the case forward. Northstar had to force them to by motion. /26

I just think that's weird, because if you were truly damaged - wouldn't you want to move a case quickly and get your reward? The average case from filing to finish in EDVA - where Amazon filed - is 11 months. We're at month 21 and just now starting discovery. /27

Now, Gibson Dunn is a big firm. Some of the most expensive lawyers in America. But a court recently said they “committed fraud about fraud.” Whatever it takes, right? bit.ly/3mKqRkW /28

@threadreaderapp unroll please