Donzigerdämmerung?

Steven Donziger’s lawyers, Keker & Van Nest LLP, have moved for leave to withdraw from the case, citing non-payment of its fees of more than $1.4 million. The motion pulls no punches, accusing Judge Kaplan of allowing the case to “degenerate[] into a Dickensian farce” and accusing Chevron of “scorched-earth litigation, executed by its army of hundreds of lawyers” and of “using its limitless resources to crush defendants and win this case through might rather than merit.” Craig Smyser, lawyer for those of the LAPs that have appeared in the case, has also moved for leave to withdraw.

When I look at the New York docket, I have some sympathy for this cri de cœur. Here is Rule 1 of the Federal Rules of Civil Procedure:

These rules govern the procedure in all civil actions and proceedings in the United States district courts, except as stated in Rule 81. They should be construed and administered to secure the just, speedy, and inexpensive determination of every action and proceeding.

When the dust finally settles, we will be able to judge whether Judge Kaplan has exercised a firm enough control over the pretrial proceedings. I think he is open to fair criticism on this score. But of course one’s view on this will be influenced by what one thinks of the merits. Chevron would say that its efforts were justified by the requirements of proving that it was the victim of a $19 billion fraud. Still, there is room to ask whether the court has allowed more in the way of motion practice and discovery than even such a complex case required, and if so whether the sheer amount of work prejudiced Donziger and the LAPs. Even then, we need to consider that the LAPs’ money troubles resulted (I would guess entirely or in large part, but I don’t know) from their loss of litigation funding, and their funder, Burford Capital, withdrew its support on account of the supposed fraud. So this is a very tangled issue.

It’s not a foregone conclusion that Judge Kaplan will allow the lawyers out of the case. I can imagine a judge requiring them to continue, since it is difficult to conceive how Donziger, let alone the LAPs, could proceed without counsel. This is one of the risks litigators face.

And this thought leads me to speculate. Everything that follows is the purest, rankest speculation—you have been warned! Donziger is a smart guy. Perhaps he has concluded that he is almost certain to lose in Judge Kaplan’s court. Suppose he simply defaults or agrees to entry of judgment. If he assumes that he will lose, then he is no worse off than he would have been had he continued to litigate, and he would have saved himself the additional attorney’s fees his lawyers would have charged him for the trial. And a default judgment or a consent judgment typically will not be given claim- or issue-preclusive effect. Donziger could be aiming at avoiding preclusion problems for the LAPs in the other jurisdictions where they are seeking recognition and enforcement of the Ecuadoran judgment. Do I have any reason to believe that this is so? Not really. But it would be a fitting next twist in this most twisty of cases.

About Ted Folkman

Ted Folkman is a shareholder with Murphy & King, a Boston law firm, where he has a complex business litigation practice. He is the author of International Judicial Assistance (MCLE 2d ed. 2016), a nuts-and-bolts guide to international judicial assistance issues, and of the chapter on service of process in the ABA's forthcoming treatise on International Aspects of US Litigation, and he is the publisher of Letters Blogatory, the Web's first blog devoted to international judicial assistance, which the ABA recognized as one of the best 100 legal blogs in 2012, 2014, and 2015.

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