Lago Agrio: Donziger Seeks Rehearing En Banc

Shimon Peres
May his memory be for a blessing. Credit: Michael Thaidigsmann

Steven Donziger has petitioned the Second Circuit to rehear his appeal of Judge Kaplan’s judgment in the RICO case en banc. It’s a Deepak Gupta brief, so it’s well-done and a good read. Will it be successful? Here are a few thoughts.

Any discussion has to begin with the observation that at least as of a few years ago, the Second Circuit “hears the fewest cases en banc of any circuit by a substantial margin.” Mario Lucero, The Second Circuit’s En Banc Crisis, 2013 Cardozo Law Review “de novo,” 32, 33 (2013). So the baseline prediction has to be that the petition will be denied because the Second Circuit is particularly stingy with petitions for rehearing en banc. The over-the-top nature of this case makes review less likely, not more likely: are the judges really likely to want to delve into these waters voluntarily?

As I noted with the main appellate brief, Donziger has seemed to challenge Judge Kaplan’s findings of fact without actually arguing that they were clearly erroneous. This time, he ackowledged the issue:

The panel’s lawless opinion can only be explained by its mistaken belief that appellant Steven Donziger has not challenged the facts, bringing to mind the adage that bad facts make bad law. But bad facts are not the same as fact findings. The district court erected a fortress of hundreds of pages of alternative findings and drive-by credibility determinations, many embedded in one of nearly 2,000 footnotes, so that they could not be challenged on appeal. But make no mistake: Mr. Donziger has consistently, vigorously denied the allegations against him—including the outrageous, shifting tale of bribery and ghostwriting by the star witness made rich by Chevron.

I have to say I still don’t understand this at all. The facts, for purposes of the appeal, are what the district court found them to be, unless Donziger claims that the district court’s findings were clearly erroneous; but that’s exactly what he doesn’t do.

There’s another point about the facts that Donziger emphasizes, namely Guerra’s testimony in the BIT arbitration, which I reviewed almost a year ago. Donziger claims that Guerra’s testimony in the arbitration undercuts the RICO judgment. Here’s what I had to say about this before, and it’s still my view today:

Now, assuming I’m right about Guerra, I see few if any consequences for the US RICO litigation. That case has already gone to judgment; Judge Kaplan came to a different conclusion, and as I have noted, Donziger is not really claiming on appeal that the judge’s findings of fact were clearly erroneous.

Once we turn to the arguments, things get a little more interesting. Donziger’s best point, as I’ve observed before, is the question he raises about whether the RICO statute authorizes a private party to seek equitable relief. There is a circuit split on this issue, though it seems more likely that the issue will be resolved (if it is resolved) by the Supreme Court rather than in the Second Circuit. I think if the case ever comes out in his favor, this will be the reason. There are other arguments, too, aiming to show that Judge Kaplan’s judgment was an impermissible collateral attack on the Ecuadoran judgment—I’m not going to say more about this here.

So: a well-written brief, one that highlights the inequities of the outcome of the New York trial from Donziger’s perspective, but one that has a relatively low chance of success.

About Ted Folkman

Ted Folkman is a shareholder with Murphy & King, a Boston law firm, where he has a complex business litigation practice. Folkman also serves as an arbitrator and is a member of the Commercial and Consumer Panels of the American Arbitration Association. 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 treatise on International Aspects of US Litigation (J. Berger, ed. 2017), 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 and 2014 - 2016.

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