Chevron has brought a motion asserting that Steven Donziger, the LAPs’ American lawyer, is in contempt of the final judgment in the RICO case, which included an injunction forbidding Donziger to seek to monetize the Ecuadoran judgment. The allegations are juicy, but as we will see, there may be less to Chevron’s claim than meets the eye.

Recall that the judgment in the RICO case Chevron brought against Chevron and the LAPs, among other things, enjoined Donziger from “undertaking any acts to monetize or profit from the [Ecuadoran] Judgment … including without limitation by selling, assigning, pledging, transferring or encumbering any interest therein.”

In its motion, Chevron presents the affidavit of Lee Grinberg, of Elliott Management Corp., a New York hedge fund. He related the following story: a colleague, Jesse Cohen, told him on November 3, 2017, that he had been introduced by Jonathan Bush of athenahealth, Inc. to Katie Sullivan of Streamline Family Office, Inc. According to Bush, Streamline was “trying to help the successful plaintiffs in the Chevron Ecuador deal.” Grinberg arranged to meet Sullivan on November 6. Just before the meeting, Sullivan told Grinberg that Donziger would attend the meeting, and she asked him to sign a non-disclosure agreement to that Donziger could “speak freely.” Grinberg didn’t sign the NDA, but the meeting went together anyway. According to Grinberg, Donziger “informed [him] of his successful, ongoing efforts to raise millions of dollars from third-party investors to fund his efforts to enforce the judgment he had obtained against Chevron in Ecuador.” According to Grinberg, Donziger “inquired whether Elliott would provide him with funds for that purpose in exchange for an interest in proceeds that may result from enforcement of the Ecuadoran judgment.” Grinberg and Cohn were non-committal. Donziger later emailed Sullivan and Grinberg, offering to provide “a packet of materials that I generally send out to those doing due diligence on the opportunity.” But Elliott passed on the “opportunity.”

Marcus Junius Brutus

Et tu, Calmbacher Reyes the Huaorani people Burford Capital Stratus Consulting Beltman Maest Bogart Patton Boggs DeLeon H5 Pablo Fajardo Grinberg?
Credit: Marie-Lan Nguyen

Citing this affidavit, Chevron has sought an order to show cause why he should not be required to preserve all evidence regarding his compliance with the judgment, Chevron should not be entitled to take discovery, and Donziger should not be held in contempt. In response, the judge granted the motion, though he modified Chevron’s proposed order somewhat.

I begin by noting that the affidavit itself is just an affidavit, untested by cross-examination, and that the emails attached to it are not self-authenticating. So as I have done in the past, let’s pause to think about just how strong the affidavit is from an evidentiary point of view, and let’s assume that Grinberg would testify to what the affidavit says. Grinberg’s account of what Donziger said and offered, both in email and orally, seems plainly admissible to me. And I take it that Grinberg’s account of what Sullivan said is probably also admissible, either as background to the statements Donziger made or else on the theory that Sullivan was acting as Donziger’s agent. I am less certain about whether Bush’s statement, as recounted by Grinberg, would be admissible. And of course, it could be that Donziger has another story to tell and that Grinberg is not being truthful.

But leaving these points aside, if things happened as Grinberg claims, is Donziger in real trouble? Well, maybe. The judgment prohibits “monetizing” the judgment, which I take to mean exchanging interests in the judgment for money. But if Grinberg is telling the truth, it seems that that is just what Donziger was trying to do, even if he was not personally seeking to profit (which is the other act that the injuction prohibits)—at least if we read the injunction naively.

But if Donziger was trying to broker a sale of someone else’s interest rather than his own, then likely Chevron is overreaching. Judge Kaplan, in an April 2014 decision in response to motions brought by the LAPs and Donziger after the judgment, 1 has already construed the monetization provision in the injunction:

The point of paragraph 5—which is narrower than language that was proposed by Chevron in its post-trial memorandum and not specifically objected to by movants in their reply memoranda—was to prevent Donziger and the LAP Representatives from avoiding the effect of the constructive trust imposed on assets in their hands that otherwise would have been direct proceeds of the Judgment by selling, assigning, or borrowing on their interests in the Lago Agrio Judgment and thus at least confusing the issue of traceability.

We can’t tell from the papers Chevron has filed whether Donziger was selling his own interest, or someone else’s.

The issue is complicated by another issue Chevron raises in its motion: under the judgment, Donziger was supposed to transfer to Chevron his interest in Amazonia, an entity set up to receive and distribute the proceeds of the Ecuadoran judgment. Chevron says Donziger hasn’t done that, and Chevron would know. So if Donziger had been trying to broker a sale of Amazonia’s interest, then there’s a real issue, and the failure to transfer his interest in Amazonia is itself a contempt. But on the juiciest claim, we will have to wait and see.

The most interesting question raised by these papers is: how on earth did Chevron come to have Grinberg’s story? Did Grinberg go to Chevron with the story? Did Chevron find out in some other way?

I asked Donziger and his team for comment and also to say whether the meeting took place as described, whose interest Donziger was seeking to sell, and whether there is any substantive defense to the claimed failure to transfer the Amazonia interest. I didn’t get answers to the specific questions, but Karen Hinton, Donziger’s spokeswoman, told me that Chevron’s filing was “misleading” and “desperate,” and that “Fundraising by Steven or anybody else associated with the case to support litigation and advocacy is First Amendment protected activity under the Constitution and also is clearly permitted by the court’s own RICO judgment.” (Of course, if Donziger has disobeyed the injunction, the First Amendment is neither here nor there). I also asked Chevron for comment on how it got Grinberg’s story and on whose interest it thought Donziger was seeking to sell, but the company declined to comment.

Notes:

  1. I noted the decision when it was issued.