Lago Agrio: Donziger Held In Contempt

Memorial Day at Arlington Cemetery

On May 23, Steven Donziger, the American lawyer for the Lago Ario plaintiffs, was held in contempt of court in post-judgment proceedings in New York. Chevron first moved to hold Donziger in contempt in March 2018, and it has filed a series of motions since then. I have covered the contempt issues, though not exhaustively, in several posts, which you can find by browsing through this archive.

Judge Kaplan held that Donziger had failed to assign his entire interest in the Lago Agrio judgment to Chevron, that he had profited from the sale of interests in the Ecuadoran judgment, and that he had failed to comply with his discovery obligations by turning over his electronic devices. I am not going to review all the evidence in detail. Rather, I will just touch on a few points.

  1. It seems clear that Donziger did not comply with the obligation to assign his entire interest. He admittedly has not assigned his interest in a 2017 agreement with the ADF that purports to give him a personal interest in the judgment. Donziger says he doesn’t believe he has any interest under the 2017 agreement, which makes the failure to assign it and the risk of a contempt finding perplexing. Donziger faced a similar issue when he belatedly assigned his interest in Amazonia, the Gibraltar entity set up to receive the proceeds of the Ecuadoran judgment. If Donziger is not trying to pull a fast one, so to speak, why fight about such things?
  2. I am not going to review the evidence about Donziger’s commingling of funds except to say “yikes!” The one thing that gets lawyers into trouble more than anything else, at least judging by the “bar discipline” column in Massachusetts Lawyer’s Weekly, is mishandling of client funds, which always need to be kept segregated from personal funds. It is also pretty apparent that Donziger was in contempt of the injunction forbidding him to monetize his interest in the Ecuadoran judgment, even crediting Donziger’s view (on which more below) that the injunction only forbade him to sell his own interests, not his clients’ interests. The clearest example is the assignment of a share of Donziger’s interest to David Zelman, his “performance coach.” Judge Kaplan entered a new supplemental judgment in Chevron’s favor for the amount he found was Donziger’s illicit profit, which was more than $600,000.
  3. I do think Judge Kaplan’s decision is unfair in an important respect. When the LAPs sought a stay of the New York judgment, they argued that the injunction would make it impossible for them to finance their appeal. Judge Kaplan rejected the argument at the time, noting that “nothing in the N.Y. Judgment prevents the LAPs (other than the two Representatives who are named in the N.Y. Judgment) and their allies from continuing to raise money” by selling interests in the judgment. So it has seemed to me that there was at least a good argument that as long as Donziger was only helping the LAPs not subject to the injunction sell their interests, such conduct would not be forbidden by the injunction. Now, as we have seen, Donziger disobeyed the injunction even read as he would read it. Nevertheless, I think Judge Kaplan was wrong to say that Donziger should be held in contempt to the extent he was acting within the limits that Judge Kaplan’s own decision on the motion to stay suggested were proper. The scope of the injunction was at best unclear given Judge Kaplan’s later pronouncements. And some of the judge’s arguments to the contrary are highly technical. For example, the notice of appeal deprived the District Court of jurisdiction, Judge Kaplan argued, and therefore the District Court could not have modified the injunction even if it had wished to. Given that a contempt sanction is proper only if the injunction was clear and unambiguous, I do not think Judge Kaplan should have punished Donziger to the extent he was offering the LAPs’ interests in the judgment to investors; he should instead have clarified the meaning of the injunction and allowed Chevron to bring another motion if Donziger continued to disobey.
  4. Chevron’s Dave Samson had the following reaction to the decision:

    His tweet, which was funny if in questionable taste, prompted furious reactions, including this from Paul Paz y Miño:

    Kenny Rodgers, the Gambler
    You got to know when to hold ’em, know when to fold ’em.

    Chevron and some writers who take its positions do seem to like to dance on Donziger’s grave, but Samson’s point, restated in a less snarky way, is a good one: Donziger doesn’t know the meaning of defeat. I phrased it that way because you could see it as admirable defiance or your could see it as self-destructive folly. Every lawyer has to learn how to lose a case, just like ever doctor has to learn how to lose a patient. The case may not be over for the LAPs everywhere in the world, but it is over for Donziger. For good or ill, he hasn’t recognized that reality. I am not sure how this ends in a good way for Donziger, which is not something to be happy about. All his bravado and bad judgment and line-crossing aside, I happen to think he set out to try to do something good for the world many years ago, so no one should take pleasure in his predicament.

  5. I expect we will see an appeal from this decision, and also an attempt to obtain a stay from Judge Kaplan’s coercive sanctions, which increase daily.

3 responses to “Lago Agrio: Donziger Held In Contempt”

  1. […] wrong? Well, you can be found in contempt and then appeal (which Donziger has done—the judge found Donziger in civil contempt in May). Then you can seek a stay of the sanctions pending appeal. Donziger unsuccessfully sought a […]

  2. […] But there is one aspect of the civil contempt finding against Donziger that I’ve previously written was probably wrong. Donziger appealed from that aspect of the contempt finding and argued the […]

  3. […] in the Ecuadoran judgment to finance further litigation. I’ve written about this before. I criticized this aspect of the contempt finding in May 2019, and in September 2020 I predicted Donziger would […]

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