Chevron Corporation v. Donziger et al
Filing
2209
MEMORANDUM OPINION: re: 2175 MOTION TO HOLD STEVEN DONZIGER IN CONTEMPT OF COURT FOR HIS FAILURE TO COMPLY WITH THE COURT'S MARCH 5, 2019 ORDER filed by Chevron Corporation, 2089 MOTION TO HOLD STEVEN DONZIGER, THE LAW OFFICES OF STEVEN R. DONZIGER, AND DONZIGER ASSOCIATES, PLLC IN CONTEMPT OF COURT FOR THEIR FAILURE TO COMPLY WITH THE RICO AND DEFAULT JUDGMENTS AND THE APRIL 16, 2018 RESTRAINING NOTICE filed by Chevron Corporation, 2178 MOTION TO HOLD STEVEN DONZIGER IN CONTEMPT OF PARAGRAPHS 1 AND 5 OF THE RICO JUDGMENT BASED ON HIS TRANSACTIONS WITH DAVID ZELMAN filed by Chevron Corporation, 2112 MOTION TO HOLD STEVEN DONZIGER, THE LAW OFFICES OF STEVEN R. DONZIGER, AND DONZIGER ASSOCIATES, PLLC IN CONTEMPT OF COURT F OR THEIR FAILURE TO COMPLY WITH THE RICO AND DEFAULT JUDGMENTS AND THE APRIL 16, 2018 RESTRAINING NOTICE filed by Chevron Corporation. Chevron's motions to hold Donziger and Donziger & Associates, PLLC, in civil contempt of court [DI 1968, D I 2089 and DI 2112, DI 2175, and DI 2178] all are granted to the extent hereafter set forth. With respect to Chevrons October 1, 2018 motion [DI 2089, DI 2112]: Donziger is in wilful civil contempt of paragraph 1 of the RICO Judgment by virtue of hi s failure to assign and transfer to Chevron all rights to any contingent fee that he now has or hereafter may obtain including without limitation all such rights under the 2017 Retainer. Unless Donziger previously shall have executed, acknowledged, a nd delivered to Chevron's counsel the form of assignment attached as Exhibit 88 to DI 2091 without any additions, alterations, attachments or addenda (other than to reflect accurately the year in whichthe document was signed), he shall pay a coe rcive civil fine to the Clerk of Court with respect to May 28, 2019 and each subsequent day from that date until the date on which he fully purges himself of this contempt by doing so. The amount of the coercive fine shall begin at $2,000 for Ma y 28, 2019 and shall double for each subsequent day during which Donziger fails fully to purge himself of this contempt. Donziger is in wilful contempt of paragraph 1 of the RICO Judgment by virtue of his profiting in the amount of $666,476.34 f rom the sale of interests in the Ecuador Judgment and his failure to assign and transfer to Chevron that profit, which constitutes property that Donziger has received, or to which he had a right, title or interest, that is traceable to the Ecuador Ju dgment. The Clerk shall enter a second supplemental judgment awarding that sum to Chevron and against Steven Donziger and Donziger & Associates, PLLC, jointly and severally. With respect to the first of Chevron's two motions filed March 20, 2019 [DI 2175]: Donziger is in wilful civil contempt of paragraph 4 of the March 5, 2019 order [DI 2172]. Unless Donziger previously shall have complied fully with each duty imposed upon him by paragraph 4 of the March 5, 2019 order, he shall pay a coerc ive civil fine to the Clerk of Court with respect to May 28, 2019 and each subsequent day from that date until the date on which he fully purges himself of this contempt by doing so. The amount of the coercive fine shall begin at $2,000 for May 28, 2019 and shall double for each subsequent day during which Donziger fails fully to purge himself of this contempt. With respect to the Chevron's second motion filed March 20, 2019 [DI 2178]: Donziger is in wilful civil contempt of paragraph 5 of the RICO Judgment by virtue of his selling, assigning, pledging, transferring or encumbering part of his putative contingent fee interest to David Zelman in exchange for approximately $11,000 worth of personal services. With respect to each of the wilful civil contempts adjudicated herein(paragraphs 1(a), 1(c), 2(a), and 3(a)), plaintiff shall recover of Donziger and Donziger & Associates, PLLC their reasonable attorneys' fees in prosecuting these applications. The parties each sh all file, on or before May 29, 2019 at 1:00 pm, an affidavit or declaration stating whether each of Danziger and Donziger & Associates, PLLC has fully purged him- or itself of each of the civil contempts enumerated in paragraphs 1(a), 1(c), and 2, an d if not, each respect in which he or it has not done so. Nothing herein forecloses the possibility of the Court granting additional coercive relief, including increased fines and other measures, in the event the civil contempts hereinare not fully purged. The foregoing constitute the Court's findings of fact and conclusions of law. SO ORDERED. (Signed by Judge Lewis A. Kaplan on 5/23/2019) (ama) Modified on 5/23/2019 (ama). (Main Document 2209 replaced on 5/23/2019) (ama).
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 1 of 74
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
---------------------------------------x
CHEVRON CORPORATION,
Plaintiff,
-against-
11-cv-0691 (LAK)
STEVEN DONZIGER, et al.,
Defendants.
---------------------------------------x
MEMORANDUM OPINION
Appearances:
Randy M. Mastro
Andrea E. Neuman
GIBSON, DUNN & CRUTCHER, LLP
Herbert J. Stern
Joel M. Silverstein
STERN, KILCULLEN & RUFALO, LLC
Attorneys for Plaintiff Chevron Corporation
Steven R. Donziger
Defendant Pro Se
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 2 of 74
Table of Contents
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
The RICO Judgment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Prior Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
The RICO Judgment Against Donziger and the LAP Representatives. . . . . . . . . . 4
The First Pending Contempt Motion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
The Default Judgment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
The Second Pending Contempt Motion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
The Third Pending Contempt Motion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
The Fourth Pending Contempt Motion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Facts Concerning the Pending Motions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Failure to Assign All Contingent Fee Rights to Chevron . . . . . . . . . . . . . . . . . . . 11
Monetization and Profiting From the Ecuador Judgment. . . . . . . . . . . . . . . . . . . 16
Sale of and Attempt to Sell Parts of Donziger’s Contingent Fee Interest in
Exchange for Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Sale of and Attempts to Sell Interests to Investors . . . . . . . . . . . . . . . . . . 20
The Role of the Lenczner Firm in Toronto . . . . . . . . . . . . . . . . . . 25
Mary Katherine Sullivan and the CWP Account . . . . . . . . . . . . . 26
Commingling of Client, Personal, and PLLC Funds . . . . . . . . . . 28
Profiting From the Ecuador Judgment . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
The Restraining Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
The March 5, 2019 Order the Forensic Inspection Protocol . . . . . . . . . . . . . . . 34
Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
I.
Civil Contempt General Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
II.
Disobedience of Paragraph 1 of the RICO Judgment the 2017 Retainer. . . . . . 36
III.
Disobedience of the RICO Judgment Monetizing and Profiting from the
Ecuador Judgment and Failure to Transfer to Chevron Money Traceable to It . . 40
A.
Monetization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
1.
Direct and Attempted Sale of Donziger’s Personal Contingent Fee
Interest in Exchange for Services . . . . . . . . . . . . . . . . . . . . . . . . . 42
2.
Donziger’s Sales and Attempted Sales to Investors of Interests in
the Judgment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(a)
The Stay Opinion Had, and Could Have Had, No Legal
Effect on the Plain Text of the RICO Judgment . . . . . . . . 43
(b)
The Stay Opinion Was Not Intended to Modify, Nor
Reasonably Could Have Been Understood as Modifying,
the RICO Judgment
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
B.
Donziger Personally Profited from and Failed to Pay Chevron Money
Traceable to the Ecuador Judgment in Violation of Paragraphs 1 and 5 of
the RICO Judgment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
IV.
Disobedience of the Restraining Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
A.
Legal Principles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
B.
Analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 3 of 74
3
V.
VI.
VII.
Disobedience of the March 5, 2019 Order The Forensic Protocol . . . . . . . . . . 62
Alleged Continuation of Pattern of Racketeering. . . . . . . . . . . . . . . . . . . . . . . . . 63
Relief. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
A.
Coercive Sanctions for Disobedience of Orders Requiring Performance of
Actions Not Yet Performed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
B.
Compensatory Sanctions for Injurious Disobedience . . . . . . . . . . . . . . . . 65
C.
Sanctions to Promote Future Compliance. . . . . . . . . . . . . . . . . . . . . . . . . 67
D.
Attorneys’ Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 4 of 74
LEWIS A. KAPLAN, District Judge.
Steven Donziger, formerly a lawyer,1 has led a corrupt effort to extort billions of
dollars from Chevron Corporation (“Chevron”). One element of that scheme was the fraudulent
procurement of a multibillion judgment from a provincial court in Ecuador (the “Ecuador
Judgment”). Chevron brought this action against Donziger and others to enjoin enforcement of the
Ecuador Judgment, to prevent Donziger from profiting from his actions, and for other relief. After
a lengthy trial on the merits, the Court ruled in Chevron’s favor. In consequence, Donziger is subject
to a constructive trust and a permanent injunction (the “RICO Judgment”) as well as a money
judgment for more than $800,000 (the “Money Judgment”).
The RICO Judgment has been affirmed on appeal. In the words of the Court of
Appeals, “[t]he record in the present case reveals a parade of corrupt actions by the LAPs’ [i.e., the
Ecuadorian plaintiffs’] legal team, including coercion, fraud, and bribery, culminating in the promise
to [Ecuadorian] Judge Zambrano of $500,000 from a judgment in favor of the [Ecuadorian plaintiffs,
the] LAPs.”2 Donziger has exhausted all appellate avenues with respect to the RICO Judgment. And
1
Donziger has been suspended from the practice of law in the State of New York, Matter of
Donziger, 163 A.D.3d 123, 80 N.Y.S.3d 269 (1st Dept. 2018), the District of Columbia,
Matter of Donziger, No. 18-BG-967 (D.C. App. filed Sept. 20, 2018) [DI 2091-68, 209169], and by this Court. He therefore now represents only himself and no longer may
represent the Donziger & Associates, PLLC or any other person or entity. E.g., Lattanzio
v. COMTA, 481 F.3d 137, 139-40 (2d Cir. 2007).
2
Chevron Corp. v. Donziger, 833 F.3d 74, 126 (2d Cir. 2016), cert. denied, 137 S.Ct. 2268
(2017).
Nor is this the only tribunal to reach such conclusions. To mention one other, an arbitration
tribunal under the auspices of the Permanent Court on Arbitration at the Hague, after
extensive hearings, found, among many other things, the following:
•
“This assessment starts with certain of the Lago Agrio Plaintiffs’ representatives,
especially Mr Donziger and Mr Fajardo. The evidence before this Tribunal points
clearly to the conclusion that they engaged in prolonged, malign conduct towards
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 5 of 74
2
while the Money Judgment is on appeal, Donziger neither has paid it nor obtained a stay. So both
judgments are fully enforceable. Accordingly, Chevron has undertaken supplementary proceedings
to locate assets to satisfy the Money Judgment, to determine whether Donziger has complied with
the RICO Judgment, and to obtain remedies for alleged non-compliance.
Donziger largely has stonewalled Chevron’s efforts. He has disobeyed explicit
provisions of the RICO Judgment and defied court process compelling him to provide discovery and
to take other actions. He has ignored the fundamental “proposition that all orders and judgments of
courts must be complied with promptly. If a person to whom a court directs an order believes that
order is incorrect the remedy is to appeal, but, absent a stay, he must comply promptly with the order
the Respondent’s legal system generally and, particularly, the Lago Agrio Court in
a manner that almost beggars belief in its arrogant contempt for elemental
principles of truth and justice. It is pointless here to characterise such conduct any
further, because these individuals are not the object of the exercise required for this
Award under the Treaty applying international law. Such conduct, as related above,
also speaks for itself. Moreover, others unknown were also involved in the
‘ghostwriting’ exercise.”
•
The Ecuadorian “Judge Zambrano actively solicited a bribe from whichever side
in the Lago Agrio Litigation would be willing to pay him for issuing a favourable
judgment in the Lago Agrio Litigation. Chevron refused his approaches; but
certain of the Lago Agrio Plaintiffs’ representatives did not. It is not proven that
Judge Zambrano did receive a monetary consideration actually paid to him before
the issuance of the Lago Agrio Judgment. On a balance of probabilities, however,
it is proven that the consideration was a promise to reward him financially at a
later date from proceeds to be recovered from the enforcement against Chevron of
the Lago Agrio Judgment.”
•
“Judge Zambrano did not draft the entirety of the Lago Agrio Judgment by himself,
as he falsely testified on oath in the RICO Litigation. The Tribunal finds that Judge
Zambrano, in return for his promised reward, allowed certain of the Lago Agrio
Plaintiffs’ representatives, corruptly, to ‘ghostwrite’ at least material parts of the
Lago Agrio Judgment (with its Clarification). These representatives included Mr
Fajardo and Mr Donziger.” Matter of Chevron Corp. v. Republic of Ecuador, PCA
No. 2009-23, Second Partial Award on Track 2 §§ 5.229-5.231 (Aug. 30, 2018) [DI
2082-1] (emphasis added).
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 6 of 74
3
pending appeal.”3
The matter is before the Court on four motions by Chevron to hold Donziger in civil
contempt.4
Background
The RICO Judgment
The RICO Judgment imposed a constructive trust on and contains a permanent
injunction against Donziger5 and the two of his former Ecuadorian clients who defended this case (the
“LAP Representatives”).6 Among other things, it (1) enjoins them from seeking to enforce the
Ecuador Judgment in the United States, (2) requires Donziger to convey to Chevron all of his right,
title and interest in, among other things, (a) shares of Amazonia Recovery Limited (“Amazonia”),
3
In re Payne, 707 F.3d 195, 206 (2d Cir. 2013) (quoting Maness v. Meyers, 419 U.S. 449,
458 (1975) (internal quotation marks omitted)).
4
A fifth contempt motion became moot when Donziger very belatedly executed documents
that he had been required by the RICO Judgment to execute years earlier. DI 2105.
5
Also named as defendants and subject to the judgment are The Law Offices of Steven R.
Donziger and Donziger Associates, PLLC. For ease of convenience, references to
“Donziger” include Steven Donziger and these additional defendants except where it is
necessary to distinguish among them. (A search on the New York Department of State
Division of Corporations web site indicates that Donziger & Associates, PLLC, is the only
New York corporation the name of which includes “Donziger.” Donziger has
acknowledged that Donziger & Associates, PLLC is known also as Donziger Associates,
PLLC. DI 2085-1.)
6
DI 1874, DI 1875.
The LAP Representatives were two of the 47 Ecuadorian plaintiffs. The other 45
Ecuadorian plaintiffs also were named as defendants in this case but they and most of the
others defaulted.
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 7 of 74
4
a Gibraltar company formed to collect and distribute any proceeds of the Ecuador Judgment, and (b)
any contingent fee interest which he has or may acquire with respect to the Chevron dispute, and (3)
forbids Donziger and the LAP Representatives from doing any act to monetize or profit from the
Ecuador Judgment, including by selling, assigning, pledging, transferring or encumbering any
interest in it. The Money Judgment was entered following the Court of Appeals’ decision and
reflected taxable court costs.
Three of the pending contempt motions involve Donziger’s alleged violation of
provisions of the RICO Judgment and a default judgment later entered against the LAPs and other
defendants (the “Default Judgment”) that foreclose all of them from doing any act to monetize or profit
from the Ecuador Judgment or seeking to do so. One of these three motions involves, in addition,
Donziger’s alleged contempt of a restraining notice by transferring assets that otherwise could have
been used to satisfy the Money Judgment. That motion seeks also a civil contempt adjudication with
respect to Donziger’s failure to comply with the requirement that he transfer and assign to Chevron
any contingent fee interest that he may have.
The fourth motion arises by reason of Donziger’s virtually categorical refusal to comply
with court orders to produce documents to Chevron in relation to enforcement of the Money Judgment
and investigating Donziger’s compliance with equitable provisions of the RICO Judgment.
Prior Proceedings Relevant to the Pending Motions
The RICO Judgment Against Donziger and the LAP Representatives
The RICO Judgment, in the words of the Court of Appeals in upholding the relief
granted, “prohibit[s] Donziger and the LAP Representatives from profiting from the corrupt conduct
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 8 of 74
5
that led to the entry of the Judgment against Chevron . . . .”7 It contains three provisions pertinent here:
•
Paragraph 1 imposes a constructive trust on all property that Donziger has
“received, or hereafter may receive, directly or indirectly, or to which Donziger
[as of the date of the RICO Judgment] now has, or hereafter obtains, any right,
title or interest, directly or indirectly, that is traceable to the [Ecuador]
Judgment or the enforcement of the [Ecuador] Judgment anywhere in the
world.”8 It requires also that he “transfer and forthwith assign to Chevron all
such property that he now has or hereafter may obtain.”9
•
Paragraph 3 directed “Donziger [to] execute in favor of Chevron a stock power
transferring to Chevron all of his right, title and interest in his shares of
Amazonia,” and directed both “Donziger and the LAP Representatives . . . [to]
execute such other and further documents as Chevron reasonably may request
or as the Court hereafter may order to effectuate the foregoing provisions of
this Judgment.”10
•
Paragraph 5 enjoined both Donziger and the LAP Representatives “from
undertaking any acts to monetize or profit from the [Ecuador] Judgment . . .
including without limitation by selling, assigning, pledging, transferring or
7
Chevron Corp., 833 F.3d at 151.
8
DI 1875 ¶ 1.
9
Id.
10
Id. ¶ 3.
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 9 of 74
6
encumbering any interest therein.”11
The RICO Judgment named Donziger and the LAP Representatives. It did not bind directly the 45
LAPs (i.e., those other than the two LAP Representatives) or the other defendants in this case who did
not appear.
The First Pending Contempt Motion
Chevron made the first of the pending contempt motions on March 19, 2018.12 It there
alleged, on the basis of evidence then in its possession, that Donziger was in contempt of paragraphs
3 and 5 of the RICO Judgment by (a) failing to comply with its paragraph 3 obligation to transfer his
Amazonia shares to Chevron, and (b) seeking to sell an interest in the Ecuador Judgment to Elliott
Management Corporation (“Elliott”) and thus undertaking acts to monetize or profit from that
judgment. It contended also that Donziger likely was in contempt of paragraph 5 by other actions. It
therefore sought leave to conduct post-judgment discovery of Donziger and others as to all matters
relevant to the enforcement of paragraphs 3 and 5 of the RICO Judgment in order to compile a full
evidentiary record.13 It sought a civil contempt adjudication and appropriate relief on the basis of the
evidence then in hand and anticipated the possibility of future applications as discovery revealed what
had transpired.14 Its motion was supported in part by a declaration of Lee Grinberg, a portfolio
11
Id. ¶ 5.
12
DI 1968; see also DI 1966; DI 1967.
13
DI 1966 at 16.
14
Id. at 1, 4, 16.
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 10 of 74
7
manager at Elliott, who stated that he had met with Donziger on November 6, 2017, and that Donziger,
on that occasion,
“after informing us 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, . . . 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 Ecuadorian judgment.”15
The Court in due course denied the portion of the contempt motion that was based on
paragraph 3 of the RICO Judgment in view of the need for further proceedings.16 It likewise granted
leave to conduct discovery with respect to compliance with paragraph 5, the non-monetization
provision. But it ordered a hearing with respect to the contempt charge based on the Elliott events17
in order to obtain a fuller understanding of what had occurred with respect to Elliott. The facts
concerning Elliott seemed likely to shed light not only on whether the Elliott approach had been
contumacious but on what may have occurred with other possible targets of fund raising efforts.18
15
DI 1967-2 (Grinberg Decl.) ¶ 6.
16
DI 2006 at 5-13.
Further proceedings were necessary with respect to Donziger’s obligation to transfer the
Amazonia shares, see, e.g., DI 2072 & DI 2079, but have been resolved.
17
The hearing took place on June 28, 2018 after having been postponed at Donziger’s request
for over a month. See DI 2006 (setting May 22 hearing); DI 2012 (Donziger application
for adjournment); DI 2013 (order adjourning hearing until June 27); DI 2017 (order
adjourning hearing from June 27 to June 28 at Chevron’s request).
18
For example, Chevron’s moving papers included a copy of an email from Donziger to
Elliott that referred to “a packet of materials that I generally send out to those doing due
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 11 of 74
8
The Default Judgment
On April 23, 2018 after the filing of the first contempt motion but before the filing
of the second the Court entered the Default Judgment against all of the remaining defendants in the
case. Those enjoined included, among others, all of the plaintiffs in the Ecuadorian litigation
(collectively, the “Defaulted Defendants”) save the LAP Representatives, who already were subject
to the RICO Judgment. Among other things, it enjoined the Defaulted Defendants “from undertaking
any acts to monetize or profit from the [Ecuador] Judgment, . . . including without limitation by
selling, assigning, pledging, transferring, or encumbering any interest therein.”19
The Default Judgment binds the Defaulted Defendants as well as “their officers, agents,
servants, employees, and attorneys; and other persons who are in active concert and participation with
any of the foregoing.”20 Donziger is an attorney-in-fact for the Frente de Defensa de la Amazonia (the
“ADF”21), a Defaulted Defendant and the exclusive beneficiary of the Ecuador Judgment,22 pursuant
diligence on the opportunity,” DI 1967-2 at ECF p. 15, but not the materials. It seemed
likely that a hearing might result in production of those materials, which potentially could
have had a significant bearing on the contempt motion. As matters developed, the “packet
of materials” was not given to Elliott, and Donziger failed to produce it in response to
Chevron’s subpoena. Tr., June 28, 2018 [DI 2062], at 55:15-56:17.
19
DI 1985 ¶ 4.
20
DI 1985 ¶ 7.
21
The ADF is known also as the FDA, the Amazon Defense Front, and the Amazon Defense
Coalition or ADC.
22
DI 2114-1 at ECF p. 411 (The ADF is “both the exclusive interest-holder of the 10% award
made by the Ecuador Judgment . . . and the beneficiary of the environmental remediation
award and related awards under the Ecuador Judgment and the Ecuador Trust.”).
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 12 of 74
9
to a broad power of attorney and retainer agreement executed in November 2017 (the “2017
Retainer”).23 He therefore is bound by the Default Judgment by virtue of his relationship to the ADF.
He is bound by it also to whatever extent he is in active concert or participation with the ADF or any
of the other Defaulted Defendants.24 And he was bound as well, until he was suspended from the
practice of law, as an attorney at law for some Defaulted Defendants.
The Second Pending Contempt Motion
On October 1, 2018, Chevron again moved to hold Donziger in civil contempt.25 That
motion rests on four principal contentions:
First. Donziger is in continuing violation of paragraph 1 of the RICO Judgment in
that he never has complied with its command that he “transfer and forthwith assign to Chevron” (a)
the 6.3 percent interest in the Ecuador Judgment or any settlement with Chevron granted to him by the
ADF in the 2017 Retainer, as well as (b) money paid to him out of funds raised from investors and
those to whom he sold or otherwise disposed of interests in the Ecuador Judgment.
Second. Donziger has violated paragraph 5 of the RICO Judgment by acting to
monetize and profit from the Ecuador Judgment and paragraph 4 of the Default Judgment by actively
participating with the ADF and other Defaulted Defendants in their monetization of that judgment.
23
Moreover, as this Court found after trial, Donziger in fact controlled the ADF, at least up
to that time. Chevron Corp. v. Donziger, 974 F. Supp. 2d 362, 392, 398-99, 423 (S.D.N.Y.
2014), aff’d, 833 F.3d 74 (2d Cir. 2016); see also id. at 443 (stating that Donziger had
prepared a press release issued by the ADF).
24
DI 1875 ¶ 8; FED. R. CIV. P. 65(d)(2).
25
DI 2089; DI 2112.
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 13 of 74
10
He is likely to continue to do so.
Third. Donziger has violated, and likely continues to violate, the restraining notice
served by Chevron. The violation of a restraining notice constitutes contempt of court.
Fourth. Donziger is continuing to engage in the same pattern of racketeering activity
that led to the RICO Judgment against him.
Chevron argues that civil contempt sanctions are necessary to ensure the cessation
of his unlawful activities.
The Third Pending Contempt Motion
The third contempt motion asserts that Donziger has continued to violate paragraph
1 of the RICO Judgment by failing to assign his rights to a contingent fee to Chevron.26 It asserts
also that Donziger violated paragraph 5 of the RICO Judgment by treating “the Ecuadorian judgment
as his personal cash cow”27 and signing over to a “performance coach”28 a share of Donziger’s own
personal interest in the Ecuador Judgment in exchange for the coach’s services.29
The Fourth Pending Contempt Motion
As is evident from prior rulings, Donziger has sought to frustrate Chevron’s efforts
26
DI 2179 at 9-10.
27
Id. at 4.
28
Id. at 1.
29
Id. at 10.
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 14 of 74
11
to enforce its Money Judgment and to conduct discovery with respect to Donziger’s compliance with
the equitable provisions of the RICO Judgment at every turn.30 Ultimately, having been left with
virtually no choice, the Court directed that Donziger’s electronic devices, storage media, and email
and other digital accounts be forensically imaged and examined in order to obtain responsive
documents. The history is spelled out in the Court’s Memorandum re Forensic Inspection Protocol,31
familiarity with which is assumed.
Donziger announced in advance that he would not comply with these provisions of
the Protocol and has not done so. The final contempt motion concerns Donziger’s intentional
disobedience of the Forensic Protocol.
Facts Concerning the Pending Motions
Failure to Assign All Contingent Fee Rights to Chevron
As detailed in the RICO opinion, Donziger entered into a written retainer agreement
concerning the Ecuador case in January 2011 (the “2011 Retainer”).32 Among other things, it gave
30
See, e.g., DI 2009; DI 2088; DI 2108.
31
DI 2171.
32
PX 558 (Retainer Agreement).
The agreement provided that the LAPs retained Donziger & Associates, PLLC. The ADF
and the Asamblea de Afectados por Texaco (the “Asamblea”) are collectively defined as
“Plaintiffs’ Coordinators.” The President of the ADF signed the agreement on behalf of the
ADF and Luis Yanza signed the agreement on behalf of the Asamblea.
The agreement provided Donziger’s firm (not Donziger personally), “[a]s compensation for
its services” in representing the LAPs, the right to a contingent fee determined as follows.
Id. ¶ 3(a). Donziger’s firm was entitled to 31.5 percent of The Total Contingency Fee
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 15 of 74
12
him a right to a contingent fee of 6.3 percent of any monies collected by or available to the LAPs in
respect of the Ecuador case.33 It was signed on behalf of the LAPs by Pablo Fajardo, who then was
Donziger’s Ecuadorian counsel, as attorney-in-fact for the LAPs.34
In order to ensure that Donziger did not profit from his bribery, fraud and
racketeering, paragraph 1 of the RICO Judgment imposed the constructive trust, previously
described, on:
“all property, . . . tangible or intangible, vested or contingent, that Donziger has
received, or hereafter may receive, directly or indirectly, or to which Donziger now
has, or hereafter obtains, any right, title or interest, directly or indirectly, that is
traceable to the Judgment or the enforcement of the Judgment anywhere in the world
including, without limitation, all rights to any contingent fee under the [2011]
Retainer Agreement.”35
Moreover, it directed Donziger to “transfer and forthwith assign to Chevron all such property that
he now has or hereafter may obtain.”36
Payment (“TCFP”). Id. The TCFP was defined as 20 percent of all Plaintiff Collection
Monies (“PCM”). Id. PCM in turn was defined in relevant part as any “amounts paid . .
. from Chevron . . . in respect of the Litigation.” Id. The “Litigation” was defined to
include the Ecuador litigation, enforcement proceedings in Ecuador and elsewhere in the
world, and settlement with Chevron. Id. at 1.
33
Id. ¶ 3(a).
34
Id. at 12; Chevron Corp., 974 F. Supp. 2d at 477-78.
35
DI 1875 ¶ 1 (emphasis added).
36
Id.
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 16 of 74
13
Donziger failed from 2014 until 2018 to comply with the direction that he “transfer
and forthwith assign to Chevron” his contingent fee rights under the 2011 Retainer. In September
2018, following extensive motion practice37 and another explicit directive from this Court,38 he
finally did so.39 But that was not the end of this problem.
As previously mentioned, Donziger personally (as distinct from his PLLC) in
November 2017 entered into the 2017 Retainer with the ADF
not the LAPs. Thus, the 2017
Retainer differed from the 2011 Retainer both in respect of who was obligated to pay and who had
a right to receive any contingent fee. That 2017 Retainer contractually obligated the ADF (as
opposed to the LAPs) to pay Donziger (as opposed to his firm) a contingent fee of 6.3 percent of any
funds that the ADF might obtain in respect of the Ecuador litigation.40 Yet Donziger did not assign
37
See, e.g., DI 2046; DI 2047; DI 2075; DI 2076.
38
DI 2072.
39
Champion Decl. Ex. 1 [DI 2085-1].
40
Champion Decl. Ex. 23 [DI 2091-23].
There is no direct evidence of exactly why this new document was executed, but there is
abundant circumstantial evidence.
First, the circumstances of the 2017 Retainer were quite different from those of the 2011.
At the time the 2011 Retainer was signed on January 5 of that year, no judgment had been
entered in Ecuador and there was uncertainty as to who or what would be judgment
creditors. Chevron Corp., 974 F. Supp. 2d at 528. The Ecuador Judgment, which was
entered on February 14, 2011, made the judgment payable 90 percent to a trust (the
“Trust”) to be established for the benefit of the ADF and 10 percent to the ADF. PX 400
(Ecuador Judgment) at 186-87. The purpose of the Trust corpus would be to pay the costs
of remediation. And the Trust would be controlled by a board consisting of representatives
of the ADF or persons designated by the ADF. Id. at 187. Accordingly, Donziger stood
to benefit from a new contingent fee agreement with the ADF, which is entitled in its own
right to 10 percent of any recovery and not only is the sole beneficiary of the Trust, but is
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 17 of 74
14
his contingent fee interest under the 2017 Retainer as required by paragraph 1 of the RICO Judgment
entitled to designate its directors, id., and thus to control all of the money, if any ever were
realized. (In the past, the ADF, which was founded by Donziger and his close friend, Luis
Yanza, was controlled by them. Chevron Corp., 974 F. Supp. 2d at 398-99. No evidence
suggests that this is not still the case.)
Second, Donziger and the ADF, on the one hand, and Fajardo, who had signed the original
retainer on behalf of the LAPs, as well as organizations of indigenous people whom
Donziger previously had claimed to represent, see Donziger Decl. [DI 2122-1] ¶ 3 n.1, had
had a falling out as evidenced by at least two pieces of evidence.
As an initial matter, Pablo Fajardo, who was the attorney of record for plaintiffs in the
Ecuadorian litigation, asserted in a letter to the ADF that (1) Donziger was not a lawyer for
the LAPs in Ecuador, (2) neither he nor the ADF represents them, and (3) documents
signed by the ADF, purportedly on behalf of the LAPs, including documents purporting to
convey interests in the Ecuador Judgment in exchange for investments, were unauthorized.
Champion Decl. Ex. 28 [DI 2114-3] at ECF pp. 442-46. While the letter is undated, it
speaks in the past tense of an event that is said to have occurred in January 2016. Id. at
ECF p. 443. Donziger confirms that he is no longer a colleague of Fajardo and indeed that
their relationship has soured. Donziger Decl. [DI 2122-1] ¶ 3 n.1 (“My impression is that
the UDAPT [a successor entity to the Asamblea] has been ‘taken over’ in recent years by
my former colleague Pablo Fajardo, who often uses the organization as a vehicle to publicly
attack me and thus regrettably serve the purposes of his supposed opponent, Chevron.”).
The 2017 Retainer is dated November 1, 2017, after Fajardo asserted that Donziger and the
ADF do not represent the LAPs and that the ADF had no authority on behalf of the LAPs.
See Champion Decl. Ex. 28 [DI 2114-3] at ECF p. 443.
To comparable effect is a declaration of the affected nationalities in the Province of
Sucumbios, Ecuador. It asserts that Donziger and others, including Ermel Chavez, the
President of the Administrative Board of the Trust, have acted maliciously and recklessly
toward UDAPT and the Ecuadorian plaintiffs, that Donziger is not authorized to represent
the nationalities, and that Donziger has failed to comply with a request by UDAPT for
“detailed information about all of the money they have managed that belongs to the
UDAPT.” Champion Decl. Ex. 30 [DI 2114-3] at ECF pp. 455-57. The declaration asserts
that Donziger and Luis Yanza “are hereby considered personae non gratae because they
failed to defend the collective interest rights of the indigenous nationalities and peasants”
in order “to advance their own private and personal interests.” Id. at ECF p. 456.
In all the circumstances, the Court finds that Donziger obtained the 2017 Retainer from the
ADF to ensure that he had a direct and personal contractual right to a contingent fee from
it. This was especially desirable in view of the facts that (1) the LAPs had no legally
protected right to share in any proceeds of the Ecuadorian litigation and thus no ability to
pay any contingent fee, and (2) Donziger could not count on the acquiesence of the LAPs
in any payments to Donziger given his falling out with Fajardo, who had represented the
LAPs and, indeed, held their powers of attorney. Chevron Corp., 974 F. Supp. 2d at 477
& n.704.
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 18 of 74
15
nor even disclose its existence in anything approaching a timely fashion.
Production of the 2017 Retainer was called for by several specifications of Chevron’s
post-judgment document subpoena.41 Donziger initially objected to each of those specifications on
unsubstantiated and meritless boilerplate grounds and did not disclose the 2017 Retainer42 although
its disclosure was called for. In due course, the Court ordered Donziger to produce some categories
41
As the Court pointed out previously, the 2017 Retainer was responsive to Chevron’s
document Request 26, which required production of “All DOCUMENTS evidencing or
relating to any payment, proceeds, compensation, revenue, or any other thing of value YOU
have . . . contracted to receive, or have been promised related to any aspect of YOUR
involvement in the ECUADOR LITIGATION, ECUADOR JUDGMENT, and/or
ECUADOR ENFORCEMENT ACTIONS,” among other requests. DI 1989-1.
42
These grounds included, inter alia:
•
“Timing. Discovery at this time is not appropriate in light of the fact that the
supplemental judgment supposedly justifying discovery is currently on appeal,”
and, as a matter of “common sense,” there is “no basis to rush ahead with discovery
when there remains a reasonable chance that the underlying judgment will be
vacated.”
•
“Burdensome approach.
burdensome.”
•
“Overbroad and irrelevant. Chevron’s requests . . . reveal themselves to be a
fishing expedition to learn information about the financing of the process of
enforcing the [Ecuador Judgment] . . . .”
•
“Privilege. Many of the requests are objectionable because they appear to call for
the production of information subject to attorney-client privilege, work product
doctrine, or common interest doctrine privileges, or that otherwise may reflect the
opinions, conclusions, legal theories, mental impressions, or strategic thinking of
myself, other counsel, or other individuals whose assistance was required for the
development and provision of informed advice protected by the attorney-client
privilege.”
•
“Logistical burden. . . . I have limited capacity to undertake the necessary effort
and expense [to produce the required documents].” DI 1989-2 at 1-3.
The approach taken by Chevron . . . is unduly
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 19 of 74
16
of responsive documents, categories that included the 2017 Retainer, by June 15, 2018.43 But
Donziger failed to produce the 2017 Retainer (or any other documents) as required by the Court’s
order. The 2017 Retainer first was mentioned during a deposition of Donziger on or about June 25,
2018.44 Chevron brought its existence to the Court’s attention in open court on June 28, 2018.45
Only shortly thereafter was the 2017 Retainer first produced. And even then, Donziger failed to
assign and transfer his contingent fee rights under that agreement to Chevron as required by
paragraph 1 of the RICO Judgment.
Monetization and Profiting From the Ecuador Judgment
The pending contempt motions were made at different times. The information
concerning Donziger’s activities that Chevron had obtained, principally from non-parties, was
greater when the second motion was made. Some relevant events
for example, the entry of the
Default Judgment and a hearing on certain events relevant to the first of the two motions
intervened between them.46 Nevertheless, to the extent that the pending motions allege that Donziger
43
DI 2009.
44
See Champion Decl. Ex. 2 [DI 2121-2] (Donziger Dep.) at 29:2-20, 58:15-60:9.
45
See Tr., June 28, 2018 [DI 2062], at 70:14-22.
46
As will appear, the Default Judgment materially changed the landscape. Chevron Corp. v.
Donziger, 37 F. Supp. 3d 653, 661 (S.D.N.Y. 2014) (“Nothing in the [RICO] Judgment
prevents the LAPS (other than the two LAP Representatives who are named in the [RICO]
Judgment) and their allies from continuing to raise money in the same fashion” as before –
i.e., selling shares in any recovery.). That changed, however, with the entry of the Default
Judgment, which bound all of the LAPs, the ADF and others, depending upon
circumstances, from such activities. Donziger has admitted as much. Compare Tr., June
28, 2018 [DI 2062], at 71:5-21, with Donziger Dep., June 25, 2018 [DI 2207-1], at 19:8-12
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 20 of 74
17
has acted to monetize and profit from the Ecuador Judgment in violation of this Court’s decrees, it
is convenient to set out the facts, to the extent they are of record, in a single section. The logical
starting point is the RICO Judgment itself.
The RICO Judgment, as noted, enjoined Donziger and the LAP Representatives from
undertaking any act to monetize or profit from the Ecuador Judgment or seeking to do so.47 As this
Court made clear long ago, it did not constrain the LAPs (other than the two LAP Representatives)
or the ADF from doing so,48 subject only to the Rule 65(d)(2) caveat noted above. Thus, the LAPs
and perhaps even the ADF enjoyed broad latitude to seek third party financing in exchange for
interests in any recovery. They and their supporters in Ecuador and elsewhere, could have
approached established third-party funders, private investors, and others. But Donziger and the LAP
Representatives were enjoined from engaging in such efforts. Nevertheless, following entry of the
RICO Judgment, Donziger exchanged and sought to exchange portions of the contingent fee interest
for services rendered to him and his wife. He resumed selling interests in the Ecuador Judgment and
any proceeds thereof to “investors.” Moreover, quite a significant amount of the money he thus
.
47
DI 1875 ¶ 5.
48
Chevron Corp., 37 F. Supp.3d at 661 (“Nothing in the [RICO] Judgment prevents the LAPs
(other than the two LAP Representatives who are named in the [RICO] Judgment) and their
allies from raising money in the same fashion [as previously].” (emphasis added)). That
passage was written in response to an argument raised by the LAP Representatives and
therefore mentioned only them in the “other than” clause. But the RICO Judgment put
Donziger in exactly the same position as the LAP Representatives with respect to
monetization of or profiting from the Ecuador Judgment. DI 1875 ¶ 5. In other words, the
LAPs who did not appear in this action were free (prior to entry of the Default Judgment)
to raise money by monetizing or profiting from the Ecuador Judgment, but the LAP
Representatives and Donziger were enjoined from doing so.
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 21 of 74
18
raised after he was enjoined wound up in his pocket.
Given Donziger’s resistance to discovery that would reveal information about his
compliance or non-compliance with the provisions of the RICO Judgment here at issue, it is doubtful
that the full extent of Donziger’s efforts to monetize and profit from the Ecuador Judgment or even
the full extent of the funds thus raised
is before the Court. Nevertheless, the following is clear.
Sale of and Attempt to Sell Parts of Donziger’s Contingent Fee Interest in
Exchange for Services
In the fall of 2016, Donziger was introduced to one David Zelman,49 a self-styled
“executive coach.”50 Donziger began Zelman’s “Transitions” program in late 2016 and completed
it in 2017.51 The program cost $14,000.52 Donziger and Zelman agreed that Donziger would pay
for the program by granting Zelman “an interest in the Ecuador judgment from [Donziger’s] fees
should they be collected.”53 Specifically, they agreed to “14/250 of an eighth of a point” of the total
49
Champion Decl. Ex. 2 [DI 2180-2] at ECF p. 2.
50
Id.
51
Id.
52
Id. at ECF p. 74.
53
Id.
Donziger had an assignable and transferable right to a contingent fee from the moment the
Ecuador Judgment was entered. Chevron Corp., 974 F. Supp. 2d at 640 & n.1820. That
right was subject to the constructive trust from March 4, 2014, the date the RICO Judgment
was entered, onward. He conveyed his right under the 2011 Retainer to Chevron in 2018.
Champion Decl. Ex. 1 [DI 2085-1]. His failure to convey his rights under the 2017
Retainer is a subject of these motions. To the extent, if any, that any right to any contingent
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 22 of 74
19
recovered.54 As Donziger wrote, “ I am pledging this amount out of my personal fees from this
litigation.”55 Additionally, Donziger paid Zelman either $2,000 or $3,000 in cash, the record is
unclear as to which it was.56
In December 2016, Donziger asked Zelman if he could “fold another person ([]my
wife) into the same deal.”57 Zelman charged Donziger’s wife, Laura Miller, $11,000 for the program
and originally agreed to compensation in the form of another interest in the Ecuador Judgment.58
Zelman, however, did not receive this second interest and instead was compensated with $2,000 or
$3,00059 in cash and services provided by Ms. Miller related to preparation for a TED Talk.60
fee remains in Donziger, it remains subject to the constructive trust and to his other
obligations under the RICO Judgment. Nonetheless, the Court refers to his contingent fee
interest and to his interest in the Ecuador Judgment for ease of expression without implying
that he actually still has any such interest.
54
Champion Decl. Ex. 2 [DI 2180-2] at ECF p. 74.
55
Id.
56
Compare id. at ECF p. 2, with Champion Decl. Ex. 8 [2180-8] at 79:18-24.
57
Champion Decl. Ex. 11 [DI 2180-11].
58
Champion Decl. Ex. 8 [DI 2180-8] at 87:2-89:7.
59
Compare Champion Decl. Ex. 2 [DI 2180-2] at ECF p. 2, with Champion Decl. Ex. 8 [DI
2180-8] at 88:2-12.
60
Champion Decl. Ex. 8 [DI 2180-8] at 91:1-22.
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 23 of 74
20
Sale of and Attempts to Sell Interests to Investors
Following the entry of the RICO Judgment, Donziger engaged in persistent efforts
to raise money by selling interests in the Ecuador Judgment which, in an effort to avoid contempt
liability, he characterizes as assisting his clients to sell their interests in it.61 These included: (1)
creating an investment opportunity memorandum with the help of Donziger’s partner, Aaron Marr
Page,62 that directed all inquiries regarding potential investments to Donziger’s attention,63 (2)
instructing Mary Katherine Sullivan to seek out investors by pitching them “a one-eigth [sic] of a
point in a 12b[illion] judgment,” or a “50x multiple,” on a $250,000 investment,64 (3) arranging an
“Ecuador Investor Call” to discuss his “commitment to source funding from a significant capital
partner or partners who will give our team the ability to put additional pressure on Chevron in and
out of the courtroom,” and “raising a round of $500k to $1m to bridge us to the larger capital
61
Tr., June 28, 2018 [DI 2062], at 33:15-34:24.
62
Champion Decl. Ex. 92 [DI 2091-92] at ECF p. 2.
Some aspects of Page’s involvement with Donziger were discussed previously in the
opinion after trial, 974 F. Supp. 2d at 410 n.198, 421, in an opinion before trial, 970 F.
Supp. 2d 214, 225, 232 n.89 (S.D.N.Y. 2013), in an opinion before trial concerning nonparty discovery, No. 11-cv-691 (LAK), 2013 WL 1087236, at *18 n.161, and in In re
Naranjo, 768 F.3d 332, 345-46 (4th Cir. 2014).
63
Sullivan Decl. [DI 2116] ¶ 16; Champion Decl. Ex. 14 [DI 2114-2] at ECF pp. 18-23.
64
Champion Decl. Ex. 13 [DI 2114-2] at ECF p. 16; see also Sullivan Decl. [DI 2116] ¶ 15.
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 24 of 74
21
raise,”65 and (4) communicating directly with investors66 to flog his “investment opportunity”67
shares of any recovery in the Ecuador case in exchange for cash. As he explained to one potential
investor in response to an inquiry as to exactly what he was selling, Donziger wrote that “[s]hares
are a percentage of the total claim owed which is now a little over $11b,” with “[e]xpenses [to] come
off the top.”68
These efforts included also an approach to Elliott Management that took place as a
result of Mary Katherine Sullivan, who met Donziger and became involved in some of his efforts.
In October 2017, Ms. Sullivan suggested to Donziger that he approach Elliott Management, a well
known hedge fund, regarding a possible investment.
Donziger responded enthusiastically,
whereupon Sullivan approached someone with whom she previously dealt, Jonathan Bush, as a
means of getting to Elliott. Donziger and Sullivan met with two Elliott portfolio managers.
Donziger offered to sell Elliott an interest in the Ecuador Judgment in exchange for
an “investment” by Elliott of an unspecified amount of money, adding that he had raised about $33
65
Champion Decl. Ex. 15 [DI 2114-2] at ECF pp. 25-26.
66
Id. Ex. 12 [DI 2114-2] at ECF pp. 7-8.
67
Id. at ECF pp. 9-14.
68
Id. at ECF p. 7.
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 25 of 74
22
million in that way,69 part of which he had used to pay himself.70 Donziger told Elliott that he had
a 6.3 percent interest in the Ecuador Judgment himself,71 this notwithstanding that the RICO
Judgment ordered
and still requires
him to transfer that interest to Chevron.72
We now know that Donziger’s post-RICO Judgment efforts succeeded to the extent
of raising a minimum $2,367,500 from at least seven people or entities.73 Of that total, $791,500
went directly to and remained with Canadian counsel seeking to enforce the Ecuador Judgment
there,74 $1,525,940 went directly or indirectly to Donziger or Donziger-related bank accounts (i.e.,
69
Donziger claimed that the $33 million figure he mentioned at the meeting referred to the
amount he had raised over the whole course of the Chevron litigation, Tr., June 28, 2018
[DI 2062], at 35:7-12, whereas Grinberg understood him to say that he had raised $33
million “to facilitate enforcement of the judgment.” Id. at 12:5-13:3. Donziger claimed
also that the figure was high. Id. at 35:7-22.
70
Id. at 33:15-25.
71
Id. at 21:5-14 (Grinberg), 37:18-24 (Donziger); Champion Decl. Ex. 3 (Grinberg meeting
notes) [DI 2058-11].
72
In the last analysis, it turned out that Elliott had had little or no interest in Donziger’s
proposition from the outset. Indeed, it had agreed to the meeting principally as a favor to
Jonathan Bush, Sullivan’s associate who had reached out to Elliott. Tr., June 28, 2018 [DI
2062], at 27:25-28:8.
73
Slavek Decl. Ex. 2 [DI 2115-1].
74
The LAPs have sued to enforce the Ecuador Judgment in Argentina, Brazil and Canada.
They have lost the Argentine and Brazilian cases entirely. In Canada, they sued both
Chevron and Chevron Canada, a seventh tier subsidiary. As to Chevron Canada, which was
not a party to the Ecuador litigation, the LAPs sought a determination that the Ecuador
Judgment could be enforced against its stock or assets. The Ontario Court of Appeal upheld
a grant of summary judgment dismissing as to Chevron Canada. Yiaguaje v. Chevron
Corp., 2018 CarswellOnt 7942 (Can. Ont. C.A.) (WL). The Supreme Court of Canada
recently denied leave to appeal. Yiaguaje v. Chevron Corp., 2019 CarswellOnt 5162 (Can.
S.C.C.) (WL); Yiaguaje v. Chevron Corp., 2019 CarswellOnt 5163 (Can. S.C.C.) (WL).
Accordingly, the case against Chevron Canada has been concluded. This Court is not
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 26 of 74
23
the CWP account, discussed below), and $50,600 appears to be unaccounted for, all as shown on
Table 1. And a few more words are appropriate regarding the manner in which these transactions
were structured and the flow of funds before passing on to what happened to the money that went
into Donziger’s personal and business accounts.
[balance of page left blank]
informed about the current status, if any, of the case against Chevron Corporation, although
a prior Canadian decision made clear that Chevron itself has no assets in Canada. Yaiguaje
v. Chevron Corp., 2017 ONSC 135 [DI 2114-8 at ECF pp. 93-94, 108].
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 27 of 74
24
TABLE 175
Invest.
Investor
Equity
ment
No.
Agree-
Interest
Date
Agreement
Remained with
Deposited into Donziger or Donziger-Related Account
Canadian
Amount
After Fees
counsel
Amount
Date
I
Glenn Krevlin
5/2/16
0.125%
$250,000
$250,000
$175,000
$74,990
I
Glenn Krevlin
7/11/16
0.050%
$100,000
$100,000
$100,000
Cliff Eisler
7/11/16
0.125%
$250,000
$250,000
$145,000
III
W DIS Finance LLC
8/24/16
0.165%
$300,000
$285,000
IV
W ellbeck Partners
8/24/16
0.110%
$200,000
III
W DIS Finance LLC
11/10/16
0.055%
V
Indigenous People Ltd.
11/24/16
0.1375%
Account Name
-
II
Bank
5/10/2016
TD
Donziger & Assoc.
$104,990
7/19/16
TD
Donziger & Assoc.
$141,500
$143,490
10/6/16
TD
Donziger & Assoc.
$200,000
$100,000
$99,990
10/21/16
TD
Donziger & Assoc.
$100,000
$95,000
$30,000
$64,990
12/19/16
TD
Donziger & Assoc.
$250,000
$237,500
$100,000
$137,490
2/21/17
TD
Donziger & Assoc.
$1,450,000
$1,417,500
$791,500
$625,940
$102,000
$100,000
N/A
$50,000
1/25/16
TD
Steven Donziger
0.076%
$50,000
$50,000
N/A
$50,000
2/14/17
TD
Donziger & Assoc.
0.025%
$50,000
$50,000
N/A
$50,000
12/11/17
TD
Donziger & Assoc.
$202,000
$200,000
$500,000
$500,000
1/2/18
$250,000
BoA
CW P Assoc.
1/5/18
$250,000
1/18/18
$250,000
BoA
CW P Assoc.
Total to or through Canadian Counsel
VI
Fenwick (Geo. W aters)
1/22/16
VI
Fenwick (Geo. W aters)
2/3/17
VI
Fenwick (Geo. W aters)
12/17/17
0
Total Fenwick
VII
CHC LLC (Tony Abiatti
12/20/17
0.25%
$150,000
N/A
and client)
I
Glenn Kervlin
Total CWP
GRAND TOTALS
1/2/18
0.16675%
$250,000
$250,000
$750,000
$750,000
$2,402,000
$2,367,500
75
Extracted from Slavek Decl. Ex. 2 [DI 2115-1].
N/A
$750,000
$791,500
$1,525,940
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 28 of 74
25
The Role of the Lenczner Firm in Toronto
The entry of the RICO Judgment in March 2014 appears to have impacted the
structuring of the investment opportunities Donziger was selling. There is no evidence that the
LAPs’ Canadian counsel,76 the Lenczner firm in Toronto, had anything to do with handling or
otherwise being involved with money raised from investors before the RICO Judgment was
rendered.77 Following the entry of the RICO Judgment, that changed.
In early 2016, Donziger began using a form of investment agreement between and
among each investor, the Lenczner firm, the ADF, and the Trust and Trust Board President (together
with the ADF, the “Ecuador Parties”).78 The form of agreement names Donziger as the “U.S.
76
The Canadian action is a suit by the LAPs for recognition and enforcement of the Ecuador
Judgment. The LAPs, including the LAP Representatives, are the only plaintiffs in that
action. See, e.g., Champion Decl. Exs. 81-84 [DI 2114-8] at ECF pp. 87-170 (various
Canadian court papers and decisions listing the parties). Neither the Trust nor the ADF is
a party notwithstanding that the Ecuador Judgment purports to be payable 90 percent to the
Trust and 10 percent to the ADF, requires that the trustees of the Trust be designees of the
ADF, and provides that the ADF is the beneficiary of the Trust. The LAPs are not judgment
creditors. The question whether the LAPs have standing to pursue the Canadian action is
immaterial here.
77
Indeed, such evidence as there is, although incomplete, all confirms that it had no such role.
E.g., DeLeon Investment Agreement [PX 543]; Burford Funding Agreement [PX 552];
Bogart Witness Statement [PX 3100] at 2-3 (stating that PX 552 is a true and correct copy
of the Funding Agreement entered into and signed by Burford through an indirect
subsidiary related to financing counsel in connection with representation of the Lago Agrio
plaintiffs). The Court notes parenthetically that there is no evidence that any money was
raised in 2014 and 2015. See Slavek Decl. [DI 2115] ¶ 24.
78
Champion Decl. Ex. 6 [DI 2114-1] at ECF p. 411.
Two points about the Trust bear mention.
First, it is difficult to understand how the individual claimants in the Ecuadorian case could
have placed their “individual interests” into a trust in 2012 as, at that time, they had none.
Chevron Corp., 37 F. Supp. 3d at 662 & n.39.
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 29 of 74
26
Representative” of the Ecuador Parties.79 It purports to grant the investor a percentage interest of
“any and all funds actually collected by the Ecuador Parties” or related persons by settlement or
otherwise in relation to the Ecuador Judgment.80 And it stipulates that the Lenczner firm would
collect any judgment proceeds obtained anywhere in the world and distribute them per the
agreement.81 From that point onward, all investor money that was raised until December 2017, to
the extent reflected in this record, went into a Lenczner firm account in Canada, which disbursed a
good deal of it to Donziger while retaining some, presumably in whole or in part for payment of its
own fees.
Mary Katherine Sullivan and the CWP Account
In December 2017, shortly after the Elliott approach failed, Donziger decided “that
Lenczner’s firm had been sufficiently compensated and . . . would ask for more money if Lenczner
knew that there were new investors.”82 Thus, in Donziger’s view, it was time to keep the Lenczner
firm in the dark about Donziger’s funds. Accordingly, Donziger asked Ms. Sullivan to take over
managing the investor money.83
Second, the Trust is controlled by the ADF which, under the Ecuador Judgment, is entitled
to designate its directors. PX 400 at 186-87.
79
Champion Decl. Ex. 6 [DI 2114-1] at ECF pp. 411, 421.
80
Id. at ECF p. 412.
81
Id. at ECF pp. 413-14.
82
Sullivan Decl. [DI 2116] ¶ 48.
83
Id. ¶¶ 48-49.
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 30 of 74
27
Ms. Sullivan, at Donziger’s direction, caused Streamline Family Office Inc., a
corporation she owned and operated,84 to open a d/b/a account at Bank of America (“BoA”) under
the name “CWP Account.”85 The purpose of the account was “to receive and disburse investor
monies at [Donziger]’s direction.”86
Ms. Sullivan used the CWP account just as it had been intended. In early 2018,
investors solicited by Donziger put up $750,000 in exchange for interests in the Ecuador Judgment.
Per Donziger’s direction, they transferred those funds to the CWP account.87 In March 2018,
however, Ms. Sullivan decided to terminate her arrangement with Donziger.
At that time, the CWP account balance was $356,421.88 Ms. Sullivan then paid a
Donziger American Express bill of $11,796 and herself $2,580 for her out-of-pocket expenses out
of the CWP account.89 After a demand by Aaron Marr Page, Donziger’s partner,90 and a threat of
litigation against Sullivan by Donziger and Page, she closed the CWP account by sending Page two
cashier’s checks, dated May 3, 2018, totaling $342,015.16, and payable per Page’s instructions to
84
Id. ¶ 2
85
Id. ¶ 49. CWP was an acronym for “Chevron Will Pay.”
86
Id. ¶ 50.
87
Id. ¶¶ 48, 51.
88
Id. ¶¶ 56-60; see also Id. Ex. 35.
89
Id. ¶ 60.
90
Champion Decl. Ex. 92 [DI 2091-92] at ECF p. 2.
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 31 of 74
28
“Aaron M Page fbo FDA.”91
Commingling of Client, Personal, and PLLC Funds
There is another interesting phenomenon related to the manner in which Donziger
received and maintained purportedly client-owned funds. It is his apparent failure or refusal to
maintain the funds in a separate account or otherwise as the rules of professional conduct require.92
The evidence of record demonstrates that Donziger raised $50,000 from an investor
in January 2016 that went directly into his personal account at TD Bank. The funds raised in the
period February 2017 through December 17, 2017 ($100,000) went directly into a Donziger &
Associates account. Almost half of the money raised during the intervening period from May 2016
through November 2016 ($625,940 of $1,417,500) went first from investors to the Lenczner firm
and then from the Lenczner firm to a Donziger & Associates account. And a significant portion of
the money raised during the period December 2017 through January 2018 ($342,045 of $750,000)
went first to the CWP account in a bank located in Massachusetts, where Ms. Sullivan dealt with it
91
Sullivan Decl. [DI 2116] ¶¶ 56-59 & Ex. 39.
92
This is strictly prohibited by the New York Rules of Professional Conduct. 22 N.Y.C.R.R.
1200.15, Rule 1.15.
There is no indication in the record that any of the client funds that have reached Donziger
and his PLLC in recent years have been held in an “Attorney Special Account,” “Attorney
Trust Account,” or “Attorney Escrow Account” as the professional conduct rules require.
Inasmuch as the question whether Donziger has engaged in professional misconduct in this
regard is not material to the determination of the issues before it, the Court makes no
determination with respect to professional conduct.
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 32 of 74
29
pursuant to Donziger’s instructions,93 and thence into Donziger’s personal account or a Donziger &
Associates account.
Profiting From the Ecuador Judgment
As Table 1 and the preceding discussion reflect, Chevron has proved that Donziger
raised at least $2.3 million from January 2016 through the beginning of 2018, all of it by selling
interests in the Ecuador Judgment. As the following discussion will make clear, Chevron has proved
also that Donziger personally profited from this money that he raised, allegedly on behalf of his
clients.
Approximately $1,242,985 in investor funds was deposited into Donziger’s personal
and business accounts from May 2016 to May 2018 as follows.
As shown by Table 1 above, $775,940 was deposited directly or indirectly into
Donziger’s accounts and $750,000 was deposited into the CWP account. Before closing the CWP
account, Ms. Sullivan wired a total of $125,000 from the account to one of Donziger’s accounts.94
Then, on May 3, 2018, she transferred approximately $342,045 to Aaron Marr Page fbo the ADF by
cashier’s checks and closed the account.95 Five days later, Forum Nobis, Page’s law firm, wire
93
Sullivan Decl. [DI 2116] ¶¶ 49-50 (“The purpose of the CWP Account was to receive and
disburse investor monies at Steven’s direction. As far as I could tell, Steven had complete
control and discretion over how this money, which belonged to the FDA, was spent.”).
94
Id. ¶ 52; Slavek Decl. Ex. 3A [DI 2115-1].
95
Sullivan Decl. [DI 2116] ¶¶ 57-60, Exs. 38-39.
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 33 of 74
30
transferred the same amount into a Donziger personal account.96 The total
$1,242,985
approximately
made up nearly all of the money deposited into the Donziger accounts from January
2016 to June 2018.97 Only $72,988.15 in deposits came from other sources.98
In broad strokes, here is what Donziger did with that money. From January 2016 to
June 2018, he spent $1,343,028.57
just north of the amount deposited into his accounts from
investors or traceable to them.99 Of that money, $862,401.94, or 64.2 percent, came out of his
personal accounts.100
The most significant payments from those personal accounts totaled
approximately $531,475 and were made to cover personal expenses including Donziger’s credit
cards, his home mortgage, and payments made directly to his wife.101 Specifically, Donziger
transferred from personal accounts: (1) $83,368.49 to payments on his home mortgage, (2)
$163,831.73 to pay his American Express bills, (3) $72,276.12 to pay his TD Bank credit card bills,
and (4) $212,000.00 directly to his wife.102 Donziger transferred an additional $135,000.00 from a
96
Slavek Decl. [DI 2115] ¶¶ 18-19.
97
Id. ¶ 22.
98
Id.
99
Id. ¶ 41.
100
Id.
101
Id. Ex. 5B.
102
Id.
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 34 of 74
31
business account or accounts to his wife.103 These five transfers total $666,476.34.
Donziger claims that any money spent from his accounts was client funds either used
to pay appropriate disbursements for the benefit of clients or to pay him a monthly retainer or
arrearages thereof.104 These claims are addressed in a subsequent section. For present purposes,
however, it is sufficient to note that: (1) Donziger co-mingled investor funds with personal funds in
his various accounts,105 (2) Donziger spent all or nearly all of the money that he received directly or
indirectly from investors,106 (3) a majority of his disbursements came out of his personal rather than
business accounts,107 and (4) the evidence suggests that a majority of those disbursements were
payments for personal expenses.108
The Restraining Notice
On April 16, 2018 seventeen days before Ms. Sulllivan sent the $342,015 to Page
Chevron served a restraining notice on Donziger, the Law Offices of Steven R. Donziger, and
Donziger and Associates, PLLC, in an effort to collect the unpaid Money Judgment.109 The
103
Id.
104
Donziger Decl. [DI 2122-1] ¶¶ 11-12; Donziger Opposition Br. [DI 2125] at 16-18.
105
See, e.g., Slavek Decl. [DI 2115] ¶¶ 18, 19.
106
Id. ¶¶ 22, 41.
107
Id. ¶ 41.
108
Id. Ex. 5B.
109
Champion Decl. Ex. 70 [DI 2114-8] at ECF pp. 39-57.
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 35 of 74
32
restraining notice forbids each of Donziger and his firms from making or suffering any “sale,
assignment, transfer or interference with any property in which [he or it has] an interest”110 until the
Money Judgment is paid.
As we have seen, it is undisputed that Donziger opened a new personal checking
account at TD Bank (xxxx8132) on May 7, 2018.111 On the very next day, May 8, 2018, Forum
Nobis of which Aaron Marr Page is managing attorney transferred the $342,045.16 that Page had
received from Sullivan’s CWP account just a few days before into Donziger’s new personal
account.112 Two days later, May 10, 2018, Donziger caused his PLLC to open a new business
checking account (xxxx8174) at the same bank.113 The opening deposit was the $342,015.16, which
came from Donziger’s personal checking account (xxxx8132).114 He then transferred $50,000 out
110
Id. at ECF p. 41 (emphasis omitted).
111
See, e.g., Slavek Decl. Ex. 1 [DI 2115-1].
112
Slavek Decl. [DI 2115] ¶¶ 17-20.
Donziger claims that the wiring of the money to his personal account was accidental.
Donziger Decl. [DI 2122-1] ¶ 17. He does not elaborate on the nature of the alleged
accident. But the claim rings hollow.
Donziger opened the personal account on May 7. Page wired the money into that account
on May 8. Donziger did not open the new law firm account until May 10. In the absence
of any explanation of how or why Donziger gave Page the number of the new personal
account between its opening of May 7 and Page’s dispatch of the money to that account on
May 8, the only or at least most logical explanation is, and the Court finds, that Donziger
opened the new personal account for the precise purpose of receiving the wire transfer and
gave Page the number to permit him to send it there.
113
Slavek Decl. [DI 2115] ¶ 20.
114
Id.
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 36 of 74
33
of the new business checking account back to Forum Nobis, $35,000 back into his own personal
checking account (xxxx8132), and $125,000 into yet another Donziger business checking account
(xxxx8783).115
Additionally, in June 2018, Donziger made a personal credit card payment or
payments in the amount of $3,620.43 from an unspecified Donziger personal account or accounts
at TD Bank.116 And on June 11, 2018, Donziger transferred $15,000 from a Donziger law firm
business account to the personal account of Donziger’s wife, Laura Miller.117
The restraining notice served in April 2018 is the subject of the second contempt
motion filed October 1, 2018,118 which was fully briefed by November 7, 2018.119 Naturally, that
motion focuses exclusively on transfers made prior to those dates. The Court accordingly will not
consider subsequent transfers that have come to light as subjects of possible contempt adjudications
on the present motions.120
As the record makes clear, Donziger has transferred over $440,000 to his wife, Laura
Miller, over the past seven years. All of those transfers were by wire transfer from Donziger’s
115
Id. ¶¶ 19-21.
116
Id. Ex. 7-B.
117
Slavek Reply Decl. [DI 2129] ¶ 10.
118
DI 2089; DI 2112.
119
DI 2127.
120
This is without prejudice to any subsequent motion charging contempt based on later
transfers.
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 37 of 74
34
accounts to those of his wife until June 11, 2018,121 shortly after the service of the restraining notice.
Subsequently, however, Donziger has made at least six additional transfers to his wife totaling at
least $66,086.75.122 And what is especially interesting about these additional transfers is that the
money came to Donziger in checks from third parties payable to himself and that Donziger
transferred those funds to his wife by endorsing each check to her order.123 Thus, although Donziger
was the payee in each case, the funds presumably bypassed his bank accounts and were transferred
directly to Laura Miller. As the restraining notice barred Donziger from transferring “any property
in which [he had] an interest,”124 the fact that he endorsed the checks to his wife and thereby
apparently sought to avoid discovery of those transfers by keeping them out of his bank accounts
bears on the scope of the relief that should be granted if the early transfers were contumacious.
The March 5, 2019 Order
the Forensic Inspection Protocol
The Forensic Inspection Protocol (the “Protocol”) required Donziger to (a) identify
and provide certain additional information with regard to his electronic devices, media, and webbased accounts in writing on or before March 8, 2019, and (b) surrender his devices and give access
to his accounts the Neutral Forensic Expert on March 18, 2019 for forensic imaging.125 The Protocol
121
Slavek Decl. [DI 2198] ¶ 5.
122
Id. ¶ 6.
123
Id.
124
Champion Decl. Ex. 70 [DI 2114-8] at ECF p. 41.
125
Forensic Inspection Protocol [DI 2172] ¶¶ 4-10.
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 38 of 74
35
specifies a procedure for identifying responsive documents on the images and producing them to
Chevron.
Donziger quite intentionally has not complied with the requirements set out in the
preceding paragraph. Indeed, he explicitly has invited a contempt finding in this regard.
Discussion
I.
Civil Contempt
General Principles
The purpose of civil contempt is not to punish but to compensate for injury caused
by any violation of a court order or process, to coerce compliance, or both.126 In order to prevail on
a civil contempt motion, the moving party must establish that (1) the court order with which the
alleged contemnor failed to comply was clear and unambiguous, (2) the proof of noncompliance is
clear and convincing, and (3) the alleged contemnor has not diligently attempted to comply in a
reasonable manner.127 Contrary to Donziger’s frequent assertions to the contrary,128 no proof of bad
faith or wilfulness is required in order to establish civil contempt.129
126
Hess v. New Jersey Transit Rail Operations, Inc., 846 F.2d 114, 115 (2d Cir. 1988).
127
See King v. Allied Vision, Ltd., 65 F.3d 1051, 1058 (2d Cir. 1995) (citing N.Y. State Nat’l
Org. for Women v. Terry, 886 F.2d 1339, 1351 (2d Cir. 1989)).
128
E.g., Donziger Opposition Br. [DI 2184] at 3 n.1 (stating that “a finding of contempt against
me is only possible if I knowingly and willfully disobeyed a clear and unambiguous order”).
129
McComb v. Jacksonville Paper Co., 336 U.S. 187, 191 (1949) (“The absence of wilfulness
does not relieve from civil contempt.”); Utica College v. Gordon, 389 Fed. App’x 71, 73
(2d Cir. 2010) (summary order); Canterbury Belts Ltd. v. Lane Walker Rudkin, Ltd., 869
F.2d 34, 39 (2d Cir. 1989); 7 JAMES WM. MOORE ET AL., MOORE’S FEDERAL PRACTICE §
37.51[7][b], at 37-110 (3d ed. 2018).
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 39 of 74
36
A court order is clear and unambiguous when it “leaves no uncertainty in the minds
of those to whom it is addressed.”130 Those parties must be able to “ascertain from the four corners
of the order precisely what acts are forbidden.”131 That said, a court retains discretion as to whether
to impose civil contempt sanctions.132
II.
Disobedience of Paragraph 1 of the RICO Judgment
the 2017 Retainer
As set forth above, it is abundantly clear that Donziger violated, and continues to
violate, paragraph 1 of the RICO Judgment by failing to transfer and assign his contractual right from
the ADF to a contingent fee of 6.3 percent of any moneys obtained in respect of the Ecuador
Judgment, whether by its enforcement or otherwise.
First, paragraph 1 of the RICO Judgment is clear and unambiguous. It provides in
relevant part that a constructive trust was imposed:
“for the benefit of Chevron on all property, whether personal or real, tangible or
intangible, vested or contingent, that Donziger has received, or hereafter may receive,
directly or indirectly, or to which Donziger now has, or hereafter obtains, any right,
title or interest, directly or indirectly, that is traceable to the Judgment or the
enforcement of the Judgment anywhere in the world including, without limitation,
130
Hess, 846 F.2d at116 (citing Int’l Longshoremen’s Ass’n v. Philadelphia Marine Trade
Ass’n, 389 U.S. 64, 76 (1967)).
131
Fonar Corp. v. Deccaid Services, Inc., 983 F.2d 427, 430 (2d Cir. 1993) (quoting Sanders
v. Air Line Pilots Ass’n, Int’l, 473 F.2d 244, 247 (2d Cir. 1972)).
132
Terry, 886 F.2d at 1351, 1353.
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 40 of 74
37
all rights to any contingent fee under the [2011] Retainer Agreement . . . . Donziger
shall transfer and forthwith assign to Chevron all such property that he now has or
hereafter may obtain.”133
As the RICO opinion said, Donziger’s contractual rights to contingent fees are assignable and subject
to the constructive trust imposed by the RICO Judgment.134 Indeed, the Court previously ordered
Donziger to assign his rights under the 2011 Retainer, an order with which he grudgingly complied,
albeit only years after compliance was required.
Second, it is undisputed that Donziger has not complied with his obligation to assign
his rights under the 2017 Retainer.
Finally, Donziger has made no attempt to comply with paragraph 1 of the RICO
Judgment in this respect. Rather than do so, he failed to disclose the 2017 Retainer, even when
ordered to produce documents that unmistakably required its production. And he now continues in
his refusal to comply.
Donziger’s principal response to this aspect of Chevron’s contempt motions is a
single paragraph:
“The contingency interest stated in the updated power of attorney signed by FDA
leadership in November 2017 was not intended to grant a new interest, but to
recognize my existing interest in any Aguinda recovery. The Court has now coerced
me into signing what I understand to be the entirety of my contingency interest over
133
DI 1875 ¶ 1 (emphasis added).
134
Chevron Corp., 974 F. Supp.2d at 640 & n.1820.
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 41 of 74
38
to Chevron. I am not taking the position that the November 2017 contract is
protected or separable from the Court’s other orders with respect to my contingency
interest. If Chevron feels like it needs some additional documentation with respect
to the November 2017 power, it should just ask me rather than rush to file for
contempt.”135
This is no defense at all:
•
The 2017 Retainer, contrary to Donziger’s claim as to its intention, in fact did
grant Donziger a new interest. That is exactly what it says:
“In consideration of Mr. DONZIGER’s leadership, investment,
professional and collection services, as set forth above, both in the
past and in the future, the FDA hereby acknowledges, confirms, and
undertakes to support Mr. DONZIGER’s existing contractual
INTEREST or, alternatively, to the extent it is necessary or useful,
hereby grants Mr. DONZIGER an INTEREST in his own right equal
to Mr. DONZIGER’s existing contractual INTEREST.
Such
INTEREST, in any case, shall be understood to entitle Mr.
DONZIGER to 6.3% of any FUNDS RECOVERED . . . .”136
•
Donziger’s claim that this 2017 Retainer was intended only to recognize an
135
Donziger Decl. [DI 2122-1] ¶ 21.
136
Champion Decl. Ex. 23 [DI 2091-23] at ECF p. 4 (emphasis added).
The fact that the interest perhaps might be considered contingent is immaterial. Paragraph
1 of the RICO Judgment explicitly applies to contingent interests.
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 42 of 74
39
existing interest (a reference to the 2011 Retainer) is nonsense. The 2017
Retainer created an obligation on the part of the ADF, which controls the
Trust and itself is a judgment creditor on and the exclusive beneficiary of the
Ecuador Judgment. The 2011 Retainer was quite different. It obligated only
the LAPs, who have no rights in the Ecuador Judgment, to pay a contingent
fee. In other words, the 2017 Retainer replaced the evidently impecunious
LAPs, the obligors on the 2011 Retainer and from whom Donziger now
apparently is estranged, with the ADF, a judgment creditor and the exclusive
beneficiary of the Ecuador Judgment.
•
Finally, the suggestion that Chevron somehow should be faulted for seeking
contempt rather than “just ask[ing]” Donziger if it felt it needed additional
documentation is risible. Donziger was obliged by the plain terms of
paragraph 1 of the RICO Judgment to assign and transfer his contingent fee
interest under the 2017 Retainer from the moment it came into existence
regardless of whether Chevron asked him to do so. And, in fact, Chevron last
October provided Donziger with a form of assignment for that purpose.137
That form remains unsigned.
In sum, Donziger’s contingent fee interest is property. It is traceable to the Ecuador
Judgment, which “is the indispensable predicate of his right to collect [any] contingent fee.”138 And,
137
Champion Decl. Ex. 88 [DI 2114-9] at ECF pp. 70-72.
138
Chevron Corp., 974 F. Supp. 2d at 640. As the Court has made clear before, contingent fee
interests such as this are assignable and transferable property. Id. at 640-41 & n.1820. And
they most assuredly are traceable to the Ecuador Judgment under the everyday and legal
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 43 of 74
40
perhaps most important of all, paragraph 1 of the RICO Judgment specifically required Donziger to
transfer and assign to Chevron his continent fee interest under the 2011 Retainer, making
unmistakable the fact that the RICO Judgment regarded it
arrangement giving Donziger a contingent fee interest
and therefore any other instrument or
as traceable to the Ecuador Judgment.
Clear and convincing evidence establishes that Donziger is in civil contempt by
disobeying its command that he transfer all of his right, title and interest to a contingent fee under
the 2017 Retainer.
III.
Disobedience of the RICO Judgment Monetizing and Profiting from the Ecuador Judgment
and Failure to Transfer to Chevron Money Traceable to It
Chevron moves to hold that Donziger is in civil contempt by (a) engaging in fund
raising activities to monetize the Ecuador Judgment in violation of paragraph 5 of the RICO
Judgment, (b) profiting from it, and (c) failing to transfer to Chevron, as required by paragraph 1,
investor funds traceable to the Ecuador Judgment that came into Donziger’s possession.139
definitions of the word “traceable.” Chevron Corp., No. 11-cv-691 (LAK), 2018 WL
4360770, at *2 (citing United States v. Gordon, 710 F.3d 1124, 1135 n.13 (10th Cir. 2013);
United States v. Bornfield, 145 F.3d 1123, 1135 n.13 (10th Cir. 1998)); see also United
States v. Torres, 703 F.3d 194, 196 (2d Cir. 2012); United States v. Marimon, 507 Fed.
App’x 5, 7 (2d Cir. 2012) (summary order).
139
DI 2113 at 23-27.
According to Chevron, Donziger’s fund raising activities, ostensibly on behalf of the ADF
and other Defaulted Defendants, violated paragraph 4 of the Default Judgment as well to the
extent that they occurred after its entry on April 23, 2018. DI 2113 at 26-27. The theory
seems to be that Donziger’s actions were in active concert and participation with the ADF
in its sale of interests in the Ecuador Judgment. But there is no evidence of any such
activities after the entry of the Default Judgment. Accordingly, that piece of Chevron’s
motion requires no further discussion.
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 44 of 74
41
A.
Monetization
Paragraph 5 of the Judgment, quoted in full above, prohibits “undertaking any acts
to monetize or profit from the [Ecuador] Judgment . . . including without limitation by selling,
assigning, pledging, transferring or encumbering any interest therein.”140
Donziger admitted that he has arranged for sales of shares in the Ecuador Judgment
to at least six investors since March 2014.141 He seeks to defend those actions by claiming that the
Court’s April 25, 2014 order, which largely denied a stay pending appeal from the RICO Judgment
(the “Stay Opinion”), “permitted [Donziger] [to] sell interests in the Ecuadorian judgment, as long
as he did not sell his ‘own’ shares or the shares of the two named LAPs.”142 In contrast, he
repeatedly denied that he ever had sold any part of his own interest in that judgment.143
The evidence clearly and convincingly establishes that Donziger, contrary to his
denials, in fact monetized his own interest in the Ecuador Judgment by pledging or selling part of
his contingent fee interest to someone else in exchange for services. Moreover, the Stay Opinion
140
DI 1875 ¶ 5 (emphasis added).
141
Tr., June 28, 2018 [DI 2062], at 33:16-21, 34:21-24. The record establishes that the
number is at least seven and that sales to them have been made on at least ten different
occasions. Slavek Decl. [DI 2115] ¶ 13, Ex. 2.
142
DI 2113 at 26 (citing DI 1985 at 6-7). Accord, Tr., May 8, 2018 [DI 2010], at 17:13-19
(“[M]y clients in Ecuador were allowed to sell their shares in the judgment to finance
litigation expenses, that is, to sell shares to investors in anticipation of some sort of future
collection, and you distinguished between doing that and actually selling shares that I
owned myself to profit personally.”).
143
See, e.g., Tr., June 28, 2018 [DI 2062], at 34:12-14, 39:11-15; Tr., May 8, 2018 [DI 2010],
at 17:22-18:2 (“There is no evidence . . . that I ever have attempted or ever have sold my
shares.”); Id. at 18:23-19:1 (“I am not selling my own shares.”).
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 45 of 74
42
could not and did not alter the terms of the RICO Judgment. In any case, the evidence clearly and
convincingly establishes that Donziger violated the RICO Judgment by profiting from the Ecuador
Judgment. He raised money in exchange for shares of his ostensible client’s interest in it and then
used a substantial share of the money thus raised for his personal benefit. It establishes also that
Donziger disregarded his obligation to pay over to Chevron any funds traceable to the Ecuador
Judgment in which he had an interest.
1.
Direct and Attempted Sale of Donziger’s Personal Contingent Fee Interest
in Exchange for Services
Under the 2011 and 2017 Retainers, Donziger was entitled to 6.3 percent of any
proceeds related to the Ecuador Judgment. He concedes that any act to monetize the Ecuador
Judgment, including by attempting to transfer, sell, pledge or assign any part of that 6.3 percent
interest, violated paragraph 5 of the RICO Judgment.144 Thus, even on Donziger’s own view
concerning the effect and meaning of the Stay Opinion, he is in contempt of paragraph 5 by virtue
of his commitment to pay Zelman “14/250 of an eighth of a point of whatever is recovered on the
total claim” out of Donziger’s “personal fees from this litigation.”145
2.
Donziger’s Sales and Attempted Sales to Investors of Interests in the
Judgment
Donziger attempts to defend his sales of interests in the Ecuador Judgment to
144
Tr., May 8, 2018 [DI 2010], at 18:23-19:1.
145
Champion Decl. Ex. 2 [DI 2180-2] at ECF p. 74.
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 46 of 74
43
investors on two grounds. First, he argues that the Stay Opinion changed the terms of the RICO
Judgment and limited the prohibitions in paragraphs 1 and 5 to acts related to money obtained as a
result of a collection on the Ecuador Judgment. Second, he submits that sales of shares of the
interests of his client, the ADF, were unobjectionable because the ADF was not subject to the RICO
Judgment at the time of the sales.146
(a)
The Stay Opinion Had, and Could Have Had, No Legal Effect on the
Plain Text of the RICO Judgment
Donziger contends that he “moved for relief from the ‘monetize or profit from’
portions of the original RICO judgment,” that “the Court granted relief,” and that the Stay Opinion
“is effectively the applicable order of the Court.”147 Those contentions, however, are incorrect.
As an initial matter, Donziger never made any such motion. He merely sought a stay
pending appeal from this Court. Nor did the Court grant any relief from the “monetize or profit”
portions of the judgment. It denied Donziger’s motion in all material respects. There is not a single
word in the Stay Opinion that even suggests that the Court intended to modify the RICO Judgment.
And the Stay Opinion most assuredly is not “the applicable order of the Court,” “effectively” or
otherwise. Indeed, this Court lacked the power to modify or alter the terms of the RICO Judgment
at the time the Stay Opinion was entered because Donziger and the LAP Representatives had
appealed the RICO Judgment to the Court of Appeals on March 18, 2014, over a month before the
Stay Opinion was issued. Moreover, it was the RICO Judgment that was affirmed by the Court of
146
As noted, the ADF now is subject to the Default Judgment, which parallels the RICO
Judgment.
147
Donziger Opposition Br. [DI 1986] at 5.
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 47 of 74
44
Appeals and that is embodied in its mandate, not the Court’s rationale for denying a stay pending
appeal.148
As the Supreme Court has held in language quoted by this Court in a closely related
case to which Donziger was a party and of which he therefore was quite aware
notice of appeal is an event of jurisdictional significance
“the filing of a
it confers jurisdiction on the court of
appeals and divests the district court of its control over those aspects of the case involved in the
appeal.”149 In consequence, this Court could not have modified, altered or otherwise changed the
RICO Judgment during the pendency of the appeal even if it had wished to do so. Donziger’s
suggestion to the contrary simply is not correct.
(b)
The Stay Opinion Was Not Intended to Modify, Nor Reasonably
Could Have Been Understood as Modifying, the RICO Judgment
(1)
The Crafting of the RICO Judgment Provisions
The genesis of paragraphs 1 and 5 of the RICO Judgment is an appropriate starting
point.
In its post-trial brief, Chevron specifically sought an injunction barring Donziger and
the LAP Representatives from “[u]ndertaking any acts to monetize or profit from the [Ecuador
148
Chevron Corp., 833 F.3d at 150-51.
149
In re Chevron Corp.,749 F. Supp. 2d 170, 177 n.27 (S.D.N.Y. 2014) (quoting Griggs v.
Provident Consumer Discount Co., 459 U.S. 56, 58 (1982)), aff’d, 409 Fed. App’x 393 (2d
Cir. 2010). Accord, Federal Ins. Co. v. United States, 882 F.3d 348, 361 (2d Cir. 2018)
(quoting United States v. Rodgers, 101 F.3d 247, 251 (2d Cir. 1996)).
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 48 of 74
45
J]udgment,”150 the concept ultimately embodied in paragraph 5 of the RICO Judgment. It sought
also the imposition “of a constructive trust for the benefit of Chevron, [on] any interest, direct or
indirect, in . . . any proceeds from the 2011 [Ecuador] Judgment or any subsequent Judgment or
Enforcement Judgment,”151 a proposal that in substance is embodied in paragraph 1 of the RICO
Judgment.
Donziger resisted these provisions in his own post-trial brief. He complained that
they would foreclose any acts to monetize or profit from the Ecuador Judgment and require those
to whom the RICO Judgment applies including Donziger to pay any proceeds from the Ecuador
Judgment over to Chevron.152
As the RICO Judgment reflects, this Court rejected Donziger’s arguments. It adopted
the core of these two Chevron proposals. Thus, when this Court entered the RICO Judgment,
Donziger understood that the RICO Judgment barred him from any conduct to monetize or profit
from the Ecuador Judgment and required him to turn over to Chevron any money or other property
traceable to the Ecuador Judgment.
(2)
The Stay Motions
Following entry of the RICO Judgment, and contrary to Donziger’s present claims,
neither Donziger nor the LAP Representatives sought any modification or clarification. Instead, they
150
Chevron Post-Trial Br. [DI 1847] at 348 (emphasis added).
151
Id. at 341 (emphasis added).
152
Donziger Post-Trial Reply Br. [DI 1857] at 12-13.
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 49 of 74
46
separately moved for stays pending appeal. The focus of those motions was whether the appellants
were threatened with imminent and irreparable injury absent a stay and whether they had
demonstrated a likelihood of success on appeal. The Court concluded that neither was the case and
denied the motions in all relevant respects.153
In his attempt to establish irreparable injury, Donziger claimed in his motion, among
other things not relevant here, that the prohibition on his selling, assigning, pledging, transferring
or encumbering any interest in the Ecuador Judgment and the requirement that he transfer his interest
in that judgment to Chevron would prevent Donziger from continuing to work on the Ecuador
matter, destroy his law practice, and leave him no means of earning a living unless the RICO
Judgment were stayed pending appeal.154 This Court rejected that argument because nothing in the
judgment prevented Donziger from working on the Lago Agrio case.155 Nor, in the Court’s view,
was his compensation likely to be so affected before his appeal was decided as to constitute
irreparable injury.156
Donziger’s compensation was governed by the 2011 Retainer, which provided for a
monthly retainer and a contingent fee of 6.3 percent of any recovery.157 Donziger’s right to a
153
Chevron Corp., 37 F. Supp. 3d 653.
Neither Donziger nor the LAP Representatives sought a stay from the Court of Appeals.
154
DI 1888 at 16.
155
Chevron, 37 F. Supp. 3d at 658.
156
Id. at 658-60.
157
Id. at 658 (citing PX 558).
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 50 of 74
47
contingent fee, the Court wrote, is subject to the constructive trust imposed by paragraph 1 of the
Judgment. But the monthly retainer payments, the Court said, would not be subject to it unless they
somehow were “traceable to the Lago Agrio [Ecuador] Judgment.”158 As one example of how
retainer payments could fall within the Judgment’s prohibitions, the Court noted that “as long as no
collections are made in respect of the Lago Agrio Judgment and funneled to Donziger as retainer
payments, the [RICO] Judgment would not prevent Donziger from being paid [a monthly retainer],
just as he has been paid . . . over the past nine or ten years.”159
Donziger now claims that the use of the word “collections” in the quoted sentence
in substance defined the word “traceable” in such a way as to limit paragraphs 1 and 5 of the RICO
Judgment to money or other property obtained “as a result of enforcement and then executing” on
the Ecuador Judgment as opposed to the sale or monetization of all or part of it.160 But that argument
flies in the face of the plain meaning of the term “traceable.” And it misrepresents and conflicts with
other statements in the Stay Opinion. Indeed, it is inconsistent with other statements by Donziger.
158
Id.
The effect of paragraph 5, it wrote, “is to prevent him from benefitting personally, at
Chevron’s expense, from property traceable to that fraudulent [Ecuador] Judgment.” Id. at
660.
159
Id. at 658.
In addition, the Court noted that Donziger would not have been harmed irreparably if the
portions of the RICO Judgment that affected his ability to collect a contingent fee remained
in effect pending appeal. He never had received any contingent fee in the past and would
not be harmed beyond repair, even if a contingent fee became payable while the appeals
were pending. The worst that would happen in that unlikely case would have been only that
his ability to collect such a fee would have been delayed. Id. at 658-59.
160
Tr., May 8, 2018 [DI 2010], at 19:21-25 (emphasis added); see also Donziger Resp. Br.
[DI 2184] at 2.
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 51 of 74
48
1.
The word “traceable” has an established meaning. As this Court has written:
“Money or other property is ‘traceable’ to a given source, event, or activity if its
‘acquisition is attributable to’ that source, event, or activity. To put it another way,
‘proof that the proceeds of the’ event or activity . . . ‘enabled the defendant to acquire
the property’ makes that property ‘traceable to the’ event or activity. So any property
(1) that Donziger (a) had as of the date of the judgment in this case, or (b) acquired
from the date of the judgment until now, or (c) hereafter may acquire and (2) that
Donziger was ‘enabled to acquire’ by the Ecuadorian Judgment or its enforcement
is traceable to that Judgment.”161
That is the plain meaning of the English word “traceable.”162
2.
Donziger ignores also the text of paragraph 1 of the RICO Judgment, which
is inconsistent with the argument he now makes.
The precisely relevant portion of paragraph 1 of the RICO Judgment reads “The Court
161
Chevron Corp., No. 11-cv-0691 (LAK), 2018 WL 4360770, at *2 (emphasis in original)
(footnotes and citations omitted).
162
The Oxford Dictionaries define “traceable” as “[a]ble to be followed on its course or to its
origin.”
OXFORD
DICTIONARIES
(available
at
https://premium.oxforddictionaries.com/us/definition/american english/traceable) (last
visited May 21, 2019). The OED likewise defines “traceable” as “[c]apable of being traced
(in various senses of the verb).” OXFORD ENGLISH DICTIONARY (available at
http://www.oed.com/view/Entry/204180?redirectedFrom=traceable#eid) (last visited May
21, 2019). Among the definitions of the verb form of “trace” is “[t]o follow the course,
development, or history of. Also with the course, etc. as object.” Id. (available at
http://www.oed.com/view/Entry/204177?rskey=1QAYF6&result=4#eid) (last visited May
21, 2019). The OED’s examples of the use of “trace” in that sense include Blackstone’s
use of the term in this phrase: “[t]he tracing the inheritance back through the male line of
ancestors must at last have inevitably brought us up to the first purchasor . . . ” II WILLIAM
BLACKSTONE, COMMENTARIES ON THE LAWS OF ENGLAND 236 (1766). See also, e.g.,
RESTATEMENT (THIRD) OF RESTITUTION AND UNJUST ENRICHMENT § 58 cmt. a (2011).
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 52 of 74
49
hereby imposes a constructive trust for the benefit of Chevron on all property, whether personal or
real, tangible or intangible, vested or contingent, that Donziger has received, or hereafter may
receive, directly or indirectly, . . . that is traceable to the Judgment or the enforcement of the
Judgment anywhere in the world.”163 Donziger’s argument that the constructive trust reaches only
money obtained by enforcement of and execution on the Ecuador Judgment
would render the
words “to the Judgment or” entirely superfluous. Paragraph 1 specifically and explicitly reaches not
only money or property traceable to enforcement of the Ecuador Judgment, but money or property
traceable to the Judgment itself quite apart from whether the Judgment ever is enforced or executed
upon.
3.
Finally, Donziger himself has recognized that the realization of money or
other value that is traceable to the Ecuador Judgment need not be obtained by “collection” in
Donziger’s cramped meaning of that term
enforcement and execution
in order to come within
the constructive trust and non-monetization provisions. He conceded in open court that a settlement
payment
which would not be a result of “enforcement” or “execution” of the Ecuador Judgment
nevertheless would be traceable to that judgment and therefore a collection within the meaning of
the Stay Opinion.164
Thus, Donziger’s contention that paragraphs 1 and 5 of the RICO Judgment apply
only to collections in the sense of realization of value “as a result of enforcement and then
163
DI 1875 ¶ 1 (emphasis added).
164
Tr., May 8, 2018 [DI 2010], at 20:7-11.
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 53 of 74
50
executing”165 on the Ecuador Judgment is simply wrong. Donziger instead has interpolated the
phrase “as a result of enforcement and then executing” where it is not to be found and ignores
portions of the RICO Judgment and the Stay Opinion that are inconsistent with his contention.
Donziger makes an additional argument based on part of the Court’s response in the
Stay Opinion to an argument made only by the LAP Representatives and not by Donziger. The LAP
Representatives contended that paragraph 5 of the Judgment, unless stayed, would have prevented
them from financing their appeal.166 Donziger then focuses on language in the Stay Opinion that said
that “all other interest-holders in the Ecuador Judgment are ‘virtually unconstrained by the NY
Judgment in their ability to attempt to fund their litigation efforts against Chevron by continuing to
sell shares in anything that may be recovered for whatever investors are willing to pay.’”167 From
this he would draw the conclusion that the non-appearing LAPs were free to sell interests in the
judgment and that he was free to do it for them.
The Stay Opinion actually said that “[n]othing 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 any eventual recovery.168 In other words, the LAP
Representatives
as distinguished from the defaulting LAPs
were prevented by the RICO
Judgment from selling interests in any eventual recovery. They were prevented from doing so at
165
Id. at 19:22-23.
166
Chevron Corp., 73 F. Supp. 3d at 660.
167
Donziger Resp. Br. [DI 2184] at 2 (quoting the Stay Opinion [DI 1901] at 20).
168
Chevron Corp., 37 F. Supp. 3d at 661 (emphasis added).
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 54 of 74
51
least because that would have constituted monetization of the Ecuador Judgment in violation of
paragraph 5 of the RICO Judgment. Moreover, as Donziger also is subject to paragraph 5, he too
is prevented from selling any interest in the Ecuador Judgment. His name did not appear in the
quoted passage of the Stay Opinion only because that passage was addressed to an argument made
only by the LAP Representatives.
Finally, Donziger’s contention that the Stay Opinion modified the RICO Judgment
so as to enjoin him only from selling his interest in the Ecuador Judgment would be misguided even
if the Stay Opinion could have done so despite the Court’s lack of jurisdiction over the injunction
at the time that opinion was issued.
Donziger’s argument seizes on the following language:
“The point of paragraph 5 . . . was to prevent Donziger . . . from avoiding the effect
of the constructive trust imposed on assets in [his] hands that otherwise would have
been direct proceeds of the Judgment by selling, assigning, or borrowing on [his]
interest[] in the Lago Agrio Judgment and thus at least confusing the issue of
traceability.”169
He argues that this statement meant that he was free to sell interests in the Ecuador Judgment as long
as the interests sold were not personally owned by him. But there are two straightforward answers
to that argument.
First, the language of paragraph 5, which controls here, enjoins Donziger from
“undertaking any acts to monetize or profit from the [Ecuador] Judgment . . . including without
169
Id. at 659-60 (emphasis omitted).
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 55 of 74
52
limitation by selling, assigning, pledging, transferring or encumbering any interest therein.”170 It thus
applies to “any” interest, not merely interests owned by Donziger. Moreover, nothing in the passage
upon which Donziger relies said that the only point of paragraph 5 was to foreclose sales by
Donziger of personal interests in the Ecuador Judgment.
Second, Donziger conspicuously ignores the very next paragraph of the Stay Opinion,
which in relevant part states that “[t]he N.Y. Judgment, including paragraph 5, in fact would deprive
Donziger of the ability to profit from the Lago Agrio Judgment that he obtained by fraud.”171
Permitting Donziger to sell interests in the Ecuador Judgment to investors, even if those interests
belonged to the ADF or the Trust, in order to generate money to pay himself certainly would not
deprive him of that ability. And the object of paragraph 5 and other provisions of the RICO
Judgment was to do just that.
Accordingly, the Court rejects Donziger’s proposed arguments based on the Stay
Opinion. The RICO Judgment stands unmodified. It bars any and all acts to monetize or profit from
the Ecuador Judgment, including without limitation sale, assignment, pledge, transfer or
encumbrance of any interest therein. Donziger, in the Court’s view, violated paragraph 5 via his
sales and efforts to sell interests in the Ecuador Judgment irrespective of whether the interests sold
were in Donziger’s contingent fee interest or the Ecuador Parties’ interests in the Ecuador Judgment
itself.172 In the last analysis, however, it is unnecessary to decide these motions on that basis. The
170
DI 1875 ¶ 5 (emphasis added).
171
Chevron Corp., 37 F. Supp.3d at 660.
172
As Judge Posner has written, appellate courts give “particularly heavy weight” to the
interpretation of an injunction by “the same judge who entered it and is thus familiar with
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 56 of 74
53
fact of the matter is that Donziger, in consequence of his sales, has profited extensively from the
Ecuador Judgment in violation of the RICO Judgment. He has done so to Chevron’s detriment. And
the Court elects to rest its decision on that ground.
B.
Donziger Personally Profited from and Failed to Pay Chevron Money Traceable to
the Ecuador Judgment in Violation of Paragraphs 1 and 5 of the RICO Judgment
Chevron has proved that Donziger raised over $2.4 million from investors in
exchange for interests in the Ecuador Judgment totaling at least 1.28525 percent from at least May
2016 through 2018.173 Indeed, Donziger states that he is “proud of that fact.”174
At least $1,242,985 of invested money was deposited, either directly or indirectly,
into personal checking accounts owned by Donziger or business checking accounts nominally owned
by his PLLC. All of it was traceable to the Ecuador Judgment as it reflected investments made in
exchange for interests in that judgment. The total then would be subject to the constructive trust if
it were “received” by Donziger or if he had “any right” to or “interest” in it. Assuming for purposes
of this analysis that the funds Donziger raised and received initially belonged to the ADF, the only
remaining issue is the extent to which Donziger or his PLLC had any right to or interest in them.
Donziger’s own descriptions of his rights and responsibilities with respect to client
its history, or when interpretation . . . involves the taking of testimony or a piecing together
of documents.” Schering Corp. v. Illinois Antibiotics Co., 62 F.3d 903, 908 (7th Cir. 1995).
173
DI 2113 at 15-16 (citing Slavek Decl. Ex. 2 [DI 2115-1].
174
Donziger Opposition Br. [DI 2125] at 16.
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 57 of 74
54
and investor funds provides an ample basis for findings. In his own words:175
“11.
The FDA has committed to compensate me at a fixed rate of $25,000 per
month for my work on all the responsibilities described above . . . . It is often the
case that there are not funds available to pay me and meet other critical case
expenses. Often, I insist that certain other critical expenses (such as legal fees in
enforcement jurisdictions) are covered first. Although it is understood that any
unpaid monthly fee gets rolled into arrears, non-payment has occurred frequently
enough over the course of many years (including long stretches without any
compensation) that full payment of my arrears has become highly unlikely, a
situation that FDA leadership has explicitly recognized in discussions with me.
Accordingly, again in light of the long-standing and trusting relationship I have with
my clients, the FDA has authorized me to pay down my arrears to the extent
possible, at my discretion and in light of other demands on available funds. *
*
*
“12.
Similarly, the FDA, through its representatives and after extensive
consultation, has been apprised of the substantial outstanding debts I am owed by
the case arising from times when I was forced to rely on personal funds to keep case
operations going. Again, the FDA though [sic] its representatives has agreed that
investor-provided funds should be used to pay down such debt to the extent possible
given the availability of funds and the exigency of other funding needs. The FDA,
175
The Court makes no finding as to whether or not the quoted account is credible. It assumes
its truth for purposes of this motion. It notes, however, that there is no evidence other than
Donziger’s assertions as to a good deal of it.
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 58 of 74
55
through its representatives and after extensive consultation, also has agreed that all
of my legal expenses incurred in responding to Chevron’s SLAPP-style and other
attacks on me (including the RICO case itself, appeals thereto, and post-judgment
proceedings) are properly considered expenses owing to the overall litigation that
should be paid from investor-provided funds as they become available and in light
of other funding needs.
“13.
Even though I often was legally entitled draw down funds to satisfy
the debts and arrears discussed above as soon as funds were raised, I typically chose
to pay other members of our team prior to reimbursing myself for expenditures.
Other times, I would pay myself as appropriate, but later, as funds became tight once
again, I would pay other individuals and case expenses from my personal accounts
so that necessary efforts could continue with minimal interruption.”176
Accordingly, it may be that Donziger had a right to or an interest in the entire
$1,242,985. Assuming the truth of his assertions, he had substantially unfettered control over the
funds in his hands, including the discretion to pay himself with that money whenever he wished to
do so. That control and discretion, in the extraordinary circumstances of this case,177 arguably means
that Donziger and his PLLC was entitled to, or at least had “an interest” in, every penny. And such
a finding finds support in New York law, which states:
“the party who possesses property is presumed to be the party who owns it. When
176
Donziger Decl. [DI 2122-1] ¶¶ 11-13 (emphasis added).
177
Certainly one hopes that the commingling of client and personal funds and the apparent
disregard of Rule 1.15 of the professional conduct rules that seems to have gone on here is
extraordinary.
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 59 of 74
56
a party holds funds in a bank account, possession is established, and the presumption
of ownership follows.”178
But it is unnecessary to decide the issue in order to resolve these motions.
Donziger has stated multiple times that he paid himself from investment funds.179
The evidence shows the same. For example, Sullivan stated that she paid Donziger $125,000 from
January to March 2018 from “investor money [that] had been deposited” into the CWP account.180
She did so at Donziger’s direction without back-up documents for three invoices that he submitted.181
Additionally, Donziger “paid himself” from investor funds held in his accounts by using that money
to pay bills and cover personal expenses. The evidence shows that from January 1, 2016 to June 30,
2018, $1,315,973.31 was deposited into Donziger’s accounts from external sources.182
Approximately $1,242,985.00 of that amount came from investors.183 Over the same time period,
Donziger made $72,276.12 in payments from his personal accounts to cover his TD Bank credit card
178
EM Ltd. v. Republic of Argentina, 473 F.3d 463, 474 (2d Cir. 2007) (internal quotation
marks omitted) (quoting Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan Gas
Bumi Negara, 313 F.3d 70, 86 (2d Cir. 2002)); see also United States v. $79,000 in
Account Number, etc., No. 96-cv-3493 (MBM), 1996 WL 648934, at *4 (S.D.N.Y. Nov.
7, 1996).
179
See, e.g., Donziger Opposition Br. [DI 2125] at 10 (arguing that Donziger’s conduct raising
and spending investor funds on “[his] own fees” was proper).
180
Sullivan Decl. [DI 2116] ¶ 52.
181
Id.
182
Slavek Decl. [DI 2115] ¶ 12.
183
Id. ¶ 22.
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 60 of 74
57
bills, $163,831.73 in payments from his personal accounts to cover his American Express credit card
bills, and $83,368.49 from his personal accounts to make payments on his home mortgage.184 He
transferred $347,000 from his personal and business accounts to his wife, Laura Miller.185 Donziger
therefore received in his personal capacity either through direct payments of invoices or through
payments to cover personal expenses
at least $666,476.34 of investor funds traceable to the
Ecuador Judgment in violation of paragraphs 1 and 5 of the RICO Judgment.
As mentioned previously, Donziger makes two arguments in support of the propriety
of these payments and disbursements. He argues that the money consisted of his monthly retainer,
or payments on previously unpaid monthly fees that had gone into arrears, and client funds that were
used to pay appropriate disbursements for the benefit of clients.186 To be sure, it may well be that
part of the $236,107.85 that Donziger paid on his credit cards reflected payments for expenses
Donziger incurred on behalf of the ADF that were not personal in nature. But he has offered no
credible evidence to rebut the most probable and logical inference
that the credit card bills paid
with funds from personal bank accounts were for Donziger’s personal benefit.
The argument that the funds were payments of monthly retainers or retainer arrearages
does not improve Donziger’s position. If anything, it is a concession that Donziger had a right to or
interest in the money. It is obvious also that the money was traceable to the Ecuador Judgment, as
Donziger raised it himself by selling interests in that judgment to investors. He then controlled the
184
Id. Ex. 5B.
185
Id.
186
Donziger Opposition Br. [DI 2125] at 11, 16-18.
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 61 of 74
58
flow of those funds, for example, by directing them either through Lenczner or the CWP account,
or receiving them directly into his own business or personal accounts.
Accordingly, the Court finds by clear and convincing evidence that Donziger used
at least $666,476.34 of investment funds for personal expenses, that those funds were traceable to
the Ecuador Judgment, and that he had a personal right to or an interest in those funds. Donziger
and his PLLC therefore are in contempt of paragraphs 1 and 5 of the RICO Judgment by profiting
from and failing to assign to Chevron funds traceable to the Ecuador Judgment.
IV.
Disobedience of the Restraining Notice
A.
Legal Principles
CPLR Section 5222, which applies to Chevron’s efforts to collect the Money
Judgment by virtue of Federal Rule 69(a), allows a judgment creditor to serve a judgment debtor
with a restraining notice that prohibits the judgment debtor from transferring or assigning any
property in which the debtor has an interest. Violation of a restraining order is “punishable by
contempt”187 including by a federal court where, as here, the restraining notice was served to enforce
a federal judgment.188
187
Cordius Tr. v. Kummerfeld Assocs., Inc., 658 F. Supp.2d 512, 517 (S.D.N.Y. 2009); see
also CPLR § 5251.
188
Cordius, 658 F. Supp. 2d at 518 (citing Vinos Argentinos Imports USA, Inc. v. Los Andes
Imports, Inc., No. 91-cv-2587 (JSM), 1993 WL 465353, at *1 (S.D.N.Y. Nov. 8, 1993);
Adidas Sportschufabriken v. New Generation, No. 88-cv-5519 (PKL), 1995 WL 646213,
at *3 (S.D.N.Y. Nov. 3, 1995).
The Court notes also that a restraining notice is issued by an attorney “as officer of the
court.” E.g., CPLR § 5222; CSX Transportation, Inc. v. Island Rail Terminal, Inc., 879
F.3d 462, 470 (2d Cir. 2018). Violation of a restraining notice issued in a federal action
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 62 of 74
59
B.
Analysis
Donziger has not denied either the service of the restraining notice on April 16, 2018
or any of the transactions described above. It is undisputed also that Donziger and his PLLC, both
of which were subject to the restraining notice, made at least the following transfers after that notice
became effective:
TABLE 2189
From Donziger Personal Account (TDxxxx8132)
Date
Amount
May 10, 2018
Transferee
$342,045.16
Donziger PLLC business account (TDxxxx8174)
From Unspecified Donziger Personal Account at TD Bank
June __, 2018
$3,620.43
American Express (Donziger account payment)
From Donziger PLLC Business Account (TDxxxx8174)
May 10, 2018
$50,000.00
Forum Nobis
May 10, 2018
$35,000.00
Steven Donziger personal account (TDxxxx8132)
May 10, 2018
$125,000.00
Donziger PLLC business account (TDxxxx8783)
From Unspecified Donziger PLLC Business Account at TD Bank
June 11, 2018
$15,000.00
Laura Miller Donziger
The restraining notice barred each of these transfers as long as the transferor
therefore is punishable by fine or imprisonment or both, as it constitutes “[d]isobedience
or resistance to its [i.e., the federal court’s] lawful writ, process, order, rule, decree, or
command.” 18 U.S.C. § 401(3); see also Adidas Sportschufabriken, No. 88-cv-5519
(PKL), 1995 WL 646213, at *3 (“Refusal or willful neglect by any person to obey a
restraining notice shall . . . be punishable as a contempt of court.” (internal quotations and
citation omitted)); Vinos Argentinos, No. 91-cv-2587 (JSM), 1993 WL 465353, at *1-2.
189
Slavek Decl. Exs. 4-A, 7-B [DI 2115-1]; Slavek Reply Decl. [DI 2129] ¶ 10.
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 63 of 74
60
Donziger and, in some instances, his PLLC had “an interest” in the money transferred.190 Neither
Chevron nor Donziger has addressed that question.
Nevertheless, the record permits that
determination with respect to at least some of these transfers to an extent sufficient to determine the
motions.
As discussed above, Donziger claims that he had the authority, in his discretion, to
use investor funds that came into his hands to pay his client’s alleged debts to him. This view is
reinforced by the 2017 Retainer, which contains a virtually boundless power of attorney that provides
that “Mr.DONZIGER has the broadest powers and attributions awarded by the law to
representatives.”191 For the same reasons the Court would be permitted to find that Donziger had
an interest in the entire amount of investment funds deposited into his personal and business
accounts, the Court would be permitted to find that Donziger had an interest in all of the funds
described in Table 2. The Court, however, is not obliged to do so and considers the following
relevant to the analysis.
On May 8, 2018, Page transferred $342.045.16 into Donziger’s personal checking
account. That money at least nominally belonged to the ADF, as it was raised by investment
agreements nominally executed by the ADF and signed by investors. While the fact that the money
was wired into Donziger’s personal bank account gave rise to a presumption that the money
belonged to Donziger,192 the presumption is rebutable. In view of the apparent source of the funds,
190
CPLR § 5222(b).
191
Champion Decl. Ex. 23 [DI 2091-23] at ECF p. 4.
192
See supra, III.B.
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 64 of 74
61
the Court assumes that the money was ADF property when it was deposited into that account.
Donziger then transferred the money to one of his law firm accounts. At the moment
of that transfer, the funds presumably remained property of the ADF despite the funds’ presence in
the law firm account.193 But shortly thereafter, Donziger transferred $35,000 back to his personal
account, $15,000 to his wife, and $3,620.43 from a personal account or accounts to American
Express to cover his credit card bill. One of two things necessarily is true as to each of these
transfers. The first option is that Donziger exercised his discretion to use his alleged ADF-granted
authority to make the payment. The second is that he decided to take those ostensibly client funds
for himself or his own benefit. In either case, Donziger had a right to or at least an interest in the
funds no later than the moment at which he made the decision to make each of these three transfers.
Accordingly, each of those three transfers violated the restraining notice.
The Court finds that the restraining notice was clear and unambiguous. The proof
that Donziger and his law firm both failed to comply with the restraining notice by transferring
property in which he had an interest is clear and convincing. It further finds that he has not diligently
sought to comply with the restraining notice, not least because Donziger commingled client funds
with his personal and law firm assets and failed to keep client funds in properly designated accounts.
Accordingly, the Court finds, by clear and convincing evidence, that both Donziger and his law firm
are in contempt of the restraining notice.
193
As noted previously, it appears that the law firm account in question was not a special
account for client funds required by the New York Rules of Professional Conduct.
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 65 of 74
62
V.
Disobedience of the March 5, 2019 Order
The Forensic Protocol
Paragraph 4 of the Protocol provides in relevant part:
“Within three (3) business days of entry of this Protocol, defendant Steven
Donziger . . . shall provide to both the Neutral and Chevron’s Forensic Experts via
email a representation listing under penalty of perjury all devices he has used to
access or store information or for communication since March 4, 2012
including,
but not limited to, personal computers, tablets, phones, and external storage devices,
such as external hard drives and thumb drives (the “Devices”), indicating for each
of the Devices whether he has possession, custody, or control of the Devices and, if
not, stating the reasons why that is so, i.e., whether they were destroyed, lost, etc. and
the present location of the Devices. Additionally, Donziger shall produce under
penalty of perjury a list of all accounts including, but not limited to, email accounts
(including web-based email accounts); accounts (including web- or cloud-based)
related to any document management services, such as Dropbox; and accounts related
to any messaging services, such as WhatsApp, Facebook Messenger, instant
messages, etc.
Donziger has used since March 4, 2012 (the “Media”), indicating
whether he presently has the ability to access those accounts and, if not, stating the
reasons why that is so.”194
Compliance was required on or before March 8, 2019, as the Protocol was entered on March 5.
Paragraph 5 provides in relevant part:
“The Neutral Forensic Expert shall take possession of Donziger’s Devices
194
Forensic Inspection Protocol [DI 2172] ¶ 4.
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 66 of 74
63
and have access to his Media for the purposes of making a mirror image of those
Devices and Media. The Devices shall be surrendered to the Neutral Forensic Expert
at Donziger’s address at 245 West 104th Street, #7D, New York, NY 10025. * *
* The devices shall be surrendered to the Neutral Forensic Expert at 12:00 pm at
245 West 104th Street, #7D, New York, NY 10025 on March 18, 2019.”195
These provisions of the Protocol are as clear as a bell. Donziger’s non-compliance
is not only clear and convincing it is admitted. And he has made no effort whatever to comply, as
is evident from his anticipatory refusal to do so.196
VI.
Alleged Continuation of Pattern of Racketeering
Chevron’s October 1, 2018 contempt motion complains that Donziger’s pattern of
racketeering activity that was identified in the Court’s RICO opinion continues unabated. It asks for
the imposition of severe sanctions.197
It is unclear whether Chevron seeks a contempt adjudication based on post-judgment
tortious behavior or, instead, offers this argument in support of a position that severe sanctions
should be imposed for any violations of the RICO Judgment or other court orders or process that may
be found. To whatever extent it suggests the former, the suggestion is without merit.
Rule 65(d)(1) requires that injunctions state their terms specifically and describe in
195
Id. ¶ 5.
196
See, e.g., DI 2173-1 at ECF p. 2.
197
DI 2113 at 33-38.
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 67 of 74
64
reasonable detail the act or acts restrained or required. In other words, any continuation of the
pattern of racketeering activity is remediable by civil contempt only to the extent, if any, that all or
parts of it are prohibited by explicit terms of the RICO Judgment or other court process. The RICO
Judgment here does not include the sort of general “go and sin no more” language often found in
some consent decrees. Thus, to whatever extent Chevron’s argument is that Donziger is in contempt
simply because he has continued the sorts of activities that resulted in the entry of the RICO
Judgment, the argument is without merit.
VII.
Relief
The law governing relief is clear:
“[T]he sanctions for civil contempt serve two purposes: to coerce future
compliance and to remedy any harm past noncompliance caused the other party.
United States v. United Mine Workers of America, 330 U.S. 258, 302-04, 67 S.Ct.
677, 700-01, 91 L.Ed. 884 (1947). This court has commented that, ‘[s]o far as the
first of these functions is concerned, the district judge, sitting in equity, is vested with
wide discretion in fashioning a remedy.’ Vuitton et Fils S.A. v. Carousel Handbags,
592 F.2d 126, 130 (2d Cir.1979) (citing United Mine Workers ). The compensatory
goal, by contrast, can only be met by awarding to the plaintiff any proven damages.
See id. The district court in either case may award appropriate attorney fees and costs
to a victim of contempt.”198
The civil contempts found here fall into two categories.
198
Weitzman v. Stein, 98 F.3d 717, 719 (2d Cir. 1996).
The first involves
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 68 of 74
65
disobedience of court directions to perform acts that have not yet been performed.199 The second
involves actions that violated court-imposed prohibitions.200 These two categories warrant somewhat
different treatment.
A.
Coercive Sanctions for Disobedience of Orders Requiring Performance of Actions
Not Yet Performed
Donziger’s failure to perform required acts that have not been performed warrant
sanctions for the purpose of coercing compliance. Accordingly, the Court will afford a brief period
before the commencement of coercive monetary sanctions during which Donziger may comply fully
with the relevant orders. It imposes escalating fines for each day of continued non-compliance after
the expiration of that brief period while reserving the possibility of increasing those fines and/or
resorting to other remedies in the event Donziger does not swiftly comply. As with all such
remedies, Donziger will have the option of purging himself of these contempts.
B.
Compensatory Sanctions for Injurious Disobedience
Chevron is entitled to recover any damages it sustained by reason of Donziger’s
contempts, including both those discussed in the preceding paragraph and the violations of the
injunctive portions of the RICO Judgment and the restraining notice. The question is whether the
199
These are the failure to assign Donziger’s rights under the 2017 Retainer, the failure to
comply with several specific provisions of the March 5, 2019 order (the Protocol), and the
failure to transfer to Chevron all funds received by Donziger that are traceable to the
Ecuador Judgment.
200
These are the sale and attempt to sell portions of Donziger’s personal interest in a
contingent fee with respect to the Ecuador Judgment, the profiting from the sale of interests
in the Ecuador Judgment to investors, and transfers in violation of the restraining notice.
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 69 of 74
66
evidence supports any such award.
Chevron has established no economic damages that yet have flowed from Donziger’s
failure to assign to Chevron his contingent fee interest under the 2017 Retainer, his failure to comply
with the Forensic Protocol, and his sale and attempted sale of portions of his contingent fee claim
with respect to and interests in the Ecuador Judgment.
That leaves two other matters
the disobedience to the restraining notice and the
violation of so much of paragraphs 1 and 5 of the RICO Judgment as prohibited Donziger from
profiting from the Ecuador Judgment and imposed a constructive trust on and required Donziger to
pay over to Chevron all property received by him that was traceable to the Ecuador Judgment.
As discussed above, Donziger made at least three transfers after the service of the
restraining notice totaling at least $53,620.43 in which he had an interest.201 Each of those transfers
constituted a separate contempt. The question is whether and to what extent they caused economic
loss to Chevron.
In considering this issue, it is relevant that the restraining notice is only a device for
enforcing Chevron’s Money Judgment of more than $800,000. Chevron thus already has a judgment
larger than the sum of these three transfers. The award of another judgment for the transfers per se
would result in a duplicative recovery. Accordingly, a compensatory damages award is not
warranted in these circumstances.
Donziger’s failure to respect the prohibitions of paragraph 5 and the requirement in
paragraph 1 that he “transfer and forthwith assign to Chevron all . . . property” that is “traceable to
201
As noted, the Court does not here consider subsequent transfers in possible violation of the
restraining notice as those are not subjects of the contempt motions now before it.
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 70 of 74
67
the Ecuador Judgment” is another matter. As the findings above make clear, Donziger raised at least
$2.4 million from investors in exchange for interests in the Ecuador Judgment. All of that money
was traceable to the Judgment. Donziger had a personal right to or at least a personal interest in
and profited from
at least $666,476.34 of those funds. He was obliged to turn over at least that
amount to Chevron. Accordingly, the Court will enter a supplemental judgment in favor of Chevron
and against Donziger for that sum. This is perfectly consistent with the overall purposes of
paragraphs 1 and 5 of the RICO Judgment, which in part were designed to prevent Donziger from
benefitting from the outrageous fraud he perpetrated.202
C.
Sanctions to Promote Future Compliance
The foregoing demonstrates that Donziger has not complied with paragraphs 1 and
5 of the RICO Judgment in that he has sold and attempted to sell parts of his interest in a contingent
fee, profited from the sale of interests in the Ecuador Judgment to investors, failed to comply with
the constructive trust and the requirement that he turn over to Chevron all property traceable to the
Ecuador Judgment that he has a right to or interest in, and the restraining notice. He has behaved
as if the RICO Judgment and the restraining notice do not exist. He has disregarded his obligations
under the Protocol. The likelihood that he will continue to do so is high. Accordingly, Chevron
urges the Court to grant additional relief in order to coerce future compliance.203 Specifically, it
would have the Court impose periodic disclosure and reporting requirements on Donziger.
202
See, e.g., Chevron Corp., 833 F.3d at 151.
203
DI 2113 at 39.
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 71 of 74
68
“There can be no question that courts have inherent power to enforce compliance with
their lawful orders through civil contempt.”204 They have ‘“broad discretion to design a remedy that
will bring about compliance.’”205 Nevertheless, the relief Chevron has proposed is unnecessary.
Chevron already has the right to conduct very broad discovery of Donziger and others in order to
collect the Money Judgment and ensure compliance with the RICO Judgment.206
D.
Attorneys’ Fees
Attorneys’ fees may be awarded with respect to civil contempt regardless of whether
the other relief granted is coercive, compensatory or both. As the Second Circuit has stated: “The
district court in either case may award appropriate attorney fees and costs to a victim of contempt.”207
Moreover, a finding of wilfulness is not an indispensable prerequisite to such an award although it
is a relevant consideration.208 In all the circumstances, the Court finds, by clear and convincing
evidence, that Donziger’s contempts as specifically enumerated below were wilful. Accordingly,
Chevron is entitled to recover its reasonable attorneys fees, disbursements, and expert witness fees
with respect to the discovery and litigation of those civil contempts that the Court has found to have
204
Shillitani v. United States, 384 U.S. 364, 370 (1966).
205
Paramedics Electromedicina Comercial, Ltda. v. GE Med. Sys. Info. Techs., Inc., 369 F.3d
645, 657 (2d Cir. 2004) (quoting Perfect Fit Indus. v. Acme Quilting Co., 673 F.2d 53, 57
(2d Cir.1982)).
206
FED. R. CIV. P. 69(a); CPLR § 5223; State of N. Y. v. Shore Realty Corp., 763 F.2d 49, 53
(2d Cir. 1985).
207
Weitzman, 98 F.3d at 719.
208
Id.
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 72 of 74
69
been wilful, but not with respect to other issues that may have been litigated on these motions. Any
application for attorneys’ fees shall be filed no later than June 18, 2019.
Conclusion
Chevron’s motions to hold Donziger and Donziger & Associates, PLLC, in civil
contempt of court [DI 1968, DI 2089 and DI 2112, DI 2175, and DI 2178] all are granted to the
extent hereafter set forth.
1.
With respect to Chevron’s October 1, 2018 motion [DI 2089, DI 2112]:
a.
Donziger is in wilful civil contempt of paragraph 1 of the RICO
Judgment by virtue of his failure to assign and transfer to Chevron all rights to any contingent fee
that he now has or hereafter may obtain including without limitation all such rights under the 2017
Retainer.
b.
Unless Donziger previously shall have executed, acknowledged, and
delivered to Chevron’s counsel the form of assignment attached as Exhibit 88 to DI 2091 without
any additions, alterations, attachments or addenda (other than to reflect accurately the year in which
the document was signed), he shall pay a coercive civil fine to the Clerk of Court with respect to
May 28, 2019 and each subsequent day from that date until the date on which he fully purges himself
of this contempt by doing so. The amount of the coercive fine shall begin at $2,000 for May 28,
2019 and shall double for each subsequent day during which Donziger fails fully to purge himself
of this contempt.
c.
Donziger is in wilful contempt of paragraph 1 of the RICO Judgment
by virtue of his profiting in the amount of $666,476.34 from the sale of interests in the Ecuador
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 73 of 74
70
Judgment and his failure to assign and transfer to Chevron that profit, which constitutes property that
Donziger has received, or to which he had a right, title or interest, that is traceable to the Ecuador
Judgment. The Clerk shall enter a second supplemental judgment awarding that sum to Chevron and
against Steven Donziger and Donziger & Associates, PLLC, jointly and severally.
2
With respect to the first of Chevron’s two motions filed March 20, 2019 [DI
2175]:
a.
Donziger is in wilful civil contempt of paragraph 4 of the March 5,
b.
Unless Donziger previously shall have complied fully with each duty
2019 order [DI 2172].
imposed upon him by paragraph 4 of the March 5, 2019 order, he shall pay a coercive civil fine to
the Clerk of Court with respect to May 28, 2019 and each subsequent day from that date until the
date on which he fully purges himself of this contempt by doing so. The amount of the coercive fine
shall begin at $2,000 for May 28, 2019 and shall double for each subsequent day during which
Donziger fails fully to purge himself of this contempt.
3.
With respect to the Chevron’s second motion filed March 20, 2019 [DI 2178]:
a.
Donziger is in wilful civil contempt of paragraph 5 of the RICO
Judgment by virtue of his selling, assigning, pledging, transferring or encumbering part of his
putative contingent fee interest to David Zelman in exchange for approximately $11,000 worth of
personal services.
4.
With respect to each of the wilful civil contempts adjudicated herein
(paragraphs 1(a), 1(c), 2(a), and 3(a)), plaintiff shall recover of Donziger and Donziger & Associates,
Case 1:11-cv-00691-LAK-JCF Document 2209 Filed 05/23/19 Page 74 of 74