Chevron Corp. v. Donziger
384 F. Supp. 3d 465
| S.D. Ill. | 2019Background
- After trial the court entered a RICO judgment (the "RICO Judgment") and a money judgment against Steven Donziger, imposing a constructive trust and permanently enjoining Donziger from profiting from the Ecuador (Lago Agrio) judgment; the RICO Judgment required Donziger to assign to Chevron any contingent-fee interests and forbade any acts to monetize the Ecuador Judgment.
- The Second Circuit affirmed the RICO Judgment; Donziger did not obtain a stay of the money judgment and has exhausted appeals as to the RICO Judgment.
- Chevron filed multiple post-judgment contempt motions alleging Donziger (a) failed to assign contingent-fee rights (including under a 2017 retainer with the ADF), (b) solicited investors and sold or pledged interests in the Ecuador Judgment and otherwise monetized it, (c) transferred funds in violation of a restraining notice issued to collect Chevron’s money judgment, and (d) refused to comply with a court-ordered forensic inspection protocol.
- The record showed Donziger raised at least ~$2.37 million by selling interests; at least $1.24 million flowed into Donziger personal/firm accounts and the court found $666,476.34 was used for personal expenses traceable to investor funds.
- The court concluded Donziger repeatedly disobeyed clear injunctive and discovery orders, commingled funds, and wilfully refused to comply with the forensic protocol, and therefore found him (and his PLLC) in civil contempt on multiple grounds.
Issues
| Issue | Plaintiff's Argument (Chevron) | Defendant's Argument (Donziger) | Held |
|---|---|---|---|
| Failure to assign contingent-fee rights (Paragraph 1) | Donziger failed to assign contingent-fee rights under the 2017 Retainer (and earlier instruments) to Chevron as the RICO Judgment commanded. | The 2017 instrument merely acknowledged an existing interest and did not create a new assignable right; Chevron should have asked for documents before seeking contempt. | Court: violated Paragraph 1; 2017 Retainer granted Donziger a new 6.3% interest and he wilfully failed to assign it; coercive fines and an assignment requirement ordered. |
| Monetization / profiting from the Ecuador Judgment (Paragraph 5) | Donziger sold/pledged portions of contingent-fee interests and solicited investors, profiting personally; these acts violated the non-monetization injunction and funds traceable to the judgment must be paid to Chevron. | Donziger relied on the court's stay-order language (the "Stay Opinion") and contended sales were of others’ interests (not his) or that the Stay modified the RICO Judgment. | Court: rejected defendant’s Stay-based reading; Paragraphs 1 and 5 reach property traceable to the Judgment, not only enforcement proceeds; Donziger monetized his interest and personally profited; $666,476.34 awarded to Chevron as supplemental judgment. |
| Transfers after restraining notice (CPLR §5222 enforcement) | Restraining notice barred transfers; Donziger made transfers (including to his wife and to pay personal cards) after notice while funds were within his control/interests. | Donziger claimed discretionary authority from clients to use investor funds to pay arrears/expenses; some transfers were ‘‘accidental’’ or client-authorized. | Court: restraining notice was clear; transfers (e.g., $35,000, $15,000, credit-card payment) were in contempt because Donziger had an interest/control and failed to keep client funds separate. No duplicative compensatory award beyond the money judgment. |
| Noncompliance with forensic inspection protocol (March 5, 2019 order) | Donziger refused to (a) provide device/account list under penalty of perjury and (b) surrender devices/accounts for imaging as ordered. Contempt is warranted. | Donziger announced he would not comply (no substantive defense to the specific protocol obligations). | Court: protocol clear; Donziger admitted refusal; found wilful contempt and imposed escalating coercive fines until compliance. |
Key Cases Cited
- Chevron Corp. v. Donziger, 833 F.3d 74 (2d Cir. 2016) (appellate affirmance describing the corrupt scheme underlying the Ecuador judgment and upholding district court relief)
- Maness v. Meyers, 419 U.S. 449 (1975) (filing an appeal divests the district court of control over aspects of the case involved in the appeal)
- United Mine Workers of America v. [United Mine Workers], 330 U.S. 258 (1947) (civil contempt sanctions serve compensatory and coercive functions)
- In re Payne, 707 F.3d 195 (2d Cir. 2013) (addressing standards for contempt and appellate review of contempt findings)
- Hess v. New Jersey Transit Rail Operations, Inc., 846 F.2d 114 (2d Cir. 1988) (defining when a court order is sufficiently clear and unambiguous for contempt purposes)