Lawyer and Chevron critic Donziger's civil contempt finding mostly upheld; fees and sanctions vacated

(Reuters) - A federal appeals court largely upheld but narrowed the scope of a 2019 civil contempt finding against the lawyer Steven Donziger arising from his battles against Chevron Corp over pollution in the Ecuadorian rainforest.

Reuters Westlaw Today - Jonathan Stempel 08/03/2021

(Reuters) - A federal appeals court largely upheld but narrowed the scope of a 2019 civil contempt finding against the lawyer Steven Donziger arising from his battles against Chevron Corp over pollution in the Ecuadorian rainforest.

The 2nd U.S. Circuit Court of Appeals also set aside an order that Donziger pay Chevron $4.1 million in sanctions and attorneys' fees, and ordered the fee component recalculated to reflect the contempt finding's narrower scope.

Thursday's decision by a panel including Circuit Judges Gerard Lynch, Dennis Jacobs and Richard Sullivan was mostly unanimous, though Sullivan dissented in part and would have upheld the entire contempt finding.

Donziger, who represented himself in the federal appeal after having been disbarred in New York, is also defending against separate but related criminal contempt charges filed by the same judge who found him in civil contempt. He did not immediately respond to a request for comment.

Thomas Hungar and Randy Mastro of Gibson Dunn & Crutcher represented Chevron. Chevron spokesman Sean Comey said the company was pleased with much of the decision, including limits it imposed on Donziger's future activities.

The case stemmed from a $9.5 billion judgment that Donziger won in 2011 against Chevron in an Ecuadorian court, but which the San Ramon, California-based oil company claimed had been procured by fraud.

Donziger represented villagers in Ecuador's Lago Agrio region who sued over decades of water and soil contamination by Texaco, which Chevron later acquired.

Chevron countered that Texaco cleaned up the area, and Petroecuador was mainly responsible for the contamination.

In March 2014, U.S. District Judge Lewis Kaplan in Manhattan sided with Chevron.

He issued an injunction barring Donziger from profiting from the judgment or trying to enforce it in the United States, though Donziger could try — and has tried, unsuccessfully — to enforce it elsewhere.

The appeals court upheld Kaplan's findings in 2016.

Three years later, Kaplan found Donziger in contempt of the injunction for having, among other activities, raised more than $1.2 million by selling interests in the Ecuadorian judgment to six investors.

He ordered Donziger to pay Chevron $3.43 million in attorneys' fees, and $666,476 in sanctions for violating it.

In Thursday's decision, Lynch rejected Donziger's claims that the oil company's alleged misconduct and far greater resources made it unfair to award costs.

But he said a partial stay pending appeal that Kaplan had issued in April 2014 injected "considerable ambiguity into the otherwise clear text of the injunction," issued one month earlier, as to how Donziger could be paid for work on the case.

"It was not unreasonable for someone in Donziger's position to believe that he could continue monetizing his clients' interests in the Ecuadorian judgment and pay himself with those proceeds because, as the district court itself noted, that is how the case 'always has been financed,'" Lynch wrote.

"But five years after the district court issued the stay order, it found him in contempt for (among other things) doing exactly that," Lynch added.

Lynch said, however, that Kaplan's more recent elaborations about the terms of the injunction make clear that if Donziger repeated the actions underlying the now-vacated contempt findings, he would be held in contempt.

The judge also said his decision should not be seen as vindication for Donziger.

"Indeed, except with respect to the very specific alleged violation of the injunction discussed in this opinion, Donziger does not even attempt to challenge the district court's findings of his contumacious conduct," the judge wrote.

Kaplan drafted the criminal contempt charges against Donziger on the United States' behalf in 2019, an unusual move for a judge. The law firm Seward & Kissel is representing the prosecution in that case. A May 10 trial is scheduled.

The case is Chevron Corp v. Donziger, 2nd U.S. Circuit Court of Appeals, Nos. 18-855, 18-2191, 19-1584.

For Donziger: Pro se

For Chevron: Thomas Hungar and Randy Mastro of Gibson, Dunn & Crutcher

References

CHEVRON CORP; GIBSON DUNN AND CRUTCHER LLP; SEWARD AND KISSEL LLP

Fuente Original