The Global Lawyer: Chevron, Ecuador and contempt for truth

When we left Chevron nemesis Steven Donziger, he was crushed under a pair of 500-page rulings that documented his fraud against Chevron in Ecuador in devastating detail. [See 'Chevron, Ecuador and the joys of arbitration', fDi Magazine, December 2018]. He was already disbarred (pending a September hearing), and he was bound by the tightest court orders a defendant could desire.

That didn't stop Mr Donziger, like Captain Ahab, from chasing the $9.5bn Ecuadoran judgment he won in 2011, in the tragic case he has pursued from the plank of his kitchen table since 1993. 

It seems he simply never stopped hawking fractional interests in his fraudulent mega-verdict. According to US judge Lewis Kaplan, Mr Donziger raised more than $2.3m for enforcement efforts in 2016 to 2018, with at least $666,000 used for living expenses. On May 23, the judge held Mr Donziger in wilful civil contempt on four counts.

First, he had profited from the Ecuadoran judgment. Second, he hadn't given Chevron the $666,000, though he owed the company $800,000 in costs. Third, he had flouted Mr Kaplan's order to give Chevron his 6.3% share of the judgment, by nervily documenting a new 6.3% interest only weeks after purporting to sign it over. Finally, he had refused to bend over for the court's digital rectal exam. Mr Kaplan imposed supplemental damages of $666,000, plus litigation fees to be determined – and ordered a $2000 fine to double every day until Mr Donziger signed over his 6.3%. 

Has Moby Dick at last stymied Captain Ahab? Maybe soon, but not quite yet. Mr Donziger said he would comply enough to avoid the doubling fine, while issuing his usual up-is-down statement of defiance. On appeal, he will renew his argument that shares sold in the judgment are not "traceable" to the judgment. (Mr Kaplan has a different, plain English reading of the word, and anyhow rests his main contempt finding on the fact that Mr Donziger had "profited".)

Donziger again paints himself as a human rights martyr speaking freely in a manifestly just cause. But bribery, blackmail and extortion are not protected speech in Mr Kaplan's book. And by using such tactics, the lawyer only hid the merits of his clients' case. Meanwhile, Mr Donziger and his allies push toward a new trial in Canada.

Chevron knows any serious court will see overwhelming evidence of fraud. In any event, the company has already shielded its subsidiary with Canadian assets. The plaintiffs profess optimism that they will pierce the parent's veil, though they are surely doing no favours for the cause of corporate accountability. The wonder to a longtime observer is that Mr Donziger can still con sincere environmentalists.

Fortunately, "court is one of those places where facts still matter", as judge Amy Jackson tartly noted after Donald Trump adviser Paul Manafort tried to hide money laundering behind conspiracy mongering. And whatever the equities in Ecuador may be, facts usually help the good guys. Who knows? Environmentalists may find comfort in the courts' stubborn adherence to the truth when Chevron and its peers go on trial over claims they misled the public about global warming.

Michael D Goldhaber serves as US correspondent for the International Bar Association. He has been tracking the world’s largest disputes since the turn of the millennium. Email: michael.goldhaber@gmail.com