The US Court of Appeals for the Second Circuit on Thursday dismissed a contempt of court finding against human rights attorney Steven Donzinger, the latest ruling in a years-long legal battle between Donzinger and international energy company Chevron.
The issue originated in 2011, when an Ecuadorian court rendered a $9.5 billion judgment against Chevron for alleged environmental damage in Ecuador’s Lago Agrio region. Donzinger represented Ecuadorian plaintiffs in this original case, but a subsequent suit by Chevron brought Racketeer Influenced and Corrupt Organizations (RICO) charges against Donzinger and a group of Ecuadorian residents.
A judge for the US District Court for the Southern District of New York found Donzinger and Ecuadorian residents had conspired to obtain the $9.5 billion judgment by illegal means, including fraud and bribery. That litigation was resolved in 2014 when the district court awarded damages and litigation costs to Chevron. The court also enjoined Donzinger from seeking to monetize or enforce the $9.5 billion judgment in the US.
The present case involved Donzinger’s appeal of that 2014 decision, wherein he challenged the amount due Chevron in costs and challenged several contempt proceedings initiated by Chevron arising from Donzinger’s alleged violations of the 2014 injunction order. Donzinger argued that the injunction wrongfully encroached on his ability to enforce the 2011 judgment on behalf of his clients, injured his law practice, and precluded his clients from financing an appeal by selling their interests in the 2011 judgment.
The district court found Donzinger to be in contempt in 2019 by monetizing and profiting from the 2011 judgment through sales of his shares in the judgment, which Donzinger argued was essential to ensure he could obtain enforcement of the 2011 judgment in countries other than the US and to be paid for that work as well. This contempt ruling resulted in Donzinger being liable for millions of dollars in attorney’s fees to Chevron.
While the Court of Appeals upheld the 2014 damage awards to Chevron, it found that the injunction against him was ambiguous as to his rights to monetize his clients’ interests in the 2011 judgment and pay himself with those proceeds. Because the order “muddied the waters” as to acceptable behavior, the Court of Appeals found that the district court exceeded the bounds of its discretion for finding Donzinger in contempt for continuing his monetizing activities.
However, the ruling emphatically stated that any such ambiguity no longer existed, and Donzinger’s continued monetization would result in a fresh contempt finding Donzinger’s legal team has celebrated this ruling and calls for the dismissal of any further charges against Mr. Donzinger, calling the injunction a “contempt trap” that impedes his human rights work.
The 2011 ruling against Chevron for $9.5 billion has yet to be enforced. Chevron continues to deny its responsibility for the environmental damage in Lago Agrio.
