NY Bar Ref Says Chevron Foe's Disbarment 'Too Extreme' - Law360

3/2/2020 NY Bar Ref Says Chevron Foe's Disbarment 'Too Extreme' - Law360

By Andrew Strickler Law360 (February 26, 2020, 8:10 PM EST) -- New York attorney Steven Donziger has won a round in his long war with Chevron Corp. over his alleged misconduct in a massive environmental case, landing a disciplinary recommendation that he be allowed to resume practicing law.

In a highly unusual report, a court hearing officer on Monday said the now-suspended Donziger should be “immediately” returned to active status, despite calls from a court grievance committee and Chevron lawyers that he be permanently banned for his conduct in securing a $9.5 billion judgment against the energy giant's predecessor.

“Assessment of character is not an exact science, but we can all agree that the essential components are honesty, integrity, and credibility,” said the referee, John Horan. "It is far from clear that [Donziger] is lacking in those qualities as the committee argues.” He said that disbarring Donziger would be "too extreme."

Horan, a former federal prosecutor who oversaw Donziger’s four-day bar hearing last fall, described him as “besieged” by Chevron, but not someone who represented any threat to clients or the integrity of the profession.

“The extent of his pursuit by Chevron is so extravagant, and at this point so unnecessary and punitive, while not a factor in my recommendation, is nonetheless background to it,” Horan wrote.

The report and recommendation to a Manhattan appellate court is one chapter in a long tale that started with Donziger’s decades of work for tens of thousands of people in Ecuador who said they'd been hurt by environmental pollution caused by Chevron predecessor Texaco Inc. The case resulted in $9.5 billion judgment against the oil company in an Ecuadorian court in 2011.

But three years later, Donziger was in a New York federal court facing racketeering accusations from Chevron that he’d bribed judges and otherwise manipulated the justice system to secure the mammoth judgment.

U.S. District Judge Lewis Kaplan ultimately ruled in 2014 that Donziger had helped engineer the judgment through bribes and other fraud, and blocked both its enforcement in the U.S. and Donziger’s ability to profit from the judgment.

But with Donziger continuing to try to enforce the judgment abroad, Chevron and its team of Gibson Dunn & Crutcher LLP lawyers pressed the court for sanctions and contempt findings, accusing Donziger of, among other things, breaking court orders by signing away interests in the judgment in violation of a court injunction.

Despite Judge Kaplan's findings and amid an ongoing criminal contempt case, Donziger has maintained his innocence, and accused Chevron of trying to destroy him financially and professionally while dodging the enforcement of the judgment overseas.

Based on Judge Kaplan’s decision, the First Judicial Department of the state Supreme Court's Appellate Division also put Donziger in mid-2018 under an interim bar suspension. While bar https://www.law360.com/articles/1247891/print?section=energy 1/3 3/2/2020 NY Bar Ref Says Chevron Foe's Disbarment 'Too Extreme' - Law360 disciplinary actions in New York are typically confidential until and unless a final sanction is issued, he successfully petitioned the court, over the objections of the grievance committee, to make his proceeding public.

In his 36-page report, Horan called the bar case “decidedly unusual,” particularly in that it sprang from criminal-like findings regarding Donziger’s actions in Ecuador that arose from a civil matter.

And despite knotty collateral estoppel issues stemming from Judge Kaplan's ruling, Horan said he allowed Donziger to explain in the sanction-focused proceeding that he continued to contest those findings, and thus provide context for his lack of “remorse” in the bar case.

Horan also described those who testified to Donziger’s integrity and honesty — they included attorney John Keker of Keker Van Nest & Peters and musician Roger Waters of rock band Pink Floyd — as “inherently credible.”

And despite Donziger’s “casual use” of bank accounts and failures to properly set up trust accounts, Horan said disbarment was too harsh a punishment. He also noted that no evidence had been presented that any investor or client involved in the Ecuador case had questioned Donziger’s financial dealings.

Donziger’s “conduct in this unique matter, all arising from one unusually lengthy and difficult environmental pollution case conducted in Ecuador against the most vigorous and oppressive defense money can buy, leads inexorably to a severe sanction but should be judged in its entire context; the Kaplan decision is entitled to considerable weight but not necessarily, in these unique circumstances, decisive weight,” Horan said.

In an email to Law360 on Wednesday, Donziger told Law360 on Wednesday said Chevron’s lawyers “spoon-fed” information to the grievance committee, which “did not conduct itself in a neutral fashion.” He also said it was encouraging that a former federal prosecutor “looked at the total situation and was able to point out the gross unfairness of what has occurred.”

“This is a very significant ruling as it is the first time that a third party judicial officer in New York has examined Judge Kaplan's findings which I have been contesting for several years,” he wrote. “The sad part is that the hearing officer was not allowed to address head-on what we believe is the false evidence supporting Judge Kaplan’s findings.”

Chevron counsel Randy Mastro told Law360 on Wednesday said the referee “essentially ignored” the findings from a respected federal judge that Donziger had committed extortion, bribery and multiple other offenses, findings that were later affirmed by the Second Circuit.

“If those damning findings against an attorney don't warrant sanctions, what ever would?” he said. “At the end of the day, we continue to believe the state judges who review this referee's nonbinding recommendation — and previously had to admonish him to apply those findings to this case as a matter of collateral estoppel — will see to it that justice is done here, just as it was in the federal courts."

Requests for comment from grievance committee counsel were not returned Wednesday.

Donziger is represented in the disciplinary case by Richard H. Friedman of Friedman Rubin PLLC, Martin Garbus and Aaron Page of Offit Kurman PA and pro se.

The Attorney Grievance Committee for the First Judicial Department is represented by its own Jorge Dopico and Naomi F. Goldstein and by special counsel George Davidson of Hughes Hubbard & Reed LLP.

The case is In the Matter of Stephen R. Donziger, case number 2018.7008, in the Supreme Court of the State of New York, Appellate Division, First Judicial Department.

--Editing by Bruce Goldman.

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