Steven Donziger, a lawyer who fought against Chevron’s depredation of the Amazon via a successful lawsuit in Ecuador, may now lose his law license. Why? Because Chevron accused Donziger of bribing an Ecuadorian judge and employed a racketeering statute to privately prosecute him in the Southern District of New York. Now, a great injustice may rest on an argument that cannot be raised, rather than an issue decided. Indeed, an issue was decided, that Steven Donziger bribed his way to victory against Chevron. Is this true? What is unquestionably true is that Chevron annihilated the rainforest during its efforts to extract oil from the upper Amazon. But does this exploitation matter in light of the bribery allegation against Donziger? No, not according to SDNY Judge Lewis A. Kaplan, for whom Chevron’s conduct in the Amazon was irrelevant in deciding the case against Donziger. What matters, and all that matters, is that Donziger, in Kaplan’s eyes, bribed to win the judgment. But did he? How do we know? Because Kaplan said it so after a trial where Chevron amended its demands to cheat Donziger out of a jury and anchored its case on a star witness, who later admitted to lying about his interactions with Chevron and Donziger.1 Donziger has already been slapped with an $800,000 bill for Chevron’s attorney’s fees, but now he risks paying for his successful advocacy with his right to advocate.
A New York State court may invoke collateral estoppel, a common law doctrine used to prevent re-litigating issues already decided, to disbar Donziger without first examining exculpatory evidence that was also ignored by Judge Kaplan—evidence that would impeach Chevron’s star bribery witness and thereby materially undermine the basis of Donziger’s pending disbarment. By order of New York State’s Appellate Division, First Department, Referee John Horan, who is presiding over Donziger’s post-suspension hearings, must give collateral estoppel effect to Judge Kaplan’s decision. Before the First Department’s order precluded him from examining the allegations against Donziger, Referee Horan questioned whether Donziger had “received a full and fair hearing before Judge Kaplan.”2
Collateral estoppel should not have been applied in this case for three reasons: first, the bribery finding, by Judge Kaplan’s own declaration, was not necessary to his RICO racketeering judgment; second, new evidence calls the bribery finding into question; and third, applying collateral estoppel in this case would perversely incentivize corporations to encourage civil actions against plaintiffs’ attorneys as a means of debilitating opposing suits.
New York State courts have established that preclusive collateral estoppel is applicable only when several conditions are met. One such condition is that “the issue previously litigated was necessary to support a valid and final judgment on the merits.”3 New York courts also examine whether the judgement to be given preclusive effect decided issues “identical” to the issues in the second proceeding.4 Giving Judge Kaplan’s bribery finding collateral estoppel effect in this case is inconsistent with the doctrine’s requirements. As Referee Horan has stated, “[t]o argue that respondent has already had his due process in the trial before Judge Kaplan and is entitled to nothing more in this proceeding to sanction him as a lawyer, is to overlook the substantial differences in the proceedings. There is an obvious asymmetry in the case before Judge Kaplan and the case now underway to sanction respondent notwithstanding similarity or even identity of factual issues.”5
For a civil RICO charge to be actionable, two predicate findings of criminal activity are required. Kaplan built his RICO judgment on what Donziger’s appellate counsel described as a “fortress” of predicate findings, such that attack on any one of them would not bring the judgment and injunction down. His opinion repeatedly introduces his lesser findings under headings declaring them to constitute independent bases, for example, “Fraud Warranting Equitable Relief Even Absent Bribery.” (emphasis added). He appears to have been recognizing the weakness of his finding, anticipating that if an appellate court were to deem it “clearly erroneous,” his other predicate findings would insulate his judgment and injunction from reversal. He used this very argument himself, post-trial, in the context of his hearing and order imposing court costs on Donziger of more than $800,000.
At the post-trial hearing, Donziger tried to oppose the bribery finding by bringing new evidence to the judge’s attention. Kaplan did not examine the evidence, explaining that “fraudulent behavior warranted equitable relief with respect to the Ecuadorian judgment . . . without necessary regard to whether Donziger . . . bribed former Judge Zambrano.”6 The fact that Kaplan did not rest his civil RICO judgment squarely on any of the underlying predicates, including the bribery claim that is of critical importance to the disbarment hearing, has two core consequences. First, it indicates that none of the individual predicates were “necessary” to support a valid finding on the merits. Any two predicates could have been the basis, but no two in particular were “necessary.” Second, because the civil RICO finding was based on alternate predicates, Kaplan did not have to individually find any of the claims by a preponderance of the evidence standard. Kaplan necessarily found that at least two of the predicate claims existed by a preponderance, but never had to identify which two. Because the exact predicates on which his decision was based were never identified, they cannot be considered “identical” to the issues now at hand in the disbarment hearing. Both of these conclusions suggest that the civil RICO bribery finding in this case is not a proper basis for collateral estoppel.
Furthermore, Kaplan based his key bribery finding against Donziger on the testimony of a single witness. The oil company had given their bribery witness more than a million dollars’ worth of benefits and had relocated him and his family from Ecuador to the United States.7 Chevron’s counsel prepped their witness for his testimony against Donziger in more than fifty individual sessions.8 Their witness was credited by Judge Kaplan over Donziger’s staunch denial, notwithstanding the flimsiness and inconsistencies of his rehearsed story. The unreliability of this witness and the crucial role his testimony played raises the question, as noted by Referee Horan, of whether Donziger was provided a “full and fair hearing” before Judge Kaplan. Furthermore, after the civil RICO judgment, Donziger brought to Kaplan’s attention new vidence that Chevron’s paid witness had lied about the bribe. Discovery of new evidence should preclude application of collateral estoppel.9 Courts have been found “clearly in error” for applying collateral estoppel in the face of newly discovered evidence.10 The lack of a “full and fair hearing” and the impropriety of applying collateral estoppel in this case both suggest that Donziger should be given the opportunity to bring forward arguments of his innocence in his disbarment hearing.
Here’s the rub. Donziger’s appellate counsel, on appeal from Kaplan’s RICO judgment, legally challenged only Chevron and Kaplan’s unprecedented use of the RICO statute to thwart a foreign judgment. He appealed only on the law, focusing on the impropriety of civil RICO in this case, not on the facts relating to Donziger’s conduct. Although he vigorously disputed the findings in his statement of the case, he did not challenge Kaplan’s factual findings as “clearly erroneous.” Consequently, the judges of the Second Circuit Court of Appeals took the facts as found by Kaplan to be “conceded” and “admitted,” and thereafter proceeded to rule in favor of Chevron and Kaplan on the law.
Thereupon, judges on the SDNY Attorney Disciplinary Committee referred Donziger to the Attorney Grievance Committee for the First Judicial Department of the State of New York (“AGC”) with request and recommendation to suspend and disbar him from practice. On motion by the AGC, the Appellate Division, First Department agreed: “Respondent appealed Judge Kaplan’s decision, yet chose not to challenge the underlying factual findings . . . Because Judge Kaplan’s findings constitute uncontroverted evidence of serious professional misconduct which immediately threatens the public interest, respondent should be immediately suspended [and is] suspended from the practice of law, effective immediately and until further order of this Court . . . the Referee may not reexamine this Court’s determination, based on the doctrine of collateral estoppel, that respondent committed professional misconduct.”11
One question is, why would appellate counsel dispute but not legally challenge Kaplan’s factual findings? What was he thinking?
As appellate counsel explained to Referee Horan when asked why he didn’t appeal the factual findings, the target of his appeal was the racketeering judgment and injunction, not the predicate findings. Chevron’s extraordinary use of the racketeering statute implicated far reaching issues of the standing of a corporate defendant in civil environmental litigation to weaponize the RICO statute as a means to prosecute an opposing plaintiff’s lawyer for criminal racketeering. The profoundly threatening potential effect of this use of the RICO statute if affirmed was what appellate counsel felt he needed to present to the Second Circuit Court of Appeals. This was his main chance.
Indeed, denying Donziger the opportunity to challenge his disbarment on the merits will send a signal to lawyers everywhere. Other plaintiff’s lawyers seeking to hold corporations accountable will have to consider whether they are willing to risk being sued personally by wealthy corporations intent on seeing them disbarred. Making matters worse, companies with millions to spend will be further incentivized to bring furtive lawsuits for the purpose of incapacitating their opponents via disbarment.
Giving collateral estoppel effect to a juryless decision in a case brought by a private party in part to see its opposing attorney disbarred is not a typical application of the doctrine in disciplinary proceedings.12 Instead, judgements given preclusive effect by the Appellate Division, First Department are generally spin-off proceedings addressing attorney misconduct alleged to have been committed in relation to an ongoing matter before the initial court –– oftentimes, in that judge’s very courtroom. These decisions are often the result of the attorney’s client stepping forward with a grievance, or of an adversary pointing to misconduct occurring within the case then before the court. In such scenarios, the evidence deemed relevant is inherently limited by the proximity of the alleged misconduct to the ongoing proceeding. Accusers cannot search far and wide for evidence to support their allegations, and accused attorneys need only examine and argue against the evidence related to the proceeding –– evidence readily available to them. Once a judge decides what that evidence proves, her decision can be given collateral estoppel effect to avoid having to engage in the same process over again. Donziger is alleged to have committed bribery in Ecuador, not in the Southern District of New York. While offenses committed abroad are surely no less serious, the separation between Judge Kaplan’s proceedings and the purported misconduct is what gave Chevron the room it needed to ready its personal campaign against Donziger and capitalize on the disparity of resources between a corporation and an indigenous peoples lawyer. The fruits of their campaign took the form of a seven-week trial with 31 live witnesses, the sworn testimony of three dozen others, and thousands of documents. As Referee Horan recognized, “the length of the proceeding and the volume of evidence” does not lead to the conclusion Donziger “receive[d] a full and fair hearing before Judge Kaplan.” To the contrary, with respect to whether he should lose his right to practice law based on Chevron’s efforts, it suggests the opposite.
Should the decision by his appellate counsel not to appeal Kaplan’s findings preclude Donziger from asserting his innocence in his disbarment proceeding?
Collateral estoppel is a form of proof by hearsay. Indeed, the doctrine of collateral estoppel is best understood as a judicially created hearsay exception to the usual rules of proof. From the vantage of Referee Horan’s hearing or the Appellate Division, Judge Kaplan’s bribery finding against Donziger is an out-of-court assertion offered in proof of the truth of the matter it asserts. The testimony of Chevron’s paid witness, on which the finding is based, were it to be introduced in Donziger’s disciplinary proceeding, instead of the finding based on it, might be admitted under the hearsay exception for prior testimony, assuming proper foundation for the exception, but would not preclude Donziger from contesting its truth, challenging the credibility of its declarant, or demonstrating the inadequacies of the foundational requisites for invoking the hearsay exception. Contrast proof by collateral estoppel, here based only on Kaplan’s crediting of the testimony of Chevron’s paid witness.
By order of the Appellate Division, Donziger is not only estopped from challenging the truth of Kaplan’s finding, but estopped as well from impeaching Kaplan for his bias, and from contesting the foundational elements for collateral estoppel to apply. Judged as hearsay, Kaplan’s bribery finding lacks indicia of reliability. Kaplan’s framing of the finding gives evidence of his “testimonial” intent to see his findings used against Donziger in later litigation, including his appeal and disbarment. In this context, his counsel’s misjudgment (in hindsight) in not legally appealing Kaplan’s bribery findings should be seen not as preclusive validation of the truth of the finding, but rather for the reality that Judge Kaplan’s finding has never been reviewed on the merits by any judge, federal or state, and new evidence undercutting the finding has never been considered on its merits by any judge, including Judge Kaplan. Confronted with evidence that impeached his finding, Judge Kaplan chose not to stand behind it.
Because of the obvious asymmetry between Donziger and Chevron, treating another judge’s credibility finding as incontestable proof of what it asserts in a disciplinary setting—particularly when based on the testimony of a corrupt witness—becomes all the more problematic.
Chevron’s resources would allow it to pursue litigation against Donziger until it succeeded in winning a judgement that could be given collateral estoppel effect in a disciplinary hearing. Even if Donziger had won the civil RICO action, Chevron could have strongly encouraged (funded) other entities to file suit with related or unrelated claims upon which disbarment could be based until any one of them was found by a preponderance to have occurred. In such a scenario, if and when Chevron found a single sympathetic judge, that judge’s opinion could be given preclusive collateral estoppel effect, preventing Donziger from arguing before the court actually considering whether to disbar him. By contrast, if cases initially brought in part for the purpose of seeing a lawyer’s license removed were not given collateral estoppel effect, lawyers like Donziger could address the allegations against them head-on before the court ultimately charged with deciding their fate, and corporations would not be incentivized to spend millions on disbarment campaigns.
Once out from under the shadow of Judge Kaplan’s false bribery finding, Chevron’s and Judge Kaplan’s demonization of Donziger appears in new light. It becomes clear that Chevron’s attacks were brought not because of their merits, but rather as a means to protect the oil company from having to answer for its degradation of the Amazon.
Lastly, there is another question worth asking: what would be gained by depriving Donziger the opportunity to finally face the accusations leveled against him on fair footing? If the evidence against him stands on its own two feet—in the absence of Chevron’s private support—surely Donziger would be disbarred. However, if, as the new evidence suggests, there is an absence of actual proof sufficient for disbarment, automatically incapacitating Donziger would create a powerful and dangerous endorsement of corporate private prosecutions against opposing counsel. For the reasons stated above, Donziger should be given a full and fair opportunity to prove his innocence––without Chevron’s thumb on the scale.
1 Alberto Guerra stating “I lied” in reference to his statement to Chevron representatives that the Plaintiffs had offered to bribe him $300,000. Chevron Corporation v. The Republic of Ecuador, World Bank No. 2009-23, at 743–44 (Apr. 21, 2105) (Horacio Naon & Vaughan Lowe, Arbs.).
2 Matter of Donziger, Attorney Grievance Committee v. Steven Donziger, Decision on Procedure for the Post-Suspension Hearing (N.Y. App. Div. Nov. 8, 2018).
3 Conason v. Megan Holding, LLC, 29 N.E.3d 215, 224 (2015).
4 Gilberg v. Barbieri, 423 N.E.2d 807, 808 (1981).
5 Matter of Donziger, Attorney Grievance Committee v. Steven Donziger, Decision on Procedure for the Post-Suspension Hearing (N.Y. App. Div. Nov. 8, 2018).
6 Chevron Corp. v. Donziger, No. 1 CIV. 0691 (LAK), 2018 WL 1137119, at *5 (S.D.N.Y. Mar. 1, 2018), appeal dismissed (May 7, 2018).
7 Chevron Corporation v. The Republic of Ecuador, World Bank No. 2009-23, at 304 (Apr. 21, 2105) (Horacio Naon & Vaughan Lowe, Arbs.)
8 Id. at 612-615.
9 See Goldstein v. Consol. Edison Co. of New York, 462 N.Y.S.2d 646, 648 (1983), aff’d, 62 N.Y.2d 936, (1984).
10 See Vincent v. Thompson, 377 N.Y.S.2d 118, 127 (1975).
11 Matter of Donziger, 80 N.Y.S.3d 269, 271 (N.Y. App. Div. 2018).
12 See, e.g., Matter of Zappin, 73 N.Y.S.3d 182 (N.Y. App. Div.), appeal dismissed, 32 N.Y.3d 946, (2018), and leave to appeal denied, 32 N.Y.3d 915 (2019); In re Escalante, 3 N.Y.S.3d 352 (N.Y. App. Div. 2015); In re Altman, 22 N.Y.S.3d 868 (N.Y. App. Div. 2016).