Lago Agrio: Court Holds Donziger Liable For More Than $800,000 In Costs

One of the worst things about losing a civil action is that your victorious opponent can seek to recover its costs. Talk about being kicked when you’re down! In the United States, unlike in many other jurisdictions, “costs” do not include attorney’s fees. In general, each side bears its own lawyer’s fees. But you can recover items such as filing fees, the costs of service of process, the costs of court reporters, etc. In today’s case of the day, Judge Kaplan, the judge who ruled in favor of Chevron in its RICO case against Steven Donziger and the Lago Agrio plaintiffs, awarded potentially ruinous costs to Chevron against Donziger.

The main item of costs was more than $900,000 of fees paid to a special master. The judge had appointed the master because of

[The] parties’ proposal to take at least 42 depositions in a relatively short period, the extreme contentiousness of counsel, deposition misconduct by Donziger and counsel for him and the LAP Representatives in a related prior litigation, defendants’ obstructive and disruptive actions in this case, the possibility that important depositions in this case would occur outside the United States and require effective and timely supervision, and the high likelihood that many claims of privilege would be asserted, including during depositions outside New York and the United States, making prompt rulings essential to proper progress of this case.

Each party was to advance 50% of the cost, subject to reallocation at the end of the case. But Donziger and the LAPs refused to pay their share. So Chevron advanced the entire cost, and the question was whether Donziger would have to bear that cost.

I’m not going to review the details of the judge’s reasoning. The bottom line is that Donziger must pay 85% of the special master’s fees, or $741,526.49, in addition to more than $70,000 in more traditional costs (service fees, court reporter’s fees, and translation fees). Donziger has asserted that he lacks resources, though it’s hard to know—the court’s decision finds that Donziger failed to make adequate disclosures about his financial situation at various times during the case. But barring some commitment from a third-party litigation funder to pay these costs, there’s no question they will be burdensome for Donziger.

No doubt Donziger will take an appeal from this order, though it is worth noting that in order to obtain a stay of execution while an appeal is pending, it is generally necessary to file a supersedeas bond, which courts generally will not approve without sureties. So Donziger may face an immediate money problem. And these costs are not the only trouble he is facing: a recent press release from a firm aligned with Donziger indicates that he is facing disciplinary proceedings in New York (as I reported earlier) and that the bar is seeking to give Judge Kaplan’s findings of fact in the RICO case preclusive effect, which would be devastating, and to temporarily suspend Donziger from the practice of law immediately.

Let me just add that if you wonder whether those in the know are reading Letters Blogatory, check out footnote 39 in today’s decision.

Oil barrels in Ecuador

This Post Has 3 Comments

  1. Peter Lynn

    This case is certainly not doing much to improve the image of the legal system, which is quite often seen as a bit of a game in which the side with the most expensive lawyers will win through gamesmanship and underhand tactics. I mean no offence by that, and believe most lawyers (yourself certainly included) to be ethical, and that a lot of the perception described is down to a lack of understanding amongst us non lawyers. As a non lawyer I know there is much I don’t understand, so in following this case I have tried to learn, but am left mightily puzzled on at least three major issues: –

    – How it is Chevron were able to argue that Ecuador provided an adequate forum for the purposes of Form non Conveniens, yet totally inadequate for the purposes of recognition

    – How could evidence given by Guerra help Chevron despite the character of the man and the fact he was well coached and well rewarded

    And now

    – Chevron avoided a trial by jury precisely because they dropped monetary claims, so how is it that they are now able to come back for the money?

    Ok, on the last point I do understand that out of pocket costs are different to claims, but the amount in question is extortionate. A claim of just $20 would have been enough to entitle Donziger to a jury, yet Judge Kaplan is apparently able to determine alone that he is obliged to pay 85% of a $900,000 bill.

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