LEWIS A. KAPLAN, District Judge.
This case is an outgrowth of the decades long litigation between residents of Ecuador's Amazon rain forest (the "Lago Agrio Plaintiffs" or "LAPs"), and first Texaco and then Chevron Corporation ("Chevron"). Steven Donziger, a New York lawyer who purports to represent the LAPs, and his allies obtained a multibillion dollar judgment from the Ecuadorian courts (the "Lago Judgment"). Chevron sued Donziger, his clients, and others in this Court where they claimed, among other things, that the Lago Judgment was obtained by fraud (the "NY Case"). On March 4, 2014, this Court, after a lengthy trial, found that the Lago Judgment was the product of fraud and part of an extortionate scheme, all directed by Donziger. It found that Donziger:
The Court imposed a constructive trust on any proceeds of the Lago Judgment that have reached or might reach Donziger and the two LAPs who defended the case (the "LAP Representatives")
Prior to the rendition of the Lago Judgment, Donziger had enlisted the firm of Patton Boggs LLP ("Patton"), which since has merged with or been acquired by another firm, to work on behalf of the LAPs. Beginning in early 2010, Patton developed a strategy for enforcement of the judgment that Donziger and his allies expected to obtain in Ecuador, wrote at least some court papers that were submitted in Ecuador, played an important role in resisting U.S. discovery sought by Chevron in aid of the Ecuadorian and other litigation, represented the two LAP Representatives in the Second Circuit in appeals and other proceedings relating to the NY Case, and even wrote court papers in the NY Case that were submitted over the names of other attorneys.
Patton, the full role of which is not yet known, did not confine itself to acting as counsel for the LAPs. It brought three lawsuits against Chevron on its own behalf. This was the last of the three. In due course, Patton's claims against Chevron were dismissed, Chevron filed counterclaims against Patton, and Patton's motion to dismiss Chevron's counterclaims was denied.
Following the ruling against Donziger and the LAP Representatives in the NY Case, Patton and Chevron entered into a settlement and release agreement, dated May 7, 2014 (the "Settlement Agreement"), pursuant to which Patton, among other things, agreed to pay Chevron $15 million, expressed regret for its actions in light of the findings made in the NY Case, and agreed to provide Chevron certain discovery, subject to all applicable Rules of Professional Conduct.
Donziger and the LAP Representatives are not and never were parties to this action. They move to intervene and for reconsideration of the Court's "so ordering" of the Rule 41 Stipulation which, they claim, contemplated or approved alleged breaches of professional responsibilities owed by Patton to them.
Most of the important facts concerning the long running disputes between Chevron, on the one hand, and Donziger and his clients, on the other, are fully set forth in this Court's March 4, 2014 and earlier opinions, as well as the Court of Appeals' decision affirming the March 4, 2014 opinion, familiarity with which is assumed. For present purposes, it suffices to describe the Patton-Chevron litigation, the effective termination of Patton's relationship with the LAPs generally and the LAP Representatives in particular, and the settlement of the Patton-Chevron case. We refer to earlier background only to the extent it is relevant to the discussion.
Patton first became involved in this controversy as a litigant rather than merely as counsel in 2010, when it sued Chevron in the District of Columbia. It there sought a declaration that its representation of parties adverse to Chevron in litigation relating to the Ecuador dispute did not violate standards of professional conduct despite the fact that Patton owned the Breaux Lott Group, a lobbying firm that had acted for Chevron in relation to the same dispute. Patton then moved to amend its complaint to add additional claims of tortious interference with a contract, tortious interference with an attorney-client relationship, and civil conspiracy against both Chevron and its outside counsel, Gibson Dunn & Crutcher ("Gibson"). In due course, Judge Henry H. Kennedy denied Patton's motion for leave to amend on the ground that the proposed amended complaint failed to state any legally sufficient claim and granted Chevron's motion to dismiss the complaint.
Undaunted, Patton filed a second action against Chevron and Gibson, again on its own behalf rather than on behalf of its clients. Its complaint "present[ed] claims identical to those that Patton Boggs sought to add in the first action."
Following the district court's dismissal of its two District of Columbia actions, Patton commenced this third lawsuit, again on its own behalf, against Chevron, this one in the District of New Jersey. Its complaint contained three claims for relief. The first sought recovery for Patton itself on a preliminary injunction bond that had been filed in an action in the NY Case—an action to which Patton never was a party and in which it never even appeared as counsel in the district court.
Chevron then moved to dismiss the complaint and for leave to assert counterclaims against Patton. Both motions were granted.
Thus, by the time the dust had settled with respect to Patton's three lawsuits against Chevron, all of Patton's claims against Chevron and Gibson had been dismissed but Patton was facing a claim for quite substantial damages for alleged fraud, deceit, and malicious prosecution. That claim was grounded largely in the contention that Patton was a culpable participant in the fraudulent procurement of the Lago Judgment and related misconduct. It was that claim that Patton ultimately settled.
In the meantime, the professional relationship between Patton and the LAPs had ended, for all practical purposes, long before the May 7, 2014 settlement between Patton and Chevron.
As noted, the Patton-LAP relationship began in early 2010 and comprehended the Lago Agrio litigation, the Section 1782 discovery matters,
By November 2013, Patton was nearing the completion of those tasks it had agreed to undertake on behalf of the LAPs. On or about November 7, 2013, Patton's James Tyrrell spoke with Pablo Fajardo, the LAPs' lead Ecuadorian counsel and the holder of their powers of attorney, and another of the LAPs' representatives. Tyrrell informed them that the firm would complete the remaining tasks it had agreed to perform, but would not undertake any new assignments. He further advised them that Patton would not handle any appeal from an adverse judgment in the NY Case, then on trial, although they might discuss that issue further.
On March 14, 2014, following the trial court decision in the NY Case, Tyrrell again spoke to representatives of the LAPs, including Fajardo. He advised them that he would argue an appeal on their behalf in the Fourth Circuit in another matter, but that that argument would be the last work Patton would do on the LAPs' behalf.
Patton and Chevron settled their lawsuit pursuant to the Settlement Agreement of May 7, 2014.
The operative terms of the Rule 41 Stipulation were two:
The Rule 41 Stipulation was signed by counsel for both parties and "so ordered" by a judge, who added that "The Clerk of the Court Shall mark this action closed and all pending motions denied as moot."
Donziger and the two LAP Representatives move to intervene as of right
Intervention as of right is governed by Rule 24(a) of the Federal Rules of Civil Procedure. It is appropriate only when all of the following requirements are met:
No one disputes seriously the timeliness of the motion to intervene nor that the interests of both of the parties to this action diverge from those of the movants. There are, however, additional questions: whether any of the movants claims an interest in the transaction or transactions that are the subject or subjects of the action and, even if any does, whether disposition of the action, as a practical matter, may impair his or her ability to protect his or her interest, and whether any possible impairment is too remote or contingent to warrant intervention. Moreover, in view of the prior dismissal of this action, whether there is anything in which to intervene.
As this Court wrote in ruling on another Donziger motion to intervene in a previous action:
Movants here seek to intervene on the theory that certain terms of the Settlement Agreement breached Patton's professional obligations to its clients or former clients, the LAP Representatives. But there are several problems with this argument.
Donziger and the LAP Representatives may have an interest, in the sense of caring about, the transactions that were the subject or subjects of the action between Patton and Chevron—Patton's claims against Chevron on the injunction bond and for malicious prosecution, and Chevron's claims against Patton for alleged complicity in the corrupt scheme to extort Chevron by, among other things, obtaining and enforcing a corrupt judgment in Ecuador, for fraud, and for other alleged misbehavior by Patton. But none of them advances a concern with Patton's claims against Chevron or Chevron's claims against Patton "that is `direct, substantial, and legally protectable.'"
Movants would have no right to intervene even if Rule 24(a) embraced a claim that the terms of a settlement breached legal obligations owed by one of the settling parties to a putative intervenor as distinct from an interest in the subject of the action between or among the settling parties.
We begin with Donziger. There is no suggestion that Donziger ever was a client of Patton. Accordingly, even assuming for the purpose of discussion that Patton's actions in settling with Chevron breached professional obligations to Patton's clients, Donziger himself—who does not claim an attorney-client relationship with Patton—would have no legally protectable interest or concern. Donziger therefore would have no right to intervene even if a claim of breach of a duty to the LAP Representatives by virtue of the settlement terms to which Patton agreed came within Rule 24(a).
The LAP Representatives are in a different position because they claim they were Patton clients and thus beneficiaries of obligations owed by lawyers to their clients. If Patton breached those obligations by settling with Chevron on the terms to which it agreed, and if Rule 24(a) were construed to include the LAP Representatives concerns with Patton's actions within the term "an interest relating to the property or transaction that is the subject of the action," the LAP Representatives would have surmounted this hurdle. But even on those assumptions, which we do not adopt, there would remain the question whether the LAP Representatives are so situated that their ability to protect any such interest would be impaired, as a practical matter, absent intervention as Rule 24(a) requires.
The LAP Representatives here contend that Patton's agreement to certain of the terms of the Settlement Agreement was improper. As they put it:
The relief they seek is reconsideration of the Court's approval of the Rule 41 Stipulation. In the circumstances, it is impossible to see how the "interest" they espouse, assuming it to be an "interest" for Rule 24(a) purposes, is "significantly protectable and direct as opposed to remote or contingent."
For starters, Patton's statement expressing regret at having taken on their representation of the LAP Representatives and its alleged failure to notify the LAP Representatives of what it intended to do were historical facts well before the motion to intervene was filed. Indeed, they were historical facts when the Rule 41 Stipulation was filed.
Patton's agreement to submit to certain discovery is different to the extent that that obligation is prospective. But the difference is superficial at best. The Settlement Agreement provided, as noted above, that Patton's discovery obligations were subject to the requirements that (a) Patton inform the LAPs of the depositions and document requests, and (b) the LAPs "be afforded an opportunity to assert any privilege or work product protection that may attach to any information sought to be discovered, subject to Chevron's right to seek a determination from this Court that any privilege or work product protection is inapplicable for any reason."
We assume arguendo that the LAP Representatives have an interest in preventing any breach of any privilege or work product protection to which they are entitled. But the Settlement Agreement recognized and protected that interest by (1) subjecting Patton's obligation to cooperate in discovery to "all applicable Rules of Professional Conduct" and, in addition, (2) obligating Patton to give the LAP Representatives (a) notice of any discovery requests made of it as well as (b) an opportunity to assert their positions and have them determined before Patton gave any discovery as to which the LAP Representatives asserted protection. Thus, the interest in protecting against disclosure of protected information, even if it qualified as "an interest relating to the property or transaction that is the subject of the action," which in our view it does not, would not give rise to a right to intervene here. Given the terms of the Settlement Agreement, the LAP Representatives are not "so situated [with respect to claims of privilege or work product protection] that disposing of the action may as a practical matter impair or impede [their] ability to protect [their ]interest," as Rule 24(a)(2) requires. In any case, any impairment, and we see none,
Finally, apart from what has been said thus far, the claim of a right to intervene fails for another reason. All that movants seek is reconsideration of the order approving the Rule 41 Stipulation. But that could accomplish nothing of any practical significance.
This action between Patton and Chevron was a private, bilateral litigation in which neither party acted on behalf of any absent persons.
In these circumstances, the relief the movants would seek in the event they intervened would not vindicate or protect any "interest" they assert. If the Court were to grant reconsideration and, on reconsideration, to withhold its approval of the Rule 41 Stipulation, it would be open to Patton and Chevron to dismiss the action anyway by a stipulation that did not require court approval—that is, to eliminate any provision for retention of jurisdiction to enforce the Settlement Agreement and otherwise to settle on exactly the same terms.
In short, intervention not only is unnecessary to protect any legitimate interest of any of the movants, it would not do so in any event.
Even if Rule 24(a) could be stretched to characterize movants as meeting its requirements, they nevertheless would have no right to intervene.
As a practical matter, this lawsuit between Patton and Chevron ended on May 7, 2014 with the entry of the May 7, 2014 order. An application to intervene presupposes the continued existence of a lawsuit over which the court has jurisdiction and, in consequence, that a motion to intervene in a terminated case must fail. As the Second Circuit has said:
To be sure, the May 7, 2014 order retained jurisdiction. But it did so only for the very limited purpose "of enforcing the Settlement Agreement and for purposes of deciding any claim of breach of the Settlement Agreement." No request to enforce or to decide any claim of breach of the Settlement Agreement ever has been made. Nothing is pending before this Court into which movants may intervene.
For all of the foregoing reasons, intervention is denied.
The denial of intervention is sufficient to dispose of this motion. But it is useful to address the merits briefly both because they are somewhat intertwined with the intervention issue and to foreclose any possibility of remand.
As unusual as this motion first may appear, it is not—to borrow a phrase—our first rodeo with these contestants. To mix the metaphor, this well might be called Rule 41 Redux. And it involves almost a 180-degree change of position by movants.
As noted, the NY Case involved fraud and other claims by Chevron against Donziger and the LAP Representatives, as well as a RICO claim against Donziger. At the outset of the NY Case, however, there were additional defendants, most notably for present purposes a Colorado consulting firm known as Stratus and a couple of its personnel. In due course, Chevron settled with Stratus. The settling parties sought court approval of the settlement and the dismissal stipulation which, unlike here, required court approval under Rule 41(a)(2) because the stipulation was not signed by all of the parties.
Here, movants have reversed position.
Movants were right the first time to the extent they argued that this Court's authority in approving a Rule 41 dismissal in a private settlement of private claims in ordinary civil litigation does not typically extend to passing on the terms on which the parties have agreed. There is one narrow exception, which was in play in the Stratus settlement in the NY Case. A court has discretion under Rule 41(a)(2) to protect any non-settling parties from legal prejudice that might flow from a settlement by other parties.
To be sure, a court asked to retain post-dismissal jurisdiction for the purpose of enforcing a settlement agreement is obliged to exercise its discretion in determining whether retention of jurisdiction is advisable.
For the foregoing reasons, the motion [DI 82] to intervene for the purposes of seeking reconsideration of this Court's order approving the parties' Stipulation and Order of Dismissal with Prejudice is denied in all respects. In the event there were a right to intervene, the Court would deny reconsideration of the order and, in the alternative, on reconsideration would adhere to the order as entered.
SO ORDERED.
In addition, Rule 24(c) requires that "[a] motion to intervene . . . be accompanied by a pleading that sets out the claim or defense for which intervention is sought." Fed. R. Civ. P. 24(c). Movants ignored that requirement. Nevertheless, as they have made their position quite clear in extensive briefing, the Court will take those papers as the substantial equivalent of the missing pleading.