MEMORANDUM OPINION

Lewis A. Kaplan, District Judge.

Table of Contents

Background...472

Facts Concerning the Pending Motions ... 476

Discussion ... 488

I. Civil Contempt — General Principles ... 488

II. Disobedience of Paragraph 1 of the RICO Judgment — the 2017 Retainer ... 489

III. Disobedience of the RICO Judgment — Monetizing and Profiting from the Ecuador Judgment and Failure to Transfer to Chevron Money Traceable to It ... 491

IV. Disobedience of the Restraining Notice ... 500

V. Disobedience of the March 5, 2019 Order — The Forensic Protocol ... 502

VI. Alleged Continuation of Pattern of Racketeering ... 503

VII. Relief ... 503

Conclusion ... 506

Steven Donziger, formerly a lawyer,1 has led a corrupt effort to extort billions of dollars from Chevron Corporation ("Chevron"). One element of that scheme was the fraudulent procurement of a multibillion judgment from a provincial court in Ecuador (the "Ecuador Judgment"). Chevron brought this action against Donziger and others to enjoin enforcement of the Ecuador Judgment, to prevent Donziger from profiting from his actions, and for other relief. After a lengthy trial on the merits, the Court ruled in Chevron's favor. In consequence, Donziger is subject to a constructive trust and a permanent injunction (the "RICO Judgment") as well as a money judgment for more than $800,000 (the "Money Judgment").

The RICO Judgment has been affirmed on appeal. In the words of the Court of Appeals, "[t]he record in the present case reveals a parade of corrupt actions by the LAPs' [i.e., the Ecuadorian plaintiffs'] legal team, including coercion, fraud, and bribery, culminating in the promise to [Ecuadorian] Judge Zambrano of $500,000 from a judgment in favor of the [Ecuadorian plaintiffs, the] LAPs."2 Donziger has exhausted all appellate avenues with respect to the RICO Judgment. And while the Money Judgment is on appeal, Donziger neither has paid it nor obtained a stay, So both judgments are fully enforceable. Accordingly, Chevron has undertaken supplementary proceedings to locate assets to satisfy the Money Judgment, to determine whether Donziger has complied with the RICO Judgment, and to obtain remedies for alleged non-compliance.

Donziger largely has stonewalled Chevron's efforts. He has disobeyed explicit provisions of the RICO Judgment and defied court process compelling him to provide discovery and to take other actions. He has ignored the fundamental "proposition that all orders and judgments of courts must be complied with promptly. If a person to whom a court directs an order believes that order is incorrect the remedy is to appeal, but, absent a stay, he must comply promptly with the order pending appeal."3

The matter is before the Court on four motions by Chevron to hold Donziger in civil contempt.4

Background

The RICO Judgment

The RICO Judgment imposed a constructive trust on and contains a permanent injunction against Donziger5 and the two of his former Ecuadorian clients who defended this case (the "LAP Representatives").6 Among other things, it (1) enjoins them from seeking to enforce the Ecuador Judgment in the United States, (2) requires Donziger to convey to Chevron all of his right, title and interest in, among other things, (a) shares of Amazonia Recovery Limited ("Amazonia"), a Gibraltar company formed to collect and distribute any proceeds of the Ecuador Judgment, and (b) any contingent fee interest which he has or may acquire with respect to the Chevron dispute, and (3) forbids Donziger and the LAP Representatives from doing any act to monetize or profit from the Ecuador Judgment, including by selling, assigning, pledging, transferring or encumbering any interest in it. The Money Judgment was entered following the Court of Appeals' decision and reflected taxable court costs.

Three of the pending contempt motions involve Donziger's alleged violation of provisions of the RICO Judgment and a default judgment later entered against the LAPs and other defendants (the "Default Judgment") that foreclose all of them from doing any act to monetize or profit from the Ecuador Judgment or seeking to do so. One of these three motions involves, in addition, Donziger's alleged contempt of a restraining notice by transferring assets that otherwise could have been used to satisfy the Money Judgment. That motion seeks also a civil contempt adjudication with respect to Donziger's failure to comply with the requirement that he transfer and assign to Chevron any contingent fee interest that he may have.

The fourth motion arises by reason of Donziger's virtually categorical refusal to comply with court orders to produce documents to Chevron in relation to enforcement of the Money Judgment and investigating Donziger's compliance with equitable provisions of the RICO Judgment.

Prior Proceedings Relevant to the Pending Motions

The RICO Judgment Against Donziger and the LAP Representatives

The RICO Judgment, in the words of the Court of Appeals in upholding the relief granted, "prohibit[s] Donziger and the LAP Representatives from profiting from the corrupt conduct that led to the entry of the Judgment against Chevron...."7 It contains three provisions pertinent here;

The RICO Judgment named Donziger and the LAP Representatives. It did not bind directly the 45 LAPs (i.e., those other than the two LAP Representatives) or the other defendants in this case who did not appear.

The First Pending Contempt Motion

Chevron made the first of the pending contempt motions on March 19, 2018.12 It there alleged, on the basis of evidence then in its possession, that Donziger was in contempt of paragraphs 3 and 5 of the RICO Judgment by (a) failing to comply with its paragraph 3 obligation to transfer his Amazonia shares to Chevron, and (b) seeking to sell an interest in the Ecuador Judgment to Elliott Management Corporation ("Elliott") and thus undertaking acts to monetize or profit from that judgment. It contended also that Donziger likely was in contempt of paragraph 5 by other actions. It therefore sought leave to conduct post-judgment discovery of Donziger and others as to all matters relevant to the enforcement of paragraphs 3 and 5 of the RICO Judgment in order to compile a full evidentiary record.13 It sought a civil contempt adjudication and appropriate relief on the basis of the evidence then in hand and anticipated the possibility of future applications as discovery revealed what had transpired.14 Its motion was supported in part by a declaration of Lee Grinberg, a portfolio manager at Elliott, who stated that he had met with Donziger on November 6, 2017, and that Donziger, on that occasion,

The Court in due course denied the portion of the contempt motion that was based on paragraph 3 of the RICO Judgment in view of the need for further proceedings.16 It likewise granted leave to conduct discovery with respect to compliance with paragraph 5, the non-monetization provision. But it ordered a hearing with respect to the contempt charge based on the Elliott events17 in order to obtain a fuller understanding of what had occurred with respect to Elliott. The facts concerning Elliott seemed likely to shed light not only on whether the Elliott approach had been contumacious but on what may have occurred with other possible targets of fund raising efforts.18

The Default Judgment

On April 23, 2018 — after the filing of the first contempt motion but before the filing of the second — the Court entered the Default Judgment against all of the remaining defendants in the case. Those enjoined included, among others, all of the plaintiffs in the Ecuadorian litigation (collectively, the "Defaulted Defendants") save the LAP Representatives, who already were subject to the RICO Judgment. Among other things, it enjoined the Defaulted Defendants "from undertaking any acts to monetize or profit from the [Ecuador] Judgment, ... including without limitation by selling, assigning, pledging, transferring, or encumbering any interest therein."19

The Default Judgment binds the Defaulted Defendants as well as "their officers, agents, servants, employees, and attorneys; and other persons who are in active concert and participation with any of the foregoing."20 Donziger is an attorney-in-fact for the Frente de Defensa de la Amazonia (the "ADF"21), a Defaulted Defendant and the exclusive beneficiary of the Ecuador Judgment,22 pursuant to a broad power of attorney and retainer agreement executed in November 2017 (the "2017 Retainer").23 He therefore is bound by the Default Judgment by virtue of his relationship to the ADF. He is bound by it also to whatever extent he is in active concert or participation with the ADF or any of the other Defaulted Defendants.24 And he was bound as well, until he was suspended from the practice of law, as an attorney at law for some Defaulted Defendants.

The Second Pending Contempt Motion

On October 1, 2018, Chevron again moved to hold Donziger in civil contempt.25 That motion rests on four principal contentions:

First. Donziger is in continuing violation of paragraph 1 of the RICO Judgment in that he never has complied with its command that he "transfer and forthwith assign to Chevron" (a) the 6.3 percent interest in the Ecuador Judgment or any settlement with Chevron granted to him by the ADF in the 2017 Retainer, as well as (b) money paid to him out of funds raised from investors and those to whom he sold or otherwise disposed of interests in the Ecuador Judgment.

Second. Donziger has violated paragraph 5 of the RICO Judgment by acting to monetize and profit from the Ecuador Judgment and paragraph 4 of the Default Judgment by actively participating with the ADF and other Defaulted Defendants in their monetization of that judgment. He is likely to continue to do so.

Third. Donziger has violated, and likely continues to violate, the restraining notice served by Chevron. The violation of a restraining notice constitutes contempt of court.

Fourth. Donziger is continuing to engage in the same pattern of racketeering activity that led to the RICO Judgment against him.

Chevron argues that civil contempt sanctions are necessary to ensure the cessation of his unlawful activities.

The Third Pending Contempt Motion

The third contempt motion asserts that Donziger has continued to violate paragraph 1 of the RICO Judgment by failing to assign his rights to a contingent fee to Chevron.26 It asserts also that Donziger violated paragraph 5 of the RICO Judgment by treating "the Ecuadorian judgment as his personal cash cow"27 and signing over to a "performance coach"28 a share of Donziger's own personal interest in the Ecuador Judgment in exchange for the coach's services.29

The Fourth Pending Contempt Motion

As is evident from prior rulings, Donziger has sought to frustrate Chevron's efforts to enforce its Money Judgment and to conduct discovery with respect to Donziger's compliance with the equitable provisions of the RICO Judgment at every turn.30 Ultimately, having been left with virtually no choice, the Court directed that Donziger's electronic devices, storage media, and email and other digital accounts be forensically imaged and examined in order to obtain responsive documents. The history is spelled out in the Court's Memorandum re Forensic Inspection Protocol,31 familiarity with which is assumed.

Donziger announced in advance that he would not comply with these provisions of the Protocol and has not done so. The final contempt motion concerns Donziger's intentional disobedience of the Forensic Protocol.

Facts Concerning the Pending Motions

Failure to Assign All Contingent Fee Rights to Chevron

As detailed in the RICO opinion, Donziger entered into a written retainer agreement concerning the Ecuador case in January 2011 (the "2011 Retainer").32 Among other things, it gave him a right to a contingent fee of 6.3 percent of any monies collected by or available to the LAPs in respect of the Ecuador case.33 It was signed on behalf of the LAPs by Pablo Fajardo, who then was Donziger's Ecuadorian counsel, as attorney-in-fact for the LAPs.34

In order to ensure that Donziger did not profit from his bribery, fraud and racketeering, paragraph 1 of the RICO Judgment imposed the constructive trust, previously described, on:

Moreover, it directed Donziger to "transfer and forthwith assign to Chevron all such property that he now has or hereafter may obtain."36

Donziger failed from 2014 until 2018 to comply with the direction that he "transfer and forthwith assign to Chevron" his contingent fee rights under the 2011 Retainer. In September 2018, following extensive motion practice37 and another explicit directive from this Court,38 he finally did so.39 But that was not the end of this problem.

As previously mentioned, Donziger personally (as distinct from his PLLC) in November 2017 entered into the 2017 Retainer with the ADF — not the LAPs. Thus, the 2017 Retainer differed from the 2011 Retainer both in respect of who was obligated to pay and who had a right to receive any contingent fee. That 2017 Retainer contractually obligated the ADF (as opposed to the LAPs) to pay Donziger (as opposed to his firm) a contingent fee of 6.3 percent of any funds that the ADF might obtain in respect of the Ecuador litigation.40 Yet Donziger did not assign his contingent fee interest under the 2017 Retainer as required by paragraph 1 of the RICO Judgment nor even disclose its existence in anything approaching a timely fashion.

Production of the 2017 Retainer was called for by several specifications of Chevron's post-judgment document subpoena.41 Donziger initially objected to each of those specifications on unsubstantiated and meritless boilerplate grounds and did not disclose the 2017 Retainer42 although its disclosure was called for. In due course, the Court ordered Donziger to produce some categories of responsive documents, categories that included the 2017 Retainer, by June 15, 2018.43 But Donziger failed to produce the 2017 Retainer (or any other documents) as required by the Court's order. The 2017 Retainer first was mentioned during a deposition of Donziger on or about June 25, 2018.44 Chevron brought its existence to the Court's attention in open court on June 28, 2018.45 Only shortly thereafter was the 2017 Retainer first produced. And even then, Donziger failed to assign and transfer his contingent fee rights under that agreement to Chevron as required by paragraph 1 of the RICO Judgment.

Monetization and Profiting From the Ecuador Judgment

The pending contempt motions were made at different times. The information concerning Donziger's activities that Chevron had obtained, principally from non-parties, was greater when the second motion was made. Some relevant events — for example, the entry of the Default Judgment and a hearing on certain events relevant to the first of the two motions — intervened between them.46 Nevertheless, to the extent that the pending motions allege that Donziger has acted to monetize and profit from the Ecuador Judgment in violation of this Court's decrees, it is convenient to set out the facts, to the extent they are of record, in a single section. The logical starting point is the RICO Judgment itself.

The RICO Judgment, as noted, enjoined Donziger and the LAP Representatives from undertaking any act to monetize or profit from the Ecuador Judgment or seeking to do so.47 As this Court made clear long ago, it did not constrain the LAPs (other than the two LAP Representatives) or the ADF from doing so,48 subject only to the Rule 65(d)(2) caveat noted above. Thus, the LAPs and perhaps even the ADF enjoyed broad latitude to seek third party financing in exchange for interests in any recovery. They and their supporters in Ecuador and elsewhere, could have approached established third-party funders, private investors, and others. But Donziger and the LAP Representatives were enjoined from engaging in such efforts. Nevertheless, following entry of the RICO Judgment, Donziger exchanged and sought to exchange portions of the contingent fee interest for services rendered to him and his wife. He resumed selling interests in the Ecuador Judgment and any proceeds thereof to "investors." Moreover, quite a significant amount of the money he thus raised after he was enjoined wound up in his pocket.

Given Donziger's resistance to discovery that would reveal information about his compliance or non-compliance with the provisions of the RICO Judgment here at issue, it is doubtful that the full extent of Donziger's efforts to monetize and profit from the Ecuador Judgment — or even the full extent of the funds thus raised — is before the Court. Nevertheless, the following is clear.

Sale of and Attempt to Sell Parts of Donziger's Contingent Fee Interest in Exchange for Services

In the fall of 2016, Donziger was introduced to one David Zelman,49 a self-styled "executive coach."50 Donziger began Zelman's "Transitions" program in late 2016 and completed it in 2017.51 The program cost $14,000.52 Donziger and Zelman agreed that Donziger would pay for the program by granting Zelman "an interest in the Ecuador judgment from [Donziger's] fees should they be collected."53 Specifically, they agreed to "14/250 of an eighth of a point" of the total recovered.54 As Donziger wrote, "I am pledging this amount out of my personal fees from this litigation."55 Additionally, Donziger paid Zelman either $2,000 or $3,000 in cash, the record is unclear as to which it was.56

In December 2016, Donziger asked Zelman if he could "fold another person ( []my wife) into the same deal."57 Zelman charged Donziger's wife, Laura Miller, $11,000 for the program and originally agreed to compensation in the form of another interest in the Ecuador Judgment.58 Zelman, however, did not receive this second interest and instead was compensated with $2,000 or $3,00059 in cash and services provided by Ms. Miller related to preparation for a TED Talk.60

Sale of and Attempts to Sell Interests to Investors

Following the entry of the RICO Judgment, Donziger engaged in persistent efforts to raise money by selling interests in the Ecuador Judgment which, in an effort to avoid contempt liability, he characterizes as assisting his clients to sell their interests in it.61 These included: (1) creating an investment opportunity memorandum with the help of Donziger's partner, Aaron Marr Page,62 that directed all inquiries regarding potential investments to Donziger's attention,63 (2) instructing Mary Katherine Sullivan to seek out investors by pitching them "a one-eigth [sic] of a point in a 12 b[illion] judgment," or a "50x multiple," on a $250,000 investment,64 (3) arranging an "Ecuador Investor Call" to discuss his "commitment to source funding from a significant capital partner or partners who will give our team the ability to put additional pressure on Chevron in and out of the courtroom," and "raising a round of $500k to $1m to bridge us to the larger capital raise,"65 and (4) communicating directly with investors66 to flog his "investment opportunity"67 — shares of any recovery in the Ecuador case in exchange for cash. As he explained to one potential investor in response to an inquiry as to exactly what he was selling, Donziger wrote that "[s]hares are a percentage of the total claim owed which is now a little over $11b," with "[e]xpenses [to] come off the top."68

These efforts included also an approach to Elliott Management that took place as a result of Mary Katherine Sullivan, who met Donziger and became involved in some of his efforts. In October 2017, Ms. Sullivan suggested to Donziger that he approach Elliott Management, a well known hedge fund, regarding a possible investment. Donziger responded enthusiastically, whereupon Sullivan approached someone with whom she previously dealt, Jonathan Bush, as a means of getting to Elliott. Donziger and Sullivan met with two Elliott portfolio managers.

Donziger offered to sell Elliott an interest in the Ecuador Judgment in exchange for an "investment" by Elliott of an unspecified amount of money, adding that he had raised about $33 million in that way,69 part of which he had used to pay himself.70 Donziger told Elliott that he had a 6.3 percent interest in the Ecuador Judgment himself,71 this notwithstanding that the RICO Judgment ordered — and still requires — him to transfer that interest to Chevron.72

We now know that Donziger's post-RICO Judgment efforts succeeded to the extent of raising a minimum $2,367,500 from at least seven people or entities.73 Of that total, $791,500 went directly to and remained with Canadian counsel seeking to enforce the Ecuador Judgment there,74 $1,525,940 went directly or indirectly to Donziger or Donziger-related bank accounts (i.e., the CWP account, discussed below), and $50,600 appears to be unaccounted for, all as shown on Table 1. And a few more words are appropriate regarding the manner in which these transactions were structured and the flow of funds before passing on to what happened to the money that went into Donziger's personal and business accounts.

                                                                                 TABLE 175

  Invest.     Investor                      Agreement     Equity              Agreement              Remained with       Deposited into Donziger or Donziger-Related Account
  No.                                       Date          Interest                                   Canadian
                                                                       Amount         After Fees     counsel           Amount         Date          Bank     Account Name

  I           Glenn Krevlin                  5/2/16       0.125%         $250,000       $250,000     $175,000             $74,990     5/10/2016     TD       Donziger & Assoc.

  I           Glenn Krevlin                 7/11/16       0.050%         $100,000       $100,000     $100,000                   _

  II          Cliff Eisler                  7/11/16       0.125%         $250,000       $250,000     $145,000            $104,990       7/19/16     TD       Donziger & Assoc.

  III         WDIS Finance LLC              8/24/16       0.165%         $300,000       $285,000     $141,500            $143,490       10/6/16     TD       Donziger & Assoc.

  IV          Wellbeck Partners             8/24/16       0.110%         $200,000       $200,000     $100,000             $99,990      10/21/16     TD       Donziger & Assoc.

  III         WDIS Finance LLC             11/10/16       0.055%         $100,000        $95,000      $30,000             $64,990      12/19/16     TD       Donziger & Assoc.

  V           Indigenous People Ltd.       11/24/16       0.1375%        $250,000       $237,500     $100,000            $137,490       2/21/17     TD       Donziger & Assoc.

  Total to or through Canadian Counsel                                 $1,450,000     $1,417,500     $791,500            $625,940

  VI          Fenwick (Geo. Waters)         1/22/16       0              $102,000       $100,000          N/A             $50,000       1/25/16     TD       Steven Donziger

  VI          Fenwick (Geo. Waters)          2/3/17       0.076%          $50,000        $50,000          N/A             $50,000       2/14/17     TD       Donziger & Assoc.

  VI          Fenwick (Geo. Waters)        12/17/17       0.025%          $50,000        $50,000          N/A             $50,000      12/11/17     TD       Donziger & Assoc.

  Total Fenwick                                                          $202,000       $200,000                         $150,000

  VII         CHC LLC (Tony Abiatti        12/20/17       0.25%          $500,000       $500,000          N/A              1/2/18      $250,000     BoA      CWP Assoc.
              and client)                                                                                                  1/5/18      $250,000

  I           Glenn Kervlin                  1/2/18       0.16675%       $250,000       $250,000          N/A             1/18/18      $250,000     BoA      CWP Assoc.

  Total CWP                                                              $750,000       $750,000                         $750,000

  GRAND TOTALS                                                         $2,402,000     $2,367,500     $791,500          $1,525,940

The Role of the Lenczner Firm in Toronto

The entry of the RICO Judgment in March 2014 appears to have impacted the structuring of the investment opportunities Donziger was selling. There is no evidence that the LAPs' Canadian counsel,76 the Lenczner firm in Toronto, had anything to do with handling or otherwise being involved with money raised from investors before the RICO Judgment was rendered.77 Following the entry of the RICO Judgment, that changed.

In early 2016, Donziger began using a form of investment agreement between and among each investor, the Lenczner firm, the ADF, and the Trust and Trust Board President (together with the ADF, the "Ecuador Parties").78 The form of agreement names Donziger as the "U.S. Representative" of the Ecuador Parties.79 It purports to grant the investor a percentage interest of "any and all funds actually collected by the Ecuador Parties" or related persons by settlement or otherwise in relation to the Ecuador Judgment.80 And it stipulates that the Lenczner firm would collect any judgment proceeds obtained anywhere in the world and distribute them per the agreement.81 From that point onward, all investor money that was raised until December 2017, to the extent reflected in this record, went into a Lenczner firm account in Canada, which disbursed a good deal of it to Donziger while retaining some, presumably in whole or in part for payment of its own fees.

Mary Katherine Sullivan and the CWP Account

In December 2017, shortly after the Elliott approach failed, Donziger decided "that Lenczner's firm had been sufficiently compensated and ... would ask for more money if Lenczner knew that there were new investors."82 Thus, in Donziger's view, it was time to keep the Lenczner firm in the dark about Donziger's funds. Accordingly, Donziger asked Ms. Sullivan to take over managing the investor money.83

Ms. Sullivan, at Donziger's direction, caused Streamline Family Office Inc., a corporation she owned and operated,84 to open a d/b/a account at Bank of America ("BoA") under the name "CWP Account."85 The purpose of the account was "to receive and disburse investor monies at [Donziger]'s direction."86

Ms. Sullivan used the CWP account just as it had been intended. In early 2018, investors solicited by Donziger put up $750,000 in exchange for interests in the Ecuador Judgment. Per Donziger's direction, they transferred those funds to the CWP account.87 In March 2018, however, Ms. Sullivan decided to terminate her arrangement with Donziger.

At that time, the CWP account balance was $356,421.88 Ms. Sullivan then paid a Donziger American Express bill of $11,796 and herself $2,580 for her out-of-pocket expenses out of the CWP account.89 After a demand by Aaron Marr Page, Donziger's partner,90 and a threat of litigation against Sullivan by Donziger and Page, she closed the CWP account by sending Page two cashier's checks, dated May 3, 2018, totaling $342,015.16, and payable per Page's instructions to "Aaron M Page fbo FDA."91

Commingling of Client, Personal, and PLLC Funds

There is another interesting phenomenon related to the manner in which Donziger received and maintained purportedly client-owned funds. It is his apparent failure or refusal to maintain the funds in a separate account or otherwise as the rules of professional conduct require.92

The evidence of record demonstrates that Donziger raised $50,000 from an investor in January 2016 that went directly into his personal account at TD Bank. The funds raised in the period February 2017 through December 17, 2017 ($100,000) went directly into a Donziger & Associates account. Almost half of the money raised during the intervening period from May 2016 through November 2016 ($625,940 of $1,417,500) went first from investors to the Lenczner firm and then from the Lenczner firm to a Donziger & Associates account. And a significant portion of the money raised during the period December 2017 through January 2018 ($342,045 of $750,000) went first to the CWP account in a bank located in Massachusetts, where Ms. Sullivan dealt with it pursuant to Donziger's instructions,93 and thence into Donziger's personal account or a Donziger & Associates account.

Profiting From the Ecuador Judgment

As Table 1 and the preceding discussion reflect, Chevron has proved that Donziger raised at least $2.3 million from January 2016 through the beginning of 2018, all of it by selling interests in the Ecuador Judgment. As the following discussion will make clear, Chevron has proved also that Donziger personally profited from this money that he raised, allegedly on behalf of his clients.

Approximately $1,242,985 in investor funds was deposited into Donziger's personal and business accounts from May 2016 to May 2018 as follows.

As shown by Table 1 above, $775,940 was deposited directly or indirectly into Donziger's accounts and $750,000 was deposited into the CWP account. Before closing the CWP account, Ms. Sullivan wired a total of $125,000 from the account to one of Donziger's accounts.94 Then, on May 3, 2018, she transferred approximately $342,045 to Aaron Marr Page fbo the ADF by cashier's checks and closed the account.95 Five days later, Forum Nobis, Page's law firm, wire transferred the same amount into a Donziger personal account.96 The total — approximately $1,242,985 — made up nearly all of the money deposited into the Donziger accounts from January 2016 to June 2018.97 Only $72,988.15 in deposits came from other sources.98

In broad strokes, here is what Donziger did with that money. From January 2016 to June 2018, he spent $1,343,028.57 — just north of the amount deposited into his accounts from investors or traceable to them.99 Of that money, $862,401.94, or 64.2 percent, came out of his personal accounts.100 The most significant payments from those personal accounts totaled approximately $531,475 and were made to cover personal expenses including Donziger's credit cards, his home mortgage, and payments made directly to his wife.101 Specifically, Donziger transferred from personal accounts: (1) $83,368.49 to payments on his home mortgage, (2) $163,831.73 to pay his American Express bills, (3) $72,276.12 to pay his TD Bank credit card bills, and (4) $212,000.00 directly to his wife.102 Donziger transferred an additional $135,000.00 from a business account or accounts to his wife.103 These five transfers total $666,476.34.

Donziger claims that any money spent from his accounts was client funds either used to pay appropriate disbursements for the benefit of clients or to pay him a monthly retainer or arrearages thereof.104 These claims are addressed in a subsequent section. For present purposes, however, it is sufficient to note that: (1) Donziger co-mingled investor funds with personal funds in his various accounts,105 (2) Donziger spent all or nearly all of the money that he received directly or indirectly from investors,106 (3) a majority of his disbursements came out of his personal rather than business accounts,107 and (4) the evidence suggests that a majority of those disbursements were payments for personal expenses.108

The Restraining Notice

On April 16, 2018 — seventeen days before Ms. Sulllivan sent the $342,015 to Page — Chevron served a restraining notice on Donziger, the Law Offices of Steven R. Donziger, and Donziger and Associates, PLLC, in an effort to collect the unpaid Money Judgment.109 The restraining notice forbids each of Donziger and his firms from making or suffering any "sale, assignment, transfer or interference with any property in which [he or it has] an interest"110 until the Money Judgment is paid.

As we have seen, it is undisputed that Donziger opened a new personal checking account at TD Bank (xxxx8132) on May 7, 2018.111 On the very next day, May 8, 2018, Forum Nobis — of which Aaron Marr Page is managing attorney — transferred the $342,045.16 that Page had received from Sullivan's CWP account just a few days before into Donziger's new personal account.112 Two days later, May 10, 2018, Donziger caused his PLLC to open a new business checking account (xxxx8174) at the same bank.113 The opening deposit was the $342,015.16, which came from Donziger's personal checking account (xxxx8132).114 He then transferred $50,000 out of the new business checking account back to Forum Nobis, $35,000 back into his own personal checking account (xxxx8132), and $125,000 into yet another Donziger business checking account (xxxx8783).115

Additionally, in June 2018, Donziger made a personal credit card payment or payments in the amount of $3,620.43 from an unspecified Donziger personal account or accounts at TD Bank.116 And on June 11, 2018, Donziger transferred $15,000 from a Donziger law firm business account to the personal account of Donziger's wife, Laura Miller.117

The restraining notice served in April 2018 is the subject of the second contempt motion filed October 1, 2018,118 which was fully briefed by November 7, 2018.119 Naturally, that motion focuses exclusively on transfers made prior to those dates. The Court accordingly will not consider subsequent transfers that have come to light as subjects of possible contempt adjudications on the present motions.120

As the record makes clear, Donziger has transferred over $440,000 to his wife, Laura Miller, over the past seven years. All of those transfers were by wire transfer from Donziger's accounts to those of his wife until June 11, 2018,121 shortly after the service of the restraining notice. Subsequently, however, Donziger has made at least six additional transfers to his wife totaling at least $66,086.75.122 And what is especially interesting about these additional transfers is that the money came to Donziger in checks from third parties payable to himself and that Donziger transferred those funds to his wife by endorsing each check to her order.123 Thus, although Donziger was the payee in each case, the funds presumably bypassed his bank accounts and were transferred directly to Laura Miller. As the restraining notice barred Donziger from transferring "any property in which [he had] an interest,"124 the fact that he endorsed the checks to his wife and thereby apparently sought to avoid discovery of those transfers by keeping them out of his bank accounts bears on the scope of the relief that should be granted if the early transfers were contumacious.

The March 5, 2019 Order — the Forensic Inspection Protocol

The Forensic Inspection Protocol (the "Protocol") required Donziger to (a) identify and provide certain additional information with regard to his electronic devices, media, and web-based accounts in writing on or before March 8, 2019, and (b) surrender his devices and give access to his accounts the Neutral Forensic Expert on March 18, 2019 for forensic imaging.125 The Protocol specifies a procedure for identifying responsive documents on the images and producing them to Chevron.

Donziger quite intentionally has not complied with the requirements set out in the preceding paragraph. Indeed, he explicitly has invited a contempt finding in this regard.

Discussion

I. Civil Contempt — General Principles

The purpose of civil contempt is not to punish but to compensate for injury caused by any violation of a court order or process, to coerce compliance, or both.126 In order to prevail on a civil contempt motion, the moving party must establish that (1) the court order with which the alleged contemnor failed to comply was clear and unambiguous, (2) the proof of noncompliance is clear and convincing, and (3) the alleged contemnor has not diligently attempted to comply in a reasonable manner.127 Contrary to Donziger's frequent assertions to the contrary,128 no proof of bad faith or wilfulness is required in order to establish civil contempt.129

A court order is clear and unambiguous when it "leaves no uncertainty in the minds of those to whom it is addressed."130 Those parties must be able to "ascertain from the four corners of the order precisely what acts are forbidden."131 That said, a court retains discretion as to whether to impose civil contempt sanctions.132

II. Disobedience of Paragraph 1 of the RICO Judgment — the 2017 Retainer

As set forth above, it is abundantly clear that Donziger violated, and continues to violate, paragraph 1 of the RICO Judgment by failing to transfer and assign his contractual right from the ADF to a contingent fee of 6.3 percent of any moneys obtained in respect of the Ecuador Judgment, whether by its enforcement or otherwise.

First, paragraph 1 of the RICO Judgment is clear and unambiguous. It provides in relevant part that a constructive trust was imposed:

As the RICO opinion said, Donziger's contractual rights to contingent fees are assignable and subject to the constructive trust imposed by the RICO Judgment.134 Indeed, the Court previously ordered Donziger to assign his rights under the 2011 Retainer, an order with which he grudgingly complied, albeit only years after compliance was required.

Second, it is undisputed that Donziger has not complied with his obligation to assign his rights under the 2017 Retainer.

Finally, Donziger has made no attempt to comply with paragraph 1 of the RICO Judgment in this respect. Rather than do so, he failed to disclose the 2017 Retainer, even when ordered to produce documents that unmistakably required its production. And he now continues in his refusal to comply.

Donziger's principal response to this aspect of Chevron's contempt motions is a single paragraph:

This is no defense at all:

In sum, Donziger's contingent fee interest is property. It is traceable to the Ecuador Judgment, which "is the indispensable predicate of his right to collect [any] contingent fee."138 And, perhaps most important of all, paragraph 1 of the RICO Judgment specifically required Donziger to transfer and assign to Chevron his continent fee interest under the 2011 Retainer, making unmistakable the fact that the RICO Judgment regarded it — and therefore any other instrument or arrangement giving Donziger a contingent fee interest — as traceable to the Ecuador Judgment.

Clear and convincing evidence establishes that Donziger is in civil contempt by disobeying its command that he transfer all of his right, title and interest to a contingent fee under the 2017 Retainer.

III. Disobedience of the RICO Judgment — Monetizing and Profiting from the Ecuador Judgment and Failure to Transfer to Chevron Money Traceable to It

Chevron moves to hold that Donziger is in civil contempt by (a) engaging in fund raising activities to monetize the Ecuador Judgment in violation of paragraph 5 of the RICO Judgment, (b) profiting from it, and (c) failing to transfer to Chevron, as required by paragraph 1, investor funds traceable to the Ecuador Judgment that came into Donziger's possession.139

A. Monetization

Paragraph 5 of the Judgment, quoted in full above, prohibits "undertaking any acts to monetize or profit from the [Ecuador] Judgment ... including without limitation by selling, assigning, pledging, transferring or encumbering any interest therein."140

Donziger admitted that he has arranged for sales of shares in the Ecuador Judgment to at least six investors since March 2014.141 He seeks to defend those actions by claiming that the Court's April 25, 2014 order, which largely denied a stay pending appeal from the RICO Judgment (the "Stay Opinion"), "permitted [Donziger] [to] sell interests in the Ecuadorian judgment, as long as he did not sell his `own' shares or the shares of the two named LAPs."142 In contrast, he repeatedly denied that he ever had sold any part of his own interest in that judgment.143

The evidence clearly and convincingly establishes that Donziger, contrary to his denials, in fact monetized his own interest in the Ecuador Judgment by pledging or selling part of his contingent fee interest to someone else in exchange for services. Moreover, the Stay Opinion could not and did not alter the terms of the RICO Judgment. In any case, the evidence clearly and convincingly establishes that Donziger violated the RICO Judgment by profiting from the Ecuador Judgment. He raised money in exchange for shares of his ostensible client's interest in it and then used a substantial share of the money thus raised for his personal benefit. It establishes also that Donziger disregarded his obligation to pay over to Chevron any funds traceable to the Ecuador Judgment in which he had an interest.

1. Direct and Attempted Sale of Donziger's Personal Contingent Fee Interest in Exchange for Services

Under the 2011 and 2017 Retainers, Donziger was entitled to 6.3 percent of any proceeds related to the Ecuador Judgment. He concedes that any act to monetize the Ecuador Judgment, including by attempting to transfer, sell, pledge or assign any part of that 6.3 percent interest, violated paragraph 5 of the RICO Judgment.144 Thus, even on Donziger's own view concerning the effect and meaning of the Stay Opinion, he is in contempt of paragraph 5 by virtue of his commitment to pay Zelman "14/250 of an eighth of a point of whatever is recovered on the total claim" out of Donziger's "personal fees from this litigation."145

2. Donziger's Sales and Attempted Sales to Investors of Interests in the Judgment

Donziger attempts to defend his sales of interests in the Ecuador Judgment to investors on two grounds. First, he argues that the Stay Opinion changed the terms of the RICO Judgment and limited the prohibitions in paragraphs 1 and 5 to acts related to money obtained as a result of a collection on the Ecuador Judgment. Second, he submits that sales of shares of the interests of his client, the ADF, were unobjectionable because the ADF was not subject to the RICO Judgment at the time of the sales.146

(a) The Stay Opinion Had, and Could Have Had, No Legal Effect on the Plain Text of the RICO Judgment

Donziger contends that he "moved for relief from the `monetize or profit from' portions of the original RICO judgment," that "the Court granted relief," and that the Stay Opinion "is effectively the applicable order of the Court."147 Those contentions, however, are incorrect.

As an initial matter, Donziger never made any such motion. He merely sought a stay pending appeal from this Court. Nor did the Court grant any relief from the "monetize or profit" portions of the judgment. It denied Donziger's motion in all material respects. There is not a single word in the Stay Opinion that even suggests that the Court intended to modify the RICO Judgment. And the Stay Opinion most assuredly is not "the applicable order of the Court," "effectively" or otherwise. Indeed, this Court lacked the power to modify or alter the terms of the RICO Judgment at the time the Stay Opinion was entered because Donziger and the LAP Representatives had appealed the RICO Judgment to the Court of Appeals on March 18, 2014, over a month before the Stay Opinion was issued. Moreover, it was the RICO Judgment that was affirmed by the Court of Appeals and that is embodied in its mandate, not the Court's rationale for denying a stay pending appeal.148

As the Supreme Court has held — in language quoted by this Court in a closely related case to which Donziger was a party and of which he therefore was quite aware — "the filing of a notice of appeal is an event of jurisdictional significance — it confers jurisdiction on the court of appeals and divests the district court of its control over those aspects of the case involved in the appeal."149 In consequence, this Court could not have modified, altered or otherwise changed the RICO Judgment during the pendency of the appeal even if it had wished to do so. Donziger's suggestion to the contrary simply is not correct.

(b) The Stay Opinion Was Not Intended to Modify, Nor Reasonably Could Have Been Understood as Modifying, the RICO Judgment

(1) The Crafting of the RICO Judgment Provisions

The genesis of paragraphs 1 and 5 of the RICO Judgment is an appropriate starting point.

In its post-trial brief, Chevron specifically sought an injunction bailing Donziger and the LAP Representatives from "[u]ndertaking any acts to monetize or profit from the [Ecuador J]udgment,"150 the concept ultimately embodied in paragraph 5 of the RICO Judgment. It sought also the imposition "of a constructive trust for the benefit of Chevron, [on] any interest, direct or indirect, in ... any proceeds from the 2011 [Ecuador] Judgment or any subsequent Judgment or Enforcement Judgment,"151 a proposal that in substance is embodied in paragraph 1 of the RICO Judgment.

Donziger resisted these provisions in his own post-trial brief. He complained that they would foreclose any acts to monetize or profit from the Ecuador Judgment and require those to whom the RICO Judgment applies — including Donziger — to pay any proceeds from the Ecuador Judgment over to Chevron.152

As the RICO Judgment reflects, this Court rejected Donziger's arguments. It adopted the core of these two Chevron proposals. Thus, when this Court entered the RICO Judgment, Donziger understood that the RICO Judgment barred him from any conduct to monetize or profit from the Ecuador Judgment and required him to turn over to Chevron any money or other property traceable to the Ecuador Judgment.

(2) The Stay Motions

Following entry of the RICO Judgment, and contrary to Donziger's present claims, neither Donziger nor the LAP Representatives sought any modification or clarification. Instead, they separately moved for stays pending appeal. The focus of those motions was whether the appellants were threatened with imminent and irreparable injury absent a stay and whether they had demonstrated a likelihood of success on appeal. The Court concluded that neither was the case and denied the motions in all relevant respects.153

In his attempt to establish irreparable injury, Donziger claimed in his motion, among other things not relevant here, that the prohibition on his selling, assigning, pledging, transferring or encumbering any interest in the Ecuador Judgment and the requirement that he transfer his interest in that judgment to Chevron would prevent Donziger from continuing to work on the Ecuador matter, destroy his law practice, and leave him no means of earning a living unless the RICO Judgment were stayed pending appeal.154 This Court rejected that argument because nothing in the judgment prevented Donziger from working on the Lago Agrio case.155 Nor, in the Court's view, was his compensation likely to be so affected before his appeal was decided as to constitute irreparable injury.156

Donziger's compensation was governed by the 2011 Retainer, which provided for a monthly retainer and a contingent fee of 6.3 percent of any recovery.157 Donziger's right to a contingent fee, the Court wrote, is subject to the constructive trust imposed by paragraph 1 of the Judgment. But the monthly retainer payments, the Court said, would not be subject to it unless they somehow were "traceable to the Lago Agrio [Ecuador] Judgment."158 As one example of how retainer payments could fall within the Judgment's prohibitions, the Court noted that "as long as no collections are made in respect of the Lago Agrio Judgment and funneled to Donziger as retainer payments, the [RICO] Judgment would not prevent Donziger from being paid [a monthly retainer], just as he has been paid ... over the past nine or ten years."159

Donziger now claims that the use of the word "collections" in the quoted sentence in substance defined the word "traceable" in such a way as to limit paragraphs 1 and 5 of the RICO Judgment to money or other property obtained "as a result of enforcement and then executing" on the Ecuador Judgment as opposed to the sale or monetization of all or part of it.160 But that argument flies in the face of the plain meaning of the term "traceable." And it misrepresents and conflicts with other statements in the Stay Opinion. Indeed, it is inconsistent with other statements by Donziger.

1. The word "traceable" has an established meaning. As this Court has written:

That is the plain meaning of the English word "traceable."162

2. Donziger ignores also the text of paragraph 1 of the RICO Judgment, which is inconsistent with the argument he now makes.

The precisely relevant portion of paragraph 1 of the RICO Judgment reads "The Court hereby imposes a constructive trust for the benefit of Chevron on all property, whether personal or real, tangible or intangible, vested or contingent, that Donziger has received, or hereafter may receive, directly or indirectly, ... that is traceable to the Judgment or the enforcement of the Judgment anywhere in the world."163 Donziger's argument — that the constructive trust reaches only money obtained by enforcement of and execution on the Ecuador Judgment — would render the words "to the Judgment or" entirely superfluous. Paragraph 1 specifically and explicitly reaches not only money or property traceable to enforcement of the Ecuador Judgment, but money or property traceable to the Judgment itself quite apart from whether the Judgment ever is enforced or executed upon.

3. Finally, Donziger himself has recognized that the realization of money or other value that is traceable to the Ecuador Judgment need not be obtained by "collection" in Donziger's cramped meaning of that term — enforcement and execution — in order to come within the constructive trust and non-monetization provisions. He conceded in open court that a settlement payment — which would not be a result of "enforcement" or "execution" of the Ecuador Judgment — nevertheless would be traceable to that judgment and therefore a collection within the meaning of the Stay Opinion.164

Thus, Donziger's contention that paragraphs 1 and 5 of the RICO Judgment apply only to collections in the sense of realization of value "as a result of enforcement and then executing"165 on the Ecuador Judgment is simply wrong. Donziger instead has interpolated the phrase "as a result of enforcement and then executing" where it is not to be found and ignores portions of the RICO Judgment and the Stay Opinion that are inconsistent with his contention.

Donziger makes an additional argument based on part of the Court's response in the Stay Opinion to an argument made only by the LAP Representatives and not by Donziger. The LAP Representatives contended that paragraph 5 of the Judgment, unless stayed, would have prevented them from financing their appeal.166 Donziger then focuses on language in the Stay Opinion that said that "all other interest-holders in the Ecuador Judgment are `virtually unconstrained by the NY Judgment in their ability to attempt to fund their litigation efforts against Chevron by continuing to sell shares in anything that may be recovered for whatever investors are willing to pay.'"167 From this he would draw the conclusion that the non-appearing LAPs were free to sell interests in the judgment and that he was free to do it for them.

The Stay Opinion actually said that "[n]othing in the NY. Judgment prevents the LAPs (other than the two Representatives who are named in the N.Y. Judgment) and their allies from continuing to raise money" by selling interests in any eventual recovery.168 In other words, the LAP Representatives — as distinguished from the defaulting LAPs — were prevented by the RICO Judgment from selling interests in any eventual recovery. They were prevented from doing so at least because that would have constituted monetization of the Ecuador Judgment in violation of paragraph 5 of the RICO Judgment. Moreover, as Donziger also is subject to paragraph 5, he too is prevented from selling any interest in the Ecuador Judgment. His name did not appear in the quoted passage of the Stay Opinion only because that passage was addressed to an argument made only by the LAP Representatives.

Finally, Donziger's contention that the Stay Opinion modified the RICO Judgment so as to enjoin him only from selling his interest in the Ecuador Judgment would be misguided even if the Stay Opinion could have done so despite the Court's lack of juris diction over the injunction at the time that opinion was issued.

Donziger's argument seizes on the following language:

He argues that this statement meant that he was free to sell interests in the Ecuador Judgment as long as the interests sold were not personally owned by him. But there are two straightforward answers to that argument.

First, the language of paragraph 5, which controls here, enjoins Donziger from "undertaking any acts to monetize or profit from the [Ecuador] Judgment ... including without limitation by selling, assigning, pledging, transferring or encumbering any interest therein."170 It thus applies to "any" interest, not merely interests owned by Donziger. Moreover, nothing in the passage upon which Donziger relies said that the only point of paragraph 5 was to foreclose sales by Donziger of personal interests in the Ecuador Judgment.

Second, Donziger conspicuously ignores the very next paragraph of the Stay Opinion, which in relevant part states that "[t]he N.Y. Judgment, including paragraph 5, in fact would deprive Donziger of the ability to profit from the Lago Agrio Judgment that he obtained by fraud."171 Permitting Donziger to sell interests in the Ecuador Judgment to investors, even if those interests belonged to the ADF or the Trust, in order to generate money to pay himself certainly would not deprive him of that ability. And the object of paragraph 5 and other provisions of the RICO Judgment was to do just that.

Accordingly, the Court rejects Donziger's proposed arguments based on the Stay Opinion. The RICO Judgment stands unmodified. It bars any and all acts to monetize or profit from the Ecuador Judgment, including without limitation sale, assignment, pledge, transfer or encumbrance of any interest therein. Donziger, in the Court's view, violated paragraph 5 via his sales and efforts to sell interests in the Ecuador Judgment irrespective of whether the interests sold were in Donziger's contingent fee interest or the Ecuador Parties' interests in the Ecuador Judgment itself.172 In the last analysis, however, it is unnecessary to decide these motions on that basis. The fact of the matter is that Donziger, in consequence of his sales, has profited extensively from the Ecuador Judgment in violation of the RICO Judgment. He has done so to Chevron's detriment. And the Court elects to rest its decision on that ground.

B. Donziger Personally Profited from and Failed to Pay Chevron Money Traceable to the Ecuador Judgment in Violation of Paragraphs 1 and 5 of the RICO Judgment

Chevron has proved that Donziger raised over $2.4 million from investors in exchange for interests in the Ecuador Judgment totaling at least 1.28525 percent from at least May 2016 through 2018.173 Indeed, Donziger states that he is "proud of that fact."174

At least $1,242,985 of invested money was deposited, either directly or indirectly, into personal checking accounts owned by Donziger or business checking accounts nominally owned by his PLLC. All of it was traceable to the Ecuador Judgment as it reflected investments made in exchange for interests in that judgment. The total then would be subject to the constructive trust if it were "received" by Donziger or if he had "any right" to or "interest" in it. Assuming for purposes of this analysis that the funds Donziger raised and received initially belonged to the ADF, the only remaining issue is the extent to which Donziger or his PLLC had any right to or interest in them.

Donziger's own descriptions of his rights and responsibilities with respect to client and investor funds provides an ample basis for findings. In his own words:175

Accordingly, it may be that Donziger had a right to or an interest in the entire $1,242,985. Assuming the truth of his assertions, he had substantially unfettered control over the funds in his hands, including the discretion to pay himself with that money whenever he wished to do so. That control and discretion, in the extraordinary circumstances of this case,177 arguably means that Donziger and his PLLC was entitled to, or at least had "an interest" in, every penny. And such a finding finds support in New York law, which states:

But it is unnecessary to decide the issue in order to resolve these motions.

Donziger has stated multiple times that he paid himself from investment funds.179 The evidence shows the same. For example, Sullivan stated that she paid Donziger $125,000 from January to March 2018 from "investor money [that] had been deposited" into the CWP account.180 She did so at Donziger's direction without back-up documents for three invoices that he submitted.181 Additionally, Donziger "paid himself" from investor funds held in his accounts by using that money to pay bills and cover personal expenses. The evidence shows that from January 1, 2016 to June 30, 2018, $1,315,973.31 was deposited into Donziger's accounts from external sources.182 Approximately $1,242,985.00 of that amount came from investors.183 Over the same time period, Donziger made $72,276.12 in payments from his personal accounts to cover his TD Bank credit card bills, $163,831.73 in payments from his personal accounts to cover his American Express credit card bills, and $83,368.49 from his personal accounts to make payments on his home mortgage.184 He transferred $347,000 from his personal and business accounts to his wife, Laura Miller.185 Donziger therefore received in his personal capacity — either through direct payments of invoices or through payments to cover personal expenses — at least $666,476.34 of investor funds traceable to the Ecuador Judgment in violation of paragraphs 1 and 5 of the RICO Judgment.

As mentioned previously, Donziger makes two arguments in support of the propriety of these payments and disbursements. He argues that the money consisted of his monthly retainer, or payments on previously unpaid monthly fees that had gone into arrears, and client funds that were used to pay appropriate disbursements for the benefit of clients.186 To be sure, it may well be that part of the $236,107.85 that Donziger paid on his credit cards reflected payments for expenses Donziger incurred on behalf of the ADF that were not personal in nature. But he has offered no credible evidence to rebut the most probable and logical inference — that the credit card bills paid with funds from personal bank accounts were for Donziger's personal benefit.

The argument that the funds were payments of monthly retainers or retainer arrearages does not improve Donziger's position. If anything, it is a concession that Donziger had a right to or interest in the money. It is obvious also that the money was traceable to the Ecuador Judgment, as Donziger raised it himself by selling interests in that judgment to investors. He then controlled the flow of those funds, for example, by directing them either through Lenczner or the CWP account, or receiving them directly into his own business or personal accounts.

Accordingly, the Court finds by clear and convincing evidence that Donziger used at least $666,476.34 of investment funds for personal expenses, that those funds were traceable to the Ecuador Judgment, and that he had a personal right to or an interest in those funds. Donziger and his PLLC therefore are in contempt of paragraphs 1 and 5 of the RICO Judgment by profiting from and failing to assign to Chevron funds traceable to the Ecuador Judgment.

IV. Disobedience of the Restraining Notice

A. Legal Principles

CPLR Section 5222, which applies to Chevron's efforts to collect the Money Judgment by virtue of Federal Rule 69(a), allows a judgment creditor to serve a judgment debtor with a restraining notice that prohibits the judgment debtor from transferring or assigning any property in which the debtor has an interest. Violation of a restraining order is "punishable by contempt"187 including by a federal court where, as here, the restraining notice was served to enforce a federal judgment.188

B. Analysis

Donziger has not denied either the service of the restraining notice on April 16, 2018 or any of the transactions described above. It is undisputed also that Donziger and his PLLC, both of which were subject to the restraining notice, made at least the following transfers after that notice became effective:

                                             TABLE 2189

  From Donziger Personal Account (TDxxxx8132)

  Date               Amount          Transferee

  May 10, 2018       $342,045.16     Donziger PLLC business account (TDxxxx8174)

  From Unspecified Donziger Personal Account at TD Bank

  June ___, 2018       $3,620.43     American Express (Donziger account payment)

  From Donziger PLLC Business Account (TDxxxx8174)

  May 10, 2018        $50,000.00     Forum Nobis

  May 10, 2018        $35,000.00     Steven Donziger personal account (TDxxxx8132)

  May 10, 2018       $125,000.00     Donziger PLLC business account (TDxxxx8783)

  From Unspecified Donziger PLLC Business Account at TD Bank

  June 11, 2018       $15,000.00     Laura Miller Donziger

The restraining notice barred each of these transfers as long as the transferor — Donziger and, in some instances, his PLLC — had "an interest" in the money transferred.190 Neither Chevron nor Donziger has addressed that question. Nevertheless, the record permits that determination with respect to at least some of these transfers to an extent sufficient to determine the motions.

As discussed above, Donziger claims that he had the authority, in his discretion, to use investor funds that came into his hands to pay his client's alleged debts to him. This view is reinforced by the 2017 Retainer, which contains a virtually boundless power of attorney that provides that "Mr. DONZIGER has the broadest powers and attributions awarded by the law to representatives."191 For the same reasons the Court would be permitted to find that Donziger had an interest in the entire amount of investment funds deposited into his personal and business accounts, the Court would be permitted to find that Donziger had an interest in all of the funds described in Table 2. The Court, however, is not obliged to do so and considers the following relevant to the analysis.

On May 8, 2018, Page transferred $342,045.16 into Donziger's personal checking account. That money at least nominally belonged to the ADF, as it was raised by investment agreements nominally executed by the ADF and signed by investors. While the fact that the money was wired into Donziger's personal bank account gave rise to a presumption that the money belonged to Donziger,192 the presumption is rebutable. In view of the apparent source of the funds, the Court assumes that the money was ADF property when it was deposited into that account.

Donziger then transferred the money to one of his law firm accounts. At the moment of that transfer, the funds presumably remained property of the ADF despite the funds' presence in the law firm account.193 But shortly thereafter, Donziger transferred $35,000 back to his personal account, $15,000 to his wife, and $3,620.43 from a personal account or accounts to American Express to cover his credit card bill. One of two things necessarily is true as to each of these transfers. The first option is that Donziger exercised his discretion to use his alleged ADF-granted authority to make the payment. The second is that he decided to take those ostensibly client funds for himself or his own benefit. In either case, Donziger had a right to or at least an interest in the funds no later than the moment at which he made the decision to make each of these three transfers. Accordingly, each of those three transfers violated the restraining notice.

The Court finds that the restraining notice was clear and unambiguous. The proof that Donziger and his law firm both failed to comply with the restraining notice by transferring property in which he had an interest is clear and convincing. It further finds that he has not diligently sought to comply with the restraining notice, not least because Donziger commingled client funds with his personal and law firm assets and failed to keep client funds in properly designated accounts. Accordingly, the Court finds, by clear and convincing evidence, that both Donziger and his law firm are in contempt of the restraining notice.

V. Disobedience of the March 5, 2019 Order — The Forensic Protocol

Paragraph 4 of the Protocol provides in relevant part:

Compliance was required on or before March 8, 2019, as the Protocol was entered on March 5.

Paragraph 5 provides in relevant part:

These provisions of the Protocol are as clear as a bell. Donziger's non-compliance is not only clear and convincing — it is admitted. And he has made no effort whatever to comply, as is evident from his anticipatory refusal to do so.196

VI. Alleged Continuation of Pattern of Racketeering

Chevron's October 1, 2018 contempt motion complains that Donziger's pattern of racketeering activity that was identified in the Court's RICO opinion continues unabated. It asks for the imposition of severe sanctions.197

It is unclear whether Chevron seeks a contempt adjudication based on post-judgment tortious behavior or, instead, offers this argument in support of a position that severe sanctions should be imposed for any violations of the RICO Judgment or other court orders or process that may be found. To whatever extent it suggests the former, the suggestion is without merit.

Rule 65(d)(1) requires that injunctions state their terms specifically and describe in reasonable detail the act or acts restrained or required. In other words, any continuation of the pattern of racketeering activity is remediable by civil contempt only to the extent, if any, that all or parts of it are prohibited by explicit terms of the RICO Judgment or other court process. The RICO Judgment here does not include the sort of general "go and sin no more" language often found in some consent decrees. Thus, to whatever extent Chevron's argument is that Donziger is in contempt simply because he has continued the sorts of activities that resulted in the entry of the RICO Judgment, the argument is without merit.

VII. Relief

The law governing relief is clear:

A. Coercive Sanctions for Disobedience of Orders Requiring Performance of Actions Not Yet Performed

Donziger's failure to perform required acts that have not been performed warrant sanctions for the purpose of coercing compliance. Accordingly, the Court will afford a brief period before the commencement of coercive monetary sanctions during which Donziger may comply fully with the relevant orders. It imposes escalating fines for each day of continued non-compliance after the expiration of that brief period while reserving the possibility of increasing those fines and/or resorting to other remedies in the event Donziger does not swiftly comply. As with all such remedies, Donziger will have the option of purging himself of these contempts.

B. Compensatory Sanctions for Injurious Disobedience

Chevron is entitled to recover any damages it sustained by reason of Donziger's contempts, including both those discussed in the preceding paragraph and the violations of the injunctive portions of the RICO Judgment and the restraining notice. The question is whether the evidence supports any such award.

Chevron has established no economic damages that yet have flowed from Donziger's failure to assign to Chevron his contingent fee interest under the 2017 Retainer, his failure to comply with the Forensic Protocol, and his sale and attempted sale of portions of his contingent fee claim with respect to and interests in the Ecuador Judgment.

That leaves two other matters — the disobedience to the restraining notice and the violation of so much of paragraphs 1 and 5 of the RICO Judgment as prohibited Donziger from profiting from the Ecuador Judgment and imposed a constructive trust on and required Donziger to pay over to Chevron all property received by him that was traceable to the Ecuador Judgment.

As discussed above, Donziger made at least three transfers after the service of the restraining notice totaling at least $53,620.43 in which he had an interest.201 Each of those transfers constituted a separate contempt. The question is whether and to what extent they caused economic loss to Chevron.

In considering this issue, it is relevant that the restraining notice is only a device for enforcing Chevron's Money Judgment of more than $800,000. Chevron thus already has a judgment larger than the sum of these three transfers. The award of another judgment for the transfers per se would result in a duplicative recovery. Accordingly, a compensatory damages award is not warranted in these circumstances.

Donziger's failure to respect the prohibitions of paragraph 5 and the requirement in paragraph I that he "transfer and forthwith assign to Chevron all ... property" that is "traceable to the Ecuador Judgment" is another matter. As the findings above make clear, Donziger raised at least $2.4 million from investors in exchange for interests in the Ecuador Judgment. All of that money was traceable to the Judgment. Donziger had a personal right to or at least a personal interest in — and profited from — at least $666,476.34 of those funds. He was obliged to turn over at least that amount to Chevron. Accordingly, the Court will enter a supplemental judgment in favor of Chevron and against Donziger for that sum. This is perfectly consistent with the overall purposes of paragraphs 1 and 5 of the RICO Judgment, which in part were designed to prevent Donziger from benefitting from the outrageous fraud he perpetrated.202

C. Sanctions to Promote Future Compliance

The foregoing demonstrates that Donziger has not complied with paragraphs 1 and 5 of the RICO Judgment in that he has sold and attempted to sell parts of his interest in a contingent fee, profited from the sale of interests in the Ecuador Judgment to investors, failed to comply with the constructive trust and the requirement that he turn over to Chevron all property traceable to the Ecuador Judgment that he has a right to or interest in, and the restraining notice. He has behaved as if the RICO Judgment and the restraining notice do not exist. He has disregarded his obligations under the Protocol. The likelihood that he will continue to do so is high. Accordingly, Chevron urges the Court to grant additional relief in order to coerce future compliance.203 Specifically, it would have the Court impose periodic disclosure and reporting requirements on Donziger.

"There can be no question that courts have inherent power to enforce compliance with their lawful orders through civil contempt."204 They have "`broad discretion to design a remedy that will bring about compliance.'"205 Nevertheless, the relief Chevron has proposed is unnecessary. Chevron already has the right to conduct very broad discovery of Donziger and others in order to collect the Money Judgment and ensure compliance with the RICO Judgment.206

D. Attorneys' Fees

Attorneys' fees may be awarded with respect to civil contempt regardless of whether the other relief granted is coercive, compensatory or both. As the Second Circuit has stated: "The district court in either case may award appropriate attorney fees and costs to a victim of contempt."207 Moreover, a finding of wilfulness is not an indispensable prerequisite to such an award although it is a relevant consideration.208 In all the circumstances, the Court finds, by clear and convincing evidence, that Donziger's contempts as specifically enumerated below were wilful. Accordingly, Chevron is entitled to recover its reasonable attorneys fees, disbursements, and expert witness fees with respect to the discovery and litigation of those civil contempts that the Court has found to have been wilful, but not with respect to other issues that may have been litigated on these motions. Any application for attorneys' fees shall be filed no later than June 18, 2019.

Conclusion

Chevron's motions to hold Donziger and Donziger & Associates, PLLC, in civil contempt of court [DI 1968, DI 2089 and DI 2112, DI 2175, and DI 2178] all are granted to the extent hereafter set forth.

1. With respect to Chevron's October 1, 2018 motion [DI 2089, DI 2112]:

a. Donziger is in wilful civil contempt of paragraph 1 of the RICO Judgment by virtue of his failure to assign and transfer to Chevron all rights to any contingent fee that he now has or hereafter may obtain including without limitation all such rights under the 2017 Retainer.

b. Unless Donziger previously shall have executed, acknowledged, and delivered to Chevron's counsel the form of assignment attached as Exhibit 88 to DI 2091 without any additions, alterations, attachments or addenda (other than to reflect accurately the year in which the document was signed), he shall pay a coercive civil fine to the Clerk of Court with respect to May 28, 2019 and each subsequent day from that date until the date on which he fully purges himself of this contempt by doing so. The amount of the coercive fine shall begin at $2,000 for May 28, 2019 and shall double for each subsequent day during which Donziger fails fully to purge himself of this contempt.

c. Donziger is in wilful contempt of paragraph 1 of the RICO Judgment by virtue of his profiting in the amount of $666,476.34 from the sale of interests in the Ecuador Judgment and his failure to assign and transfer to Chevron that profit, which constitutes property that Donziger has received, or to which he had a right, title or interest, that is traceable to the Ecuador Judgment. The Clerk shall enter a second supplemental judgment awarding that sum to Chevron and against Steven Donziger and Donziger & Associates, PLLC, jointly and severally.

2. With respect to the first of Chevron's two motions filed March 20, 2019 [DI 2175]:

a. Donziger is in wilful civil contempt of paragraph 4 of the March 5, 2019 order [DI 2172].

b. Unless Donziger previously shall have complied fully with each duty imposed upon him by paragraph 4 of the March 5, 2019 order, he shall pay a coercive civil fine to the Clerk of Court with respect to May 28, 2019 and each subsequent day from that date until the date on which he fully purges himself of this contempt by doing so. The amount of the coercive fine shall begin at $2,000 for May 28, 2019 and shall double for each subsequent day during which Donziger fails fully to purge himself of this contempt.

3. With respect to the Chevron's second motion filed March 20, 2019 [DI 2178]:

a. Donziger is in wilful civil contempt of paragraph 5 of the RICO Judgment by virtue of his selling, assigning, pledging, transferring or encumbering part of his putative contingent fee interest to David Zelman in exchange for approximately $11,000 worth of personal services.

4. With respect to each of the wilful civil contempts adjudicated herein (paragraphs 1(a), 1(c), 2(a), and 3(a)), plaintiff shall recover of Donziger and Donziger & Associates, PLLC their reasonable attorneys' fees in prosecuting these applications.209

5. The parties each shall file, on or before May 29, 2019 at 1:00 pm, an affidavit or declaration stating whether each of Donziger and Donziger & Associates, PLLC has fully purged him- or itself of each of the civil contempts enumerated in paragraphs 1(a), 1(c), and 2, and if not, each respect in which he or it has not done so.

6. Nothing herein forecloses the possibility of the Court granting additional coercive relief, including increased fines and other measures, in the event the civil contempts herein are not hilly purged.

The foregoing constitute the Court's findings of fact and conclusions of law.

SO ORDERED.