Supreme Court refuses appeal by lawyer jailed for contempt in $9.5 billion Chevron environmental case

The Supreme Court refused Monday to consider the appeal of a disbarred lawyer jailed for contempt of court after he won a $9.5 billion judgment against Chevron in an environmental lawsuit in Ecuador.

The attorney, Steven Donziger, was sentenced to six months in jail for failing to comply with a judge's order to surrender all of his electronic devices.

He had asked the Supreme Court to take the case, arguing that a federal district court judge overstepped his legal authority in appointing three lawyers as special prosecutors to handle Donziger's contempt trial after the U.S. Attorney in Manhattan declined to prosecute him.

Two conservative justices, Neil Gorsuch and Brett Kavanaugh, dissented from the decision, saying they would have the Supreme Court accept the appeal by Donziger.

Gorsuch, in his blunt written dissent, suggested that the appointment of special prosecutors by the judge violated the Constitution's separation of powers of branches of government, which gives the executive branch the power to file criminal cases, and the judiciary the power to interpret the laws.

"In this country, judges have no more power to initiate a prosecution of those who come before them than prosecutors have to sit in judgment of those they charge," Gorsuch wrote.

"Our Constitution does not tolerate what happened here," he added.

The other justices who voted to deny Donziger a hearing of his appeal did not explain their decision in writing, as is customary.

Ron Kuby, a lawyer for Donziger, told CNBC, "I was pleased to see that at least two justices of the United States Supreme Court found the Donziger prosecution was a constitutional abomination and should not be repeated."

Theodore Boutrous, a lawyer for Chevron, in a statement, said that Donziger's petition to the Supreme Court "had no bearing on Chevron's federal racketeering judgment against him, in which a unanimous [federal appeals court] panel found that Donziger engaged in a 'parade of corrupt actions … including coercion, fraud, and bribery.' "

Donziger's contempt case stems from a lawsuit alleging decades of pollution of the South American Amazon region's rain forests and rivers by Texaco, a corporate predecessor to Chevron.

A group of Ecuadorians represented by Donziger filed a class-action suit against Chevron in Manhattan federal court in 1993.

"At the company's insistence, the court transferred the litigation to Ecuador," Gorsuch wrote in his five-page dissent.

"Later, Chevron came to regret that move," Gorsuch noted.

The plaintiffs in the lawsuit were awarded $9.5 billion from Chevron by a judge in Ecuador.

Chevron then filed a legal action in Manhattan federal court and won an injunction against the enforcement of the judgment in any U.S. court.

The company also obtained a so-called constructive trust on all assets Donziger had received as a result of the judgment in Ecuador.

Manhattan federal Judge Lewis Kaplan in a nearly 500-page ruling in 2014 wrote that Donziger and Ecuadorian lawyers "corrupted" the lawsuit in Ecuador.

Kaplan said the lawyers had, among other things, submitted fraudulent evidence, coerced a judge to use a supposedly impartial expert whose report was ghost-written by a Colorado consulting firm Donziger paid, and then promised $500,000 "to the Ecuadorian judge to rule in their favor and sign their judgment."

To enforce the hold that Kaplan had placed on assets Donziger received in connection with the Ecuador judgment, he ordered Donziger to surrender all of his electronic devices so they could be imaged.

After Donziger failed to fully comply with that order, Kaplan held him in criminal contempt of court and referred that case to the U.S. Attorney's Office, which normally prosecutes such matters.

However, the Manhattan U.S. Attorney declined to take the case.

Kaplan then appointed three lawyers as special prosecutors. Donziger then was tried, convicted and sentenced to jail.

Donziger had objected to Kaplan's actions, arguing that a judge had no right to override a federal prosecutor's discretion in deciding not to prosecute a case.

But the U.S. Court of Appeals for the 2nd Circuit upheld his conviction.

In his dissent Monday, Gorsuch noted that the Supreme Court in the late 1980s "approved the use of court-appointed prosecutors as a 'last resort' in certain criminal contempt cases."

"But that decision has met with considerable criticism," Gorsuch added. "As Members of this Court have put it, the Constitution gives courts the power to 'serve as a neutral adjudicator in a criminal case,' not 'the power to prosecute crimes.'"

In the Chevron case, Gorsuch wrote, "However much the district court may have thought Mr. Donziger warranted punishment, the prosecution in this case broke a basic constitutional promise essential to our
liberty."