PD - Pacific Lumber case tossed

Pacific Lumber case tossed
Judge says charges in fraud lawsuit 'contrived,' bars D.A. from refiling case
By MIKE GENIELLA THE PRESS DEMOCRAT
Wednesday, June 15, 2005

In a blow to Humboldt County prosecutors, a Superior Court judge Tuesday tossed out a contentious civil fraud case against Pacific Lumber Co.

Judge Richard Freeborn, the second judge to review the high-profile case, concluded that the 2003 lawsuit filed by District Attorney Paul Gallegos' office was based upon a series of "contrived" misconducts.

Freeborn's ruling bars Gallegos and his chief assistant, Tim Stoen, from refiling the fraud case. It also ordered Humboldt County to cover Pacific Lumber's legal costs, estimated to be in excess of $150,000.

Stoen said Tuesday he and Gallegos were reviewing the ruling, which could result in the collapse of a case that's attracted statewide attention. He declined further comment.

The only option left for Stoen and Gallegos is to appeal the court ruling, a decision that could expose the county to even more legal costs and potentially months, if not years, of legal wrangling.

Pacific Lumber attorney Jared Carter on Tuesday hailed the court decision.

"Judge Freeborn cited the same legal arguments that we made to Gallegos and Stoen before the case was filed," said Carter.

Carter said the case not only wrongly accused the company of fraud, but has proven costly to the company and local taxpayers.

"It's one more example of how politically motivated politicians attempt to abuse the legal system by filing inappropriate litigation," said Carter.

The fraud case was filed by Stoen within six weeks after his boss Gallegos took office in January 2003.

At the core of the lawsuit were allegations that the company lied to state negotiators in 1999 in order to get permission for high rates of logging on Pacific Lumber's 210,000 acres of southern Humboldt County timberland. Future logging rates were key elements of a joint $500 million state-federal deal with Pacific Lumber to buy and create the 7,500-acre Headwaters Forest reserve.

Stoen and Gallegos contended that Pacific Lumber intentionally understated the threat of landslides in logging areas.

Freeborn in his 23-page ruling said he could find only one instance of conduct that could be deemed wrongful, and that would be only if the District Attorney's office "could meet its burden at trial of showing its wrongfulness."

Freeborn said he believed at its core the case presented by prosecutors was a "stretch."