NCJ - Rush to judgment?

Rush to judgment?http://www.northcoastjournal.com/032003/news0320.html#anchor755179
The DA's case against PL is getting slammed before it reaches court
March 20, 2003
by KEITH EASTHOUSE & ANDREW EDWARDS

AT ONE POINT DURING LAST WEEK'S STORMY of the Humboldt County Board of Supervisors, County Counsel Tamara Falor tried to get the five supervisors back on point.

The focus here, she said, should be on the liability that might arise should the board approve District Attorney Paul Gallegos' request to bring in a San Francisco Bay Area firm to help in his lawsuit against the Pacific Lumber Co.

The reminder fell largely on deaf ears. Roger Rodoni had set the tone early on when he wondered whether the lead lawyer for the firm, Joe Cotchett, would want a park named after him after he put Pacific Lumber out of business. Bonnie Neely said flatly, almost impatiently, that she had serious doubts about the merits of Gallegos' case -- a sentiment that was echoed later on by Jimmy Smith. Throughout, the newest supervisor, Jill Geist, had a lot of questions, not all of them terribly relevant.

Only John Woolley seemed to recognize the obvious: that the emotional, overheated atmosphere that prevailed that day in the Supervisors' chambers -- packed as it was with agitated loggers and a much smaller number of environmentalists -- was not an ideal atmosphere in which to make a decision. The board, Woolley suggested, needed more time to chew on the proposal. He made a motion to reconsider it at the next meeting, March 25. It died for lack of a second.

Neely's motion to deny Gallegos' request, already on the table, was then voted on. It passed on a 4-1 vote, with Woolley the odd man out.

So ended one of the more contentious, and perhaps fateful, supervisors' meetings in memory. The upshot was that Gallegos and Assistant District Attorney Tim Stoen, the lawyer in charge of the case, are on their own. While Pacific Lumber has large legal resources at its disposal, the DA will have to rely on his own staff and whatever resources he can bring to bear with his $2.7 million budget.

As is well known by now, the DA is accusing Pacific Lumber of concealing critical information during the 1999 Headwaters negotiations. They say the deception enabled the company to log as many as 100,000 redwoods on unstable slopes that it otherwise wouldn't have been able to get at. They are seeking as much as $250 million in damages.

Gallegos and Stoen could come back before the Supervisors and try again to win their approval to enter into a contractual agreement with the Cotchett firm. But barring some unforeseen development that would enhance the case before it goes before a judge, there doesn't seem to be much point. Geist, perhaps, might vote differently, but Smith, Rodoni and Neely clearly have their minds made up.

While Gallegos and Stoen put a brave face on things last week, vowing to push ahead, the fact of the matter is that they lost the services of a firm that has extensive expertise in precisely the field of law they are litigating in the PL case: corporate fraud.

Referring to a high-profile savings and loan case in which Cotchett won a $1.7 billion settlement, Stoen said, not without a trace of bitterness: "That's the kind of legal talent turned down by the board."

An influential letter

To a large extent, Gallegos and Stoen were done in by a letter from the California Department of Fish and Game.

Addressed to Stoen, it arrived in the DA's office on March 10, the day before the supervisors' meeting. So late did it arrive that Stoen didn't even see it until the next morning, when he was about to go before the board. The supervisors also received copies.

When Stoen read it, and saw the assertion that "there are errors in the facts presented" in the DA's case, it didn't make his day, to put it mildly. "I felt blindsided," he said later.

The letter was a major reason the supervisors voted not to engage the services of Cotchett's firm -- despite the fact that the letter said nothing about the issue before the board, the hiring of outside counsel.

"In terms of hiring outside counsel, that's not our business," said Fish and Game Conservation Program Manager Mark Stopher, speaking from his Redding office a couple of days after the meeting. "We're not in a position to decide if the DA needs help or not."

Supervisor Smith said that in discussions with Fish and Game Regional Manager Don Koch and CDF Director Andrea Tuttle the weekend before the meeting, and through reading material forwarded by their attorneys, he had come to the conclusion that the county would be put at significant risk if the Cotchett firm was hired.

"[The California Departments of Forestry, and Fish and Game] said they were going to step up to the plate [to defend PL]," Smith said in an interview last Thursday. "I don't think it was ever perfectly clear what the cost could be to the county to take on the state and federal government, henceforth my vote was no."

It may sound like Smith was second guessing the DA on the merits of bringing a fraud case against PL. Not so, Smith said.

"If the DA chooses, and I believe him to be a man of good character, he can make that choice: that's his domain. I would never, ever second guess him on that."

Why did Fish and Game comment on pending litigation (in which its representatives might be called to testify) in the first place?

Stephanie Tom Coupe, senior staff counsel with Fish and Game and the author of the letter to Stoen, said the department wanted to make sure he knew that Fish and Game was already defending the Headwaters deal in a legal challenge brought by the Environmental Protection Information Center, a Garberville group that has long been a thorn in PL's side.

"We wanted him to understand that," Coupe said in a telephone interview from her Sacramento office. "We tried to communicate that we wanted to avoid a situation in which we would be testifying against Humboldt County."

According to Stopher, the department sent the letter because Stoen wasn't listening to reason in their first and only meeting on March 7, the Friday before the supervisors' meeting.

"We (Fish and Game) came away from that not sure whether or not they were interested in hearing what we had to say," Stopher said. "I thought maybe Mr. Stoen was already vested [in the case] and wouldn't adequately consider our comments if they were only put verbally."

A Fish and Game source said Stoen became hostile when factual errors in his 45-page legal complaint were spelled out at the meeting.

Two subsequent conference calls on the 13th and 18th were called off by the DA's office without any reason given.

"My sense is that he considers us now to be the enemy," Stopher said.

The target was Reid

The factual information recounted in the letter doesn't go to the heart of the case, alleged fraud committed by PL. But it does attack some important peripheral points.

The suit alleges that PL concealed information contained in a report on the Jordan Creek watershed, located above Humboldt Redwoods State Park, and as a result successfully persuaded then CDF Director Richard Wilson to approve a less stringent set of logging restrictions known as "Alternative 25."

That alternative, as well as the one Wilson originally chose, "Alternative 25a," are part of a key document in the Headwaters deal, the Sustained Yield Plan, which imposes limits on PL's logging rates over the next 100 years.

Coupe's letter stated that "The CDF director's decision to approve Alternative 25 did not provide additional access for PL to harvest timber on unstable areas. It did provide the ability to harvest additional timber from portions of the ownership which are not unstable."

If that's true, it cuts Gallegos' case off at the knees because he's alleging that PL's deception enabled it to access timber in areas prone to sliding.

But Coupe's statement conflicts with one contained in a letter signed by two high-ranking officials of the U.S. Fish and Wildlife Service and the National Marine Fisheries Service. Dated Feb. 27, 1999, right at the time when Wilson was being pressured to approve Alternative 25, the letter said the following: "According to information received from PL, most of the difference in available harvest volume in the two alternatives is derived from the amount which can be harvested in mass wasting areas of concern." In other words, unstable areas.

Alternative 25, it turns out, does indeed allow for selective logging on unstable slopes if a geologist can figure out a way to make it work without producing undue amounts of sediment. Alternative 25a prohibits logging on unstable slopes, plain and simple.

So the DA's complaint has merit?

That would seem logical, were it not for another Headwaters document, the Habitat Conservation Plan -- designed to protect endangered species -- which trumps the Sustained Yield Plan. The HCP does not allow harvesting on slopes that have more than a high risk of producing excess sediment.

So the DA's case doesn't have merit?

That, too, would seem logical were it not for another possibility: the HCP itself is flawed. According to Ken Miller, a vehement PL critic, there is disagreement to this day, even with the restrictions imposed by the HCP, about what constitutes a stable area and what constitutes an unstable area. That uncertainty might have been avoided had the work of Leslie Reid, a leading expert on the cumulative impacts of logging, carried more weight. Reid, of the U.S. Forest Service's Redwood Sciences Laboratory in Arcata, studied the Bear Creek watershed immediately adjacent to the Jordan Creek basin in the late 1990s. She ended up recommending a methodology to determine sustainable logging levels that Pacific Lumber blanched at because it was too restrictive. It was to prevent Reid's "methodology" from being generalized to Jordan Creek and the rest of the 211,000 acres under PL ownership that PL carried out its deception.

That, at least, is what Stoen says in his complaint.

Public input thwarted

Stoen, for his part, essentially called the Fish and Game letter a red herring.

"Frankly, it doesn't address the fundamental issue," Stoen said.

Which is, he said, the apparent fact that when Wilson ditched Alternative 25a in favor of Alternative 25, he did so not knowing that Pacific Lumber had, at the eleventh hour, given correct data on Jordan Creek to a mid-level CDF official in Fortuna. Had Wilson known that, he would have recirculated a document called the Environmental Impact Report to various state and federal agencies and to the public for input. That input, in turn, could have led to stricter logging restrictions. But he didn't know about the new data (the official in Fortuna, according to Stoen's complaint, never passed it up the chain of command) and as a result, the report was never recirculated.

Therefore, according to Stoen, the report, which the Headwaters deal hinged on, was fraudulent.

"If the EIR was fraudulent, then there's no right to cut any trees," Stoen said.

Stoen said he was angry that Fish and Game chose to release its letter just before last week's supervisors meeting. And he doesn't think that was an accident.

"It was a clever ploy to get the supervisors nervous," he said.

***END***

Of course, as time went on, more of the facts surfaced. It was revealed that Ken Miller had been largely instrumental in the drafting of the suit, which explains his vehement response; it later became clear that Stoen was not qualified to this or any other suit, really, and questions are raised as to whether he has ever taken a trial before a jury. It appears that he wins his cases by trying them in the press, and scaring the victim into settling to avoid the bad PR and the extensive legal costs. He lost in this case, though as his case did not pass demurrer, did not even make it into court. He also lost on another case, where a local city councilwoman he went after stood up to him, and at great legal expense, exposed him.

In the beginning, at this meeting of the Board of Supervisors, Stoen bragged that with two legal experts and a couple of days in court this case would be over, which begged the question, why did he need Cotchett in the first place?

It is also worth noting that although Stoen had announced his INTENT to file the suit, it wasn't until much much later that he actually filed the suit - after John Burton introduced a curiously "related" bill - as iff he was waiting for that. In the meantime Stoen, Gallegos and Salzman embarked on an extensive PR campaign that included dog and pony shows to local civic groups. Declaring that PL had pressued the Board of Supervisors into this 4-1 vote against hisring Cotchett, in fact all the pressure seemed to be coming from Stoen.