1.12.2008

TS - DA largely resigned to Palco ruling

DA largely resigned to Palco ruling
John Driscoll The Times-Standard
Article Launched: 01/12/2008 01:21:18 AM PST

Humboldt County District Attorney Paul Gallegos said he disagrees -- but respects -- a state appellate court's ruling allowing his hallmark fraud suit against the Pacific Lumber Co. to be tossed out.

At a press conference Friday, Gallegos said that the California 1st District Court of Appeal upheld privileges that originate in the First Amendment.

”Certainly I understand the public policy issues behind those privileges,” Gallegos said.

But he said that there is no societal value in fraud. While he believes the case looks into a new area of law, he said it is unlikely that he will petition the California Supreme Court in the matter.

The lawsuit, filed in February 2003, claimed Palco submitted faulty studies during the Headwaters Forest negotiations to get the California Department of Forestry to adopt a less restrictive long-term logging plan. Gallegos' second amended complaint was thrown out of Humboldt County Superior Court by visiting Judge Richard Freeborn, a ruling upheld by the appeals court.

The logging plan was part of the agreement to sell the 7,400-acre Headwaters Forest and other groves for $480 million. Gallegos argued that the company secured it by submitting false data on landslides in one watershed and not submitting a correction until the last minute.

Palco's lobbying efforts with the state were the real force behind CDF's decision to drop the stricter logging plan and adopt a less restrictive one, the appeals court judges determined. The California Environmental Quality Act proceedings during the Headwaters discussions were the appropriate venue to consider if any evidence presented was false, they wrote.

Those lobbying efforts are privileged under state unfair competition laws, the ruling reads. The court also determined that Palco is protected by the Noerr-Pennington Doctrine that shields anyone petitioning the government or government agencies against civil liability, unless they are engaged in a “sham.”

But Palco's efforts didn't meet the definition of a sham, the court wrote.

Gallegos said that he does not regret filing the case, and said the appellate court ruling informs the public in regard to the unfair competition law and the Noerr-Pennington Doctrine in a unique situation. He said it was worth the cost, but did not have a figure on how much money or how many hours were spent pursuing the case.

Before considering a petition to the California Supreme Court, he said would consult with colleagues about it. But Gallegos said the issue may be something the Legislature should consider taking up.

Palco Vice President Frank Bacik said in a phone interview that the Supreme Court reviews only a small portion of significant or novel cases, and said the appellate court cited long-standing precedents in making its ruling.

”One would not expect them to be interested in reviewing this case,” Bacik said.

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