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Showing posts with label PL CA Supreme. Show all posts
Showing posts with label PL CA Supreme. Show all posts

5.01.2008

Why DA's Palco suit was ill-advised

”All good things must come to an end” is an old saying we all know. With any luck, the same could be said of all bad things, and so it is with the People v. Pacific Lumber Company lawsuit filed by the Humboldt County district attorney.

After being dismissed by the trial court and then having been unanimously rejected by the appeals court, the California Supreme Court has driven a stake through the heart of this ill-advised lawsuit. On April 24, the Supreme Court denied District Attorney Gallegos' petition for review. It also denied his request to have the appellate court decision depublished.

The public deserves an explanation of what all this means.

Before that, I would like to make it clear that I in no way approve of Palco's behavior. I personally prosecuted them twice criminally (obtaining literally every last penny available as penalties under the 15 counts I charged collectively) and once civilly (against Scopac, actually), receiving $80,000 in a settlement, $35,000 of which I sent to schools in the Van Duzen watershed.

And I found Palco's behavior in the recall election astounding and shameful, an incredibly bad set of decisions to fund petition signers and more in an effort to drive out an elected official.

That said, Gallegos' decision to prosecute Palco was a political one, make no mistake. Political prosecutions are never a good idea.

Within days of taking office, Gallegos directed his chief investigator to conduct an investigation. When his investigators reported they could not find evidence of a crime, the suit was filed civilly instead. The day before it was filed, a member of a local watchdog organization sat in the DA's library and read the complaint.

The civil complaint was poorly charged, forcing Gallegos' office to twice amend it during trial. Even so, the trial court ultimately dismissed it on a “demurrer,” which is a motion asserting the case lacks the basic essentials to get to trial. The dismissal was “without leave to amend,” meaning the trial court found the allegations incapable of proceeding. The appellate court was even less kind.
Stating the rule that it must “give the complaint a reasonable interpretation, and treat the demurrer as admitting all material facts properly pleaded,” the appellate court examined the only two arguments Gallegos made: (1) the “litigation privilege” in Civil Code section 47(b), which is “absolute,” and (2) the Gallegos-named “right-to-lie” argument (the Noerr-Pennington doctrine, actually). Both went down in flames.

The idea in the “litigation privilege” is that those honestly in court should be allowed to make whatever claims they may without fear of then being sued simply for having made those claims. The principles are (1) protecting access to the courts, and (2) the “chilling effect” that such a fear would have on those with legitimate claims.

The appellate court looked at many cases, as well as the facts of the Palco case, and found that “the same chilling effect would occur here, we fear, were this (Palco) lawsuit to proceed.”

The “Noerr-Pennington doctrine” gives those who attempt to influence the government immunity from liability under federal antitrust law. There is a “sham exception” to this immunity, which Gallegos argued applied to Palco.

The appellate court “decline(d) to hold that the state's fraud-based allegations meet the requirements of the sham exception,” and held that Palco was “undoubtedly immune from liability under Noerr-Pennington.”

The appellate court closed its opinion noting that the court “must determine whether plaintiffs [the state] have demonstrated evidence which, if credited, would justify their prevailing at trial.” It then held that “for the reasons discussed above, we conclude the state's evidence, even if credited, would not justify its prevailing at trial. Further, we conclude the state has failed to prove, on its third try, a reasonable possibility that the (complaint)'s defect can be cured by amendment.”

In short, all arguments advanced by District Attorney Gallegos, both at trial and on appeal, were shot down in their entirety.
It is said that “bad facts make bad law.” And so Gallegos asked to have the appellate court's decision “depublished,” meaning that it would no longer be law. The Supreme Court declined, and we are left with “The People ex rel Paul V. Gallegos, as District Attorney v. the Pacific Lumber Company.”

Some may celebrate the end of this case, finding it bad, while others may lament, seeing the case as good. We are all still left deciding if we approve of further political prosecutions That, I submit, is bad.

Paul Hagen is an attorney in Eureka. He previously served as a deputy district attorney in four northern California counties, including Humboldt county. He resides in Eureka.

Paul Hagen
Article Launched: 05/01/2008 01:27:25 AM PDT

4.25.2008

TS - Supreme Court won't reverse Palco case decision

The California Supreme Court has refused to hear Humboldt County District Attorney Paul Gallegos' major fraud case against the Pacific Lumber Co.

The court turned down the DA's request to review a scalding decision handed down in January by the California Court of Appeals' First District.

”Further, we conclude the state has failed to prove, on its third try, a reasonable possibility that the operative pleading's defect can be cured by amendment,” the three-judge panel wrote for the First District.

The Supreme Court ruled without comment. It also denied Gallegos' request that the First District decision be depublished, which would have prevented it from being a precedent-setting opinion.

The 2002 suit alleged that Palco secured a overly liberal long-term logging plan when it agreed to sell the 7,400-acre Headwaters Forest and other groves for $480 million. The company submitted false data on landslides in one watershed and didn't correct the record until the last minute -- which prompted the California Department of Forestry to adopt a less stringent logging strategy, the complaint held.

The suit was filed shortly before an effort was launched to recall Gallegos, a campaign that was largely funded by Palco. The recall failed.

Palco is now in bankruptcy.

”The trial court, the appellate court and now the California Supreme Court have all recognized this case to be more an exercise in spite and sloganeering than an action of any substance or legal merit,” said Palco Vice President and General Counsel Frank Bacik.

Gallegos did not return the Times-Standard's phone call by deadline.

Humboldt County Superior Court visiting Judge Richard Freeborn threw out an amended complaint in 2005, writing that Gallegos didn't prove that Palco had scammed the government to gain an advantage over a competitor.

The appellate court determined that Palco's lobbying efforts with the state during the 1999 Headwaters negotiations led CDF to drop a stricter logging plan and adopt a more liberal one.

The so-called Noerr-Pennington Doctrine protects anyone petitioning the government or government agencies against civil liability. That doctrine prevails unless the actions taken during lobbying are a “sham.” Since Palco's efforts weren't intended to affect a competitor's business relationship, the appellate court determined, it didn't meet the definition of a sham.

Palco's communications with the CDF during the Headwaters negotiations -- whether fraudulent or not -- are privileged under state unfair competition laws, the appeals ruling reads. California Environmental Quality Act proceedings at the time were the right means to ferret out any false evidence, the First District judges wrote.

Supreme Court won't reverse Palco case decision
John Driscoll The Times-Standard
Article Launched: 04/25/2008 01:15:42 AM PDT

ER - District Attorney Paul Gallegos' fraud lawsuit halted by California Supreme Court

Ending a five-year legal odyssey through the state’s court system, the California Supreme Court has refused to review Humboldt County District Attorney Paul Gallegos’ appeal of his fraud lawsuit against The Pacific Lumber Co.

The Supreme Court acted on Wednesday to deny the petition from Gallegos to review his appeal of the First District Court of Appeal’s ruling in January, which upheld a Humboldt County Superior Court ruling that tossed out his lawsuit.

The Supreme Court also denied his petition seeking depublication of the Appellate Court’s lengthy written ruling, which now becomes established case law.

With the high court’s ruling, Gallegos has no further ability to appeal.

Gallegos alleged in his original lawsuit filed in Humboldt County Superior Court in 2003 that PALCO intentionally committed fraud to increase timber harvesting when it manipulated reports during the environmental review phase of PALCO’s Sustained Yield Plan for the historic Headwaters Deal in 1999.

But in a 2005 decision, visiting Judge Richard Freeborn sustained a previous court ruling that Gallegos’ lawsuit had no legal basis and that PALCO’s submission of an allegedly erroneous report and the subsequent resubmission of corrected data were protected under California Civil Code “litigation privilege.”

Gallegos appealed Freeborn’s ruling to California’s First District Court of Appeals, which upheld the ruling that the fraud charges brought against PALCO under unfair competition laws weren’t legally sufficient to warrant a trial.

But going beyond just affirming the lower courts ruling, the appellate court justices published a rare and critical 23-page decision and opinion that stated Gallegos failed to prove that his case could be fixed to move forward and even if it did, the evidence presented “would not justify their prevailing at trial.”

Following that ruling, Gallegos held a news conference and adamantly defended his decision to pursue the lawsuit despite it being dismissed twice because the court found it had no legal merit.

Gallegos did not return a phone call to comment Thursday.

In a written statement Thursday, a PALCO official said Gallegos could not state a single valid legal claim even after the court gave him numerous opportunities to amend his complaint.

“The trial court, the appellate court and now the California Supreme Court have all recognized this case to be more an exercise in spite and sloganeering than an action of any substance or legal merit,” stated Frank Bacik, PALCO’s vice president and general counsel, who responded to the news in a statement Thursday.

“There’s nothing left now but to marvel at the truly irresponsible waste of public money, time and energy this case represents.”

District Attorney Paul Gallegos' fraud lawsuit halted by California Supreme Court
By NATHAN RUSHTON, The Eureka Reporter
Published: Apr 24 2008, 5:59 PM · Updated: Apr 25 2008, 12:31 AM

Last night Gallegos was on Channel 3 TV News saying that The Supreme Court didn't really reject his appeal, that they were just "too busy" to hear it. I'm not kidding.

3.04.2008

TS - Gallegos asks Supreme Court to review Palco ruling

Gallegos asks Supreme Court to review Palco ruling

Humboldt County District Attorney Paul Gallegos is asking the state Supreme Court to review an appellate court's ruling that allowed his fraud suit against the Pacific Lumber Co. to be tossed out. He also is requesting that the Supreme Court order “depublication” of the opinion.

”We would like the court to review it,” Gallegos said Monday.

Palco Vice President Frank Bacik said in a news release that the “filings contain a series of slogans that lack reason, explanation or basis for either depublication of the appellate court's opinion or grant by the Supreme Court for a review of that opinion.”

”The new filings appear in the form of vague assertions that everybody is wrong except Paul Gallegos. The trial court is wrong, the court of appeal is wrong, Palco is wrong,” Bacik said.

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.

The appeals court judges determined that 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. They found the California Environmental Quality Act proceedings during the Headwaters discussions were the appropriate venue to consider if any evidence presented was false.

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.”

Palco's efforts didn't meet the definition of a sham, the judges wrote in the ruling.

The Times-Standard
Article Launched: 03/04/2008 01:21:16 AM PST

ER - DA petitions Supreme Court

DA petitions Supreme Court

Humboldt County District Attorney Paul Gallegos is asking the California Supreme Court to review his fraud lawsuit against Pacific Lumber Co. that has failed three times to pass legal muster.

Gallegos said this time the influential environmental group Sierra Club is also asking the court to hear the case.

“We’ll see what happens,” Gallegos said in a phone interview Monday.

The district attorney’s case, filed in 2003 in Humboldt County Superior Court, and subsequent amended suits were dismissed on demurrer, which effectively throws out the suit on a lack of legal merit.

After hearing legal arguments from Gallegos and a city of San Francisco attorney on his behalf in December, the California Appellate Court justices blasted his case and concluded in a rare 23-page published ruling and opinion in January that Gallegos failed to prove — on his third attempt — any “reasonable possibility” that his case could be corrected to move forward.

Gallegos confirmed Monday that he has petitioned the state’s top court seeking judicial review of the Appellate Court’s ruling, which he wrote is in “clear error” and effectively denies the government a platform to prosecute cases where the underlying administrative proceedings were corrupt.

In addition to seeking judicial review, Gallegos is asking the Supreme Court to order the depublication of the appeal court’s opinion, which would prevent other courts from citing it as case law.

Gallegos’ suit alleges that PALCO intentionally committed fraud in an effort to increase timber harvesting by manipulating watershed sediment reports during the environmental review that led to the signing of the controversial Headwaters Deal in 1999.

But the courts have maintained that PALCO’s submission of an allegedly erroneous report and the subsequent resubmission of corrected data was protected by the “litigation privilege” that protects communications made as part of a judicial or quasi-judicial proceeding.

Gallegos argues that to grant immunity to an applicant who submits false information erodes the integrity of the system and disempowers the administrative agencies from fulfilling their mandate.

Except in certain death penalty cases, the California Constitution affords no automatic right to appeal before the Supreme Court, which is only granted as a matter of discretion, according to the Supreme Court Web site.

In his letter to the California Supreme Court, Gallegos said the “reasons why courts must shield litigants from derivative litigation are the very same reasons why courts must allow an exception to these evidentiary shields when the path to truth was muddied beyond the point of recourse.”

“In such an instance, a collateral attack under the (Unfair Competition Law) is the only form of equitable relief through which the government can stop an ongoing fraud,” Gallegos wrote.

In a response, PALCO Vice President and General Counsel Frank Bacik described Gallegos’ new filings as “vague assertions that everybody is wrong except Paul Gallegos.”

“The trial court is wrong, the court of appeal is wrong, Palco is wrong,” Bacik said.

Bacik said Gallegos argues that the Supreme Court should carve out an exception to the company’s constitutional right to petition administrative agencies, and also create a special provision for criminal prosecutors who feel like reopening final administrative and environmental review proceedings in order to have the last word on the accuracy and truthfulness of the process.

“His filings contain a series of slogans that lack reason, explanation or basis for either de-publication of the appellate court’s opinion or grant by the Supreme Court for a review of that opinion,” Bacik said.

As an example, Bacik cited Gallegos’ statement to the court that “the clear errors that the trial court committed and the appellate court affirmed obstruct not only the sanctity of 211,000 acres of Humboldt forest timberland, but also the very ‘paths which to lead to [sic] the ascertainment of truth.’”

“Whatever that means, it hardly presents a reasoned legal argument,” Bacik stated. “We’re eager to hear what the California Supreme Court makes of it, and interested to see how long Mr. Gallegos intends to continue beating this long-dead horse at considerable expense to the taxpayers of Humboldt County.”

It is unclear how much the five-year legal battle has cost taxpayers because Gallegos indicated in an e-mail correspondence previously that his office doesn’t keep such records.

“We have an overall budget,” Gallegos wrote. “There are attorney hours, which we don’t keep. I do not believe we had any other costs.”

Gallegos indicated he is still waiting to receive PALCO’s claim of costs, which the court ruled the county would have to pay.

PALCO officials declined to disclose the amount of legal fees it has incurred defending the lawsuit.

By NATHAN RUSHTON, The Eureka Reporter
Published: Mar 3 2008, 10:23 PM