Fund for Gallegos' PL case

In The News

◼ Rush to judgment? - by KEITH EASTHOUSE & ANDREW EDWARDS/North Coast Journal March 20, 2003

The DA's case against PL is getting slammed before it reaches court

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.
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Tree-sitters taken down

by ANDREW EDWARDS

PACIFIC LUMBER CO. MADE GOOD ON ITS PROMISE TO TAKE DOWN TREE-SITTERS FROM their perches in Freshwater this week, launching an operation that's supposed to last several days.

On Monday long time tree-sitter Remedy and her neighbor Wren were hauled down in a day-long operation, involving six climbers, more than 15 Humboldt County Sheriffs (many working on their day off), seven correctional staff from the Humboldt County Jail to book prisoners, at least four California Highway Patrol officers and tens of activists.

Greenwood Heights Road, an offshoot of Kneeland Road that winds up a wooded mountainside just northeast of Eureka, was blocked off by Pacific Lumber personnel for several hours on Monday. The company's justification for the closure, which involved no public notification? An encroachment permit it had applied for last year.

The aim was apparently to prevent activists from gathering at the base of trees that tree-sitters occupied. But even residents were turned back. Only press, PL workers and law enforcement were allowed.

Humboldt County Supervisor John Woolley received about 30 angry calls from his constituents and looked into the matter. After consulting with Public Works (which manages county roads) Woolley concluded that the encroachment, which was solely for logging, didn't apply to tree-sitter extraction, and county attorneys notified PL that the barricades would have to come down.

"It's only there for commercial logging processes," Woolley said, adding that he was worried about lawsuits. "You could see the future, if you're dealing with an illegal encroachment permit."

County Counsel Tamara Falor said PL must give Public Works two-week notice of any road closure. Such notice was not given in this case, Falor said.

Sheriff's deputies, unaware of the wrangling behind the scene, went to work early enforcing the permit. They walked a group of activists that had gathered at the base of the tree down the road, until one of the more vocal ones, Alexander Carpenter, aka Four Winds, 26, laid down in the road and was arrested.

"I got so tired of being pushed down the hill by billy clubs I laid down and let them arrest me," Carpenter said. "I was a guilty man there."

Carpenter was back on the scene as soon as he got out of jail.

The climbers, led by the always cheerful Eric Schatz of Schatz Tree Service, threw ropes into the trees and went up after the tree-sitters, three climbers per tree. Hours passed and nothing happened. A cold wind blew.

After four o'clock the road was opened and activists began to stream back. They were herded past the tree-sits, contained by a wall of deputies.

Around 5 p.m., after hours of apparently pleasant, if fruitless, coaxing by Schatz, Remedy was brought down; they had cut the chains that anchored her in her lock box.

"If the chains had been shorter they wouldn't have been able to do that. It was kind of a faux pas on my part," Remedy said in an interview Tuesday.

The mood was emotional. People were crying. When Remedy appeared and was driven away in a cop car the crowd surged forward, blocking the road. Deputies forced them back. Finally they sat down on the road and chanted.

When Wren came down things got ugly. Activists were shoved back by batons and the crowd was pepper-sprayed. Several people were arrested.

That night, both trees were reoccupied, Remedy's by three women and Wren's as well. In the case of Wren's tree, activists reportedly climbed up PL's own rope, which had been left overnight.

The next day the climbers came to the heavily populated lower village but were only successful in removing one tree-sitter, Annapurna. She was unhurt. Her tree was immediately reoccupied by tree-sitters travelling high up on traverse lines.

In an apparent gesture of frustration at the end of the day, PL employees surrounded the tree, still occupied, and girdled it with a chainsaw, removing the bark from around the base of the tree to kill it.

Activists on the road rushed the workers screaming that the tree was occupied, almost as if in pain. Some scrambled to protect surrounding trees but the workers didn't do anything more.

After two days, three tree-sitters had been arrested, three trees reoccupied, one road reopened, one tree girdled, 11 ground-based activists arrested. Stay tuned. The battle is supposed to continue all week.
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◼ Fund for Gallegos' PL case - North Coast Journal March 20, 2003

Stymied in his attempt to hire an outside law firm for his suit against the Pacific Lumber Co., District Attorney Paul Gallegos may get a bit of help from local residents.

A Redway man has started a fund to help defray the county's legal expenses in connection with the lawsuit. Jared Rossman, a landlord and property manager, sent out an e-mail urging people to "put your money where your mouth is" and donate to his "Citizens' Fund for Equal Justice."

"I was so upset by the way the Board of Supervisors handled this," he said. They could have shown support for "this independent DA." Instead, they missed an opportunity. "If the county officials are going to drop the ball then the citizens are going to have to pick it up," he said. "When the law is applied evenhandedly, the truth will win out, and that's what America was built on."

The fund was established at the Community Credit Union of Southern Humboldt in Garberville. It was unclear at press time whether it is legal for a citizens' group to earmark private donations for use by the county in a specific lawsuit.

Meanwhile, another local man has started a group called the Alliance for Ethical Business, a "citizens advocacy group concerned about corporate crime," said founder Richard Salzman. He said his group would support Gallegos' efforts to discover the truth in the Pacific Lumber case, and is organizing an event for April 9 at the Arcata Community Center in which Gallegos and Assistant DA Tim Stoen will answer questions about the lawsuit.
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NOTE: Gallegos' lawsuit never made it past demurrer, though he appealed it all the way to the California Supreme Court, where he was laughed out of the room, and they denied his appeal.

The suit was a case of activists succeeding in getting an elected official they had backed to publicly file their private lawsuit, a public prosecution. But they were armed only with bumper sticker rhetoric and a layman's understanding of the issue, activist pipe dreams, as it were.

Their attempts to bring in their big gun, Bob Cotchett, were thwarted, when the Board of Supervisors refused to allocate the funds to pay his high fees. The activists concocted all kinds of scenarios where the fines per tree would pay for the lawyer, and even devised a "Trust Fund' scheme, in which they plotted to solicit, accept and use special interest money to privately fund a public prosecution.

They failed. And failed, and failed again. It seems in the end, Mr. Easthouse should eat his words.

The media also failed in this entire debacle. Many reporters followed Gallegos around with their tongues hanging out, and their glowing, loving reports must embarrass them in hindsight.

It's time for the record to be corrected.

SAVE: Paul Gallegos restored honor to DA's office, Ken Miller's MY WORD revisionist history

Paul Gallegos restored honor to DA's office
Ken Miller/My Word
POSTED: 12/14/2013 02:35:33 AM PST
UPDATED: 12/14/2013 02:35:34 AM PST

Susan Dodd celebrates Humboldt County District Attorney Paul Gallegos' coming departure with a litany of accusations (”Good riddance to Paul Gallegos,” Times-Standard, Dec. 6, Page A4), but misses his signature accomplishment: restoring dignity, independence and integrity to an office that was blind to some of Humboldt's most successful crooks. Two examples are illustrative:
Mr. Gallegos' courageous lawsuit vs. Maxxam/Pacific Lumber stood out in stark contrast to the conciliatory stance adopted by every other political and regulatory agency official, who acted mostly as enablers, beneficiaries, or appeasers, while the venerable PL was looted, and our watersheds and forests liquidated with catastrophic consequences for residents, fish, and the future of our forest products industry.

Despite accumulating a record of California Department of Forestry violations, despite causing ongoing flooding and loss of domestic water supplies in Elk River, despite despoiling Freshwater, Jordan, Stitz, and Bear Creeks as well, our regulators and policymakers stood by while protesters were castigated and arrested. When the California Regional Water Board entered the fray with its independent authority, local ranchers and foresters rose up to defend Maxxam/PL, and opposed appropriate regulations to restore water quality, thereby turning against their own neighbors.

It was in this context that Gallegos showed his independence and integrity. He challenged only one of Maxxam/PL's deceitful practices, when PL allegedly cheated on the environmental documents submitted in support of the Headwaters Deal.

Maxxam prevailed only because of legal technicalities that in part may be summed up as “The Right to Lie.” But Humboldt County Superior Court Judge Christopher Wilson, before his unfortunate removal from the case, ruled that if PL/Maxxam's actions prevented fruition of the process, it could be guilty of “extrinsic fraud,” thereby bypassing that so-called right to lie. And prevent it it would have: Another Wilson, Richard, former head of CDF, proclaimed that had he been aware of the evidence, he would not have approved the deal.

It should be recalled that Gallegos was forced to go it alone against Hurwitz's legal team when our supervisors declined to accept the offer of pro bono legal assistance from the powerful law firm of Cotchett et al. in the Bay Area. That's right: they declined free legal help from one of the state's finest law firms, which pretty much sums up the county's near total capitulation to, and conflicts of interest with, Maxxam during the firm's two decades of rapacious liquidation in Humboldt County.

Former Supervisor Roger Rodoni rented hundreds of acres from Maxxam/PL for a pittance, and former Supervisor Bonnie Neely was married to Gallegos' opponent, Terry Farmer, who lost the 2000 election.

It's no wonder that Maxxam financed the failed recall of Mr. Gallegos.

Unsurprisingly, Gallegos lost in court against the high-priced team of lawyers for Maxxam/PL, but we are the big losers.

Paul took a lot of heat that should rightly have been directed at the biggest crooks to despoil our county in modern times.

In another act of political independence and bravery, Gallegos took the highly unusual, and politically and personally risky, step of prosecuting the architects of the killing of Cheri Lynn Moore. Here you had a mentally distraught woman armed with a flare gun, holed up in her own apartment in downtown Eureka. She wanted help, so she called mental health services, and the cops went into action. After denying her friend access, claiming Ms. Moore posed an imminent risk of fire, they charged her locked door and killed her when she turned in surprise holding the flare gun, unfired.

Had the Eureka SWAT police evacuated her building, called in the fire department, consulted ballistic experts about flares, and waited while mental health professionals resolved the now safely secured standoff, Cheri Lynn Moore would be alive today. Entering the apartment with shields and fire extinguishers would have resulted in the same end.

Instead, led by Chief Douglas and Lt. Zanotti, they did the opposite. Despite claiming imminent fire hazard, police stationed their command and control center below the proclaimed fire threat instead of safely across the street with a view of her apartment, and charged into her apartment without shields or extinguishers.

Again, legal technicalities involving the Grand Jury scuttled Mr. Gallegos' laudable effort to hold the perpetrators accountable.

But Gallegos' gutsy efforts will and should be long remembered, and recounted, not as unsuccessful (or “botched”), but as instances of courage and integrity in the face of fire, and examples of why we need a DA who is independent of, and unintimidated by, the powers that be.

Ken Miller resides in McKinleyville.

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

Ken Miller Op-Ed - He really wants his Palco suit to keep going

Real value of DA's suit vs. Palco yet to come?
Ken Miller for The Times-Standard
Article Launched: 02/03/2008 01:30:26 AM PST

Your editorial of Jan. 25, “An end to the saga,” criticizes Mr. Gallegos instead of the court's decision, or Maxxam.

It is ironic that the Times-Standard blames Mr. Gallegos for an “ill-thought-out attack on Humboldt County's historical way of life, and on one of the county's main economic engines.” Isn't it Hurwitz who is attacking? After all, the Headwaters Deal secured for Hurwitz a billion-dollar refinance that our watersheds could not afford, with bankruptcy of that venerable “engine” -- and our watersheds -- as the predicted results.

Does anyone doubt Pacific Lumber committed fraud? How else do you so deplete such a rich resource so rapidly, and wreak so much social, economic and environmental havoc, and get away with it?

The court's decision in the Pacific Lumber case crystallizes a frightening expansion of the “right to lie,” so that the successful cheater (as opposed to one who is caught during the proceeding) is immune from any legal consequences for lying in most government proceedings. The rationale is that the protection of free speech, and finality in permitting processes, are worth the damages resulting from undetected deception.

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government agency personnel, already stretched beyond their limits, rely upon compliance with laws that deter, not encourage fraud.
PL is now trying to use the court's decision to stop the Water Board from regulating them. The court concluded that if any part of the state government agreed to the deal, all parts are presumed to have agreed, and therefore must defend it -- including the Water Board, which disagreed, and has been trying unsuccessfully to make PL do something about the nuisance flooding in Freshwater and Elk River.

Analogously, the court determined that as part of the government, the DA -- who never participated in any part of the Headwaters proceedings -- was obligated to have discovered the alleged fraud and to have acted during the Draft Environmental Impact Report (DEIR) or forever defend, not attack, the deal. The implications of this are alarming, especially if fraud is involved.

It is also disturbing that the court's determination -- that PL's lobbying efforts, not the alleged fraud, resulted in the company's success in obtaining a sustained yield plan (SYP) with harvest volumes that finally finished off the company and our watersheds -- was based on fundamental misunderstandings of fact by the judges that could have been avoided in a fair trial.

PL allegedly hid significant new information that proved that their proposed SYP harvest rates would violate water laws, in order to avoid having to recirculate the DEIR, thereby allegedly depriving the public of a legitimate process.

PL had the information over six weeks prior to submitting it, according to the consultant who analyzed the actual data. When PL did turn it in, to officials uninvolved in the process, it was too late to influence the DEIR, which was therefore based on incorrect landslide data. The court did not understand the significance of this.

Recirculation would have meant that all the scientists, agencies, affected residents and interested public weighing in on PL's harvests rates, methods, and proposed mitigations, would have had powerful, irrefutable evidence from PL's own surveys and consultants that PL's proposed logging plans in the SYP were unsustainable and unlawful.

The Mutual Defense Pact (MDP) of the Headwaters Agreement bound the resource agencies to defend the agreement instead of the people, so our government personnel collaborated with PL to avoid the time-consuming recirculation, and keep the March 1 deadline.

Although the political momentum for a Headwaters deal was enormous, PL's lobbying efforts allegedly would have been thwarted by a reanalyzed EIR containing the “corrected” landslide conclusions from Jordan Creek, according to then California Department of Forestry (CDF) chief Richard Wilson.

Soon after the deal was signed, Jim Branham, a key figure in the Headwaters Deal for the California Resources Agency, and Craig Anthony from CDF, joined the PL team, both from lead agencies for the state in the EIR process.

The Appellate Court misconstrued the agencies' roles as independent and unconflicted; but in compliance with the MDP, these agencies have defended PL from the opposition of their critics, including affected watershed residents and others, agency personnel and the DA.

The real value of the suit, and of Mr. Gallegos' foresight in clarifying the damaging consequences of this immunity to our watersheds and workforce, will be if the Legislature makes a “successful” cheater liable, not immune, allowing government to protect us effectively. The court's decision included that advice from the state Supreme Court.

Ken Miller lives in McKinleyville.

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.

ER - Gallegos responds to appeal court ruling on fraud suit

Gallegos responds to appeal court ruling on fraud suit

By NATHAN RUSHTON, The Eureka Reporter
Published: Jan 12 2008, 2:21 AM

At a news conference Friday, District Attorney Paul Gallegos adamantly defended his decision to pursue a fraud lawsuit against Pacific Lumber Co. that was dismissed twice because the court found it had no legal merit.

“I think it was right to file the case,” Gallegos said.

He acknowledged that a considerable amount of time and effort went into the legal battle that has spanned four years and the county was at risk to pay the legal fees and possibly PALCO’s attorney costs.

A California Appeals Court published a rare 23-page decision and opinion Thursday upholding a Humboldt County Superior Court ruling that the fraud charges brought against PALCO under Unfair Competition Laws weren’t legally sufficient to go to trial and were dismissed on demurrer.

Going beyond simply upholding the demurrer ruling, the appellate court stated that 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.”

After review, Gallegos said he disagrees with the court’s ruling, but respects the decision.

Gallegos’ alleged in his original suit, filed in 2003, that PALCO intentionally committed fraud 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.

In a 2005 decision, visiting judge Richard Freeborn sustained a previous demurrer ruling that PALCO’s submission of an allegedly erroneous report and the subsequent resubmission of corrected data was protected under Civil Code “litigation privilege.”

The court noted that a corrected report was resubmitted more than one month before the permits were granted by state regulators and didn’t likely affect the outcome of an extensive and exhaustive administrative process.

Gallegos hasn’t ruled out an appeal of the ruling to the California Supreme Court, but said he wanted to consult with his colleagues before deciding.

According to its Web site, the Supreme Court must have an appeal served and filed within 10 days after the appeal court’s decision is final.

Gallegos stated he believes it is right for citizens to believe that businesses seeking logging permits should be obligated to provide truthful and accurate statements in environmental impact review processes.

Gallegos said a legislative remedy may be needed to address fraudulent data entering administrative hearings.
While Gallegos said he believes the California Environmental Quality Act process was undermined by the alleged fraudulent information by PALCO, he said it is uncertain if it would have played out differently if they had the correct information earlier.

“We really don’t know,” Gallegos said.

But Gallegos said what is known following the court ruling is that the sediment reports were protected under the litigation privilege laws

Frank Bacik, vice president and general counsel for PALCO, responded Friday to whether fraudulent information ever was submitted to regulators during the process.

“No, absolutely not,” Bacik said.

Bacik said there was never any need for the company to rely on the litigation privilege’s immunity defense.

“We don’t believe there was any misinformation or fraud,” Bacik said.

ER - Appeal court upholds dismissal of fraud suit against PALCO

Appeal court upholds dismissal of fraud suit against PALCO

By NATHAN RUSHTON, The Eureka Reporter
Published: Jan 10 2008, 8:09 PM

A California Appeals Court has upheld a Humboldt County Superior Court ruling that the fraud charges brought against Pacific Lumber Co. by District Attorney Paul Gallegos weren’t legally sufficient to move forward.

Barring an appeal to the California Supreme Court, it is the end of the line for the lawsuit filed by Gallegos under Unfair Competition Laws in 2003.

The 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 district attorney’s case and two subsequent amendments were dismissed by the courts on demurrer, which effectively throws out the case as a result of a lack of legal claims.

In 2005, visiting judge Richard Freeborn, acting for the Humboldt County Superior Court, sustained a previous demurrer ruling that PALCO’s submission of an allegedly erroneous report and the subsequent resubmission of corrected data was protected by the “litigation privilege” under Civil Code section 47(b).

Litigation privilege protects communications made as part of a judicial or quasi-judicial proceeding, according to court documents.

PALCO said its actions were also protected under the Noerr-Pennington Doctrine, which it argued is constitutionally protected freedom of speech that provides immunity from litigation to businesses in their efforts to persuade government.

In this case it was the lengthy California Department of Forestry’s environmental review as part of the California Environmental Quality Act process for the timber company’s long-term harvest plan as part of the Headwaters Agreement.

Gallegos stated in his oral arguments Dec. 19 to the Appeals Court justices in San Francisco that the trial court erred in its previous ruling in applying the law, citing PALCO’s conduct was not protected under the litigation privilege or Noerr-Pennington.

In an audio transcript obtained by The Eureka Reporter, Gallegos told the court that the fraud case is “fundamentally about preserving the integrity” of judicial and CEQA proceedings.

Gallegos said that to grant immunity to an applicant who submits false information “completely erodes the integrity of the system and disempowers the administrative agencies from fulfilling their mandate,” which he said in this case is protecting the state’s resources.

But the appellate court justices disagreed and concluded in a rare 23-page published ruling and opinion that Gallegos failed to prove — on his third attempt — any “reasonable possibility” that his case could be corrected to move forward and even if it did, the evidence presented “would not justify their prevailing at trial.”

The court also noted that even though PALCO may have submitted erroneous data, the corrected data was available to decision-makers and stricter harvest permits were adopted.

The opinion states: “Given the undisputed presence of disinterested decision makers at the CDF, as well as other state agencies, the extensive independent review and analysis of Pacific Lumber’s proposed harvesting plan, the public hearing open to all interested persons and agencies, and the review process that was available for correcting any identifiable errors (including misrepresentations) in a timely fashion, we are thus disinclined to conclude the CEQA proceedings were rendered illegitimate by Pacific Lumber’s alleged submission of fraudulent data — which indeed was corrected over a month before issuance of the CDF’s ultimate decision.”

Frank Bacik, vice president and general counsel for PALCO, said in a telephone interview from San Francisco Thursday that the company was pleased with the court’s published ruling.

“The court confirmed the application of longstanding legal doctrines established by the state legislature and the U.S. Supreme Court protecting the right of companies to petition the government,” Bacik said in a statement. “The court determined that the trial court was correct as a matter of law to dismiss the case, even before trial, because the DA simply urged incorrect and untenable interpretations of law.”

Bacik said in upholding the dismissal of the case, the appeal court looked at a vast array of facts and found that CDF and the public had extraordinary access to reports and information related to the long-term timber harvest plan in question.

“I am very pleased to the extent that the facts were analyzed,” Bacik said.

For Gallegos, the lawsuit he first filed against PALCO in February 2003 was a key moment in his political career.

The controversial lawsuit propagated an unsuccessful recall effort to oust him from the District Attorney position he took over in 2002 after defeating 20-year incumbent Terry Farmer.

Whether or not Gallegos intends to appeal Thursday’s ruling to the California Supreme Court and how much the county might have to pay PALCO for its legal costs to defend itself is uncertain.

Gallegos did not return phone calls to The Eureka Reporter by deadline.

TS - Gallegos' Palco case dashed by appeals court

Down in flames! The Times Standard's first attempt 'Breaking News' has some facts wrong - the case was filed February 24, 2003, Gallegos took office January 2003.
***
Gallegos' Palco case dashed by appeals court
The Times-Standard
Article Launched: 01/10/2008 02:36:47 PM PST

A state appeals court has upheld a Humboldt County Superior Court ruling that threw out District Attorney Paul Gallegos' fraud lawsuit against the Pacific Lumber Co.

In a ruling Thursday, the California First District Court of Appeal agreed with visiting Judge Richard Freeborn's decision to toss out the suit -- which was first filed in 2002. It alleged Palco knowingly submitted faulty studies during the Headwaters Forest negitoations to sway regulators to allow it to cut more timber.

Freeborn ruled the district attorney didn't prove that the company duped the government to gain advantage over a competitor, Freeborn wrote in his June 2005 decision.

The appeals court said that Freeborn had no discretion to weigh the evidence in the case when it ruled. But the appeals court went further, saying that even if the evidence submitted by the DA's office was considered, it wouldn't show that the DA would prevail at trial.

There will be a full story in the morning paper.

There is more coverage and discussion at watchpaul.blogspot.com - there are links to all of the case filings, amendments and briefs as well.

GALLEGOS' APPEAL DOCS in order

http://www.scribd.com/doc/337250/palco-suitORDER SUSTAINING DEMURRER WITHOUT LEAVE TO AMEND - a 24 page pdf file
Gallegos vs Pacific Lumber Company, Scotia pacific Holding Company, Salmon Creek Corporation and Does 1 through 10 Case No. DR030070
June 14, 2005

APPELLANT'S OPENING BRIEF - a 35 page pdf file
Gallegos vs Pacific Lumber Company, et al Case No. A112028 (Humboldt Superior Court No. DR030070
November 8, 2006

Also available here: humboldt.ca.us/distatty/pdf/palco

RESPONDENT'S REPLY BRIEF - a 57 page pdf file
August 31, 2007

APPELLANT'S REPLY BRIEF - a 36 page pdf file
September 20, 2007 (or September 24)

Gallegos takes on PL

District Attorney Paul Gallegos has come out with both guns blazing in a case filed against the Pacific Lumber Co. earlier this week.

In essence, the case alleges that the company and several of its subsidiaries hid scientific data that could have led to a curtailment of logging on its timberlands.

The DA's office is contending that the company lied in its representation of the severity of landslides in Jordan Creek, located upstream of Humboldt Redwoods State Park. The office also says the company suppressed the distribution of several key environmental documents.

Gallegos is seeking $250 million in restitution for the alleged violations.

Local environmentalists are ecstatic.

"I'm flying. This is the best thing that has ever happened," said Ken Miller, a member of the Humboldt Watershed Council, and a longtime opponent of PL, in a phone interview Tuesday. "My god, finally we have a champion who has some power."

When Gallegos came into office he sent out a letter to many of the local environmental and property rights groups, saying that he believed it was his duty, under California's constitution, to enforce certain environmental laws and asked for any input the groups thought would be helpful.

The DA's office declined to comment on the case, citing ethical rules that prevent them from biasing anyone against their opponents. Pacific Lumber could not be reached for comment.

Gallegos' action comes less than a week after he vowed to the Journal that his office would not sit idly by if environmental laws were being trampled (see "Fresh Air," Feb. 20).

TS - Gallegos wants Bay area firm to help with PL suit (Cotchett)

Gallegos wants Bay area firm to help with PL suit
By James Tressler The Times-Standard March 07, 2003

EUREKA -- Humboldt County District Attorney Paul Gallegos is expected to ask the Board of Supervisors next week to let him hire a powerful Bay area law firm to assist in his lawsuit against Pacific Lumber Co.

The reason he's going before supervisors is to ask them to pony up some money to help pay at least some of the legal bills. His own department's budget can't handle all of them.

The request is on the board's agenda next Tuesday. It'll likely be heard fairly early in the morning.

The Burlingame firm, Cotchett, Pitre, Simon & and McCarthy, represents California Public Employees Retirement System, the Regents of the University of California, and has represented the state Senate and Assembly. The firm has also sued Enron, WorldCom and other companies associated with corporate fraud.

According to a March 5 draft proposal signed by Joseph W. Cotchett and sent to Assistant District Attorney Tim Stoen, the firm is asking for a fee of 14.5 percent of any recovery should the district attorney's office prevail against the timber company.

The district attorney launched a suit against PL last month, alleging the timber company didn't hand over important data on landslides before the $480 million Headwaters Forest deal was signed in March 1999. That alleged deception allowed the company access to more timber each year than it would otherwise have been allowed.

It also has caused damage to slopes and streams, filled in the Humboldt Bay shipping channel with sediment, and harmed bridges, roads, homes and the property rights of Humboldt County residents, the suit claims.

In the lawsuit, Gallegos is asking PL pay damages of up to $2,500 per tree for every one cut as a result of its alleged deception surrounding the Headwaters deal. The district attorney's office has estimated the company cut 30,000 trees it shouldn't have been allowed to cut, which appears to mean the damages the district attorney is seeking are in the neighborhood of $75 million. Of that, the Bay area firm would want more than $10 million plus expenses.

According to the firm's draft proposal, the firm would serve as special counsel, while the district attorney's office would be the lead attorney and retain full control over the lawsuit.

County officials Thursday were reviewing Gallegos' request to retain the firm, and asking Gallegos supply figures on how much, if any, money would have to come out of the county's pocket. The firm will have to be paid for its time and expenses and that's likely to add up to a hefty amount if the litigation drags on and depending on how much of the work is turned over to the Burlingame firm.

County Administrative Officer Loretta Nickolaus said while the county regularly retains outside counsel on lawsuits, it's highly unusual for such counsel to be retained for the district attorney's office.

Nickolaus indicated that it's likely the district attorney's office will have to pick up the tab for retaining the firm out of its own roughly $880,000 annual budget. That might be tough to do.

The Board of Supervisors hasn't yet taken any official stance on the lawsuit. Fourth District Supervisor Bonnie Neely, wife of former District Attorney Terry Farmer, who Gallegos beat in last year's election, has criticized the new district attorney for not consulting the board before moving forward with this litigation.

The high-profile lawsuit has sparked a wide range of opinions from the public. Some, including the Environmental Protection Information Center in Garberville, which has a similar lawsuit against PL, have praised Gallegos for challenging the timber company. But others, including county supervisors Roger Rodoni and Neely, have accused Gallegos of political grandstanding and serving as a dupe for environmental special interests.

PL officials have called the suit another step toward trying to put the timber company out of business, and have said the suit is based on allegations that have already failed in the courts before.

Attempts to reach Gallegos for comment Thursday were unsuccessful. But in the wake of controversy, he has stood by his decision to file suit, telling reporters he feels obligated to respond to public concerns about environmental violations.

ER - It ain't over until it's over - Ken Miller

Better title is "Desperation"

***
It ain't over until it's over
by Ken Miller, 7/27/2005

We should not forget that the evidence alleged in the DA’s lawsuit vs.
PL argues that Maxxam PL committed fraud during the Headwaters
Agreement in order to obtain a rate of harvest that would allow Hurwitz to
refinance PL’s long-term debt by liquidating PL’s forest inventory.

This alleged scam has cost our county hundreds of millions of dollars
in impacts to private property and infrastructure, and the compromised
future of our timber and fishing industries.

Is anyone surprised that Maxxam PL would pull off such a stunt? If so,
check out what they did in Owl Creek in 1992
(www.humboldtwatersheds.org). A Nixon-appointed federal judge found them guilty of forging
documents that they then deceptively submitted to government regulators, in
an MO remarkably similar to the fraud alleged in the DA’s complaint.
Same with the deceit that led to the loss of their timber license in 1998.

Amid all the attacks on the DA’s Office, and Tim Stoen, we must not
lose sight of the effects of PL’s alleged and proven fraud(s), and the
implications of Judge Freeborn’s ruling.

The judge got the facts and the law wrong. A DA must have the right to
penalize malfeasance in administrative proceedings, to protect
communities from the potentially devastating consequences of lying and cheating
by permit applicants. Otherwise, we will need very big government to
uncover sophisticated scams, and no one wants, or can afford, that.

Allegations against Debi August also would constitute anti-competitive
behavior. Her attorney, Greg Rael, claims that Debi August’s conflicts
of interest do not constitute a “truly serious case of political
misconduct.” I beg to differ. Ms. August has been president, Humboldt County
Board of Realtors, and regional chair, California Association of
Realtors, and a member of the Fortuna Planning Commission for 15 years.

She knows better. What she alleged to have done, which has not been
denied, is blatant insider trading, an inexcusable and intolerable
textbook case of serious political corruption.

The real mystery is why Judith Schmidt, the grand jury foreperson, and
her attorney Allison Jackson, who has it in big-time for Mr. Gallegos,
have not been charged with jury tampering and obstruction of justice.
Their defense? The DA has a vendetta. Perpetrators frequently blame
their accusers of crimes they themselves commit. PL has made a career out
of this strategy.

Tim Stoen has bravely challenged corruption by the well-connected in
pursuing Paul Gallegos’ promise of meting out justice for all. Their
courage should be a beacon for us all.

(Ken Miller is a McKinleyville resident. Opinions expressed in columns
and guest opinions do not necessarily represent those of The Eureka
Reporter or its staff. Readers who would like to respond to this and other
columns and guest opinions may e-mail letters, columns and guest
opinions to editor@eurekareporter.com.)

McK Press - Palco's bankruptcy ignites debate, speculation

Daniel Mintz usually gets his facts straight, and more often than not he gets the dynamite quotes and the best articles on any given topic. This one is particularly interesting because it reveals Paul Gallegos' pre-determination that Pl is guilty, and his stop-at-nothing approach to dealing with the case.

By Daniel Mintz Press Staff Writer
McKinleyville Press

The Pacific Lumber Company's financial strife has peaked with bankruptcy, and as the company names regulatory pressure as the reason why, its critics call attention to ongoing debt and past forecasts of liquidation.

The company's Thursday, Jan. 18, bankruptcy filing puts its insolvency in black and white. Now Palco (Pacific Lumber's preferred abbreviation) will be temporarily shielded from those it owes money to while it restructures. And it owes a lot of money, and has ever since it was taken over in the mid-1980s by the Texas-based Maxxam Corporation and its vilified owner, Charles Hurwitz.

With a continuous debt load of about $750 million, Palco's timberland subsidiary, Scotia Pacific, has struggled to meet interest payments to timber note holders. Recent years have been the toughest, with the company closing multiple mills and borrowing money off future timber sales to make the bi-annual debt payments.

Now that bankruptcy's been filed, the company and the community arrive at differing takes on it - Palco points at "regulatory limitations" as a financial crimp while those who have warned of economic collapse for years continue to portray Maxxam as a forest grabbing bankruptcy-maker - including the county's District Attorney, whose fraud lawsuit against the company nears an appeal determination.

D.A.: Debt serviced by fraud

Interviewed not long after hearing of the bankruptcy, District Attorney Paul Gallegos said he isn't surprised. "That's what we're saying in our lawsuit - their whole plan is to carry out an unsustainable harvest rate to fund that debt," he continued.

The lawsuit was dismissed due to legal conditions unrelated to the D.A.'s allegation that Palco knowingly submitted false information during the 1998 Headwaters Deal process. Gallegos' appeal of the dismissal is being considered by the state's Supreme Court. He thinks the company's huge and lingering debt pressured it to push for higher cutting rates - and to commit fraud.

"There was one thing on their minds and that was having a set harvest rate - they were going to make sure they got it and that was the reason they submitted false information," said Gallegos.

Pacific Lumber and the state agencies that dealt with it have said that the wrong data represents a mistake that didn't have much bearing on regulatory decisions. And in a press statement released a day after the bankruptcy filing, Palco cites harvesting limits set by state and regional water quality control boards as an economic crippler.

Reduced harvests in the Elk River and Freshwater watersheds have been imposed due to flooding and sedimentation concerns. The company has filed a lawsuit against the state, alleging that the permit conditions are a violation of the Headwaters Deal.

"The failure of the state to live up to the terms of the Headwaters Agreement has prevented Pacific Lumber and (Scotia Pacific) from remaining economically viable without restructuring," Palco's press release stated.

What that restructuring will consist of is also being debated.

'Breathing room'

Andrea Arnot, Palco's communications director, emphasized that filing for bankruptcy doesn't mean the company is about to fold. "This is a way for us to get breathing room and work out financial issues without pressure from our creditors and our lenders," she said. "We are not going out of business, that is not what we intend to do - Chapter 11 bankruptcy will allow us to preserve and strengthen our business to best meet our financial obligations."

Palco's financial strength has been increasingly drained. In 2005, the company came close to bankruptcy and proposed giving its timber note holders a 90 percent majority ownership share in exchange for debt relief. But Palco achieved debt service through borrowing.

Asked about the economic effects of bloated debt, Arnot said she couldn't "speculate" about it, and re-emphasized the impacts of water board actions and the Headwaters Deal. She repeated the press release's description of the Headwaters Deal as the trigger for "the most stringent environmental restrictions ever placed on timber harvesting."

The company is about restructure itself, she added, but the way it will be done hasn't been decided. "We aren't there yet," Arnot said. "We filed for bankruptcy last night and we won't come up with a plan overnight."

But Darryl Cherney, one of the lead players in motivating the Headwaters Deal, said he knows exactly what will happen next. "Charles Hurwitz is going to part out Pacific Lumber like a stolen car," he said. "As I've said repeatedly, Charles Hurwitz does not know how to build companies, he only knows how to rip them apart and bankruptcy was always part of his plan."

The regulations connected to the Headwaters agreement followed double- and triple-cutting episodes that led to Forest Practice Act violations and revocation of Palco's harvesting license. Cherney pointed out that the company's debt remained high even when cutting was multiplied.

"People would say (Hurwitz) is cutting down trees to pay off the debt and I always disagreed," he said. "He's cutting down trees to line his pockets."

Mention of the company's litigation against the state has been included in Palco's recent financial filings to the Securities Exchange Commission. Gallegos thinks Palco's management needs to take responsibility for the economic shortfall. "They've blamed it on everyone except themselves from day one," he said.

NCJ - One year later

At the time I am posting this article on this archival blog - Gallegos has been re-elected yet again, sworn in for another four year term.

He has lost all but three of the experienced prosecutors who made up the office he inherited. He is unable to attract new and qualified replacements. The new hires haven't been working out very well, one left after only a few days, another left in less than 60 days. The ones who are staying have problems - Jeffrey "yougofree.com" Schwartz has done next to nothing since coming on board, and Gallegos gave him the now decimated Child Abuse Services Team (CAST) assignment. He has yet to take a child abuse case to trial. Another, Allan Dollison, had been suspended by the bar for moral turpitude, forging court documents.

Gallegos himself has been caught plagiarizing in a couple of instances, and using the purloined words for his own Op-Ed pieces ("My Word") in the Times Standard.

He finally filed an appeal of the Palco Case dismissal, in the meantime, plea bargains are up and crime is on the rise. Gallegos' relationship with law enforcement has not improved. During the most recent election, every single law enforcement group in the County endorsed his opponent, Worth Dikeman.

He is losing his investigators, his office manager has taken a position elsewhere. Four people left or announced they were leaving within the last couple of weeks.

Humboldt County is big trouble.



ONE YEAR LATER
Gallegos survived the recall attempt.
Now for the hard work, learning to run the office
March 3, 2005



A YEAR AGO, HE WAS RIDING HIGH. ON THE NIGHT OF MARCH 2, 2004, DISTRICT ATTORNEY Paul Gallegos was the center of attention at the packed Lost Coast Brewery, celebrating his landslide victory over those who tried to boot him from office in a recall election. The message was clear, Gallegos told the adoring crowd, "that if we work and sacrifice for democracy, it will work and sacrifice for us."

They were stirring words for his supporters, who saw the victory as a repudiation of good-ol'-boy politics in Humboldt County. Gallegos, a biblical David, had gone up against the Goliath of the Pacific Lumber Co. -- the company he had sued for fraud and the one that provided some 80 percent of the funding for the recall -- and vanquished it. It was nothing less than the beginning of a new era.

But the feeling of jubilation was not shared by many of Gallegos' colleagues and staff. Today, the affable 42-year-old DA is struggling to manage a massive workload in his office, caused, in part, by his own doing. He consistently skips important meetings, and is out of touch with colleagues and community groups, critics say. And some of the public statements he made during the recall campaign continue to trouble those whose trust he lost.

"I can't say that he hasn't tried," said Eureka Police Capt. Murl Harpham [photo at left] , a 48-year veteran of the force. "We have a good relationship in terms of communicating. The problem is things are not getting done. It hurts our morale, it hurts our ability to do the job."

`Tuned and buffed'

In some ways, Gallegos said, the recall was positive. "It was a good thing because it was an exercise in our values," he said late one recent Friday afternoon in his office's law library. But the divisive campaign also was a major diversion from the job he began in January 2003 after working nine years as a local defense attorney.

"When it was over, it was like, I can get to work. I've been working to do that, to get the office tuned and buffed. The first thing is to turn us into a team. I think we're getting there."

But the ranks of his team have thinned considerably in two years. Gallegos has lost a significant number of his deputy district attorneys, the lawyers who go to court to prosecute Humboldt County's alleged murderers, rapists, drug dealers and petty thieves. Rob Wade and Ed Borg resigned in late summer for jobs in other counties. Nandor Vadas was laid off because a domestic violence grant that funded his position ran out. Harry Kassahkian and Gloria Albin Sheets were laid off. (Sheets later ran as a replacement candidate in the recall and has sued the office for discrimination, claiming she was let go in connection with a workers' compensation claim. The suit is pending.) And, in June, Gallegos fired Allison Jackson.

The loss of Wade, Vadas and Jackson -- all veteran felony prosecutors -- was a crushing blow to the office, observers say. The remaining veterans, Max Cardoza, Worth Dikeman and Maggie Fleming (who only works part-time), are left to shoulder the vast majority of the most serious criminal cases.

Gallegos has chosen not to replace Wade and Jackson with similarly experienced attorneys for budget reasons. Instead, he's hired two recent law school graduates to deal with misdemeanors, the less serious crimes. A third will be hired soon. All must be trained before they set foot in the courtroom. (Other vacancies will not be filled.)

"You try to do the job in a cost-effective way," Gallegos said. "So one of the things we wanted to do is to have misdemeanor attorneys do misdemeanor caseloads, but also support felony deputies. It reduces the felony deputies' caseload, so I don't need as many of them, also my staff is less expensive.

"Could we use more people? Absolutely. Could we use more felony attorneys? Yeah. Times aren't as plush as they were in the past. But I certainly hope this office is fulfilling its obligation, and I believe it is."

Gallegos is taking on some of the load by trying cases in court himself, fulfilling a campaign pledge. He's also getting some additional support for the Palco fraud suit from Steve Schectman, who was officially deputized as an unpaid prosecutor to assist Assistant District Attorney Tim Stoen on the case.

Gallegos won't comment on why he fired Jackson, except to say that he does not regret doing so. Jackson, who got a job doing civil law for the Harland firm in Eureka, declined to be interviewed for this story, as did Wade, Cardoza and Fleming.

As Gallegos continued to talk about the workload, his tone became more serious.

"Are we pushing the office to the point of breaking it?" he said. "Yeah, I think so."

Ripple effects

Others, too, have felt the loss of staff in the DA's office. Jackson and Wade, along with Andrew Isaac, were the deputies who handled nearly all of the sexual assault and child abuse cases in the county -- cases that are complicated to investigate and often difficult to prosecute, said Maryann Hayes-Mariani, one of the managers at the North Coast Rape Crisis Team in Eureka.

The departure of Jackson and Wade was an "incredible, monumental" blow, Hayes-Mariani said. "If your focus day in and day out is to prosecute cases where people are hurting people in these horrendous ways, when you're used to having staff that have an incredible amount of experience doing this work, and they can support each other, it's just helpful," she said. "They were very excellent at their jobs, and that we no longer have them is a great void for this community."

The staff shortage has caused another problem, Hayes-Mariani said. Cases that used to be handled from beginning to end with one prosecutor may now be shuttled among several -- with the victim of the crime completely in the dark as to whom to contact about their case.

"The survivor starts feeling frustrated by the system, and if something happens that they weren't made aware of, they end up feeling re-victimized," she said, "lost in the system."

Gallegos said he is simply too short-staffed to always have one deputy stick with a case from beginning to end. "If I had the people, we'd do it absolutely," he said. But "if a judge says that [a particular] case has to be tried, it gets tried by someone. To me, you get the job done."

Law enforcement also feels the pain when prosecutors are up to their eyeballs in work.

"There's just not enough attorneys to review the cases and try the cases," said Dave Walker, a former investigator in the DA's office who now works part-time as a Sheriff's Office investigator. In many instances, he said, charges are never brought against suspects. "That's one of the ways that you really discourage your rank and file guys," he said. "It's really subtle. It's a partnership. The police enforce the law and they have the expectation that many of [the suspects] are going to be prosecuted. I think most of the working police officers I know are just gritting their teeth and waiting to see what happens in the next election."

Police Chief Dave Douglas did not return phone calls seeking comment. Humboldt County Sheriff Gary Philp declined to be interviewed.

"I'm not trying to say it's all his fault," Walker continued. "He's got a pretty tough row to hoe."

But Gallegos does not have a law enforcement background, and the police have never trusted him. They still chafe at the memory of one of Gallegos' early comments: that he would not be "buddies" with the cops. (He is a servant of the community and cannot afford to get too close to anyone, he says.)

"You don't have to be buddies," Walker said. "But you have to have a pretty cordial relationship with them and understand what they're trying to do. He's had a pretty good swing at it and he still hasn't done it. If he hasn't done it by now, it's not going to happen."

The Stoen factor

The presence in the District Attorney's Office of Tim Stoen [photo at left], Gallegos' right hand man, continues to be a sore subject among some of his colleagues, according to members of the legal community who asked to remain anonymous. Stoen, whom some consider rather an odd duck, was recruited by Gallegos from Mendocino County. Though he does work on some criminal cases, much of his time in the last two years has been spent on one civil case: the fraud suit against Pacific Lumber. That may be a hard pill to swallow for those who see criminal cases as more pressing. For Gallegos, it's not an either-or situation.

"Part of what my responsibility is is to file civil lawsuits [as well as criminal cases]," he said. "The people of the state of California and of this community want us to create social justice as well. If someone's committing fraud, be it someone selling cars out here and doing bait-and-switches, or whatever it is, and it falls under the Unfair Business Practices Act, prosecute them."

Of course, some of the animus against Stoen may have to do with the Palco case. For many longtime Humboldt residents, the fact that the county is "going after" one of its biggest and oldest employers is incomprehensible.

Stoen knows that he has been something of a lightning rod for criticism of the office, and he takes it in stride.

"People have told me that I have a big target on my back," he said. "I'm happy when the papers go after me rather than Paul, because the job of a loyal No. 2 is to take those arrows. If I can take some of the heat off Paul, I'm happy to do it."

Stoen says he thinks things are running much more smoothly in the office than they were a year ago. The recall "cleared the air, and established Paul as being in charge," he said. "He has this gift of being able to transcend the personal attacks and personal grievances and concentrate on the job that needs to be done. The focus really is to protect public safety and make this ship run smoothly. I think he's doing an excellent job as a manager and administrator, since it's new to him."

Forging ahead

Deputy District Attorney Wes Keat's job is to take all of the reports that come in to the DA's office from the various police agencies and make formal charges against crime suspects.

Though the office has been trying to cope with a very high volume of cases and a shortage of attorneys, things are going better lately, said Keat, a former Riverside police officer who joined the DA's office in 1994.

"Obviously, [Gallegos] has made some choices which impact that, but the problem is not of his making. It's a financial problem," Keat said. "We teach young lawyers the trade and then they go somewhere where they can make a lot more money. We're very much at the bottom end" of the DA pay scale in California.

The ones who stay, he said, are truly dedicated. "What it really means is that the office is full of people for whom money is no object. They believe in it. If we were after money, we wouldn't be here."

Gallegos is "very much different" than former District Attorney Terry Farmer, Keat said, but he's doing a fine job. "He approaches his job differently and he does different stuff," like trying cases himself. "Terry didn't do that very much. Paul, I think, sees himself more as providing the leadership, and he leaves some of the smaller trivial administrative details to other people, such as myself. He's a trial lawyer. He goes to court, he tries cases."

Deputy District Attorney Worth Dikeman, who ran as a replacement candidate in the recall election, said Gallegos has been fairly effective as a trial lawyer. Asked how effective he is as a manager, Dikeman said, "I think that's a question you should ask Paul."

The best candidate?

Some of his colleagues clearly give Gallegos credit for going into the courtroom. Others say the job of managing his office is monumental enough and he shouldn't be trying cases on top of everything else.

Being a county department head means going to meetings: keeping abreast of overall budget issues, being in touch with other departments and community groups, forging good communications. On this score, some say, Gallegos is falling short.

Christina Allbright [photo at right] has been an attorney for 14 years with the county Public Defender's Office. She said Gallegos is a friend, she likes his politics and she supported him strongly in the recall. But when it comes to representing his office, she said, Gallegos is a no-show.

"He just can't make it to meetings or send a representative, and he's a critical player," Allbright said. "And I know that that's a concern of different community groups."

Records of monthly county department head meetings reveal that Gallegos has attended twice in the last year.

Allbright said she has talked with Gallegos about her misgivings. And she has talked with others about whether there might be a better person for the job. "I'm concerned that he may not be the best candidate in the future."

Gallegos said he attends many meetings each week, but that "getting cases tried and making this office work is my first responsibility, I think."

There is no clear indication who might run against him.

When Dikeman ran as a replacement candidate in the recall, he said throughout the campaign that he was "not running against Paul." He threw his name in the ring when Steve Schectman, a civil attorney with no prosecutorial experience, said he would run in support of Gallegos. Dikeman was determined to keep Schectman out should the recall succeed.

Later, he voted in favor of the recall, and said on election night that there were certain things that had "troubled" him about his boss's conduct.

One example: Gallegos' public statements on his handling of the case of Pedro Martinez-Hernandez, a 39-year-old Ferndale man accused of continually molesting a minor for eight years. The initial charge against Martinez-Hernandez, assigned by Keat as the charging deputy, was one count of "continuous sexual abuse." But Keat also wrote that there were probably many, many sex offense counts that could give the defendant 100 years in prison, and Gallegos' critics said he eventually got additional information that justified multiple charges. Still, Gallegos -- who was handling the case in court and could have amended the charges -- allowed the man to plead guilty in January 2004 to the single count.

When critics blasted Gallegos about the incident, his response was to say that Keat made the charging decisions, not him.

Dikeman said last year that "there was an effort to cover it up," and that "misinformation was released." He did not elaborate, but others have gone further, saying that Gallegos either had not read the file or had misread it. Basically, they say, he screwed up and would not admit it. Worse, he put the blame on Keat.

Gallegos maintains, as he has all along, that it was a "righteous charging decision," and that the fact that Martinez-Hernandez got 16 years in prison was "not a bad resolution of that case.

"The thing I regret is that some people thought I was trying to pony it off on Wes Keat," he said. "I accept that criticism. But it wasn't my intention to cast blame."

Asked whether he would run against Gallegos next year, Dikeman said, "I have not eliminated that possibility yet. Of course, the last election demonstrated that he is a very skillful politician who is capable of generating large amounts of cash." (The Friends of Paul Gallegos raised about $300,000, mostly in small donations, in the recall fight. On the pro-recall side, Pacific Lumber alone contributed more than $313,000 in cash and nonmonetary donations.) And Gallegos has a large following, Dikeman said. "All of those things go into the mix." Meanwhile, his aging Subaru still sports a "Worth Dikeman" bumper sticker from the recall campaign.

Richard Salzman was the campaign manager for No on F, the anti-recall effort. He said the group managed to put together an "infrastructure and environment that encouraged grassroots participation," and thousands joined in: donating money, phone banking, distributing lawn signs. "Ultimately, our success was due to the cause itself," he said, "and to the candidate."

Still, there was considerable outrage generated by the fact that Pacific Lumber was bankrolling the recall effort. The next election won't have that element. "We'll have a greater challenge to raise money this time around," Salzman said.

As to who might run against Gallegos, Salzman said the ideal candidate "probably will need to be from out of the area," although she or he would qualify only after relocating here, of course. Dikeman might run, but "I don't see how you can be an opponent of your boss and still work in the office."

Gallegos himself said he has "every intention" of running for office again when his seat comes up in June 2006. "I still have work to do. I like this job," he said. He called the rumor that he might instead run for judge "ridiculous." (Judges Dale Reinholtsen and Timothy Cissna will be up for re-election next year.)

If he had the last year to do over again, would he change anything?

Small stuff? Sure, he said. Big things, fundamental decisions? "Probably not," he said. "I'm just not one of those kind of people who sit around and think about how to redo life. I don't."

Photo above left: Mosaic mural at Humboldt County courthouse

SEE ALSO:

Feb. 19, 2004 COVER STORY: "Just another day... Shadowing Paul Gallegos"
Feb. 26, 2004: COVER STORY - "The three who would be D.A."
March 4, 2004 NEWS STORY: "Jubilation at the brewery: hundreds celebrate the DA's easy victory"
May 1, 2003 NEWS STORY: "Declaring war: The bid to recall DA Paul Gallegos has begun"
July 31, 2003: COVER STORY - "Standing in the Shadows of Jonestown: Assistant District Attorney Tim Stoen"

***
The Related Stories are too numerous to list here. This entire blog is related to this topic, as is its companion http://watchpaul.blogspot.com where all the current discussion takes place. It is my hope that someday someone writes a full accounting of what happened here - the lies and deceit, the effect of high powered ACTIVIST PR firms (the story of palco's influence has already been told, the other side of the picture is missing entirely from the record) influencing small town elections, the story of Gallegos' campaign handlers and backers who have in Gallegos a powerful weapon - the culmination of a decade + long effort to destroy one company has gained the ability to use the public judicial system to achieve their end game.

ER - Court nixes ruling on part of Headwaters agreement

Court nixes ruling on part of Headwaters agreement
by Kara D. Machado, 12/18/2005

A state appellate court last Monday overruled a Humboldt County Superior Court judge’s ruling that sided with environmentalists over The Pacific Lumber Company.

The appellate decision threw out the July 2003 ruling by Judge John Golden, which invalidated a major portion of the PALCO’s 1999 Headwaters agreement.

“Of course we are delighted with the decision,” said PALCO president and CEO Robert Manne.

Larry Evans, president of the Environmental Protection Information Center, was not.

EPIC was one of two plaintiffs that sued the California Department of Forestry and other “interested parties,” including PALCO, with regard to what EPIC considered a “flawed” Headwaters agreement concerning species and habitat.

Evans said EPIC’s next step will be to analyze the decision and, should it decide to do so, appeal to the state Supreme Court.

“We will be reading through it with a fine-tooth comb,” Evans said. “Overall, we disagree with it, respectfully, and we stand by our basic case, which is that (PALCO’s environmental) plan doesn’t represent the realities on the ground, meaning species are being pushed to the brink of annihilation.”

According to Chris Manson, manager of regional government relations at PALCO, Golden’s ruling invalidated the company’s Sustainable Yield Plan — which allowed it to cut up to 178 million board feet per year; its State Incidental Take Permits — in relation to the steps PALCO took to protect species and habitat; and its Streambed Alteration Permit — which allowed PALCO to put in crossings on water courses.

Despite Golden’s ruling, PALCO did not have to shut down operations, it just shifted gears and obtained different permits and a different option in its sustainable yield plan.

Throughout the 84-page appellate ruling, there were several comments that stated EPIC “confused” distinct notifications and its attacks against PALCO and the environmental plan were “nonsensical,” erroneous, “simply wrong,” have taken too “narrow a view” and even stated that EPIC’s complaint that no mitigated measures were provided for the geologic impact identified in the environmental report were “meritless.”

Evans said the science the appellate court relied on to make its ruling is “suspect.”

“It has been politicized from the highest levels, from the Bush administration and its cabinet,” Evans said. “They are taking science from people in the field and rewriting it and then deleting whole sections in some cases and sending them back down as agency science.”

Evans said EPIC believes PALCO has logged about 120 percent in the overall watershed within the first seven years of its 10-year equivalent acreage and “the only thing they’ve sustained the yield of is mud and sediments into the creeks and sustained the yield of floods.”

EPIC plans to continue to closely watch PALCO’s operations and Evans said that it is not EPIC’s intention to “just beat up on PALCO.”

“We want reform of forestry across the board,” he said.

Manson said what’s important for PALCO regarding the appellate decision is the validation.

“It’s a validation for what we’ve said all along,” he said. “ ... We’re operating in a sustainable and environmentally sensitive manner.”

Copyright (C) 2005, The Eureka Reporter. All rights reserved.

NCJ - The unraveling of People v. Pacific Lumber and People v. Debi August

Case dismissed: The unraveling of People v. Pacific Lumber and People v. Debi August
by HANK SIMS
July 7, 2005

SITTING IN HIS OFFICE ON THE FOURTH floor of the county courthouse last week, District Attorney Paul Gallegos marveled at the venom of his enemies. Earlier in the month, both the DA's fraud lawsuit against Pacific Lumber and the grand jury's conflict of interest case against Fortuna City Councilmember Debi August had been thrown out of court. His detractors were exultant -- the DA had finally got his comeuppance for hotly pursuing two cases they believed to be rooted more in politics than the law.

"We file tough cases sometimes," Gallegos said in answer to their charges. "That's our obligation. If I said I wasn't going to file a case because it may be tough, or I may lose, I'd be doing an injustice to this community."

There are no regular, scientific opinion polls to gauge the mood of the local electorate, but it would be a fair guess that Gallegos' hypothetical approval rating probably dropped in June, perhaps substantially. Two developments in the last two weeks -- Deputy DA Worth Dikeman's entry into next year's election and a sharply critical assessment of the office from the Humboldt County grand jury -- certainly couldn't have helped him. But the biggest blow to his image was likely the defeats handed to him in the two highest-profile cases his office has prosecuted. Both cases were dismissed before they went to trial, though for very different reasons.

Maybe it was unfair that the two cases consumed so much ink, and so much public attention, when the office continued to prosecute murderers and other violent criminals. But from Gallegos' first days in office, after he filed the Pacific Lumber lawsuit, the public has come to think of him in terms of his sweeping, politically charged cases. Last year's attempt to recall him only cemented this picture. To supporters, Gallegos has been a crusading advocate for the people, dispensing justice even-handedly and cleaning the Augean stables of the local good-old-boy system. To detractors, he's been a showboater, filing dubious legal actions in order to stoke the passions of the environmental community, his political base.

These perceptions will be slow to fade, especially if Gallegos decides to pursue an appeal in the Pacific Lumber case. But the events of the last month feel like the turning of a page. Deputy District Attorney Tim Stoen, the prosecutor whom Gallegos brought with him to office and who led the prosecution in both the Palco and August cases, last week announced that he will be leaving the office effective next Friday to return to a job under Mendocino County DA Norm Vroman  (see "Weekly Wrap"). Despite his protestations, and perhaps partly due to circumstances beyond his control, without the Pacific Lumber case Gallegos seems incomplete. In the coming year, in the long lead-up to what is sure to be another bitterly fought, politically divisive election, he may have to campaign as any of the state's 57 other district attorneys do -- less as a sword of righteousness, more as an effective bureaucrat.

In any case, he is unrepentant.

"Believe me, when you run for office, you realize you will be judged," he said. "If people think I've done wrong, they're going to toss me. That's the way it works."

People v. Pacific Lumber

JUMP TO: People v. Debi August
THE PACIFIC LUMBER FRAUD SUIT WAS FIRST FILED shortly after Gallegos took office. It relied on information provided to the office by Ken Miller of the Humboldt Watershed Council, who had unearthed an irregularity in the 1999 Headwaters deal between Pacific Lumber and the state and federal governments. In negotiations over the company's future logging plans, the company submitted preliminary data that called into question conventional wisdom on the relationship between logging and landslides. The data seemed to suggest that the company could log more, without severely affecting ground stability. Palco then lobbied regulators to allow a greater yearly harvest.

But later, the company submitted the final version of that data, which apparently ended up contradicting the initial study and was much more in line with what geologists had assumed to be the usual effect of harvesting. The final data was submitted to regional offices of the California Department of Forestry and the North Coast Regional Water Quality Control Board rather than to CDF headquarters, where it should have gone. The revised information never made it to the desk of Richard Wilson, then the director of the CDF; Wilson later testified that if it had, he would have waited for additional public comment before approving the final Palco harvest schedule.

On July 14, after pondering the case for many months, Judge Richard L. Freeborn -- a visiting judge from Lake County -- agreed with the company's argument that the DA's lawsuit had no legal merit. Freeborn presented several justifications for the decision in his opinion, but primarily he agreed with Palco's contention that a legal theory known as the Noerr-Pennington doctrine -- which Stoen dubbed the "right-to-lie" defense -- protected the company, as it was at the time exercising its First Amendment right to petition (or "lobby") the government.

One apparent conclusion that can be drawn from the ruling is that Stoen made a huge tactical blunder last year when he undertook a months-long fight to get Judge Christopher Wilson, a member of the Humboldt County bench, removed from the case.

In arguments before an outside judge and a California appellate court, Stoen argued that Wilson had at least the "appearance" of prejudice against him and the case. Stoen cited the fact that Wilson had a "personal relationship" with a relative of Humboldt County Supervisor Bonnie Neely, who he said is a staunch timber supporter, and argued that apparently jocular comments Wilson directed at Stoen during another controversial case -- to the effect that Stoen was "trying to get me to lose my job" -- demonstrated bias. The appellate court ruled against Stoen, but Wilson voluntarily bowed out anyway, handing the case to Freeborn.

Exactly why Stoen was so opposed to Wilson hearing the case -- and why he was willing to risk the approbation of the court and the wider legal community to get the judge removed -- remains something of a mystery. True, in an earlier ruling Wilson had written that the California Unfair Competition Law was an "ill-suited vehicle" for the charges, and added that Stoen would likely have had a difficult time proving the facts of the case at trial.

[Photo at right: Tim Stoen]

Nevertheless, in the same ruling Wilson unequivocally stated that according to his reading, the company was not protected by Noerr-Pennington: "[T]he immunity afforded by the Noerr-Pennington Doctrine does not apply in this case," he wrote. If Stoen had stuck with Wilson, the case would almost certainly have gone to trial.

Asked to comment on this aspect of the case's history last week, Gallegos said only that he didn't dwell on the past. Stoen likewise declined comment. But both said that they believed that Freeborn's ruling is ripe for appeal.

Gallegos said that he believes the ruling is plainly erroneous, and he offered a reductio ad absurdum argument to explain his reasoning. Apply it to someone seeking a building permit from city government, he said; according to Freeborn, the applicant can lie and swindle the building department with impunity, as the First Amendment offers them complete immunity in their "lobbying" of regulators.

"This interpretation, taken to its extreme, is that every interaction with government is quasi-judicial, and therefore `lobbying,'" he said. "So there's no obligation to be truthful."

But his conviction that the ruling is mistaken does not necessarily mean that he will appeal the decision. Gallegos said that the decision on an appeal will largely be made in consultation with his fellow district attorneys, and will likely hinge on whether they want to run the risk of having Freeborn's ruling confirmed at the appellate level -- where it would become binding on everyone.

"Right now you have a ruling that's pretty perverse, or odd," he said. "But it's not a published decision. The question is, do you want a decision like that to be published law? I think all the DAs in the state of California do not want that to be a published decision."

[Photo at left: Paul Gallegos]

Then again, he said, it could be that his colleagues would want to see the ruling challenged. Since the passage of Proposition 64 last fall, district attorneys and the state attorney general are the only people who may bring a suit under the California Unfair Competition Law. If Freeborn were overturned at the appellate level, their powers to bring suit would be more clearly defined.

Stoen, for one, believes that it's worth the risk.

"This case is ready-made," he said. "It's juicy, it's ready to show that the Noerr-Pennington doctrine does not allow lies in the seeking of a permit. If Paul decides to appeal, we can set a statewide standard that every person and every corporation will have to follow."

People v. Debi August

IT WAS PERHAPS A FITTING ENDING TO A CASE that was never far from threatening to devolve from a legal proceeding into a soap opera, or a Shakespearean tragicomedy.

Just as jurors were being chosen for the August trial, Judith Schmidt, the foreperson of the grand jury that investigated and accused August of malfeasance in office, stepped forward with a sheaf of internal grand jury e-mails and other documents that she had squirreled away in her own home office -- fearing, she said, that the day would come in which they would be needed. And they were: Among the Schmidt documents were some that the current grand jury had not provided to August's defense team, despite a court order.

Jury selection was halted while Stoen and August's attorneys, Greg Rael and William Bragg, questioned Schmidt. Then, in response to a motion from the defense, Judge John Feeney threw the case out, ruling that August's rights to due process of law, and the court's own ability to make fair judgments in earlier rulings, had been irretrievably harmed by the fact that the grand jury's official records in the case had apparently been culled.

Gallegos, for one, said last week that he was not sorry to see the case end.

"Frankly, that's a case I would rather not have had, every step of the way," he said. "You know there's going to be a hue and a cry, and there was a hue and a cry."

Feeney's dismissal meant that the charges against August leveled in May 2004 by the grand jury, with Stoen acting as its legal counsel, would never be heard. Likewise, the dual mysteries of how the case came to be and how the Schmidt documents came to be missing from the grand jury's files will probably remain mysteries for some time.

In 2003, the grand jury received a complaint from a Fortuna resident, saying that August was acting inappropriately in regards to a proposed subdivision that was working its way through city government. A real estate broker by trade, she had signed on as "agent" for the project, working with city staff and appearing before the city's planning commission on its behalf. (Though she had initially said that she would "probably" end up selling the resulting lots through her office, she later reversed herself, saying that she would disclaim any financial interest).

After investigating on its own for a few months, the grand jury called in the DA's office to ask about potential legal proceedings that could be brought against August. In addition to the alleged conflict of interest, the grand jury had turned up financial disclosure forms that August had mistakenly filled out when she was a planning commissioner. The grand jury interviewed several other witnesses with Stoen present, then, following his advice, initiated a rare legal proceeding known as an "accusation," which sought to remove August from office.

For several months, the case took several odd turns -- at one point, last August, it was mistakenly thrown out after some paperwork went missing. Taking offense at Stoen's characterization of this premature dismissal as a "major error," Judge J. Michael Brown recused himself from the case, saying he would be unable to remain impartial so long as Stoen was the attorney.

The case -- which Feeney had pruned of everything except the key conflict-of-interest charge -- was set to go to trial when Schmidt stepped forward.

One thing became clear in the aftermath of Schmidt's testimony: There was a deep sense of mistrust between the grand jury and the DA's office, centered mostly on the conflict between August's right to confront her accusers and the grand jury's traditional promise of secrecy to the people who testify before it. Schmidt told the court that the current grand jury foreperson, Darlene Marlow, had ordered her to destroy the documents in her possession. Reportedly, Marlow and other grand jury members were upset that documents had been delivered to August's attorneys, and entered into the public court file.

According to Stoen, this was a result of the grand jury going off half-cocked, initiating an investigation on their own and promising confidentiality to witnesses -- seemingly unaware, all the while, that records of interviews would have to be turned over to the defense if charges were filed.

"If they had come to us, we would have said don't do that. Let our investigators do that," Stoen said.

Gallegos said that the spat between members of the grand jury and his office was largely responsible for the condemnatory report on his office filed by the grand jury last week.

"Darlene Marlow -- she's been upset at us for two years now," he said. "There were disagreements on how the August case was handled, over our obligations. Was our obligation to them, to protect their privacy rights, or was it to Debi August, to protect her due process rights? I know where I would fall every day. Debi August is the accused."

August attorney Greg Rael said that he was preparing to ask Schmidt what had prompted her to retain documents, contrary to grand jury policy, when Feeney decided to dismiss the case. Her answer may have shed some light on how the documents came to be missing from the grand jury file, he said. [Photo at left: Greg Rael]

In any case, Rael is certain that if the case had gone to trial August would have been vindicated. He said that the case law on grand jury accusations, as represented by the 1996 case Steiner v. Superior Court, mandated that such actions must be reserved for truly serious cases of political misconduct. As such, he said, he took lightly claims by Gallegos and Stoen that they were happy to sacrifice the case if August's due process rights had been violated.

"If the DA's office were truly interested in protecting Debi August's rights in this case, then they would have correctly interpreted the leading case on this issue," Rael said.

SEE ALSO: COVER STORY: "The Debi August File" - Sept. 9, 2004

© Copyright 2005, North Coast Journal, Inc.