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Maxxam / Pacific Lumber takes another hit in court

Report on a preliminary hearing in the lawsuit filed by Humboldt County District Attorney against Pacific Lumber Company, alleging fraud and in securing logging permits and asks damages of up to $250 million.
MAXXAM/Pacific Lumber Takes Another Hit in Court
By Ellen O'Tellin

July 29, 2003 -- About 60 spectators turned out to pack a Eureka courtroom
Monday for round one of The People of the State of California v. Pacific Lumber
Company et al (DR030070). The suit, filed by Humboldt County district attorney
Paul Gallegos on February 23, 2003, charges PL, Scotia Pacific Holding Company, and Salmon Creek Corp. with six counts of "deceptive concealment," "fraudulent representation," and "fraudulent suppression" in securing logging permits and asks for injunctive relief and damages of up to $250 million. (More charges were filed later.)

Pacific Lumber, now owned by MAXXAM Corporation of Texas, filed papers asking
for the suit to be dropped, and for sanctions against the District Attorney's
office. Judge Christopher G. Wilson opened the hearing on these matters
by denying requests by Humboldt Community News and KMUD radio to tape
record the proceedings. It was the only ruling Wilson made that day. Apparently
taped instant replays are not permissible in this sport, or at least this
round, which pitted Humboldt County District Attorney Tim Stoen against PL attorneys
Edgar Washburn, John Benke and Jared Carter (with only Washburn in a speaking
role and Carter not at the table).

The suit in question alleges that on November 18, 1998, PL provided data
which caused state and federal regulators to conclude that, "In Jordan
Creek, 85 percent of the recent landslides had occurred on the older harvested
area, and only 15% on the recently harvested area." A few months later, PL
supplied low-level Santa Rosa and Fortuna offices with corrective data
indicating that 60% of the landslides occurred in recently harvested areas. The public was
never made aware of this discrepancy and to this day it has never made its
way into administrative record, Stoen said.

The faulty data undermined scientific consensus that harvesting-to-landslide
relationships existed for all of PL's unstable slopes, giving PL the
opening to lobby for the right to log on unstable slopes, the suit states.
Stoen charged in court that PL suppressed and concealed their corrective
data, and thereby gained the right to log 176.2 million board feet/year rather than 136.6
million board feet, boosting their yearly earnings by $40 million.
Washburn characterized the allegations as miniscule in the three-year
Headwaters process involving an 80,000-page document and 6,000 public
comments. He raised statute of limitations issues, easily dispensed of by Stoen, and
attempted to argue by case law that, "Whoever petitions the government
is immune from liability for their communications." This brought hoots from the crowd
and accompanying admonishments from the judge and bailiff. Stoen thoroughly
shredded this argument, saying his opponent was arguing PL had "the right to
lie." The Noer-Pennington (sp?) case cited, Stoen said, specifically protected
political speech, and by precedent did not apply to regulatory processes, citing
strong language from case law that such an interpretation would invite
criminal and fraudulent behavior.

Judge Wilson gave Washburn a pass when Stoen finished his case, warning
the attorneys that he had read their briefs and didn't need to hear further
arguments. Apparently the taxpaying public in attendance was not
considered entitled by Judge Wilson to witness Humboldt County justice in action, as it was
getting late in the day at a hearing scheduled for 4 PM that began at
4:30. Consequently the second issue at hand, involving sanctions, was barely
argued and the Judge took the matter under advisement.
Meanwhile, AG Gallegos was in another courtroom arguing against the release
of a repeat offender by detailing not only his lengthy rap sheet but also a
complaint received by his office that the man had threatened someone with a
knife. I must say I felt personally relieved that I wouldn't be meeting this man on
a street corner in Humboldt county anytime soon. Our "soft on crime" DA even
refused to grant a two-day paternity pass to a low-level family court offender, reading thoroughly the papers he was presented, expressing concerns about the safety of a two-year-old child involved, and asking, wisely, for more time to make his decision.

On Gallegos's entrance to the courtroom after the PL hearing, Benke was heard
to say, "Hi Paul, still alive?" It was unclear whether he was speaking
politically or literally. Gallegos is facing a possible recall as backlash to the
filing of the PL suit, and he recently severed his femoral artery in a surfing
accident. However, he looked just fine. Marathon treesitter Remedy was at the hearing, smiling as she read over a SLAPP suit amusingly titled, "Pacific Lumber v. Remedy et al." I asked
a Freshwater resident in attendance if he was bothered by the fact that our DA's office
had filed civil, rather than criminal, charges against the defendants. "The way people who are harmed get compensated is in civil court," he replied.

Judge Wilson set no future dates in the case. He will have until October 27
to rule. Onlookers were looking forward to Wednesday's 8:30 AM hearing in the
epic EPIC lawsuit, wherein PL will get one more chance to argue financial
hardship before Judge Golden throws out the Headwaters Sustained Yield
Plan altogether.