New Judge Hears Pacific Lumber Fraud Case

Eureka, CA - A long-awaited hearing in the controversial Fraud lawsuit against Pacific Lumber (PL) was held in Eureka Wednesday morning in front of a new judge. Retired Lake County Judge Richard L. Freeborn, made his first public appearance in the case following the self-disqualification of Judge Christopher Wilson.

The “Demurrer” motion filed by PL was the second such attempt to have the historic case thrown out of court. PL’s first “Demurrer” was largely rejected by Judge Wilson in May 2004 following a politically turbulent nine-month delay.

In the People vs. Pacific Lumber, the DA claims PL committed fraud by grossly understating the percentage of logging-induced landslides to the California Department of Forestry (CDF) during negotiations leading to the purchase of Headwaters Forest.

Both sides argued over the sufficiency of PL’s belated correction of landslide data to the local CDF office instead of delivering it to the lead office in Sacramento where negotiations were taking place. Assistant District Attorney Tim Stoen said that to conceal the fraud, PL needed to show it corrected the data, but that it did not want to “do it effectively,” which would have threatened the high logging rate sought by the Houston-based Maxxam Corporation, which controls PL.

Attorney Edgar Washburn argued PL had “first amendment rights” during negotiations and that the lawsuit should be dropped based on PL’s success in getting the state to agree to an additional 40 million board feet of lumber per year. If anyone should be the focus of the DA’s lawsuit, it is CDF for not reopening the public comment period after the corrected landslide information was submitted, Washburn said.

Stoen rebutted Washburn’s argument, calling it PL’s “right to lie” defense. If the court agrees with PL, Stoen said it would be a green light to deceive the government during negotiations, and would have “devastating social consequences.”

The false landslide data had an additional harmful effect of undermining a report by Redwood Sciences Lab Dr. Leslie Reid which linked high landslide probability with logging.

Washburn argued that the data in question was not involved in determining PL’s rate of cut.

PL also sought to strike the DA’s request for a jury trial, but Judge Freeborn denied the motion saying it is within the court’s discretion to allow a jury to help determine the facts of the case.

Newly deputized district attorney Steve Schectman argued against PL’s motion for monetary sanctions, which would order the DA to pay PL’s attorneys fees as a penalty for filing the lawsuit in the first place. Schectman said the DA’s immunity is “legally bulletproof” - a district attorney can’t be liable for bringing legal action or there would be a “chilling” effect on law officials doing their job. Judge Freeborn denied PL’s Motion.

Schectman’s involvement in the case is a point of contention for PL, and the two have a history of facing off in court. At the end of the hearing, PL attorney John Behnke requested Schectman reveal his relationship with the DA’s office as it may be pertinent to how PL chooses to proceed with the case in the future.

“It’s not,” Judge Freeborn stated curtly, prompting an excited response of the nearly packed courtroom who had sat mostly silent through the technical, hour-long hearing.

Judge Freeborn did not issue a ruling on whether the lawsuit will be allowed to go forward. He took the matter under submission and is expected to give his decision within ninety days.
##