On the cover North Coast Journal

July 7, 2005


Case dismissed: The unraveling of People v. Pacific Lumber and People v. Debi August [photo of wooden gavel]
Case dismissed: The unraveling of People v. Pacific Lumber and People v. Debi August


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.

[protestors with signs, on Palco logging truck.]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.

[Tim Stoen]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.

[Paul Gallegos]"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.

[Debi August]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.

[Greg Rael]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




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