Court Tosses Unfair Competition Suit Over Timber Harvesting

Friday, January 11, 2008

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Court Tosses Unfair Competition Suit Over Timber Harvesting

By KENNETH OFGANG, Staff Writer

The First District Court of Appeal yesterday affirmed a Humboldt Superior Court judge’s ruling throwing out a lawsuit in which the Humboldt County district attorney claimed The Pacific Lumber Company made misrepresentations and concealed crucial facts during an environmental review of its plan to harvest timber under the Headwaters Agreement.

Under the agreement, brokered by Democratic U.S. Sen. Dianne Feinstein, Maxxam Incorporated, which acquired Pacific Lumber in 1986, agreed to sell the Headwaters Forest—7,500 acres of environmentally sensitive old-growth redwoods—to the government for more than $300 million.

In turn, the state and federal governments agreed that Pacific Lumber could log its remaining acreage in the area, more than 200,000 acres, subject to environmental requirements reviewable under state law, including plans for preservation of habitat for the imperiled marbled murrelet and the northern spotted owl, prevention of excessive logging and protection of streams.

Pursuant to that agreement, the California Department of Forestry and Fire Protection certified an environmental impact report in 1999 and approved the company’s sustained yield and habitat conservation plans. Those approvals are the subject of separate litigation now pending before the state Supreme Court.

Yesterday’s ruling stems from a suit by District Attorney Paul Gallegos, brought under the Unfair Competition Law. Gallegos claims the company submitted a report containing false data in order to obtain approval from the CDF for an increased rate of timber harvesting and to ensure decreased environmental mitigation requirements.

Gallegos said the false data was submitted to conceal a finding by a consultant hired by Pacific Lumber that new timber harvesting could trigger increased landslide frequency in the Bear Creek and Elk River watersheds.

Worried such a finding would result in issuance of permits for lower rates of harvesting, and thus would hinder its ability to meet certain of its financial obligations, Pacific Lumber devised a scheme to submit false data for a watershed adjacent to Bear Creek, which indicated, contrary to the Bear Creek and Elk River finding, that new harvesting would not likely trigger increased landslide frequency, the district attorney alleged.

But Superior Court Judge Richard L. Freeborn sustained the company’s demurrer, ruling that even if the allegations were true, the conduct was absolutely privileged under Civil Code Sec. 47(b) because it occurred in connection with administrative proceedings under the California Environmental Quality Act.

Alameda Superior Court Judge Jeffrey Horner, sitting on assignment in the Court of Appeal’s Div. Three, said the trial judge was correct. Horner rejected Gallegos’ contention that the litigation privilege does not apply in an action brought under the UCL.

Horner cited Rubin v. Green (1993) 4 Cal.4th 1187, in which the court held that the litigation privilege barred a mobilehome park owner’s suit charging a tenant and the tenant’s lawyers with violating the UCL in connection with solicitation of potential plaintiffs for litigation against the park owner.

Horner rejected Gallegos’ attempt to distinguish Rubin on the ground that he was not a party to the CEQA proceedings, and that UCL actions brought by public prosecutors are distinguishable from those brought by private litigants.

Horner noted that the state was a party to the CEQA proceedings, and that the attorney general is in fact defending the actions of the CDF and other involved agencies in the case before the Supreme Court. And there is nothing to indicate that the Legislature intended to exempt public prosecutors bringing UCL suits from the litigation privilege, the justice said.

The case is People ex rel. Gallegos v. The Pacific Lumber Company, 07 S.O.S. 92.