Palco Suit

7074457041

Superior Court, Humbold

01 :08:38p . m .

06-14.2005

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PALCO has demurred to Plaintiffs Second Amended Complaint (SAC).

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(1 have adopted the collective term "PALCO", as used in previous pleadings, to refer to

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all defendants.) The matter was argued and submitted on February 16,2005.

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PALCO's Motion to Strike a request for a jury was denied at the conclusion of the

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hearing. The Court deemed Plaintiffs request as being for an advisory jury, which is within the power of the Court

I have read and considered the pleadings and arguments of both sides, and

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10 as requested, have taken judicial notice of the Statement of Decision in EPIC -v$- CDF ef

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a.,Humboldt County Superior Court Case No. CV990445. In deciding a challengeto a

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12 complaint by a demurrer, the court may consider all previous pleadings and allegations of 13 the parties. I have also taken a fresh look at the issues presented without being bound by

14 previous lings in the case. A trial judge is permitted to reconsider intermediate rulings 15 prior to final judgment, and an order overruling or sustaining a demurrer is not res

16 judicata. 5 W&in Cal. Proc. Pleadinq, Section 936,and citations. However, except to

17 the extent that this ruling may differ from the reasoning and conclusions of the Honorable 18 Christopher G. Wilson, my judicial predecessor concerning this case, Iaccept and adopt 19 his reasoning and wisdom in his other conclusions.

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BACKGROUND

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The genesis of this case lies in the Headwaters Agreement. As previously

25 noted by this court, PALCO transferred a significant private holding of ancient redwood

26 forest to the State and Federal Governments in exchange for additional property, over 300

27 million dollars and other consideration, including substantialfunds to local government. 28 A key aspect of the considerationfor PALCO was to obtain some degree of predictability

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in its ability to manage and harvest its resources in light of evolving environmental

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2 concerns for timber harvest practices and enhanced polical and public involvement 3 4

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resulting in substantial collateral costs. To this end, an important aspect of the

Headwaters Agreement for all parties was the development of a Sustained Yield Pian

5 (SYP)IHabitat conservation Plan (HCP) covering the extensive private holdings of

6 PALCO. Predictabilityto PALCO in its use and management of its resources would be balanced with the pubk's interest in management of those resources in an mvironmentaliy amptable fashion. Individual Timber Harvest Plans (THPs) would then rely upon information developed in the SYP process and the THPs would fit within the

framework set forth by the SYP. Development of the SYP is an extensive and costly multiagency process with primary responsibility lying with the California Department of I

Forestry (CDF) the state's lead agency and the U.S. Fish and Wildlife Service concerning the federal interest therein. The process requires the SYP be developed and submitted to the Director of the CDF who then evaluates its sufficiency prior to release for agency and public review. Comment and response are contemplated ultimately resutting in the approval of a final SYP by the Director

As well detailed in the Statement of Decision in EelC (supra) this was a

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20 somewhat messy process and voluminous as well, running to some 80,000 pages of 21 administrative record. (EDic, Statement of Decision pg. 15). Clearly, there was an

22 abundance of public and agency input in the process, whatever one might think of the 23 condusions reached by the public bodies making the final decisions,

PLAINTIFF'S CONTENTIONS 27 28

As with the original Complaint (OC) and the First Amended Complaint

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Superior Court. Humbold

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06-14-2005

(FAC), the essence of PlaintiWs suit, stated in the SAC, remains that Defendants allegedly committsd fraud by submitting false information in acquiring a Sustained Yield Plan (SYP), and intentionally concealed that false information from the appropriate authorities until the Plan was final, resulting in approval of timber harvesting rates beyond environmentally acceptable levels and without benefR of public scrutiny and comment.

Plaintiff alleges that in November 1998, the Regional Water Quality Control Board (Water Quality), because of concerns it had about logging related impacts, "ordered reports" for certain additional information concerning the effects of logging on five watersheds within the area in question. Plaintiff further alleges that PALCO also knew that Water Quality ordered these reports in response to the severe logging-related impacts that had been observed by government agents over the preceding years. SAC p.8. Plaintiff claims that in response to the possible negative effect of such impacts, PALCO conceived of and executed a fraudulent plot to cover up such negative matters. It allegedly did this by filing a false report on November 18, 1998 (two days after the close of the public comment period); and, on January 22, 1999, delivering a final "truthful

report" to CDF and Water Quaiiity (two days "after" the final Environmental Impact Statemenu Environmental Impact Report (EISIEIR) was published,),and by delivering same to "local" ofices of CDF and Water Quality. Plaintiff alleges this new report should have been filed in the "...government offices specifically designated to review public comments and make a final determination on the permits"; and, that Defendant thereafter failed to call such new report to the attention of appropriate authorities. It is alleged that on February 25, 1999, CDF issued findings for the SYP adopting a LongTerm Sustained Yield (LTSY) projection known as SYP Alternative 25(a). Plainti has alleged in all three of its complaints (OC, FAC and SAC) that thereafter PALCO, without calling the attention of the Director of CDF to the alleged "truthful report". "...lobbied8

7074457041

Superlor Court. Humbald

01:10:20 p.m.

06-14-2005

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1 CDF for a greater allowance of annual board feet of timber, and on March 1,1999, CDF

adopted a different LTSY, known as SYP Alternative 25, which permitted a greater

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3 annual timber harvest.

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Plaintiff alleges that the foregoing constitutes wrongful conduct under

7 California's Unfair Competition Law (UCL) (Business and Professions Code Section 8

]I 17200el seq.) and seeks civil penalties pursuantto B

& P Code Section 17206, of $2,500

9 for each tree harvested since March 1,1999, in excess of SYP Alternative 25(a).

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DEFENDANT'S DEMURRER

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Defendant asserts that the Distdct Attorney cannot atate a cause of action under 15 16 the UCL, and alleges three areas of alleged deficiencies in the Second Amended 17 Complaint:

First:

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Plaintiis claims are barred by California's "Litigation Privilegen, California Civli Code Section 47)

Second: The Second Amended Complaint Violates Safeguards for Constitutionally Protected Speech (The "Noerr-Pennington Doctrine?

Third:

The CEQA Process Was Not undermined by PALCO's Alleged Actions Page 5 of 23

Superior Court. Humbold

01:10:3Qp.m.

06-14-2005

DISCUSSION

FIRST:

Defendant claims that PlaintiWs claims are barred by California C i l Code Section 47, the "Litigation Privilege".

As concluded by Judge Wilson in his RULING RE DEMURRER TO 'HE FIRST AMENDED COMPLAINT (hereafter RULING) and the authorities cited, iled herein April 30,2004,the Ligation Privilege does apply to the fads of this case. I

~dopthis reasoning and conclusion so far as the application of Section 47 to the review n d SYP process here involved. In essence, Section 47 provides a privilege to any litigant ~rother authorized person, for a communication made in any judicial or quasi-judicial lroceedingwith a record subject to review, if the communication seeks to achieve the ~bjectsof the litigation, and has some connection or logical relation to the action or ~roceeding.The purpose of the privilege is to afford persons the utmost freedom of lccess to the courts and other ofticial proceedings authorized by law, without fear of

~eingharassed subsequently by derivative tort actions. The communication in the course C a proceeding subject to Civil Code Section 47 may be "fraudulent" or "perjured" but it ;absolutely privileged and does not provide a basis for avoiding the finality of the

ecision made in the process itself. The law favors free cornrnunication in the belief that dl and fair discussion will lead to the ascertainment of a correct result. See generally: jilbera -vs- Anderson (1990) 50 Cal.3d 205.

I respectfully d i r with Judge Wilson's conclusion that despite the privilege ~ffordedby Civil Code Section 47, as above discussed, Plaintiff, should be permitted to tlead and try to prove extrinsic fraud.

Extrinsic fraud is an equitable doctrine !bat may be used as a direct attack Page 6 of 23

707 445 7041

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01:10:53 p.m.

Superior Cow, Humbold

06-14-2005

7 124

upon a judgment or used defensively to defeat the finality of a court judgment where the

2 subject defendant was preventedfrom having a fair adversary hearing and has been 3 deprived of an opportunity to present his claim or defense to the court. Extrinsic fraud 4

principally applies where a party has been "denied his day in court" by some wrongful

5 act of another party. It is expressly a narrow equitable doctrine because of the general 6

spirit of the law favoring finality of judgments, and disfavoring an attack on the integrity

7 of evidence after the proceedings have concluded, See: RULING RE DEMURRER TO 8 THE FIRST AMENDED COMPLAINT (RULING), pp.17-19.

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Here we are not dealing with "...a court judgment...", but rather a

12 sustained yield plan (SYP) adopted through an administrative proceeding. Does the 13 extrinsic fraud doctrine used as an attack or defensively against a final judgment in

14 judicial proceedings apply to a SYP adopted through administrative proceedings? 15

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Assuming arguendo that extrinsic fraud might apply to the facts of this

18 case as concluded in the RULING, supra, do the facts set forth in the OC, FAC and SAC

19 warrant Hs application? I conclude that on their face they do not. 20 21

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Starting at page 8 of the SAC, Plaintiff sets out a factual summary. The first

23 paragraphs are: 24

25 26

1.

On September 28,1996 the Headwaters Agreement was signed by or on

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behalf of PALCO, MAXXAM, INC., The UNITED STATES DEPARTMENT OF

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THE INTERIOR, and THE CALIFORNIA RESOURCES AGENCY. Page 7 of 23

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Superior Court, Humhold

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06-14-2005

On February 27, 1998, the parties as well as the NATIONAL

MARINE FISHERIES SERVICE, signed a "follow-up agreement" whereby

3 all parties agreed that the CDF and U.S. Fish and Wildlife Service would make available 4

for review and comment a draft EnvironmentalImpact StatemenffEnvironmentalImpact

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Report ("EISIEIR") on PALCO'S Sustained Yield Plan "pursuanr to the California

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Environmental Quality Act (CEQA).

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From the outset, and even included in the "follow-up agreement'' of 9 lo February 27,1998, as alleged in the OC, is an acknowledgement of the importance of the public's 'mass wasting" landslide concernsSthe gravamen of PIaintiWs action here.

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The concern about b a s s wastingnlandslides and sedimentation were

expressly known and of concern to all parties, certainly including Water Quality, '6

throughout the process which included a draft EIR, Public Comment Period, and follow

17 up requests for information by affected agencies. 18

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There followed a number of studies and reports thereon. It seems likely that a significant part of the 80,000 page administrative transcript of the process

z2 11 mentioned in

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supra, would have been involved with mass wasting, sedimentation

As alleged in the OC, PALCO retained an independent consulant, Dr. William

27 Weaver, a principal of Pacific Watershed Associates (PWA). During the course of the Page 8 of 23

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comment period he submitted various studies and reports.

Water Quality requestc

Dr. Leslie Reid, a noted scientist concerning sediment source investigation and reduction, to do a study of Bear Creek watershed. Her reports expressed concerns based on her study of Bear Creek watershed that she had found excessive landslides and sedimentation resulting from logging activity. Based on her information and conclusions she contended that the results would apply across the several watersheds under study. She contended that logging would have to be significantly limited and widely dispersed to avoid future problems and to permit restoration of previously logged areas. Her reports were apparently at significant variance with the repwts of Dr. Weaver, and would in effect lead to a significant reduction in the amount of logging that could be conducted without adverse impacts.

The end of the public comment period was coming near. In the OC, Plaintiff alleged that the dose of the Public Comment Periodfor submission of information to be filed to become a part of the final EIR was November 18, 1998. In the FAC and SAC it is alleged that November 18,1998 is two days AFTER the close of such period. Iwill assume that November 16, 1998 was the closure date, per PlaintiWs correction.

Plaintiff asserts that near the time for closure of the public comment period, PALCO conceived of a deceitful plot to mislead the agencies involved, particularly about the negative impact of Dr. Reid's report. However, 8 is notable that at this late stage of the proceedings, the chain of events leading to the filing of the allegedly false report, the socalled "Jordan CreeK report, was NOT initiated by PALCO, but by Water Quality.

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707 445 7041

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Swerior Court, Humbold

01:l l : 3 3 p

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06-14-2005

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At page 18 ofthe OC, Plaintiff alleges that 'On October 8, 1998, Mr. Lee

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Michlin, Executive Officer of Water Quality, notifid Tom Herman of PL that based on

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Table 5 of the Sediment Budgets and Inventory for Bear Creek and NF Elk River, the landslide rate on recently harvested slopes less than 15 years old is 9.6 for Bear and 13.0

5 for Elk when compared to areas hawested greater than 15 years old. Water Quality had 6 found that the 'increase in rate of debris landslides is due to silvicultural activities' which

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7 'indicates a strong connection between the increased timber harvesting and increased 8

discharge of sediment." This is a very specific averment, as opposed to later allegations

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in the FAC and SAC that are general to the point of meaninglessness. There is no

10 suggestion or allegation that Mr. Michlin was a tool of PALCO or corruptly involved in

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11 some plot to alter the outcome of the process.

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As alleged in the OC p. 19, On November 12, (998, PALGO submitted a responsive 14 15 letter to Mr. Michlin of Water Quality contending his concerns were not well founded

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16 and gave as an example a "draft Jordan Creek report" that contained data leading to an 17 opposite conclusion. Again according to the OC, on November 18,1998 ( which as above

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18 discussed was two days after the last day for filing before closure of the Public Comment

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19 Period) PALCO followed up by submitting to the same Mr. Michlin a document dated

20 November 10,1998, containing representations by its independent consultant, Dr. Weaver 21 of PWA, and indicating it was a response to Dr. Leslie Reid's negative comments of 22

PWA's previous studies. This response it refened to as the "draft Jordan Creek report",

23 and it is alleged that it neutralized the findings of Dr. Reid that her Bear Creek study 24

could be generalized across all the watersheds under consideration. Again, these

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allegations are quite specific, totally unlike the generalized allegations in the FAC and

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SAC that refer to submissions to "CDF" ( SAC p.4, or "submitted material and

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significant, false Information regarding Jordan Creek. ..for the purpose of said false

28 information being used to defraud the agencies and the pubiic..."SAC p1O. No mention

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707 445 7041

Superior Couft, Hurnboid

01:ii:SOp.m.

06-14-2005

1 is made in the SAC as to which agency of office this material was "submitted".Also, in 2 the SAC Plaintiff alleges that PALCO "...submitted the 'incorrect' Jordan Creek 3 draft to government agents..."(SAC 14).

Where was the false report lodged or filed?

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It is noted that in the OC Plaintiff alleges that the drail Jordan Creek 9 10 report was "submitted" to Mr. Michlin of Water Quality (OC page 19). In the FAC, it

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1I does not refute the submission to Mr. Michlin, but alleges it was "submitted to the

I 2 Ilgovernrnent'' in letter form (FAC p.11). In the SAC. Plaint@alleges Oefendant

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13 "...submitted fraudulent and false data to the California Department of Forestry..." It

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14 does not say where or with whom SAC p.4. At pages Q and 10 of the SAC Plaintiff 15

I1 alleges that Defendant "submitted" the false report "for the purpose" of defrauding the

16 agencies and the public, but again, it does not state where or with whom such report was 17 filed. At page 14 of the SAC Plaintiff alleges that Defkndant "...submitted the 'incorrect' 18 Jordan Creek drafl to government agents..."

Considering the factual averments of the three complaints the following appears

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22 likely: Mr, Michlin of Water Quality initiated the subject exchange of information and 23 defendant responded to Mr. Michlin as the responsible officer of Water Quality. It

24 would seem it was Water Quality, not Defendant, that caused the inclusion of the "draft 25 Jordan Creek report" in the final EIR

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But in any event, as Defendant has noted, the submission of the report afler

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1 closure of the Public Comment period made it legally irrelevant, and it wuld have been

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disregarded by the agencies in charge, had they chosen to do so.

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Plaintiff has claimed that the next stage in Defendant's scheme took place on

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January 22, 1999, after the final EISIEIR was published. PALCO then allegedly prepared a

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final truthful report that was more consistent with the report of Dr. Reid. How was it

7 delivered and to whom according to Plaintiff?

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OC:

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'...by hand-delivering it to the resource manager of CDF in Fortuna... ( P 21)

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13

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FAC: "...delivering the corrected report...to local offices of CDF and to the Wate Quality Control Board ..." (p.12)

Note: It is not alleged what office or officer of Water Quality was the recipient. Was it the same Mr. Michlii who had been the effective correspondent for the agencies concerning the subject at hand?

sAC: "...det~eringthe correct repo&..to local offices of CDF and to the Water Quality Control Board..."(p.1 I)

Note: Again, it is not alleged what officer or officer of WQ was the Recipient.

in all three complaints it is in essence alleged that Defendant should have delivered the corrected report to the government offices specifically designated to review public comments and make a final determination on the permits, i.e. the Sacramento office of CDF. However, it appears that rightly or wrongly, Defendant likely had its correspondence on the subject with Water Quality, the agency that originated and Page 12 of 23

Superlor Court. Humbold

7074457041

01:12:16 p.m.

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06-14-2005

1 initiated the exchange.

2 In its final allegations, Plaintii asserts Defendant furthered its scheme by failing

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4 to notify the recipients of the January 22,1999 report of its significance, making sure 5 they delivered it to Sacramento, failing to call attention to authorities of the draft Jordan Creek report in the final EIRIEIS, lobbying for the Afternatbe 25, rather than 25a

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7 harvesting plan based on the Jordan Creek report as included, and alereafter logging in 8

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reliance thereon. However, if the PALCO'S initial communication of the Jordan Creek

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9 Report was immune pursuant to Civil Code Section 47, as Ihave held, these alleged 10 wmmissions by inaction are meaningless.

It appears to me that as a matter of fact that we do not have such extrinsic fraud as

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14 would bar Defendant from claiming the privilege of Civil Code Section 47. What we do 15 have is a lengthy period of study and reporting from various individuals and agencies,

16 lloften a "dueling experts" game, that was followed by an agency decision. Was the

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17 agency decision in some objective sense, right or wrong? That is not the subject of this 18 lawsuit.

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20 The privilege provided by California Civil Code Section 47 provides a m p l e t e

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22 defense to Plaintiis action.

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SECOND:

Defendant contends that The Se~ondAmanded Complaint violates

26 safeguards for constitutionally protected speech (The "Noerr-Pennington Doctrine" 27

11 hereinafter referred to as "Noen".). Page 13 of 23

Plaintiff alleges that Defendant violated the UCL by submitting the allegedly false ordan Creek report and thereafter "lobbying" for an amendment to the final SYP

rm alternative 25(a) (a restrictive plan) to 25 (a less restrictive plan), permitting )efendant to log more extensively than Plaintiff contends is warranted.

Defendant asserts that its submitted Jordan Creek report and subsequent lobbying E constitutionally protected by the Noerr.

What is the Noerr?

Noen is a constitutionat privilege based upon freedom of speech and the right of k e n s to petition their government at all levels.

The First Amendment to the United States Constitution guarantees the right "to efiion the Government for a redress of grievances." U.S. Constitution Amendment I, ;lause 6. The Supreme Court has long recognizedthat for the Petition Clause to be a ~eaningfulprotection of the democratic process, citizens must be immune from some ,rms of liability for their efforts to persuade government officials to adopt policy or erfom their functions in a certain way. This judicially declared privilege based upon le U.S.Constitution had its origin in the antitrust laws. Kottle v. Northwest (1998) 146

.3d.1056.

In Eastem RR Presidents Conference v. Noerr Motor Freiclht, Inc. (1961) 365 Page 14 of 23

Superior Court. Humbold

01:12:40 p.m.

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U.S. 127, the Court rejctcted antitrust liability stemming from an aggressive lobbying campaign by a railroad to persuade states to adopt legislation that would severely limit competition from truckers. The Court explained that "...in a representative democracy such as this ... the whole concept of representation depends upon the ability of the people to make their wishes known to their representatives." Id. At 137. The Court then concluded that the Sherman Act did not apply to the railroads' advocacy of legislative action, nohnrithstanding their anticompetitive intent Id. At 138.

The Court subsequently expanded the holding of Noerr to include activities aimed at the executive and judicial branches of government. United Mine Workers v.

PenninFlton (1965) 381 U.S. 657 (executive); and California Motor Transport Co. v. Truckino Unlimited (1972) 404 U.S. 508 (judicial). The Court explained that "...the right to petition extends to all departments of the Government..."and therefore, "...the same philosophy governs the approach of citizens or groups of them to administrative agencies

(which are both creatures of the legislature, and arms of the executive) and to courts,the lhird branch of Government." California Motor trans^. supra,

The principal enunciated in the foregoing two paragraphs became commonly known as the "Noerr-Pennington Doctrine"

In &@e,supra, the Court held that "Given the sweep of the Noerr-Pennington doctrine, we have no difficulty in joining our sister circuits to conclude that a lobbying ~ffortdesigned to influence a state administrative agency's decision ... is within the ambit of the doctrine."

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Superior Cowt. Humbold

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01:12:54p.m.

06-14-2005

On its face, Noerr applies to People v. PALCO.

Plaintiff has raised a question, and the earlier RULING considered, whether there is an exception, known as the "sham exception", to Noerr that applies in this case. I think not.

What is the "sham exception" to Noerr?

In

m,supra, the Court acknowledged that "...there may be situations in

16 which a publicity campaign, ostensibly directed toward influencing government action, 17 is a mere sham to cover what is actually nothing more than an attempt to interfere with

18 the business relationships of a competitor."

In

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m,supra, (p. 1060) it was noted that the "shamnexception to Noerr

22 encompasses situations in which persons use the governmental process 23

24 25

- as opposed to

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the outcome of that process - as an anticompetitive weapon. A classic example is the

filing of frivolous objections to the license application of a competitor, with no expectation of achieving denial of the license but simpfy in order to impose expense and

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delay. A "sham" situation involves a defendant whose activities are not genuinely aimed

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at procuring favorable government action at all, not one who genuinely seeks to achieve

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his governmental result, but does so through improper means.

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Superior Couii, Humbold

01:13:06 p.m.

06-14-2005

17&4

Did PALCO'S actions in the underlying administrative proceeding constitute a

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2 "sham"? 3

4 A number of California cases have applied Noerr. The following is a

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6 representative sampling and their relationshipto our case:

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1)

HiToo Steel Cow. V. Lehrer (1994) 24 Cai. App. 4m570

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Plaintiis stated a cause of action under the sham exception to Noerr because defendants i

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that case petitioned the government SOLELY to prevent

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12 plaintii from competing with them.

[In the case at hand, no competitors have been implicated, directly or indirectly,]

2)

Blank v. Kirwan (1985) 39 Cai. 3d 311. The Court held that it is

only when efforts to influence government action are a "sham" that they fall outside the protection of Noerr and within the scope of the Sherman Act, 15 U.S.C.S. Section 1. Such efforts amount to a sham when though ostensibly directed

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toward influencing governmental action, they are actually nothing more than an attempt

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to interfere directly with the business relationships of a competitor. Such efforts, by

26 contrast, do not amount to a sham when, no matter how anticompetitive in purpose or 27 effect, they constitute a genuine effirt to influence govemment action. In other words, 28

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efforts to influence government action are a sham only when the person or persons

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naking such efforts involves the process of governmental decision making for the injury hat the process alone will work on others.

[In our case, Palw was directly trying to obtain an advantageous result fmm tl CEQA process. So far as can be ascertained from the pleadings, Palw had n been seeking any advantage over a competitor because no competitor wi involved.]

3)

Ludwia v. Superior Court (1995) 37 CalApp. 4& 8.

r motion to strike a city's action against a developer for interfering with city's plans

hould have been granted, because the action involved developer's first amendment rights ~ n he d intended to induce government action, not harass third parties. Under Noerr, it as long been clear that the motive of the petitioners is irrelevant, as long as the intent is enuinely to induce government action rather than to frustrate or deter a third party imply by the use of the governmental process.

[There can be little doubt in our case that PALCO was attempting to sew governmental action in its favor. There is no suggestion that it was trying frustrate some actual or speculative competitor.]

While not directly mentioned in the pleadings, one must consider the inception

f the CEQA process in this case. The Headwaters Agreement was not some covert, dark . f night, operation instigated solely by PALCO. It was a well publicized coming together

Fa number of interested parties with a wide divergence of interests in politics, business, mlogy, flood control, revenue, employment, and other factors. The process was open to one Page 18 of 23

and all, and the 80,000 page administrative record mentioned in EPlC , supra, attests to :he extent to which many contributed to the record. This complex and extensive xoceedings was not some fabrication of PALCO initiated as a "sham" to take advantage of >them.

It is clear to me based on the foregoing authorities that the "sham

3xceptionnto Noerr has no application to PALCO'S position in the CEQA process.

There has been considerable discussion about whether Noerr should ~pply,or should be applied more "narrowly", to PALCO'S position in a quasi-adjudicatory ~roceedingsbefore an administrative agency, rather than an openly political body such as he legislature. Shouid Nwrr immunity be available to a? My review of the cited authorities such as

m,supra, and others, suggests that this would be a mistake.

There is authority that the "sham exception" is applied more narrowly in judicial mceedings, and in administrative proceedings where the body is acting in a quasiudicial capacity in making findings of fact and where the action is evidenced by a record hat is subject to review, such as by mandamus. (See generally, i(ottle,supra.) But even

n such instances, the immunity of Noerr applies if the whole thrust of the party's acts is o obtain a certain governmental action to its direct advantage, rather than the 'sham' of sing the governmental action to cause disadvantage to others.

Taking the supposed "narrowing" of the sham exception to Noerr a step krrther, 3r purpose of discussion if one were to assume the "sham" might apply during the fact

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Superior Couii. Humbold

01:13:44 p m .

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inding or open public portion of the CEQA process, and I do not, Plaintiff still cannot )revail.

After the close of the public period on November 16, 1998, the agencies nnsidered the amassed material and on February 25, 1999, CDF issued findings for the SYP adopting a Long-Term Sustained Yield (LTSY) projection known as SYP

Uternat'ie 25(a). Plaintiff has not in any of its pleadings asserted that 25(a) was not Ifair

determination, warranted by the record. In other words, PALCO'S supposed deceit

lad gained it naught.

And then? PALCO LOBBIED to change the agency determination to SYP itternatbe 25, which gave it a more extensive logging potential.

". .. PL lobbies agencies..." OC p.24 "... Pacific Lumber proceeded to aggressively lobby CDF and other government agencies

..."SAC p.13

"... Pacific Lumber thereafter lobbied CDF ..."SAC p.12 What is the significance of "lobbying" in the Noerr context? "Misrepresentations

re a fact of life in politics (cite) and lobbying is the sine qua non of democracy."

m,

upra, p 1062.

After November 16, 1998 (closure of public input), and before February 25, 999 (findings by CDF), that is: during the 'lobbying phase", the context changed from l e that might be arguably more adjudicatory in nature (to which the "sham exception" Page 20 of 23

Supsrlor Court. Hwnbold

01:13:56p.m.

06.14-2005

might apply) to one that was more openly political (to which the "sham exception" clearly does not apply.).

Plaintiff cannot state a cause of action because PALCO'S actions are wnstitutionally protected by Noerr.

THIRD:

Defendant contends that the CEQA process was not

undermined by PALCO's alleged actions.

Interestingly, Plaintiff has not responded directly to this part of Defendant's Demurrer. Plaintiff does not mention it in its OPPOSITION filed July 16, 2004, or in the SUPPLEMENTAL BRIEF IN OPPOSITION TO DEMURRER TO SECOND AMENDED COMPLAINT filed December 27,2004. 1 will assume this is an innocent oversight in the "heat of battle" and will look at it independently.

As defendant points out in its Demurrer pp.14-16, the allegedly false report and the so called corrected repoit were both filed after the November 16, 1998 cut off date and CDF was therefore under no obligation to consider elher of them. The adoption by SDF of SYP 25(a) [the restrictive plan] on February 25,1000, suggests that CDF was uell able to evaluate the mass of the record and make an independent conclusion tnat favored the lower harvesting limit. This occurred well after PALCO'S submission of either report. It was only later, after PALCO had availed itself of its constitutionally permitted obbying activlty that CDF reconsidered and adopted the less restrictive SYP Plan 25.

Page 21 of 23

Superlor Court. Humbold

01:14:OBpm.

06-14-2005

Plaintiff alleges that CDF was deprived of the effect of the "corrected" or 'true" report, but if that was the case, Plaintiff fails to explain how CDF arrived at the initial SYP Plan 25(a) that of necessity reflected such information calling for a reduced scale of logging, more consistent with the "corrected" report.

While the Demurrer provides further reasons for its granting under this heading,

Ibelieve we need go no further.

Based on the facts shown by the several complaints, it does not appear that Plaintiff can state a sustainable cause of sction, even with any likely amendment. Therefore, the Demurrer is sustained without leave to amend.

Defendant at page 17 of its Demurrer and Motion to Strike requests the Court to strike the District Attorney's Multiple UCL claims. This is moot in light of the sustaining 3f the Demurrer without leave to amend.

Nevertheless. I shall address it.

California's Unfair Competition Law can be employed where there are any of :hree varieties of unfair competition, including acts or business practices that are 'unlawful" or "unfair" or "fraudulent". Podolskv-vs- First Healthcare Corn. (1996) 50 2al. ~pp.4' 632. The UCL statute is also not confined to anticompetitive business xactices, but is also directed toward the public's right to protection from such conduct. 3ut the statute is directed at ongoing wrongful conduct. The "practii" requirement tnvisions something more than a single transaction. It contemplates a pattern of conduct, ~ngoingconduct, a pattern of behavior, or a course of conduct. Hewlett a s - SPuaw Page 22 of 23

I

1 Vallev Ski Cow. (1997) 54 Cal.~pp.4'"499. 2

3 In the present case, it appears !hat the alleged wrongful conduct is the advancing

4

I I7 I I ll 5

of the "draft Jordan Creek report". That is a single act in my estimation, assuming

6 Plainti could meet its burden at trial of showing its wrongfulness. It is noteworthy that according to the pleadings, PALCO had submitted other reports fmm Dr. Weaver to

8 which Plaintiff takes no exception. Itherefore find that PALCO's "practice" was to 9 Ilsubmit reports that Plaintiff does not contend are wrongful, and that it is only in this

11

10 single instance that ~ t a i n t iobjects. i The attempt to allege other wrongdoing by alleging

Il

11 a scaries of contrived omissions is a stretch to get around that requirement of

w,

I/ /I

12 supra, for multiple wrongful acts to constitute a practice. The "practice" in question is 13 the submission of reports in the CEQA process.

l 11

In the end, even if the action of PALCO was subject to the UCL, it nevertheless

17 has a complete statutory defense with California Civil Code Section 47 and a defense 18 under the free speech and petition provisions of the First Amendment to the U.S.

19 Constitution as developed in the Noerr-Pennington Doctrine.

22

Defendant is allowed its costs of suit. Defendant's counsel shall serve and

23 submit a suitable form of judgment.

I

Page 23 of 23

STATE OF CALIFORNIA, COUNTY OF HUMBOLDT

) ) SS. APFIDAVIT OF

SERVICE BY MAIL

1, LINDA GAUMEtl , say: That I am a citizen of the United States. over 18 vears of age. a resident of the Countv of Humboldt, State of California, and not a par& to the within acti&;'that my business add& is Humboldt Ccuntv Courthouse, Eureka. California: that I served a true m v of the attached ORDER SUSTAINING DEMURRER LEAVE TO &END b G said copies in the attorney's mail delivery box in the Court Operations Office at Eureka, C ~ f o m a on the date indicated below, or by placing said copies in envelope(s) and then placing the envelope(s) for collection and mailing on the date indicated below following our ordinary business practices. I am readily familiar with this business practice for collecting and processing correspondence for mailing. On the same day that correspondence is placed for collection and mailing, it is deposited in the ordinary course of business with the United States Postal Service at Eureka, California in a sealed envelope with postage prepaid. These copies were addressed to:

WITHOUT

DA (GALLEG0S)-BOX #64 IN COURT OPERATIONS

TJk ..

. EDGAR B. WASHBURN MORRISON & FORRESTER

425 MARKET STREET SAN FRANCISCO, CA 94105-2482

J

:

i

SF FA), CER.TEf<

JOHN A. BEHNKE CARTER BEHNKE OGLESBY & BACIK P 0 BOX 720 UKIAH, CA 95482

I declare under penalty of perjury, under the laws of the State of California, that the foregoing is true and correct. day of-, 2005, at the City of ~ u r e k a ,County of Humboldt, Executed on-#'/h-et State of California. DWIGHT W. CLARK,Clerk of the Court