palco suit

8/14/2019 palco suit

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7 0 7 4 4 5 7 0 4 1 Superior Court, Humbold 01 :08:38 .m . 06-14.2005

5 11 hearing. The Court deemed Plaintiffs request as being for an advisory jury, which is

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6 11 within the power of the Court

PALCO has demurred to Pla intif fs Second Amended Complaint (SAC).(1 have adopted the collective term "PALCO", as used in previous pleadings, to refer toal l defendants.) The matter was argued and submitted on February 16,2005.PALCO's Motion to Strike a request for a jury was denied at the conclusion of the

12 complaint by a demurrer, the court may consider all previous pleadings and allegations of/I9

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I have read and considered the pleadings and arguments of both sides, andas requested, have taken judicial notice of the Statement of Decision in EPIC -v$- CDF efa.,Humboldt County Superior Court Case No. CV990445. In deciding a challenge to a

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the parties. Ihave also taken a fresh look at the issues presented without being bound byprevious lings in the case. A trial judge is permitted to reconsider intermediate rulingsprior to fina l judgment, and an order overruling or sustaining a demurrer is not resjudicata. 5 W&in Cal. Proc. Pleadinq, Section 936, nd citations. However, except tothe extent that this ruling may differ from the reasoning and conclusions of the HonorableChristopher G.Wilson, my judicial predecessor concerning this case, Iaccept and adopthis reasoning and wisdom in his other conclusions.

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BACKGROUND

The genesis of this case lies in the Headwaters Agreement. As previouslynoted by this court, PALCO transferred a significant private holding of ancient redwoodforest to the State and Federal Governments in exchange for additional property, over 300

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million dollars and other consideration, including substantial funds to local government.A key aspect of the consideration or PALCO was to obtain some degree of predictability


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707 445 7041 Superior Court. Humbald 01:08:53 p.m. 06-14-2005

3 resulting in substantial collateral costs. To this end, an important aspect of theI112

in its ability to manage and harvest its resources in light of evolving environmentalconcerns for timber harvest practices and enhanced poli ca l and public involvement

balanced with the p ubk's interest in management of those resources in anmvironmentaliy ampta b le fashion. Individual Timber Harvest Plans (THPs) would thenrely upon information developed in the SYP process and the THPs would fit within theframework set forth by the SYP. Development of the SYP is an extensive and costlymultiagency process with primary responsibility lying with the California Departmentof

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

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Headwaters Agreement for a ll parties was the development of a Sustained Yield Pian(SYP)IHabitat conservation Plan (HCP) covering the extensive private holdings ofPALCO. Predictability o PALCO in itsuse and management of its resources would be

PLAINTIFF'S CONTENTIONS

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As well detailed in the Statement of Decision inEelC (supra) this was asomewhat messy process and voluminous as well, running to some 80,000pages ofadministrative record. (EDic,Statementof Decision pg. 15). Clearly, there was anabundance of public and agency input in the process, whatever one might think of thecondusions reached by the public bodies making the final decisions,

I/ Page3 of 232728 As with the original Complaint (OC) and the First Amended Complaint


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(FAC), the essence of PlaintiWs suit, stated in the SAC, remains that Defendantsallegedly committsd fraud by submitting false information in acquiring a Sustained YieldPlan (SYP), and intentionally concealed that false information from the appropriateauthorities until the P lan was final, resulting in approval of timber harvesting ratesbeyond environmentally acceptable levels and without benefR of public scrutiny andcomment.

Plaintiff alleges that in November 1998, the Regional Water QualityControl Board (Water Quality), because of concerns i t had about logging related mpacts,"ordered reports" for certain additional information concerning the effectsof logging onfive watersheds within the area in question. Plaintiff further alleges that PALCO also knewthat Water Quality ordered these reports in response to the severe logging-related mpactsthat had been observed by government agents over the preceding years. SAC p.8.Plaintiff claims that in response to the possible negativeeffect of such impacts, PALCOconceived of and executeda fraudulent plot to cover up such negative matters. Itallegedly did this by filing a false report on November 18, 1998(two days after the closeof the public comment period); and, on January 22, 1999, delivering a final "truthfulreport" to CDF and Water Quaiiity (two days "after" the final Environmental ImpactStatemenu Environmental Impact Report (EISIEIR) was published,),and by deliveringsame to "local" ofices of CDF and Water Quality. Plaintiff alleges this new reportshould have been filed in the "...government offices specifically designated to reviewpublic comments and make a final determination on the permits"; and, that Defendantthereafter failed to call such new report to the attention of appropriate authorities. It isalleged that on February 25, 1999, CDF issued findings for the SYP adopting a Long-Term Sustained Yield (LTSY) projection known as SYP Alternative 25(a). P la in t i hasalleged in a ll three of its complaints(OC, FAC and SAC) that thereafter PALCO, withoutcalling the attention of the Director of CDF to the alleged "truthful report". "...lobbied8


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7 0 7 4 4 5 7 0 4 1 Superlor Court. Humbald 01:10:20 p.m. 06-14-2005 5

8 ]I 17200 el seq.) and seeks civil penalties pursuant to B & P Code Section 17206, of $2,500

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CDF for a greater allowance of annual board feet of timber, and on March 1,1999, CDFadopted a different LTSY, known as SYP Alternative 25, which permitted a greaterannual timber harvest.

Plaintiff alleges that the foregoing constitutes wrongful conduct underCalifornia's Unfair CompetitionLaw (UCL) (Business and Professions Code Section

DEFENDANT'S DEMURRER

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15 11 Defendant asserts that the Distdct Attorney cannot atate a cause of action under

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

16 the UCL, and alleges three areas of alleged deficiencies in the Second Amended/ I17 Complaint:I

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

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Third: The CEQA Process Was Not undermined by PALCO'sAlleged Actions

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First: P la in tiis claims are barred by California's "Litigation Privilegen,California Civli Code Section 47)


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Superior Court. Humbold 01:10:3Qp.m. 06-14-2005

DISCUSSION

FIRST: Defendant claims that PlaintiWs claims are barred byCalifornia C i lCodeSection47, the "Litigation Privilege".

As concluded by Judge Wilson in his RULING RE DEMURRER TO'HE FIRSTAMENDED COMPLAINT (hereafter RULING) and the authorities cited,iledherein April 30,2004,he L igat ion Privilege does apply to the fads of this case. I~dop t is reasoning and conclusion so far as the application of Section47 to the reviewn d SYP process here involved. In essence, Section47 provides a privilege to any litigant~rother authorized person, for a communication made in any judicial or quasi-judiciallroceeding with a record subject to review, i f the communication seeks to achieve the~bjects f the litigation, and has some connection or logical relation to the action or~roceeding. he purpose of the privilege is to afford persons the utmost freedom oflccess to the courts and other ofticial proceedings authorized by law, without fearof~e ing arassed subsequently by derivative tort actions. The communication inthe courseC a proceeding subject to Civil Code Section47 may be "fraudulent" or "perjured" but it; bsolutely privileged and does not provide a basis for avoiding the finality of theecision made in the process itself. The law favorsfree cornrnunication in the belief thatdl and fair discussion will lead to the ascertainment of acorrect result. See generally:jilbera -vs- Anderson (1990) 50 Cal.3d 205.

I espectfullyd i rwith Judge Wilson's conclusion that despite the privilege~fforded y Civil Code Section47, as above discussed, Plaintiff, shouldbepermitted totlead and try to prove extrinsic fraud.

Extrinsic fraud is an equitable doctrine !bat may be used asa direct attackPage6 f 23


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upon a judgment or used defensively to defeat the finality of a court judgment where thesubject defendant was prevented rom having a fair adversary hearing and has beendeprived of an opportunity to present his claim or defense to the court. Extrinsic fraudprincipally applies where a party has been "denied his day in court" by some wrongfulac t of another party. It is expressly a narrow equitable doctrine because of the generalspirit of the law favoring finality of judgments, and disfavoring an attack on the integrityof evidence after the proceedings have concluded,See: RULING RE DEMURRER TOTHE FIRST AMENDED COMPLAINT (RULING), pp.17-19.

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Here we are not dealing with "...a court judgment...", but rather asustained yield plan (SYP) adopted through an administrative proceeding. Does heextrinsic fraud doctrine used as an attack or defensively against a final judgment in

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judicial proceedings apply to a SYP adopted through administrative proceedings?

1617 Assuming arguendo that extrinsic fraud might apply to the facts of this1819202122

case as concluded in the RULING, supra, do the facts set forth in the OC, FAC and SACwarrant Hs application? Iconclude that on their face they do not.

Starting at page 8 of the SAC, Plaintiff sets out a factual summary. The first tw13

24paragraphs are:

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1. On September 28,1996 the Headwaters Agreement was signed by or onbehalf of PALCO, MAXXAM, INC., The UNITED STATES DEPARTMENT OFTHE INTERIOR, and THE CALIFORNIA RESOURCES AGENCY.

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9 11 From the outset, and even included in the "follow-up agreement'' of

70 7 44 5 704'; Superior Court, Humhold 01 1 1 07 p m 06-14-2005 C

lo 11 February 27,1998, as alleged in the OC, is an acknowledgement of the importance of the

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/Ipublic's 'mass wasting" landslide concernsShe gravamen of PIaintiWs action here.

2. On February 27, 1998, the parties as well as the NATIONALMARINE FISHERIES SERVICE, signed a "follow-up agreement" wherebyal l parties agreed that the CDF and U.S. Fish and Wildlife Service would make availablefor review and comment a draft Environmental Impact StatemenffEnvironmental mpactReport ("EISIEIR") on PALCO'S Sustained Yield Plan "pursuanr to the CaliforniaEnvironmental Quality Act (CEQA).

14 11 The concern about b a s s wastingn andslides and sedimentation were'6

expressly known and of concern to all parties, certainly including Water Quality,throughout the process which included a draft EIR, Public Comment Period, and follow

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z2 11mentioned in supra, would have been involved with mass wasting, sedimentation

up requests for information by affected agencies.

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

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As alleged in the OC, PALCO etained an independent consulant, Dr. WilliamWeaver, a principalof Pacific Watershed Associates (PWA). During the course of the


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707 445 7041 Swerior Court, HumboldI 01:l l :3 3p m 06-14-20053 Table 5 of the Sediment Budgets and Inventory for Bear Creek and NF Elk River, theII12

4 landslide rate on recently harvested slopes less than 15 years old is 9.6 for Bear and 13.0I /

At page 18 ofthe OC, Plaintiff alleges that 'On October 8, 1998, Mr. LeeMichlin, Executive Officer of Water Quality, no t if id Tom Herman ofPL that based on

7 'indicates a strong connection between the increased timber harvesting and increasedI I56

for Elk when compared to areas hawested greater than 15 years old. Water Quality hadfound that the 'increase inrate of debris landslides is due to silvicultural activities' which

11 some plot to alter the outcome of the process./I

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14 11 As alleged in the OC p. 19,On November 12, (998, PALGO submitted a responsive

discharge of sediment." This is a very specific averment, as opposed to later allegationsin the FAC and SAC that are generalto the point of meaninglessness. There is nosuggestion or allegation that Mr. Michlin was a tool of PALCO or corruptly involved in

15 11letter to Mr. Michlin of Water Quality contending his concerns were not we ll founded16 and gave as an example a "draftJordan Creek report" that contained data leading to anI/17 opposite conclusion. Again according to the OC, on November 18,1998 ( which as aboveI118 11discussed was two days after the last day for filing before closure of the Public Comment19 Period) PALCO followed up by submitting to the same Mr. Michlin a document datedI /

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November 10,1998, containing representations by its independent consultant, Dr. Weaverof PWA, and indicating it was a responseto Dr. Leslie Reid's negative comments ofPWA's previous studies. This response it refened to as the "draft Jordan Creek report",and it is alleged that it neutralized the findings of Dr. Reid that her Bear Creek studycou ld be generalized across al l the watersheds under consideration. Again, theseallegations are quite specific, totally unlike the generalized allegations in the FAC andSAC that refer to submissions to "CDF"(SAC p .4 , or "submitted material andsignificant, false Information regarding Jordan Creek. ..for the purpose of said falseinformation being used to defraud the agencies and the pubiic .."SAC p1O. No mention


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707 44 5 7041 Superior Couft, Hurnboid 01:i i:SOp .m. 06-14-2005 11 124

6 Where was the false report lodged or filed?7

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9 / / It is noted that in the OC Plaintiff alleges that the d rail Jordan Creek

is made in the SAC as to which agency of office this material was "submitted". Also, inthe SAC Plaintiff alleges that PALCO "...submitted the 'incorrect' Jordan Creekdraft to government agents..." SAC 14).

10 report was "submitted" to Mr. Michlin of Water Quality (OC page 19). In the FAC, itII1I 1does not refute the submission to Mr. Michlin, but alleges it was "submitted to theI 2 Ilgovernrnent'' in letter form (FAC p.11). In the SAC. Plaint@ lleges Oefendant13 "...submitted fraudulent and false data to the California Department of Forestry .." It/I14 does not say where or with whom SAC p.4. At pages Q and 10 of the SAC PlaintiffI/15 alleges that Defendant "submitted" the false report "for the purpose" of defrauding theI1161718

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

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Considering the factual averments of the three complaints the following appearslikely: Mr, Michlin of Water Quality initiated the subject exchange of information anddefendant responded to Mr. Michlin as the responsible officer of Water Quality. Itwould seem itwas Water Quality, notDefendant, that caused the inclusion of the "draftJordan Creek report" in the final EIR

2728 But in any event, as Defendant has noted, the submission of the report afler


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closure of the Public Comment period made it legally irrelevant, and it wuld have beendisregarded 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 onJanuary 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 wasitdelivered and to whom according to Plaintiff?

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

sAC: "...det~ering he correct repo&..to local offices of CDF and tothe Water Quality Control Board..." p.1I)

OC: '...by hand-delivering it to the resource manager of CDF in Fortuna...( P 21) I1314

Note: Again, it is not alleged what off icer or officer ofWQ was theRecipient.

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

in all three complaints it is in essence alleged that Defendant should havedelivered the corrected report to the government offices specifically designated to reviewpublic comments and make a final determinationon the permits, i.e. the Sacramentooffice of CDF. However, it appears that rightly or wrongly, Defendant likely had itscorrespondence on the subject with Water Quality, the agency that originated and

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7074457041 Superlor Court. HumboldII 01:12:16 p.m. 06-14-20051 initiated the exchange.23

8 reliance thereon. However, if the PALCO'S initial communicationof the Jordan CreekI

In its final allegations, P la in tii asserts Defendant furthered its scheme by failing4567

9 Report was immune pursuant to Civil Code Section47 , as I ave held, these allegedI/

to notify the recipients of the January 22,1999 reportof its significance, making surethey delivered it to Sacramento, failing to call attention to authorities of the draft JordanCreek report in the final EIRIEIS, lobbying for the Afternatbe 25, rather than 25aharvesting plan based on the Jordan Creek report as included, and alereafter logging in

10 11wmmissions by inaction are meaningless.

16 llo ften a "dueling experts" game, that was followedbyan 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/I

It appears to me that as a matter of fact thatwe do not have such extrinsic fraud aswould bar Defendant from claiming the privilege of Civil Code Section47. What we dohave is a lengthy period of study and reporting from various individuals and agencies,

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22 defense to Plaint iis action.I1

lawsuit.

2021 The privilege provided by California Civil Code Section47 provides a m p l e t e

27 11 hereinafter referred to as "Noen".).2526

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SECOND: Defendant contends that The S e ~ o n dmanded Complaint violatessafeguards for constitutionally protected speech (The "Noerr-Pennington Doctrine"-


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Plaintiff alleges that Defendant violated the UCL by submitting the allegedly falseordan Creek report and thereafter "lobbying" for an amendmentto the final SYPrm 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 lobbyingE constitutionally protected by the Noerr.

What is the Noerr?

Noen is a constitutionat privilege based upon freedom of speech and the r ight ofk e n s o petition their government at all levels.

The First Amendment to the United States Constitution guarantees the right "toefi io n the Government for a redress of grievances." U.S. Constitution AmendmentI,;lause 6. The Supreme Court has long recognized hat for the Petition Clause to bea~ean ing ful rotection of the democratic process, citizens must be immune from some,rms of liability for their efforts to persuade government officials to adopt policy orerf om their functions in a certain way. This judicially declared privilege based uponle 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) 365Page 14 of 23


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U.S. 127, the Court rejctcted antitrust liability stemming froman aggressive lobbyingcampaign by a railroad to persuade states to adopt legislation that would severely limitcompetition from truckers. The Court explained that "...in a representative democracysuch as this ... the whole concept of representation depends upon the ability of the peopleto make their wishes known to their representatives." Id. At 137. The Court thenconcluded that the Sherman Act did not applyto the railroads' advocacy of legislativeaction, nohnrithstanding their anticompetitive ntent Id. At138.

The Court subsequently expanded the holding of Noerr to include activities aimedat 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 rightto petition extends to a ll departments of the Government..."and therefore, "...the samephilosophy governs the approachofcitizens or groups of them to administrative agencies(which are both creatures of the legislature, and arms of the executive) andtocourts, helhird branch of Government." California Motor trans^. supra,

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

In&@e,supra, the Court held that "Given the sweep of the Noerr-Penningtondoctrine, we have no difficulty in oining our sister circuits to conclude that a lobbying~ f f o r tesigned to influence a state administrative agency's decision ... s within theambit of the doctrine."

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On itsface, Noerr applies to People v. PALCO.

Plaintiff has raised a question, and the earlier RULING considered, whether thereis an exception, known as the "sham exception", to Noerr that applies in this case. I thinknot.

What is the "sham exception"to Noerr?

Inm, upra, the Court acknowledged that"... here may be situations in

Inm, upra, (p. 1060) itwas noted that the "shamnexception to Noerr

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22 encompasses situations in which persons use the governmental process- s opposed toII

which a publicity campaign, ostensibly directed toward influencing government action,is a mere sham to cover what is actually nothing more than an attempt to interfere withthe business relationships of a competitor."

23 the outcome of that process- s an anticompetitive weapon. A classic example is theI/24 filing of frivolous objections to the license application of a competitor, with noI

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expectation of achieving denial of the license but simpfy in order to impose expense anddelay. A "sham" situation involves a defendant whose activities are not genuinely aimedat procuring favorable government action at all, not one who genuinely seeks to achievehis governmental result, but does so through improper means.


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6 representative sampling and their relationship to our case:ll

707 445 70 41 SuperiorCouii, Humbold 01:13:06 p.m. 06-14-2005 17&4

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

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

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12 p la in ti i from competing with them.II I1) HiToo Steel Cow. V. Lehrer (1994) 24 Cai. App. 4m570

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

Plaintiis stated a cause of action under the sham exception to Noerr because defendants ithat case petitioned thegovernment SOLELY to prevent 1

2) Blank v. Kirwan (1985) 39Cai. 3d 311. The Court held that it isonly when efforts to influence government action are a "sham" that they fall outside theprotection of Noerr and within the scope of the Sherman Act, 15U.S.C.S. Section 1. Such efforts amount to a sham when though ostensibly directed

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28 efforts to influence government action are a sham only when the person or personsII I

toward influencing governmental action, they are actually nothing more than an attemptto interfere directly with the business relationships of a competitor. Such efforts, by

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contrast, do not amount to a sham when, nomatter how anticompetitive in purpose oreffect, they constitute a genuine eff ir t to influence govemment action. In other words,


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

[In our case, Palw was directly trying to obtain an advantageous result fmm tlCEQA process. So far as can be ascertained from the pleadings, Pa lw had nbeen seeking any advantage over a competitor because no competitor wiinvolved.]

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 planshou ld have been granted, because the action involved developer's first amendment rights~ n de intended to induce government action, not harass third parties. UnderNoerr, itas long been clear that the motive of the petitioners is irrelevant, as long as the intent isenuinely to induce government action rather than to frustrate or deter a third partyimply by the use of the governmental process.

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

While not directly mentioned in the pleadings, one must consider the inceptionf 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 togetherFa 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

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and all, and the 80,000 page administrative record mentioned inEPlC ,supra, attests to:he extent to which many contributedto the record. This complex and extensivexoceedings 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 "sham3xceptionn o Noerr has no application to PALCO'S position in the CEQA process.

There has been considerable discussion about whether Noerr should~pply , r should be applied more "narrowly", to PALCO'S position in a quasi-adjudicatory~roceedings efore an administrative agency, rather than an openly political body such ashe legislature. Shouid Nwrr immunitybeavailable to a? My review of the citedauthorities such asm, upra, and others, suggests that this would be a mistake.

There is authority that the "sham exception" is applied more narrowly in judicialmceedings, and in administrative proceedings where the body is acting in a quasi-udicial capacity in making findings of fact and where the action is evidenced by a recordhat is subject to review, such as by mandamus. (See generally, i(ottle, upra.) But evenn such instances, the immunity of Noerr applies if the whole thrust of the party's acts iso obtain a certain governmental action to its direct advantage, rather than the 'sham' ofsing 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 i f one were to assume the "sham" might apply during the fact

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ind ing or open public portion of the CEQA process, and Ido not, Plaintiff still cannot)revail.

After the close of the public period on November 16,1998, the agenciesnnsidered the amassed material and on February 25, 1999, CDF issued findings for theSYP adopting a Long-Term Sustained Yield (LTSY) projection known as SYPUternat'ie 25(a). Plaintiff has not in any of its pleadings asserted that 25(a) was notI air determination, warranted by the record. In other words, PALCO'S supposed deceitlad gained it naught.

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

". .. PL lobbies agencies..." OC p.24

"... Pacific Lumber proceeded to aggressively lobby CDF and othergovernment agencies ..."SAC p.13

"... Pacific Lumber thereafter lobbied CDF ..."SAC p.12What 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 froml e hat might be arguably more adjudicatory in nature (to which the "sham exception"

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

Plaintiff cannot state a causeof action because PALCO'S actions arewnstitutionally protected by Noerr.

THIRD: Defendant contends that theCEQA process was notundermined by PALCO's alleged actions.

Interestingly, Plaintiff has not responded directly to this partof Defendant'sDemurrer. Plaintiff does not mentionit in its OPPOSITION filed July 16, 2004, or in theSUPPLEMENTAL BRIEF IN OPPOSITION TO DEMURRER TO SECONDAMENDED COMPLAINT filed December 27,2004. 1 will assume this is an innocentoversight 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 andthe so called corrected repoit were both filed after the November 16,1998 cut off dateand CDF was therefore under no obligationtoconsider elhe r of them. The adoptionbySDF of SYP 25(a) [the restrictive plan] on February 25,1000, suggests that CDF wasue ll able to evaluate the mass of the record andmakean independent conclusiontnatfavored the lower harvesting limit. This occurred well after PALCO'S submission of eitherreport. It was only later, after PALCO had availed itself ofitsconstitutionally permittedobbying activlty that CDF reconsidered and adopted the less restrictive SYP Plan25.

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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 initialSYP Plan 25(a) that of necessity reflectedsuch information calling for a reduced scale oflogging, more consistent with the "corrected" report.

While the Demurrer provides further reasons for itsgranting under this heading,I elieve we need go no further.

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

Defendant at page 17 of its Demurrer and Motion to Strike requests the Court tostrike the District Attorney's Multiple UCL claims. This is moot in light of the sustaining3f the Demurrer without leave to amend. Nevertheless.Ishall address it.

California's Unfair Competition Law can be employed where there are anyof:hree varieties of unfa ir competition, including acts or business practices that are'unlawful" or "unfair" or "fraudulent". Podolskv-vs- First Healthcare Corn. (1996) 502al. ~pp.4' 632. The UCL statute is also not confined to anticompetitive businessxactices, but is also directed toward the public's rightto protection from such conduct.3ut the statute is directed at ongoing wrongful conduct. The "prac t i i" requirementtnvisions something more than a single transaction. It contemplates a pattern of conduct,~ngoingonduct, a patternof behavior, or a course of conduct. Hewlett a s - SPuaw

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

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

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6 P l a i n t icould meet its burden at trial of showing its wrongfulness. It is noteworthy thatI IIn the present case, itappears !hat the alleged wrongful conduct is the advancing

7 according to the pleadings, PALCO had submitted other reports fmm Dr. Weaver toII8 which Plaintiff takes no exception. I herefore find that PALCO's "practice" was toll9 Ilsubmit reports that Plaintiff does not contendare wrongful, and that it is only in this10 11single instance that ~ t a i n t i ibjects. The attempt to allege other wrongdoing by alleging11 a scaries of contrived omissions is a stretch to get around that requirement ofw,Il12 supra, for multiple wrongful acts to constitute a practice. The "practice" in question isI /13 the submission of reports in the CEQA process./ I

ll In the end, even if the action of PALCO was subject to the UCL, it nevertheless17 11has a complete statutory defensewith California Civil Code Section 47 and a defense1819

II Page 23 of 23

under the free speech and petition provisions of the First Amendment to theU.S.Constitution as developed in the Noerr-Pennington Doctrine.

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Defendant is allowed its costs of suit. Defendant's counsel shall serve andsubmit a suitable form of judgment.


24/24

STATE OF CALIFORNIA, )COUNTY OF HUMBOLDT ) SS. APFIDAVIT O F SERVICE BY MAIL1, LINDA GAUMEtl , ay:That I am a citizen of the United States. over 18vears of age. a resident of the Countv of

Humboldt, State of California, and not a par& to the within acti&;'that my business add& isHumboldt Ccuntv Courthouse, Eureka. California: that I served a true m v f the attachedORDER SUSTAINING DEMURRERWITHOUTLEAVE TO&END b Gsaid copies in the attorney's mail delivery box in the Court OperationsOffice at Eureka, C ~ f o m aon the date indicated below, or by placing said copies in envelope(s) and then placing theenvelope(s) for collection and mailing on the date indicated below following our ordinary businesspractices. I am readily familiar with this business practice for collecting and processingcorrespondence for mailing. On the same day that correspondence is placed for collection andmailing, it is deposited in the ordinary course of business with the United States Postal Service atEureka, California in a sealed envelope with postage prepaid. These copies were addressed to:DA (GALLEG0S)-BOX #64 IN COURT OPERATIONS

. EDGA R B. WASHBURN TJkMORRISON & FORRESTER J : i425 MARKET STREETSAN FRANCISCO, CA 94105-2482 SF FA),CER.TEf

palco suit

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