By Bob Van Voris and Amy Linn
April 25 (Bloomberg) -- W.R. Grace & Co. and five former executives asked a judge to end the biggest environmental-crime trial in U.S. history, claiming that prosecutors didn’t prove they broke the law and that the government committed misconduct that irreparably tainted the case.
Grace and the former executives yesterday asked U.S. District Judge Donald Molloy in court filings in Missoula, Montana, to take the case away from a jury that has been hearing evidence since February and find them not guilty.
The company is accused of conspiring to endanger the residents of Libby, Montana, by exposing them to asbestos- contaminated vermiculite and to defraud the government by lying to investigators. Grace is also charged with violating the Clean Air Act and obstructing justice. It faces more than $280 million in fines and restitution if convicted, an amount that might complicate a company plan to emerge from bankruptcy this year.
Molloy has criticized the government’s case throughout the trial. He said of one key witness, “This guy is a liar.” On another occasion, he told prosecutors he didn’t understand their case.
“Where is the conspiracy?” Molloy asked prosecutors earlier this month. “Six weeks we’ve been at this and I don’t know what the conspiracy is.”
Two men charged with violating the Clean Air Act could be sentenced up to 15 years in prison if convicted. The other defendants, charged with conspiracy, face up to five years.
Not-Guilty Pleas
Grace, the Columbia, Maryland, specialty chemicals maker, and the former executives all pleaded not guilty. Molloy has ordered the parties not to talk publicly about the case.
In Grace’s bankruptcy case, government lawyers said in February that fines and restitution could reach $1.28 billion if the company is convicted.
Molloy is to hear arguments on the defense requests April 27 and could rule at any time after that.
Prosecutors urged Molloy not to take the case away from the 15 western Montana residents who make up the jury of 12 and three alternates.
The defendants claim prosecutors presented perjured testimony and failed to turn over evidence favorable to them as required.
Grace’s lawyers drew parallels between the trial and the case of former U.S. Senator Ted Stevens, an Alaska Republican, whose corruption conviction was thrown out because prosecutors failed to turn over evidence that could have helped his defense.
Obstruction Charge
Andrew King-Ries, a University of Montana law professor following the trial, said Molloy may throw out all the charges except obstruction of justice against Grace. The maximum possible fine would be only $250,000 for each of four counts.
“There’s nothing unique about an obstruction of justice charge,” said King-Ries, a former prosecutor whose “Grace Case” Web log provides daily coverage of the trial by University of Montana law and journalism students. “That’s a run-of-the-mill case.”
Prosecutors claim more than 1,000 people have been injured and more than 200 killed by exposure to asbestos in and around Libby, where Grace mined and processed vermiculite, a mineral used in construction and gardening, from 1963 until 1990.
Grace and seven former executives were charged in 2005. One died in 2007 of a non-asbestos-related cancer, and the other is scheduled to be tried alone.
The case, first set for trial in 2006, was delayed while prosecutors appealed a series of pretrial rulings by Molloy, including his dismissal of charges of conspiracy to endanger residents and knowing endangerment under the Clean Air Act.
Charges Reinstated
A San Francisco-based court reinstated the charges and ruled prosecutors could use much of the evidence the judge had ruled out of the trial.
Early in the trial, Molloy denied a prosecution request to designate 34 possible prosecution witnesses, most of them current or former Libby residents, as crime victims under the 2004 Crime Victims Rights Act. The judge said there were no identifiable victims. Again the government appealed and won.
“I abide by their determination, though I don’t agree with it,” Molloy said in a hearing on March 2. He lectured prosecutors about moving forward with the trial.
“It has been delayed, delayed, delayed. And it’s going to get tried,” Molloy said.
Molloy limited the testimony of prosecution witnesses including Paul Peronard, an ex-Environmental Protection Agency official in Libby; Dr. Alan Whitehouse, a pulmonologist who treated Grace workers and Libby residents; and Dr. Daniel Teitelbaum, an expert in toxicology.
7 of 53 Documents
Molloy on April 23 admitted just seven of 53 documents government lawyers tried to introduce after calling their last witness this week. The judge criticized “the prosecution’s practice of presenting incomplete proof calculated to exclude all evidence adverse to its litigation position.”
Defense lawyers claimed Robert Locke, a former Grace executive who testified for the government, lied on the stand, and Molloy agreed.
He permitted the defendants to pursue documents that hadn’t been turned over, netting 128 pages of e-mail between Locke and Robert Marsden, a special agent with the EPA.
The defendants claim the e-mails show an improperly close relationship between Locke and the prosecution team and undercut Locke’s claim that he testified without a grant of immunity.
Grace claims the alleged perjury and failure to turn over the documents poisoned the case. Government lawyers argue that Locke should be subjected to further questioning and jurors permitted to decide whether to believe him.
‘Dead and Dying’
“In a case of this magnitude, with as many people already dead and dying, it would be wrong for the judge to take the case from the jury,” said David Uhlmann, formerly the Justice Department’s top environmental crimes prosecutor and now a professor at the University of Michigan Law School.
Uhlmann, who with U.S. Attorney Bill Mercer, Montana’s top federal prosecutor, headed the team that investigated and sought the indictment of Grace, said Molloy’s comments from the bench and in written opinions “raise questions about whether the court is ensuring that both sides receive a fair trial.” “The United States, the defendants, and perhaps most of all the town of Libby deserve to see justice done, without any concern that the judge’s temperament or his personal views might influence the outcome of the case,” Uhlmann said. “With so much at stake for everyone involved, the judge has an obligation to conduct the trial in a way that no one questions his fairness or impartiality.
“Right now, that is not happening.”
Former Conflict
Molloy, 62, was appointed to the federal bench in 1996 by President Bill Clinton. He has tangled publicly with Mercer, whose office is prosecuting Grace. In 2005, Molloy, who was then Montana’s chief federal judge, wrote Attorney General Alberto Gonzales urging that Mercer be replaced.
The frequent absence from Montana of Mercer, who served at the same time as the No. 3 official at the Justice Department in Washington, was causing problems for the courts and for the U.S. attorney’s office, Molloy said.
Grace is scheduled to enter the final phase of its bankruptcy case in June when U.S. Bankruptcy Judge Judith Fitzgerald will begin a series of court hearings in Wilmington, Delaware, to help her decide whether to approve the company’s reorganization plan.
Should Fitzgerald approve the plan after the final round of hearings in September, the company could pay off its creditors and exit bankruptcy by the end of the year, if it raises enough money.
The Montana case is U.S. v. W.R. Grace, 05-CR-7, U.S. District Court, District of Montana (Missoula).
To contact the reporters on this story: Bob Van Voris in New York at rvanvoris@bloomberg.net; Amy Linn in Missoula, Montana, at amylinn@bresnan.net.
Last Updated: April 25, 2009 00:01 EDT
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