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United States of America v. Sierra Pacific Industries

November 18, 2011

UNITED STATES OF AMERICA, PLAINTIFF,
v.
SIERRA PACIFIC INDUSTRIES, ET AL., DEFENDANTS.



ORDER

On July 19, 2011, the United States filed a motion to find counsel for Sierra Pacific Industries in contempt. Dckt. No. 242. The motion is predicated on alleged intentional violations of the court's earlier orders prohibiting unauthorized, ex parte contacts with a represented party. The undersigned held a hearing on the motion on September 7, 2011. For the reasons explained below, the court denies the motion to find counsel in contempt, but finds that the conduct of Sierra Pacific's counsel, which is addressed herein, violated California Rule of Professional Conduct 2-100.

I. Background

A. This Court's Previous Order

On November 16, 2010, this court found that one of Sierra Pacific's attorneys had violated Rule 2-100 (the no-contact rule) by communicating directly with employees of the United States Forest Service about the subject matter of this litigation without the consent of attorneys for the United States. Dckt. No. 92 at 8-12. The court ordered Sierra Pacific to "identify all federal employees contacted without the knowledge of counsel for the United States in this matter to date." Id. at 12. The court's order also contained the following language: "the court accepts SPI counsel's representation that counsel will identify [their] relationship to Sierra Pacific and involvement in this litigation before seeking out and interviewing particular government employees about issues related to the Moonlight Fire. [And] . . . to notice the deposition of control group federal employees if and when [counsel] wish to ask them questions." Id. at 12-13.

Sierra Pacific moved for reconsideration of this order. Dckt. No. 107. The then-assigned district judge denied that motion and affirmed the undersigned's ruling that Sierra Pacific's counsel had violated Rule 2-100, and further found that counsel's conduct in failing to reveal to the United States Forest Service employees that he represented Sierra Pacific was an ethical lapse. See Order, Dckt. No. 124, at 5-7. Judge Mendez admonished, "[f]inally, this Court believes it is important to make clear that it is troubled by SPI's counsel's behavior and decisions with respect to this particular incident. Such conduct is out of the ordinary and the Court takes SPI's counsel at its word that it will not occur again." Id. at 6.*fn1

B. Carman

Sierra Pacific has retained Steven Carman, a retired Special Agent with the Bureau of Alcohol, Tobacco, Firearms and Explosives, as an expert in this case. Carman Decl., Dckt. No. 280-1 at 3, 1. On June 6, 2011, Carman met with counsel for Sierra Pacific, Downey Brand attorneys Meghan Baker, Thomas Marrs, and William Warne. Id. at 4. They discussed a former forest service employee, Michael McNeil, who is suspected of setting a series of arson fires and who may have been in the area of the Moonlight Fire at the time it started. Id. at 3-4. The attorneys told Carman that McNeil had been arrested by two ATF agents, Karl Anglin and Michael Hidalgo, in October 2007, "on charges related to terrorist threats and possibly an arson in Southern California." Id. at 4.

Carman told the attorneys that Anglin and Hidalgo had been his friends and associates for many years, and suggested that he contact them to find out whether they had been involved in investigating McNeil as a serial arsonist. Id. at 5. The attorneys agreed that he could contact Anglin and/or Hidalgo. Id. The attorneys told Carman that "they also wanted be to be clear in any conversations that [Carman] was working for the defense of Sierra Pacific Industries on a case brought against the company by the U.S. Attorney's office." Id. at 5-6.

Carman called Anglin on the same day. Id. at 6. Carman declares that he told Anglin: . . . instead of working on the side of the federal government, I was working opposite them. I said I had actually been hired by a law firm that was representing the largest logging company (and I may have mentioned that I thought it was the largest private land owner) in California. I told Karl that the Civil Division of the U.S. Attorney's office in Sacramento had filed a $1 billion lawsuit against this company. . . . I explained that it was related to a large wildland fire in Northern California that occurred on Labor Day, 2007. I do not think I mentioned the names "Moonlight fire" or "Sierra Pacific Industries" because with Karl being in Los Angeles and not working directly in Northern California, I did not think either name would mean a thing to him. I am sure however that I did state I was opposite the U.S. government because I explained to Karl that it felt really strange working against the U.S. Attorney's office after having worked with them for twenty years on fire cases.

Id. at 6-7. Carman declares that he asked Anglin for "public information" regarding McNeil. Id. at 7.

In contrast, Anglin declares that Carman told him during this phone call "that he had been retained as an expert by a law firm representing a 'large client' involved in a civil lawsuit involving a wild-land fire in Northern California." Anglin Decl., Dckt. No. 242-8 at 2. He declares: "Based on Mr. Carman's statements to me, I never understood that the lawsuit in which he was working was brought by the United States and was being civilly prosecuted by the United States Attorney's Office . . . it was my understanding based on the comments made by Mr. Carman that the lawsuit involved private parties and not the United States. Had I known that Mr. Carman was working for a party against the United States, I would not have provided him information . . . ." Anglin Supp. Decl., Dckt. No. 287-4 at 2.

Carman then wrote an email to Hidalgo. Carman Decl., Dckt. No. 280-1 at 8. The email stated that Carman was "across from the Civil side of the US Attys office in Sacramento" but did not mention the name of the client he was working for or the name of the fire. Id. Carman sent the email to the wrong address, so it was not received by Hidalgo. Id. at 8-9.

Carman declares that on June 9, 2011, Hidalgo called Carman, and Carman told Hidalgo that he "was across from the U.S. Attorney in Sacramento in a civil case involving a big wildland fire and that I was working for a company that was being sued by the government for $1 billion . . . . Like my discussion with Karl Anglin, I do not specifically recall mentioning the names 'Sierra Pacific Industries,' 'Downey Brand' or the 'Moonlight fire' because again I did not think any of those names would mean anything to Mike [Hidalgo]." Id.

In contrast, Hidalgo declares that Carman told him "that he has been retained as an expert by a law firm representing a client involved in a civil lawsuit involving a wild land fire in Northern California." Hidalgo Decl., Dckt. No. 242-9 at 2. Hidalgo further declares: "At no point did Mr. Carman ever tell me that the case in which he was retained was brought by the United States, or that the client was Sierra Pacific Industries." Id. He declares that: "Mr. Carman never 'expressly mentioned that [he] was working on a civil defense case 'across from the Civil side of the US Attys office in Sacramento'. . . . [He] certainly never explained that the lawsuit was brought by the United States and was being civilly prosecuted by the United States Attorney's Office, and I never understood that to be the case . . . . Had I known that Mr. Carman was working for a party against the United States, I would not have provided him information." Dckt. No. 287-5 at 2.

Carman asked Hidalgo questions about McNeil. Carman Decl., Dckt. No. 280-1 at 9-10.

Hidalgo gave Carman information about his investigation of McNeil. Id. at 10. He stated that he had not investigated McNeil for arson. Id. According to Carman, Hidalgo "told me that if I would like to come to Los Angeles, he would accompany me to the jail to interview McNeil."

Id. Carman declares that Hidalgo "indicated that . . . I could ask questions regarding McNeil related to the case I was working and that any evidence of criminal activity would be something [Hidalgo] could follow up on or pass off to other agents." Id. at 11. Carman told him that he would have to get permission from the attorneys he was working with. Id.

Carman declares that Hidalgo later told him that Hidalgo had contacted Diane Welton at the United States Forest Service to get information about McNeil. Id. Welton told Hidalgo that she had been instructed not to talk about the ...


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