Friday, September 9, 2011

Litigious Humboldt

For an out-of-the-way county like Humboldt, has seen a lot of big legal action recently. These lawsuits will have significant impacts on the future of the area.

Some of the biggest litigation involved the Pacific Lumber Company, also known as PL or PALCO. PL was originally a well-respected lumber company, with ample land and what seemed to be inexhaustible timber resources. That is until 1985, when PL was the victim of a hostile takeover.

After the Maxxam Corporation acquired PL, it began over harvesting the timber, causing a great deal of anger and divisiveness in Humboldt. There were allegations that Maxxam falsified documents dealing with timber harvests and sales of land, prompting District Attorney Paul Gallegos to file a complaint for fraud and personally try the case.

The case was eventually thrown out by the courts in 2008, but not before the case divided the county in an “us vs. them” battle culminating in an unsuccessful recall election against Mr. Gallegos in March 2004. PL’s legal woes continued when creditors squabbled over the remaining carcass of a once proud company that Maxxam ran into the ground. The restructured company, now known as Humboldt Redwood Company, is struggling to survive with a skeleton mill.

While PL seemed to be falling apart at the seams, another company seemed very stable: Humboldt Creamery, the local dairy co-op. With a number of high-profile contracts including making ice cream for Costco and providing the military with most of its powdered milk needs, the future of the co-op seemed bright. Until 2009 when the CEO, Rich Ghilarducci, admitted to cooking the books. He did so rather than admitting to co-op members that the Creamery was having financial problems.

The resulting chaos ended with the sale of the Creamery to a corporation and a 30-month sentence for the disgraced former CEO. Many dairy families thought that Mr. Ghilarducci was let off easy by an urban federal court not familiar with farm country values. The once proud co-op run by the dairy farmers themselves has now gone corporate, and the farmers aren’t too happy with the court's role in the downfall.

Now Humboldt finds itself embroiled in more litigation. CalTrans and the Federal Department of Transportation are looking to widen Highway 101 through Richardson Grove State Park. Large redwood trees flank the narrow road so tightly no long tractor-trailers can pass. The plan was to remove a few of the trees and widen the road to a point that more commercial vehicles could reach Humboldt and possibly spur an economic upturn in a county losing more and more blue collar jobs.

But environmentalists want to protect the trees, and some locals feel that better connections with the rest of California will damage the unique feel Humboldt County has as a mostly isolated area. They have begun filing injunctions to block the planned widening creating more tension between different factions in Humboldt. Some locals feel that a bunch of hippies with no roots in the area are abusing the legal system to stop progress.

Humboldt appears to be turning to the legal system to resolve more of its conflicts. Yet as a rural county, is this an expected behavior? For a county with more trees and cows than people, and which prides itself on being mellow and accepting, Humboldt certainly seems to have a lot of attorneys running around these days.

5 comments:

oceguera said...

I'm aware of the plan to widen the road along Richardson Grove. I have heard arguments against the widening of the road linked to increased militarization of the area...I'm not sure exactly how, but it would be interesting to find out more about this. I have also heard of growing commercial interest from multinational corporations like sun valley floral (netherlands; they have been known to hire undocumented workers; exposing them to toxic chemicals and have worked closely with ICE to deport them) and cypress grove (sweden) trying to establish their own niche in the area. Walmart and Home Depot are also big proponents of the plan to widen the road as they would like to expand their market in the area. True, Humboldt county residents need jobs however, exploitative low wages that are offered by big business will only continue to damage the local economy.

hgill said...

Since I'm not familiar with the area, why would the people of Humbolt County be upset with Paul Gallegos? As the District Attorney, he probably has some roots to the area. Additionally it can be seen that he is a local guy going after a corporation that falsifying the books ruins the reputation of a dear Humboldt company. If anything I would think the town would applaud him for standing up to the "outsiders".

As far as Mr. Ghilarducci- I don't know if letting him off easily is necessarily non-rural v. rural. Most people in white collar crime like this, hardly ever get what most would consider justice.

Courtney Taylor said...

It's interesting to see how two local companies eventually met their demise through sneaky business practices. Maxxam tried to take over PL hoping no one would notice, then Humboldt Creamery's CEO falsified financial statements. I know corporate-takeovers and "cooking the books" happen in urban and rural counties alike, but I wonder if living in an isolated area, people feel insulated from the watchful eye of the law.

Jason said...

I just drove up 101 over Labor Day weekend and passed through Richardson Grove. It really is an amazing place and I can see why people would be fighting to protect it. On the other hand I think I side more with those people that may benefit from employment by allowing more traffic to travel into Humbolt. I think many times rural residents feel that people not of the community, like hippies, often meddle in their affairs based on pure emotion rather than rational thinking.

Scarecrow said...

The other transportation concern is railroad service. A line exists between Eureka and Napa, but it's in disrepair, and efforts to get it up and running have been stymied by court battles over the southern end of the line (aka the urban end). The added shipping costs for companies based in Humboldt county means they are at a disadvantage versus competitors closer to market.
It's too bad, because rail service would lessen the need to tear out those beautiful trees.