(David McNew/Getty Images)
 

Is there a hole in our justice system where corruption is allowed to fester? Yes.

Sixty years ago, John Leo Brady was tried for murder in a Maryland court. Brady never denied helping to plan a robbery with his accomplice, Donald Boblit, but insisted that Boblit had pulled the trigger when the scheme went awry. Brady's lawyer argued that his client should therefore be sentenced to life in prison, not death. The jury disagreed and voted to execute him. It was only after Boblit himself was convicted and sentenced to death that Brady's lawyer learned that the prosecutor had intentionally kept hidden Boblit's admission to the crime.
Ruling on Brady's appeal, the Maryland Court of Appeals agreed that the suppression of exculpatory evidence was a 14th Amendment due-process violation, and remanded the case to the trial court on the question of punishment. In 1963, the Supreme Court affirmed in Brady v. Maryland that exculpatory evidence withheld from the defense by the prosecution violates constitutional protections. Ever since then "Brady violations" have resulted in sanctions against prosecutors and police, as well as overturned criminal convictions.
But what happens when the government withholds exculpatory evidence during the prosecution of a civil lawsuit against an individual or company? Nothing, apparently.
With Brady deemed to apply only to criminal cases, no specific case law punishes a government lawyer for failing to disclose evidence that would've been helpful to a civil defendant. If there were, then last year the 9th Circuit Court of Appeals might not have denied a motion by Sierra Pacific Industries, a California forest products company, to set aside a consequential settlement it had made in 2012 with the U.S. Department of Justice. For that matter, if there had been a civil equivalent of Brady, there probably wouldn't have been a settlement in the first place.
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In 2009, the Justice Department's Eastern District of California filed a lawsuit against Sierra Pacific Industries (and some minor defendants) for damages stemming from a 2007 forest fire in California's Sierra Nevadas. The fire burned about 65,000 acres of forest, most of them national lands. The suit was based on an origin-and-cause report filed by Joshua White, an investigator from the California Department of Forestry and Fire Protection (Cal Fire), that claimed a tractor operated by SPI's logging subcontractor had struck a rock, generating a spark that ignited some forest duff and then turned into a conflagration.
California filed a separate suit against SPI but signed a joint prosecution agreement with DOJ, allowing the two government agencies to prepare cooperatively. The only substantial difference between the two suits was the amount they sought in damages. The state of California wanted about $10 million. The feds wanted nearly a $1 billion. Which seemed excessive, since the total value of the land was about $25 million and the costs of fighting the fire were less than $10 million. The outsized damages were just the first sign that something was very wrong with the government's case.
Sierra Pacific Industries sounds like a big, faceless corporation, but in reality it's a family-owned company, founded more than six decades ago as a tiny sawmill by Archie Aldis "Red" Emmerson, who'd survived a truly Dickensian childhood by outworking everyone around him. Now one of the country's most successful lumber suppliers, SPI fought back as if its future was at stake. Because it was.
Over the course of nearly three years of discovery, Emmerson's lawyers in Sacramento deposed witnesses and produced evidence that comprehensively dismantled the investigator's report. They found that White and his counterpart from the United States Forest Service had failed to follow established investigative protocols, fabricated inculpatory evidence, hid exculpatory evidence, invented both a false theory of the fire and a false ignition point for the fire, lied under oath, and intentionally disregarded the possible involvement of a young man named Ryan Bauer, who started volunteering unsolicited alibis and statements which turned out to be contradicted by facts and subsequent statements.
Whether or not Bauer had had anything to do with the fire, the circumstantial evidence of his involvement appeared so compelling that SPI's lead attorney, William Warne, planned to put him on the stand as a dramatic symbol of the government's flawed investigation. That Cal Fire's White had deliberately ignored Bauer would underscore for the jury how poorly he had done his job—unless, that is, his job had been to target a deep-pocketed company instead of someone the state would be on the hook for incarcerating. (There was also a known arsonist in the area at the time of the fire. White ignored him, too.)
But just before trial, Assistant United States Attorney Kelli Taylor filed motions warranting to the court that there was not a "shred of physical evidence" to suggest another party might have been liable, and asked the court to preclude SPI from turning the trial into an "arson witch hunt." Judge Kimberly Mueller assented. SPI would not, she ruled, be allowed "to argue that someone else started the fire."
Now Red Emmerson faced a stark choice. Where victory once seemed certain, the odds had fallen to about 50-50—not good enough to risk possibly losing his company. Reluctantly, he and his sons George and Mark, who now ran SPI, agreed in July 2012 to transfer 22,500 acres of California forest owned by SPI to the United States Forest Service, and pay $50 million. The DOJ valued the settlement at $122.5 million and celebrated it as the "largest ever received by the United States for damages caused by a wildfire."
Emmerson explained that what made the decision to settle somewhat easier was knowing he would still get his day in court, as long as the California judge didn't issue a similar ruling.
Warne and his team were prepping for that trial when he got a call from Ryan Bauer's father, Edwin, who "wanted to gloat," Warne says, "about the settlement." Then Bauer mentioned "the bribe."
"What are you talking about?" Warne asked.
In late spring of 2012, officials from the Justice Department went to serve a subpoena on Bauer's father, Edwin. During the encounter, Edwin claimed that Warne had approached the Bauers' attorney and offered them money in exchange for Ryan Bauer admitting to starting the fire. Edwin claimed that his attorney had presented this offer to the Bauers and that the Bauers had refused it.
The DOJ investigators immediately contacted the Bauers' lawyer—but he denied that any such thing had happened, and proved it to their satisfaction. This lawyer later told Warne he'd naturally assumed Warne had been informed about the Bauers' allegation. But he hadn't been. No one from DOJ ever mentioned it to the defense, or the court.
Warne was shocked but not surprised. After all, AUSA Taylor hadn't dropped the suit even after seeing it was based on a dishonest investigation. Now she had withheld knowledge of a false accusation made by a percipient witness, too.
The disclosure would have contradicted Taylor's assertion that there was not a "shred" of evidence pointing to anyone else, and presumably would have inclined Judge Mueller to allow the defense to put Bauer on the stand. In which case, the federal trial would have proceeded. And given what soon happened in California, the verdict can be reasonably supposed.
Scheduled for July 2013, the California trial never took place. After reading hundreds of pages of motions, Superior Court Judge Leslie Nichols dismissed the lawsuit, calling it "corrupt and tainted," and ordered Cal Fire to pay the defendants $32 million (the largest discovery sanction ever ordered by a judge against a government agency) for its "egregious and reprehensible conduct."
While the state ruling didn't affect the federal suit, Judge Nichols's finding of pervasive misconduct confirmed the defendants' belief that the prosecutors had perpetrated a "fraud on the court," for which there was ample precedent to set aside the settlement.
Warne filed a motion with the district court, which dismissed it, then appealed to the 9th Circuit, which ruled "the district court correctly concluded that Brady does not generally apply in civil proceedings . . . the government did not have a specific duty to disclose the false bribe information, beyond its standard discovery obligations."
Of course, those standard discovery obligations had also applied to Brady's prosecutor in 1958, and yet the Supreme Court decided 7-2 that such obligations would be honored more diligently if the prosecution faced sanctions for failing to abide by an inscription carved into the walls of the Department of Justice, as quoted by Justice William O. Douglas in his Brady opinion: "The United States wins its point whenever justice is done its citizens in the courts."
By that reasoning, it is nothing less than an injustice that "courts" doesn't refer also to civil courts.