W.R. Grace Acquitted In Criminal
Environmental Case
In what has been called the largest environmental criminal prosecution in U.S. history, a jury in Libby, Montana acquitted W.R. Grace & Co. and three executives on Friday, May 8, 2009. The company and executives were charged with conspiracy, knowing endangerment violations under the federal Clean Air Act, wire fraud and obstruction of justice and faced more than $280 million in fines and restitution if convicted. This prosecution also joined a growing list of recent cases where government prosecutors have been cited for failing to disclose potentially damaging evidence to the defense.
Allegations
W.R. Grace, a specialty-chemicals manufacturer, mined and processed vermiculite — a mineral used in insulation, potting soil, and fireproofing — which the U.S. government alleged was contaminated with tremolite asbestos. W.R. Grace conducted mining operations in Libby, Montana from 1963 to 1992.
The U.S. government alleged that W.R. Grace knew the vermiculite released toxic fibers in the air and continued to mine the material, and even donated it for use at local schools, all the while lying to federal agencies and selling vermiculite-contaminated properties. According to lawyers for residents of Libby, Montana, more than 200 people have died and more than 2,000 have suffered asbestos-related illness since W.R. Grace acquired the mine in 1963.
Five executives were prosecuted along with the company for conspiring to expose Libby residents to asbestos-contaminated vermiculite and hiding the dangers of inhaling asbestos fibers from employees and residents. Company audits and internal memos dating back to the 1980s were used to support the indictment. However, charges against two of the individuals were dismissed by the prosecution after U.S. District Judge Donald Molloy substantially limited the evidence jurors could hear.
The government filed the criminal case in February 2005. The trial began on February 19, 2009 and lasted 11 weeks. The verdict was announced during the second day of deliberations. According to regulatory filings current through March 31, W.R. Grace spent $146 million in legal fees to defend itself and seven former executives against the criminal charges.
Concerns Raised with Government’s Disclosure
Continuing a trend challenging the adequacy of government disclosure in criminal matters — most recently highlighted by U.S. Attorney General Eric Holder’s decision in April to dismiss the indictment and not seek a new trial in the case against former Senator Ted Stevens (R-AK) on the basis of disclosure issues — the defense complained about the prosecution’s failure to disclose immunity negotiations with their 'star witness', and sought to have the case dismissed.
While declining to dismiss the case on ground of prosecutorial misconduct after finding that "incompetence is not bad faith" and "[p]oor planning is not malice," U.S. District Judge Molloy permitted defense counsel to cross-examine the witness on his relationship with the government and instructed the jurors to entirely disregard the witness's testimony against one W.R. Grace Executive. Judge Molloy also noted in his ruling that the government witness had destroyed his personal calendars on the night before trial, lied about knowing the identity of W.R. Grace’s lead corporate counsel and gave incomplete testimony.
In-House Counsel
The Department of Justice declined to comment on the verdict, citing the pending trial of an in-house lawyer for W.R. Grace, whose case was severed from this trial and is scheduled to begin in September. According to the indictment, the in-house lawyer served as corporate legal counsel from 1970 until 1993, and is charged with one count of conspiracy.
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