Sacramento County reeling from jury’s $107 million verdict against it in mining case

Rocks cover a Teichert Construction mining area. A jury on March 21 found Sacramento County officials aided Teichert, putting gravel mines out of business.
Rocks cover a Teichert Construction mining area. A jury on March 21 found Sacramento County officials aided Teichert, putting gravel mines out of business. Hector Amezcua Sacramento Bee file

With Sacramento County reeling from a federal court jury’s landmark $107 million judgment against it, plaintiffs’ lawyers said Wednesday the “undue influence” case should serve as a warning shot for any governmental entity that plays political favorites.

“The theme I saw in this case, that the jury saw, was a local government that got so close to these big companies they were regulating that they basically got dependent on them,” said R. Paul Yetter, the Houston-based attorney who represented plaintiffs Joseph and Yvette Hardesty. “They got in alignment so that when the companies came to the government and said, ‘We want you to target this little competitor,’ the county took sides.”

The Hardestys operated a 100-acre sand-and-gravel mine on property owned by the cattle-ranching and mining Schneider family of Sloughhouse. The Schneiders had been mining on the land with “vested rights” and without controversy since the 1800s, their lawyer said, until the county shut them down in 2010. Planning officials, acting on complaints from the nearby Teichert Construction gravel-mining company, lawyers said, found the operation in violation of zoning ordinances. They demanded the Schneiders obtain a conditional use permit, and upped the amount of the bond the family had to post to reclaim the land from less than $200,000 to $8.8 million.

But if county attorneys thought they played a strong hand with the zoning violations they threw at the Schneiders, the attorney for the family thought he had a stronger to one punch back with: the due process protections of the Fifth and 14th Amendments.

“The plaintiffs never could get a fair hearing under local laws administered by county officials,” said Glenn W. Peterson, the Roseville lawyer who represented the Schneiders. “But ultimately, they were protected by the highest laws in the land, and the federal system, and that’s the most significant thing about this case.”

Gregory P. O’Dea, the private attorney retained to defend the county as well as former county Supervisor Roger Dickinson and two other county officials who were named as defendants, said after the verdict Tuesday that he did not think the jury’s findings were supported by the evidence and that he plans to contest the awards in post-trial motions.

“It is our sincere belief that (the verdict) should not stand,” O’Dea said.

The award is believed to be the largest ever against the county, although officials could not confirm that Wednesday. Sacramento County Counsel Robyn Drivon said she needs to meet with the Board of Supervisors “to assess and review” the case on how the county would pay it off if the award stands and whether any of the money would come out of the general fund.

Drivon said the county is self-insured to $2 million “and then has an excess coverage rate over that.”

“This may exceed that,” Drivon said. “But part of what’s under review is what those limits are and what those funds would consist of. We’re allowed to ask for 10 years of payments. That’s all of what’s under consideration.”

In their trial briefs, the plaintiffs charged that county officials took a heavy-handed approach toward the Hardestys and the Schneiders at the behest of Teichert, the company that mines aggregate near the Schneider land in eastern Sacramento County.

The Hardestys and Schneiders said Teichert exerted inordinate political influence with county officials – including Dickinson, the late former state Sen. Dave Cox and former Congressman Dan Lungren – in an effort to take out a business competitor.

Peterson said his clients did not sue Teichert for a simple reason: the company did not violate anybody’s due process rights. “In my opinion, it was very predatory, what Teichert did, but this case was about a failure of government and a corruption within the government, not elsewhere,” he said.

Teichert’s chief executive officer, Jud Riggs, said in a prepared statement Tuesday: “We recognize the value of competition, and believe that all operators should act responsibly.”

Inferring that the Hardesty-Schneider operation enjoyed a competitive advantage with its “historic mine” and “vested rights” status, Riggs said that “all aggregate mining operators should be held to the same regulatory standards that are designed to protect the environment and public health.”

“We have tremendous respect for Sacramento County officials who have acted to ensure that all operators are accountable, and the community is protected,” Riggs said, on behalf of his 130-year-old company.

Jurors needed only a day and a half to come back with a verdict Tuesday in the trial that began Feb. 16 in front of U.S. District Judge Kimberly J. Mueller and consumed 18 court days. The panel’s relatively quick work returned compensatory awards against Sacramento County of $75 million to the Hardestys and $30 million to the Schneiders.

Equally damaging to the county’s reputation were the nearly $1.8 million in punitive damages the jury awarded against the county and to the plaintiffs for the actions of Dickinson ($25,000 to the Schneiders), former Planning Director Robert Sherry ($500,000 to the Hardestys; $250,000 to the Schneiders) and former aggregate resource manager Jeff Gamel ($1 million to the Schneiders).

Jurors also hit the county with a $30,000 award to the Schneiders on the family’s retaliation claim.

Dickinson declined to comment Wednesday on the jury’s decision that sustained allegations of malicious and oppressive conduct against him.

The Hardestys and Schneiders argued in a joint pre-trial brief that Dickinson should not benefit from “qualified immunity” that is usually bestowed on public officials acting in their official capacity.

They said that Dickinson knew about the Schneiders’ “vested rights” and voted in 2002 to allow them to maintain their status as a historic mining operator that enabled the family to excavate gravel on their 3,500-acre property without having to obtain a conditional-use permit. Yet, as chairman of the Board of Supervisors, the plaintiffs said, Dickinson later conducted meetings “in such a way as to effectively take the vested rights away” by “simply declaring that they never existed.”

Moreover, “he acknowledged substantial (and repeated) pre-hearing contacts with Teichert and (company attorney) John Taylor,” the brief said. Plaintiffs’ lawyers claimed they had “sufficient evidence to support the argument that Mr. Dickinson was involved in a conspiratorial effort (initiated and orchestrated by Teichert) to take the Schneider/Hardesty operation out of contention in the aggregate marketplace by aggressively and unfairly attempting to regulate it.”

The plaintiffs called it “part of a scorched-earth approach” to put the Hardesty-Schneider operation out of business.

Peterson, the attorney who represents the Schneiders, said his side is willing to engage in settlement talks with the county.

But no matter the outcome, “one thing is for sure,” Peterson said. “The verdict will change the county’s culture of indifference toward small-business and small-land owners. I think now the county will listen.”

Andy Furillo: 916-321-1141, @andyfurillo

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