Crime - Sacto 911

These miners won a massive $107 million ruling against Sac County. Will it stand?

An archival photo of a gravel mine. Joseph Hardesty and Jay Schneider shut down their graving mining operation near Sloughhouse in 2010.
An archival photo of a gravel mine. Joseph Hardesty and Jay Schneider shut down their graving mining operation near Sloughhouse in 2010. Sacramento Bee Staff Photo

Whether government officials became “blinded” and “corrupted,” or if they only demanded regulatory complicity from a rogue gravel-mining operation, the matter of Hardesty and Schneider v. Sacramento County isn’t done yet.

The fight that has been going on for 27 years seemingly ended two months ago when gravel miner Joseph Hardesty and landowner Jay Schneider convinced a federal jury in Sacramento that the county had put them out of business, possibly for the benefit of a rival construction company – the politically influential A. Teichert & Sons.

But Hardesty and Schneider face a whole lot more legal war before they can cash in on their $107 million award.

Their first obstacle will be an effort by the county’s lawyers – even before they take the case to the appellate courts – to persuade U.S. District Court Judge Kimberly J. Mueller that the jury got it wrong.

The county’s post-trial motions were supposed to be filed within 28 days of the March 21 verdict, but that timetable evaporated when a pending appeal filed by a former defendant in the case forced Mueller to vacate her official order of judgment eight days after the verdict.

On Tuesday, the ancillary appeal got resolved, which sets the stage for the judge to make the verdict official and start the clock on the county lawyers to file their post-trial motions.

When they get underway, the two sides once again will blast away at each other with the same arguments they presented to the jury.

“This is a case about a government that became blinded – blinded by the desire for funding, for power, for control that resulted from the government becoming corrupted, and harming a small business,” Hardesty’s attorney, R. Paul Yetter, told the jury in his closing argument.

Hardesty had worked the mine since 1981 on a handshake deal with Schneider, the property owner and cattle rancher who enjoyed a “vested right” to excavate on his 3,691 acres of land near Sloughhouse in Southeast Sacramento County that has been in his family since 1905. The two plaintiffs claim that in 2009, the county moved to shut them down as a result of complaints lodged against their operation by Teichert, the regional construction industry giant.

“The defendants didn’t just take money or property from the plaintiffs in this case,” Glenn W. Peterson, the lawyer for Schneider, argued to the jury. “They took away their way of life.”

Gregory O’Dea, the county’s privately retained attorney, countered that nobody tried to put anybody out of business, and that the only thing the county ever wanted out of Hardesty and Schneider was for them to get a conditional use permit to cover their hugely expanded gravel mining operation.

“They moved away from what I’ll characterize as a more mom-and-pop type operation, a small-scale operation, to this large-scale operation,” O’Dea said in his closing argument. “So (county officials) begin to tell this to Mr. Schneider, that, ‘Look, what you’re doing now is different, and it’s the kind of thing that’s going to warrant a conditional use permit.’”

According to O’Dea, Hardesty Sand and Gravel historically had worked about 4.5 acres of Schneider’s property, producing anywhere from 5,000 to 25,000 tons of aggregate a year. But by 2009, he said, the mining operation had grown to 180 acres, production had hit 500,000 tons, and the equipment had begun to encroach on the south bank of the Cosumnes River.

An economist who testified for the plaintiffs said that Hardesty’s sales peaked at $6.23 million in 2008, with him making payments of $891,000 the following year to Schneider and keeping $848,000 in profits for himself. The same economist, Gilbert Coleman, also estimated that over its 50-year life span, the mine would have been worth another $98 million, a figure that roughly corresponded to the jury’s award to the two plaintiffs.

Hardesty shut the mine in 2010, in the face of regulatory pressure, massively increased financial assurances bonds, and multi-agency investigations and inspections coming down on him and Schneider.

“It was like machine guns at us,” Schneider testified at trial.

Hardesty filed his federal lawsuit against the county in September 2010, Schneider brought his in September 2012, and Mueller consolidated the bulk of the two cases in August 2014. Following 16 days of testimony and arguments and two days of deliberations, the jury on March 21 found that the county violated the plaintiffs’ due process rights and awarded $75 million to Hardesty and his wife and $30 million to Schneider and his family.

On top of that, jurors awarded the two of them nearly $2 million more in punitive damages levied against former state Assemblyman and Board of Supervisors member Roger Dickinson, former Sacramento County Planning Director Robert Sherry and former county aggregate resources manager Jeff Gamel.

In court papers, the lawyers for the plaintiffs charged that the county officials as well as the late former state Sen. Dave Cox and former U.S. Rep. Dan Lungren stirred a number of governmental agencies into action against Hardesty and Schneider as a result of the Teichert company’s influence and campaign contributions.

Dickinson has not commented on the verdict, but he testified at the trial that “I did not pay attention to when the contributions were made” in the days before he was one of five supervisors who voted unanimously in September 2010 to require Schneider to obtain a permit for the mine.

He did admit to taking two or three meetings with Teichert representatives to hear their complaints that the Hardesty-Schneider operation enjoyed an unfair business advantage. Once he talked it over with them, Dickinson told the jury, he forwarded the company’s complaints to county staffers.

“They felt that the mining activity at the Schneider property had dramatically expanded,” Dickinson said of the Teichert people’s concerns, “that it far exceeded what had happened historically, and that that was activity that should not be permitted or allowed without a county permit.”

Trouble had been brewing between the Hardesty-Schneider operation and the county long before Teichert entered the picture, according to testimony at the recently completed trial and thousands of pages of declarations, exhibits, state and county investigative reports.

Sacramento County zoning officials in July 1990 received a complaint from an unknown source about “illegal surface mining” taking place on the Schneider property. They told him he needed to get a permit, but later dropped that demand and said he’d be fine by filing a reclamation plan and posting a financial assurance bond to pay for the reclamation.

Schneider did neither, and the state’s Office of Mine Reclamation launched an investigation into the mining operation in July 1999. By November 2002, he had worked out a reclamation plan with the county.

In 2005, however, production at the Hardesty mine skyrocketed, and in 2007, Teichert began to complain to the politicians about unfair competition.

A parade of government – the U.S. Fish and Wildlife Service, the U.S. Army Corps of Engineers, the state Department of Conservation, state Fish and Game and the Office of Mine Reclamation, and Sacramento County’s air quality management board, among others – conducted a series of inspections.

On April 2, 2009, then county planning director Sherry sent Schneider a letter that cited the huge increase in production at the Hardesty mine into areas that had never been cut before, including some that were adjacent to the Cosumnes River. Sherry’s letter said that the added intensity of the mining operation “is not protected by your vested right” and that he needed to get a permit.

When Schneider did not, the county’s Department of Neighborhood Services in April 2010 sent him a notice of violation and that if he didn’t get the permit within 90 days he had to “cease the mining operation” or face possible criminal prosecution.

A criminal investigation, in fact, already was underway, with a district attorney’s investigator who participated in one of the inspections noticing oil leaking from some of the mining machinery.

Six months later, Sacramento prosecutors filed a 15-count misdemeanor complaint against Hardesty, charging him with an assortment of environmental crimes. He pleaded no contest on Jan. 31, 2011 to a single count of storing hazardous materials without a permit and was sentenced to a year’s probation.

Meanwhile, prosecutors in El Dorado County filed another, 14-count misdemeanor criminal complaint on Hardesty in 2013 over the operation of his Big Cut Mine outside Placerville. They dismissed the case in December 2014, when Hardesty agreed to pay a $45,000 settlement.

More than two years later, the civil case of Hardesty and Schneider v. Sacramento County moved toward trial and the jury was sworn on Feb. 16. The proceedings lasted more than a month and took up 18 court days.

In his closing argument, Yetter told the jury, “Hardesty Sand and Gravel would be going today successfully if it were not for the events of this case,” and the Schneiders’ attorney, Glenn W. Peterson, asked the panel to “give them back their self reliance.”

O’Dea, the county’s lawyer, said there were no secret deals between the county and Teichert, and that nobody did anybody any favors.

“It is obvious,” O’Dea said, “from the evidence in this case, that everything these county employees did ... was directly tied to legitimate government purpose and legitimate interests in making sure that with respect to this expanded mining operation, that it complied with the zoning code of the county.”

Andy Furillo: 916-321-1141, @andyfurillo

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