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Ruling: Grace may face charges

Karen Dorn Steele
Staff writer
September 21, 2007

Federal prosecutors can reinstate criminal charges of “knowing endangerment” against W.R. Grace & Co. and seven of its executives for deliberately exposing 8,000 people in Libby, Mont., to an epidemic of lung disease, the Ninth U.S. Circuit Court of Appeals ruled Thursday.

The ruling revives the most serious of the U.S. Department of Justice’s 2005 charges against W.R. Grace and reverses a ruling made last year by U.S. District Court Judge Donald Molloy of Missoula.

Molloy tossed out the “knowing endangerment” charge _ which can lead to 15 years in prison on each count _ saying the government’s five-year statute of limitations had expired.

But Thursday’s ruling by a three-judge panel of the Ninth Circuit rejected that argument.

The district court dismissed the knowing endangerment object in the original indictment as ‘time-barred’ “because it failed to allege an overt act within the statute of limitations, not because the indictment was untimely filed….The district court erred,” the opinion states.

When it filed charges against Grace in 2005, the Justice Department described the case as one of the most serious criminal indictments in U.S. history because of the extent of the asbestos pollution and the number of people who had fallen ill or died of lung disease linked to asbestos exposure.

In a statement at the time of the indictment, the company said it “categorically denied” any wrongdoing.

From 1963 until the early 1990s, Grace mined and processed a large supply of vermiculite ore on a mountain six miles outside Libby. Clouds of vermiculite, which contained tiny shards of dangerous asbestos, were inhaled by the miners and brought home to their families in their clothes.

The health crisis that followed didn’t become national news until 1999 when the Seattle Post-Intelligencer reported that hundreds of vermiculite miners and their families had died and thousands more had become ill. The U.S. Environmental Protection Agency immediately launched an emergency cleanup.

Internal W.R. Grace documents produced through legal discovery show that company officials knew that the ore was extremely dangerous _ but failed to warn their workers.

A Spokane plaintiff’s attorney hailed Thursday’s Ninth Circuit ruling.

“This is excellent. When we first got involved in this case half a decade ago, the first documents we uncovered caused us to say, ‘these guys ought to be in jail,’” said Darrell Scott, who now serves as chairman of a bankruptcy court committee representing asbestos property damage plaintiffs in W.R. Grace’s bankruptcy.

Grace sought Chapter 11 protection in 2001 after its stock fell 80 percent in a wave of asbestos lawsuits. Grace’s bankruptcy is now “winding towards closure,” Scott said.

The vermiculite extracted in Libby was shipped to more than 200 processing plants nationwide, including “expansion plants” in Spokane, Portland and Seattle, where it was heated to make Zonolite attic and wall insulation. It was also used in lawn and garden products.

The potentially dangerous insulation is in the attics and walls of 15 million to 35 million homes and businesses, according to government estimates. A class-action lawsuit filed in Spokane on behalf of people with Zonolite in their homes was stayed when Grace declared bankruptcy.

-The Associated Press contributed to this report

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