W.R. Grace loses appeal of ruling by 3-judge panel in asbestos case

The Baltimore Sun

W.R. Grace & Co. and executives criminally charged in 2005 with the deadly asbestos contamination of a Montana town lost a bid this week to challenge an earlier court ruling that allowed one of the government's charges to stand.

The move would have further delayed the trial, which has undergone a series of postponements and legal appeals.

On Wednesday, a San Francisco federal appeals court declined to reconsider an earlier decision by three of its judges upholding the government charge of "knowing endangerment" against the Columbia-based chemical manufacturer. Grace had asked the court to review the decision en banc - meaning with a full panel of judges.

The denial moves the case "a step closer to trial" assuming Grace does not ask the Supreme Court to review the issue, said Allen M. Brabender, who is among the Justice Department attorneys prosecuting the case. Brabender, who learned of the denial yesterday, called the move an "excellent" development.

Brabender said he had hoped to take the case to trial in September 2005, but postponements and legal appeals of pretrial rulings have thrown off the schedule.

"Grace is disappointed [by the court's decision], and the company is evaluating its options," spokesman Greg Euston said yesterday.

A second Grace request for appeal, which will determine whether certain government witnesses may testify against the company, was granted earlier this year and will be heard next week by the full 11-judge panel of the 9th Circuit Court of Appeals.

A federal grand jury indicted Grace and seven executives, one of whom has since died, in February 2005, charging them with knowingly exposing residents of Libby, Mont., to asbestos contamination. The government alleges that the contamination came from a vermiculite mine that Grace maintained nearby from the early 1960s through 1990. Officials were also accused of wire fraud, obstructing government cleanup efforts and concealing information.

"Grace has categorically denied any criminal wrongdoing and intends to vigorously defend itself at trial," a filing in August with the Securities and Exchange Commission said. If convicted, the filing said a fine of about $280 million could be assessed against the company.

Last year, Grace was ordered to pay roughly $55 million to the Environmental Protection Agency, which cleaned up land and buildings around the former mine.

The government's indictment said 1,200 people have become sick or died from the asbestos exposure.

Shares of Grace fell 7 cents to close at $26.49 on the New York Stock Exchange yesterday.


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