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Wednesday, April 12, 2000

Gasoline-Paying the Price

Experts: Chevron
ruling unusual

One law professor says the
state must have made 'a pretty
good case' for a judge to pierce
attorney-client privilege

By Rob Perez


A federal judge's decision to review confidential communications between Chevron Corp. and its lawyers has given the state an unusual pre-trial victory in its gasoline price-fixing lawsuit, several mainland antitrust experts say.

Courts generally are reluctant to pierce the attorney-client privilege of confidentiality, not wanting to discourage frank and normally private discussions about legal strategies, said James R. McCall, a University of California at San Francisco law professor who specializes in antitrust issues.

Only narrow exceptions are made to pierce that confidentiality, even if a judge turns out to be the only one to see the material, the antitrust experts said.

In the Chevron case, the state had to show that the judge likely would find evidence supporting a claim that the attorneys and company officials discussed the commission of a crime or fraud, McCall said.

"That first showing is tough to make," said McCall, who has been teaching antitrust courses at Hastings College, the UC-San Francisco law school, for nearly 30 years. "That means the state has made a pretty good case" on the likelihood of finding fraud.

The state supported its request for the court review by referring to parts of a deposition it conducted last October of Dave Young, former Chevron public relations manager in Hawaii. Young held that post for 14 years until September 1998.

During the deposition, Young testified that Chevron tried to "bury" the state with documents to thwart past investigations of Hawaii's high gas prices, according to the court order granting the review. He also said he gave false or misleading testimony, prepared by Chevron lawyers, to the state Legislature and coordinated press campaigns with company competitors.

Chevron says Young's comments are not true.

The order issued last week by Magistrate Francis Yamashita cites Young's testimony and says the state met the legal threshold to warrant the court review.

It ordered Chevron to turn over certain confidential documents, though not as many as the state sought. It also required Young to complete his deposition and answer questions he didn't answer in the first go-around because of objections by Chevron lawyers, who cited attorney-client privilege.

The court will review the documents and Young's answers to determine whether the state can use the material for its case. The state has accused Chevron and six other oil companies of conspiring to keep Hawaii gas prices artificially high and trying to conceal the conspiracy. Two defendants, Tesoro Petroleum Corp. and BHP Hawaii Inc., recently settled the case for $15 million, although they denied any wrongdoing.

Giving the state access to confidential Chevron documents would be a major victory for the state, said Ash Bhagwat, a Hastings College associate professor of law. "At that point, the judge is basically saying, 'Yes, the lawyers did participate in fraud.' It would be a big deal," Bhagwat said.

Chevron spokesman Albert Chee Jr. cautioned against drawing any conclusions from Yamashita's order or Young's testimony until the process is completed and the company has a chance to present its side. He said the judge's ruling was a preliminary one on a procedural matter and didn't cover whether any of the allegations were true.

Chee also denied that Chevron has lied to or misled the Legislature and said the company has cooperated with state investigators each time they looked into gas prices and has nothing to hide.

"If there's any smoke out there, it's what Dave Young is blowing," Chee said.

Young, however, defended his testimony. "When you are deposed, you swear to tell the truth."

Young gave his testimony while he was employed at the state Department of Business, Economic Development and Tourism.

But Young and DBEDT officials said his hiring as a permanent, civil service employee was not connected in any way to the lawsuit and went through all the proper channels.

He joined the department in May 1999, several months before he was subpoenaed by the state.

"Nobody (at DBEDT) even knew he was going to be subpoenaed," said Vicky Chiu-Irion, an agency spokeswoman.

Even before he was hired at DBEDT, Young said he told the state he wouldn't help with the lawsuit, but he was forced to answer questions once the subpoena came. The position Young filled was established by the state in the 1960s and had been vacant since April 1998, Chiu-Irion said.

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