Grace, six ex-officials get appeal rehearing


October 30, 2007|By Bloomberg News

W.R. Grace & Co. and six former executives charged criminally with the asbestos contamination of Libby, Mont., won yesterday a rehearing of their attempt to block some government witnesses from testifying at trial.

The U.S. Court of Appeals for the 9th Circuit in San Francisco agreed to reconsider a July decision by a three-judge panel of the court, which said that the trial judge improperly blocked prosecutors from adding to a list of 233 possible trial witnesses.

The July ruling reversed a decision by U.S. District Judge Donald S. Molloy in Missoula, Mont., who is overseeing the case against Grace and the executives, all of whom are charged with violating the Clean Air Act and obstruction of justice.

In a one-page ruling yesterday, the full court said it will reconsider the appeal.

The ruling gives Grace a new chance to try to limit the evidence that prosecutors can have admitted at trial. It might further delay a case that had been scheduled to go to trial in September 2006. That timetable has been set back by pretrial appeals.

Prosecutors contend Grace and the executives released asbestos-containing vermiculite in Libby and interfered with a government cleanup.

If convicted, Grace could face a fine of as much as $280 million, the company said in a filing with the Securities and Exchange Commission in August.

The individual defendants could be sentenced to as many as 15 years in prison if convicted. Asbestos-injury claims forced the Columbia-based specialty chemicals maker to file for bankruptcy protection in 2001.

Grace spokesman Greg Euston declined to comment on yesterday's decision, pointing to an order by Molloy. Assistant U.S. Attorney Jessica Fehr in Missoula didn't immediately return a voice mail message. Grace and its former executives say they are innocent.

Last month, a different panel of the appeals court reversed Molloy's decision to throw out part of the case against Grace and the former executives. Grace has told the court that it plans to ask for a full-court review of that decision.

Prosecutors claim the defendants were part of a conspiracy to expose workers and Libby residents to the tainted vermiculite, a mineral used in fireproofing, insulation and potting soil. Grace mined and processed it near Libby from 1963 to 1990.

Shares of W.R. Grace fell 30 cents to $30.13 yesterday in trading on the New York Stock Exchange.

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