Free Reply to Response to Motion - District Court of Colorado - Colorado

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 01-cv-2163-BNB-MEH SIERRA CLUB and MINERAL POLICY CENTER, Plaintiffs, vs. EL PASO PROPERTIES, INC., Defendant. _____________________________________________________________________________ EL PASO'S REPLY IN SUPPORT OF MOTION FOR ATTORNEY FEES AND LITIGATION EXPENSES _____________________________________________________________________________ El Paso Properties, Inc. ("El Paso"), by counsel, respectfully submits this Reply to Plaintiffs' July 30, 2007 Response ("Response") Regarding El Paso's Motion for Attorney Fees and Litigation Expenses. Nowhere in their Response do Plaintiffs discuss or justify the conduct that shows their citizen's suit against El Paso was frivolous, unreasonable and groundless. Specifically, Plaintiffs make no attempt to explain: (a) why they focused their so-called "diligent efforts to remedy water quality

degradation from toxic mine runoff"1 on Cripple Creek, which is not listed by the Colorado Water Quality Control Division ("WQCD") as water quality impaired or threatened; (b) how they expected a single-asset, closely held family company to fund the costs

of water treatment or pay penalties, attorney's fees and litigation costs;

1

Plaintiffs' Response [Doc # 275] at 2.

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(c)

why they filed and litigated this case for six years after U.S. Environmental

Protection Agency ("EPA") and WQCD staff reported that "more work needs to be done before the responsible parties [for the Roosevelt Tunnel portal flow] can be identified"2 while doing no such work, even as state and federal judges emphasized the need for more data; (d) how they expected to obtain additional scientific evidence to support their case

when they knew by August 2001 that entry into the Roosevelt Tunnel posed mortal risks; or (e) how they expected to prevail at trial relying on only a single data point to

characterize background water quality, a vital component of their natural tracer theory, when they could not even prove the location from which the lone sample was collected. Instead of explaining their conduct, Plaintiffs mischaracterize the history of the litigation, point out that fee awards against unsuccessful citizen's suit plaintiffs are rare and argue that the requested fees are unreasonable. None of these arguments excuse Plaintiffs' conduct in this case. A. Plaintiffs' description of the history of this litigation is misleading.

In describing events that occurred before the filing of this litigation, Plaintiffs refer to an excerpt from a letter El Paso's counsel wrote to the WQCD on October 12, 2001 as "impliying [sic] that El Paso certainly was one of the sources of the [Roosevelt Tunnel] discharge."3 Plaintiffs' Response ignores El Paso's précis of Roosevelt Tunnel hydrology and geochemistry stated elsewhere in the same letter: The hydrology of the Roosevelt Tunnel is complex and not fully understood. Along its many thousands of feet of extent, the Roosevelt
2 3

Exhibit 4 to EL PASO'S MOTION FOR SANCTIONS [Doc # 233] at 1. Plaintiffs' Response [Doc # 275] at 3 (italics in original).

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Tunnel may both gain and lose water flows depending on local geology and other conditions. As a result, we believe it is impossible at present to determine the precise sources of the flow discharging from the Roosevelt Tunnel portal or the origins of the constituents of that discharge. 4 El Paso's October 2001 position regarding the scientific uncertainty surrounding Roosevelt Tunnel flows has since been adopted by a Colorado Administrative Law Judge, another federal judge within this district, and by this Court.5 El Paso's statement, written one month before Plaintiffs filed this case, refutes Plaintiffs' assertion that El Paso failed "to argue that Plaintiffs' claims lacked foundation and were unsupported by evidence"6 until filing this motion.7

Exhibit 2 to Plaintiffs' Response [Doc # 275] at 1 (emphasis supplied). El Paso caused Roosevelt Tunnel, LLC to apply for a discharge permit because it believed that the scientific hurdles to understanding pollutant transport and fate within the Roosevelt Tunnel would be formidable, especially given the dangerous and deteriorating conditions within the Tunnel itself. El Paso believed that a collective approach to dealing with portal flows would be more productive and equitable than protracted litigation based on limited data. El Paso's letter to the WQCD also states: While [El Paso] is willing to serve as a constructive catalyst in addressing Roosevelt Tunnel discharge issues, it believes that ultimate responsibility for monitoring and treating the discharge may need to be shared with others. Accordingly, [El Paso] has begun discussions with other parties to better understand the potential sources of the discharge and create a framework for compliance with a discharge permit. Id. at 2. Plaintiffs' failure to explain their lack of support for El Paso's efforts to obtain a discharge permit is perplexing since issuance of such a permit was Plaintiffs' stated goal in pursuing this action. See, Plaintiffs' Complaint [Doc # 1] at 7, ¶ 25 & 10, ¶¶ A & B. 5 In Re: The Matter of El Paso Gold Mines, Inc. (Case No WQ2002-001); Sierra Club v. Cripple Creek and Victor Gold Mining Co., Civil Action No. 01-cv-02307-MSK-MEH. 6 Plaintiffs' Response [Doc # 275] at 18. 7 El Paso has consistently maintained throughout this litigation that Plaintiffs' claims lacked evidentiary support. See, e.g., Defendant's Trial Exhibit A at 17; Defendant's Trial Exhibit B at 3; EL PASO'S BRIEF IN OPPOSITION TO PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT [Doc # 85 passim]; and EL PASO'S PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW REGARDING REMEDIES [Doc # 108 passim].
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Plaintiffs also suggest that El Paso's failure to seek a directed verdict demonstrates that the case was not groundless.8 In fact, El Paso decided not to seek dismissal at the close of Plaintiffs' case because: (a) the Court consolidated the Rule 702 hearings with trial on the merits; (b) Plaintiffs requested permission to call some of their witnesses out of order; and (c) Plaintiffs did not rest their case until near the end of the fourth day of a five-day trial. El Paso has consistently maintained that Plaintiffs' claim lacks evidentiary support but El Paso's counsel opted to use the remaining trial time in order to make a complete factual record. Plaintiffs characterize their trial evidence as just barely "less than 50.1% of the evidence,"9 conveniently ignoring this Court's finding that Plaintiffs' "natural tracer theory collapses because they cannot distinguish the water quality at the Portal from the baseline water quality."10 Plaintiffs' failure of proof was not minor or technical but rather reflects a fundamental shortcoming of their natural tracer theory--the inability to distinguish between manmade and naturally occurring sources of constituents.11 This shortcoming stems from Plaintiffs' unreasonable decision to rely on a single sample, RT-EP-4000, to establish baseline water quality from granite ceiling seeps within the Roosevelt Tunnel. Given that the viability of their entire case rested on this single datum, Plaintiffs and their attorneys should have taken special care to verify the location where the sample was
8 9

Plaintiffs' Response [Doc # 275] at 5 & 17-18. Id. at 5. 10 MEMORANDUM OPINION & ORDER [Doc # 253] at 24 (italics supplied). 11 Dr. Ann Maest and Dr. James McCord testified that "to use a natural tracer to support a fate and transport analysis, there must be a clear distinction between the concentration at the source and the concentration naturally occurring in the environment." Id. at 22 (emphasis supplied).
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taken.12 Nor do Plaintiffs explain why Dr. Maest disregarded U.S. Geological Survey data regarding baseline sulfate concentrations at other locations unambiguously described as granite seeps within the Roosevelt Tunnel.13 Plaintiffs' unexplained decision to disregard baseline water quality data included in a scientific article attached to their own expert's report further undermines the claim that their case was well-grounded in fact. During the past six years these Plaintiffs never gathered any in-tunnel evidence of their own.14 Instead, they relied only on one expert who admitted she reached her conclusions after five hours of work. Plaintiffs knew that they would need to prove background levels of naturally occurring constituents; in his opening statement, Plaintiffs' counsel stated: "this isn't a situation where Dr. Maest is guessing at what the characteristics of the different sources are. She knows what they are."15 Dr. Maest's testimony showed counsel's statement to be false; she could not testify reliably about the location of the Plaintiffs' lone sample of water quality data characterizing granite seepage between the El Paso shaft and the Tunnel portal.

12

FED. R. CIV. P. 11(b)(3). Despite the uncertainty surrounding the location of RT-EP-4000, Plaintiffs apparently made no effort to verify the sample location, even as they were litigating against the entity that collected the sample (CC&V) and could have easily established the sample location with a request for admission. 13 Selected excerpts of this report, which was received into evidence as Defendant's Exhibit Z, were attached to Dr. Maest's June 2002 Expert Report, Plaintiffs' Trial Exhibit 21. 14 Contrary to Plaintiffs' suggestion at page 21 of their Response, El Paso did not refer to the Sierra Club's substantial financial assets to argue that a fee award is justified because of Plaintiffs' ability to pay fees; rather, El Paso made this reference to show that Plaintiffs have sufficient resources to conduct a thorough, scientifically-valid study of the sources of the Roosevelt Tunnel discharge and yet they inexplicably failed to do so. 15 Transcript of February 5, 2007 Trial [Doc # 274] at 9, ll. 2-5.
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Plaintiffs seek to distinguish this case from the CC&V case by claiming that Plaintiffs' expert witnesses did not testify in that case but did testify in this case.16 Plaintiffs' Response refers to Mr. Klco's credentials as a "geologist with experience in flow of water in mine drainage tunnels" and later describes him as one of "Plaintiffs' expert witnesses in this case."17 Elsewhere, the Response also refers to Plaintiffs' "several experts at trial."18 These references are incorrect. The only expert witness to testify in Plaintiffs' case in chief at trial was Dr. Maest. Plaintiffs did not proffer Mr. Klco at trial as an expert witness19 and Dr. McCord testified only in Plaintiffs' rebuttal case. Plaintiffs originally endorsed Dr. Maest, Mr. Klco and Robert Burm as expert witnesses in both the CC&V case and this case and filed expert reports for each. Even after Judge Krieger's Rule 702 rulings in the CC&V case discredited these witnesses,20 however, Plaintiffs listed Mr. Burm and Mr. Klco as may call witnesses.21 Mr. Klco and David Akers of the WQCD testified for Plaintiffs in both cases;22 this case differs from the CC&V case mainly in that the Rule 702 proceedings were consolidated with trial and Dr. Maest was permitted to testify as an expert herein. In light of fundamental
16 17

Id. at 6. Id. at 7. 18 Id. at 11. 19 At a Rule 702 hearing conducted on June 3, 2005 in the CC&V case, Judge Krieger found that Mr. Klco was not qualified to testify as an expert witness and also found that his work was not sufficiently reliable to render his opinions admissible pursuant to FED. R. EVID. 702. Exhibit 20 to EL PASO'S MOTION FOR SANCTIONS [Doc # 233] at 11, ll. 22-24. 20 Exhibits 20 - 22 to EL PASO'S MOTION FOR SANCTIONS. 21 Plaintiffs' Witness List, attached to the FINAL PRETRIAL ORDER [Doc # 219] at 42-43. 22 See, Sierra Club v. Cripple Creek and Victor Gold Mining Co., Civil Action No. 01-cv-02307MSK-MEH [Docs # 289 ­294]. Indeed, Plaintiffs listed five of the seven witness who testified in

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flaws in Dr. Maest's analysis such as her inability to establish reliable sample locations and her unexplained disregard for contradictory data, her lack of testimony in the CC&V case is an insignificant distinguishing feature. Plaintiffs twice state that they "could not have known in advance that they would fail."23 To the contrary, it is hard to imagine how Plaintiffs could have believed that they would succeed. In the two Roosevelt Tunnel cases tried between 2003 and 2006, neither the Plaintiffs nor the Colorado WQCD (with the assistance of an EPA expert witness) were able to prove that pollutants from the El Paso shaft were discharged at the Roosevelt Tunnel portal. Although Plaintiffs had ample opportunity to correct evidentiary shortcomings identified in previous Roosevelt Tunnel litigation, they failed to overcome the fact that little relevant data exists. Plaintiffs also rely upon a 2002 Justice Department letter as proof that their claim was well-founded. This letter, listed by Plaintiffs as a trial exhibit but never offered into evidence, simply states that "those parties that discharge through the El Paso shaft . . . may be liable under the Clean Water Act . . . ."24 Whatever comfort this letter might have originally provided Plaintiffs surely evaporated when ALJ Matthew Norwood found in 2003 that the failure of EPA's expert to explain inconsistencies in the Roosevelt Tunnel water quality data was fatal to the WQCD's case.25

the CC&V case--Scott Lewis, Lawrence Myers, Ken Klco, Jeff Pontius and David Akers--as witnesses in this case. 23 Plaintiffs' Response [Doc # 275] at 1-2 & 13 24 Exhibit 12 to Plaintiffs' Response [Doc # 275] at 2. 25 Exhibit 3 to EL PASO'S MOTION FOR SANCTIONS [Doc # 233] at 11 & 12.
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Plaintiffs argue that the protracted history of this litigation combined with this Court's careful consideration of the factual issues shows that their claim was well-founded. While a lengthy procedural history and a court's careful consideration of the facts may weigh against a finding that a claim lacked merit, no court has held that these factors are dispositive of the issue. Federal courts have uniformly relied on the plaintiff's evidence or lack thereof in making their decisions. See, e.g. Pascoucau v. Martin Marietta Corp.,1999 WL 495621 at 8 (10th Cir. 1999); Jones v. Texas Tech University, 656 F.2d 1137, 1146-1147 (5th Cir. 1981); E.E.O.C. v. Kenneth Balk Associates, Inc., 813 F.2d 197, 198 ( 8th Cir. 1987); E.E.O.C. v. L.B. Foster Co., 123 F.3d 746, 752-756 (3rd Cir. 1997). Plaintiffs commenced this litigation nearly six years ago, but the majority of that time was consumed by the original trial court proceedings before remand and the Tenth Circuit's reversal of summary judgment. The case was remanded in the fall of 2005 and the Court held its first status conference in December 2005, little more than one year before trial. Despite a change of judge in the fall of 2006, the case was tried in February 2007 and thus the "lengthy" procedural history does not support Plaintiffs' arguments.

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B.

Even though fee awards against unsuccessful citizen's suit plaintiffs are rare, federal courts have awarded fees to defendants where factual claims lacked credible evidence or had been previously adjudicated.

Rather than discussing the fundamental scientific shortcomings in their proof, Plaintiffs argue that fee awards against unsuccessful citizen's suit plaintiffs are rare because of the heavy burden the courts have placed on prevailing defendants. Although El Paso agrees that its burden here is a heavy one, this case is distinguishable because in the cases cited by Plaintiffs, the court was considering factual issues for the first and only time. None of the cases in which fee motions were denied involved a plaintiff who had brought a claim whose factual premise had been considered and rejected previously by two other tribunals. Plaintiffs are "unaware of a case, other than the CC&V case, in which a court has ever awarded fees to a prevailing defendant in a CWA citizen suit."26 The CC&V fee award is persuasive and compelling precisely because it came after Judge Krieger had rejected Plaintiffs' factual contention regarding the source of the Roosevelt Tunnel discharge. Plaintiffs should have reconsidered their prosecution of this case when Judge Krieger ordered them to pay the CC&V defendants $325,000 in attorney fees and litigation expenses based on her finding that they had continued to litigate after their claims clearly became frivolous and groundless.27 This case is most similar to the cases cited by Plaintiffs in which the courts did award fees against unsuccessful plaintiffs. In Crabtree v. Muchmore, 904 F.2d 1475, 1477-78 (10th Cir. 1990), the Tenth Circuit affirmed a fee award after finding a plaintiff's claim frivolous because a

26 27

Plaintiffs' Response [Doc # 275] at 11 (emphasis supplied). Exhibit 24 to EL PASO'S MOTION FOR SANCTIONS [Doc # 233] at 11-12 & 16.

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state court and a federal bankruptcy court had previously found that the property interests at issue did not exist. Plaintiffs in this case were similarly aware of two previous adjudications in which a trier of fact had determined the evidence was insufficient to prove the key factual issue in this case and yet they ignored those rulings and pursued this case through trial without any new or different physical evidence to support their claim. In Dill v. City of Edmond Oklahoma, 1998 WL 740962 at 5 (10th Cir. 1998), the Tenth Circuit upheld an award of attorney fees to a prevailing defendant where the plaintiff "failed to come forward with credible, non-speculative evidence" to support his claims at trial. Plaintiffs here rested their case on the "natural tracer" theory, which requires proof of the naturally occurring baseline concentration of constituents in the granite around the Roosevelt Tunnel. This Court found that Plaintiffs' theory "collapsed" because the record lacked "credible evidence" from which the Court could determine the baseline water quality.28 Plaintiffs have known since 2006 that they would need to prove baseline levels of constituents in the granite seeps surrounding the Roosevelt Tunnel and yet they failed to present credible evidence in this regard. Plaintiffs' decision to continue to trial knowing that two other courts had found the existing Roosevelt Tunnel water quality data to be insufficient and without other credible evidence to support their theory was unreasonable, frivolous and groundless.

28

MEMORANDUM OPINION & ORDER [Doc # 253] at 24.

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C.

Plaintiffs' "unclean hands" argument lacks merit because the orders that El Paso failed to comply with were entered erroneously.

Plaintiffs' claim that El Paso has "unclean hands" because it failed to pay civil penalties, attorney fees and costs or secure a bond is disingenuous.29 The orders to which Plaintiffs refer were reversed by the Tenth Circuit Court of Appeals which held their issuance to have been erroneous.30 Since no stay had been entered in the case, Plaintiffs' recourse in 2003 was to execute on the attorney fee judgment. Plaintiffs made no effort to do so and should not now be heard to complain about El Paso's failure to pay monies or secure a bond. While Plaintiffs criticize El Paso's failure to pay Plaintiffs' attorney fees and civil penalties, they pointedly ignore the Court's February 10, 2003 injunction requiring El Paso to obtain a discharge permit for the Roosevelt Tunnel portal. Although a discharge permit was ostensibly the goal of this citizen's suit, when El Paso failed to comply with the injunction Plaintiffs never sought to enforce this portion of the Court's order. Given Plaintiffs' claim that they were making "diligent efforts to remedy water quality degradation,"31 their failure to enforce the main judicial relief they sought in this case is inexplicable. Finally, Plaintiffs criticize El Paso for paying some of its legal fees since 2003 while representing to the Court that it could not pay Plaintiffs' fees or penalties.32 Exhibit 4 to Plaintiffs' Response shows that the total of all fees and costs paid by El Paso since 2003 is less than the $94,900 penalty originally imposed by the Court and a fraction of Plaintiffs' fee award.
29 30

Plaintiffs' Response [Doc # 275] at 21-23. August 24, 2005 Order & Judgment at 2, attached hereto as Exhibit 1. 31 Plaintiffs' Response [Doc # 275] at 2.
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D.

The fees and costs claimed by El Paso are reasonable.

Plaintiffs point out, and El Paso's counsel agrees, that it charged its clients $114,349.50 for legal services between August 26, 2006 and June 19, 2007.33 Contrary to Plaintiffs' assertions, El Paso does not seek to recover fees for time shown as "No Charge" in its counsel's bills. All "No Charge" amounts were excluded from the fees and costs claimed by El Paso. El Paso's legal bills reflect that on 446 occasions its attorneys elected not to charge their client for time or expenses spent devoted to this case.34 Plaintiffs complain of "block billing" when their own legal bills reflect the same practice.35 As to Plaintiffs' remaining reasonableness objections, El Paso submits that those are left to the Court's sound discretion. Northington v. Marin, 102 F.3d 1564, 1571 (10th Cir. 1996) ("the amount of an attorney fee award...is left to the discretion of the district court, and is subject for review only for abuse of discretion"). The fees claimed by El Paso are substantially less (both in terms of hourly rates and total billings) than the comparable amounts claimed by Plaintiffs herein before remand36 and by the defendants at the conclusion of the CC&V case.37

32 33

Id. at 21-22. Plaintiffs' Response [Doc # 275] at 24. 34 El Paso's counsel did not charge for a total of 481.1 hours of professional time, representing $71,130 in write offs. 35 Exhibits 1 ­ 4 to PLAINTIFFS' MOTION FOR ATTORNEY'S FEES [Doc # 113]. 36 Id. at 6-7. 37 Exhibit 24 to EL PASO'S MOTION FOR SANCTIONS [Doc # 233].
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E.

Conclusion.

An award of fees is justified because Plaintiffs did not rationally evaluate the facts, the law or the possible benefits of pursuing this litigation and continued to litigate after it was clear that even a judicial victory would not improve water quality in Cripple Creek. The insignificance of the Roosevelt Tunnel discharge forced the Plaintiffs into the awkward and untenable position of arguing that: (a) they could prevail so long as "any amount of any pollutant discharged from the El Paso Mine drainage into Roosevelt Tunnel is also discharged at the Roosevelt Tunnel portal";38 (b) "there is no de minimus exception in the Clean Water Act for liability";39 and (c) the issue presented is "whether it's more likely than not that any flow and any amount of pollutants from the El Paso shaft have reached the Roosevelt Tunnel, even if only on an intermittent basis."40 At the end of the day, the question Plaintiffs have not answered is why they brought this litigation at all. Plaintiffs never introduced any evidence of "water quality degradation" caused by "toxic mine runoff." If there were such evidence, Plaintiffs would surely have presented it to the Court. Despite the lack of any environmental harm, Plaintiffs and their attorneys unaccountably cobbled together a meager case and spent six years unsuccessfully suing a familyowned corporation with no income or assets other than 100 acres of mining claims. For these reasons, the Court should grant El Paso's motion for attorney's fees and litigation expenses.

38 39

Transcript of February 5, 2007 Trial [Doc # 274] at 2, ll.18-22. Id. at 5, ll. 11-12. 40 Transcript of February 9, 2007 Trial [Doc # 281] at 3, ll. 10-17.
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Respectfully submitted this 4th day of September, 2007.

s/ Stephen D. Harris James L. Merrill, #9466 Stephen D. Harris, #24178 Michael J. Gustafson, #37364 MERRILL, ANDERSON & HARRIS, LLC 20 Boulder Crescent Colorado Springs, CO 80903-3300 Telephone: (719) 633-4421 Facsimile: (719) 633-4759 Counsel for El Paso Properties, Inc. CERTIFICATE OF SERVICE I hereby certify that a copy of the foregoing EL PASO'S REPLY IN SUPPORT OF MOTION FOR ATTORNEY FEES AND LITIGATION EXPENSES was sent electronically via ECF this 4th day of September, 2007, to the following: John M. Barth, Esq. Attorney at Law Post Office Box 409 Hygiene, Colorado 80533 Lori Potter M. Brooke McKinley KAPLAN KIRSCH & ROCKWELL LLP 1675 Broadway, Suite 2300 Denver, CO 80202 Roger Flynn, Esq. Jeffrey C. Parsons, Esq. 412 High Street Lyons, Colorado 80540

s/ Sarah D. White Sarah D. White, Staff Assistant

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