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. 00-cv-02325-MSK-MEH SIERRA CLUB and MINERAL POLICY CENTER, Plaintiffs, vs. CRIPPLE CREEK AND VICTOR GOLD MINING COMPANY, ANGLOGOLD ASHANTI (COLORADO) CORP. ANGLOGOLD ASHANTI NORTH AMERICA INC. and GOLDEN CYCLE GOLD CORPORATION Defendants. and Civil Action No. 01-cv-02307-MSK-MEH SIERRA CLUB and MINERAL POLICY CENTER, Plaintiffs, vs. CRIPPLE CREEK AND VICTOR GOLD MINING COMPANY, et al., ANGLOGOLD ASHANTI (COLORADO) CORP. ANGLOGOLD ASHANTI NORTH AMERICA INC. and GOLDEN CYCLE GOLD CORPORATION Defendants.

PLAINTIFFS' CONSOLIDATED REPLY TO DEFENDANTS' OPPOSITIONS TO MOTION TO STRIKE DEFENDANTS' EVIDENCE

Plaintiffs hereby submit this Consolidated Reply to Defendants' Oppositions to Motion to Strike Defendants' Evidence. As discussed below, there is no reason for the Court to diverge

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from the well established and important policy pronouncements that disfavor the use of settlement discussions to prove the validity of claims brought. I. INTRODUCTION AND SUMMARY

Plaintiffs have moved to strike evidence of settlement discussions submitted to the Court in the Anglo Defendants' Motion for Attorney Fees [Doc. # 314, argument at 10-11, 13-14; Exhibits 1 and 2] as prohibited by Fed.R.Civ.P. 408, 68, and 801. Plaintiffs stress their position that all the factual contentions put forth by the Anglo Defendants with regard to bad faith, including those relating to the settlement discussions addressed herein, are absolutely false and without evidentiary support. Nonetheless, in order to clear and set the record regarding these inflammatory arguments, Plaintiffs filed the instant motion seeking to strike evidence of settlement negotiations submitted by Anglo Defendants into the record before the Court. The contested evidence consists of 1) a pre-trial settlement letter written by Plaintiffs to Defendants in the course of settlement negotiations, 2) a pre-trial settlement letter written by Defendants to Plaintiffs, purporting to be a Fed.R.Civ.P. 68 Offer of Judgment, and 3) factually unsupported hearsay statements contained in the Anglo Defendants' argument for attorney fees describing and characterizing these letters and other settlement discussions had by the parties in the course of litigation. See Anglo Defendants' Motion for Attorney Fees at 10-11 (Section 5 "Initial Settlement Discussions"), 13-14 (Section 7 "Final Settlement Discussions"). Both settlement letters and the Anglo Defendants' description and characterization of settlement discussions should be stricken under Fed.R.Civ.P. 408 because the evidence is being introduced in an attempt to demonstrate the invalidity of Plaintiffs' claims in this case. The Defendants' settlement letter is excludable on the independent ground that Fed.R.Civ.P. 68 prohibits the introduction of such a letter except in a single narrow circumstance not present

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here. Lastly, the Anglo Defendants' counsel's arguments contained in their Motion for Attorney Fees that describe and characterize facts and events surrounding settlement meetings are factually unsupported and inadmissible hearsay.1 II. A. Rule 408 The Anglo Defendants respond that Rule 408 does not preclude the admission of the two settlement letters because they show "Plaintiffs disregarded the shortcomings of their claims and maintained them in bad faith" and that the Court has "already decided" the issue of validity or invalidity of the claims. Anglo Defendants' Response to Motion to Strike Evidence at 3-4. Anglo Defendants' argument is contradicted by caselaw demonstrating that a court's judgment as to whether or not a claim is frivolous constitutes a determination on the validity or invalidity of the claim so as to trigger the Rule 408 prohibition. Wimberly v. City of Clovis, 375 F.Supp.2d 1120, 1126 (D. N.M. 2004)(excluding under Fed.R.Civ.P. 408 Defendants' argument made in reliance on evidence of conduct or positions taken in settlement discussions in rejecting Defendants' argument for attorney fees); Alphonso v. Pitney Bowes, Inc., 356 F.Supp.2d 442, 447 n.4 (D.N.J. 2005)(disregarding pursuant to Fed.R.Civ.P. 408 Plaintiff's argument referring to confidential settlement discussions in determining whether to impose sanctions for frivolous and bad faith litigation). This authority establishes that the Anglo Defendants cannot escape
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ARGUMENT

Defendant Golden Cycle Gold Corp. (GCGC) also filed a Response to Plaintiffs' Motion to Strike, wherein it disavowed reliance on the evidence of settlement discussions submitted by the Anglo Defendants. GCGC's Response to Motion to Strike at 2-3. Thus, the remainder of GCGC's obscure Response, seemingly aimed at rearguing its Motion for Attorney Fees, is irrelevant to the evidentiary matter now at issue and should be disregarded. Significantly, GCGC's disavowal of reliance on the purported evidence of settlement discussions submitted by the Anglo Defendants highlights the fact that GCGC's Motion for Attorney Fees lacks any evidentiary basis upon which to meet the heavy burden of showing entitlement to attorney fees. 3

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Rule 408's prohibition. The Anglo Defendants may not use settlement discussions as evidence of the invalidity of a claim. Moreover, the Anglo Defendants offer no legal authority or other support for the assertion that once a Court rules on claim before it that the validity or invalidity of in arguing Plaintiffs' claims has already been determined by the Court for purposes of an award of attorney fees. Accordingly, the settlement letters and any argument addressing settlement for which these letters are claimed as evidence should be stricken. The Anglo Defendants also ask this Court to ignore the policy behind Rule 408 that cautions "the better practice is to exclude evidence of compromises or compromise offers whenever the issue of admissibility is doubtful." Bradbury v. Phillips Petroleum Co., 815 F.2d 1356, 1364 (10th Cir. 1987). See Anglo Defendants' Response at 4. The Anglo Defendants contend that because the Tenth Circuit allowed the admission of evidence in Bradbury, this Court should as well. However, the Bradbury court was not faced with the situation presented here. First, the evidence in Bradbury came from settlement discussion in prior cases. 815 F.2d at 1362. As the Tenth Circuit noted, Rule 408, when read literally, prohibits only settlement materials only from the case at hand. Id. at 1363. Second, the settlement evidence in Bradbury was admissible under the "other uses" exception in Rule 408 (it went to a specific element in the claim of outrageous conduct), id. at 1364, rather than proving the "invalidity of the claim," as Defendants wish to use it here, a purpose which is expressly prohibited under Rule 408. The validity or invalidity of the claims is directly at issue with this Court's determination of frivolousness and bad faith.2 Thus, while the

In the Tenth Circuit, an award of attorney fees based on allegations of bad faith, "requires more than merely a finding that a claim was frivolous when brought." Autorama Corp. v. Stewart, 802 F.2d 1284, 1287 (10th Cir. 1986).

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general cautionary approach set forth by the Tenth Circuit applies in this case as well, the court's actual holding in the Bradbury case admitting the evidence at issue is readily distinguishable. B. Rule 68 The Anglo Defendants argue that Fed.R.Civ.P. 68 does not preclude the admissibility of the purported Rule 68 Offer of Judgment arguing that the instant proceeding is one "to determine costs." Anglo Defendants' Response at 4-5. However, this argument misconstrues Rule 68. The Anglo Defendants' argument ignores the fact that Rule 68 is intended to allow an Offer of Judgment to be submitted as evidence only in one very narrow circumstance, where a court needs the letter to determine whether a Defendant is entitled to costs after a Plaintiff prevails, but on terms not more favorable than those offered. Fed.R.Civ.P. 68. The U.S. Supreme Court has interpreted "a proceeding to determine costs" to be only one "concerning the amount or the items of costs that defendant seeks to recover." Delta Air Lines, Inc. v August, 450 U.S. 346, 350 n.6, 101 S.Ct. 1146, 1149 n.6 (1981). As discussed in Plaintiffs' Motion to Strike at 5, the arguments for which the Anglo Defendants wish to make use of the purported Rule 68 Offer of Judgment are whether Defendants are entitled to attorney fees, and not "concerning the amount or items of costs." Thus, the Rule 68 prohibition on admissibility applies here. Further, the fact that attorney fees are calculated as part of these costs under the Clean Water Act is not pertinent, as the threshold issue before the Court is whether Defendants are entitled to any such costs in the first place. See Anglo Defendants' Response at 5. As such, this Court should exclude the Anglo Defendants' settlement letter under Fed.R.Civ.P. 68.

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C.

Hearsay With regard to the hearsay objection, the Anglo Defendants respond in categorical

fashion that Plaintiffs' Motion to Strike is not ripe because the argument and supporting facts contained in the Motion for Attorney Fees it is not evidence, only a "summary" of events that occurred in settlement discussions between the parties. Anglo Defendants' Response at 5-6. The Anglo Defendants go on to concede that this "summary" of evidence has not been admitted into evidence, nor has it even yet been moved for admission. Rather, the Anglo Defendants indicate that they may, at some future time, ask that some evidence be admitted. Thus they argue the Motion to Strike is not ripe. Id. at 6. Defendants' argument is unsupported by any case law or other authority, and defies logic. They attempt to meet their heavy burden of proof in the fees litigation by stating purported, and from Plaintiffs' view overtly skewed and false, facts supporting their argument, then concede that these facts are not in evidence. Apart from the inadmissible settlement letters discussed supra, the Anglo Defendants have neither submitted nor cited to any evidence in support of the arguments in briefing asserting frivolous and bad faith litigation based on conduct in either the initial or final pre-trial settlement discussions in this case. Indeed, even both of these letters only dealt with the final pre-trial settlement positions of the parties, meaning that the Anglo Defendants provided no evidentiary support whatsoever regarding their so-called "summary" characterization of facts and argument surrounding the parties' initial settlement discussions held some 6 years ago. See Anglo Defendants' Motion for Attorney Fees at 10-11. As a result, the Anglo Defendants have presented no competent, probative, or admissible evidence to meet their heavy burden of proving frivolousness and bad faith, and the arguments attempting to characterize such evidence without support should be stricken.

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III.

CONCLUSION

Overall, this Court should preserve the integrity of settlement discussions. The Anglo Defendants' evidence of settlement discussions and the arguments that rely thereon should be stricken. All of this evidence is inadmissible under Fed.R.Civ.P. 408 with respect to arguments asserting frivolous and bad faith litigation. Further, Fed.R.Civ.P. 68 provides a separate ground disallowing Defendants' proffered settlement letter. Lastly, any argument contained in the Anglo Defendants' Motion for Attorney Fees that relies on Defendants' counsel's description or characterization of events or position taken during settlement should be stricken as unsupported by evidence and hearsay.

DATED this 21st day of June, 2006.

Respectfully Submitted, s/ Jeffrey C. Parsons Jeffrey C. Parsons Roger Flynn Western Mining Action Project 2260 Baseline Road, Suite 101A Boulder, CO 80302 (303) 473-9618 [email protected] John M. Barth Attorney at Law P.O. Box 409 Hygiene, CO 80533 (303) 774-8868 [email protected] Randall M. Weiner, Atty. No. 23871 1942 Broadway, Suite 408 7

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Boulder, Colorado 80302 Tel: 303-938-3773 Fax: 303-442-6622 [email protected]

CERTIFICATE OF SERVICE I, the undersigned, hereby certify that a copy of the foregoing, along with Plaintiffs' Combined Response in opposition to Defendants' Motions for Attorneys Fees, was filed electronically with the Clerk of the Court on June 21, 2006 and was then forwarded electronically to the following persons via the ECF system: Eugene J. Riordan Vranesh and Raisch P.O. Box 871 Boulder, CO 80306-871 [email protected] Don Sherwood 10861 West 28th Place Denver, CO 80215 [email protected] Robert C. Troyer Hogan and Hartson One Tabor Center 1200 17th Street, Suite 1500 Denver, CO 80202 [email protected] s/ Jeffrey C. Parsons ____________________ Jeffrey C. Parsons Craig Carver Carver, Kirchhoff, Schwartz, McNab & Bailey, P.C. Hudson's Bay Centre 1600 Stout Street, Suite 1700 Denver, CO 80215

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