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

Case 1:00-cv-02325-MSK-MEH

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Honorable Marcia S. Krieger Civil Action No. 00-cv-02325-MSK-MEH SIERRA CLUB and MINERAL POLICY CENTER, Plaintiffs, v. CRIPPLE CREEK & VICTOR GOLD MINING COMPANY, ANGLOGOLD ASHANTI (COLORADO) CORPORATION, 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, v. CRIPPLE CREEK & VICTOR GOLD MINING COMPANY, ANGLOGOLD ASHANTI (COLORADO) CORPORATION, ANGLOGOLD ASHANTI NORTH AMERICA INC., and GOLDEN CYCLE GOLD CORPORATION, Defendants. _____________________________________________________________________ DEFENDANT GOLDEN CYCLE GOLD CORPORATION'S REPLY TO PLAINTIFFS' RESPONSE TO DEFENDANT GOLDEN CYCLE GOLD CORPORATION'S MOTION FOR ATTORNEYS' FEES _____________________________________________________________________

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Pursuant to the federal Clean Water Act (hereinafter "CWA"), 33 U.S.C. ' 1365(d), the Defendant Golden Cycle Gold Corporation (hereinafter "Defendant Golden Cycle" or simply "Golden Cycle") has asked the Court to award it its attorneys' fees and litigation expenses (hereinafter "legal fees and costs") in the amount of $130,975.60 including $1,391.60 in out-of-pocket costs. See Golden Cycle's Motion for Attorneys' Fees With Incorporated Legal Authority [# 315, at pp. 2 and 5-6], as corrected by Golden Cycle's Notice of Corrections [# 326, at pp. 3-4] to that Motion. Cf. the corrected Affidavit attached to that Notice [as an exhibit to # 326], correcting the otherwise comparable Affidavit attached to the Motion [similarly as an exhibit to # 315], and see also the other exhibits attached to the original Motion [# 315] or filed immediately after the filing thereof [as #s 316-322, inclusive]. All the other Defendants in this case (collectively hereinafter the "AngloGold Defendants"] have separately asked the Court for their attorney fees, expert witness fees, and litigation expenses [Motion, # 314], and have today separately filed their Reply to the Plaintiffs' Combined Response in Opposition to Defendants' Motions for Attorney Fees [# 333, filed May 17, 2006] (hereinafter the "Plaintiffs' Combined Response" or simply "Response"). This is Golden Cycle's separate Reply to that Response [# 333]. INTRODUCTION TO DEFENDANT GOLDEN CYCLE'S ARGUMENTS This case was brought by the Plaintiffs against the Defendant Golden Cycle 1) for an improper purpose; 2) with no evidentiary basis for any contested factual issue; 3)

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in bad faith; 4) absent any novel, unresolved issues, and 5) any balancing of the equities favors a full and complete award of Golden Cycle's legal fees and costs. GOLDEN CYCLE'S JOINDER WITH ANGLOGOLD DEFENDANTS As it has throughout this litigation, Golden Cycle now joins the AngloGold Defendants in the substance of and the legal authorities set forth in their Reply to the Combined Response on all five of the issues described above, insofar as the Plaintiffs have asserted that all of the defendants--including Golden Cycle--collectively, or any one or more of the AngloGold Defendants, have violated the Clean Water Act as alleged in these consolidated cases by the Plaintiffs. LIMITED APPLICABILITY TO GOLDEN CYCLE OF THE RESPONSE In combining their response to Golden Cycle's Motion [#s 315-322] with their responses to the AngloGold Defendants' Motion [# 314] in their Combined Response [# 333], Plaintiffs make almost no direct references to Golden Cycle. Save for the caption, the Certificate of Service, and the identification of Golden Cycle as a defendant on page 1, and on page 22, where it is named six times in one paragraph, Golden Cycle is named nowhere else in Plaintiffs' Response. That is not surprising, since Plaintiffs submitted no evidence that Golden Cycle itself violated the CWA or any other law--state or federal. Nor did Plaintiffs prove that Golden Cycle participated in the management of the Cripple Creek & Victor Gold Mining Company or the operations which the AngloGold Defendants conducted at the mine, on the property, within the "permit boundary" or anywhere else in the Cripple Creek Mining

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District, in Teller County, or on any lands within the Arkansas River watershed. Plaintiffs no doubt filed a "Combined" Response to the two separate Motions now at issue for that reason and to make liberal use of the convenient plural of the singular "Defendant". Looking first to the Plaintiffs' conclusions, in Part VI of their Response, at p. 30, the Plaintiffs say that both Defendants' motions "should be denied in their entirety," and that the "Defendants' fee request [sic.] should be significantly reduced." Keeping in mind that slip of the pen and the fact that there are two fee requests, exactly what is it that the Plaintiffs say about the Defendant Golden Cycle? The one place in the Combined Response where Plaintiffs say anything at all about Golden Cycle is that paragraph beginning at the top of page 22. There the Plaintiffs ignore this Court's express Finding of Fact [Memorandum Opinion and Order, p. 5] that Golden Cycle "has not participated in" the "management" of the Cripple Creek & Victor Gold Mining Company ("CC&V") "joint venture." 1 The Plaintiffs also ignore the Court's Findings of Fact that (1) since at least September 1995, CC&V "has owned and operated the Cresson Project" and that (2) pursuant to the "Joint Venture Agreement, AngloGold Colorado acts as the manager of CC&V." 2 Despite these Findings of Fact, the Plaintiffs persist in asserting that Golden Cycle is "a proper defendant in this case." Plaintiffs' use of the convenient plural of the
The Memorandum Opinion and Order, at p. 5, reads: "GCG Corporation is the joint venture's minority shareholder and has not partcipated in its management."
2 1

Id. at p. 4.

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singular "Defendant" cannot therefore be sufficient, insofar as Golden Cycle is concerned, unless demonstrably applicable to Golden Cycle, and only that one paragraph of the Combined Response is demonstrably applicable to Golden Cycle. Nothing else in the Combined Response implicates Golden Cycle by name or in fact. Indeed, the Plaintiffs make no specific objection anywhere in the Combined Response to Golden Cycle's claim for legal fees and costs. Certainly, the Plaintiffs make no suggestion that Golden Cycle's legal fees and costs are excessive or unreasonable. OTHER ARGUMENTS IN REPLY 1. This case was brought by the Plaintiffs for an improper purpose. If Golden Cycle actually owned or operated the mine or participated in making operational decisions, Plaintiffs might have justified their election to sue Golden Cycle. 3 But Golden Cycle owned neither any residual reversionary interest in the property nor a 50% or greater interest (divided or undivided) in the joint venture. At every opportunity, Golden Cycle denied that it was either the owner or the operator, and by October 8, 2003, when in Case No. 01-02307 [# 80] Golden Cycle provided proof that it was neither at any pertinent time, Plaintiffs knew that they could not prove Golden Cycle liable. Nonetheless, they announced in that case on October 27, 2003, [# 91] that they intended to hold Golden Cycle liable, without fault, jointly and severally with the operator

"Might" because neither ownership nor operation is necessarily the criterion for liability under 33 U.S.C. ' 1365(d), which attaches to "discharge" responsibility. There is no evidence in this case that Golden Cycle has at any time discharged anything.

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and even, ultimately, the owner, for any unlawful discharge even if Golden Cycle had no power whatever either to prevent or to remedy the discharge. 2. This case was brought by the Plaintiffs with no evidentiary basis for any contested factual issue. Even after the decision of the Tenth Circuit Court of Appeals in the El Paso case, Sierra Club v. El Paso Gold Mines, Inc., 421 F.3d 1133, 1145-46, on August 24, 2005, that the owner must prevent or cure unlawful discharges if no operator can be identified and found, but that the discharge must be one for which the owner is responsible, the Plaintiffs continued to threaten Golden Cycle with joint and several liability and, therefore, bankruptcy. Today, Plaintiffs put it this way: Plaintiffs need not "prove management authority if the defendant is an 'owner or operator' of the point source," Response, p. 22, citing El Paso at 1144. Again, the Plaintiffs never proved Golden Cycle either an owner or an operator, let alone both, despite Golden Cycle's persistent insistence that it was neither. Furthermore, Plaintiffs made ultimately no effort at all to do so, either at trial or otherwise. 3. This case was continued by the Plaintiffs in bad faith for years after it became clear that no good faith legal argument that Plaintiffs have ever asserted that Golden Cycle is, on any evidentiary basis whatever, liable for something it did not do and could neither prevent nor cure. May 17th was the Plaintiffs' final opportunity to cite authority for any proposition so obviously false. Even on page 22 of their Response at the end of the paragraph after their sole paragraph concerning Golden Cycle, Plaintiffs cite United

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States v. Best Foods 4 for their similar claim against Defendant AngloGold North America, but they cite nothing against Defendant Golden Cycle. Simply put, that demonstrates that Plaintiffs have no good faith legal argument. There is no question that Plaintiffs have been and continue to be brazen in this case, but they do not have a credible basis for their claims against Golden Cycle, and never did. 5 4. Plaintiffs pointed out no novel, unresolved issues pertinent to their claims against Golden Cycle. What is novel is Plaintiffs' failure either to cite authority for their position or to show any conflict among the authorites. 5. Any balancing of the equities in this case favors a full and complete award of Golden Cycle's legal fees and costs. As against Golden Cycle, the Plaintiffs' purpose was plainly improper. Plaintiffs knew perfectly well who the owner and the operator were. Plaintiffs knew equally well that the Defendant Golden Cycle would, if sued, have to bet the Company against the threat that Plaintiffs would seek first to collect their attorneys fees from Golden Cycle. It is impossible for Plaintiffs to show why they should not make Golden Cycle whole for doing what it had to do to avoid a corporate catastrophe for which the Company was wholly blameless.

4

524 U.S. 51 (1998).

The Plaintiffs' description of the S.D. Warren [___ U.S. ___ (May 15, 2006) (Part IIIB)] and Miccosukee [541 U.S. 95, 102-203 (March 23, 2004, almost two years prior to trial of the instant case)] cases to this Court on pages 18 and 19 of their Response is comparable to their argument that the "catalyst theory" applies in this case. Response, p. 4 at n. 2. Both arguments are not just misleading, but wrong. The former do not leave the law applicable in this case unsettled, nor do they say anything at all about the "very core" of Plaintiffs' positions. And as to the latter, Plaintiffs surely know that the "catalyst theory" died with the Buckhannon [532 U.S. 598 (2001)] and Sierra Club v. City of Little Rock [(351 F.3d 840, 844-45 (8th Cir. 2003)] cases, yet they cite to this Court only a pre-Buckhannon CWA case to support their assertion.

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As between Golden Cycle and the U.S. Environmental Protection Agency and the Colorado Water Quality Control Division settlement, Golden Cycle was not deemed at fault either by the EPA or by the CWQCD. The Plaintiffs have never proved the contrary.

CONCLUSION Golden Cycle's fee request is reasonable, and the Plaintiffs have suggested nothing to suggest that their unspecific and unsupported assertions have merit. Golden Cycle has heretofore demonstrated that what was done was necessary and done efficiently. Golden Cycle suggests that as the Plaintiffs have made no specific objections to Golden Cycle's paid bills and, Golden Cycle should be allowed the present value of its legal fees and costs, all as described in its Motion [# 315], as corrected [# 326] Respectfully submitted this 1st day of June, 2006.

s/ Don H. Sherwood Don H. Sherwood Attorney at Law 10861 West 28th Place Denver, Colorado 80215-7114 Telephone: (303) 233-0335 E-mail: [email protected] Attorney for Defendant Golden Cycle Gold Corporation

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CERTIFICATE OF SERVICE I hereby certify that on this 1st day of June, 2006, I electronically filed the foregoing DEFENDANT GOLDEN CYCLE GOLD CORPORATION'S REPLY TO PLAINTIFFS' RESPONSE TO DEFENDANT GOLDEN CYCLE GOLD CORPORATION'S MOTION FOR ATTORNEYS' FEES with the Clerk of the Court using the CM/ECF system which will send notification of such filing to the following email addresses: John M. Barth P.O. Box 409 Hygiene, CO 80533 [email protected] Craig R. Carver Carver, Kirchhoff, Schwarz, McNab & Bailey, P.C. 1600 Stout Street, Suite 1700 Denver, CO 80202 [email protected] Eugene J. Riordan Lisa C. Ledet Vranesh & Raisch, LLP P.O. Box 871 Boulder, CO 80306-0871 [email protected] [email protected] Randall M. Weiner Law Offices of Randall M. Weiner, P.C. 1942 Broadway, Suite 408 Boulder, CO 80302 [email protected]

Roger Flynn Jeffrey C. Parsons Western Mining Action Project P.O. Box 349 Lyons, CO 80540 [email protected]

Robert C. Troyer Hogan & Hartson, L.L.P. 1200 17th Street, Suite 1500 Denver, CO 80202 [email protected]

s/ Don H. Sherwood Don H. Sherwood

GCGC:06/01/2006:DHS

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