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 Case 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 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. ______________________________________________________________________________ ANGLOGOLD DEFENDANTS' REPLY IN SUPPORT OF MOTION FOR ATTORNEY FEES ______________________________________________________________________________

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Nowhere in their opposition to the AngloGold Defendants' Motion for Attorney Fees do the Plaintiffs explain or justify the pattern of conduct that shows their lawsuit was frivolous from the outset and continued in bad faith. Specifically, they never explain: (a) Why they filed their CWA citizen suit just weeks after the approval of

Amendment 8 (instead of directly appealing that approval) when the alleged unpermitted discharges had been flowing for over 40 years, and the last permit exceedance had occurred well over a year before; (b) Why they decided to forego an appeal of the agencies' Settlement Agreements,

and instead pressed a lawsuit in which they could recover attorney fees; or (c) Why they maintained claims they acknowledged required expert testimony even

after their experts were excluded by the Court's Rule 702 orders. Instead of explaining this pattern of conduct, Plaintiffs offer four arguments why fees should not be awarded (and several arguments why the amount requested is not reasonable). But none of those arguments justifies Plaintiffs' course of conduct in this case, and given that conduct the amount requested is reasonable. Accordingly, the Court should award the requested fees. A. PLAINTIFFS INITIATED AND MAINTAINED THEIR CITIZEN SUIT FOR AN IMPROPER PURPOSE.

Plaintiffs' self-proclaimed "best evidence" that they did not bring this case for an improper purpose is Mr. Barth's correspondence dated December 15, 2005 (attached to the AngloGold Defendants' Fee Motion [#314] as Exhibit 2 and referred to by Plaintiffs as the "Confidential Settlement Communication"). Response Brief [#333] at 13. Plaintiffs argue that this eleventh-hour Confidential Settlement Communication is proof of their good faith 2
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throughout the entire course of this litigation because it does not specifically request that Defendants "close the mine or reduce its size." But the absence of such a request hardly proves Plaintiffs' point. They did not have to specifically request that the mine be closed in order to exercise the massive bargaining power of the CWA to try to punish CC&V for expanding the Cresson Project under Amendment 8. Plaintiffs' intention is best demonstrated by their overall course of conduct throughout this case and the circumstances surrounding that conduct, not the absence of a written overt threat. B. PLAINTIFFS FAILED TO MATCH THE FACTS TO THE ELEMENTS.

For their second objection, Plaintiffs argue "there was evidentiary support for the factual contentions." Response Brief at 14-17. This section of the Response Brief reads like Plaintiffs' Closing Argument. Repetition of that story does not make their allegations any less frivolous; it does not cure Plaintiffs' failure to subject their allegations to even a modest analysis at the outset, or justify continuance of their claims for over five years. Plaintiffs never went through the rudimentary steps to determine (a) if Mineral Policy Center met the criteria for representational standing, (b) if there was factual support for Plaintiffs' "ongoing" permit violation claims, and (c) if Plaintiffs could connect the hydrologic dots for the alleged unpermitted discharges. Repetition of their story ­ of Plaintiffs' perception of what they thought was happening ­ is not a substitute for concrete facts and expert testimony explaining how those facts prove the elements of their case. Plaintiffs had ample discovery time to develop those facts and expert opinions. Failure to present them at trial leads to the inescapable conclusion that they never had a case to begin with, never intended to match facts to the elements of their claims, but pressed those claims nonetheless.

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Moreover, the frivolous nature of Plaintiffs' claims does not change because Defendants were not successful in their motions for summary judgment. Plaintiffs resisted those motions based, in part, on their assertion that there were disputes as to material facts.1 The Court was in no position to see through that smoke screen in the summary judgment context and deferred to Plaintiffs' assertion about "material facts" in denying those motions.2 Those summary judgment rulings, therefore, do not endorse the potential merit of Plaintiffs' claims: "although in some instances a frivolous case will be quickly revealed as such, it may sometimes be necessary for defendants to `blow away the smoke screens the plaintiffs had thrown up' before the defendants may prevail." Introcaso v. Cunningham, 857 F.2d 965, 967 (4th Cir. 1988) (quoting Hicks v. Southern Maryland Health Systems Agency, 805 F.2d 1165, 1167-68 (4th Cir. 1986). Here, Plaintiffs' hype and bluster about their claims was clearly exposed when Plaintiffs were unable to match the facts to each of the elements of their claims. C. THERE WAS NO NOVEL LEGAL ISSUE.

Plaintiffs' third objection to an award of legal fees is that the applicable law was "unsettled." Response Brief at 17-20. This attempt to find refuge in Fed.R.Civ.P. 11(b)(2) lacks merit for a number of reasons. First, Plaintiffs have never suggested that the law might be unsettled. On the eve of trial, they submitted a 27-page Trial Brief [#281] that lists all of the statutes, regulations, and cases supporting their claims. There is no mention of any uncertainty in the law. Second, as Plaintiffs suggested in their Trial Brief, the law on the "addition of a

See, e.g., Plaintiffs' Consolidated Response in Opposition to Defendants' Motion for Summary Judgment on Eleventh and Twelfth Causes of Action and Brief in Support [00-MK-2325, #161] at 3-9. 2 See, e.g., Order on Pending Motions Filed in Case No. 00-MK-2325(OES), Consolidating Cases, Setting Rule 16 Hearing, and Withdrawing the Reference from the Magistrate Judge [00-MK-2325, #170] at 5 ("it also appears that discovery is required for determination of" Plaintiffs' eleventh and twelfth causes of action).

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pollutant from a point source" is well settled. All of the cases that have addressed the issue require that the addition be from the "outside world" or from another watershed. The critical inquiry, as the Court explained in its Opinion [#309] at 40, has been on the source of the water and the constituents. This was true even in the cases upon which Plaintiffs now attempt to rely. In U.S. v. Earth Sciences, Inc., 599 F.2d 368 (10th Cir. 1979), it was the documented overflow and seepage from a process water impoundment that constituted the discharge of a pollutant from a point source. And in Sierra Club v. Abston Construction Co., 620 F.2d 41 (5th Cir. 1980), the evidence demonstrated that pollutants were being added from a mine pit, from sediment basins designed to catch the mine pit overflow water, and from erosion of overburden spoil piles. Just as importantly, Plaintiffs did not misunderstand the law. They "proceeded to try the case by presenting evidence of an ongoing flow of polluted water from man-made point sources." Response Brief at 6 (emphasis added). But Plaintiffs failed to prove critical elements of their claims: explained, If water contains a substance in the same amount or degree as naturally occurs in the environment, then it is unlikely that anything has been added or discharged into the water. Sierra Club has presented no evidence as to whether, what or the degree to which the chemicals or other substances reported in test results are naturally found in the water at the subject locations. Thus, the Court has no evidence from which it can determine whether any pollutant has been added or discharged into the water. Opinion at 41. This finding was not based on any novel interpretation of the CWA; the Court was simply explaining that Plaintiffs had failed to connect the hydrologic and geologic dots. Plaintiffs' feigned confusion about the law is not credible given that these same Plaintiffs were specifically told by the Tenth Circuit that proof of the "addition of a pollutant from a point where the water and the constituents were coming from. As the Court

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source" elements requires such a connection. See Sierra Club and Mineral Policy Center v. El Paso Gold Mines, Inc., 421 F.3d 1133, 1149-51 (2005).3 D. THE EQUITIES FAVOR AN AWARD OF LEGAL FEES.

Plaintiffs' last objection to an award of legal fees is that, even if their lawsuit was frivolous, the equities disfavor such an award. Response Brief at 23-26. But the equities actually highlight the propriety of a fee award. First, the agency inspections, information

requests and settlement agreements upon which Plaintiffs rely did not "confirm" any of Plaintiffs' claims or vindicate any of Plaintiffs' positions. The EPA's Notice of Violation was, like Plaintiffs' Complaint here, an allegation of certain violations, not proof of them. The only thing "confirmed" was that there were past, but not ongoing, exceedances of the permits. The remaining issues were not confirmed, proven, or vindicated ­ they were settled.4 Second, the agencies' enforcement actions actually highlight the improper purpose for Plaintiffs' lawsuit. The agencies did act in this case; their limited resources were never an impediment. And upon completion of the agency enforcement actions, there was nothing to supplement. Indeed, Plaintiffs specifically acknowledge that "Defendants paid a civil penalty for these [alleged] violations" and that no further injunctive relief was required because Defendants had taken whatever remedial actions were necessary. Response Brief at 3-4. Plaintiffs pursued this case because they did not think the penalty was high enough, not because they had any facts
Contrary to Plaintiffs' assertion, these elements of liability have not somehow become "unsettled" by the recent U.S. Supreme Court decision in Warren v. Maine Board of Environmental Protection, __U.S.__, 126 S.Ct. 1843, 164 L. Ed. 2d 625 (2006). That case addressed an entirely different section of the CWA, which it specifically recognized is "not interchangeable" with and "serves different purposes" and "use[s] different language" than the section at issue here. Id. at 635-36. 4 Plaintiffs' "catalyst theory" argument is disingenuous at best. See Response Brief at 4, n.2. As Plaintiffs know full well, that theory is no longer available under the CWA. See Sierra Club v. City of Little Rock, 351 F.3d 840, 844-45 (8th Cir. 2003), citing Buckhannon Bd. & Care Home, Inc. v. W.V. Dep't of Health & Human Res., 532 U.S. 598, 605 (2001) (rejecting catalyst theory of awarding attorney fees under prevailing party fee-shifting statutes, like the CWA).
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or expert testimony to prove their claims. Their continued reliance on the agencies' allegations, even after the agency settlements and years of discovery, makes the dearth of such facts glaringly apparent. Third, the fact that Defendants can recoup their litigation expenses is irrelevant. The Court does not condone frivolous lawsuits, regardless of the financial condition of the Defendants. Moreover, Plaintiffs' assertion in their Response Brief at 23 that an award of legal fees against them "will severely harm Plaintiffs" is belied by the apparent financial condition of Sierra Club itself. As noted on the website "www.activistcash.com," Sierra Club reported income in 2004 of over $91 million and a net worth of over $53 million. Sierra Club may be a non-profit corporation, but it has the financial wherewithal of a big business capable of paying for its decision to initiate and maintain a frivolous lawsuit. Fourth, CC&V's permitting activities were neither unconventional nor unprecedented. As for the Arequa Gulch Outfall 001A permit, CC&V challenged the original permit issued in 1996 and obtained judicial stays of certain terms in that permit all in accordance with state law. During the pendency of that challenge, CC&V implemented the remaining terms and conditions of the permit and attempted to settle its objections with the WQCD. The parties were close to a resolution by the time CC&V was required to apply for a renewal permit and CC&V's application reflected that fact. CC&V explained that it was applying for a renewal permit if settlement discussions broke off and it was finally determined that the flows in Arequa Gulch required a permit, and, in the alternative, that it was applying for a new permit at Outfall 001A to reflect the settlement position CC&V had proposed to the WQCD. Exh. 603. Ultimately, a renewal permit was issued and never challenged. As for the Fourmile Creek Springs permit, the

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AngloGold Defendants agreed to get that permit as a way of settling the agencies' allegations, not because the agencies ever proved a connection between the Carlton Tunnel Ponds and the Fourmile Creek Springs. Finally, the fact that "courts have almost uniformly declined to award fees to defendants under Section 1365 of the CWA," Response Brief at 12, does not license Plaintiffs like these to file and maintain suits they know are unfounded. An award here is appropriate because it will ensure that citizen plaintiffs take their responsibilities seriously when they assert their role under the CWA as private attorneys general. E. THE FEE AWARD REQUESTED IS REASONABLE.

None of Plaintiffs' general "reasonableness" objections has merit. For example, even if the filings were unsuccessful at the time, there was nothing unreasonable about filing dispositive motions that, as the trial result revealed, certainly were not without foundation. Similarly, what the Plaintiffs now call "other cases" and "regulatory matters" were all directly related to this case ­ as their own efforts to admit evidence from those other cases into the trial of this case attest. Moreover, the defense experts necessitated by Plaintiffs' own claims and expert endorsements are not now, in hindsight, somehow unnecessary just because the Defendants succeeded in excluding Plaintiffs' experts before trial. As to Plaintiffs' more specific reasonableness objections (concerning particular time entries and the like), the AngloGold Defendants submit that those are left to the Court's sound discretion to determine.

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Respectfully submitted this 1st day of June, 2006.

HOGAN & HARTSON L.L.P. s/ Robert C. Troyer __________________________________ Robert C. Troyer 1200 17th Street, Suite 1500 Denver, CO 80202 Telephone: 303-899-7300 Facsimile: 303-899-7333 [email protected] and Eugene J. Riordan Lisa C. Ledet VRANESH AND RAISCH, LLP 1720 14th Street, Suite 200 P.O. Box 871 Boulder, CO 80306-0871 Telephone: 303-443-6151 Facsimile: 303-443-9586 [email protected] [email protected] Attorneys for Defendants Cripple Creek & Victor Gold Mining Company, AngloGold Ashanti (Colorado) Corp., and AngloGold Ashanti North America Inc.

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CERTIFICATE OF SERVICE I hereby certify that on June 1, 2006, I electronically filed the foregoing ANGLOGOLD DEFENDANTS' REPLY IN SUPPORT OF MOTION FOR ATTORNEY FEES with the Clerk of the Court using the CM/ECF system which will send notification of such filing to the following e-mail addresses: John M. Barth P.O. Box 409 Hygiene, CO 80533 [email protected] Roger Flynn Jeffrey C. Parsons Western Mining Action Project P.O. Box 349 Lyons, CO 80540 [email protected] Randall M. Weiner Law Offices of Randall M. Weiner, P.C. 1942 Broadway, Suite 408 Boulder, CO 80302 [email protected] Don H. Sherwood Attorney at Law 10861 West 28th Place Denver, CO 80215 [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] Peter V. O'Connor (via U.S. mail) AngloGold Ashanti North America Inc. 7400 E. Orchard Road, Suite 350 Greenwood Village, CO 80111

s/ Robert C. Troyer __________________________________ Robert C. Troyer 1200 17th Street, Suite 1500 Denver, CO 80202 Telephone: 303-899-7300 Facsimile: 303-899-7333 [email protected]

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