Free Motion to Strike - 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

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.

MOTION TO STRIKE DEFENDANTS' EVIDENCE UNDER FED.R.EVID. 408, FED. R. EVID. 801, AND FED. R. CIV. P. 68

Plaintiffs hereby submit this Motion to Strike Defendants' Evidence under Fed. R. Evid. 408, Fed. R. Evid. 801, and Fed. R. Civ. P. 68.

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I.

INTRODUCTION AND SUMMARY

This Court issued a Memorandum Opinion and Order, along with a Judgment in favor of Defendants on all claims, on April 13, 2006 [Docs. ## 309, 310]. In the Memorandum Opinion and Order, the Court ordered that "[i]n accordance with Fed. R. Civ. P. 54(d) and 33 U.S.C. § 1365(d), the Defendants may apply for an award of attorney fees and costs within 14 days after entry of judgment." Order at 42. Motions for Attorney Fees were filed electronically by both the Anglo Defendants and Defendant Golden Cycle Gold Corporation on April 27, 2006. The Motion for Attorney Fees submitted by the Anglo Defendants included argument addressing settlement communications between Plaintiffs and Defendants, and also included an exhibit containing settlement communications.1 The Anglo Defendants recognized the irregularity of including such settlement negotiations and the Federal Rule of Evidence 408 proscribing their use. Anglo Defendants' Motion at 10, n.3. As discussed herein, this evidence of settlement has been introduced for an improper purpose and is otherwise excludable under Fed. R. Evid. 408. In addition to introducing Plaintiffs' settlement communications, the Anglo Defendants also inappropriately seek to admit a letter Anglo Defendants refer to as a Fed. R. Civ. P. 68 Offer of Judgment. As discussed herein, Fed. R. Civ. P. 68 specifically prohibits the introduction of such offers in circumstances such as that presented here. Lastly, the arguments made by the
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The Motion for Attorney Fees submitted by Defendant Golden Cycle Gold Corporation does not include any exhibits or argument directly disclosing settlement negotiations that have occurred in this case. However, Defendant Golden Cycle Gold does state in its Motion that it "joins in the recitation of legal authority incorporated into the AngloGold Defendants' Motion for Attorney Fees, and adopts that authority" into its Motion. Golden Cycle Gold Corporation Motion for Attorney Fees at 2. Thus, to the extent this Court excludes the evidence of settlement negotiations, the ruling should also apply to the extent applicable to Golden Cycle Gold Corporation. 2

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Anglo Defendants with respect to alleged bad faith are based on inadmissible hearsay, and should be stricken on this independent ground. II. A. ARGUMENT

Anglo Defendants Improperly Introduced Evidence of Settlement Communications Proscribed Under Fed. R. Evid. 408

Federal Rule of Evidence 408 provides that: Evidence of (1) furnishing or offering or promising to furnish, or (2) accepting or offering or promising to accept, a valuable consideration in compromising or attempting to compromise a claim which was disputed as to either validity or amount, is not admissible to prove liability for or invalidity of the claim or its amount. Evidence of conduct or statements made in compromise negotiations is likewise not admissible. This rule does not require the exclusion of any evidence otherwise discoverable me\rely because it is presented in the course of compromise negotiations. This rule also does not require exclusion when the evidence is offered for another purpose, such as proving bias or prejudice of a witness, negativing a contention of undue delay, or proving an effort to obstruct a criminal investigation or prosecution. In their Motion for Attorney Fees, the Anglo Defendants have sought to introduce statements contained in Plaintiffs' offers to compromise and settle this case in support of an argument that the case was frivolous. Specifically, the Anglo Defendants contend that while they "recognize that caution and sensitivity always should be employed before informing the Court about the substance of settlement discussions," the Anglo Defendants "raise these facts because they are probative of Plaintiffs' disregard for the merits of their claims and continuance of this case in bad faith." Anglo Defendants' Motion at 10, n.3. Thus, despite obliquely recognizing the prohibition on introducing such evidence, the Anglo Defendants nevertheless both attached Plaintiffs' settlement letters and included the content of settlement discussions as the basis for their argument that Plaintiffs' case was frivolous or without merit. See Anglo Defendants' Motion at 10-11; 13-14. As such, this evidence is introduced to "prove ... invalidity

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of the claim or its amount," an improper purpose under Fed. R. Evid. 408, and should be stricken from the record. Anglo Defendants may contend that the evidence of settlement negotiations was not admitted in order to demonstrate the invalidity of the claim, but merely to assert an improper motive in bringing the case. However, as discussed in Plaintiffs' Combined Response In Opposition To Defendants' Motions For Attorney Fees, this evidence is not probative on this issue, and should be disregarded on that ground. See Plaintiffs' Combined Response at 2, n.1. In any case, courts in the Tenth Circuit uniformly recognize that "[o]n balance, however, 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)." Southwest Nurseries, LLC v. Florists Mut. Inc., 266 F.Supp.2d 1253, 1258 (D. Colo. 2003). To allow admission of evidence disclosing the content of such offers or settlement discussions "would discourage settlement negotiations and defeat the public policy underlying Rule 408." Id. at 1259. See also Fed. R. Evid. 408 Advisory Committee Note 1 ("A more consistently impressive ground [for excluding evidence of settlement discussions] is promotion of the public policy favoring the compromise and settlement of disputes."). Given the express language of Fed. R. Evid. 408 calling for the exclusion of evidence of settlement negotiations, the dubious relevance of the evidence of settlement negotiations in this case, and the strong public policy grounds upon which Fed. R. Evid. 408 is based, this Court should strike the settlement evidence submitted by the Anglo Defendants as well as the argument relying on such evidence.

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B.

This Court Should Strike the Anglo Defendants' Evidence of Their Offer of Judgment Under Fed. R. Civ. P. 68

In their Motion for Attorney Fees, the Anglo Defendants introduced evidence of a settlement offer that the Anglo Defendants refer to as an Offer of Judgment under Fed. R. Civ. P. 68, which was not accepted by Plaintiffs. Anglo Defendants Motion at 14.2 However, Fed. R. Civ. P. 68 expressly prohibits the introduction of any rejected Offer of Judgment tendered, stating that "[a]n offer not accepted shall be deemed withdrawn and evidence thereof is not admissible except in a proceeding to determine costs." Fed. R. Civ. P. 68. The Anglo Defendants introduce this letter not in an argument as to the amount of costs, as contemplated under the Rule, but rather in an attempt to argue what they contend were the improper motives of Plaintiffs in rejecting the offer. Thus, this letter is introduced in an attempt to demonstrate bad faith as the basis for an argument directed at showing eligibility for attorney fees and litigation expenses, not "to determine costs."3 Thus, apart from the issue of the illegitimacy of their argument as to improper motive, addressed in Plaintiffs' Combined Response In Opposition To Defendants' Motions For Attorney Fees, this evidence should be excluded as outside the

While the Anglo Defendants refer to this letter as an Offer of Judgment under Fed. R. Civ. P 68, the caselaw in the Tenth Circuit makes clear that any such Offer must include an award of costs. Knight v. Snap-On Tools Corp., 3 F.3d 1398, 1405 (10th Cir. 1993). See also Scheriff v. Beck, 452 F.Supp. 1254, 1259-60 (D.Colo. 1978)(offer of judgment that does not include costs is not valid). In this case, the so-called Offer of Judgment specifically excluded any costs, and thus did not comport with Fed. R. Civ. P. 68, rendering the offer ineffective. An Offer of Judgment does not apply when judgment is entered in favor of the defendant, as in this case, and thus the Anglo Defendants' reliance on it is improper. Delta Air Lines, Inc. v. August, 450 U.S. 346, 352 (1980), cited in Landon v. Hunt, 938 F.2d 450, 451 n.1 (3d Cir. 1991); Carillon Square v. Ernst Home Center, Inc., 34 F.3d 1076, p. 4 n.3 (10th Cir. 1994) (unreported); see also Federal Procedure, Lawyers Edition §§ 51:34, 51:46 (1997). 5
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allowable purposes for which such an offer may be admitted as evidence.4 C. Defendants' Argument Should be Stricken as Hearsay

The Anglo Defendants' Motion contains numerous statements about Plaintiffs' prior statements and conduct, which constitute inadmissible hearsay under Fed. R. Evid. 801. Anglo Defendants' Motion at10-11, 13-14. The Anglo Defendants offer no admissible evidence to support their claim of Plaintiffs' alleged "bad faith" in this matter, and the motion can be denied on those grounds alone. 5 Fed. R. Evid. 801 defines hearsay as follows: "`Hearsay' is a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted." Fed. R. Evid. 802 then deems hearsay inadmissible except where specifically allowed. Here, the Anglo Defendants' brief centers on hearsay statements describing prior events "offered to prove the truth of" Plaintiffs' statements, conduct and intentions. Not only are the Anglo Defendants' statements false, they are hearsay and should be stricken. CONSULTATION UNDER LOCAL RULE 7.1(A) Prior to filing this Motion, counsel for Plaintiffs contacted counsel for the Anglo Defendants and counsel for Golden Cycle Gold Corporation. Counsel for Plaintiff alerted Defendants' counsel to Plaintiffs' intent to file this Motion and advised them of the reasons for the Motion, as discussed herein. Counsel for the Anglo Defendants and Counsel for Defendant
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As the letter that the Anglo Defendants call an Offer of Judgment under Fed. R. Civ. P. 68 also constitutes settlement negotiations, it should be excluded under Fed. R. Evid. 408, based on the foregoing discussion of the public policy underpinnings of that Rule. See First National Bank v. FDIC, 196 F.2d 1186, 1189 (10th Cir. 1999)(confirming that an offer of judgment under Fed, R, Civ. P. 68 constitutes a settlement communication). 5 The sole piece of any evidentiary material the Anglo Defendants filed was a copy of prior settlement correspondence between the parties, which is itself inadmissible under Rule 408. See Section II.A. supra. 6

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Golden Cycle Gold Corporation stated that they oppose the Motion.

DATED this 17th day of May 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 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 May 17, 2006 and was then forwarded electronically to the following persons via the ECF system: Eugene J. Riordan Vranesh and Raisch Craig Carver Carver, Kirchhoff, Schwartz, McNab & Bailey, P.C. 7

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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]

Hudson's Bay Centre 1600 Stout Street, Suite 1700 Denver, CO 80215

s/ Roger Flynn ____________________ Roger Flynn

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