Free Supplement/Amendment - District Court of Colorado - Colorado

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AFFIDAVIT
STATE OF COLORADO COUNTY OF JEFFERSON } } ss }

Having been first duly sworn, I state the following to be true: 1. My name is Don H. Sherwood. I am 70 years of age, and

reside in the City of Lakewood and in the County of Jefferson and State of Colorado. 2. My 1960 B.Sc. degree is from the University of Nebraska, with credits in mining engineering and geology transferred from the Universities of Idaho and Minnesota. 3. I have been a member of the Society for Mining, Metallurgy, and Exploration (SME), American Institute of Mining, Metallurgical and Petroleum Engineers (AIME), since 1956. 4. I graduated from the University of Nebraska College of Law on June 10, 1961. 3. I was admitted to the practice of law on October 26, 1961, in the Supreme Court of Colorado and in this Court. I have

been admitted further in the United States Courts of Appeal for the Tenth and Ninth Circuits on March 22, 1971, and December 26, 1984, respectively, and in the United States Supreme Court on January 29, 1968. 4. I was associated with Sherman & Howard (then known as Dawson, Nagel, Sherman & Howard) in Denver during 1961-1965.

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-2After two years as Executive Director of the Rocky Mountain Mineral Law Foundation in Boulder, I returned to that firm part time in 1966 and full time in 1967, becoming a partner in 1969. On January 1, 1992, I joined Parcel, Mauro, Hultin & Spaanstra, going from there on September 1, 1998, to Alfers & Carver (later Carver & Kirchhoff). From April 1, 2003, I have been engaged in

the sole practice of law. 5. Throughout my professional life my practice has been limited to natural resources and public land law, first in water law, primarily for mining clients, then in mining law for both miners and mineral land owners, and ultimately in environmental law, also for such clients. Not all such lawyers handle

litigation, but I have done so from the beginning, almost exclusively in cases involving mines and mining, water and geology, mining claims and mineral titles, and relationships between such clients and various agencies of all governments from local to national levels. 5. Among other things, I have during those years served as President of the Rocky Mountain Mineral Law Foundation (19741975), as a member of the U.S. Bureau of Land Management Colorado Multiple Use Advisory Board (1968-1977), the U.S. Department of the Interior National Public Lands Advisory Council (Charter Member, 1980-1981), and of the Board of Directors of the Colorado

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-3Mining Association (1970-1982). I served as Chairman of the

Mineral Law Section of the Colorado Bar Association in 1969-1970, and I was in 2004 the first recipient of the Clyde O. Martz Teaching Award in Natural Resources Law from the Rocky Mountain Mineral Law Foundation to be recognized for adjunct teaching of mining law in the law schools both at the University of Colorado and at the University of Denver, the latter for more than twenty years, where I was named in 1987 its first Distinguished Practitioner-in-Residence. 6. Deeming litigation, rather than speeches and published articles, to be the primary qualification in this matter, I list instead the reported cases which I have handled over the years as illustrative of my practice and experience. In all of these,

except as specifically noted, I was personally engaged to represent the client in and to manage the litigation, select assisting lawyers and, more often than not, to write any required briefs as well as to approve pleadings and other papers. 7. Not insignificantly, the first of my reported cases were among the earliest of modern case authorities on mining law in which miners and mining companies failed in the last instance to sustain victories upon appeals from lower tribunals: United States v. New Jersey Zinc Co., 74 Interior Decisions 191 (June 21, 1967), and United States v. Coleman, 390 U.S. 599 (1968), in

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-4which The New Jersey Zinc Company appeared amicus. I wrote the

briefs for that company in both cases under the supervision of the responsible partner. After Coleman, miners and their lawyers

learned that there is no longer such a thing as a "slam dunk" in mining law. 8. Water cases, few of which were reported, occupied the next few years, e.g., United States v. District Court of Eagle County, 169 Colo. 555, 458 P.2d 760 (1969), aff'd, 401 U.S. 520 (1971), in which The New Jersey Zinc Company intervened, and Fellhauer v. People, 167 Colo. 320, 447 P.2d 986 (1969) (argued amicus at the invitation of Clyde O. Martz, principal counsel). 8. On appeal, I was the principal lawyer and argued successfully for the mining company which had lost at trial in Green v. Castle Concrete Co., 181 Colo. 309, 509 P.2d 588 (1973), arguably the first of the modern environmental mining cases initiated in Colorado by environmental activists. I had not been

successful either at trial or on the appeal in the earlier Ryan v. Pitkin Iron Co., 444 F.2d 717 (10th Cir. 1971) (argued), in which the mining company won against what was essentially an environmental objection to a non-mining use of public land. 9. I was, however, successful in a series of cases involving oil shale, for all of which I had primary responsibility as to at least one party, beginning with United States v. Mobil Oil

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-5Corporation, Civil Action No. C-4135 [D. Colo.], settled after briefing. The trial brief filed with the Court prior to

settlement was then, with the permission of the client Mobil Oil, used in the course of a companion case tried successfully on the same issues by a different firm and reported as United States v. Eaton Shale Co., 433 F. Supp. 1256 (D. Colo. 1977). Later cases

were Environmental Defense Fund, Inc., v. Andrus, 619 F.2d 1368 (10th Cir. 1980), representing AMOCO, one of the two federal oilshale lessee defendants in that case; TOSCO Corp. v. Hodel, 611 F. Supp. 1130 (D. Colo. 1985) (representing Union Oil Co. of California), vacated as moot, 826 F.2d 948 (10th Cir. 1987), but see Marathon Oil Co. v. Lujan, 771 F. Supp. 1556 (D. Colo. 1991); Marathon Oil Co. v. Lujan, 751 F. Supp. 1454 (D. Colo. 1990), modified and affirmed, 937 F.2d 498 (10th Cir. 1991) (no petition), and 771 F. Supp. 1556 (D. Colo. 1991) (order on remand) (represented, with others, Marathon Oil Company throughout the reported proceedings and over a number of years before that litigation began). 10. Here and elsewhere, I have been responsible to other lawyers (and of course often associated with local counsel) in many mining cases, some successfully, some not, but all technical and difficult, for example: Chief Consol. Mining Co. v. Sunshine Mining Co., 725 F. Supp. 1191 (D. Utah 1989) (represented the

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-6Chief company; settled during appeal pending in the 10th Circuit Court of Appeals); Topaz Beryllium Co. v. United States, 479 F. Supp. 309 (D. Utah 1979) (argued), aff'd, 649 F.2d 775 (10th Cir. 1981) (a partial success) (represented the Colorado Mining Association); Mt. Emmons Mining Co. v. Babbitt, 117 F.3d 1167 (10th Cir. 1997) (wrote the briefs at trial, and in the successful appeal, for the law firm responsible to the mining company); and represented NL Industries in a series of cases in Nevada state and federal courts, culminating in NL Industries, Inc. v. Secretary of the Interior of the United States, 777 F.2d 433 (9th Cir. 1985) (argued all the cases and won all but the last). 11. I am not listing here the many cases I have handled within the federal land-managing agencies, even those with published decisions, because the procedures in such cases are not comparable to court cases. I list the cases above, whether won

or lost, because the experience gained in cases such as those is all I have to sell. In any event, to represent prospectors and

miners is rarely easy and almost never certain, particularly where public and political issues attract lawyers motivated by money rather than facts. The instant case is typical.

12. I first went down a shaft in a hardrock mine at the age of 13 in 1949. It was a working mine just north of the town of

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-7Cripple Creek, and the District was then still active. The last

mines there closed about the time I came to Colorado in 1961, but I represented the owners of the Strong Mine, very close to the property involved in this case, for about thirty years, beginning in 1969. District. I became familiar with the history of and mining in the I understand both the mineralogy and the geology of

the District, as well as the water problem and the history of drainage through progressively deeper and therefore longer adits. 13. I was asked to represent the Defendant Golden Cycle Gold Corporation in this matter in the first months of 2001. It was

apparent to me from the beginning that there was a disconnect between the Plaintiffs and reality. Golden Cycle is simply

neither the cause of nor the solution to the allegations either that unlawful discharges have and will continue to occur, or that the defendants, collectively, are liable for all that has ever been done in mining the brecciated diatreme at Cripple Creek. To

succeed in any defense, however, would most likely require close attention to developments, and great care, to avoid liability for three primary reasons. 14. First, the Plaintiffs intended to yoke Golden Cycle to the mining companies responsible, if anyone is, for contaminants emanating from the District. Second, the Plaintiffs expected to

make Golden Cycle jointly and severally liable therefor with

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-8those mining companies. Third, the Plaintiffs made no attempt to

make AngloGold Ashanti Limited [www.anglogold.com], the ultimate moneyed foreign parent of those mining companies, a defendant. The Plaintiffs plainly intended to put Golden Cycle out of business even if they could not put AngloGold Limited out of business. In sum, it was apparent from the outset that the

Plaintiffs intended to punish Golden Cycle simply for existing. 15. Faithfully represented, none of those things should in my opinion happen to Golden Cycle, and I so advised the officers and directors of the Company. All recognized that the Company

had neither the staff nor the means to do more than defend itself. Furthermore, it had neither the right nor the power to

interfere with the owner and the operator in their defense of the mine. I was therefore engaged to prepare and file every paper I was to

necessary to assert Golden Cycle's particular defenses.

join with the other defendants where possible, to supplement when necessary what they decided to do, and to oppose what they might do if it should ever come to that. 16. To do all of this, I tried to minimize separate pleadings, and to stay out of the way of those risking a great deal more than we. I tried to distinguish the case against

Golden Cycle from that against the other defendants to no avail. As late as opening arguments in the case at trial, Mr. Barth made

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-9no distinction at all, telling the Court that "[t]he defendants in this case are the mining companies that own, operate, and control that mine" and they "should be responsible" [Transcript [#291], Barth, 2/13, p. 3, lines 18-19; p. 17, lines 16-18]. once in the course of this litigation did Plaintiffs or their counsel concede that Golden Cycle owned, operated, and controlled nothing, not even the stock-water pond in Squaw Gulch. Their Not

intention is manifest: to punish any entity connected in any way, nor matter how remotely, with mining in the District. 17. I began by commissioning research, at the lowest level possible in the firm of which I was then a member, to identify all the pitfalls which might exist and, aware of unforgiving caselaw, to ensure that I understood early the intricacies of applicable law. My duty would be to respond immediately whenever

and wherever necessary, whether in pleadings, in discovery, or at trial, to anything false, misleading, disingenuous, or mistaken. Once that preparation was done, I carried on alone, trying to minimize expense as much as possible. 18. Thus, by 2003, my responsibility and my obligation to minimize expense led me to account to Golden Cycle for specific litigation papers and subjects rather than peripherals which generally distract from rather than advance cases to settlement or trial. I therefore exercised my own judgment not to bill for

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- 10 most of this, save as part and parcel of handling what was in fact important; in other words, the substance of documents, especially pleadings and evidence, rather than minutia, most of which is accumulated in ordinary letters and electronic mail, often mere posturing, and sometimes tedious reporting. Golden

Cycle left me free, but of course with greater responsibility, to do what had to be done, reporting only when crucial to do so. has paid me to do what I am perhaps best qualified to do: to protect the Company and its many shareholders from plunder. of this has in fact kept my fees and expenses reasonable by centering my attention upon the individual documents and the testimony, in discovery as well as at trial. Fortunately, all All It

counsel representing the other defendants went out of their way to make it possible for me to do this economically. 19. So billed, the cost of Golden Cycle's lawyers in this matter came to $ 118,841.50. That amount, less $ 1,391.60 in

billed disbursements, was $ 117,449.90, which divided by a total of 534.9 hours, is about $ 220 per hour. these amounts have been paid. 20. More importantly, what was it worth? There can be no Every cent of all of

question that hourly rates of lawyers with equivalent experience in this market, and there are few or none from my generation with comparable experience still in active practice, range from $ 300

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- 11 to $ 400, even $ 500, hourly [See the National Law Journal survey (www.nlj.com) (12/9/2002)]. A 2005 survey is due out from the

National Law Journal in the next few days, according to that publication's website, and the likelihood that the numbers will decline rather than increase is next to nil. Indeed, on the

strength of that 2002 survey, John Barth himself sought $ 250 hourly for 871.25 hours of his own time a few years ago in the El Paso case [Doc. # 113 in Case No. 01-cv-2163 in this District]. 21. A reasonable fee would be my 335.2 hours, plus the 2.4 hours of Messrs. Carver and Kirchhoff's time at $ 300, plus the remaining 195.2 hours at $ 145, or $ 101,280.00 plus $ 28,304.00, a total of $ 130,975.60, including billed disbursements. hours were necessary and reasonable. All the

It is in no way the fault

of Golden Cycle that it required thirteen 2.5 inch binders just to collect all that I had to read, together with the many linear feet of correspondence and exhibits, as well as all of the El Paso case materials which found their way into these cases. All

of that was either generated or necessitated primarily by the Plaintiffs attempting to do what should never have been undertaken in the first place. 22. Further Affiant sayeth not.

s/ Don H. Sherwood Don H. Sherwood

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- 12 Sworn to before me this 1 st day of May, 2006.

s/ Karen Montoya Notary Public My commission expires: SEAL 05/16/2009

Affidavit 4/27/06 : Corrected 5/1/06