Free Motion for Release of Bond Obligation - 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, 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' MOTION FOR STAY OF JUDGMENT PENDING APPEAL AND TO WAIVE BOND, OR IN THE ALTERNATIVE, TO ALLOW FOR LETTER OF CREDIT OR REDUCED BOND

Pursuant to Federal Rule of Civil Procedure 62 and Fed. R. App. Proc. 8(a), plaintiffs respectfully make the following motions: 1) A motion for stay, pending appeal, of the Court's Order Granting, In Part, Motion for

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Attorney Fees dated December 20, 2006 [#345]; and of any judgment incorporating that Order. 2) A motion to waive surety for such a stay, due to the non-profit nature of the plaintiff groups, the public interest exception to the bond requirement, the hardship that obtaining such a bond would impose on those groups, and the fact that it is unlikely that requiring a surety would make any difference regarding ultimate collectibility of the judgment. 3) In the alternative, a motion to allow a letter of credit from plaintiff group Sierra Club instead of a supersedeas bond to secure the judgment for both plaintiff groups. 4) If the Court does require posting of a surety, a motion to set the amount of the required letter of credit at $50,000, or the required bond at $25,000. These motions are supported by the attached declarations of Bruce Hamilton and Steve D'Esposito, and by the legal authority cited herein. I. IT IS APPROPRIATE AND NECESSARY FOR THE COURT TO STAY THE ORDER AND JUDGMENT, AND WAIVE SUPERSEDEAS BOND A. Stay of Collection of a Monetary Award Pending Appeal is Appropriate

As explained in detail infra, the courts commonly stay the execution of money judgments pending appeal. Preserving the status quo is appropriate, because if the plaintiffs prevail on appeal, any moneys paid to defendants would have to be returned, with interest. Upon posting of a supersedeas bond, a stay of collection of a money judgment pending appeal is automatic. American Mfrs. Mut. Ins. Co. v. American Broadcasting­Paramount Theatres, Inc., 87 S. Ct. 1, 3, 17 L.Ed.2d 37 (1966). However, as discussed infra, a supersedeas bond is not required in order to obtain a stay pending appeal.

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B.

The Supersedeas Bond Requirement Should be Waived in Public Interest, Private Attorney-General, Cases

The district court has the authority to "dispense with any security requirement whatsoever." Federal Prescription Serv., Inc. v. American Pharm. Ass'n, 636 F2d 755, 759­760 (D.C. Cir. 1980). One exception is the "private attorney-general" situation. Virtually without exception, the courts which have addressed the question in the context of injunctions and stays have held that it is appropriate to waive bond entirely, or to require only a nominal amount ($100 to $1000), where the group seeking the stay has brought the lawsuit in the public interest, as "private attorneys-general" enforcing the federal environmental laws.1 As explained by the Supreme Court construing analogous citizen suit provisions, Congress, in enacting such provisions, "has opted to rely heavily on private enforcement to implement public policy and to allow counsel fees so as to encourage private litigation." Alyeska Pipeline Serv. Co. v. Wilderness Soc'y, 421 U.S. 240, 163 (1975). A bond order that exposes citizen plaintiffs to substantial financial liability effectively cancels out the incentive to litigate created by Congress. Indeed, "special precautions to ensure access to the courts must be taken where Congress has provided for private enforcement of a statute." California ex rel. Van De Kamp v. Tahoe Regional Planning Agency, 766 F.2d 1319, 1325-26 (9th Cir. 1985). Courts have long declined to impose anything more than a minimal bond in order to avoid frustrating "public-interest"
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Much of the public interest case law cited herein is in reference to requests for waiver of bond for preliminary injunctions, pursuant to Fed. R. Civ. Proc. 65, rather than injunctions pending appeal, pursuant to Fed. R. Civ. Proc. 62. Plaintiffs cite this case law because the analysis found therein is, in large part, more generalized than the Rule 65 context, and the reasoning regarding the need to promote public interest "private attorney general" litigation is equally applicable to the appeal context. Plaintiffs' counsel were able to find a relatively small amount of case law regarding Rule 62, and do cite herein the relevant Rule 62 3

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litigation. See Friends of the Earth v. Brinegar, 518 F.2d 322, 323 (9th Cir. 1975); Natural Resources Defense Council v. Morton, 337 F. Supp. 167, 168-69 (D.D.C. 1971). Thus, a bond must not be set so high as to deny the moving party its right to judicial review of its claims. Utahns for Better Transp. v. United States Dept. of Transp., 2001 WL 1739458 at *5 (10th Cir. 2001) (citing Van De Kamp). The public interest exception is not based on the indigency of the plaintiff, but on the Congressionally established policy of promoting private enforcement of public rights. Indeed, some of the earliest cases to apply the exception involved large national environmental organizations like the Sierra Club and the other plaintiff groups that were seeking to enforce the public's right to environmental compliance. See Natural Resources Defense Council v. Morton, 337 F. Supp. 167; Environmental Defense Fund v. Corps of Engineers, 331 F. Supp. 925 (D.D.C. 1971). [W]hen plaintiffs such as environmental or civil rights organizations sue to protect a public interest, waiver of the bond requirement may promote the protection of that interest. If 'private attorneys general' were required in all cases to pay all of the damages that could result from the interlocutory injunctions they seek, they could be subject to tremendous liabilities and would thus be deterred from seeking socially desirable injunctions. Thus, when plaintiffs sue to protect a public interest, courts should either waive the bond requirement or exercise their discretion to set the bond at an appropriately low amount. Note, Recovery for Wrongful Interlocutory Injunctions Under Rule 65(c), 99 Harv. L. Rev. 828, 835 & n.29 (1986). See also Daniel Riesel, Preliminary Injunctions and Stays Pending Appeal in Environmental Litigation, SK094 ALI-ABA 467, 498 (2005) (explaining that "[i]t is common for courts in environmental cases brought by environmental groups or individuals with limited means, . . . to require little or no security.").

case law that they located. 4

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The consensus among the commentators is that public interest litigants should be relieved from injunction bonds. As one commentator put it, "why [should] a citizen suing as a private attorney general [be] required to post a bond when the attorney general is not?" Henson & Gray, Injunction Bonding In Environmental Litigation, 19 Santa Clara L. Rev. 541, 565, 578 (1979) (concluding that "[i]f the public interest environmental plaintiff is to be encouraged to vindicate legal rights, the hurdle of the injunction bond must be lowered.") See also Reina Calderon, Note, Bond Requirements Under Federal Rule of Civil Procedure 65(c): An Emerging Equitable Exemption for Public Interest Litigants, 13 B.C. Envtl. Aff. L. Rev. 125, 167 (1985) (concluding that "[t]he federal exemption demonstrates that a bond can and should be waived in the public interest litigation setting."). Thus, it is well established that in public interest environmental cases the plaintiff need not post a surety to obtain a stay or injunction, because of the potential chilling effect on litigation to protect the environment and the public interest. Federal courts have consistently waived the bond requirement in public interest environmental litigation, or required only a nominal bond. See, e.g., Colorado Wild v. U.S. Forest Service, 299 F. Supp. 2d 1184 (D. Colo. 2004) (waiving bond); Barahona-Gomez v. Reno, 167 F.3d 1228, 1237 (9th Cir. 1999) (upholding nominal bond in immigrant class action); Baykeeper v. U.S. Army Corps of Engineers, 2006 U.S. Dist. LEXIS 67483, *53 (E.D. Cal.) ("[I]n light of the nature of the case, the court relieves plaintiffs of the obligation to file a bond"); California for Alternatives to Toxics v. Troyer, 2005 U.S. Dist. LEXIS 37270 (E.D. Cal.) (same); Wilderness Society v. Tyrrel, 701 F. Supp. 1473 (E.D. Cal. 1988) (imposing a nominal bond of $100), rev'd on other grds, 918 F.2d 813 (9th Cir. 1990); People ex rel. Van de Kamp v. Tahoe Regional Planning Agency, 766 F.2d 1319 (9th Cir. 1985) (no bond); Scherr v. Volpe, 466 F.2d 1027 (7th Cir. 5

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1972) (no bond); West Virginia Highlands Conservancy v. Island Creek Coal Co., 441 F.2d 232 (4th Cir. 1971) ($100); Sierra Club v. Block, 614 F. Supp. 488 (D.D.C. 1985) ($20); Sierra Club v. Block, 614 F. Supp. 134 (E.D. Tex. 1985) ($1); Highland Coop v. City of Lansing, 492 F. Supp. 1372 (D. Mich. 1980) (no bond); Citizens for Responsible Growth v. Adams, 477 F. Supp. 994 (D.N.H. 1979) (no bond); Wisconsin Heritages, Inc. v. Harris, 476 F. Supp. 300 (E.D. Wis. 1979) (no bond); Alabama v. Corps of Engineers, 411 F. Supp. 1261 (N.D. Ala. 1976) ($1); Sierra Club v. Froehlke, 359 F. Supp. 1289 (S.D. Tex. 1973), rev'd on other grounds sub nom Sierra Club v. Callaway, 499 F.2d 982 (5th Cir. 1974) ($100); Boston Waterfront Residents Ass'n v. Romney, 343 F. Supp. 89 (D. Mass 1972) (no bond); Silva v. Romney, 342 F. Supp. 783 (D. Mass. 1972) (no bond); Environmental Defense Fund v. Corps of Engineers, 324 F. Supp. 878 (D.D.C. 1971) ($1); Wilderness Society v. Hickel, 325 F. Supp. 422 (D.D.C. 1970), rev'd on other grounds sub nom Wilderness Society v. Morton, 479 F.2d 842 (D.C. Cir. 1973) ($100); Natural Resources Defense Council v. Morton, 337 F. Supp. 167 (D.D.C. 1971) ($100). C. The Supersedeas Bond Requirement Also Should be Waived Where Obtaining the Bond Would Pose a Hardship

The courts have also held that a supersedeas bond should be waived if providing the bond would pose undue hardship to the appealing party; and that the district court also has the discretion to impose alternatives other than a bond to secure the judgment pending appeal. Townsend v. Holman Consulting Corp., 881 F.2d 788 (9th Cir. 1989); Intern. Telemeter v. Hamlin Intern. Corp., 754 F.2d 1492, 1495 (9th Cir. 1985) ("although Federal Rule of Civil Procedure 62 provides that a supersedeas bond may be used to stay execution of a judgment pending appeal, the court has discretion to allow other forms of judgment guarantee") (citing Poplar Grove Planting and Refining Co. v. Bache Halsey Stuart, Inc., 600 F.2d 1189, 1191 (5th

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Cir. 1979)); International Telemeter, Corp. v. Hamlin Int'l Corp., 754 F2d 1492, 1495 (9th Cir. 1985). D. This is a Public Interest Lawsuit Where the Plaintiffs Are Non-Profit Organizations Serving as Private Attorneys-General; and Purchasing a Bond Would Impose Financial Hardship

This action was brought to enforce the federal Clean Water Act. As this court noted in Neighbors for a Toxic Free Community v. Vulcan Materials Co., citizens are "acting as 'private attorney generals' when they seek declaratory and injunctive relief and civil penalties" under the Clean Water Act. 964 F. Supp. 1448, 1450 (D. Colo. 1997). As explained in the attached declarations of Sierra Club Conservation Director Bruce Hamilton and Earthworks President Steve D'Esposito, initial inquiries indicate that obtaining a bond to cover the amount of the judgment would require a premium of two percent of the amount bonded, thus, a minimum of $6500, but higher if the court required bonding of an amount greater than the judgment. Hamilton Decl. at ¶ 11; D'Esposito Decl. at ¶ 14. Of even greater concern is that obtaining the supersedeas bond would also require posting of full collateral in the form of an irrevocable letter of credit. Obtaining the irrevocable letter of credit would take another two percent premium. Thus, the total amount required for obtaining a bond, say in the amount of $350,000, would be 4%, or $14,000. Hamilton Decl. at ¶ 11; D'Esposito Decl. at ¶ 15. Paying this amount to obtain a supersedeas bond, and providing full collateral to the bonding company, would pose a significant financial hardship, as explained in the attached declarations. Hamilton Decl. at ¶¶ 8-13; D'Esposito Decl. at ¶¶ 11-16. The plaintiff groups are

non-profit organizations with budgets strictly limited by their boards, and with no budgeting available for the bond nor provisions to cover such an extraordinary posting of collateral. Id. 7

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As the declarations submitted herewith demonstrate, the ability of the non-profit plaintiffs in this case to go to court to enforce environmental laws would be profoundly and adversely affected by the imposition of anything other than a nominal bond because they have budgets dependent upon the timelines of the grants they have received and because their funds are restricted in their use. Id. The plaintiff groups cannot post a substantial bond without ending or significantly reducing ongoing, environmental programs and/or laying off related program staff. If the plaintiffs were forced to pay a substantial bond, they would be unable to cover their current operating expenses. Id. Plaintiffs and their counsel have been unable to ascertain another instance where a nonprofit environmental organization acting as private attorney-general has been required to post a significant bond pending appeal, except one case in which the plaintiff group failed to submit evidence that obtaining a bond would impose a hardship. Save Our Sonoran, Inc. v. Flowers, 408 F.3d 1113 (9th Cir. 2005). The plaintiff groups have relied upon the past history of the court waiving bonds for public interest litigation, and therefore have not sought grants or other funding to cover that unusual requirement. Thus, requiring bonding would impose a severe hardship on the plaintiffs. E. No Purpose Would Be Served By Requiring a Surety

The Sierra Club has been in existence for 115 years (Hamilton Decl. ¶ 3), and, as the nation's oldest environmental organization, will not go out of business or lose its assets pending appeal. Thus, no purpose would be served by requiring a surety. A supersedeas bond is a purely procedural mechanism that preserves the status quo during a stay pending appeal of a district court decision. Bass v. First Pac. Networks, Inc., 219 F3d 1052, 1055 (9th Cir. 2000). The rationale for requiring a bond pending appeal is "to secure the judgment throughout the appeal 8

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process against the possibility of the judgment debtor's insolvency." Grubb v. Federal Deposit Ins. Corp., 833 F.2d 222, 226 (10th Cir.1987). See also Poplar Grove Planting and Refining Co. v. Bache Halsey Stuart, Inc., 600 F.2d 1189, 1190 (5th Cir.1979) (supersedeas bond is intended to "preserve the status quo while protecting the non-appealing party's rights pending appeal"). Thus, in Federal Prescription Service, Inc. v. American Pharmaceutical Assoc., the court granted a stay of the monetary judgment pending appeal without the posting of any bond or alternative security, where the appellant's net worth was forty-seven times that of the judgment, so that the judgment creditor's interest in the ultimate recovery was not endangered. 636 F.2d 755, 760-61 (D.C. Cir. 1980). While the posting of a bond would severely impact both plaintiff organizations' ability to carry out their respective public interest purposes, as detailed in the attached declarations, absent any evidence that the judgment would somehow become uncollectible or less collectible a year or so from now, requiring a surety would serve no purpose. Furthermore, should plaintiffs prevail on appeal, the cost of the bond premium is a recoverable cost item. Thus, it could in fact harm defendants for the court to require a supersedeas bond. II. IN THE ALTERNATIVE, IF THE COURT DOES REQUIRE A SURETY, A LETTER OF CREDIT FROM SIERRA CLUB SHOULD BE ALLOWED As discussed supra, even outside of the public interest arena, the courts have waived the requirement of a supersedeas bond where purchasing the bond would impose a financial hardship. In some of those cases, the courts have allowed the posting of an irrevocable letter of credit as an alternative form of surety. In this instance, plaintiffs have learned that obtaining a supersedeas bond would require not only the purchase of the bond premium (at 2%) but also the

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posting of full collateral in the form of an irrevocable letter of credit (an additional 2%). If the Court orders a surety, a letter of credit would be issued on Sierra Club's behalf by Wells Fargo Bank, which has a triple A rating. Hamilton Decl. at ¶ 11. Thus, a letter of credit would serve the exact same purpose as posting of a supersedeas bond ­ providing full assurance of payment ­ but would cost only half as much as a bond. If Sierra Club posts a surety in order to obtain a stay, that stay should be effective as to both plaintiffs. Although plaintiffs have not located Tenth Circuit or Colorado authority to that effect, this approach makes sense; and the only case law plaintiffs' counsel has located on that unusual issue so holds. See, e.g., Thomas v. Thomas, 917 S.W.2d 425, 431 (Tex. App. - Waco, 1996); Freedom Insurors, Inc. v. M.D. Moody & Sons, Inc., 869 So.2d 1283, 1284 (Fla. App. 4 Dist. 2004); Brown v. Drennan, 347 So.2d 955, 955, on reconsid. on other grds, 358 So.2d 963 (La. App. 4 Cir. 1977). Although, as discussed supra, plaintiffs' counsel knows of only one case where a public interest plaintiff was required to post a substantial surety for a stay (beyond a nominal bond amount of $100 to $1000), plaintiffs request that if the Court does not waive the requirement of surety or require a nominal bond, that the Court allow plaintiff Sierra Club to submit an irrevocable letter of credit in lieu of a supersedeas bond on behalf of both plaintiffs. Although this too would impose a hardship on the Club (Hamilton Decl. at ¶¶ 11-12 ; D'Esposito Decl. at ¶¶15-16), the hardship would be less severe than would the purchase of a supersedeas bond. Plaintiffs request that, if such surety is required, the amount be limited to $50,000 which would greatly exceed the nominal bonds imposed by other courts on environmental organizations.

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III.

IF THE COURT DOES REQUIRE A SURETY, THE AMOUNT OF THE SURETY SHOULD BE SET AT $50,000 FOR LETTER OF CREDIT OR $25,000 FOR A BOND Plaintiffs request that, if the Court does require posting of a surety (either a letter of credit

or a bond), that the Court limit the amount. Given the public interest factors and the financial hardships described supra, and the fact that the Sierra Club is a fully solvent, longstanding organization, the Court should require no more than a $50,000 letter of credit amount. If the Court imposes a bonding requirement, since that would cost twice as much to purchase, plaintiffs request that the Court require no more than a $25,000 bond. The district court has inherent discretionary authority to set the amount of the bond. Miami Intern. Realty Co. v. Paynter, 807 F.2d 871, 873 (10th Cir. 1986). In doing so, the court considers several factors in determining whether to waive the full supersedeas bond requirement: (1) the complexity of the collection process; (2) the amount of time required to obtain a judgment after it is affirmed on appeal; (3) the degree of confidence that the district court has in the availability of funds to pay the judgment; (4) whether the appellant's ability to pay the judgment is "so plain that the cost of a bond would be a waste of money"; and (5) whether the appellant is in such a precarious financial situation that the requirement to post a bond would place appellant's other creditors at risk. Dillon v. City of Chicago, 866 F.2d 902, 904-05 (7th Cir. 1988). Thus, in Dillon, the court waived the appeal bond requirement because the plaintiff (a city) demonstrated the existence of previously appropriated and available funds for the purpose of paying judgments without substantial delay or other difficulty. 866 F.2d at 904-05. See also Fowler v. Unified School Dist. No. 259, 907 F. Supp. 348 (D. Kan. 1995), rev'd on other grds, 107 F.3d 797 (10th Cir. 1997), cert. granted, vacated on other grds, 521 U.S. 1115, 117 S. Ct. 11

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2503 (1997) (school district had sufficient funds and procedures to warrant waiver of bond pending appeal). Courts have held that the full bond requirement may be waived if the appellant demonstrates a present financial ability to respond to the judgment that is likely to continue, or, that defendant's present financial condition is such that posting a full bond would impose an undue financial burden. See Poplar Grove, 600 F.2d at 1191; Federal Prescription Service, Inc. v. American Pharmaceutical Assoc., 636 F.2d 755, 761 (D.C. Cir. 1980); Advanced Estimating System, Inc. v. Riney, 171 F.R.D. 327, 328 (S.D. Fla. 1997); Arrigan v. Hull, 125 F.R.D. 185, 186 (S.D. Fla. 1989); Schreiber v. Kellogg, 839 F. Supp. 1157, 1159 (E.D. Pa. 1993); Miami Intern. Realty Co. (imposing bond of less than judgment amount, where full amount posed a financial burden). Thus, if the Court does not deem full waiver appropriate, plaintiffs respectfully request that the Court limit the amount of the surety required, as explained above. III. CONCLUSION Based upon this brief and the declarations submitted herewith, plaintiffs respectfully request that the Court stay the monetary award and judgment pending appeal, and waive the requirement of a surety. In the alternative, if the Court does impose the requirement of a surety beyond the nominal amount typically required, plaintiffs request that the Court allow a letter of credit, and set the surety at an amount not to exceed $50,000 (or $25,000 if a bond requirement is imposed). CONSULTATION UNDER LOCAL RULE 7.1(a) Counsel for Plaintiffs hereby certifies that they consulted with counsel for Defendants regarding the issues in this Motion, and made best efforts to resolve the issues presented herein. 12

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Counsel for Defendants informed counsel for Plaintiffs that they do not consent to any stay or waiver bond amount. Dated: January 22, 2007 s/ Jeffrey Parsons _________________________ Jeffrey Parsons, Esq. Roger Flynn, Esq. Western Mining Action Project P.O. Box 349 Lyons, CO 80540 (303) 823-5738 [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]

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CERTIFICATE OF SERVICE I hereby certify that on this 22nd day of January 2007, I electronically filed the foregoing Motion to Stay Judgment Pending Appeal and to Waive Bond, Or in the Alternative, To Allow a Letter or Credit and Reduced Bond with the Clerk of the Court using the CM/ECF system which will send notification of such filing to the following e-mail addresses: [email protected] Eugene Riordan Vranesh & Raisch P.O. Box 871 Boulder, CO 80306 [email protected] Craig R. Carver Carver, Kirchhoff, Schwartz McNab & Bailey, P.C. 1600 Stout Street, Suite 1700 Denver, CO 80202 [email protected] Don H. Sherwood 10861 West 28th Place Denver, CO 80215 [email protected] Robert C. Troyer Hogan & Hartson L.L.P. 1200 17th Street, #1500 Denver, CO 80202

s/ Jeffrey C. Parsons _____________________ Jeffrey Parsons

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