Free Brief in Support of Motion - District Court of Colorado - Colorado

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 04-cv-1263-PSF-OES ROBERT M. FRIEDLAND, Plaintiff, v. TIC--THE INDUSTRIAL COMPANY and GEOSYNTEC CONSULTANTS, INC. f/k/a GEOSERVICES, INC Defendants. ______________________________________________________________________________ DEFENDANT TIC ­ THE INDUSTRIAL COMPANY'S MEMORANDUM BRIEF IN SUPPORT OF ITS MOTION FOR SUMMARY JUDGMENT ______________________________________________________________________________

Defendant TIC ­ The Industrial Company ("TIC") hereby submits its memorandum brief in support of its motion for summary judgment in favor of TIC and against Plaintiff Robert M. Friedland on all claims asserted in his Amended Complaint. I. INTRODUCTION

This lawsuit represents Plaintiff Robert M. Friedland's ("Friedland's") latest attempt to find someone else to pay for the massive environmental problems caused by his companies' operation of the Summitville Mine Site ("Mine" or "Site") in Southwestern Colorado. On December 22, 2000, Friedland entered into a consent decree, pursuant to which he paid approximately $20 million to the United States and the State of Colorado to resolve claims brought against him for recovery of the costs spent responding to environmental contamination at the Mine. During the relevant time period, the Mine had been operated by the Summitville

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Consolidated Mining Company, Inc. ("SCMCI"), a subsidiary of Galactic Resources, Ltd. and Galactic Resources, Inc. (collectively, "Galactic"), companies operated by Friedland. According to the government, Friedland's companies knowingly engaged in a number of illegal practices to dispose of hazardous substances, resulting in forty felony counts, while representing to governmental authorities that they were operating in compliance with their permits. In this lawsuit, Friedland seeks contribution under Section 113 of the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. § 9613, claiming that TIC "operated" the Site at the time of disposal and "arranged" for the disposal of hazardous substances. CERCLA, however, does not impose liability on contractors like TIC who have no authority or control over operations, exercise no decision-making with regard to hazardous substances, and have no obligation or duty to exercise control over hazardous substances. Because the undisputed evidence in this case establishes that TIC had no control over any operations at the Site, and had no decision-making authority with respect to hazardous substances, it cannot be considered an operator or arranger under CERCLA. II. BACKGROUND

In the early 1980s, Galactic, with Plaintiff Robert M. Friedland as an executive, developed a plan to construct and operate a large open pit heap leach mine the Site, located approximately 25 miles south of Del Norte, Colorado. Ex. A-1, Plea Agreement at 5; Amended Complaint at ¶ 2. The Site had been mined intermittently since the 1870s. Ex. A-2, Litigation Referral at 1-3. To effectuate its mining plan, SCMCI contracted with Bechtel to, in Friedland's words, "operate, design, construct, and guarantee the performance of the Summitville Mine." Ex. A-3,

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Friedland's Resp. to Bechtel's Mot. to Dismiss at 3 (emphasis in original). Pursuant to Bechtel's contract with SCMCI, Bechtel was responsible for "the total construction of the Project, furnishing all necessary labour, materials, equipment and tools for such construction." Ex. A-4, Contract between SCMCI and Bechtel at 2. The contract also stated that Bechtel "shall bear total and joint and several responsibility to [SCMCI] for the construction of the project, including total and joint and several responsibility for the labour performed on and incorporated into the Project by the company known as The Industrial Company of Steamboat Springs (TIC)." Id at 3. Pursuant to Bechtel's contractual authority, "Bechtel reviewed and approved of all major contracts for construction and operation at the Summitville site in 1985-86...." Ex. A-5, Friedland's Resp. to Bechtel's Mot. for Summ. J. at 13. Bechtel also "reviewed and signed off on all significant aspects of mine design and construction, including the heap leach pad design." Id. at 12. As Friedland explained Bechtel's role, "Bechtel undertook to analyze and provide its approval for all work performed on or at the Summitville Mine by any party." Ex. A-3, at 6 (emphasis added). In contrast, TIC's role was limited to that of a subcontractor whose work was contractually and actually controlled by Bechtel. TIC's contract with SCMCI explicitly stated that "[TIC] is responsible for following the directions of BECHTEL regarding the implementation of this project....[SCMCI] has retained BECHTEL...as its project agent...." Ex. A-6, TIC Construction Contract at 1. SCMCI left no doubt as to the meaning of this provision, explaining in a letter to TIC that: "Bechtel will act ... as Summitville's fully authorized agent ... any instruction ... issued by Bechtel to TIC shall be considered to be of the same effect as if issued directly by [SCMCI]," and that "instructions to TIC concerning the work under this

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Contract are to be issued directly to [sic] Bechtel, and any questions regarding such instructions which TIC may have shall be directed only to Bechtel." Ex. A-7, Letter from Edward Roper to Ed Vanderwall. The undisputed facts demonstrate that SCMCI and Bechtel, not TIC, were in control of this construction project. James Painter, TIC's Project Coordinator, who was on-site throughout TIC's involvement at the Mine, testified that "Bechtel provided the overall project management, design engineering, and construction management and provided the field supervisors who directed and oversaw all of TIC's activities." Ex. A-8, James Painter Aff. at 2. "TIC did what Bechtel asked, when they asked." Id. Ex. A-8, James Painter Aff. at 2. James Chiaro, a TIC General Foreman, stated that Bechtel "micro-managed TIC's construction activities. Bechtel told TIC what areas to work in, what kind of equipment to use, and how many TIC laborers to use in each area." Ex. A-9, James Chiaro Aff. at 1-2. TIC Project Critiques written immediately following TIC's departure from the Site expressed similar sentiments. One critique noted that "Bechtel field supervision takes complete control" and that Bechtel was "not willing to listen to TIC's suggestions." Ex. A-10, TIC Project Critique at 5. Another critique exclaimed: "Most of the time [Bechtel] observed no chain of command, and often directed our people, down to craftsman!" Ex. A-11, TIC Project Critique at 2. It is also undisputed that TIC had completed all of its assigned construction activities before SCMCI began its cyanide leaching operations. TIC began demobilization of its concrete equipment and field offices at the Mine on January 27, 1986. Ex. A-12, Weekly Report at RMFried 1398. TIC formally ended its activity relating to the project with the execution of a

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Final Release and Lien Waiver to SCMCI on April 9, 1986. Ex. A-13, Final Release. The heap leaching operation did not begin until on or about June 5, 1986, almost two months later. Ex. A14, Heap Leach System Report at 17. Following an EPA investigation, SCMCI entered into a Plea Agreement acknowledging that SCMCI's and Galactic's operation of the Site was "replete with continuing unauthorized activities" that deviated from what governmental authorities had been told in permitting applications, and pled guilty to forty felony counts. Ex. A-1, at 1, 7. EPA took control of the Site on December 16, 1992. Ex. A-2, at 10. On May 23, 1996, the United States and the State of Colorado brought an action against Friedland in this Court to recover costs incurred in responding to environmental contamination at the Site. Am. Compl. ¶ 2. Friedland responded by joining Bechtel, Industrial Constructors Corporation ("ICC"), and 11 other entities as third party defendants. Ex. A-15, Third-Party Compl. at 1. Neither Friedland nor any of those third party defendants, including Bechtel, asserted any claim against TIC. On December 22, 2000, Friedland entered into a consent decree resolving the claims against him. Am. Compl. ¶ 4. This Court approved the consent decree on June 20, 2001, pursuant to which Friedland agreed to pay approximately $20 million to the United States and the State of Colorado. Id. On June 18, 2004, two days before CERCLA's three year statute of limitations on contribution claims was set to expire, Friedland filed this action seeking contribution from TIC. Because CERCLA does not impose liability on subcontractors who carry out the orders of others and have no authority or participation in decision-making, TIC is entitled to judgment as a matter of law.

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III.

STATEMENT OF UNDISPUTED MATERIAL FACTS A. Friedland's Control

1.

SCMCI was a wholly owned subsidiary of Galactic Resources, Incorporated

("GRI") which, in turn, was a wholly owned subsidiary of Galactic Resources, Ltd. ("GRL"). Ex. A-16, Friedland Dep. at 594:2-5. 2. Friedland was a founder of GRL in 1979 and was one of its two major initial

shareholders. Ex. A-2, at 21. 3. Friedland was a director of GRL from March 23, 1981, through November 2,

1990. Friedland was President of GRL from June 12, 1981, through June 15, 1984, and then again from June 18, 1987, through February 21, 1990. Ex. A-16, at 16:3-16:25. 4. Friedland was Chairman of the Board and CEO of GRL from June 15, 1984,

through June 8, 1990. Id. at 18:5-18:21. 5. Friedland was a director and President of GRI from June 3, 1986, through January

12, 1987. Id. at 25:6-25:17. 6. Friedland was a director and President of SCMCI from April 26, 1984, through

January 12, 1987. Ex. A-16, at 25:18-26:14. 7. In the early 1980s, Galactic, with Friedland as a corporate executive, developed a

plan to operate the Mine using cyanide to extract gold from ore through a process known as heap leaching. Ex. A-1, at 5. 8. Galactic and SCMCI exercised full control over operations and environmental

compliance at the Site except for those operations which were the responsibility of Industrial Constructors Corporation. Ex. A-5, at 4.

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9.

In July 1986, after SCMCI detected cyanide leakage through the heap leach pad,

Friedland testified before the Colorado Mined Land Reclamation Board ("CMLRB") that: "The Summitville heap leach facility is something that I've been working on now for five years. It's been the focus of my life...." He went on to testify: In order to correct those kinds of problems onsite, I've suggested to your staff and I'm determined that we will hire a senior member of our organization who is responsible, if you will, as an environmental ombudsman onsite to work with the members of your staff and to work within our own organization to make sure that we remain highly responsive to any environmental issue that might arise as we go through the design of a redundant facility and as we grapple with any other issues that may arise. And, then we can see to it that that person, whom we will be hiring shortly, will also be responsible for communicating directly with myself and our Board.... Ex. A-17, transcript of CMLRB meeting at 7-8. B. Bechtel and TIC Contracts 10. On June 1, 1985, SCMCI entered into a contract with Bechtel pursuant to which

Bechtel was responsible for "the total construction of the Project, furnishing all necessary labour, materials, equipment and tools for such construction." Ex. A-4, at 2. 11. The Bechtel contract stated that Bechtel "shall bear total and joint and several

responsibility to [SCMCI] for the construction of the project, including total and joint and several responsibility for the labour performed on and incorporated into the Project by the company known as The Industrial Company of Steamboat Springs (TIC)...." Id. at 3. 12. SCMCI retained Bechtel as its project agent and "granted to BECHTEL full

responsibility and authority to act on behalf of [SCMCI] for the purposes of enforcing [SCMCI]'s rights and carrying out its duties hereunder." Ex. A-6, at 1.

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13.

On July 11, 1985, SCMCI entered into a contract with TIC pursuant to which TIC

was required to follow Bechtel's direction. Specifically, the contract provided that: "[TIC] is responsible for following the directions of BECHTEL regarding implementation of this project." Id. at 1. 14. The TIC contract provided that Bechtel had the authority to require TIC to

remove any TIC employee that Bechtel felt was unfit. Id. at RMFried 3611. 15. A July 22, 1985, letter from SCMCI to TIC confirmed the contractual relationship

between TIC and Bechtel. In that letter, SCMCI informed TIC that Bechtel was "designated the agent" of SCMCI; that "any instruction...issued by Bechtel to TIC shall be considered to be of the same effect as if issued directly by [SCMCI]" and that "instructions to TIC concerning the work under this Contract are to be issued directly to [sic] Bechtel, and any questions regarding such instructions which TIC may have shall be directed only to Bechtel." Ex. A-7. C. Bechtel's Control 16. Friedland stated in prior litigation that "Bechtel had significant design and

operational control over the entire site as a result of its global agreements." Ex. A-5, at 25. 17. Bechtel undertook to analyze and provide its approval for all work performed on

or at the Summitville Mine by any party. Ex. A-3, at 6. 18. "The construction records show that Bechtel clearly managed and directed those

activities for which it was responsible." Ex. A-18, Sittner Supplemental Expert Report (for Friedland) at 16. 19. An October 24, 1985, letter from SCMCI to the Colorado Mined Land

Reclamation Division stated: "We are presently in the construction phase of work at

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Summitville. Bechtel Civil and Minerals is our construction manager for civil, mechanical, structural, electrical and instrumentation engineering, procurement, and ancillary facilities. They supervise work by...The Industrial Company [TIC]." Ex. A-19, Letter from Roger Leonard to Phillip Saletta at 1. 20. A chart of the "Summitville Mine Project Organization As of 9/9/1985," shows

that TIC performed its "Construction" activities under Bechtel. Ex. A-20, Organization Chart. 21. Bechtel provided the overall project management, design engineering, and

construction management and provided the field supervisors who directed and oversaw all of TIC's activities. TIC did what Bechtel asked, when they asked. Ex. A-8, at 2. 22. Bechtel micromanaged TIC's construction activities and told TIC what areas to

work in, what kind of equipment to use, and how many TIC laborers to use in each area. Ex. A9, at 1-2. 23. A TIC Project Critique written immediately following TIC's departure from the

Site noted that "Bechtel field supervision takes complete control," and that Bechtel "was not willing to listen to TIC's suggestions." Ex. A-10, at 5. Another noted: "Most of the time [Bechtel] observed no chain of command, and often directed our people, down to craftsman!" Ex. A-11, at 2. D. Friedland's Allegation Regarding the Heap Leach Pad 24. TIC never had possession, control, or ownership of cyanide at the Mine and TIC

completed its construction work before cyanide leaching began in the heap leach pad ("HLP"). Ex. A-8, at 2; Ex. A-9, at 2.

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25.

The heap leaching operation did not begin until on or about June 5, 1986, almost

two months after TIC had formally ended its involvement at the Site. Ex. A-14, at 17. 26. Bechtel designed and constructed two huge well can structures at the lowest levels

of the leach pad. Ex. A-5, at 2. E. Friedland's Allegation Regarding Acid Rock Drainage 27. TIC did not dispose of any earthen materials at the Mine and had no involvement

with decision-making regarding the disposal of earthen materials. Ex. A-8, at 2; Ex. A-9, at 2. 28. TIC's contract with SCMCI stated that SCMCI would retain title to earthen

materials and the right to use or dispose of these materials and that SCMCI would provide "common backfill materials at a location not to exceed 300 feet from point of use." Ex. A-6, at RMFried 3613, 3681. 29. In prior litigation, Friedland stated that "[s]ignificant earthwork projects at this

already-disturbed historic mine site were directed and controlled by Bechtel, including clearing and grading of pads and roadways, blasting and excavation of rock and construction of the `barren pond' which housed the mine's cyanide solution, as well as a charcoal filter pond." Ex. A-5, at 2. 30. Edward C. Roper, an officer and director in both SCMCI and Galactic, stated that

he personally "had no role in the selection of waste disposal methods or locations," but that the "mine site personnel, in consultation with [two contractors, neither of whom were TIC], chose the methods and locations of waste (and ore) sites." Ex. A-21, Letter from Edward Roper to David Broste at 5. On the surrounding pages, Mr. Roper repeatedly refers to "mine site

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personnel" supervising and interacting with the various consultants and contractors at the Site, including Bechtel and ICC. See, e.g., Id. at 4. 31. Construction related earthwork activities at the Site were not done for the purpose

of waste disposal. Dr. Andy Davis, Friedland's hired expert in prior litigation, testified: "The clay ore stockpile, roads, diversion ditches, and process-related ponds were constructed in the normal course of mine operations. None of these features were used for the purpose of handling, storage, disposal, processing, or treatment of waste nor did such activities take place in those features." Ex. A-22, Andy Davis Affs., at ¶11. F. Duration of TIC's Involvement at the Mine 32. SCMCI gave TIC notice to proceed at the Site on July 24, 1985, and TIC began to

mobilize equipment and labor that same day. Ex. A-23, Progress Report at RMFried 1245, 1247. 33. TIC began demobilization of its concrete equipment and field offices at the

Summitville Mine Site on January 27, 1986. Ex. A-12, at RMFried 1398. 34. TIC formally ended its involvement at the Site with the execution of a Final

Release and Lien Waiver to SCMCI on April 9, 1986. Ex. A-13. G. Mining Operations 35. SCMCI's operation of the Site was replete with continuing unauthorized activities

that deviated from what governmental authorities had been told in permitting applications. Ex. A-1, at 7. 36. In a Plea Agreement and Statement of Facts, SCMCI pled guilty to forty felony

counts. Id. at 1. 37. EPA took control of the Site on or about December 16, 1992. Ex. A-2, at 10.

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38.

On May 23, 1996, the United States and the State of Colorado brought an action

against Friedland in this Court to recover costs incurred in responding to environmental contamination at the Site. Friedland joined Bechtel, ICC, and 11 other entities as third party defendants. No claims were asserted against TIC. Ex. A-15, Third-Party Complaint at 1. 39. On December 22, 2000, Friedland entered into a consent decree resolving the

claims against him. This Court approved the consent decree on June 20, 2001, pursuant to which Friedland agreed to pay approximately $20 million to the United States and the State of Colorado. Am. Compl. ¶ 4. IV. STANDARD OF REVIEW

Summary judgment is appropriate where the record shows that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. F.R.C.P. 56(c). Although all facts must be taken in the light most favorable to Friedland, he may not "rest upon mere allegations or denials," but rather must "set forth specific facts showing that there is a genuine issue for trial." F.R.C.P. 56(e). There can be no genuine factual dispute on issues for which Friedland has offered no proof. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-24 (1986) ("[T]he plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, on which that party will bear the burden of proof at trial"). "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Sanchez v. Denver Pub. Schs., 164 F.3d 527, 531 (10th Cir. 1998) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).

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V. A.

ARGUMENT

TIC Is Not a CERCLA "Covered Person"

To establish liability under CERCLA, Friedland must prove, among other things, that TIC is either an "operator" or an "arranger." Morrison Ent. v. McShares, Inc., 302 F.3d 1127, 1136-36 (10th Cir. 2002). Because the undisputed evidence establishes that TIC is neither an operator nor an arranger, TIC is entitled to summary judgment. 1. TIC Is Not an Operator TIC is not an operator under CERCLA because it did not, at the time of disposal, "direct the workings of, manage, or conduct the affairs of" the Site, activities specifically related to pollution, or decisions about compliance with environmental regulations. United States v. Bestfoods, 524 U.S. 51, 66-67 (1998); 42 U.S.C. § 9607(a)(2). The focus of this inquiry is the degree of control exercised by the alleged operator. As the Supreme Court explained: In our enquiry into the meaning Congress presumably had in mind when it used the verb "to operate," we recognized that the statute obviously meant something more than mere mechanical activation of pumps and valves, and must be read to contemplate "operation" as including the exercise of direction over the facility's activities. Id. at 71 (emphasis added). This Court has likewise noted in post-Bestfoods litigation involving Friedland that the "dominant explication," adopted by eight different federal circuit courts, sees an operator as "someone actively involved in running the facility, typically on a day-to-day, managerial basis." United States v. Friedland, 173 F. Supp. 2d 1077, 1094-95 n.4 (D. Colo. 2001) (emphasis added). Friedland's own discussion of operator liability in the present case makes clear that the touchstone of the inquiry is control. Friedland points to the Fifth Circuit's decision in Geraghty

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& Miller, Inc. v. Conoco Inc., 234 F.3d 917 (5th Cir. 2000) as his exemplar of a court "appropriately apply[ing] Bestfoods." Plaintiff's Resp. in Opp. to Geosyntec's Mot. for Summ. J., at 35. The Geraghty court's discussion of operator liability, spanning less than a full page, includes references to "control," "degree of control," "great deal of control," "ultimately controlled," and "degree of [the defendant's] control." Geraghty, 234 F.3d at 928-29. Based on this standard, TIC cannot be held liable as an operator as a matter of law. It was Friedland and his companies, not TIC, who had control over the Site. In July 1986, after SCMCI detected cyanide leakage through the HLP, Friedland testified to the Colorado Mined Land Reclamation Board that the Mine had been the focus of his life for five years. He told the Mined Land Reclamation Board that he would hire an "environmental ombudsman" to report directly to him. Ex. A-17, at 7-8. In addition, Friedland unambiguously admitted in previous litigation that his own companies, Galactic and SCMCI, "exercised full control over operations and environmental compliance at the site except for those operations which were the responsibility of ICC." Ex. A-5, at 4. SCMCI, in turn, delegated day-to-day construction management responsibility to Bechtel. "Bechtel had significant design and operational control over the entire site as a result of its global agreements." Ex. A-5, at 25.1 Bechtel's contract with SCMCI charged Bechtel with "the total construction of the Project, furnishing all necessary labour, materials, equipment and tools for such construction." Ex. A-4, at 2. Bechtel's contract also stated that Bechtel "shall bear total

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In addition to the absence of factual support for Friedland's allegations against TIC, Friedland's past allegations against Bechtel also contradict them. In the same paragraph in which Friedland asserted Bechtel's "significant design and operational control over the entire site," Friedland also stated that "Bechtel was directly responsible for significant earthworks at the mine site" through two subcontractors (neither of whom were TIC), and that Bechtel "designed and constructed" the two large well cans. Friedland now claims that TIC was responsible for those activities. Ex. A-5, at 25; Amended Complaint ¶¶ 18-19, 22.

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and joint and several responsibility to [SCMCI] for the construction of the project, including total and joint and several responsibility for the labour performed on and incorporated into the Project by the company known as The Industrial Company of Steamboat Springs (TIC)...." Id at 3. In contrast, TIC had no involvement in running the facility, and in fact, was not even in charge of its own affairs. TIC's contract with SCMCI explicitly stated that "[TIC] is responsible for following the directions of BECHTEL regarding the implementation of this project." Ex. A6, at 1. The contract even gave Bechtel the authority to require TIC to remove any TIC employee that Bechtel felt was unfit. Id. at RMFried 3611. SCMCI made clear that Bechtel was in control of TIC in a July 1985 letter. In that letter, SCMCI told TIC that Bechtel was SCMCI's agent, that "any instruction...issued by Bechtel to TIC shall be considered to be of the same effect as if issued directly to [sic] [SCMCI]," and that "instructions to TIC concerning the work under this Contract are to be issued directly by Bechtel, and any questions regarding such instructions which TIC may have shall be directed only to Bechtel." Ex. A-7. Bechtel used its control to micro-manage TIC's construction activities. Ex. A-9, at 1. Bechtel told TIC what areas to work in, what kind of equipment to use, and how many TIC laborers to use in each area. Id. at 1-2. Bechtel was not even willing to listen to TIC's suggestions. Ex. A-10, at 5. SCMCI told governmental authorities that Bechtel was directing TIC: "We are presently in the construction phase of work at Summitville. Bechtel Civil and Minerals is our construction manager for civil, mechanical, structural, electrical and instrumentation engineering, procurement, and ancillary facilities. They supervise work by...The Industrial Company [TIC]...." Ex. A-19, at 1

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Despite Friedland's and SCMCI's own prior words and the undisputed evidence regarding TIC's total lack of control, Friedland now alleges that TIC had "broad authority over all construction activities on Site" and "managed," "directed," and "controlled" "extensive earthwork" at the Mine, a position contrary to that taken by Friedland in his claims against Bechtel. Ex. A-24, Friedland's Resp. to TIC Interrogatories at 4, 6; Amended Complaint at ¶¶ 18, 22. Courts that have addressed contractor situations have concluded that summary judgment was appropriate for contractors who have had a dramatically more significant role than TIC's. See, e.g., Edward Hines Lumber Co. v. Vulcan Materials Co., 861 F.2d 155, 157, vac't in part on other grounds (7th Cir. 1988). In Hines, the Seventh Circuit affirmed summary judgment in favor of a contractor who designed and built the facility at issue, provided the hazardous substance at issue, trained the plaintiff's employees, and reserved the right to inspect operations following its departure from the Site. Id. at 157. That degree of control goes beyond even that exerted by Bechtel at the Site, and it bears no resemblance to TIC's role as a construction subcontractor. Nonetheless, that court granted summary judgment in favor of the contractor. Id. The court drew a distinction between the proper roles of entities such as architects, engineers, construction contractors and instructors, and the party that actually owned or operated the Site: The statute does not fix liability on slipshod architects, clumsy engineers, poor construction contractors, or negligent suppliers of on-the-job training--and the fact that Osmose might have been all four rolled into one does not change matters. The liability falls on owners and operators; architects, engineers, construction contractors, and instructors must chip in only to the extent they have agreed to do so by contract. Id. at 158-59.

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The undisputed evidence shows that TIC did not exercise direction over the facility's activities (Bestfoods, 524 U.S. at 71) and was not actively involved in running the facility (Friedland, 173 F. Supp. 2d at 1094-95 n.4). Far from being hired to exercise any sort of control, TIC was a subcontractor hired to perform certain construction tasks at the direction of Bechtel. CERCLA requires more, imposing liability on the basis of exercising direction over a facility, running a facility, or, put more simply, control over the facility. In light of the overwhelming evidence that Bechtel was given the contractual authority to and did in fact direct and supervise TIC's work, and that Bechtel, in turn, was subject to the operational control of Friedland's entities, it strains credulity at this late date to now suggest that TIC had control such that it "operated" the facility. Moreover, even if TIC had a sufficient level of control to be held liable as an operator, its activities at the Site ended before any cyanide was released. The undisputed evidence shows that TIC formally ended its involvement at the Site on April 9, 1986. Ex. A-13. An entity can only be liable as an "operator" under CERCLA if it controlled an operation specifically related to pollution at the time of disposal. Bestfoods, 524 U.S. at 66-67; 42 U.S.C. § 9607(a)(2). Since SCMCI did not begin cyanide leaching in the HLP until on or about June 5, 1986, approximately two months after TIC formally ended its involvement at the Mine, TIC cannot be an "operator" with respect to any releases or threatened releases of cyanide or other hazardous substances from the HLP. Ex. A-14, at 17. Because TIC, at the time of disposal, did not manage, direct, or conduct any operations at the Mine dealing with leakage or disposal of hazardous waste and was not involved with any

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decision regarding compliance with environmental regulations, TIC is entitled to judgment as a matter of law on Friedland's operator claim. 2. TIC Is Not an Arranger Friedland also alleges that TIC is liable as an "arranger." An arranger is "any person who by contract, agreement, or otherwise arranged for disposal or treatment, or arranged with a transporter for transport for disposal or treatment, of hazardous substances owned or possessed by such person, by any other party or entity, at any facility or incineration vessel owned or operated by another party or entity and containing such hazardous substances." 42 U.S.C. § 9607(a)(3). "A prima facie case of arranger liability requires a showing that: (1) the substances disposed of were `hazardous' under CERCLA; (2) the liable party `owned or possessed' the substances; and (3) the liable party `arranged for' disposal of the substances." Friedland, 173 F. Supp. 2d at 1099. This Court has adopted the Eleventh Circuit's approach to determine whether a party "arranged for" disposal. Friedland, 173 F. Supp. 2d at 1099 (adopting the test from South Fla. Water Mgmt. Dist. v. Montalvo, 84 F.3d 402, 406-07 (11th Cir. 1996)). This approach evaluates factors such as knowledge of the disposal, ownership of the hazardous substances, and intent. Montalvo, 84 F.3d at 406-07. TIC is entitled to summary judgment on this issue for the reasons discussed below. a. TIC Does Not Meet This Court's Arranger Liability Standard With Respect to Releases from the HLP

Friedland alleges that TIC is an arranger because the HLP leaked cyanide solution due to improper construction of Well Can No. 1. Amended Complaint, ¶¶ 20-21. To be held liable as an arranger, TIC must have ownership or possession of the hazardous substance(s) at issue. 42 U.S.C. § 9607(a)(3); Raytheon Constructors, Inc. v. ASARCO, Inc., 368 F.3d 1214, 1219 (10th

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Cir. 2003). In this case, however, TIC formally ended its involvement at the Site with the execution of a Final Release and Lien Waiver on April 9, 1986. Ex. A-13. Cyanide solution was not used at the Site until on or about June 5, 1986. Ex. A-14, at 17. Thus, the cyanide solution was not used at the Site until a minimum of two months after TIC's involvement formally ended. Moreover, the evidence is undisputed that TIC had no involvement whatsoever with the use of cyanide at the Site. Exs. A-8 and A-9, at 2. Consequently, TIC did not own or possess the cyanide solution and cannot be held liable as an arranger with respect to the cyanide solution. b. TIC Does Not Meet This Court's Arranger Liability Standard With Respect to Acid Rock Drainage

Friedland also alleges that TIC "substantially caused and/or contributed to" acid rock drainage via the generation of waste rock that Friedland alleges resulted from earth clearing and road building activities. Amended Complaint, ¶ 22. TIC does not concede that it performed any of the earthwork activities alleged by Friedland. However, even if, for purposes of this motion, it is assumed TIC performed those activities, TIC cannot be held liable as an arranger because the undisputed evidence demonstrates that none of the relevant factors for arranger liability are met. TIC did not dispose of any earthen materials at the Mine, had no intent or knowledge that its activities would result in the disposal of hazardous substances, and had no "ownership," actual or constructive, because SCMCI retained title to the earthen materials and because TIC exercised no discretionary authority with regard to any hazardous substance. i. TIC Had No Intent or Knowledge

Friedland has not provided any evidence that TIC had any intent or knowledge that its activities would result in the disposal of a hazardous substance. In fact, one of Friedland's own experts stated unambiguously in earlier litigation that construction related earthwork activities

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were not done for the purpose of waste disposal. Ex. A-22, at ¶ 11. Dr. Andy Davis testified twice that "[t]he clay ore stockpile, roads, diversion ditches, and process-related ponds were constructed in the normal course of mine operations. None of these features were used for the purpose of handling, storage, disposal, processing, or treatment of waste nor did such activities take place in those features." Id. (emphasis added). TIC employees corroborate that testimony, testifying that TIC did not dispose of any earthen materials and was not involved with decisionmaking regarding the disposal of earthen materials. Exs. A-8 and A-9, at 2. ii. TIC Had No Ownership

TIC had no ownership, actual or constructive, because it did not retain title to any of the earthen materials allegedly resulting in ARD and it did not participate in decision-making regarding their disposal. TIC's contract with SCMCI explicitly stated that SCMCI would retain title to earthen materials and the right to use or dispose of these materials and that SCMCI would provide "common backfill materials at a location not to exceed 300 feet from point of use." Ex. A-6, at RMFried 3613, 3681. TIC had no constructive ownership because it did not participate in any decision to dispose of earthen materials. "Almost all courts that have held defendants liable as arrangers have found that the defendant had some actual involvement in the decision to dispose of waste." General Electric Co. v. AAMCO Transmissions, Inc., 962 F.2d 281, 286 (2d Cir. 1992). The best illustration of a court applying this requirement comes from this Court, in the earlier litigation involving Friedland. Friedland, 173 F. Supp. 2d at 1100. In that case, Friedland alleged that a corporation that was involved at the Site in the 1930s-40s was an arranger with regard to ARD

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resulting from the disposal of waste rock at the Mine--allegations that bear a striking similarity to those in the present case. Id. at 1100. This Court disagreed with Friedland, concluding that the record before the Court indicated that the corporation had "exercised no decision-making control with regard to the disposal of the hazardous waste." Id. at 1099 (emphasis added). Specifically, the Court noted that the evidence cited by Friedland in fact showed only isolated involvement, and noted that another company--not the alleged arranger--"made all fundamental decisions concerning the development of the facility," seemingly indicating that even low-level decision-making was not enough. Id. at 1100. As a result, the court concluded that the alleged arranger "possessed no discretionary authority with respect to disposal of the waste rock, and therefore neither owned nor possessed (either directly or constructively) the Summitville Mine waste." Id. The same holds true for the present case. As discussed in the operator liability section above, there is no evidence that TIC had any discretionary authority at the Site. Bechtel, an agent of SCMCI, directed all of TIC's activities at the Mine, pursuant to the control provision in TIC's contract with SCMCI. Ex. A-6, at 1. To the extent that TIC performed any alleged earthwork, it was controlled by Bechtel. As Friedland stated in prior litigation, "[s]ignificant earthwork projects at this already-disturbed historic mine site were directed and controlled by Bechtel." Ex. A-5, at 2. The only direct evidence regarding TIC disposal decision-making consists of the testimony of TIC employees that TIC had no involvement whatsoever with such decision-making. Exs. A-8 and A-9, at 2. Friedland has not provided any evidence that TIC exerted any control or had any discretionary authority at the Site over earthwork or waste disposal. To make a prima facie case

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for arranger liability, Friedland must show that TIC had decision-making authority specifically with regard to the decision as to where to dispose of waste. Ex. A-25, Order and Memorandum of Decision at 20-22 (granting Bechtel's motion for summary judgment on arranger liability). As Judge Nottingham explained in deciding Bechtel's motion for summary judgment on arranger liability: Bechtel neither controlled, nor had the authority to control, the decision where to deposit the waste at the Summitville Mine. The record before the court indicates that Bechtel exercised no decision-making control with regard to the disposal of the hazardous waste rock at the Summitville Mine. [Friedland] contend[s] that `Bechtel was actively and inextricably involved in making, directing and implementing critical project management and oversight decisions, decisions which led to the potential releases of hazardous substances at the site'.... In support of this proposition, [Friedland] note[s] that `[t]hrough its global role, its day-to-day operational and directional control over design, project coordination, earthmoving and installation of the well cans and its involvement in diagnosing and solving the cyanide leak problems, Bechtel exercised constructive possession and control over hazardous substances generated at the site' .... I disagree.... Third-party plaintiffs have proffered no evidence suggesting that Bechtel controlled, or had the authority to control, the actual decision where to deposit waste at the Summitville Mine. Absent such indicia of control, I cannot say that Bechtel constructively possessed the hazardous substances present at the Summitville Mine. Id. at 20-21. TIC did not dispose of any earthen materials at the Mine and had no involvement with decision-making regarding the disposal of earthen materials. Exs. A-8 and A-9, at 2. As a result, TIC had no constructive ownership of the waste rock that Friedland claims resulted in ARD. Unlike the companies in Carter-Jones Lumber Co. v. Dixie Distrib. Co., 166 F.3d 840, 846 (6th Cir. 1999), or United States v. TIC Investment Corp., 68 F.3d 1082, 1087-89 (8th Cir. 1995), TIC did not have "intimate participation in the arrangement for disposal" or "the authority to control and [actual exercise of control], directly or indirectly, over the arrangement for disposal...of hazardous substances." Because TIC had no actual or constructive ownership, and because TIC

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had no intent to dispose of hazardous substances, the Court should grant summary judgment in favor of TIC as a matter of law on Friedland's arranger liability claim. VI. CONCLUSION

For all of the foregoing reasons, Defendant TIC respectfully requests that the Court enter summary judgment in TIC's favor and against Plaintiff Robert M. Friedland on all claims for relief in Plaintiff's Amended Complaint, and that it grant such other and further relief as the Court deems just and reasonable.

Respectfully submitted this 8th day of February, 2006.

s/ Colin C. Deihl Colin C. Deihl, Esq. Faegre & Benson LLP 3200 Wells Fargo Center 1700 Lincoln Street Denver, CO 80203 Telephone: (303) 607-3651 FAX: (303) 607-3600 E-mail: [email protected] Delmar R. Ehrich, Esq. Faegre & Benson LLP 2200 Wells Fargo Center 90 South Seventh Street Minneapolis, Minnesota 55402 Attorneys for Defendant The Industrial Company

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CERTIFICATE OF MAILING

I hereby certify that on this 8th day of February, 2006, a true and correct copy of the foregoing DEFENDANT TIC ­ THE INDUSTRIAL COMPANY'S MEMORANDUM BRIEF IN SUPPORT OF ITS MOTION FOR SUMMARY JUDGMENT was electronically filed via Electronic Case Filing (ECF) with the United States District Court for the District of Colorado and served electronically on the following:

John D. Fognani, Esq. R. Kirk Mueller, Esq. Lauren C. Buehler, Esq. Fognani Guibord & Homsy LLP 1700 Lincoln Street, Suite 2222 Denver, Colorado 80203 Terence M. Ridley, Esq. Wheeler Trigg Kennedy LLP 1801 California St., Suite 3600 Denver, Colorado 80202-2617 Paul J. Sanner, Esq. Hanson, Bridgett, Marcus, Vlahos & Rudy, LLP 333 Market Street, Suite 2100 San Francisco, California 94105-2173

s/ Jan Sullivan

DNVR1:60332875.10

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