Free Response to 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-MEH ROBERT M. FRIEDLAND, Plaintiff, v. TIC-- THE INDUSTRIAL COMPANY and GEOSYNTEC CONSULTANTS, INC. f/k/a GEOSERVICES, INC Defendants. ______________________________________________________________________________ DEFENDANT TIC- THE INDUSTRIAL COMPANY' RESPONSE TO PLAINTIFF' S S SUPPLEMENTAL AUTHORITY _________________________________________________________________________

Introduction Defendant TIC- The Industrial Company (" TIC" hereby submits this Response to ) Plaintiff Robert Friedland' (" s Friedland" Supplemental Authority in support of his Motion ) for Summary Judgment Regarding Plaintiff' CERCLA liability. The Supplemental s Authority does not provide any additional support for Friedland' Motion for Summary s Judgment. Nor does it change the operative legal standard by which Friedland' extensive s involvement at Summitville should be judged. As explained by TIC' Memorandum of Law s in Opposition to Friedland' Motion for Summary Judgment, Friedland " s manage[d], direct[ed], or conduct[ed]"operations related to pollution and made the very decisions which lead to releases of hazardous substances at the Summitville Mine Site. Thus, there is a genuine issue of material fact regarding Friedland' personal liability as CERCLA operator, s

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and Friedland' Motion for Summary Judgment Regarding Plaintiff' CERCLA Liability s s should be denied. Argument Rather than providing additional support for Friedland' Motion for Summary s Judgment or changing operative legal standard by which Friedland' wide-ranging s involvement at Summitville should be judged, the Supplemental Authority highlights the difference between those defendants who should not be held liable as CERCLA operators and those, such as Friedland, who should. See New York v. B.B. & S Treated Lumber Corp., 2007 WL 2908211 (E.D.N.Y. 2007). After paying over $20 million in settlement of the government' CERCLA costs recovery claim against him, Friedland now incredibly claims that the involvement of the individual defendants in Treated Lumber, Samuels and Guilloz (the " Shareholders" is ), similar to his involvement at Summitville. (Docket No. 296 at 2). Nothing could be further from the truth. The Shareholders'range of involvement at the facility at issue in Treated Lumber was narrow. Treated Lumber, 2007 WL 2908211 at *4. The manager of the plant at the facility described his contacts with the Shareholders as limited to " Christmas party or the social events." Id. at *3. The Shareholders'involvement with the company was limited to periodic shareholder meetings only about three to four times per year. Id. at *4. The Shareholders never met with government regulators regarding the company' operations and s environmental compliance. Id. They never hired or supervised anyone at the plant, and only once during the plant manager' tenure did he have a meeting with the Shareholders. Id. at s *3.

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These facts stand in stark contrast to Friedland' extensive involvement at s Summitville. As outlined in TIC' Statement of Additional Material Facts in its Opposition s to Friedland' Motion for Summary Judgment, Friedland was not just an ordinary s shareholder in the companies involved at Summitville (Summitville Consolidated Mining Company, Inc., a subsidiary of Galactic Resources, Ltd. and Galactic Resources, Inc., collectively, " Galactic" whose only involvement was at Christmas parties and shareholders' ), meetings. Instead, he " breathed life into"Galactic, dominated and " ran"Galactic' board s meetings, and continuously reported the status of the Mine' operations to Galactic s shareholders.1 Friedland himself went so far as to characterize the Mine as " focus"of his the life.2 Friedland controlled Summitville, directed people at Summitville about what to do, and took responsibility for hiring people at Summitville.3 Even the construction manager for the primary contractor at the Site, Bechtel, has testified that Friedland " certainly the person was
4 that controlled the decision-making for anything that went on at the mine." The

Shareholders in Treated Lumber acted just as one would expect classic shareholders to act in the normal course of investment, and did nothing more of consequence. Treated Lumber, 2007 WL 2908211 at *3-4. In contrast, Friedland was " founder"of Galactic, drove all the

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Friedland Dep., Exhibit B, pp. 34:12-24 (Ex-7); 35:13-20 (Ex-7); Stoehr Dep., Exhibit D, p. 54:3-9 (Ex-59); Wyman Dep., Exhibit C, pp. 49:21-52:20 (Ex-43); see also Stott Dep., Exhibit E, at pp. 6:24 (Ex-86); 7:23-25 (Ex86); Letter to Shareholders dated 10/22/85, Exhibit M (Ex-163-166); Press Release dated 7/14/86, Exhibit M (Ex167-168); Memo of Call with Robert Friedland by D.B. Linkletter of Bank of America dated 2/16/87, Exhibit M (Ex-169-171); Minutes of GRL Board of Directors Meeting dated 9/24/88, Exhibit M (Ex-172-179). For purposes of this Response, TIC cites to the Exhibits attached to TIC' Memorandum of Law in Opposition to Friedland' s s Motion for Summary Judgment as they were cited to in that Memorandum. As noted in its Memorandum, TIC provided a universal page number in the bottom right hand corner of all exhibit pages, running consecutively from 1 through the last page of the exhibits, noted as (Ex-xx-xx). 2 Mined Land Reclamation Board Meeting, July 24, 1986, Transcript, Exhibit K, at pp. 7-8 (Ex-150-151). 3 See, e.g., Stoehr Dep., Exhibit D, pp. 57:14-24 (Ex-60); 63:7-23 (Ex-61); Danielson Report, Exhibit S, p. 29 (Ex199) (emphasis added); Mined Land Reclamation Board Meeting, July 24, 1986, Transcript, Exhibit K, p. 8 (Ex151) (emphasis added). 4 See Hotaling Dep. Exhibit I, pp. 18:4-20:7 (Ex-141; 141:1-9 (Ex.-142).

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important decisions for Summitville, and was " running everything"and " calling the shots"at Summitville.5

Also in contrast to the Shareholders in Treated Lumber, Friedland had contact with environmental regulators about the condition of Summitville which changed the course of events at the Site. See Treated Lumber, 2007 WL 2908211 at *4 (noting that the
Shareholders never met with the Suffolk County Department of Health Services or New York State Department of Environmental Conservation representatives). Friedland testified

before the Colorado Mined Land Reclamation Board (" MLRB" in July 1986, stating that ) it was his personal commitment to build a facility that would serve as a model for other facilities of the same type.6 He also stated that he would hire a senior member of his staff as an " environmental ombudsman"to work with the MLRB and within Galactic to make sure that Galactic was " highly responsive to any environmental issues that may arise . . .
7 ." Friedland even offered technical advice as to how to fix the problem of a potential

cyanide leak at the Site.8 It was Friedland' representations about his personal s commitment to finding and solving the cyanide problem at the Site that caused the Mined Land Reclamation Division staff to change their minds and recommend to the MLRB that Summitville remain open.9 Moreover, instead of appointing " senior-management-level a compliance officer to oversee every aspect of the project"and ensure compliance with

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See, e.g., Friedland Dep., Exhibit B, pp. 34:12-24 (Ex-7); 35:13-20 (Ex-7); 41:5-25 (Ex-8); 43:2-44:8 (Ex-8); Stoehr Dep., Exhibit D, at pp. 63:7-23 (Ex-61); 296:8-297:18 (quotes at 297:11-18) (Ex-71); 298:4-15 (Ex-71); 302:23-303:12 (Ex-72); 341:7-342:14 (Ex-73); 372:11-21 (Ex-75); 392:1-5 (Ex-76); 399:16-400:1 (Ex-77-78); 400:23-401:24 (Ex-78); 452:2-15 (Ex-81); 460:4-461:10 (Ex-83). 6 Mined Land Reclamation Board Meeting, July 24, 1986, Transcript, Exhibit K, p. 8 (Ex-151). 7 Id.; see also Danielson Report, Exhibit S, p. 29 (Ex-199). 8 Mined Land Reclamation Board Meeting, July 24, 1996, Transcript, Exhibit K, p. 8 (Ex-151). 9 Bischoff Dep., Exhibit Y, pp. 115:7-118:1 (Ex-243-244); 119:5-121:14 (Ex-244-245).

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permit terms and applicable environmental regulations, as he promised, Friedland himself directed his companies about compliance with environmental regulations.10
As set forth in TIC' Response, the proper standard for evaluating Friedland' s s liability, which Treated Lumber incorporates, is whether the actor " manage[d], direct[ed], or conduct[ed] operations specifically related to pollution, that is, operations having to do with the leakage or disposal of hazardous waste"or made " decisions about compliance with environmental regulations." United States v. Bestfoods, 524 U.S. 51, 66-67 (1998); Browning-Ferris Ind. of Ill., Inc. v. Ter Maat, 195 F.2d 953, 955-56, 961 (7th Cir. 1999). If the " totality of circumstances"shows that an executive is closely connected to or plays a critical role in decisions related to pollution or environmental compliance (through, for example, contract negotiations, making critical decisions about the property, participating in meetings where environmental issues are addressed, or directing measures that have to do with environmental compliance) he is liable under CERCLA. See Browning-Ferris, 195 F.3d at 956 (emphasis added); FMC Corp. v. Aero Ind., Inc., 998 F.2d 842, 846 (10th Cir. 1993); City of Wichita, Kan. v. Trustees of the Apco Oil Corp. Liqu. Trust, 306 F. Supp. 2d 1040, 1055-56 (D. Kan. 2003).

Friedland is clearly not entitled to summary judgment as to his personal liability under this standard. At the very least, there are genuine issues of material fact remaining regarding the extent of Friedland' involvement in the pollution-causing activities at the s site. Friedland' control at Summitville extended to matters that directly related to s
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See, e.g., Danielson Aff., Exhibit HH, ¶¶ 15, 18, 36-37, 46-47 (Ex-291, 294-295); Danielson Report, Exhibit S, pp. 27-30 (Ex-197-200); DeDycker Aff., Exhibit R, ¶¶ 2, 20, 21 pp. 1, 5 (Ex-191-192); Harper Aff., Exhibit Q, ¶¶ 2, 19, pp. 1-2, 8 (Ex 187-188, 189); Mined Land Reclamation Board Meeting, July 24, 1996, Transcript, Exhibit K, p. 8 (Ex-151); Russell Dep., Exhibit L, pp. 10:13-16 (Ex-153); 12:1-11 (Ex-153); 61:7-17 (Ex-155); 62:1-2 (Ex-155); 126:25-127:6 (Ex-156); 133:24-134:4 (Ex-157), 141:4-12 (Ex-158); Wyman Dep., Exhibit C, pp. 163:17-164:1 (Ex54).

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pollution and had to do with hazardous waste leaks and disposal. Friedland also made decisions about compliance with environmental regulations. See Bestfoods, 524 U.S. 51, 66-67. Friedland himself made critical choices which led to the release of hazardous substances at Summitville, such as: · the decision to construct one, larger, cheaper open pit heap leach mine instead of three smaller heaps, which could have been protected against snow melt; · the decision to go forward with construction at the Site during the winter, despite adverse environmental consequences; · how to deal with the cyanide leak in the heap leach pad, including determining why the leak was happening, how to fix it, and how to handle it with the State; · how to deal with contaminated water that could not be legally discharged from the heap leach pad; and · the timing of Galactic' responses to a number of environmental issues, in light of s the financial consequences to Galactic. (See, e.g., Ex. A: Supp. Aff. of Luke Danielson at 1, 2, 5, 7-9, 14-16).11
Further, despite his clear authority and ability to do so, Friedland failed to create a corporate structure that had any semblance of a clear environmental policy. (See, e.g., Ex. A at 5-9, 19).12 Friedland failed to fulfill his promise to the MLRB to appoint an environmental

See also Campbell Report, Exhibit T, pp. 13, 19-20 (Ex-207, 209-210); Fox Report, Exhibit Z, Opinions 4, 5 and 6, pp. 5-6 (Ex-247-248); Opinion 8, p. 6 (Ex-248); Leonard Dep., Exhibit H, pp. 247:3-249:3 (Ex-139); Roper Dep., Exhibit F, pp. 123:12-16 (Ex-102); 130:1-4 (Ex-103); 154:19-155:10 (Ex-107); 156:19-157:13 (Ex-107-108); 163:24-164:6 (Ex-109); 169:11-16 (Ex-111); 193:2-17 (Ex-113); 256:11-257:6 (Ex-115); 257:7-258:18 (Ex-115); 259:6-260:13 (Ex-115-116); 350:13-352:18 (Ex-117-118); Russell Dep., Exhibit L, pp. 135:23-136:6 (Ex-157); 152:16-25 (Ex-159); 153:17-154:2 (Ex-160); 156:4-12-157:6 (Ex-160-161); Wyman Dep., Exhibit C, pp. 58:4-59:15 (Ex-45); 83:12-84:13 (Ex-49); 132:14-135:6 (Ex-51-52); 151:10-152:14 (Ex-53). 12 See also Wyman Dep., Exhibit C, p. 163:17-164:1 (Ex-54).

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compliance officer at the site and instead performed the duties himself, all the time giving priority not to environmental issues, but to his ultimate goals: increased stock price, raising new money, and personal profit. (See, e.g., Ex. A at 11-14, 17, 19).13 In light of the numerous factual differences between Treated Lumber and the present case, and the legal and factual arguments previously presented in TIC' Memorandum of s Law in Opposition to Friedland' Motion for Summary Judgment, Treated Lumber does not s provide any additional support for Friedland' Motion for Summary Judgment. Friedland s " manage[d], direct[ed], or conduct[ed]"operations related to pollution and made the very decisions which lead to releases at Summitville. Thus, at the very least, there is a genuine issue of material fact regarding Friedland' personal liability as CERCLA operator. s Friedland' Motion for Summary Judgment Regarding Plaintiff' CERCLA Liability should s s be denied. WHEREFORE, for the foregoing reasons, TIC respectfully requests that this Court deny Friedland' Motion for Summary Judgment Regarding Plaintiff' CERCLA Liability, s s finding that the " Supplemental Authority"proffered by Friedland does not compel a different result.

See also Blakeman Aff., Exhibit P, ¶¶ 2, 41, pp. 1, 8-9 (Ex-184-186); Danielson Aff., Exhibit HH, ¶¶ 15, 18, 3637, 46-47 (Ex-291, 294-295); Danielson Report, Exhibit S, pp. 27-28, 30 (Ex-197-198, 200); DeDycker Aff., Exhibit R, ¶¶ 2, 20, pp. 1, 5 (Ex-191-192); Harper Aff., Exhibit Q, ¶¶ 2, 19, pp. 1-2, 8 (Ex 187-188, 189); Leonard Dep., Exhibit H, pp. 149:21-150:19 (Ex-135), 175:13-176:4 (Ex-137); Press Release dated 7/14/86, Exhibit M, at 1 (Ex-167-168); Russell Dep., Exhibit L, pp. 10:13-16 (Ex-153); 12:1-11 (Ex-153); 61:7-17 (Ex-155); 62:1-2 (Ex155); 126:25-127:6 (Ex-156); 133:24-134:4 (Ex-157), 141:4-12 (Ex-158); Stoehr Dep., Exhibit D, pp. 108:20109:20 (Ex-63-64); 120:5-19 (Ex-65); 130:15-131:4 (Ex-67); 84:21-189:15 (Ex-69-70); 409:1-6 (Ex-79); Wyman Dep., Exhibit C, pp. 163:17-164:1 (Ex-54).

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Dated: December 19, 2007 s/Colin C. Deihl Colin C. Deihl 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 Faegre & Benson LLP 2200 Wells Fargo Center 90 South Seventh Street Minneapolis, Minnesota 55402 Attorneys for Defendant TIC ­The Industrial Company

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CERTIFICATE OF SERVICE

I hereby certify that on December 19, 2007, true and correct copies of the foregoing were electronically filed via Electronic Case Filing (ECF) with the United States District Court for the District of Colorado and served electronically on the following:

Perry L. Glantz, Esq. Fritz W. Ganz, Esq. Fognani & Faught, PLLC 1700 Lincoln Street, Suite 2222 Denver, Colorado 80203 [email protected] Terence M. Ridley, Esq. Marian L. Carlson, Esq. Wheeler Trigg Kennedy LLP 1801 California St., Suite 3600 Denver, Colorado 80202-2617 [email protected] [email protected] Paul J. Sanner, Esq. Hanson, Bridgett, Marcus, Vlahos & Rudy, LLP 333 Market Street, Suite 2100 San Francisco, California 94105-2173 [email protected]

s/ Jan Sullivan

fb.us.2461721.05

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