Free Brief in Opposition 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-F-1263-PSF-MEH ROBERT M. FRIEDLAND, Plaintiff, v. TIC-- THE INDUSTRIAL COMPANY and GEOSYNTEC CONSULTANTS, INC. f/k/a GEOSERVICES, INC. Defendants. ________________________________________________________________________ DEFENDANTS' MEMORANDUM OF LAW IN OPPOSITION TO PLAINTIFF ROBERT FRIEDLAND' MOTION FOR SUMMARY JUDGMENT REGARDING S PLAINTIFF' CERCLA LIABILITY S ________________________________________________________________________ Introduction Robert Friedland, the driving force behind the Summitville Mine, now fashions himself as a distant observer to the Mine' environmental failures. He does this in a motion s designed to shift his prima facie burden of proof to defendants TIC and GeoSyntec. Ignoring the vast record amassed in the lawsuit that culminated in the $20 million payment for which he seeks reimbursement here, Friedland cites inadmissible, conclusory and misleading excerpts to argue that he was not a CERCLA operator. In reality, Friedland bears the burden to establish that he is entitled to contribution under CERCLA § 113(f). In addition to proving that TIC and GeoSyntec are covered persons with CERCLA liability, Friedland must prove that he has paid more than his fair

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share of the clean-up costs for the Mine. He may try to meet this burden by proving that his fair share is $ 000.00, based on the theory that he had no CERCLA liability to begin with. Regardless of the amount he claims is his " share,"however, Friedland retains the burden fair of proving the allocation he advocates to each share, including his own. 1 Yet in truth, Friedland made critical decisions that not only affected major aspects of the Mine' design, construction and operation, but caused the Mine to be built in the first s place. Friedland also made decisions regarding the appropriate response to cyanide leakage at the Mine, detected almost immediately after leaching began, and communicated those decisions directly to the Colorado Mined Land Reclamation Board (MLRB). In fact, Friedland' personal appearance before the MLRB in July 1986, and the promises he made to s the Board at that time, allowed the Mine to continue operating. Friedland also made decisions about how to handle the constant problems with excess contaminated water that plagued the Mine throughout its operation. Friedland was not a backhoe operator, but an executive imbued with the highest level of corporate power. Under the law, he must stand liable for the consequences of his decisions about how to use this power. This remains true, even after Bestfoods. With his meager Statement of Undisputed Facts, based on citations to inadmissible and irrelevant documents and to his own conclusory affidavit, Friedland has not even met his initial burden to demonstrate the absence of a material fact that would entitle him to

1

In the underlying lawsuit, the report of Friedland' own expert reflected that Friedland s should bear a significant share of the clean-up costs. Call Dep., Exhibit A, pp. 60:12-62:47 (Ex-1-3).
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summary judgment as to his CERCLA operator liability. Friedland cannot possibly meet that burden, as the record cited below is replete with genuine issues of material fact showing the vast extent of his authority and control at the Summitville Mine and, hence, his liability. TIC and GeoSyntec therefore respectfully request that Friedland' motion for summary judgment s be denied. Statement of Additional Material Facts Contrary to statements made in the introduction to his motion, Friedland was actively involved in running the Summitville Mine long after January 1987. 1. In the introduction to his motion, Friedland claims that he " ceased his

involvement with SCMCI"in January 1987, when he resigned his positions " order to in pursue other business opportunities." Plaintiff Robert Friedland' Brief in Support of Motion s for Summary Judgment regarding Friedland' CERCLA Liability, pp. 2-3. s 2. In fact, Friedland' involvement with the Mine continued until at least late s

1990, when he ended his affiliation with SCMCI' ultimate parent company, Galactic s Resources Ltd. (GRL). Friedland Dep., Exhibit B, pp. 16:3-18:21 (Ex-5-6).2 3. In the spring and summer of 1990, Friedland still was participating in GRL

board meetings that included discussions of the Summitville Mine, its water balance issues, its environmental problems and its business future. Friedland Dep., Exhibit B, pp. 832:1-13 (Ex-31); 836:10-845:24 (Ex-32-34); Wyman Dep., Exhibit C, pp. 266:24-268:13 (Ex-56).

2

For convenience, Defendants have placed 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. These universal page citations appear as: (Ex-xx-xx).
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4.

At least from January to June 1987 and from August 1988 through October

1990, GRL ran the Summitville Mine from its offices in Vancouver. Wyman Dep., Exhibit C, pp. 12:11-14:4 (Ex-36-37); 19:16-20:20 (Ex-38); 46:16-47:25 (Ex-42); 53:9-55:18 (Ex44); 57:1-58:1 (addressing 1-6/87 and 10/88-9/90) (Ex-45); Stoehr Dep., Exhibit D, p. 68:1719 (addressing 8/88 - 10/90) (Ex-62). 5. Gerald Wyman served as a GRL executive from January 1987 through

September 1990. Wyman Dep., Exhibit C, pp. 12:11-14:4 (Ex-36-37); 53:9-54:4 (Ex-44). Wyman testified that Friedland was the dominant board member of GRL. Wyman Dep., Exhibit C, pp. 49:21-52:20 (Ex-43). 6. From the fall of 1988 through the summer of 1990, Friedland remained a key

decision maker for the Summitville Mine. Wyman Dep., Exhibit C, pp. 53:25-55:18 (Ex-44). 7. Richard Stoehr was a Director appointed to the GRL Board on August 24,

1988, who served until he resigned on November 19, 1991. Stoehr Dep., Exhibit D, p. 47:410 (Ex-58); 496:5-21 (Ex-84). After his first meeting, held on September 24, 1988, Stoehr was disappointed at GRL' lack of structure. Id. at pp. 53:3-6 (Ex-59); 53:23-54:11 (Ex-59); s 55:16-56:8 (Ex-59). 8. When asked to describe how this first meeting was run, Stoehr said " Well,

Friedland ran the meeting. And outside of a few instances, he did the talking. And without an agenda, he set the agenda." Id. at p. 54:3-9 (Ex-59). When asked to describe his understanding of GRL leadership at that time, he said " guess my understanding, and maybe I

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­I don' think I had any other understanding than Friedland was the chairman, the t president, the chief cook and bottle washer there." Id. at p. 55:10-15 (Ex-59). 9. When asked about his initial understanding of Friedland' role towards the s

Summitville Mine, Stoehr said " Well, I think he was pretty much ­pretty much in control of the Summitville mine. . . . Well, he' the guy that ­that seemed to know everything s about it and seemed to direct people and seemed to say what people should be doing, and so forth." Id. at p. 57:14-24 (Ex-60). As time went on, Stoehr' perception did not change. s Id. at p. 63:7-23 (Ex-61). 10. Stoehr' impression that Friedland was " s running everything"and " calling the

shots"at Summitville was based on observations at board meetings, comments made by other directors, observations at the Mine, and conversations with Friedland himself. Id. at pp. 63:7-23 (Ex-61); 296:8-297:18 (quotes at 297:11-18) (Ex-71); 298:4-15 (Ex-71); 302:23303:12 (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). 11. When Stoehr visited the Mine in 1988, he observed Friedland talking with

others at the mine about water treatment, and he talked with Friedland about Homestake' s new type of water treatment process. Id. at pp. 341-18-342:14 (Ex-73). He also talked with Friedland about acid water, and recalls Friedland making a comment like, " Hell, those creeks ran 2 pH before anybody did anything up there." Id. at pp. 346:9-347:8 (Ex-74).

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12.

In 1989, Friedland took the lead role in hiring a successor, informing

candidates that he sought a new CEO of Galactic to " take it over, run it." Stott Dep. (draft), Exhibit E, pp. 6:13-7:5 (Ex-86); 8:1-10 (Ex-86); 9:15-21 (Ex-87); 13:24-14:12 (Ex-88).

13.

Luke Danielson, former member and sometimes Chairman of the Colorado

Mined Land Reclamation Board, dealt with the Summitville Mine project on a regular basis over several years during its collapse and ultimate bankruptcy. Danielson Aff., Exhibit HH, ¶¶ 4, 15 (Ex-289, 291). He recalls that at least until some time in 1990, " [it was] the clear impression I was given by company representatives that all major decisions had to go through Mr. Friedland." Id. at ¶ 15 (Ex-291). 14. Mr. Danielson has sought to untangle the complex and ever-changing array

of companies used by Friedland, a task that is not straightforward or simple. Danielson Aff., Exhibit HH, ¶¶ 9-14 (Ex-290-291) and Exhibit 3 (Ex-358). The Summitville project was not owned throughout the years in question by a single company named " SCMCI." Id. at ¶¶ 7-9 (Ex-290). Indeed, from Gerald Wyman' perspective, SCMCI " not s did exist"­it existed on paper. Id. at ¶ 16 (Ex-291). 15. The Mine was moved from one entity to another and those entities changed

names. Id. at ¶ 9 (Ex-290). In March 1987, just two months after Friedland claims he left SCMCI by resigning from his positions there, SCMCI was merged with Triangulum Resources, Inc. and Centaurus Resources, Inc., two companies for which Robert Friedland was President and a Director; Triangulum was the surviving entity. Id. at ¶ 12 (Ex-290) and Exhibit 2 (Ex-345-357).
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16.

Finally, Friedland' continued involvement with the Mine is confirmed by his s

own Affidavit filed in response to the government' summary judgment motion, attached to s his motion in this case as Exhibit 6, where he makes numerous assertions about the operations of both GRL and the Summitville Mine for the entire period from 1984 through 1990. Friedland' Exhibit 6, ¶¶ 22-25, 35. Friedland began his affidavit by affirming, as s required, that he had personal knowledge of its contents. Id., ¶ 2. GRL and Summitville Mine operations from 1981 through 1990 were driven by Friedland' desires, control and authority. s 17. Friedland and his cofounder " breathed life into"GRL, a shell company, and

" took it out of its dormant status"in 1981. Friedland Dep., Exhibit B, pp. 34:12-24 (Ex-7); 35:13-20 (Ex-7). 18. In " early 1980s,"near 1983, Friedland' cofounder died. Id. at pp. 43:10the s

14 (Ex-8); 59:18-60:3 (Ex-10). 19. In a letter signed by Friedland in 1990, Friedland himself is identified as " the

founder"of Galactic. Id. at pp. 41:5-25 (Ex-8); 43:2-44:8 (Ex-8) (emphasis added). 20. Friedland was President of GRL from June 12, 1981 to June 15, 1984, and

again from June 18, 1987 to February 21, 1990. Id. at p. 16:16-25 (Ex-5). 21. He was GRL' Chief Executive Officer from June 15, 1984 through June 8, s

1990. Id. at p. 18:17-21 (Ex-6). 22. Friedland was Chairman of the Board of GRL from June 15, 1984 until June 8,

1990, and Vice Chairman from June 8, 1990 through November 2, 1990. Id. at p. 18:6-16 (Ex-6).

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23.

He was a Director of GRL from March 23, 1981 through November 2, 1990.

Id. at p. 16:8-15 (Ex-5). 24. As viewed by the mining industry in the late 1980s, " Galactic was Robert

Friedland." Stott Dep., Exhibit E, at p. 6:24 (Ex-86). " [W]hen you mention[ed] Galactic, it was almost synonymous with Robert Friedland." Id. at p. 7:23-25 (Ex-86). 25. Gerald Wyman served as a GRL executive from January 1987 through

September 1990. Wyman Dep., Exhibit C, pp. 12:11-14:4 (Ex-36-37); 53:9-54:4 (Ex-44). According to Wyman, Friedland was the dominant board member of GRL. Wyman Dep., Exhibit C, pp. 49:21-52:20 (Ex-43). 26. As to the earlier years, in April 1984, Ed Roper began as a Vice President of

GRL, reporting to Friedland. Id. at p. 36:4-16 (Ex-39). By June 1984 Roper became President, still reporting to Friedland. Id. pp. 39:2-5 (Ex-40); 40:14-20 (Ex-40). 27. Ed Roper said that when he met with Friedland to discuss Friedland' desire to s

bring Roper into GRL, Friedland " me what his ­I believe be told me what his goals told were, what he wanted to do with his company called Galactic ­or a company called Galactic." Roper Dep., Exhibit F, pp. 19:2-18 (Ex-90); 20:21-21:10 (Ex-90-91) (emphasis added). 28. New mining opportunities came into Galactic through Friedland. Roper Dep.,

Exhibit F, pp. 34:23-35:3 (Ex-92). 29. As Chairman of GRL' Board, Friedland had the authority to redirect the focus s

of the company' operations, and he did use that authority. Even executives at GRL had to s

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spend their time pursuing Friedland' ideas, because " s You still work for Mr. Friedland." Wyman Dep., Exhibit C, pp. 85:13-86:18 (Ex-50); 225:21-25 (Ex-55). 30. Roper also identified Friedland as his boss, who had the power to fire him.

Roper Dep., Exhibit F, p. 457:17-21 (Ex-120). 31. As noted above, Dick Stoehr identified Friedland as the man who ran GRL and

its board meetings. When he began serving in September 1988, Stoehr felt the minutes reflected more formality in the proceedings than actually occurred. Stoehr Dep., Exhibit D, pp. 58:20-60:5 (Ex-60). Stoehr recalls that " way Friedland was running this, he would the say, This is what I' thinking about. And if nobody said anything, it was reported as m unanimous." Id. at p. 60:2-5 (Ex-60). 32. Friedland also brought investor money into GRL, and as " guy that raised the

it,"Friedland got to decide how the money was spent. Wyman Dep., Exhibit C, pp. 76:2577:4 (Ex-47-48). 33. Friedland' influence extended beyond just obtaining the financing for GRL' s s

operations. During Wyman' tenure at GRL, the Summitville Mine was run by a few key s people based in Vancouver, including Friedland, who discussed the Mine on an almost daily basis. Wyman Dep., Exhibit C, pp. 44:19-45:8 (Ex-41-42); 46:16-47:25 (Ex-42); 55:14-18 (Ex-44); 58:4-59:15 (Ex-45); 65:9-66:21 (Ex-46). 34. Included in those constant discussions, " same broken record went on an on the

forever,"were issues about how to deal with the excess water building up in the heap leach pad, the inability to discharge that water under the Mine permits, and the possibility of

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getting rid of some of this water through land application. Wyman Dep., Exhibit C, pp. 58:459:15 (Ex-45); 83:12-84:13 (Ex-49); 132:20-135:6 (Ex-51-52). 35. Roper characterizes a similar method of operation in earlier years, with a few

key people in Vancouver talking regularly and making important decisions about the Mine together. Roper Dep., Exhibit F, pp. 71:1-16 (Ex-97); 72:16-23 (Ex-97); 74:2-76:13 (Ex-98); 89:3-90:9 (Ex-99); 95:24-97:11 (Ex-100-101); 500:25-502:25 (Ex-121).

36.

Friedland agreed that it was a " small company"and an " open shop,"with

discussion happening " the time." Friedland Dep., Exhibit B, p. 100:6-15 (Ex-11). all
37. Included among the matters addressed by Friedland were the decision to move

from a three heap leach pad design to one pad, which was done because " was cheaper" it (Roper Dep., Exhibit F, pp. 123:12-16 (Ex-102); 130:1-4 (Ex-103)); the decision to proceed with construction after financing was obtained even though construction would happen during the winter, which was much more difficult than the planned summer construction because of the elements (Id. at pp. 154:19-155:10 (Ex-107); 156:19-157:13 (Ex-107-108); 163:24-164:6 (Ex-109); 169:11-16 (Ex-111)); and the decision about how to respond to the MLRB after a cyanide leak was detected in the summer of 1986 (Id. at p. 193:2-17 (Ex113)).
38.

In the spring of 1985, construction of the Mine could not move forward

because there was not enough money. Friedland Dep., Exhibit B, pp. 248:13-249:6 (Ex23-24).

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39.

In the spring of 1985, there was a "rather dramatic change" in the ability to

finance the project, from "famine to feast," when contractor Bechtel became involved with the project. Friedland Dep., Exhibit B, pp. 252:18-253:22 (Ex-24-25). The Bank of America had been speaking with Bert Cook about financing the mine, but had not agreed to finance the project, and Friedland said "I don't think it would have gotten financed absent a dramatic increase in the price of gold or some other positive development, like finding a bigger, richer ore body or some other sort of factor." Id. at pp. 253:23-254:10 (Ex-25). 40. Friedland determined the major terms of the agreement with Bechtel.

Roper Dep., Exhibit F, pp. 136:7-25 (Ex-104); 139:13-24 (Ex-105); 142:3-18 (Ex-106); Friedland Dep., Exhibit B, pp. 267:24-268:22 (Ex-26); 314:5-22 (Ex-28). The documents exchanged during these negotiations refer directly to substantial changes made in the project design, from what had been specified in the permit. Danielson Aff., Exhibit HH, ¶ 34 (Ex-293).
41. In December 1985, after the original plastic liner contractor was terminated,

another decision needed to be made about whether to continue construction in the winter. Roper Dep., Exhibit F, pp. 256:11-257:6 (Ex-115). Friedland again directed the decision to proceed, initially and on an ongoing basis, along with Roper and Cook. Id. at pp. 257:7258:18 (Ex-115); 259:6-260:13 (Ex-115-116). 42. One reason for pushing winter construction was to meet the schedule set forth

in the Bank of America financing agreement. Roper Dep., Exhibit F, pp. 259:6-260:13 (Ex-

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115-116). Friedland negotiated to obtain this financing, along with Bert Cook. Id. at pp. 134:8-15 (Ex-104); 134:21-136:2 (Ex-104); Friedland Dep., Exhibit B, pp. 196:22 ­197:19 (Ex-21-22); 268:5-10 (Ex-26); Linkletter Dep., Exhibit G, pp. 51:20-53:15 (Ex124-125).

43.

The testimony and documents " make it clear"that the " tremendous push to

get the Summitville project built and in operation, producing gold,"was motivated in part by the desire to meet deadlines in the Bank of America agreement and in part by a desire to present good news to securities investors as the company made repeated securities offerings to the market. Danielson Aff., Exhibit HH, ¶ 36 (Ex-294). " also seems clear It that this extreme time pressure came in large part from Mr. Friedland, and that it resulted in degradation of the environmental performance of the project." Id. at ¶ 37 (Ex-294).
44. During one of Friedland' visits to the Mine, consultant Tom Krasovec heard s

Friedland admit that he had made a mistake by making promises to build the Mine under difficult working conditions caused by winter construction. Krasovec Aff., Exhibit FF, ¶¶ 3, 20, pp. 2, 8 (Ex-283, 284). 45. Friedland' influence extended to on-the-ground personnel in addition to s

Bechtel. Roper had become dissatisfied with ICC, the mining and major earthwork contractor, and by later in 1986 he wanted to terminate its work at the site. Roper Dep., Exhibit F, pp. 190:20-192:18 (Ex-112). He talked with Friedland about this and Friedland told Roper he did not want ICC to be terminated. Id. Roper then gave up the issue, because he did not think he would succeed in opposing Friedland. Id.

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46.

Indeed, Friedland was perceived by certain key people at the mine itself to be

the person in charge of the overall operation. Roger Leonard, the Mine Manager for SCMCI from the summer of 1984 to November 1986, characterized Friedland as " boss." Leonard the Dep., Exhibit H, pp. 19:9-18 (Ex-127); 44:14-45:6 (Ex-128-129); 161:19-20 (Ex-136). Leonard believed Friedland was informed about important mine issues, and thought Friedland wanted to be informed since one of Friedland' roles was to talk with investors s about the mine. Id. at pp. 71:15-72:10 (Ex-130); 88:19-89:21 (Ex-131-132). Don Hotaling, the Bechtel construction manager from June 1985 to June 1986, had the impression that Friedland " certainly the person that controlled the decision-making for anything that was went on at the mine." Hotaling Dep., Exhibit I, pp. 18:4-20:7 (Ex-141); 141:1-9 (Ex-142). Friedland' promotional interests influenced, and often drove, decisions about s the Mine' operations. s 47. The business goal for GRL, shared by Friedland and his cofounder, was " to

build an international, diversified, genuine mining company, a producing mining company, as opposed to just an exploration company." Friedland Dep., Exhibit B, at p. 103:10-19 (Ex12). The executives " wanted to expand Galactic into being a major gold operation." Roper Dep., Exhibit F, pp. 36:23-37:3 (Ex-92-93). 48. One avenue for achieving this goal, in which Friedland was interested, " very

much so,"was to acquire mining property whose potential was not fully recognized by more traditional mining companies. Friedland Dep., Exhibit B, p. 104:15-25 (Ex-12). 49. In May 1981, GRL caused the incorporation of Galactic Resources Inc. (GRI),

a wholly-owned subsidiary of GRL. Id. at pp. 54:10-55:18 (Ex-9); 130:10-24 (Ex-17).

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50.

On about April 26, 1984, Summitville Consolidated Mining Company

(SCMCI), a wholly-owned subsidiary of GRI, was incorporated. Id. at pp. 129:2-17 (Ex-17); 130:10-24 (Ex-17). 51. GRL viewed the Summitville Mine as a stepping stone on the way to greater

growth for GRL. Id. at p. 389:6-10 (Ex-29). 52. Summitville was GRL' first project, and it was " important project"to s an

GRL' overall objective of becoming a mining company. Friedland Dep., Exhibit B, at p. s 391:11-21 (Ex-29). It also was an important reason " people to invest in Galactic." Roper for Dep., Exhibit F, pp. 62:19-63:2 (Ex-96). 53. In 1984, GRL " wasn' quote, a startup company because, really, we had t,

nothing to start up. We were evaluating whether we had something to start up." Roper Dep., Exhibit F, p. 37:4-10 (Ex-93). That " something"was Summitville. Id. at 37:11-12 (Ex-93). 54. The Summitville Mine therefore was a " critical"piece to Galactic' future s

success. Roper Dep., Exhibit F, pp. 39:23-40:2 (Ex-93). 55. During 1985, " order to concentrate its efforts on development of the In

Summitville project [GRL and its affiliated companies] reduced work on its other projects to either assessment requirements or minimum activity levels." GRL' Form 10-K for the s twelve months ended 12/31/85, Exhibit J, at p. 1 (Ex-144) (emphasis added). 56. In this same 10-K report, GRL and its affiliated companies list seven or eight

" exploration properties"in which it held some interest. Id. at pp. 5-7 (Ex-145-147). Four of

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these had no known body of commercial ore (Warner, Helena, Champion and Red Hill), and three had been abandoned by the end of 1985 (Helena, Champion and Hot Tip). Id. 57. The only two properties listed as being under active exploration were Yakobi

Island and Mirror Harbor in Alaska (listed as one property), and Summitville. Id. As to the Alaska property, GRL said: " Company intends to complete the evaluation in 1986 and The reassess the potential of the property." Id. at p. 7 (Ex-147). 58. As to Summitville, GRL said: " Based on the Company' exploration and s

development activities to date, the Company believes this property to be a mineable property which will become a significant gold producer in 1986. Accordingly, the Company has concentrated its development activities on this property." Id. at p. 8 (Ex-148) (emphasis added). 59. Recalling Summitville as the central focus of GRL executives'attention

during his tenure, Ed Roper testified " [w]e lived Summitville, so we talked about it." Roper Dep., Exhibit F, pp. 96:7-97:6 (Ex-100-101) (emphasis added). 60. Friedland himself echoed the same sentiment when he testified before the

Colorado Mined Land Reclamation Board in July 1986, stating: " [t]he Summitville heap leach facility is something that I' been working on now for five years. It' been the focus ve s of my life and our Board and, you may know that it is the largest heap leach gold mine in the world that is owned by a single corporation." Mined Land Reclamation Board Meeting, July 24, 1986, Transcript, Exhibit K, at pp. 7-8 (Ex-150-151) (emphasis added).

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61.

The promotional interests of GRL, and its ability to maintain investor

credibility, acquire more mining properties and grow as a company if Summitville was perceived as a success, was one important factor that influenced the decision to proceed with winter construction in 1985 ­even though that decision meant higher construction costs and lower net profit for the Summitville Mine, and even though Roger Leonard, the mine manager, was opposed to proceeding. Roper Dep., Exhibit F, pp. 165:2-166:25 (Ex-110); Leonard Dep., Exhibit H, pp. 88:19-89:21 (Ex-131-132); 127:22-128:12 (Ex-133); 129:4-16 (Ex-134); 247:3-249:3 (Ex-139). 62. Winter construction may have compromised the integrity of the clay liner

beneath the heap leach pad, and certainly made its construction more difficult. Leonard Dep., Exhibit H, pp. 247:3-249:3 (Ex-139). 63. In 1986 and 1987, the Summitville Mine was the " flagship"operation for

Galactic, and Summitville' success would make it much easier for GRL to raise money for s other projects. Russell Dep., Exhibit L, pp. 50:9-11 (Ex-154); 51:1-17 (Ex-154). 64. In later years, GRL was concerned about how shutting the mine down would

affect GRL stock. Stoehr Dep., Exhibit D, p. 126:8-22 (Ex-66). 65. Friedland' attempts to distance himself from knowledge about the mine are s

inconsistent with his role as chief corporate promoter. Roger Leonard, the Manager when the mine was constructed, believed Friedland was informed about important mine issues and thought Friedland wanted to be informed since it was Friedland' role to talk with investors s

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about the mine. Leonard Dep., Exhibit H, pp. 71:15-72:10 (Ex-130); 88:19-89:21 (Ex-131132). 66. In fact, Friedland instructed Charles Russell, who was brought in to replace Ed

Roper in about June 1987, that he wanted to be kept apprised of " anything that affected his ability to raise money." Russell Dep., Exhibit L, pp. 10:13-16 (Ex-153); 12:1-11 (Ex-153); 61:7-12 (Ex-155). If particular aspects of the Mine' operation affected his ability to raise s money, Friedland " Mr. Wyman to fix it." Id. at 61:11-17 (Ex-155). He would say, " do told I not want this to happen again, fix it. Period." Id. at 62:1-2 (Ex-155). 67. When the rate of gold extraction at the Mine was unsatisfactory, Friedland

directed the Mine' general manager, Gerald Wyman, " want you to get more gold out. Is s I there anything that you can do to get more gold out? Go do it." Russell Dep., Exhibit L, p. 141:4-12 (Ex-158). 68. Friedland communicated his considerable knowledge regarding key aspects of

the Mine' operations to bankers, potential investors and shareholders of GRL on a regular s basis, through letters, personal meetings and press releases. See, e.g., Letter to Shareholders dated 10/22/85 (reporting on status of construction contracts, his presentation of a corporate film showing " magnitude of our undertaking at Summitville,"Exhibit M (Ex-163-166); the Press Release dated 7/14/86 (regarding new gold discovery, agreement with Bechtel to associate on future mining projects), Exhibit M (Ex-167-168); Memo of Call with Robert Friedland by D.B. Linkletter of Bank of America dated 2/16/87 (reporting on management changes, needs for working capital, and contractors at the Mine), Exhibit M (Ex-169-171);

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Minutes of GRL Board of Directors Meeting dated 9/24/88 (reporting problems at Mine, cost cutting measures being taken, need for water treatment plant), Exhibit M (Ex-172-179). 69. In some instances, Mine Manager Roger Leonard believed Friedland made

inaccurate statements to the public and potential investors, apparently to maintain the price of GRL stock. For example, in a press release dated July 14, 1986, Friedland reported that " Galactic is halfway toward its goal of doubling gold reserves at Summitville through the discovery of a major new deposit." Press Release dated 7/14/86, Exhibit M, at 1 (Ex-167168). Leonard testified that this press release was " misleading in the mildest sense, and just plain wrong." Leonard Dep., Exhibit H, pp. 175:13-176:4 (Ex-137). 70. Similarly, in a press release dated October 7, 1986, Friedland represented that

out of 90,000 ounces of gold on the heap leach pad at that time, 76,500 would be recoverable through continued leaching. Press Release dated 10/7/86, Exhibit N, at 1 (Ex-180-181). By memo dated November 6, 1986, Roger Leonard communicated his ongoing concern regarding the manner in which the company valued the leach pad ore, and made clear that the " information contained in the October 7, 1986 press release . . . is not correct with respect to recoverable inventory ounces." Inter-Office Memo dated 11/6/86, Exhibit O, (Ex-182-183). 71. In an affidavit filed in connection with the government' motion for summary s

judgment against Robert Friedland, Daniel Blakeman stated: " eventually resigned my I position at the mine, in large part because I felt that there had been improper and unethical decisions made wherein too much attention was paid to stock price rather than to the technical aspects of mining. Moreover, at Summitville, there was extreme pressure on the

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staff to meet benchmarks or criteria that were not directly related to technical mining factors. An example is the decision to load and leach ore before the heap pad liner was fully repaired." Blakeman Aff., Exhibit P, ¶ 41, pp. 8-9 (Ex-185-186) (emphasis added). Blakeman was the plant superintendent for the Summitville Mine from August 1984 until July 1987. Id. at ¶ 2, p. 1 (Ex-184). 72. Also in connection with this motion, Klohn Leonoff Project Manager Thomas

Harper, testified by affidavit that: " met Mr. Friedland for the first time on July 20, 1986 at I a meeting of Galactic and SCMCI staff and consultants held at the Denver offices of an attorney named Dean Massey. I remember Friedland expressing concern at this meeting about the effect of the cyanide release on the imminent closing of a $15 million Galactic stock placement. He stated he was very concerned about any adverse impacts of this situation on Galactic' corporate credibility and its ability to raise funds." Harper Aff., s Exhibit Q, ¶¶ 2, 19, pp. 1-2, 8 (Ex 187-188, 189) (emphasis added). 73. Phillip DeDycker, a project manager for SRK (which provided consulting

services to SCMCI) who also was at this meeting, attested: " recall that Messrs. Friedland I and Massey led the meeting, and Friedland seemed to believe the threat of a cease and desist order from the MLRB was very real. My impression was that Messrs. Friedland and Massey were not so much concerned with how to solve the environmental problems that had arisen at the mine, but rather how to keep mine operations from being shut down by the MLRB." DeDycker Aff., Exhibit R, ¶¶ 2, 20, pp. 1, 5 (Ex-191-192).

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74.

Mine manager Roger Leonard also heard conversations noting that if the mine

were shut down, or if the cyanide leak was disclosed, this would " [GRL' fundraising nix s] efforts, and they were working on other projects, in addition to Summitville. And if Summitville failed, they wouldn' be able to promote any of the projects." Leonard Dep., t Exhibit H, pp. 149:21-150:19 (Ex-135). 75. It was not only GRL that stood to benefit from these promotional efforts. Dick

Stoehr in particular felt that Friedland violated his ethical duties to GRL by recruiting deals on behalf of GRL, then shuttling the best ones off to other companies where Friedland himself stood to make a greater gain. Stoehr Dep., Exhibit D, pp. 108:20-109:20 (Ex-63-64); 120:5-19 (Ex-65); 130:15-131:4 (Ex-67); 409:1-6 (Ex-79). After Friedland resigned, GRL had an outside attorney conduct an investigation into the issue; Stoehr' dissatisfaction with s the board' decision not to pursue the issue further, after the attorney gave his initial report, s led to Stoehr' resignation. Id. at pp. 184:21-189:15 (Ex-69-70). s 76. A precise quantification of the financial benefit Friedland derived from

Summitville likely will remain elusive, due to the disorderly nature of the " herd of companies"created by Friedland, with very similar names and changing identities; the many securities offerings and different classes of securities issued by GRL; and the " endless dealing between Mr. Friedland and companies he controlled and Galactic and its subsidiaries." Expert Report of Luke Danielson (former member and Chairman of the MLRB), Exhibit S, p. 15 (Ex-195).

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77.

What is apparent is that the Summitville mine was the principal asset of GRL

from 1984-1986 and the focus of Friedland' management attention, that over these years the s market capitalization of GRL increased dramatically, that this increased value resulted in a considerable increase in the value of GRL' shareholders'holdings, that GRL' securities s s success was driven in an important way by the perception that Summitville was a success, and that GRL' success gave Friedland a platform for becoming, according to Forbes, one of s the world' richest people. Danielson Report, Exhibit S, p. 16 (Ex-196). s Friedland was one of the principal negotiators to obtain property and mineral rights for Summitville. Environmental and economic concerns were revealed in this process. 78. Friedland was one of the principal actors for GRL in negotiating for the

mineral and property rights to mine at Summitville. Friedland Dep., Exhibit B, pp. 112:21114:11 (Ex-13-14). 79. Environmental liabilities associated with Summitville were raised during the

negotiations with Anaconda, the mineral rights holder. Id. at pp. 114:10-11 (Ex-14); 123:1125:14 (Ex-15-16); 126:4-9 (Ex-16). 80. On May 10, 1984, Friedland signed the agreement for mineral rights at

Summitville as President of GRL, as President of GRI, and again as President of SCMCI. Id. at pp. 131:25-132:21 (Ex-17). 81. Although SCMCI already was in existence, GRL assumed " environmental all

and reclamation requirements and liabilities connected with the Summitville property"and

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agreed to indemnify Arco [a related company] for these assumed liabilities. Id. at pp. 132:22-133:3 (Ex-17-18); 133:15-21 (Ex-18); 134:17-135:11 (Ex-18). 82. After the mineral rights were acquired, Friedland helped negotiate for Galactic

to obtain " very large body of technical information and historical information and data" a from Anaconda. Id. at p. 142:1-7 (Ex-20); Roper Dep., Exhibit F, p. 47:2-14 (Ex-94). 83. Contained within this material was an Anaconda analysis indicating that heap

leach processing for gold would not be viable due to the short length of the outdoor leaching season at Summitville. Friedland Dep., Exhibit B, at pp. 140:22-141:4 (Ex-19-20); 142:19143:13 (Ex-20); 144:11-22 (Ex-20). 84. At his 1999 deposition, Friedland denied any memory of this, though he did

" clearly recall Ed Roper and Vic Hollister being consulted and thinking that the project might well be a candidate for heap leaching." Id. at pp. 141:7-11 (Ex-20); 144:15-22 (Ex20). 85. Ed Roper reviewed the information obtained from Anaconda and discussed

with Friedland the information that he considered to be material. Roper Dep., Exhibit F, pp. 48:25-49:25 (Ex-94-95). GRL considered the Anaconda analysis very important to its own evaluation of the feasibility of the Summitville Mine. Id. at pp. 48:3-24 (Ex-94). 86. Concerns about acid mine drainage were central in the Anaconda report, and

included both the concern that waste rock piles would generate acid drainage and the concern that an open pit mine would excavate above and into a significant portion of the underground workings from past mines, thereby exposing additional areas of sulfide mineralization to the

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acid generation process. Campbell Report, Exhibit T, § 3.1, pp. 7-8 (Ex-204-205); Summitville Open Pit Prefeasibility Report, Exhibit U, pp. 10-1, 10-3, 10-7 (Ex-215-217). If modern mine activities materially increased acid drainage, something Friedland' own expert challenged in the underlying cost recovery action, then s this increase flowed inherently from the decision to commence mining and from the way mining ultimately was conducted at Summitville. 87. Acid rock drainage (ARD) occurs naturally in the San Juan Mountain area,

which is formed from hydrothermally altered volcanic rocks. Campbell Report, Exhibit T, § 2.3, pp. 3-4 (Ex-202-203). This ARD created high acidity (low pH) conditions in many area streams before any mining activity occurred. Id. at p. 4 (Ex-203). 88. Friedland himself has expressed the opinion that the low pH found in waters

near Summitville is not due to mining activities. When touring the mine with Dick Stoehr, Friedland said something close to " Hell, those creeks ran 2 pH before anybody did anything up there." Stoehr Dep., Exhibit D, at pp. 346:9-347:8 (Ex-74). 89. In any event, Summitville was first mined over a century ago. Placer mining

began at the Summitville site in approximately 1870 and continued by various organizations until about 1973. Campbell Report, Exhibit T, § 3.1, p. 7 (Ex-204). 90. In the underlying cost recovery action between the U.S. and Friedland, though

the parties did not agree about the extent to which SCMCI' activities contributed to ARD, s " parties agreed that the Reynolds Adit, constructed in 1897, made a substantial the contribution to the ARD at the Site." Campbell Supplemental Report, Exhibit V, § 4.0, p. 16 (Ex-219).

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91.

Concerns about exacerbating ARD were one reason Anaconda decided not to

begin open pit heap leach mining operations in the early 1980s. Campbell Report, Exhibit T, § 3.1, pp. 7-8 (Ex-204-205); Summitville Open Pit Prefeasibility Report, Exhibit U, pp. 10-1, 10-3, 10-7 (Ex-215-217). As noted above, this information was obtained and reviewed by GRL, headed by Friedland, before it decided to mine the Summitville property. 92. Several sections in the original permit application for SCMCI' activities at s

Summitville were designed to mitigate the potential acid run-off from the mine. Campbell Report, Exhibit T, § 3.5, p. 15 (Ex-208) and § 6.0, p. 35 (Ex-211). 93. SCMCI blasted and/or mined 22,000,000 tons (16,923,000 cubic yards) of ore,

and the EPA estimated that 11,000,000 cubic yards of waste rock, tailings and mine waste required remediation at the Site. Campbell Supp. Report, Exhibit V, § 4.0, pp. 16-17 (Ex219-220). 94. TIC' expert engineer, Pressley Campbell, explains that the record from the s

underlying cost recovery action " indicate[s] that the ARD being released from the South Mountain and other areas of the Site, including the Reynolds Adit, was exacerbated by the blasting and excavation of the mine pit that allowed infiltration of surface water into the subsurface . . ." Campbell Supp. Report, Exhibit V, § 4.0, p. 16 (Ex-219). 95. Dr. Campbell also believes ARD was exacerbated by SCMCI' extensive s

deviations from the permitted design, which altered the size, sequence, location and reclamation of the mine facilities. Campbell Report, Exhibit T, §6.0, p. 35 (Ex-211). These changes eliminated many hydrologic mitigation measures that were intended to manage

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effectively the runoff, with the result that there was a substantial increase in ARD and erosion. Id. 96. On May 2, 1996, through its bankruptcy trustee, SCMCI pleaded guilty to 40

felony counts with respect to its operations at Summitville. Plea Agreement and Statement of Facts excerpts, Exhibit W (Ex-222-233). Among the violations was the knowing discharge of polluted water, including acidic water, from a point source at the Summitville Mine at or about the Reynolds Adit, on July 23, 1990 and several later dates. Id. at p. 32 (Ex-231). The factual basis for this charge includes that " Documents and testimony would show that Summitville had information as early as 1984 that its activities would generate acid mine drainage and would adversely affect the flow from the Reynolds Adit." Id. at p. 34 (Ex-232). 97. Once the heap leach pad was filled with ore and leachate, the " spent ore"and

liquid also posed acid drainage issues. Stott Report, Exhibit X, p. 6 (Ex-236). In the fact discussion immediately below, numerous paragraphs address the ways Friedland directed decisions about what to do with the excess water in the pad, and the environmental consequences. 98. The need to reclaim contaminated water from the heap after mining was

completed was a common and widely known feature in the industry that should have been anticipated by SCMCI and its upper management. Id. This was in fact addressed in the Summitville permit application. Id. at pp. 7-8 (Ex-237-238).

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Cyanide reclamation costs were inherent in the decision to operate the Summitville mine. If additional costs were incurred, they resulted from decisions about how the mine was constructed and operated that were influenced by, joined in or directed by Friedland. 99. Cyanide was used in the basic operation of the Summitville gold mine.

Accordingly, the decision to build the mine in the first place inevitably meant cyanide would be introduced and would need to be reclaimed or treated at some point. Stott Report, Exhibit X, pp. 5-6, 21 (Ex-235-236, 239). This eventual detoxification and reclamation was required by the Colorado permit obtained for SCMCI in connection with the Summitville mine. Id. at pp. 7-8, 21 (Ex-237-239). 100. Summitville was designed to be a closed system, with no discharge or loss of

cyanide solution to the environment. Campbell Report, Exhibit T, p. 19 (Ex-209), citing the mine' 112 Permit Application. s 101. Within a week after leaching operations began in June 1986, cyanide was

detected in the heap leach pad leak detection system and shortly thereafter it was detected in the groundwater that collected in the French drain beneath the leach pad. Campbell Report, Exhibit T, p. 12 (Ex-206). In July 1986 the Colorado Mined Land Reclamation Division (MLRD) issued a Notice of Violation (NOV) for " failure to minimize the effects to the prevailing hydrologic balance and failure to follow the proposed mine plan." Id. 102. The MLRD was very concerned about the potential that cyanide would leak

off-site, and at least two of the staff were inclined to recommend to the MLRB that the Mine be shut down until the problem could be definitively solved. Bischoff Dep., Exhibit Y, pp. 103:23-104:19 (Ex-242); 121:2-14 (Ex-245); 122:8-123:1 (Ex-245).

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103.

As noted above, Friedland was quite concerned about the effects a shut-down

at Summitville would have on his efforts to raise money for GRL, and he traveled to Colorado to participate in a meeting with Summitville employees and consultants to prepare a response to the state. 104. Friedland was one of a group who met with MLRD staff a few days before the

MLRB hearing. After Friedland' emphatic representations to the MLRD staff about his s personal commitment to finding and solving the cyanide problem, the staff changed their mind and decided not to recommend that the Mine be shut down. Bischoff Dep., Exhibit Y, pp. 115:7-118:1 (Ex-243-244); 119:5-121:14 (Ex-244-245). 105. At the official MLRB hearing, Friedland personally appeared to again express

his commitment to finding and fixing the cyanide leak. He said " is our intention to not It only build a facility that is state-of-the-art, from the point of view of extracting minerals, but it is my personal commitment to you that I want to build a facility that will serve as a model for additional facilities of this type in the future." Mined Land Reclamation Board Meeting, July 24, 1986, Transcript, Exhibit K, p. 8 (Ex-151) (emphasis added). Continuing, he said " ve suggested to your staff and I' determined that we will hire a senior member of our I' m 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 may arise . . ." Id (emphasis added). He also said " Summitville heap leach facility is something that I' been The ve

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working on now for five years. It' been the focus of my life and our Board . . ." Id. at p. 7 s (Ex-150) (emphasis added). 106. At the MLRB presentation, Friedland went on to offer his own technical

advice about how to solve the problem of a potential leak. He said: " ve come up with the I' idea it would be important for us to design and implement a redundant facility. The only kind of redundant protection like this would be something like an airlift in a spaceship ­ whereby if all those control mechanisms that you see on the blackboard there, if they were to fail for any reason, we would have backup systems to further defend that drainage from any kind of incursion of cyanide. This is very important to me, it' important to everybody in our s company, and we are now determined to engineer and construct such a backup system." Id. at p. 8 (Ex-151) (emphasis added). 107. In October 1986, SCMCI constructed a sump and pump-back system to collect

the impacted groundwater from the French drain and pump it back into the heap leach pad. Campbell Report, Exhibit T, p. 12 (Ex-206). 108. There is uncertainty and dispute about how cyanide solution got into the leak

detection and French drain systems below the pad. TIC expert Patrick Fox believes the reasons likely included errors and omissions in the design, construction and operation of the heap leach pad. Fox Report, Exhibit Z, Opinion 8, p. 6 (Ex-248). Among the many errors and omissions cited by Dr. Fox are the change from three separate heaps to a single heap, hurried construction, winter construction, a hurried ore placement and leaching schedule that

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gave insufficient time for liner repairs, and the lack of heap cover during the winters. Id., Opinions 4, 5 and 6, pp. 5-6 (Ex-247-248). 109. Between June and October 1987, SCMCI reported nine cyanide spills from the

French drain sump and pump-back system, prompting the MLRD to note that SCMCI failed to follow its permit requirements to maintain a non-discharge status. Campbell Report, Exhibit T, pp. 12-13 (Ex-206-207). On December 24, 1987, the Water Quality Control Division (WQCD) of the Colorado Department of Public Health and Environment issued an NOV for unauthorized discharges from the French drain into Wightman Fork. Id. 110. Excess contaminated water in the heap leach pad was a serious and constant

problem for the Mine, of which Friedland was well aware. Russell Dep., Exhibit L, p. 152:16-25 (Ex-159). The water level steadily rose in the heap as a result of precipitation, diluting the leachate and delaying the gold recovery. Id. at pp. 135:23-136:6 (Ex-157); 153:17-154:2 (Ex-160). The excess water problem proved " totally insoluble"for SCMCI, as they could not reduce its toxicity to the extent demanded by government regulators for release back into the environment. Id. at p. 156:4-12 (Ex-160). 111. Several factors affected the water balance. The change from three smaller

heaps, covered in the winter, to one large uncovered heap were among them. Campbell Report, Exhibit T, pp. 19-20 (Ex-209-210). 112. In addition, planned diversion ditches meant to carry water away from the pad

were not constructed and maintained in accordance with the Permit Application, thus they were ineffective and led to the washout of the clay liner beneath the pad and a substantial

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increase in the water flowing into and through the area. Campbell Report, Exhibit T, p. 20 (Ex-210). 113. SCMCI ultimately applied for a permit to discharge treated water from the

heap leach pad into Wightman Fork in February 1988. The permit was issued in May 1989, and by June 1989 a water treatment plant was constructed and operational. Campbell Report, Exhibit T, p. 13 (Ex-207). Friedland himself participated in the decision to build the plant. Wyman Dep., Exhibit C, p. 152:2-14 (Ex-53). 114. The water treatment plant was not able to meet the standards for discharge.

Wyman Dep., Exhibit C, pp. 151:10-152:1 (Ex-53). 115. In July 1989, SCMCI began land application procedures to discharge treated

water by spraying it on the roads and land. Campbell Report, Exhibit T, p. 13 (Ex-207); Russell Dep., Exhibit L, pp. 156:13-157:6 (Ex-160-161). 116. In July 1990, SCMCI was cited by the WQCD for these procedures because

they led to unauthorized overland flow. Campbell Report, Exhibit T, p. 13 (Ex-207). 117. Friedland himself participated in constant discussions about the excess water

and how to get rid of it. Among the recurring problems discussed by the GRL board was " water building up, the same broken record went on and on forever." Wyman Dep., the Exhibit C, pp. 58:4-59:15 (Ex-45).

118.

Records indicate that Wyman was on a conference call including Friedland

in June 1987, where the topic of land application of water was discussed. Wyman Dep.,
Exhibit C, pp. 132:14-134:11 (Ex-51-52). Though he didn' have a contemporaneous t

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memory of the call, when asked why he would have been discussing this with Friedland, he said " Because we thought it was a hell of a good deal. We got a permit to get rid of some of the [@#] water. . . It was a concern of everybody within the company that we had to figure out a way to get rid of that [@#] water or we were going to run it down the valley. So yes, it was considered a big thing that we were allowed to do that and had the system in place to do it." Id. at pp. 133:9-134:11 (Ex-52).
119. Ed Roper also recalls talking with Friedland about the land application of

possibly contaminated water. In fact, he said he finally quit working for GRL because he was concerned that this was going to happen when he was an executive, but he felt that he had no real authority about what happened at the mine. Roper Dep., Exhibit F, pp. 350:13352:18 (Ex-117-118).

120.

Luke Danielson believes the company was " than candid"about a less

number of issues, " of the most serious being the so-called " one land application"of contaminated water." Danielson Aff., Exhibit HH, ¶ 48 (Ex-295). He believes the lack of candor about the thoroughness of the investigation before the method was used, and about problems once it began occurring, " direct and demonstrable environmental had consequences." Id.
121. Charles Russell concurs that by the fall of 1987, the excess water problem was

apparent to everybody, including Friedland. Russell Dep., Exhibit L, p. 157:7-19 (Ex-161). Friedland directed Wyman and Russell " pursue by all means possible the solution of to getting rid of this water." Id. at pp. 161:3-162:2 (Ex-162).

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122.

Luke Danielson places the certainty even earlier. The idea that the

Summitville Mine could be a zero discharge facility was " dubious even in the early planning and permitting stages"and was clearly unattainable by the summer of 1986. Danielson Aff., Exhibit HH, ¶¶ 43-45 (Ex-295).
Friedland made key decisions that concerned environmental compliance, that had environmental consequences, and that effectively became the environmental policy for the mine. 123. Friedland had overall control of the Summitville mine project, how it was

organized, and who was in charge. He decided who the top manager would be, he personally negotiated the principal contracts for financing and construction, and he set corporate priorities. Danielson Report, Exhibit S, p. 27 (Ex-197). These priorities did not include environmental management. Id. at p. 28 (Ex-198).

124.

As is explained above, the very decision to build and operate an open pit

heap leach pad gold mine at Summitville ­a decision driven by Friedland ­carried with it many known environmental risks and consequences. See also Danielson Aff., Exhibit HH, ¶ 18 (Ex-291). As also is explained above, the numerous changes from the project as permitted to as built and the rush to construct the project in harsh weather conditions ­ aspects of the project directed by Friedland ­had negative environmental consequences. See also Danielson Aff., Exhibit HH, ¶¶ 36-37 (Ex-294).
125. Friedland' control over SCMCI' environmental priorities was displayed s s

before the MLRB in July 1986. When he spoke before the Board, he said " m determined I' that we will hire . . . an environmental ombudsman onsite . . ." Danielson Report, Exhibit S,

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p. 29 (Ex-199) (emphasis added). In a related letter he presented to the Board, he stated: " I have directed management to immediately proceed to add a senior management level compliance officer on site to oversee every aspect of the project." Id. (emphasis added).

126.

Friedland made these promises without consulting Ed Roper, the " supposed

President"of the company; this action " permanently damaged their working relationship." Danielson Aff., Exhibit HH, ¶¶ 39-40 (Ex-294).
127. Luke Danielson' response to Friedland' statements is illuminating. s s

Danielson said: " a member of the Mined Land Reclamation Board for most of a decade, I As have participated in hundreds of hearings, and am familiar with a large share of the " dirty laundry"of Colorado' mining industry." Friedland' statements to the Board " some of s s are the most stunning remarks I have ever heard by an executive of a mining company. At the point the remarks were made, the project was already built and in operation." Danielson Report, Exhibit S, p. 29 (Ex-199) (emphasis in original). 128. GRL' subsequent efforts did not fulfill Friedland' ardent promises to the s s

satisfaction of MLRB. Danielson Report, Exhibit S, pp. 29-30 (Ex-199-200). 129. Mr. Danielson' conclusions about this are reinforced by executives who s

worked with Friedland in the late 1980s. Dick Stoehr identified a visit by environmental attorney Dean Massey to the GRL board in June 1990 (four years after leaching activities began) as only the beginning of company efforts to have an environmental policy. Stoehr Dep., Exhibit D, pp. 455:7-456:22 (Ex-81-82).

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130.

Gerald Wyman could not identify a person who set environmental policy for

the mine. When asked, he said " do not know the answer, how to answer that question. It I was not set by somebody." Wyman Dep., Exhibit C, p. 163:17-20 (Ex-54). There was no formal environmental policy. Id. at p. 163:21-23 (Ex-54).

131.

Friedland himself filled this vacuum, with his typical focus on impressing

investors. Wyman said: " in the sense of a formal policy. There was ­Friedland' Not s desire that was communicated to everybody was, let' do what we are supposed to and s run this property. We are not trying to pull a fast one. We are trying to run a mine and keep it open. We don' want to have it shut down with a big scandal about the EPA t coming in and shutting the mine down or the Mined Land Reclamation coming in an shutting the place down because we could not follow the law." Wyman Dep., Exhibit C, pp. 163:21-164:1 (Ex-54).
132. Minutes from a September 1988 GRL board meeting indicate that Friedland

informed the board of the need to build a water treatment facility and to obtain the necessary additional discharge permits. Russell Dep., Exhibit L, pp. 126:25-127:6 (Ex-156); 133:24134:4 (Ex-157).

133.

Delay in building this plant, apparently caused in considerable part by the

fact that the company did not want to spend the money if there was any alternative, " clearly exacerbated the problems at the site." Danielson Aff., Exhibit HH, ¶¶ 46-47 (Ex295).

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134.

As noted above, Luke Danielson, in his role as an MLRB member, was

given the " clear impression"by company representatives that all major decisions had to go through Mr. Friedland. Danielson Aff., Exhibit HH, ¶ 15 (Ex-291).
135. In any case, Luke Danielson noted that by the time Friedland made his

promises, " horse was very much out of the barn. By July, 1986, the mine had been built the and hurried into production. That had happened apparently without any significant environmental management of the project through its critical construction phase." Danielson Report, Exhibit S, p. 30 (Ex-200). The subsequent environmental failures were " logical and probable, almost inevitable consequences[s] of not having an environmental management system at a high risk mine site." Id.

136.

Danielson agrees with Wyman' opinion that the leach pad, as built, was s

essentially a " bathtub"that would continue to fill with water over time, unless the liquids could somehow be treated to a level where they could acceptably be discharged into the environment. Danielson Aff., Exhibit HH, ¶ 19 (Ex-291). Both concur that once built, in the way it was built, the leach pad was going to discharge water ­the only question was when and how. Id. at ¶¶ 19-20 (Ex-291-292).
Friedland did not challenge his CERCLA operator status in his Amended Complaint for contribution, but TIC and GeoSyntec did place Friedland' s conduct directly at issue in their Answers. 137. On May 2, 1996, through its bankruptcy trustee, SCMCI pled guilty to 40

felony counts related to operations at Summitville. Plea Agreement and Statement of Facts, excerpts, Exhibit W (Ex-222-233). Among the listed violations were conspiracy to discharge

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pollutants from point sources and conspiracy to violate the permit (p. 15 (Ex-223)); knowing discharge of pollutants from the French Drain system on July 23 and September 26, 1990 and several later dates, which was considered culpable particularly because the past discharges had put Summitville and its management on notice of the problems (pp. 20-21 (Ex-224225)); discharge of pollutants through land application on June 21, July 23, August 5, September 26 and October 10 1990, and several later dates, accompanied by a lengthy description of Summitville' failure since the summer of 1989 to comply with the land s application system as permitted and Summitville' ongoing misrepresentations to the State s about how land application actually was being done (pp. 22-26 (Ex-226-230)); and discharge of acid pollution through the Reynolds Adit on July 23, 1990 and several later dates, which Summitville and its management knew by 1987 and earlier would be a significant problem (p. 32 (Ex-231)). 138. On May 23, 1996, the United States and the State of Colorado brought an

action against Friedland to recover response costs incurred at the Mine pursuant to Sections 104 and 106 of CERCLA. Friedland Mot. for Summ. J. dated 10/30/06, Doc. No. 151 at 3. 139. On December 22, 2000, Friedland entered into a Consent Decree that resolved

the cost recovery action, pursuant to which he paid $20,723,181 to the United States and the State of Colorado. Friedland now seeks to recover this $20.7 million payment from the Defendants in this action. Am. Compl. dated 12/17/04, Doc. No. 17 at ¶¶ 4-5, 39, 48 (Ex250, 256, 257).

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140.

Friedland' Amended Complaint alleges only claims brought under CERCLA s

§ 113. Plaintiff' Amended Complaint, Exhibit AA, pp. 7-9 (Ex-255-257). These claims are s expressly titled as claims for contribution. Id. 141. Nowhere in Friedland' Amended Complaint does he allege that he has paid s

more than his fair share of the costs incurred in connection with environmental pollution at the Summitville Mine. See Id. 142. Nowhere in Friedland' Amended Complaint does he deny that he is a s

CERCLA operator, allege that he is not a CERCLA operator, or otherwise reference or raise his personal CERCLA operator status in any way. See Id. 143. In its Answer, TIC denied that Friedland stated a claim under § 113(f), denied

that TIC had liability to Friedland for contribution under § 113, and alleged that the Complaint failed to state a claim. Answer of Defendant The Industrial Company to Amended Complaint, Exhibit BB, ¶¶ 1, 5, 6, 39, 46, 48 and First Affirmative Defense (Ex260- 264). 144. TIC also raised several Affirmative Defenses that placed Friedland' own s

misconduct squarely at issue. See the Second, Twentieth, Twenty-First, and Twenty-Fifth Affirmative Defenses. Id. at pp. 8, 11 (Ex-265). 145. On April 29, 2005, GeoSyntec made an Unopposed Motion to Amend its

Answer, after obtaining the consent of Friedland' counsel. Unopposed Motion for Leave to s Amend Answer and Affirmative Defenses, Rule 7.1 Certification, Exhibit CC, p. 1 (Ex-268). The proposed amendments included: " add a Sixteenth Affirmative Defense to the effect 2)

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that Friedland' claims may be barred or reduced because Friedland has not incurred costs, s expenses, or damages in excess of its own equitable share of liability;"and " add a 3) Seventeenth Affirmative Defense to the effect that to the extent that Friedland' claims are s based upon Section 107 of CERCLA, 42 U.S.C. § 107, rather than Section 113 of CERCLA, 42 U.S.C. § 113, Friedland' claims are bared [sic] because Friedland is a potentially liable s party." Id. at p. 2 (Ex-269) (underlining added). These two affirmative defenses were asserted. Amended Answer to Amended Complaint, Exhibit DD, p. 10 (Ex-274). 146. Other Affirmative Defenses alleged by GeoSyntec placed Friedland' own s

conduct at issue. See the Fourth, Ninth, and Thirteenth Affirmative Defenses. Amended Answer to Amended Complaint, Exhibit DD, at pp. 8-9 (Ex-272-273). Argument A. As the plaintiff in a CERCLA contribution action, Friedland has the prima facie burden to establish that he paid more than his fair share of the response costs incurred at Summitville, whether he claims his " fair share" is zero or some other amount.

Friedland brought this action under CERCLA § 113(f), which states that " Any person may seek contribution from any other person who is liable or potentially liable under section 107(a)." 42 U.S.C. § 9613(f) (2006). In resolving these " contribution claims, the court may allocate response costs among liable parties using such equitable factors as the court determines are appropriate." Id. Having brought this § 113(f) action, Friedland must prove that he is entitled to contribution. Initially, he must prove that defendants TIC and GeoSyntec are liable under § 107(a) of CERCLA. Bancamerica Commercial Corp. v. Mosher Steel of Kan., Inc., 100

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