Legal tactics land Peabody in hot seat

MONDAY, JULY 22, 2002

The world's largest coal company has been threatened with contempt sanctions for its participation in what one federal court has called "suppressing and concealing" of information from the Navajo Nation.

U.S. District Judge Emmet G. Sullivan last month criticized Peabody Coal for legal moves that stalled the tribe's case. In a June 24 decision, he warned the company that "frivolous" court motions are grounds for punishment.

"It is apparent to the court that Peabody filed its motion," he wrote, "at least in part in an attempt to further delay discovery in this matter."

But a larger defeat came with Sullivan's refusal to allow Peabody to suppress information that was already revealed in the Navajo Nation's $600 million breach of trust case against the federal government. He said the company made a "strategic decision" to release certain documents and cannot now try to conceal them.

The maneuvers comes as Peabody defends itself from an unusual lawsuit that seeks at least $2 million for alleged fraud. The company, along with other private and public entities, is accused of conspiring with federal officials to prevent the Navajo and the Hopi tribes from receiving favorable returns for coal mining in northeastern Arizona.

A final decision hasn't been made but in response to Sullivan's recent ruling, Peabody last week filed an appeal to the District of Columbia Court of Appeals. No dates have been set for oral arguments.

The lawsuit is just one of three in the federal court system involving Peabody. At issue are lease agreements for mines on the Navajo and Hopi reservations.

One suit accuses the Department of Interior of breaching its fiduciary duties to the Navajo Nation by approving the leases. It was in this case that secret meetings between former Interior Secretary Don Hodel and Stanley Hulett, a personal friend and Peabody lobbyist, came to light.

The information proved damaging to the department's defense -- and now to Peabody's -- and a federal appeals court last August said the tribe was owed damages. The Bush administration appealed and the Supreme Court will hear arguments later this fall.

Separately, Peabody is trying to force the Navajo and Hopi tribes into arbitration in federal court in Arizona. Sullivan chastised the company for using this new lawsuit, filed in February, an an excuse to delay proceedings in his court.

Besides Peabody, the defendants in the Navajo case include Salt River Project and Southern California Edison. The companies rely on coal extracted from Navajo and Hopi lands.

The Navajo Nation originally filed its lawsuit in February 1999, alleging federal fraud, racketeering and other charges. The Hopi Tribe was allowed to intervene in March 2001.

Relevant Documents:
Navajo v. Peabody (6/24) | NAVAJO NATION v. US, No 00-5086 (8/10)

Relevant Links:
The Navajo Nation - http://www.navajo.org
Peabody Energy - http://www.peabodyenergy.com