Free Status Report - District Court of Federal Claims - federal

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Exhibit A

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1 IN THE UNITED STATES ) ) ) ) ) ) ) ) ) COURT OF FEDERAL CLAIMS

PACIFIC GAS, Plaintiff, v. UNITED STATES, Defendant.

Docket Nos. 07-157C 07-167C

Courtroom 1 95 7th San Francisco, California Tuesday, June 24, 2008 The parties met, pursuant to the notice of the Court, at 10:14 a.m. BEFORE: HONORABLE LOREN A. SMITH Judge

APPEARANCES: For the Plaintiff: MARIE L. FIALA, Esquire Heller Ehrman 333 Bush Street San Francisco, California (415) 772-6000 For the Plaintiff:: STAN BERMAN, Esquire Heller Ehrman 701 Fifth Avenue, Suite 6100 Seattle, Washington 98104-7098 (206) 447-0900

94104-2878

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2 APPEARANCES (CONT'D) For the Plaintiff: ROBERT MOCKLER, Esquire LAURA LINDGREN, Esquire Hennigan Bennett & Dorman 865 South Figueroa Street, Suite 2900 Los Angeles, California 90017 (213) 694-1200 For the Plaintiff: DANIEL SAULS, Esquire Steptoe & Johnson 1330 Connecticut Avenue, N.W. Washington, D.C. 20036 (202) 429-8054 For the State of California: JOSHUA SONDHEIMER, Esquire JERRY L. CANON, Esquire California Attorney General's Office 455 Golden Gate Avenue, Suite 11000 San Francisco, California 94102-7004 (415) 703-5599 For the Defendant: MARK MELNICK, Esquire U.S. Department of Justice Civil Division Commercial Litigation Branch National Courts Section 1100 L Street, N.W. Washington, D.C. 20530 (202) 305-7573 Also Present: SEAN McNAMARA JOHN BREMER PETER BURKE RUSSELL COHEN PEGGY WILLIAMS

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169 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 They were addressing both of those questions, those issues as required by the matters that were put forth to them by the parties participating before them. They needed to address that question in order to resolve the matters that were before them. They did so and in

the process they ruled that there was a lack of privity. Having ruled that there's a lack of privity and, as we indicated before, giving them the deference that we believe this Court should, and a caselaw we've cited indicates that it should. In the absence of privity,

they cannot sue for breach of contract, they are not indistinguishable issues. I've got of other things that I'd like to say, but I'm not going to. I appreciate your patience, Your

Honor, I'm sure everyone here does and as we indicated before, we request that the Court dismiss the claims. obviously submit the remainder of the issues on the briefs. Thank you. THE COURT: Okay. Mr. Melnick, thank you and Ms. Fiala We

thank all the counsel who have argued this:

and Mr. Sondheimer and Mr. McNamara and Mr. Melnick. It's been very very helpful to the Court. This is

obviously a complicated transaction and to some extent from reading the briefs you can't get a real feel for what is going on here because usually, at least in my Heritage Reporting Corporation (202) 628-4888

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170 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 experience, understanding contracts requires some understanding of the physical or economic reality that is behind the contracts. After considering this for awhile,

it seems to me pretty clear that I'm going to have to deny the motion to dismiss. Mr. Melnick and Mr. McNamara

make pretty strong arguments and they may be right, but it seems to me those arguments are not arguments of the kind that will allow a motion to dismiss to be granted, but rather go to the central merits of the case. I guess in every case where you have a dispute between the government and a private party, there may not be jurisdiction if we were to find at the beginning of the case there was no right on the part of the plaintiff to sue. But obviously the standard can't be that or

you'd have to decide the case before you decide the case. The standard has a well-pled complaint showing the likelihood or the possibility of the plaintiffs having a right to recover and in this case, at least, I think it does and the case is complex enough that while ultimately Mr. Melnick and Mr. McNamara; the government's interpretation may be correct, at this stage it's impossible for the Court to say that. That really requires the Court to deny the motion; likewise with the issues of collateral, estoppel, and presentation to the contracting officer, at least it Heritage Reporting Corporation (202) 628-4888

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171 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 seems that there's been enough of a showing of a presentation to the contracting officer in the file claim; it's only a different legal theory that the case - the Court has to allow the case to move to a further stage, though it's always nice to be able to see if you can resolve a case on motion as quickly as possible because it's the most efficient area, however in this case it seems to me it's not the correct legal answer that the Court would have gone with. So I'm going to deny the motion to dismiss and what I'm going to suggest is a couple of things. First,

that we hold a telephone status conference; why don't we pick a day that's somewhere around 30, 45 days from now so we're at the end of June. I was going to suggest

something like the 31st of July and at that conference I would like the parties to confer with each other, the state and the utilities with the government, and come up with a proposed schedule of how we proceed to resolve this case expeditiously, because I know some of the S&L cases, as Mr. Melnick was well aware -- have taken decades and this case already involves transactions that occurred in 2000 and I would like to see if we could move this case along a little more rapidly than that. So I'd like to schedule -- how about scheduling it at 4:30 on the 31st of July? Mr. Melnick?

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172 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1:30. MS. FIALA: Fine, Your Honor. Fine with us, Your Honor. So we will schedule that. The MR. MELNICK: THE COURT: 4:30 East Coast or West Coast? The West Coast would be

East Coast.

MR. SONDHEIMER: THE COURT: Okay.

second thing I'd like to think about is in terms of understanding the case. I've obviously gotten into it

from the briefs and from the descriptions here, but I think the Court to the extent that the Court is going to interpret the contracts, because that's the only way you can understand whether there's privity or not, what the intent of the scheme was, was the Court might find it useful to have some kind of short hearing of -- I'm looking at a couple of days, three days at most -- where the Court can hear some of the people who were involved in what this transaction was all about, with a relatively limited focus of understanding the factual background of these cases. I know that was particularly helpful in the Savings & Loan cases which like the power crisis grew out of a crisis with a lot of parties' divergent interests and some emergency actions and understanding the economic reality was very helpful in getting through these cases and so I think that would really be an important step in Heritage Reporting Corporation (202) 628-4888

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173 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 idea. helping the Court understand the legal issue, is to have a factual hearing to at least get a sense of what this is all about from people who were involved. Not so much the

legal sense but the practical, economic sense of what was happening. So I leave that to the parties to discuss, that I'm not 100 percent sure how that would work, but

again from my lack of knowledge of the whole economic transaction, but I know it's essential for me to understand that if I'm going to understand the legal issues of privity. With that, let's discuss that on the 31st at 4:30. Any other business we need to -MS. FIALA: Would the Court like any written

positions in advance of the status conference? THE COURT: I don't think so. At the moment I'm If the parties

looking to try to develop a schedule.

want to submit proposed schedules -- I first recommend that you submit proposed schedules to each other and have that discussion and maybe if you can agree on some common schedule, submit that or something like five days before the conference, submit either a proposed schedule jointly or where you have differences, each side will be submitting a proposed schedule. MR. MCNAMARA: Your Honor?

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174 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: Yes? Is the proposed schedule you're

MR. MCNAMARA:

contemplating is it also then inclusive of the filing of the answer, or is the time period for filing the answer now running? THE COURT: The Court will stay the period for

filing of an answer so that that would be part of the schedule that you'd be proposing. Okay, anything else?

Well, if not, I want to thank our reporter, and also the Ninth Circuit for being very gracious in giving us this courtroom and thank you all. All your oral

arguments and briefing was extremely helpful for moving it a significant degree forward in understanding this case. And with that, the Court will stand in recess. (Whereupon, at 5:14 p.m., the hearing in the above-entitled matter was concluded.) // // // // // // // // Heritage Reporting Corporation (202) 628-4888

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175 REPORTER'S CERTIFICATE

DOCKET NOS.: CASE TITLE: HEARING DATE: LOCATION:

07-157C, 07-167C Pacific Gas v. U.S. June 24, 2008 San Francisco, California

I hereby certify that the proceedings and evidence are contained fully and accurately on the tapes and notes reported by me at the hearing in the above case before the United States Court of Federal Claims.

Date:

June 24, 2008

Kent Andrews Official Reporter Heritage Reporting Corporation Suite 600 1220 L Street, N.W. Washington, D.C. 20005-4018

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