[00:00:00] Speaker 04:
Good morning, and may it please the court.

[00:00:02] Speaker 04:
My name is Cal Chipchase.

[00:00:03] Speaker 04:
I represent the defendants, which I'll refer to together as Capilena.

[00:00:08] Speaker 04:
With me at table are Lisa Swartzfeger and Doreen Matsuoka.

[00:00:11] Speaker 04:
Your honors, this case arises in an unusual procedural posture.

[00:00:16] Speaker 04:
That is, or unusual factual posture, I guess I should say.

[00:00:20] Speaker 04:
And that is that here, the product that allegedly caused the harm was put into the stream of commerce and rendered defective by the government.

[00:00:28] Speaker 04:
not by a private actor.

[00:00:30] Speaker 04:
In the typical federal officer removal case, the private actor manufactures a product pursuant to government specifications and passes it up the stream to the government, after which it causes some harm.

[00:00:43] Speaker 04:
Here, there's no allegation that Capilena manufactured the product or rendered it defective.

[00:00:49] Speaker 04:
Instead, the allegation is the government developed the product, rendered it defective, and put it into the stream of commerce.

[00:00:57] Speaker 04:
Capilena is said to be liable solely because it was part of that stream of commerce.

[00:01:03] Speaker 04:
Now, while we find ourselves on different points in the commerce stream, one thread connects us to all of those other cases in which the court has found federal officer removal to be appropriate.

[00:01:15] Speaker 04:
That thread is that in all the cases, the private actor is alleged to be liable for some action that the government took.

[00:01:25] Speaker 00:
Do you have a federal defense?

[00:01:27] Speaker 04:
Yes, your honor.

[00:01:28] Speaker 04:
And what is that federal defense?

[00:01:30] Speaker 04:
There are two federal defenses.

[00:01:31] Speaker 04:
The first is government contractor's defense.

[00:01:34] Speaker 04:
The second is derivative sovereign.

[00:01:35] Speaker 00:
And how are they government contractors?

[00:01:38] Speaker 04:
So the government contractor's defense comes from the test in Boyle, which was developed under the FTCA's exception for discretionary actions by the federal government.

[00:01:47] Speaker 04:
Under that test, ordinarily,

[00:01:49] Speaker 04:
the contractor produces a product pursuant to some precise specifications.

[00:01:55] Speaker 00:
In that case, I think it was an airplane, yeah.

[00:01:56] Speaker 04:
An airplane or Agent Orange or boilers in the case of the asbestos cases, like Leight and Isaacson.

[00:02:06] Speaker 04:
The Isaacson, rather, Agent Orange case.

[00:02:08] Speaker 04:
Here, far more than government specifications that the contractor followed, the government is alleged actually to have developed the product itself.

[00:02:16] Speaker 04:
and itself put that product in the stream of commerce and itself made that product defective.

[00:02:21] Speaker 00:
But I think that takes you out of the federal contractor defense.

[00:02:25] Speaker 00:
Not at all, Your Honor.

[00:02:26] Speaker 04:
It's entirely consistent with the basis of the federal contractor's defense, which again is the FTCA exception.

[00:02:31] Speaker 00:
So what did your client do that was required by a federal contract?

[00:02:37] Speaker 04:
So there's two federal contracts, the Felice and the Water Agreement.

[00:02:40] Speaker 04:
What my client did, as required by those agreements, which we read together,

[00:02:44] Speaker 04:
deliver water to the plaintiffs in this case.

[00:02:48] Speaker 00:
Now, wait a minute.

[00:02:50] Speaker 00:
Did the contract with the government require them to deliver water or did the contract with the government allow them to get water?

[00:02:57] Speaker 04:
It did both, Your Honor.

[00:02:58] Speaker 04:
Remember, there are two contracts here.

[00:03:00] Speaker 04:
The district court focused only on one in both cases.

[00:03:03] Speaker 04:
In both cases, the district court correctly recognized that Copulina under the utility agreement

[00:03:08] Speaker 04:
is required to purchase and receive the government's water at the delivery point.

[00:03:13] Speaker 04:
The delivery point, as stated in the contract, are the meters on the lateral lines.

[00:03:19] Speaker 04:
Those are the meters that register use.

[00:03:21] Speaker 04:
Those meters start ticking when the users start using.

[00:03:24] Speaker 04:
The users here are the residents.

[00:03:26] Speaker 04:
And in that agreement, that water agreement,

[00:03:29] Speaker 04:
It expressly recognizes and cites the lease in several respects.

[00:03:34] Speaker 04:
One, the water agreement term is tied to the lease term.

[00:03:38] Speaker 04:
It ends when the lease ends.

[00:03:40] Speaker 04:
Two, the water agreement requires Copulina only to use the water on those premises.

[00:03:46] Speaker 04:
Three, the water agreement or utility agreement expressly contemplates that the water will be used for the tenants in two ways.

[00:03:53] Speaker 04:
One, it prohibits Copulina from reselling that water.

[00:03:56] Speaker 04:
Two, it directs that Capulino may only recover from the tenants in the leased premises its cost of delivering that water.

[00:04:04] Speaker 04:
The third connection, the final connection I should say to the lease, is that that agreement expressly requires Capulino to follow all Navy directions and instructions.

[00:04:14] Speaker 04:
That includes the lease agreement.

[00:04:17] Speaker 04:
The lease agreement was entered into pursuant to a unique federal statute.

[00:04:21] Speaker 04:
This is not the ordinary private party or public private venture statute.

[00:04:26] Speaker 04:
This is a statute specific to Ford Island.

[00:04:29] Speaker 04:
Under that statute, 10 USC 2814, the Secretary of the Navy was congressionally authorized to enter into leases only if

[00:04:39] Speaker 04:
those leases furthered the purpose of the section.

[00:04:42] Speaker 04:
The purpose of the section is the development of Fort Island in a manner that is compatible with the mission of the Navy.

[00:04:49] Speaker 04:
That finding or that purpose is then reflected in the lease, which in the first whereas clause finds that this lease will further the purpose of 28 or 10 U.S.C.

[00:04:59] Speaker 04:
Section 2014.

[00:05:01] Speaker 00:
There are three basic requirements for you to be protected or to get the removal.

[00:05:06] Speaker 00:
The second one is there must be a causal nexus between your actions taken pursuant to a federal officer's actions.

[00:05:15] Speaker 00:
Now, what actions of your client were taken pursuant to?

[00:05:20] Speaker 00:
Now, pursuant to, I read that as caused by, that is to say the federal officer directs and your client then does something.

[00:05:28] Speaker 00:
How does your client fit within that?

[00:05:31] Speaker 04:
Certainly, Your Honor.

[00:05:31] Speaker 04:
So as this court explained and gone called, what that really means is because of.

[00:05:37] Speaker 00:
Does the plaintiff seek to hold the defendant... As I read it, it is taken at the direction of.

[00:05:44] Speaker 04:
So the court has, if you're talking about the acting under element rather than the causal nexus portion of it, the court has described acting under as facilitating or assisting the government officer with its duties.

[00:05:57] Speaker 04:
It has described it as accepting subjection, guidance, or control.

[00:06:01] Speaker 04:
Guidance, assisting, facilitating, all different concepts from merely a... And what happens here is the feds are delivering water, period.

[00:06:11] Speaker 04:
That's not what happens here, period, Your Honor.

[00:06:13] Speaker 04:
What happens here is that under the two agreements, Capilena, in the lease agreement, has an obligation, is taking this lease in furtherance of Section 2814, the purposes of that.

[00:06:25] Speaker 04:
That's the federal direction.

[00:06:26] Speaker 04:
From Congress to the Navy, only lease this land if it furthers this purpose.

[00:06:30] Speaker 00:
And the contracts at issue are deliverance of water, correct?

[00:06:33] Speaker 04:
Two contracts at issue, Your Honor, the lease and the water agreement.

[00:06:37] Speaker 04:
As I said, the water agreement only exists because of the lease.

[00:06:41] Speaker 04:
The lease specifically places on Copulina the obligation to provide all utilities and to pay for those utilities.

[00:06:47] Speaker 01:
But it didn't require that they buy the water from the Navy.

[00:06:50] Speaker 04:
The lease did not.

[00:06:51] Speaker 04:
The water agreement does.

[00:06:53] Speaker 01:
Water elsewhere.

[00:06:54] Speaker 00:
So in terms of what they were required to do by the lease, there was no requirement that they take water from the Navy.

[00:07:01] Speaker 04:
Correct, Your Honor.

[00:07:02] Speaker 00:
So you could have taken it from a private source.

[00:07:04] Speaker 04:
Practically no, but under the lease terms legally yes.

[00:07:08] Speaker 00:
Now what is on the record that says practically no?

[00:07:11] Speaker 04:
That the Navy and the lease controls are accepted from the lease all of the infrastructure, all of the utility infrastructure on the premises.

[00:07:18] Speaker 04:
So if you look at what the lease demises, it excludes from the demise all utility infrastructure, including all water lines.

[00:07:25] Speaker 00:
The so you're telling me that while they had the legal right to get water elsewhere as a matter of practical fact they simply could not have done so.

[00:07:32] Speaker 00:
That's correct.

[00:07:33] Speaker 00:
And what do we have in the record that supports that conclusion.

[00:07:36] Speaker 00:
the lease, which excludes... No, you're talking about practicalities now.

[00:07:39] Speaker 00:
I'm talking about... The lease says they can get water from a private source.

[00:07:42] Speaker 00:
You're saying that as a matter of practical fact, they could not.

[00:07:45] Speaker 00:
So what do we know that tells me that that's true?

[00:07:48] Speaker 00:
The lease.

[00:07:49] Speaker 00:
No, no.

[00:07:50] Speaker 00:
I just said the lease does not say that.

[00:07:52] Speaker 00:
The lease says they can take water from the Navy, or they can take it from a practical source.

[00:07:56] Speaker 00:
And as I understand what you're saying is, as a matter of practical fact,

[00:08:00] Speaker 00:
They could not take it from a private source.

[00:08:02] Speaker 00:
Is that what you're saying or you're saying something different?

[00:08:04] Speaker 04:
If I may, Your Honor, there's two responses to that.

[00:08:07] Speaker 04:
The first is that in one provision, utility provision, it recognizes that we have the right to source water from something other than the Navy.

[00:08:14] Speaker 04:
Okay.

[00:08:15] Speaker 04:
Correct.

[00:08:16] Speaker 04:
In the demise of the lease, the part that sets out what we actually own and control, it excludes from the demise all utilities, including all water lines.

[00:08:25] Speaker 04:
So the lease both creates the right and the practical impossibility to source it from other places.

[00:08:30] Speaker 04:
But the second point that I would say, Your Honor, is that all of that is beside the point.

[00:08:36] Speaker 04:
The point is not whether we could have sourced water from some other place.

[00:08:40] Speaker 04:
The point is that we did source water from the Navy.

[00:08:43] Speaker 04:
And as both district courts recognized, once we entered into that water agreement or the utility agreement, we had the separate obligation to purchase and receive the Navy's water at the delivery point.

[00:08:54] Speaker 04:
As I said, that delivery point under the terms of the utility agreement is the meters on the lateral line where the uses are registered.

[00:09:02] Speaker 04:
So the question under the gong calls because of examination is whether we are sought to be held liable by the plaintiffs or some action that we took because of the federal direction, that guidance, that assistance, that facilitation of the government duty.

[00:09:21] Speaker 04:
The totality of our relationship with the government is reflected in the lease and in the water agreement.

[00:09:27] Speaker 04:
The totality of that relationship is to lease these premises

[00:09:31] Speaker 04:
limited to residential uses expressly in the lease, required to provide utilities expressly in the lease, provide water as directly contemplated in the water agreement to the point of regulating what we can charge tenants, not a resale, recover your costs, to lease this housing, including the provision of utilities, which under the utility agreement included the water.

[00:09:53] Speaker 04:
Now, we have focused in that relationship on one claim, principally the strict products liability claim.

[00:10:02] Speaker 04:
We focus on one claim because as this court made clear in DeFiori and the Second Circuit has made clear in Savoy and other circuits have expressed, as long as one claim meets the test for removability, all the claims may be removed.

[00:10:18] Speaker 04:
Here, that one claim asserts liability

[00:10:23] Speaker 04:
for the delivery of the government's product as part of the chain of commerce that the government started.

[00:10:28] Speaker 04:
That takes us out of situations like Lake, where there were merely ancillary obligations like who could enter the premises.

[00:10:37] Speaker 04:
But the source of the asserted liability was the failure to warn because of pesticides.

[00:10:42] Speaker 04:
Nothing about who could enter the premises had to do with whether they had an obligation to warn because of pesticides.

[00:10:48] Speaker 04:
It takes us out of cases like Cedar Sinai,

[00:10:51] Speaker 04:
where there was no federal contractual relationship.

[00:10:54] Speaker 04:
Instead, it was detailed regulation that the defendant sought to remove on.

[00:10:58] Speaker 04:
The same was true of the Supreme Court in Watson.

[00:11:00] Speaker 04:
There was no direct contractual relationship.

[00:11:03] Speaker 04:
We are much more like the situation in Goncalves, where that defendant was merely an administrator of a federal health care plan.

[00:11:12] Speaker 04:
As part of that administration, that private provider had the right to pursue subrogation or the obligation to pursue subrogation of claims where reasonable.

[00:11:25] Speaker 04:
So the discretion to determine whether they are reasonable, the discretion to determine when to file them, who to use, how to do it, none of that mattered for the causal nexus we're acting under in Goncalves.

[00:11:40] Speaker 04:
Instead what mattered was,

[00:11:42] Speaker 04:
The defendant in that case was sought to be held liable in the state court because of the filing of a subrogation lien that the defendant or the plaintiff there sought to have expunged.

[00:11:55] Speaker 04:
The administrator in Goncalves was able to remove the case.

[00:11:58] Speaker 04:
He was able to remove the case because, because as Goncalves explains, he was sought to be held liable for some action that he took under federal direction.

[00:12:07] Speaker 04:
The same is true here.

[00:12:09] Speaker 04:
We're sought to be held liable because in the totality of our agreements with the government, we had an obligation to provide residential housing.

[00:12:17] Speaker 04:
We had an obligation to provide utilities.

[00:12:19] Speaker 04:
We had an obligation to purchase and receive this water at the meters that registered the tenants use.

[00:12:23] Speaker 04:
and an obligation not to charge them more than their cost.

[00:12:26] Speaker 04:
Nothing more is required to meet that first element of removability acting under a federal officer that causes or a causal nexus to the claims that are made.

[00:12:36] Speaker 00:
You know, you can help me by going over again, because I'm not sure I quite understood you.

[00:12:43] Speaker 00:
why you are not able to purchase private water.

[00:12:48] Speaker 00:
You said something and I heard it, but I didn't quite understand it.

[00:12:53] Speaker 04:
Certainly my fault, Your Honor.

[00:12:54] Speaker 00:
Well, I'm not sure it is.

[00:12:55] Speaker 00:
It may be mine.

[00:12:55] Speaker 00:
But anyway, help me out here.

[00:12:57] Speaker 04:
I'll try to help you out all the same.

[00:12:59] Speaker 04:
So the lease, if you look at the demise and the lease.

[00:13:02] Speaker 00:
The demise?

[00:13:02] Speaker 00:
What do you mean by the demise?

[00:13:04] Speaker 04:
When a lease demises, it sets out what the tenant is taking.

[00:13:08] Speaker 01:
Right.

[00:13:08] Speaker 01:
So you want to give us the ERO site?

[00:13:10] Speaker 04:
Yes, happy to.

[00:13:12] Speaker 04:
So if you look at ER 147, the section titled Demise Under Property Specific Terms and Conditions, that section excludes from the property that's being demised all utilities, including all water lines.

[00:13:36] Speaker 04:
Second point that I made, Your Honor, so that is the source.

[00:13:38] Speaker 04:
That explains the government continues to own and control all of the water lines.

[00:13:43] Speaker 04:
The second... But owning the water lines doesn't tell you what can go through the lines.

[00:13:47] Speaker 04:
Absolutely, Your Honor, and that's why I said it's a red herring.

[00:13:51] Speaker 04:
It's no more relevant here than it was relevant in Goncalves who made the call or the decision to file the subrogation or how it was physically done, which computer, which notepads, which filing.

[00:14:02] Speaker 04:
No more relevant here than it was there.

[00:14:04] Speaker 04:
No more relevant here.

[00:14:06] Speaker 00:
I understand.

[00:14:07] Speaker 00:
Okay, irrelevant.

[00:14:08] Speaker 00:
Tell me why you can't buy private water even though the lease says you can.

[00:14:13] Speaker 04:
Because the Navy continues to control all the lines that would have supplied that water.

[00:14:20] Speaker 00:
But I thought we just understood that those are just the lines and that the lines are capable of accepting water that's not from the Navy.

[00:14:28] Speaker 04:
There's nothing in the lease that, while the Navy controls all of the lines and controls all of the connections in them,

[00:14:36] Speaker 04:
There's nothing in the demise that allows or gives control to those lines to copy Lena.

[00:14:44] Speaker 04:
But I don't want to be overly distracted by this point because it's entirely beside the point.

[00:14:49] Speaker 04:
It's no more relevant than who purchased the asbestos in late.

[00:14:52] Speaker 00:
Whether it's relevant or not, I just want to understand factually.

[00:14:55] Speaker 04:
Absolutely.

[00:14:56] Speaker 00:
If your clients wanted to purchase private water, could they have done so?

[00:15:01] Speaker 04:
No.

[00:15:01] Speaker 04:
Why not?

[00:15:02] Speaker 04:
because they don't control any of the lines under the demise, that would have supplied the water.

[00:15:07] Speaker 00:
So you're saying that not only does the Navy own the lines, you're saying the Navy would not permit private water to go through the lines?

[00:15:15] Speaker 04:
The Navy, in order to install your own lines, requires approval of specific plans and detailed specifications.

[00:15:23] Speaker 04:
Under that approach, if we had in that or endeavored... But that's not the approach Judge Fletcher asked you about.

[00:15:28] Speaker 04:
Right.

[00:15:28] Speaker 01:
And so... He wasn't asking about installation of new lines.

[00:15:31] Speaker 04:
I understand.

[00:15:31] Speaker 04:
And I suppose what I'm suggesting to the court is that it would take that effort to install new lines in order to have a hookup to a different water system other than the joint Pearl Harbor-based water system.

[00:15:42] Speaker 04:
That effort could have been engaged in with approval from the Navy of detailed plans and specifications.

[00:15:48] Speaker 04:
That is absolutely set out clearly in the lease.

[00:15:50] Speaker 00:
So it was your choice of... So it was the choice of your client to take Navy water rather than private water?

[00:15:56] Speaker 04:
Yes, Your Honor.

[00:15:57] Speaker 04:
As I said, as a practical matter, because the Navy controls everything and we would have had to install new lines.

[00:16:04] Speaker 00:
Well, now new lines from where?

[00:16:05] Speaker 00:
That is to say, the lines that go to the actual apartments, probably not.

[00:16:10] Speaker 04:
The Navy continued to control all of those lines as well.

[00:16:13] Speaker 00:
And they would not have allowed you to hook up private water to go through those lines?

[00:16:17] Speaker 04:
There's no evidence in the record that there's any means to hook up other lines to the Navy's property because we don't lease it.

[00:16:26] Speaker 04:
We don't control it.

[00:16:27] Speaker 04:
The Navy retains control over that.

[00:16:29] Speaker 04:
So it's not an interest or a right that Copulina took on under the lease.

[00:16:35] Speaker 04:
Even if it were, it wouldn't matter because there's no allegation that there was some failure in those lines, the maintenance or control of them or repair of them that led to the plaintiff's injury.

[00:16:49] Speaker 04:
Even if we could have obtained water from other sources, we did obtain water from the Navy.

[00:16:55] Speaker 04:
And it is true in every single federal contractor case that the contractor did not have to enter into the contract.

[00:17:03] Speaker 04:
The contractor could have passed on it, could have not bid on it, could have done something else.

[00:17:08] Speaker 00:
I'm not interested in a contract you didn't enter into.

[00:17:10] Speaker 00:
I'm interested in the contract you did enter into.

[00:17:12] Speaker 00:
Exactly.

[00:17:13] Speaker 00:
As I read that contract, it allowed you to get private water.

[00:17:16] Speaker 04:
And what I'm saying, Your Honor, is that even if that is stated in Section 19, true.

[00:17:21] Speaker 04:
But the fact that we went into a second contract with the Navy for the utility system added to our federal burdens and obligations.

[00:17:31] Speaker 04:
And so you look at both

[00:17:33] Speaker 04:
contracts together because the totality of them represent our contractual relationship with the Navy, and the totality of them exist under 10 U.S.C.

[00:17:44] Speaker 04:
Section 2814.

[00:17:46] Speaker 00:
Assuming that you're right, there's a practical matter.

[00:17:48] Speaker 00:
You had to accept water from the Navy.

[00:17:51] Speaker 00:
Why isn't this just a case where it's liability over?

[00:17:54] Speaker 00:
You're sued, you sue the Navy.

[00:17:56] Speaker 00:
In the event that I'm liable, well, the Navy's liable because they did it.

[00:17:59] Speaker 00:
Why does this turn you into a government contractor?

[00:18:02] Speaker 04:
So, I see I'm short, I'm running short on time, but I'll- This is the question you need to answer.

[00:18:06] Speaker 04:
Absolutely, Your Honor.

[00:18:08] Speaker 04:
I'm just prefacing it.

[00:18:08] Speaker 01:
I understand.

[00:18:09] Speaker 04:
I'll try to move on.

[00:18:10] Speaker 04:
You're fine.

[00:18:12] Speaker 04:
The government contractor defense contemplates that you voluntarily enter into a contract.

[00:18:17] Speaker 04:
Contemplates the government specification of the product and the manufacturer of it.

[00:18:22] Speaker 04:
The defense applies here because the government supplied the product.

[00:18:28] Speaker 04:
And so,

[00:18:29] Speaker 04:
It is far beyond a mere specification.

[00:18:31] Speaker 04:
It is actually the government's product that they seek to hold us liable for, not in the strict products liability count, any act or omission of Capilena.

[00:18:39] Speaker 04:
As for the purpose, which gets directly to your question of the federal officer removal statute, it is in part to test federal defenses in federal court, including naming federal actors.

[00:18:49] Speaker 04:
We were sued in state court.

[00:18:51] Speaker 04:
We cannot bring the Navy into state court.

[00:18:54] Speaker 04:
We cannot test our federal defenses in state court.

[00:18:58] Speaker 04:
in two important respects.

[00:19:00] Speaker 04:
One, as this court has held beginning with the Nielsen case, the government contractor's defense in this circuit is ordinarily limited to persons supplying military equipment.

[00:19:11] Speaker 04:
This court has made clear in DeFiori and other cases that the standard for colorability is not a Rule 12b6 standard, it's a frivolous standard.

[00:19:20] Speaker 04:
Frivolous means that it's foreclosed by US Supreme Court precedent or has broadened that faith, such as solely to obtain removal.

[00:19:29] Speaker 04:
To test that defense in federal court, we have to be able to ask the panel en banc.

[00:19:34] Speaker 04:
to overturn the earlier panel decisions or to ask the U.S.

[00:19:37] Speaker 04:
Supreme Court to resolve a circuit split between this circuit and every other circuit to consider the issue.

[00:19:43] Speaker 04:
Every other circuit to consider government contractors has not limited to the military context.

[00:19:48] Speaker 04:
And even in those cases where the circuit courts themselves have not considered it, the district courts to have considered it have not limited it to government contractors.

[00:19:57] Speaker 04:
We have to test that defense and we have to be able to sue the Navy.

[00:20:00] Speaker 04:
We have to be able to be in federal court to do either.

[00:20:03] Speaker 04:
I used my time, Your Honor.

[00:20:06] Speaker 04:
I'll step away from the podium unless there are further questions.

[00:20:09] Speaker 01:
I don't think there are.

[00:20:10] Speaker 01:
Thank you.

[00:20:11] Speaker 04:
May I ask for just two minutes for rebuttal?

[00:20:14] Speaker 01:
When you come back, we'll put two minutes on the clock.

[00:20:16] Speaker 04:
Very good.

[00:20:16] Speaker 04:
Thank you.

[00:20:30] Speaker 03:
May it please the court, I'm Jim Bickerton for the plaintiffs this morning.

[00:20:36] Speaker 03:
The part that was skipped over in council's description of this whole totality of contracts is that actually the utility agreement supersedes the lease to a certain extent.

[00:20:51] Speaker 03:
The utility agreement specifically says Capilena shall have control over the system after the delivery point.

[00:21:01] Speaker 03:
That's expressed in the utility agreement, in the lease.

[00:21:03] Speaker 01:
Where's the delivery point?

[00:21:05] Speaker 03:
I'm sorry?

[00:21:06] Speaker 01:
And where's the delivery point?

[00:21:07] Speaker 03:
The delivery point is specified, it's on page 137 of the ER, and it is specified, I believe, and this is how I read it, as the Iroquois Point housing water, because there are two housing areas described, I believe, geographically, what we call Copulina,

[00:21:29] Speaker 03:
is on Iroquois Point, but it's possible it's also Pu'uloa because there's a beach park right there called Pu'uloa Beach Park.

[00:21:35] Speaker 03:
It's not clear.

[00:21:37] Speaker 03:
On page 137, it says that the delivery point for Iroquois Point shall be delivered by the Navy to Coppelina up to the CP meters, that's the, CP is the defendant, up to the CP meters located on the waterline laterals.

[00:21:57] Speaker 03:
CP is responsible to make connections to the Navy water system.

[00:22:01] Speaker 03:
CP is responsible for reading and maintaining the lateral meters.

[00:22:05] Speaker 03:
And billing will be based on the readings from the lateral meters.

[00:22:09] Speaker 03:
So there is a point at which CP becomes the owner or at least the operator of the system.

[00:22:17] Speaker 01:
And in charge for maintenance is the way I understood that, for the system.

[00:22:21] Speaker 03:
Yes, but the utility, this is just an adendum or an exhibit to the utility agreement that specifies the term delivery point which is used in the utility agreement itself.

[00:22:32] Speaker 03:
The utility agreement itself goes beyond just maintaining, it says operating I believe.

[00:22:36] Speaker 03:
Let me point the court to that provision, if I may.

[00:22:45] Speaker 03:
And that's at page one.

[00:22:54] Speaker 03:
Exhibit 1 starts at 131.

[00:23:03] Speaker 03:
And that's the agreement that specifically says that they're responsible, says the delivery on the second page of it, 132, the delivery point represents the delineation of responsibility between the government and the purchaser.

[00:23:16] Speaker 03:
Parties are responsible for the maintenance, repair, and operation of the utility system on their respective side of the delineated delivery point.

[00:23:25] Speaker 03:
That's a little different from the lease.

[00:23:27] Speaker 03:
The lease said, as Mr. Chipchase points out, in the demise, it specifically reserved the whole water system as being not leased to them.

[00:23:38] Speaker 03:
That doesn't mean they're not being allowed to use it.

[00:23:41] Speaker 03:
It means that they don't have it as property that they can claim a 100-year lease or 99-year lease or whatever that is.

[00:23:48] Speaker 03:
It's our understanding, and again, the record is devoid on this particular question of precisely where delivery points are and it is their burden.

[00:23:58] Speaker 03:
They're the ones that are asserting federal jurisdiction.

[00:24:01] Speaker 03:
This case was filed in state court.

[00:24:03] Speaker 03:
It's their burden to present that factual record to you of exactly how the water

[00:24:07] Speaker 03:
can be controlled and where the delivery points are.

[00:24:11] Speaker 03:
It's our understanding that there are numerous points where Capilena could shut off water for everyone.

[00:24:17] Speaker 03:
But even if that isn't true, there is definitely a point at each meter for each home where they can turn it off.

[00:24:24] Speaker 03:
And according to, it's very clear in the utility.

[00:24:29] Speaker 03:
Well, this is, you know, Red Hill was a temporary problem.

[00:24:32] Speaker 03:
It lasted a total of four months.

[00:24:34] Speaker 03:
It's entirely possible to bring in water trucks and hook them up to the meters that you control.

[00:24:41] Speaker 03:
It might be expensive, it might be inconvenient, but it beats delivering

[00:24:46] Speaker 03:
water that's non-potable that's laced with jet fuel into people's homes.

[00:24:52] Speaker 03:
So that's the real what the case is about.

[00:24:55] Speaker 03:
They had the ability to control.

[00:24:57] Speaker 03:
Nothing required them to deliver tainted water.

[00:25:03] Speaker 03:
Nothing then required them to accept the Navy.

[00:25:05] Speaker 03:
In fact, they've got this utility agreement with the Navy.

[00:25:08] Speaker 03:
It says in it,

[00:25:10] Speaker 03:
Potable water, that's what the contract is for.

[00:25:13] Speaker 03:
As soon as they realize that what is coming through the Navy's line from the main Red Hill area is non-potable water, they have every right under the contract to say, no, thank you, we're turning off this particular faucet, we'll find some water somewhere else, but we're not putting this water into people's homes.

[00:25:30] Speaker 03:
Absolutely, not one thing requires them to say, oh, we must accept this and we must deliver it, which is basically what Mr. Chip Chase's argument is, to try to squeeze himself into this square peg into the round hole of the federal officer jurisdiction.

[00:25:49] Speaker 03:
So that is, I think, factually the important thing to understand is they did have control.

[00:25:56] Speaker 03:
The other part of their... He said practical ability.

[00:25:59] Speaker 01:
He's really arguing practical ability.

[00:26:01] Speaker 01:
It wasn't practical for them to purchase the water somewhere else.

[00:26:05] Speaker 01:
And you just walked through a, you know, one hypothetical was to buy...

[00:26:09] Speaker 01:
Water and trucks and delivery at home to home, are there other, is there anything else in the record that would help us at this stage to know that?

[00:26:16] Speaker 03:
I think that the record, well, basic contract principles would also help you, which is he wants to read the lease as creating an impossibility from the get-go.

[00:26:29] Speaker 03:
In other words, you can totally buy your water anywhere, ha-ha, but you actually can't because we've kept the way that you can do that.

[00:26:37] Speaker 03:
It's a very basic rule of commercial litigation, we all know, which is you don't apply a construction that is not commercially reasonable if there's any other possible reasonable construction of that language.

[00:26:50] Speaker 03:
You don't, people don't contract for impossibility.

[00:26:53] Speaker 00:
So what do we know from the record in front of us as to whether it would have been feasible to, from the get-go, simply not to get Navy water?

[00:27:03] Speaker 03:
we don't know anything about to get water other than the Navy water.

[00:27:09] Speaker 00:
Not on a separate basis.

[00:27:11] Speaker 03:
As far as I can tell from the record, I think everyone in this room knows a lot practically about the way Honolulu is set out and where city-connected subdivisions may be, but it's not in this record and it's their burden to show you

[00:27:24] Speaker 03:
They have to prove that it's not possible for them, that they had to do this, that they were bound to do this, and they haven't shown you that.

[00:27:32] Speaker 03:
We believe that even on the record that they presented, we can show you that it was possible even on this record.

[00:27:39] Speaker 03:
although it's devoid one way or the other of exactly where they might hook into the city system or to another supplier system.

[00:27:46] Speaker 03:
But you could take a water truck to the master main as well.

[00:27:50] Speaker 03:
Like you don't have to take a water truck to each house.

[00:27:52] Speaker 03:
If you have a faucet.

[00:27:54] Speaker 00:
I'm not talking about water trucks.

[00:27:55] Speaker 00:
I'm talking about setting it up as a permanent proposition.

[00:27:58] Speaker 03:
Well, there's certainly other regions within a fairly close distance that have city water.

[00:28:08] Speaker 03:
how practical it is to hook that up or how expensive, why they chose.

[00:28:13] Speaker 03:
These leases were entered into in 2003.

[00:28:15] Speaker 03:
This utility agreement where they decided they were gonna buy the water from the Navy was 2012.

[00:28:21] Speaker 03:
What did they do between 2003, 2012?

[00:28:25] Speaker 03:
I suspect they were busy renovating and rebuilding these properties.

[00:28:30] Speaker 03:
I don't know if they were actually being leased out or not.

[00:28:33] Speaker 03:
We just don't know that from the record.

[00:28:37] Speaker 03:
So I think that the causal connection, it has two parts.

[00:28:43] Speaker 03:
One is you have to be sued because of something that you did and then that something that you did has to be under the subjection guidance or control of a federal officer.

[00:28:56] Speaker 03:
And they don't really have either one.

[00:28:59] Speaker 03:
They are being sued for something that they did, but it isn't something that they had to do or was controlled or guided or under the subjection of any federal officer.

[00:29:09] Speaker 03:
And so they're building a bridge across the river and they're missing that archstone in the middle.

[00:29:15] Speaker 03:
It just isn't there.

[00:29:16] Speaker 03:
And they can wave their hands all they want.

[00:29:20] Speaker 03:
Nobody required them, once it was known that the water was tainted, nobody required them to deliver that water into people's homes.

[00:29:29] Speaker 03:
They absolutely had no compulsion to do it.

[00:29:32] Speaker 03:
The federal government is not the designer and manufacturer of this product, as he likes to say.

[00:29:37] Speaker 03:
This chemical leached into the water system because of the basaltic formations of this island, the way the island is set up and the way the original system was set up.

[00:29:47] Speaker 03:
The federal government certainly didn't want to do this but it happened.

[00:29:51] Speaker 03:
And so the federal government is simply upstream in this problem.

[00:29:54] Speaker 03:
Our clients have no privity with the federal government.

[00:29:57] Speaker 03:
They can't sue the federal government under their lease for failure to deliver potable water to them.

[00:30:02] Speaker 03:
They do have privity with their landlord and that's who they get to sue.

[00:30:06] Speaker 03:
Their last area that they really like to talk about is well,

[00:30:11] Speaker 03:
We're being sued for these things that we have absolutely no fault.

[00:30:15] Speaker 03:
There's no fault for these.

[00:30:16] Speaker 03:
Strict liability is one, and the other one is trespass.

[00:30:20] Speaker 03:
That's actually not true.

[00:30:22] Speaker 03:
If you read the cases, the concept they're really talking about is called absolute fault.

[00:30:28] Speaker 03:
And there's almost no tort that has absolute fault that I can think of.

[00:30:33] Speaker 03:
where you have absolute fault is an insurer.

[00:30:36] Speaker 03:
An insurer has to pay whether they're involved or not, whether they know anything about it or not, whether they were at the scene or not, they must pay.

[00:30:43] Speaker 03:
Here, we have two torts.

[00:30:46] Speaker 03:
Strict liability, there is still fault.

[00:30:49] Speaker 03:
You must place a defective product into the stream of commerce.

[00:30:53] Speaker 03:
It may not be negligence.

[00:30:54] Speaker 03:
I think they're conflating the concept of negligence and fault.

[00:30:58] Speaker 03:
But you can have fault in other ways.

[00:31:00] Speaker 03:
You can have intentional fault.

[00:31:01] Speaker 03:
You can have negligent fault.

[00:31:02] Speaker 03:
You can have strict liability fault, which is you put a defective product into the stream of commerce.

[00:31:07] Speaker 03:
You didn't have to do that.

[00:31:08] Speaker 03:
You didn't have to be in commerce.

[00:31:10] Speaker 03:
You didn't have to have a defective product.

[00:31:12] Speaker 03:
Same thing with trespass.

[00:31:14] Speaker 03:
If a federal officer had pushed someone onto the property, sure, you're acting under their dominion or subjection.

[00:31:21] Speaker 03:
You can't help it.

[00:31:22] Speaker 03:
You didn't voluntarily or willingly act.

[00:31:25] Speaker 03:
That's not trespass.

[00:31:27] Speaker 03:
But trespass, all it requires is an intentional invasion.

[00:31:32] Speaker 03:
You don't have to know that your invasion is wrongful even.

[00:31:35] Speaker 03:
You just have to

[00:31:37] Speaker 03:
enter someone's property or put something on their property.

[00:31:41] Speaker 03:
If it turns out it's something that's not supposed to be there, you're liable for trespass, the mental state isn't necessarily a very difficult one to meet, but it is, it does exist.

[00:31:52] Speaker 03:
It has to be a voluntary act.

[00:31:55] Speaker 03:
So when they say it's without fault, that's not true.

[00:31:57] Speaker 03:
Everything that was done here was done as a voluntary act.

[00:32:03] Speaker 01:
Thank you for that.

[00:32:04] Speaker 01:
Do you have questions for this?

[00:32:07] Speaker 03:
No?

[00:32:08] Speaker 03:
Thank you.

[00:32:08] Speaker 01:
If there are no... I just wanted to make sure that people were getting their word in edgewise if they had any questions for you.

[00:32:12] Speaker 01:
I wasn't trying to keep you off.

[00:32:12] Speaker 03:
Sure.

[00:32:13] Speaker 03:
Sorry about that.

[00:32:13] Speaker 03:
I talk a little fast.

[00:32:14] Speaker 01:
No, no, no.

[00:32:15] Speaker 01:
You're fine.

[00:32:15] Speaker 01:
You're great.

[00:32:16] Speaker 01:
I just wanted to make sure and I couldn't tell.

[00:32:18] Speaker 01:
But I think we don't.

[00:32:19] Speaker 01:
If you want to... You have more time on the clock.

[00:32:22] Speaker 02:
I wasn't trying to talk you out of anything, but... Well, I'll just... If I may just take a second to just look at my notes, make sure I did cover the points that I have.

[00:32:37] Speaker 03:
No, I think I covered everything that I wanted to talk about.

[00:32:40] Speaker 03:
Thank you very much for your time this morning.

[00:32:41] Speaker 01:
Thank you for your careful preparation and your argument.

[00:32:43] Speaker 01:
We appreciate it.

[00:32:45] Speaker 01:
Council, we're going to put two minutes on the clock as promised.

[00:32:51] Speaker 04:
Absolutely, Your Honor.

[00:32:51] Speaker 04:
I didn't realize that they were splitting their time.

[00:32:54] Speaker 04:
If they are, it's at any other argument.

[00:32:56] Speaker ?:
No, Your Honor.

[00:32:58] Speaker 04:
The Council on the left go, but I defer to, it's basically the same issues, and I assume you got to hear from one of us and both of us.

[00:33:06] Speaker 04:
So thank you.

[00:33:06] Speaker 01:
That's fine.

[00:33:08] Speaker 01:
I didn't have any indication that you're splitting your time.

[00:33:11] Speaker 01:
No, no.

[00:33:12] Speaker 01:
Okay.

[00:33:13] Speaker 01:
Typically, Madam Clerk would have called that to our attention.

[00:33:16] Speaker 01:
Okay, that's fine then.

[00:33:17] Speaker 01:
Two minutes.

[00:33:18] Speaker 04:
Very good, Your Honor.

[00:33:19] Speaker 04:
Thank you, and I appreciate the indulgence.

[00:33:21] Speaker 04:
We don't have to show that we couldn't have bought it elsewhere, either from the beginning or at any point in the actions that were taken by the federal government to contaminate what they call a product.

[00:33:32] Speaker 04:
Those are their words, not mine.

[00:33:33] Speaker 04:
They allege that the water is a product and that the government contaminated it.

[00:33:37] Speaker 04:
We don't have to show it.

[00:33:39] Speaker 04:
that we couldn't do it elsewhere because it is not necessary that you're left with no options under federal contractors' defense or under the federal officer removal statute.

[00:33:49] Speaker 04:
What is necessary, in the words of Don Calves, is to show that you are involved in an effort to assist or help carry out the actions of a federal superior.

[00:33:58] Speaker 04:
The actions of the federal superior are through the Navy in section 10, Title 10, Section 2814 of the U.S.

[00:34:06] Speaker 04:
Code to lease this property.

[00:34:08] Speaker 00:
requires showing as a condition of removal that the feds told somebody to do something and they did it.

[00:34:18] Speaker 00:
What did the feds tell you to do?

[00:34:19] Speaker 04:
The feds, through the lease agreement and the water agreement, told us to lease these properties for residential uses and to just correct the timeline.

[00:34:28] Speaker 04:
This was an assignment of an already existing lease.

[00:34:31] Speaker 04:
Once we took the assignment, we entered into a new water agreement.

[00:34:34] Speaker 04:
There's a prior water agreement that is specifically referenced in the lease that was assigned to Capulena.

[00:34:39] Speaker 01:
But it seems to me your argument really depends upon us reading those two contracts as one.

[00:34:44] Speaker 01:
And I think you've been pretty clear about that actually in your argument today.

[00:34:48] Speaker 04:
Correct, Your Honor.

[00:34:48] Speaker 04:
That is absolutely correct.

[00:34:50] Speaker 04:
And so what I will leave us with then in my 27 seconds is that

[00:34:57] Speaker 04:
here, although we end up in an unusual context in the sense that it's the government's product, we end up in the same context as all the cases that have found removal.

[00:35:06] Speaker 04:
Our actions are inextricably tied to the federal government's actions.

[00:35:11] Speaker 04:
As set out in the Lozano courts, or in both complaints actually, this was an environmental and humanitarian disaster.

[00:35:17] Speaker 04:
That's what they allege.

[00:35:18] Speaker 04:
Thousands of people have sued the Navy and federal court for personal injuries.

[00:35:22] Speaker 04:
We are linked to that through the delivery of the Navy's water to the same individuals.

[00:35:28] Speaker 04:
To test our defenses, to make the Navy a part of our case, we need to be in federal court as well.

[00:35:33] Speaker 04:
Thank you for your time, Your Honors.

[00:35:34] Speaker 01:
Thank you.

[00:35:35] Speaker 01:
Thank you all.

[00:35:36] Speaker 01:
We'll take that case under advisement.

[00:35:40] Speaker 01:
That completes our calendar for today and for the week, so we'll stand in recess.

[00:35:44] Speaker 01:
Thank you.