[00:00:02] Speaker 00: Case number 14-7030, Banneker Ventures, LLC, appellant Mrs. Jim Graham and L. Mr. Grannis for the appellant, Mr. Bregman for appellee Ramada, and Mr. Golden for appellee Jim Graham. [00:00:52] Speaker 04: Good morning. [00:00:53] Speaker 02: Good morning. [00:00:56] Speaker 02: May it please the Court, Your Honor, I'm Mark Grannis from Harrisville, Chair. [00:00:59] Speaker 02: I'm here on behalf of Banneker Ventures, appealing the dismissal of our complaint against WMATA, Jim Graham, [00:01:05] Speaker 02: Likritz-Adler development and the principles of Likritz-Adler. [00:01:09] Speaker 02: This was a case, I think, in which the sheer volume of the plaintiff's detailed allegations may have induced everyone to get a little bit ahead of themselves and ahead of the Rule 12 analysis. [00:01:19] Speaker 02: The district court, in our view, engaged in a lot of weighing and sifting of the factual allegations that is not promised for under Rule 12 and which can't stand as a grounds for dismissal of a complaint at this early stage. [00:01:32] Speaker 02: I'd like to begin, if I may, with our contract claims, because the district court's analysis of those claims really drives a lot of the later analysis in the case. [00:01:41] Speaker 02: Our claims against WMATA were based on the 2008 term sheet that was finalized by the parties, under which we paid $100,000 for an exclusive right to negotiate a definitive agreement later that would honor all the major terms in that term sheet. [00:01:57] Speaker 02: That contract, like all contracts in the District of Columbia, contained a duty of good faith and fair dealing. [00:02:03] Speaker 02: And so there were two distinct obligations created by that valid and binding contract. [00:02:08] Speaker 02: One was the obligation to negotiate exclusively with Banneker Ventures. [00:02:12] Speaker 02: The other was the obligation to negotiate in good faith with Banneker Ventures. [00:02:17] Speaker 02: And we alleged a failure to negotiate in good faith on LaMotta's part by insisting on new terms that were not in the term sheet, by delaying formal approvals after all the material terms, in fact all the terms, had been agreed with staff, by refusing to finalize, essentially refusing to take yes for an answer when all the terms were settled, and by in general evading the spirit of the agreement to agree that was embodied in the term sheet. [00:02:47] Speaker 05: What about the exclusivity argument? [00:02:50] Speaker 05: I don't see a direct allegation that WMATA negotiated with others, but are you arguing that one can infer that from the leak of information to Lukratz Adler or [00:03:08] Speaker 05: the discussions about whether one could solicit what are the best and final offers from others? [00:03:16] Speaker 05: What are the paragraphs of the complaint that you would point us to that support an inference that they violated an exclusivity provision? [00:03:26] Speaker 02: Well, there's a direct allegation in Paragraph 208. [00:03:30] Speaker 02: It's the sort of allegation you find in the Statement of Elements. [00:03:33] Speaker 02: It's that they fail to honor the exclusivity. [00:03:35] Speaker 02: So that's, if you're looking for more factual background, though, Paragraph 6 of the complaint alleges that there were dozens of meetings that involved Jim Graham, Banneker Ventures, both the principals of Lucret, Tabler, and Rosalind Docket of WMATA. [00:03:49] Speaker 02: The Paragraph 6 states that those meetings occurred both outside and inside the period of exclusivity. [00:03:55] Speaker 02: In addition, paragraphs 260 to 262 tell the story of Lacritz Adler calling up Metro saying that they're supposed to reach a deal. [00:04:04] Speaker 02: Then Jim Graham leaking confidential details of Banneker's bid outside the process, sending it to Lacritz Adler, and then Lacritz Adler following up and calling WMATA with that information. [00:04:17] Speaker 04: To have this good faith duty breached, [00:04:21] Speaker 04: Do you need to allege that it was WMATA itself or its contracting officials that were not engaging in good faith? [00:04:31] Speaker 04: Or is there authority that would suggest that a board member's single sort of solo actions can itself cause WMATA contractors not to be acting in good faith? [00:04:43] Speaker 02: That's an interesting question that I think goes [00:04:47] Speaker 02: for after the rule of 12 states. [00:04:48] Speaker 02: In other words, our authority that we rely on is the Stanford Hotels case. [00:04:53] Speaker 02: Stanford Hotels makes it clear that, well, Stanford Hotels is very parallel in fact. [00:04:58] Speaker 02: It makes it clear that you can't press the other side to agree to everything, get the signed contract after you've got this good faith obligation to get to a signed contract, and then say no. [00:05:07] Speaker 04: The question is, who was doing the pressing interfering here? [00:05:10] Speaker 02: Yes. [00:05:12] Speaker 02: What was Jim Graham's status here? [00:05:15] Speaker 02: He was the chairman of the Metro Board. [00:05:19] Speaker 02: Maybe Metro wants to take the position that that isn't sufficient to close his acts in official authority. [00:05:26] Speaker 02: My guess is that counsel for WMATA and counsel for Jim Graham may have very different answers on that question. [00:05:31] Speaker 02: And the answers to that question may determine whether we prevail on our contract claims or our interference claims. [00:05:37] Speaker 04: It gets a little confusing to say that [00:05:41] Speaker 04: Jim Graham was WMATA for purposes of the activities he took allegedly interfering with your reasonable expectations, but wasn't WMATA for purposes of immunity analysis. [00:05:58] Speaker 04: And so how does that get threaded? [00:06:01] Speaker 04: And that seems more almost a question of whether a legal claim has been stated in a way that would navigate [00:06:11] Speaker 04: the immunity question, while still making him the one responsible for the interference. [00:06:17] Speaker 02: At this stage, Your Honor, we have pleaded both theories, as is our right, and the factual development that occurs after the pleading stage, after we get an answer. [00:06:27] Speaker 02: We don't even have an answer from Jim Graham or WMATA about what they think he was doing. [00:06:32] Speaker 02: But the very notion of a person having official status and acting in an official capacity part of the time [00:06:37] Speaker 02: And acting in a personal capacity other parts of the time is sort of metaphysical and sort of confusing. [00:06:44] Speaker 02: And I'm not sure that it's fair to hold plaintiffs to the standard of clearing that all up in a short and plain statement of the case. [00:06:51] Speaker 02: I think what we should do is that WMATA breached the obligation of exclusive negotiation. [00:06:58] Speaker 02: WMATA breached the obligation of fair dealing. [00:07:01] Speaker 02: Jim Graham was certainly part of that because some of his actions were certainly official. [00:07:05] Speaker 02: But there were other actions of Jim Graham that we've detailed in the complaint that were outside of his responsibilities. [00:07:11] Speaker 02: And whether, and WMATA may be responsible for those on Responding Out Superior, that's a separate question, WMATA may deny that. [00:07:18] Speaker 02: But that's all something that the defendants have to sort out after they answer our complaint. [00:07:23] Speaker 05: Well, Mr. Grannis, we do have to look and see whether you've crossed a threshold factually, and we assume the facts that can be, you know, reasonably inferred from your complaint under Twombly-Nickelball, and then we apply the law. [00:07:37] Speaker 05: So some of these are hard legal issues we do have to resolve. [00:07:40] Speaker 05: And you pointed on the [00:07:44] Speaker 05: the duty to negotiate exclusively, you pointed to some allegations that the Likritz firm wanted in to the business that Bannerker had negotiated, which I don't think is quite the same as saying, well, Mata failed to negotiate exclusively. [00:08:02] Speaker 05: So what I'm looking for is, I mean, [00:08:05] Speaker 05: Clearly, the outside developer wants in and, in fact, wants a piece of the existing contract that seems to be being under negotiation with Banneker. [00:08:16] Speaker 05: But what about the idea of WMATA actually participating in that or responding to that? [00:08:22] Speaker 05: You point to allegations of [00:08:30] Speaker 05: Graham wanting to make a deal with Banneker whereby LeCretz Adler would join the Banneker development team, which doesn't seem quite the same as violating an exclusive negotiation clause. [00:08:42] Speaker 02: Well, our allocation and the other citations I didn't mention before were paragraphs 70 and 71 and paragraphs 131 and 133. [00:08:52] Speaker 02: In all of these cases, we have Jim Graham carrying on a lively back channel conversation with the Likritz Adler and the Likritz Adler defendants. [00:09:00] Speaker 02: And so the argument that Likritz Adler was making was, well, sure, we negotiated with them maybe, but they didn't. [00:09:06] Speaker 02: I'm sorry, WMATA was making the argument. [00:09:08] Speaker 02: Likritz Adler may have negotiated with us, but we didn't negotiate back. [00:09:11] Speaker 02: We have pointed to specific facts that show that the chairman of WMATA's board was carrying facts back to Lacritz Adler and talking about the deal, which then the Lacritz Adler defendants were using to come back and approach the WMATA staff. [00:09:27] Speaker 02: So there is, and I believe that at least for Rule 12 purposes, that is surely sufficient to place an issue whether WMATA was acting through Jim Graham or whether Jim Graham was freelancing. [00:09:39] Speaker 02: I'd love to hear their answer to that question. [00:09:41] Speaker 05: And are you relying on, I guess it's paragraph 155, WMATA staff member telling Banneker that the staff member had been directed to obtain best and final offers from [00:09:51] Speaker 05: other firms other than Banneker. [00:09:53] Speaker 05: This is during the time that this term sheet is in effect and they're supposed to be negotiating exclusively. [00:09:57] Speaker 05: Is that something you're relying on or not so much? [00:10:00] Speaker 02: We do rely on that. [00:10:01] Speaker 02: It is one of the facts that shows that we think what was actually going on here the whole time. [00:10:06] Speaker 02: And paragraph 160 is, I think, very much the same effect. [00:10:11] Speaker 04: Can you address both the immunity and sovereign immunity questions in this case and [00:10:18] Speaker 04: In particular, how can you allege on the one hand that Mr. Graham was acting in ways that bound Metro through responding at Superior, therefore within the scope of his duties, but then for purposes of his own immunity analysis was outside the scope of his duties? [00:10:37] Speaker 02: Sure, Your Honor. [00:10:39] Speaker 02: We agree with the district court that the standards we've pointed to at Metro were standards of how not to act. [00:10:44] Speaker 02: We agree on that much. [00:10:46] Speaker 02: The dichotomy in the cases is between ministerial actions and discretionary actions, and the defendants here persuaded Judge Collier to essentially [00:10:56] Speaker 02: analyze this case as anything not ministerial must be discretionary. [00:11:00] Speaker 02: We think that this court's cases actually start at the other end of the dichotomy. [00:11:04] Speaker 02: We start looking at what is discretionary because we only protect actual discretion. [00:11:09] Speaker 02: So we allege that Jim Graham was taking actions that were, in fact, expressly forbidden to him. [00:11:14] Speaker 02: He was telling staff to stop negotiating with Banneker. [00:11:17] Speaker 02: That's expressly forbidden. [00:11:18] Speaker 02: That's in paragraph 258. [00:11:19] Speaker 02: He was telling staff to cut LeCret's Adler into the deal. [00:11:23] Speaker 02: That shows favoritism toward one of the bidders. [00:11:25] Speaker 02: It's a violation of his impartiality. [00:11:27] Speaker 02: It's paragraph 259. [00:11:29] Speaker 02: He was leaking confidential information to rival bidders, paragraphs 134 and 261. [00:11:34] Speaker 02: And there are other actions that are not expressly prohibited, but which I think at least raise a question of fact as to whether they are manifestly excessive under this court's decision in Griggs. [00:11:44] Speaker 04: Let's take the leaking information or violating his rules of impartiality. [00:11:52] Speaker 04: That just seems to be a way of saying he did his job very, very badly and very wrongly, which is usually the heartland of any immunity defense, right? [00:12:04] Speaker 04: He was supposed to be making decisions and he did it impartially rather than impartially. [00:12:09] Speaker 04: He was supposed to treat information in his hands confidentially and he didn't. [00:12:15] Speaker 04: If that were a basis for denying immunity, how would we distinguish every other case where it's always an allegation that someone did their job very, very badly and wrongly? [00:12:25] Speaker 02: Under this court's previous decisions, many of them involving WMATA, that's turned on whether or not there is some prescription of how the employee should behave. [00:12:36] Speaker 02: So, for example, in the Souter case, we have Metro doing something entirely discretionary. [00:12:42] Speaker 02: It turns out they did have guidelines, and they did follow them. [00:12:45] Speaker 02: No liability. [00:12:46] Speaker 02: In the Kiska case, we have Metro doing something without any guidelines, and without any guidelines, it was discretionary, and again, there's no liability. [00:12:54] Speaker 02: We have a case that's in the middle. [00:12:55] Speaker 02: There are guidelines, and they were violated. [00:12:57] Speaker 02: And because they were violated, there is no immunity. [00:13:00] Speaker 02: The question is not whether Jim Graham's actions can be characterized in everyday English as ministerial. [00:13:08] Speaker 02: The question is whether we can actually say that he was invested by Metro with discretion. [00:13:14] Speaker 02: to leak confidential information when he saw fit? [00:13:18] Speaker 02: Was he invested by Metro with discretion to direct the staff that was expressly prohibited to him? [00:13:23] Speaker 05: It can't be a discretionary act if it's expressly prohibited. [00:13:30] Speaker 05: F2, Article 3 F2 of leaking confidential information. [00:13:35] Speaker 05: What prohibits him from working with the staff to get the best possible team on board and to add people that he thinks in his judgment would enhance the team? [00:13:45] Speaker 02: I think that there would be nothing that would prohibit him from working to get the best possible people on board. [00:13:52] Speaker 05: So what is it that that prevents him from [00:13:56] Speaker 05: interfering with Banneker's development team and trying to get the crits on board or getting Banneker to buy land from the crits. [00:14:07] Speaker 05: Those are part of your [00:14:09] Speaker 05: Part of your case there, and what are the clear WMATA guidelines? [00:14:12] Speaker 02: Well, some of the allegations of the complaint, of course, predate even Banneker's selection. [00:14:18] Speaker 02: So some of Jim Graham's actions also predate Banneker's selection. [00:14:21] Speaker 02: For example, the bullying of the development partners to try and get them to withdraw. [00:14:26] Speaker 02: Jim Graham was not the chairman of Metro at that point. [00:14:28] Speaker 02: And while you can't interfere with a contract that hasn't been signed yet, you certainly can interfere with the business expectancy. [00:14:34] Speaker 07: And so, again, these are... It's a very high bar to try to find interference with business expectancy. [00:14:43] Speaker 07: It's more than a mere wish. [00:14:45] Speaker 07: You have to have some reasonable belief that it's going to happen, a rather strong standard needed to tell. [00:14:53] Speaker 02: Yes, Your Honor, and that would change with the facts. [00:14:56] Speaker 07: This was before that could possibly have been the case. [00:14:59] Speaker 07: Here it was. [00:15:00] Speaker 02: I'm not sure, Your Honor. [00:15:03] Speaker 02: I think that there's a long period of time that we're talking about, and so we have to examine each act in relation to what the expectancy was at that time. [00:15:10] Speaker 05: But I thought you were alleging that when the term sheet was in effect, that WMATA, Graham interfered with the Banneker development team and pressured Banneker to buy land from his buddies. [00:15:27] Speaker 05: So I guess I'm wondering, what are the [00:15:30] Speaker 05: clear prohibitions on that. [00:15:36] Speaker 02: Because Jim Graham was pressuring in order to get one of his campaign supporters onto the team, that's different than just trying to work and get the best people. [00:15:47] Speaker 02: That would be a clear prohibition, a clear violation of the conflict of interest rules and using this for essentially his own electoral purposes. [00:15:55] Speaker 02: That's the allegation of the complaint. [00:15:57] Speaker 02: I see my time has expired. [00:15:59] Speaker 04: I'm happy to take it. [00:16:00] Speaker 04: We'll keep going. [00:16:02] Speaker 04: You can't say that immunity turns on the spin the complaint gives factual allegations about how someone did their job, because then there would just never be immunity. [00:16:12] Speaker 04: And so your complaint spins it as he was doing this to advance his own electoral interests or parochial interests in his jurisdiction. [00:16:22] Speaker 04: And I assume he would say, [00:16:28] Speaker 04: No, I was doing exactly what I'm supposed to do, protecting interests, looking broadly at the interests of Metro. [00:16:34] Speaker 04: And regardless, there is nothing that said beyond a very broad level of generality. [00:16:41] Speaker 04: how exactly I should go about my job as a board member or a chair of the board. [00:16:46] Speaker 02: Your Honor, we don't know yet what Jim Graham will say because the district court, instead of asking me... The whole point of the community is to decide them before. [00:16:52] Speaker 04: The community has traditionally decided, the whole point of it is to decide before we have to do answers and discovery and so it can't be [00:16:59] Speaker 04: that we wait for them to file an answer and say, no, I have a different spin on those same facts. [00:17:05] Speaker 04: I think we look at the category of activity and we say the category of activity here was [00:17:13] Speaker 04: in being involved in decisions about contracting by metro. [00:17:18] Speaker 04: And at that level, when it's within the realm, that's why there's responde at Superior. [00:17:23] Speaker 04: And he just, in your allegation, did it very badly, very wrongly, which is the case in every situation where immunity is applied. [00:17:32] Speaker 04: I'm having trouble figuring out why you're different. [00:17:34] Speaker 02: But the burden is supposed to be on Mr. Graham to explain why he is entitled to official immunity, and that was a burden of which the district court relieved him here. [00:17:42] Speaker 07: I'm not sure how you can say she relieved him. [00:17:46] Speaker 07: She sets forth in that second opinion below, I know it's not quite in the same context, but it is the question of whether an act is discretionary in the context of immunity. [00:17:56] Speaker 07: Those four factors, from Moss, from the D.C. [00:17:59] Speaker 07: court, nature of the injury, availability of alternative remedies, [00:18:04] Speaker 07: without invading the executive functions and the importance of protecting particular kinds of acts. [00:18:12] Speaker 07: That seems to be what should apply. [00:18:14] Speaker 07: How is that relieving him of burden? [00:18:19] Speaker 02: Mr. Graham himself was not required to put forth any evidence about the scope of his duties or about what he did. [00:18:24] Speaker 07: This is the immunity thing. [00:18:45] Speaker 02: It's not just that we haven't had discovery, it's that we don't have any affirmation from Mr. Graham. [00:18:54] Speaker 04: But that's not needed if the face of the complaint itself reveals the basis for immunity. [00:19:00] Speaker 04: And so your complaint alleges in terms that Graham was acting within the scope and course and scope of his employment. [00:19:08] Speaker 04: So does that mean the complaint itself has already [00:19:11] Speaker 04: provided the basis for immunity? [00:19:13] Speaker 04: That's what I was trying to ask you before. [00:19:14] Speaker 02: Right. [00:19:14] Speaker 02: There's a distinction between responding on superior liability and the immunity question. [00:19:20] Speaker 02: And again, this is one of those difficult areas where the same phrase gets used in different ways in different parts of the law. [00:19:27] Speaker 02: But it is well settled, and we've covered this in our brief, that an agent's [00:19:34] Speaker 02: an agency, an employer, anyone in a modest situation can be held under respondeat superior theory for something that was absolutely forbidden to the employer. [00:19:44] Speaker 02: So respondeat superior liability for Mr. Graham's actions is a different question from whether Mr. Graham's actions [00:19:51] Speaker 02: were truly discretionary within the scope of his employment. [00:19:54] Speaker 02: And the immunity question turns on his discretion. [00:19:58] Speaker 04: McCason said it's in the scope of employment for purposes of responding to Superior, but outside the scope of employment for immunity purposes. [00:20:09] Speaker 02: I believe Griggs says that, Your Honor. [00:20:11] Speaker 04: Because I thought what they did was they would say things were within the scope, but just manifestly excessive in the physical assault cases or the criminal allegation cases. [00:20:20] Speaker 04: They actually agreed that it was within the scope of employment, but just manifestly excessive in a way that we want to extend immunity. [00:20:26] Speaker 04: Do you think Greg's sent? [00:20:28] Speaker 02: I had understood that to just identify a category of conduct that would be within Respondiat Superior, but outside the scope of the employee because it was manifestly excessive. [00:20:40] Speaker 04: So I think it's just we're having a different phrasing. [00:20:44] Speaker 04: I just think it's outside the scope of immunity. [00:20:46] Speaker 04: But would this qualify as manifestly excessive under any case? [00:20:50] Speaker 02: I think some of the conduct alleged here would qualify as manifestly excessive, Your Honor. [00:20:54] Speaker 02: I think the leaking of confidential bit information is extremely serious. [00:20:58] Speaker 02: And some of the, you know, there's a lot of [00:21:04] Speaker 02: suggestion in the factual record of actual quid pro quos. [00:21:10] Speaker 02: Now, that's not something that, you know, that's something that's been investigated. [00:21:13] Speaker 02: I know it's been, I know it's controverted because the conflict and the evidence on that is all over the footnotes of the investigative report that WMODIC commissioned on that. [00:21:24] Speaker 02: But we believe that presents a question of fact. [00:21:28] Speaker 04: Is that, well, what I'm trying to figure out is [00:21:31] Speaker 04: If some of the things might qualify as manifestly excessive and others might not, the things Judge Pillard was mentioning, how are we supposed to sort of march through this? [00:21:42] Speaker 04: I mean, is it the right course to remand and have the district court? [00:21:46] Speaker 04: apply the analysis or is it for us to march through this and figure out what's manifestly excessive and what's not? [00:21:53] Speaker 04: Because I didn't sort of get that detailed level of analysis from the briefing and there's a lot of different allegations here. [00:22:00] Speaker 02: Yes. [00:22:00] Speaker 04: Of conduct and their timing is different. [00:22:02] Speaker 02: Yes. [00:22:04] Speaker 02: I certainly think that the factual record could [00:22:07] Speaker 02: benefit from more development before the district court. [00:22:10] Speaker 02: What we have relied on on appeal is the personal direction of the staff telling staff to cut a rival bidder who's already lost the bidding process into the deal and then leaking the confidential information to the rival bidder to bring them around. [00:22:26] Speaker 02: Those are the main things that occurred [00:22:27] Speaker 02: during the negotiation period. [00:22:29] Speaker 02: Some of the other things that are mentioned in the complaint about the quid pro quo on the lottery contract and things like that may be relevant to other causes of action and I think should also be thought of in immunity terms. [00:22:42] Speaker 07: I hate to prolong this but I'm going to do anyway by jumping to something else. [00:22:48] Speaker 07: You use the term mid-rig. [00:22:56] Speaker 07: My understanding of bid-rigging in the days when I was defending bid-riggers was that it involved competitors getting together to fix a bid. [00:23:05] Speaker 07: I don't see any conduct here that fits any traditional definition of bid-rigging. [00:23:10] Speaker 07: Can you enlighten me on that? [00:23:11] Speaker 02: Your Honor, I'm not an authority on bid-rigging, and we're not... There was a time in life when I was. [00:23:19] Speaker 07: I don't see anything here in these allegations that even resembles bid-rigging. [00:23:23] Speaker 07: It looks like the competitors remain competitors. [00:23:27] Speaker 02: I don't believe we're pressing any claims about bid rigging up on a deal, Your Honor. [00:23:33] Speaker 04: Thank you. [00:23:35] Speaker 04: Thank you. [00:23:42] Speaker 03: Good morning. [00:23:42] Speaker 03: May it please the Court. [00:23:43] Speaker 03: My name is Doug Bregman. [00:23:45] Speaker 03: I represent the Appellate of WMATA. [00:23:48] Speaker 03: And I will focus on counts one, two, and seven. [00:23:53] Speaker 03: And also, we've split the argument. [00:23:55] Speaker 03: Dan Golden represents the appellee, Jim Graham. [00:23:59] Speaker 03: And he will address the remaining counts on appeal. [00:24:04] Speaker 03: Judge Collier's decision to dismiss the counts in the amended complaint, which was close to 100 pages long, lodged against WMATA, should be affirmed. [00:24:15] Speaker 03: Taking first count one, [00:24:18] Speaker 03: And Your Honor has asked questions about Count 1 and where in the complaint is there an allegation that the term sheet obligation of exclusive negotiation, where was that violated by WMATA? [00:24:38] Speaker 03: I've scoured the amended complaint. [00:24:41] Speaker 03: It's difficult. [00:24:42] Speaker 03: It's a long document. [00:24:43] Speaker 03: There's a lot in there. [00:24:46] Speaker 03: The term sheet. [00:24:48] Speaker 03: gave one right to Banneker, and that is it had an exclusive right to negotiate with WMATA for five months. [00:24:57] Speaker 03: That was extended, didn't have to be, but it was extended by WMATA three times to the point where they really had 20 months. [00:25:04] Speaker 04: Is that a contractual right? [00:25:07] Speaker 03: To extend it? [00:25:08] Speaker 04: No. [00:25:08] Speaker 04: No, the contractual right to have that exclusive negotiation period with WMATA. [00:25:14] Speaker 04: Was that a contractual right? [00:25:15] Speaker 04: That was a contractual right. [00:25:16] Speaker 03: We're prepared to say, because the document, the term sheet itself says, this term sheet will have no binding effect on the parties. [00:25:25] Speaker 03: No binding effect. [00:25:27] Speaker 03: Except a developer shall have the exclusive right to negotiate a definitive agreement with WMATA for a period of five months from the date of the term sheet. [00:25:36] Speaker 05: So it says accept, so there clearly is, it's a contract for something. [00:25:41] Speaker 05: It's a contract for an exclusive right to negotiate and it's covered under applicable law by a duty of negotiating good faith. [00:25:49] Speaker 04: Correct. [00:25:49] Speaker 04: So you can see that in fact they did have a contract. [00:25:53] Speaker 03: We say that the term sheet had one thing in it that was binding, and that was that the parties negotiated with each other exclusively for a five-month period. [00:26:04] Speaker 04: And in good faith. [00:26:04] Speaker 03: And in good faith. [00:26:05] Speaker 04: Okay, so then the district court was just wrong because it said there's no contract here at all to enforce, so you're confessing error? [00:26:11] Speaker 03: No, I'm saying that Judge Collier did find that the parties had an obligation to negotiate with each other exclusively. [00:26:21] Speaker 03: She didn't say to the contrary. [00:26:24] Speaker 03: What she said is that the document did not go on to require that all the terms that were in the term sheet had to be part of the deal, that even the preamble to the term sheet says that it was a proposal being considered. [00:26:41] Speaker 03: So the analysis focuses on, as Your Honor asked the question, was that exclusivity obligation violated? [00:26:51] Speaker 03: And there is nothing in the allegations, as I read the amended complaint and as you will or have read the amended complaint, that shows a violation of exclusivity. [00:27:01] Speaker 04: Again, it's not just exclusivity, it's also good faith negotiations during that period to reach the agreement if possible. [00:27:08] Speaker 04: There's no [00:27:09] Speaker 04: right to have an ultimate agreement, but it is a right to have best efforts to reaching an agreement. [00:27:17] Speaker 04: And I think the complaint's filled with allegations. [00:27:20] Speaker 04: You may disagree, and I have no idea who's got the right side of the story. [00:27:25] Speaker 04: We don't decide that at this stage. [00:27:26] Speaker 04: But it's hard to say this 100-something page complaint doesn't outline a lot of things that they say was in good faith. [00:27:34] Speaker 03: I respectfully disagree. [00:27:39] Speaker 03: I'm not disagreeing that there was an obligation of good faith inherent in a negotiation, exclusive negotiation that was imposed on WMATA and on the developer. [00:27:52] Speaker 03: which was extended generously. [00:27:55] Speaker 04: I think the... Well, I think that right there you're into one of the factual disputes. [00:27:59] Speaker 04: Was it extended generously, your view? [00:28:02] Speaker 04: Was it extended as part of this effort to keep changing the rules of the game and the terms of the contract because of interference by [00:28:12] Speaker 04: Mr. Graham, that's a fact dispute. [00:28:16] Speaker 04: We can't decide as a matter of law that it was a generously granted extension as opposed to a problematic stringing out of process, can we, as a matter of law? [00:28:26] Speaker 03: If you're looking at the allegations, the allegations are conclusory. [00:28:33] Speaker 03: All the allegations say is that this matter got before the board in March almost two years after the process got started and the board decided to table. [00:28:44] Speaker 05: To say this is conclusory, it's just a far cry from the kinds of conclusory allegations that the Supreme Court criticized in Twombly and Iqbal. [00:28:56] Speaker 05: I mean, they're getting into a lot of factual granularity here about what happened when and who was doing what and who said what to whom and how things changed and how they changed again. [00:29:07] Speaker 05: So I think you're going to have to try another tack on that one. [00:29:11] Speaker 03: Well, I will, respectfully. [00:29:14] Speaker 03: I think there was all kinds of allegations of collateral noise in this two-year process of allegations of Mr. Graham talking to the developer, another developer, allegations of the other developer making phone calls to the WMATA staff. [00:29:33] Speaker 03: But there were no allegations of bad faith. [00:29:39] Speaker 03: There was no allegations that, A, there was negotiation outside of the WMATA-Fanneker context. [00:29:48] Speaker 03: And there were no allegations that the board did anything wrong in deciding to table this process after a two-year effort to make a deal. [00:29:58] Speaker 05: Let me just direct you on the exclusivity. [00:30:00] Speaker 05: I mean, I think that's a question where a pleader is going to, at best, have circumstantial information, circumstantial allegations. [00:30:13] Speaker 05: It does seem like there are allegations here from which one might infer that WMATA was in fact still talking with the other developer. [00:30:27] Speaker 05: giving out information to them. [00:30:28] Speaker 05: I mean, the fact that they're asking for advice about, hey, can we get best and final offers from these other developers? [00:30:34] Speaker 05: It sounds like what they're saying is, we've been chatting with them. [00:30:37] Speaker 05: We, in fact, have been negotiating with them. [00:30:40] Speaker 05: Can we move forward with what looks good out of those negotiations and get it formally before? [00:30:47] Speaker 05: the WMATA board. [00:30:49] Speaker 05: Why isn't that a fair inference from the allegations of the complaint? [00:30:53] Speaker 03: Your question assumes that there were negotiations. [00:30:55] Speaker 03: There were, according to the allegations, discussions with an outside developer and that outside developer was calling the staff [00:31:03] Speaker 03: and promoting itself, and bad mouthing the other developer. [00:31:08] Speaker 03: There's all kinds of allegations about that. [00:31:10] Speaker 03: But those types of discussions are not negotiations. [00:31:13] Speaker 03: The negotiations, and you have to look at the amended complaint, the negotiations continued exclusively. [00:31:21] Speaker 03: Those collateral outsides. [00:31:23] Speaker 04: Negotiations continued, but I guess characterizing communications, whether they rose to the level of [00:31:31] Speaker 04: interference with a duty to have good faith negotiations. [00:31:35] Speaker 04: Again, it sounds to me like a factual characterization that's going to need development. [00:31:41] Speaker 04: Is it not? [00:31:43] Speaker 04: As a matter of law we can say, as a matter of law we can say that those communications, repeated communications and all the allegations about [00:31:53] Speaker 04: how they were instigated and what their consequences were. [00:31:55] Speaker 04: As a matter of law, we can't hold that those did not interfere with good faith negotiations between WMATA and Banneker. [00:32:06] Speaker 03: Pelley thinks you can. [00:32:07] Speaker 03: The negotiation is a common sense term of parties negotiating a contract and its specifics. [00:32:14] Speaker 03: To have other parties out there [00:32:17] Speaker 03: saying you should have chosen us, to have another developer saying the one that you chose is not a good developer, that's not a negotiation. [00:32:27] Speaker 04: Right, but the allegation isn't just that there were parties out there, that there were parties [00:32:32] Speaker 04: You know, getting the camel's nose into the, getting the camel's, well, in conjunction with another party, getting the camel's nose into the tent. [00:32:39] Speaker 04: And what was going on? [00:32:41] Speaker 04: Again, do you have a case that as a matter of law holds that negotiations have to interfere with a good faith duty negotiation, that discussions with other people have to rise to a formal level of negotiation? [00:32:55] Speaker 03: I think our brief does address that. [00:32:59] Speaker 03: It addresses that these are not negotiations. [00:33:01] Speaker 03: These are conversations outside conversations. [00:33:05] Speaker 05: Let me ask what, just sort of on that same point, best and final offer, meaning a best and final offer of what? [00:33:12] Speaker 03: OK, so that allegation was a request that there maybe be put out to the public another opportunity for a best and final offer. [00:33:22] Speaker 03: That never happened. [00:33:23] Speaker 03: Right. [00:33:23] Speaker 05: I understand that. [00:33:24] Speaker 03: That's the key thing. [00:33:24] Speaker 05: I understand that. [00:33:25] Speaker 05: I understand that. [00:33:26] Speaker 05: And there was, in fact, legal advice given that they couldn't do it. [00:33:29] Speaker 03: And they didn't do it. [00:33:30] Speaker 03: And in fact, they extended the contract negotiations another three months. [00:33:34] Speaker 05: I've read the papers. [00:33:35] Speaker 05: But what I wonder is whether you can shed light on that. [00:33:37] Speaker 05: That's the best and final offer for the development [00:33:41] Speaker 05: Project not for a term sheet, but for the actual project, right? [00:33:46] Speaker 05: So they're saying, we're working now under this term sheet to get a final development plan with Banneker. [00:33:55] Speaker 05: Best and final offer for what? [00:33:57] Speaker 03: Based on the allegations, I think you'd have to speculate as to what it was that the best and final offer was going to be for, maybe for other monetary propositions on how to handle this development. [00:34:13] Speaker 05: A best and final offer to do this project, to build this structure. [00:34:18] Speaker 03: to yes, it was for the Florida Avenue site, and it was maybe to buy it, maybe to rent it. [00:34:24] Speaker 03: It was unclear. [00:34:25] Speaker 03: It just never happened. [00:34:26] Speaker 05: But I understand that position. [00:34:28] Speaker 03: That's key. [00:34:29] Speaker 05: But it also creates an implication about what led up to that. [00:34:33] Speaker 05: Why were they even asking about that? [00:34:35] Speaker 05: And assuming that anybody else was in a position [00:34:38] Speaker 05: to make a best-in-final offer. [00:34:40] Speaker 05: A lot of water under the bridge by that time, no? [00:34:43] Speaker 05: One might infer. [00:34:44] Speaker 03: That's key. [00:34:45] Speaker 03: That's key. [00:34:45] Speaker 03: There's a lot of water under the bridge. [00:34:47] Speaker 03: There's been almost two years of discussion, and this deal was still having difficulty coming together and having real traction, where the parties were coming to specifics and moving it on to definitive agreements. [00:35:01] Speaker 03: It was long in the tooth. [00:35:03] Speaker 03: Every deal has an hourglass with the sands dropping through it, and there was frustration, I'm sure, that no deal was done. [00:35:10] Speaker 03: They have a piece of public property that WMATA wanted to have developed at Florida Avenue, and they were still in discussions, frustrating discussions. [00:35:19] Speaker 03: So yeah, maybe they thought about putting it out, but they never did. [00:35:22] Speaker 03: They adhered to the exclusivity and even extended it another three months from that point. [00:35:27] Speaker 04: Would you agree that the source of the difficulties you referenced that caused this ultimately to not [00:35:32] Speaker 04: go through that you and the plaintiff have a different view of factually what the source of those difficulties were. [00:35:41] Speaker 04: You mentioned difficulties, but would you just agree [00:35:45] Speaker 04: that you have a different view of what caused the difficulties than they do? [00:35:50] Speaker 03: No, I think that we each... You all agree on the same story? [00:35:53] Speaker 03: No. [00:35:53] Speaker 03: Yeah. [00:35:54] Speaker 03: I think that there is an agreement that there was a lot of discussion about a lot of issues in this whole complicated financial real estate transaction. [00:36:03] Speaker 03: Yeah. [00:36:03] Speaker 04: How about at a little bit lower level of particularity? [00:36:05] Speaker 04: I mean, you don't agree with their statement. [00:36:08] Speaker 04: Do you dispute their statement of facts in their brief? [00:36:10] Speaker 04: of how everything transpired. [00:36:13] Speaker 03: We accept their statement of facts and believe that the motion to dismiss was properly granted by Judge Collier. [00:36:21] Speaker 03: I think my time is up. [00:36:23] Speaker 06: Thank you. [00:36:36] Speaker 01: Good morning, Your Honors, and may it please the Court. [00:36:38] Speaker 01: My name is Daniel Golden. [00:36:39] Speaker 01: I'm Assistant General Counsel for the Council of District of Columbia. [00:36:42] Speaker 01: I represent a former D.C. [00:36:44] Speaker 01: Council member and a former WMATA board member, Jim Graham. [00:36:47] Speaker 01: With the Court's permission, I'd like to first address the issue of immunity and then spend a few minutes talking about the merits of the underlying tort claims. [00:36:55] Speaker 01: Turning to the issue of immunity, the first point I'd like to address is Banneker's allegation that Judge Collier erred in somehow shifting the burden of proof on this issue from Councilmember Graham to Banneker. [00:37:07] Speaker 01: Banneker's reliance on the Supreme Court's decision in Westfall v. Irwin on this point is misplaced. [00:37:12] Speaker 01: That case involved a motion for summary judgment where the defendant, who was also the movement, had the burden of demonstrating there was no genuine issue of material fact. [00:37:19] Speaker 01: This is a very different procedural posture, as Your Honor has recognized. [00:37:23] Speaker 01: This is a 1256 motion. [00:37:25] Speaker 01: And so Judge Collier's correct. [00:37:26] Speaker 04: But don't you still have the burden? [00:37:27] Speaker 04: Didn't Mr. Graham still have the burden of proof? [00:37:30] Speaker 04: I mean, what that burden of proof was might be somewhat different, but you still have the burden of proof. [00:37:34] Speaker 01: Respectfully, the burden in the initial instance is on Banneker to have a well-pleaded complaint that includes allegations that, if true, would permit Banneker to circumvent the bar of absolute immunity. [00:37:46] Speaker 04: I'm sorry. [00:37:47] Speaker 04: You think the law is that they have to prove an absence of immunity at the 12b6 stage, that Mr. Graham didn't have to prove anything at that stage? [00:37:54] Speaker 01: I don't think anyone has to prove anything at the 12b6 stage, but at least the complaint needs to prove it. [00:37:58] Speaker 04: Somebody has a burden of proof. [00:38:00] Speaker 01: Correct, but I believe that then comes out at the summary judgment stage as it did. [00:38:04] Speaker 04: Is immunity an affirmative defense or is nonimmunity an element of any of the torts or contract claims they made? [00:38:11] Speaker 01: Immunity is an affirmative defense, but it's a unique affirmative defense, Your Honor, and that's because [00:38:18] Speaker 01: It's not only immunity from liability, but it's also immunity from having to endure the process. [00:38:23] Speaker 04: Absolutely, but I had always thought the burden of proof remained on the defendant at the 12-by-6 stage to make a showing that taking the facts in light most favorable to the plaintiff [00:38:36] Speaker 04: There's immunity. [00:38:37] Speaker 01: Interesting. [00:38:37] Speaker 01: I've taken a look at this issue actually over the weekend, so this is not in our briefs. [00:38:41] Speaker 01: But there is a second circuit decision called Shmueli versus City of New York. [00:38:45] Speaker 04: Have you shared that decision with opposing council? [00:38:48] Speaker 01: I have not. [00:38:49] Speaker 01: I'm sorry, Your Honor, but I would. [00:38:52] Speaker 01: And that's my oversight. [00:38:53] Speaker 04: If it's helpful, then it might be good to send in a letter afterwards so that the other side can see it as well. [00:38:59] Speaker 01: Sure. [00:38:59] Speaker 04: But go ahead and talk about it. [00:39:00] Speaker 01: But it reconciles the fact that this isn't affirmative defense yet. [00:39:04] Speaker 01: It's also [00:39:05] Speaker 01: appropriate for a court in a 12b6 motion to look solely at the allegations in the complaint and then determine whether immunity would in fact bar the plaintiff's cause of action. [00:39:17] Speaker 05: So we look at this on, I guess it's 12b1 or 12b6? [00:39:21] Speaker 01: This is actually 12b6. [00:39:21] Speaker 01: 12b1 applies to the sovereign immunity in the official capacity. [00:39:25] Speaker 01: That has not been appealed here. [00:39:26] Speaker 05: Okay, so we look at this on the 12b6 and we look at the plaintiff's allegations and I think, as I understand it, the way the burden translates is that Mr. Graham has to raise his immunity defense and then be able to articulate in briefing why, given the allegations and complaint taking them and they're like most favorable to the plaintiff, nonetheless, therefore the plaintiff's [00:39:51] Speaker 05: complaint and characterizations that are reasonably in the plaintiff's favor govern, but nonetheless, on that universe of facts, he's entitled to immunity. [00:40:01] Speaker 05: Is that how you understand it? [00:40:02] Speaker 01: That's correct, and we believe we've done that in our Epilees brief before the court. [00:40:06] Speaker 05: Well, can you address some of the questions that we were asking about the, you know, [00:40:12] Speaker 05: inside outside of the outer perimeter of his duties and the questions about whether there are certain things that even if they otherwise might be within his duties might be done through means that are impermissible [00:40:28] Speaker 05: for example, politically biased or corrupt means, and or the leaking. [00:40:34] Speaker 01: Sure. [00:40:35] Speaker 01: And I think I'd like to begin just by talking about what is in the cases that have been cited by Banneker. [00:40:41] Speaker 01: Those cases, McKinney v. Whitfield and Bishop v. Tice, those are cases where there were manifestly excessive means employed. [00:40:47] Speaker 01: Those cases were isolated instances of extreme physical coercion. [00:40:52] Speaker 01: In McKinney, for example, there was an actual battery on the plaintiff by the defendant. [00:40:57] Speaker 01: In Bishop versus Tice, there was a false imprisonment, a detention of the plaintiff. [00:41:02] Speaker 01: He was not allowed to contact a lawyer. [00:41:03] Speaker 01: He was threatened with false criminal charges. [00:41:06] Speaker 01: These kinds of situations [00:41:08] Speaker 01: would allow you to get around the immunity bar because they represent not only extreme instances of bright-line physical conduct, but also the, you know, getting to the purposes of immunity, they wouldn't necessarily... In either case, yes, the physical impropriety is necessary as opposed to... What I'm saying is you're telling me how this is different. [00:41:34] Speaker 07: What I'm trying to find out is, does that difference make a difference? [00:41:39] Speaker 01: I don't think it's necessary to have physical coercion. [00:41:42] Speaker 01: I submit there could be a case where non-physical conduct is so extreme and, you know, and otherwise... Is the taking of a quid pro quo bride sufficiently extreme to want the same treatment? [00:41:56] Speaker 01: Well, I think that conduct, just to address that briefly and then respond... I'm not happy to concede that's here, but if it were here, would that be sufficient? [00:42:09] Speaker 01: It's that kind of sensational conduct, I think, starts pushing against that boundary. [00:42:15] Speaker 01: But here, again, that conduct can be bracketed because that's something that happened before the term sheet. [00:42:21] Speaker 01: It allegedly happened before the term sheet. [00:42:22] Speaker 01: And it allegedly failed. [00:42:24] Speaker 01: Paragraph 8 of the complaint says this quid pro quo effort failed. [00:42:27] Speaker 01: If this were a case being brought by Mr. Williams or Mr. Payne, we might be having a different conversation. [00:42:33] Speaker 01: Banneker was not injured in any way by the alleged quid pro quo, and so therefore it's not really falling within the purview of the immunity analysis at all. [00:42:41] Speaker 01: I think it's kind of a red herring. [00:42:42] Speaker 04: Is that right, given that one of the reasons we might have cites for why the contract never came through was a lack of a capital development? [00:42:52] Speaker 04: partner which according to the allegations of the complaint was a direct product of that criminal activity. [00:42:58] Speaker 04: Allegedly criminal activity. [00:43:00] Speaker 01: Again I think there are you know there's some problematic you know things in their complaint for those kinds of allegations and specifically I believe it's paragraph 100. [00:43:08] Speaker 01: 36 of the complaint says, notwithstanding Grimm's misconduct to cause it be otherwise, Banneker at every step of the process put forth a development team with unquestioned capabilities and expertise. [00:43:20] Speaker 01: So even if this conduct were to have occurred, the things that are more sensational are in the complaint, they're sort of window dressing, and they don't really get to the substance of the issue. [00:43:28] Speaker 04: Well, whether they're window dressing or whether they're causal sounds like a fact dispute to me. [00:43:35] Speaker 01: I don't want to bleed over to the merits of the tort issues just yet, but I think those things are conceded as not causal in the complaint and so they should be off the table. [00:43:45] Speaker 01: But in terms of immunity, I think I would just say, you know, what we're really looking at in terms of the conduct that [00:43:51] Speaker 01: we're asking for immunity for are things like, you know, seeking an affordable housing component for the development or, you know, seeking, expressing a preference for a lease versus a sale, seeking a reappraisal. [00:44:04] Speaker 05: Those things are harder. [00:44:05] Speaker 05: I think that's right. [00:44:07] Speaker 05: It's harder to overcome the immunity. [00:44:09] Speaker 05: But I think the concern is, and the reason why even the pre-term sheet conduct seems relevant, is at least the impression that the plaintiffs have is that there was a political favoritism motive behind a lot of what Graham was doing, that WMATA was sharing in that and allowing itself to be manipulated in that. [00:44:32] Speaker 05: And the question, the legal question for us is, if that's the case, if that's adequately alleged, step one, we would have to determine based on allegations of complaint, [00:44:43] Speaker 05: Is that something that is excessive means such that it pops this out of the immunity, even though what he's doing is stuff that, had it been motivated in the impartial interests of the public, would have been within his job duties? [00:45:00] Speaker 05: And I know you point to these cases with sort of abhorrent physical conduct. [00:45:05] Speaker 05: But in politics, non-impartiality is the abhorrent Vettelboten [00:45:11] Speaker 05: And so I guess I'm asking you why that isn't treated as excessive need. [00:45:18] Speaker 01: Sure. [00:45:18] Speaker 01: And I think the answer is because the intent of the defendant is irrelevant under this circuit's precedent with respect to whether immunity should be granted or withheld. [00:45:27] Speaker 01: That's in a case called Poole versus Graces, even if the defendant acted in bad faith. [00:45:31] Speaker 01: you know, that has no bearing on the immunity analysis. [00:45:33] Speaker 01: It's similar, although it was under D.C. [00:45:35] Speaker 01: law, a judge sentelier decision in Wilson versus Libby. [00:45:38] Speaker 01: I mean, that conduct was politically motivated and, you know, allegedly done for a bad purpose. [00:45:44] Speaker 01: However, we look at what are the individual's job responsibilities and have they manifestly exceeded the line of duty. [00:45:51] Speaker 01: acted contrary to statutory authorization. [00:45:54] Speaker 01: I mean, it's a very, very high bar for the plaintiff to plead around, frankly. [00:45:59] Speaker 01: And we submit that that just did not occur here. [00:46:02] Speaker 04: But it's difficult to sort out which things are within the heartland to which community would apply, like we should have affordable housing, and which things are out, like [00:46:15] Speaker 04: Here's a piece of confidential information or a bigger story about, this is all about election campaign, war chest. [00:46:27] Speaker 04: What's the right course to do? [00:46:29] Speaker 04: Is it for us to sort this through? [00:46:32] Speaker 04: Because the district court was just very categorical about this and didn't sort of look at the distinctions in these claims. [00:46:39] Speaker 01: Well, I mean, yes, I believe it's appropriate for disposition at this stage for the reasons I expressed. [00:46:44] Speaker 01: You know, again, I believe all the conduct, you know, as a matter of law does not get you anywhere near McKinney or Bishop. [00:46:51] Speaker 01: And, you know, with that guidepost in mind, you know, what's alleged here [00:46:56] Speaker 01: is economic harm and it's within the context. [00:47:00] Speaker 01: I mean, you can imagine the problems this would create for WMATA just administratively. [00:47:06] Speaker 01: You know, is this a two and a half year's worth of conduct? [00:47:10] Speaker 01: There would have to be extensive discovery, numerous witnesses. [00:47:13] Speaker 01: This is not, you know, [00:47:15] Speaker 01: a man bites dog case like McKinney or Bishop versus Tice, this is a lot of conduct. [00:47:21] Speaker 01: It would be extremely disruptive. [00:47:23] Speaker 01: And so I think that weighs into the analysis as well. [00:47:25] Speaker 01: And then... I'm sorry. [00:47:26] Speaker 04: What weighs in that it's a big case with a lot of discovery that weighs into the immunity analysis? [00:47:32] Speaker 01: Yes, I believe so. [00:47:33] Speaker 01: Because, you know, under Westfall, you look at, you know, what are the administrative impediments that would be sort of created by denying immunity. [00:47:40] Speaker 04: And I believe that... Wouldn't that happen in every case? [00:47:43] Speaker 04: There's going to be discovery in every case, and it's always going to be claimed to be disruptive. [00:47:47] Speaker 01: But pushing every case involves a public entity doing the people's business. [00:47:51] Speaker 04: No, so by every case, by every case for sovereign immunity or immunity, it's going to involve public entities or public officials. [00:47:58] Speaker 01: Right, but I think also the conduct here is so sort of ambiguous that again it gets to this, you know, just [00:48:06] Speaker 01: just exercising the amount of effort that would be necessary to delve into this, where it ends up ultimately being he said, she said, how are certain communications interpreted. [00:48:15] Speaker 01: I mean, really at the end of the day, the alleged actual conduct here are, it's that Graham was talking to Banneker [00:48:22] Speaker 01: that Graham was talking to third parties and that he was talking to the staff. [00:48:28] Speaker 05: I mean, you referred to Bishop versus Tice as a case of physical harm or physical coercion, but it's really a threat. [00:48:34] Speaker 05: It's a threat that's being used in a way to influence or to coerce. [00:48:40] Speaker 05: at least the allegations have a lot of, you know, unless you do this, we're going to cut you out, unless you do this. [00:48:46] Speaker 05: And so, I mean, the intent line, I don't know, it seems as implicated by maybe Bishop versus Tice as this case. [00:48:54] Speaker 01: Well, I think there's a couple of things going on in Bishop versus Tice, and not only is it, you know, sort of the actual detention of the plaintiff, but [00:49:01] Speaker 01: He wasn't detained, right? [00:49:03] Speaker 01: He was threatened. [00:49:03] Speaker 01: He was. [00:49:03] Speaker 01: He was put in a room and not allowed to leave for an hour, told he could not contact a lawyer, and threatened with false criminal charges unless he resigned his job. [00:49:11] Speaker 01: And when we look at who the actors are in that case, too, it was two, I think it was OSHA, regional auditors who do not presumably have personnel authority coming in and explaining to, you know, [00:49:23] Speaker 01: this plaintiff that he was going to have to leave his position. [00:49:26] Speaker 01: So those are the, I think, you know, those are the kinds of calls that I think courts can make at a motion to dismiss stage just to say, okay. [00:49:33] Speaker 04: What if instead of a physical assault they stole someone's wallet? [00:49:39] Speaker 01: That would be closer to getting around the immunity bar, I agree. [00:49:44] Speaker 04: Would it? [00:49:45] Speaker 04: So economic harm can in fact? [00:49:48] Speaker 01: Well, it's not only economic harm, but it's a direct misappropriation of property. [00:49:53] Speaker 01: And it's like Bishop and like McKinney. [00:49:56] Speaker 01: It's a discrete event. [00:49:59] Speaker 01: The conduct here is subject to interpretation because Graham, he was a WMATO board member, PDRE, Planning Development Real Estate Committee member. [00:50:08] Speaker 01: He had responsibility for doing oversight. [00:50:12] Speaker 01: as a WMATA board member for voting, and so he had to make an informed decision. [00:50:15] Speaker 04: He necessarily would be expected to be talking to some of the folks involved here. [00:50:24] Speaker 04: Is it essentially a public policy limitation on the scope of immunity that sort of that's beyond the pale or is it something that's just so readily identifiable and discreet and has such harmful impact? [00:50:40] Speaker 04: I'm just trying to figure out from those cases what the rationale is for creating this spin back. [00:50:46] Speaker 04: The whole point of immunity is the assumption that someone did something, the assumption is you did something really bad. [00:50:50] Speaker 04: But that's what we provide immunity for. [00:50:52] Speaker 01: And I'm not sure I have a bright line test. [00:50:54] Speaker 01: I think it is often context dependent. [00:50:56] Speaker 01: But I would just say, based on the precedents that we know of, that that conduct is just not present here. [00:51:02] Speaker 01: I would like to address the merits of the tort claims, actually, briefly. [00:51:08] Speaker 01: Excuse me? [00:51:09] Speaker 01: Just briefly. [00:51:10] Speaker 01: Sure. [00:51:10] Speaker 01: On the intentional interference with the business expectancy, it's our position that as a matter of law, Banneker has failed to meet a business expectancy. [00:51:23] Speaker 01: Contrary to Banneker's claim, Judge Collier did not erroneously apply a per se rule that an interest in a expectancy that might involve government approval is always too remote. [00:51:34] Speaker 01: She actually said it ordinarily is. [00:51:37] Speaker 04: That's consistent with... But then she didn't say much else. [00:51:39] Speaker 01: What's that? [00:51:40] Speaker 04: Didn't say much else. [00:51:41] Speaker 01: Well, but her decision was consistent with what's in National Railroad. [00:51:44] Speaker 04: Well, it's consistent in outcome, but not in articulation. [00:51:49] Speaker 04: There's a much more caveat of articulation in National Railroad. [00:51:54] Speaker 04: It's going to be more difficult to show. [00:51:57] Speaker 01: That's true. [00:51:57] Speaker 01: That's true. [00:51:58] Speaker 04: That's very different than general speaking, you get nothing. [00:52:01] Speaker 01: And National Railroad says, yes, you do look at how discretionary is this decision. [00:52:07] Speaker 01: Here, the WMATA board was vested with complete discretion. [00:52:11] Speaker 04: Do we just look at that? [00:52:11] Speaker 04: Do we look at practice? [00:52:12] Speaker 04: Do we look at the fact that, at least, again, the allegation, maybe there's a factual dispute, is that two or three times here, they came [00:52:21] Speaker 04: to final agreement on terms and the board, at least as a practical matter, was never rejected that when that happened. [00:52:28] Speaker 04: You know, it seemed to keep happening repeatedly here while Jim Graham was heading the board. [00:52:33] Speaker 04: Does that weigh in at all or is it just his pure discretion so it can never? [00:52:38] Speaker 01: In our view here, at least, the language of the Joint Development Solicitation is so clear that, you know, it would be very dangerous to create tort liability in this context. [00:52:47] Speaker 01: I mean, the Joint Development Solicitation says, as long as the security deposit is returned, which was the $100,000 that was given back in this case, WMATA may terminate the selected developer designation at any time. [00:52:58] Speaker 04: We have to read it. [00:53:00] Speaker 04: This is what struck me as a little odd. [00:53:02] Speaker 04: You have a good faith duty to negotiate. [00:53:05] Speaker 04: based on terms, you know, the Stanford Hotel case. [00:53:09] Speaker 04: The expectation, at least, is that we picked you, we've agreed on these terms, we think if we work together, we'll be able to get to a contract, we'll be able to get to agreement. [00:53:20] Speaker 04: That's really what we think, and that's why we're just doing it with you, and that's why we charged you, by the way, $100,000 for this process. [00:53:27] Speaker 04: But there's no promises. [00:53:28] Speaker 04: Negotiations are tough, and these things are complicated. [00:53:31] Speaker 04: But we think there's an endpoint. [00:53:33] Speaker 04: And I don't understand what good faith did you negotiate in a world where we say, there's no rules at all about an endpoint. [00:53:42] Speaker 01: Well, there were rules. [00:53:42] Speaker 01: I mean, there were rules here. [00:53:44] Speaker 01: It was a five-month. [00:53:44] Speaker 01: I mean, true, it was extended. [00:53:46] Speaker 01: But I mean, what was clearly contemplated is you have five months to work out a deal. [00:53:51] Speaker 01: You're going to pay us $100,000, sure. [00:53:52] Speaker 01: But in the meantime, we're going to put the property on ice. [00:53:55] Speaker 01: And we're going to exclusively negotiate with you. [00:53:57] Speaker 04: But you can't say, as a matter of law, [00:54:00] Speaker 04: You have no expectation whatsoever you're ever going to get a contract and then marry that up and say, but by the way, the law does have a duty of good faith to negotiate to that, can you? [00:54:10] Speaker 01: I think you can because that's a separate cause of action, the duty to negotiate in good faith and fair dealing. [00:54:16] Speaker 01: And we're talking here about the existence of a separate business expectancy, which is a much [00:54:20] Speaker 01: That's a very difficult showing, as the court has indicated. [00:54:26] Speaker 04: Could they engage in good faith negotiations, spend a lot of time and effort, get right up to the last minute, everything's agreed upon, and then go, just kidding? [00:54:40] Speaker 04: So that would satisfy the duty of good faith negotiation. [00:54:44] Speaker 04: They did all the negotiation, and then they go. [00:54:46] Speaker 04: But it's a government contract, so we get to say, just kidding at the end. [00:54:49] Speaker 01: I think in this case though, that is not... Can you do that? [00:54:57] Speaker 04: It seems to me that at least when you have a good faith duty to negotiate, there has to be some... [00:55:02] Speaker 04: expectation that if the good net faith process is pursued, and I think this is what Stanford was saying, then there is some commitment to really try and have a contract at the end on half the government, not a commitment. [00:55:15] Speaker 01: I'm a little hesitant to wade into this more asked, but I think that what you're talking about is like a type two agreement, which does contemplate like, yes, unless both parties decide to walk away at the back end, we're going to have an agreement. [00:55:26] Speaker 01: This is very different. [00:55:27] Speaker 01: This is a term sheet just for an exclusive negotiating period. [00:55:30] Speaker 04: Stanford said something like this is a type two agreement. [00:55:32] Speaker 01: And I'm saying I think this is something less than that. [00:55:36] Speaker 01: Whatever this thing is. [00:55:38] Speaker 04: Type 3. [00:55:39] Speaker 01: Yeah, type 3. [00:55:41] Speaker 01: Or 2b. [00:55:44] Speaker 05: that all we had to have was a good possibility of securing a contract. [00:55:48] Speaker 05: And Biancar's position in his complaint is, they put up hoops, we jumped, we jumped, we jumped, we jumped. [00:55:53] Speaker 05: We were the one, I mean, we won the exclusive negotiating period. [00:55:58] Speaker 05: That gives us some expectancy. [00:56:00] Speaker 05: And then through that, we just did everything. [00:56:03] Speaker 05: We scurried, we jumped, we scurried, we jumped. [00:56:05] Speaker 05: And, you know, [00:56:07] Speaker 05: Obviously, in fact development, I could see that being defeated by all kinds of evidence. [00:56:12] Speaker 05: But on the complaint, no business expectancy that is reasonable. [00:56:18] Speaker 01: Right. [00:56:19] Speaker 01: But that's because of the language of the term sheet and the joint development solicitation. [00:56:24] Speaker 05: At will. [00:56:25] Speaker 01: Forget it. [00:56:25] Speaker 01: At will. [00:56:26] Speaker 05: All kinds of. [00:56:26] Speaker 05: You could be a contractor with the government, and they could say, look, build us [00:56:32] Speaker 05: a thousand desk chairs and they're gonna have, you know, the DC logo on them and you go and you do it and it's like, oh, actually that was, you know, at will we cancel. [00:56:45] Speaker 01: Yeah, but I mean, was that sort of baked in the cake from the beginning? [00:56:47] Speaker 01: I mean, did the person making the chairs know that that was a distinct possibility at the back end of the deal? [00:56:53] Speaker 01: And there's a body of contract law that addresses that. [00:56:55] Speaker 05: And that's probably a bad hypo because I doubt anybody would invest actual material in something if they didn't have some kind of [00:57:03] Speaker 05: clause or training up for something because you're told you're through everything except for this level of clearance and it pretty much always works. [00:57:13] Speaker 05: Isn't that what this tort is created for? [00:57:15] Speaker 01: I think this tort is created for situations that are ungoverned by contract and that's what's unusual here is you have a term sheet that [00:57:21] Speaker 01: basically sets forth what the expectations should be. [00:57:24] Speaker 01: And so this is different from, you know, another case where everybody's kind of competing or there's no written signed understanding about how this whole thing is going to go forward. [00:57:34] Speaker 01: So I think this is a unique situation. [00:57:37] Speaker 04: Thank you very much. [00:57:38] Speaker 01: Thank you. [00:57:39] Speaker 04: Mr. Grannis has used up all his time. [00:57:41] Speaker 04: We'll give you a couple of minutes. [00:57:48] Speaker 02: Thank you, Your Honor. [00:57:49] Speaker 02: I won't trespass on the Court's indulgence. [00:57:52] Speaker 02: First, I want to make clear that we don't agree on why the deal fell through. [00:57:57] Speaker 02: You're quite right about that. [00:57:58] Speaker 02: Also, on page 27 of our reply, we actually talk about some of the [00:58:06] Speaker 02: manifestly excessive allegations that are in the complaint. [00:58:10] Speaker 02: There are, in fact, allegations that criminal statutes were violated in addition to the false criminal allegations. [00:58:16] Speaker 02: So I wanted to put that in. [00:58:17] Speaker 04: Before the term agreement? [00:58:18] Speaker 02: I'm sorry? [00:58:19] Speaker 04: Before the term agreement or after? [00:58:21] Speaker 02: both, spanning the entire thing. [00:58:24] Speaker 02: But I think the key there is, as some of the questions from the court indicated, that the color that is placed on a lot of the Lucy pulling the football away stuff later on is often drawn from the earlier events that took place. [00:58:40] Speaker 04: The only other point that I... So you're suggesting that some of the earlier activity with the lottery and the... [00:58:47] Speaker 04: donate to the campaign and taking away the capital development partners had – or your complaint, I guess, alleged that that has – is part of the story here. [00:58:55] Speaker 02: That's right. [00:58:55] Speaker 02: That's right. [00:58:57] Speaker 02: The other thing that I wanted to make sure I touched on was that the – there is a conspiracy allegation in the complaint, and I think it's important not to neglect that, not only for purposes of the interference things, but also, I think, even for purposes of considering the immunity question. [00:59:12] Speaker 02: So the complaint alleges, paragraph 71, that Jim Graham and the Likritz Adler defendants all had an agreement to try and get Likritz Adler back into the deal. [00:59:21] Speaker 02: And that certainly would not be something that would be within Jim Graham's duties at WMATA. [00:59:29] Speaker 04: And you're not contesting metro sovereign immunity in this? [00:59:31] Speaker 02: On the contract claims, there is no question of sovereign immunity. [00:59:35] Speaker 02: We understand there is a sovereign immunity hurdle to the fraud claim, which we also pled in the alternative. [00:59:40] Speaker 02: And the conspiracy. [00:59:43] Speaker 02: I'm sorry? [00:59:44] Speaker 04: And the conspiracy claim? [00:59:45] Speaker 02: I don't believe METRO is included in the conspiracy claim, but if they are, then the sovereign immunity would apply there. [00:59:51] Speaker 04: And then as to Lakritz Adler. [00:59:53] Speaker 04: What exactly did they do to interfere with the contract, according to the complaint? [00:59:58] Speaker 04: I suppose just make a couple calls to folks, which they probably have a right to petition their government for their interests. [01:00:05] Speaker 02: Well, so if you're referring to the North Pennington defense, we don't believe that applies here. [01:00:09] Speaker 04: Not, no, not North Pennington. [01:00:12] Speaker 04: I'm not getting that doctrinal. [01:00:13] Speaker 04: But, you know, it can't be that a duty of exclusive good faith negotiation means that you can't even take a call from another contractor. [01:00:21] Speaker 02: Right, no, but Likritz Adler was constantly calling every few months, disparaging Banneker's bid, using confidential information on Banneker's bid in order to have those discussions and was, in fact, offering... Do you allege that they knew it was confidential and they shouldn't be using it? [01:00:37] Speaker 02: Before I directly answer that question, I want to look at the complaint, but the allegations are at 261 and 262, and it's at least a very strong inference if it's not a direct allegation, Your Honor. [01:00:51] Speaker 02: As in many of these situations, it's the timing that's so suggestive. [01:00:55] Speaker 02: It's where, you know, Jim Graham has a lunch with Omar Karim of Banneker, [01:00:59] Speaker 02: and tells him something, and then Omar Karim gets back from lunch and finds there's a phone call from LaCritz Adler. [01:01:04] Speaker 02: You can trace the information flow, and when these things happen again and again, the inference is very strong that what's happening is Jim Graham and LaCritz Adler are a team. [01:01:14] Speaker 02: And I think that that is relevant to evaluating Mr. Graham's immunity as well as to evaluating Lucretz Adler's involvement in the interference. [01:01:23] Speaker 02: It may be that Lucretz Adler, even if Mr. Graham is immune, winds up liable for what Mr. Graham did on their behalf in interfering with Banneker's contract. [01:01:32] Speaker 04: And does D.C. [01:01:33] Speaker 04: law make the leaking of information punishable by either a civil or criminal penalty, the type of leaking that occurred here? [01:01:40] Speaker 02: I don't know that offhand, Your Honor. [01:01:44] Speaker 04: Any questions? [01:01:45] Speaker 02: Thank you very much. [01:01:46] Speaker 04: Thank you. [01:01:46] Speaker 04: Case is submitted.