[00:00:00] Speaker 05:
to recognize that the behavior of the BPA and the WAPA in overcharging on the amounts that they charge for electricity in the PX and ISO markets was a clear breach of their contract.

[00:00:17] Speaker 04:
But I'm puzzled by this because it seems to me

[00:00:22] Speaker 04:
that if there is any agreement here between the power suppliers and the power purchasers, it's an agreement to arbitrate.

[00:00:33] Speaker 04:
And so why aren't the parties bound under that view to arbitrate this dispute?

[00:00:41] Speaker 05:
It seems to me that one of the parties has to have asserted that it should be arbitrated.

[00:00:45] Speaker 05:
And as far as I know, the government never asked to have the case submitted to arbitration like any other provision

[00:00:51] Speaker 05:
free to waive arbitration.

[00:00:54] Speaker 05:
The government's position is there's been no breach and therefore no problem.

[00:00:57] Speaker 05:
They didn't seem to contest.

[00:00:58] Speaker 04:
Your clients could have initiated arbitration too under the clause, right?

[00:01:04] Speaker 05:
That would have been available to us, to be sure.

[00:01:06] Speaker 05:
But there is an arbitration clause in the provision.

[00:01:11] Speaker 05:
But obviously at this point in the litigation, both sides have essentially waived that provision.

[00:01:17] Speaker 05:
So it was properly before.

[00:01:18] Speaker 05:
Well, there hasn't been any formal waiver of it, right?

[00:01:25] Speaker 05:
Well, as far as I know, I don't think there's been a formal waiver of it.

[00:01:28] Speaker 05:
On the other hand, case law is pretty substantial.

[00:01:31] Speaker 05:
It says that if the parties operate and litigate a matter before the court for an extended period of time, they have, in effect, waived.

[00:01:38] Speaker 05:
the arbitration provision in the contract.

[00:01:41] Speaker 05:
So I don't think there's an issue there.

[00:01:42] Speaker 04:
Well, but there may be an issue if the only agreement is an agreement to arbitrate, and you haven't availed yourself of that.

[00:01:54] Speaker 05:
Well, I don't know under what circumstances you could say the only agreement is an agreement to arbitrate.

[00:01:58] Speaker 05:
I mean, there is clearly an arbitration provision in here, and the government could have foisted that or could have asserted that if they'd chosen to do so.

[00:02:06] Speaker 05:
They didn't.

[00:02:07] Speaker 05:
They're perfectly comfortable litigating this matter in the Court of Federal Claims.

[00:02:10] Speaker 05:
We were perfectly comfortable litigating it there.

[00:02:14] Speaker 05:
And, candidly, the way the cases played out, at least under our interpretation, obviously, the power suppliers agreed to be bound by the tariff agreement.

[00:02:25] Speaker 05:
The tariff agreement says that they will only pay a single rate.

[00:02:29] Speaker 05:
That's a rate that's subject to determination by the Federal Energy Regulatory Commission.

[00:02:34] Speaker 05:
Commission has in fact evaluated that rate independently in another proceeding confirming that the actual rates charged on an individualized basis were excessive.

[00:02:43] Speaker 05:
There was a reset process that was then implemented pursuant to the tariff in which additional settlement statements were presented to the BPA and the WAPA under the agreement.

[00:02:55] Speaker 05:
They agreed to all payments pursuant to the tariff under those circumstances and indeed the specific languages

[00:03:03] Speaker 05:
If for any reason a PX creditor receives more than the amount to which it is entitled under the PX tariff, it shall forthwith pay the excess amount.

[00:03:11] Speaker 05:
I don't know how you can have a contract that's any plainer than that.

[00:03:13] Speaker 05:
They know they have an excess amount.

[00:03:15] Speaker 05:
They have an obligation to pay.

[00:03:16] Speaker 05:
They have never paid that money.

[00:03:18] Speaker 05:
And as a consequence of that, that's pretty much straightforward breach of contract, at least where I come from.

[00:03:23] Speaker 05:
Now, the Court of Federal Claims and the government make a couple three arguments to try to get around it.

[00:03:29] Speaker 05:
Excuse me, that's the core of what this case is about.

[00:03:32] Speaker 05:
And you can assert privity, but the reality is that who else could this obligation run between, as opposed to the buyers and the sellers?

[00:03:40] Speaker 05:
We know from these agreements that the PX and the ISO are merely acting as agents for all of these parties.

[00:03:47] Speaker 05:
They don't have the resources to buy and sell electricity.

[00:03:50] Speaker 05:
Nobody would enter into agreements for this kind of arrangement, which meant what the court said in the supervisory goodwill litigation, that it would be madness to go down.

[00:03:58] Speaker 03:
The restatement of agency.

[00:04:00] Speaker 05:
I'm sorry?

[00:04:01] Speaker 03:
The restatement of agency?

[00:04:02] Speaker 03:
Yes, your honor.

[00:04:04] Speaker 03:
Explains that the party's characterization of their relationship is not controlling.

[00:04:09] Speaker 03:
That's restatement third, section 102.

[00:04:12] Speaker 03:
And instead, we look to whether the alleged agent agreed to be controlled by the principal, which is section 101.

[00:04:20] Speaker 03:
Does the record contain any evidence that either CalISO or CalPX agreed to be controlled by the government?

[00:04:29] Speaker 05:
Yes, because I would go to the manual, which is incorporated into the tariff expressly at A449 and SA8.

[00:04:40] Speaker 05:
Section 1.4 says the manual is incorporated, and the manual explicitly says that the PX and the ISO in consecutive provisions says acts as an agent for all of the PX participants.

[00:04:54] Speaker 05:
So yeah, I don't think there's any question about this isn't a matter of us characterizing it this way.

[00:04:59] Speaker 05:
This is a matter of the agreement by its terms saying that the PX and the ISO will act as agents for all of the participants.

[00:05:08] Speaker 05:
It only makes sense in this context.

[00:05:11] Speaker 03:
You're not answering my question.

[00:05:13] Speaker 03:
I'm sorry.

[00:05:15] Speaker 03:
What in the record shows that the alleged agent agreed to be controlled by the principal, that is, by the government?

[00:05:24] Speaker 05:
Well, it seems to me that the agent, BX and ISO, were part of the original creators of the manual itself.

[00:05:34] Speaker 05:
So the manual under which the BX and ISO operate, which is incorporated into the tariff as part of the agreement, reflects the ISO and BX's willingness to undertake on behalf of all of the participants in this matter.

[00:05:47] Speaker 05:
Indeed, if you were looking for anything, it would seem to me, Judge Wallach, you'd have to be looking for language that would have carved out

[00:05:53] Speaker 05:
the agency relationship between these entities and BPA and WAPA because it's absolutely clear that across the board for every other party in this exchange.

[00:06:05] Speaker 03:
Is there any evidence on the record that John Straits the government intended to confer a benefit on appellants only and not on other market participants?

[00:06:16] Speaker 05:
No, I think the record reflects that the BPA meant to

[00:06:21] Speaker 05:
to an agreement with all of the market participants potentially.

[00:06:24] Speaker 03:
You're familiar with holding in glass.

[00:06:27] Speaker 05:
I'm not familiar with holding in glass.

[00:06:30] Speaker 03:
We've held that a party must demonstrate that the contracting question, quote, expresses the intent of the promissory to benefit the party personally, independently of his or her status as part of a class of similarly situated parties.

[00:06:46] Speaker 05:
Well, I don't know the facts of the case well enough to be able to explain exactly how it might play out, but it does seem to me, Your Honor, that when you're talking about a situation of an exchange, which is what this is, that the law in regulating exchanges says quite clearly that by simply entering in, you agree to abide

[00:07:05] Speaker 05:
by the terms of the exchange as the rules that govern how the parties to the exchange interact.

[00:07:13] Speaker 04:
Yeah, and interestingly enough, the two cases on which you rely on are incorporating arbitration clauses.

[00:07:18] Speaker 04:
That's what they're doing.

[00:07:19] Speaker 04:
Right, that's true.

[00:07:21] Speaker 04:
Well, you can't be contending that there are individual agreements with respect to buyers and sellers here because we're talking about a fungible good under Eurodiff seems to me pretty clear that there can't be individual contracts, right?

[00:07:36] Speaker 05:
Right, and it would be unrealistic to think you could have this kind of a scheme and have individual contracts, and it's unrealistic given the nature of the business.

[00:07:43] Speaker 04:
So your theory is there's a collective contract between all the buyers and all the sellers?

[00:07:48] Speaker 05:
Yes, and that's exactly what I think the exchange

[00:07:51] Speaker 05:
Cases stand for when you're going to set up an arrangement like this in which you have the exchanges which operate as agents on behalf of both sides.

[00:08:00] Speaker 05:
and that operate with fiduciary responsibilities to both sides, that the contractual relationship, the contractual obligations, flow from the real parties of interest.

[00:08:08] Speaker 04:
But your cases don't involve that.

[00:08:11] Speaker 04:
The exchange cases that you cite are cases of individual contracts between two parties.

[00:08:18] Speaker 04:
And the question was whether the arbitration clause got incorporated into those contracts as a result of the exchange agreement.

[00:08:25] Speaker 05:
But Judge Dyke, it seems to me that the parallel here is there is clearly an agreement between the PX and the federal instrumentalities, right?

[00:08:37] Speaker 05:
And that agreement incorporates the tariff and the manual and imposes all of those obligations directly on the

[00:08:46] Speaker 05:
on the instrumentalities and it does it either for the benefit of or through an agency or frankly I would say through an exchange arrangement where the law which is simply recognized that the obligations that flow from one party to the other party only make sense in this context.

[00:09:01] Speaker 04:
I'm having difficulty seeing that there was an agreement imposing any obligations outside of the arbitrable context.

[00:09:11] Speaker 05:
What the agreement itself says,

[00:09:14] Speaker 05:
in the covenant on the participation agreement, it says it will perform all obligations under the tariff involving billing and collection.

[00:09:23] Speaker 05:
And then specifically, as I read earlier, it says the PX creditor, if he receives more than the amount that he's entitled to, he will pay back.

[00:09:32] Speaker 05:
That's an agreement directly under the tariff.

[00:09:35] Speaker 05:
And that's the agreement that they incorporated expressly when they entered into the arrangement with the PX and the ISO in the first instance.

[00:09:45] Speaker 05:
So it seems to me, admittedly, there's an arbitration clause in there.

[00:09:49] Speaker 05:
And if they had asserted arbitration against the site, we probably would have arbitrated this dispute.

[00:09:54] Speaker 04:
Or you could have done it, too.

[00:09:56] Speaker 04:
I'm sorry?

[00:09:56] Speaker 04:
Or you could have done it, too.

[00:09:59] Speaker 05:
Or we could have done it, too.

[00:10:00] Speaker 05:
But typically, I think the United States prefers to litigate a court of federal claims rather than a rare alternative arrangement.

[00:10:08] Speaker 05:
I assume you'll ask them why they didn't assert the arbitration clause.

[00:10:11] Speaker 05:
Paul, why didn't you assert the arbitration clause?

[00:10:14] Speaker 05:
I think because we thought that most disputes seeking money from the United States government go to the Court of Federal Claims.

[00:10:21] Speaker 05:
It's sort of an ordinary place to go.

[00:10:22] Speaker 05:
And if the government would prefer to have it litigated in arbitration, that would have been fine.

[00:10:27] Speaker 05:
But they should have done that, obviously, more than a decade ago.

[00:10:30] Speaker 05:
It seems to me they're quite clearly pleased, perfectly happy to litigate it under these circumstances.

[00:10:36] Speaker 05:
At the end of the day, what I would ask the court to do is to recognize that Judge Smith analyzed the tariff, recognized all the obligations of the party, evaluated against the course and conduct and industry, trade, understanding, came to the conclusion that these are straightforward, almost garden-variety responsibilities.

[00:10:59] Speaker 05:
of if you get more money than you're entitled to under an agreement, you have to pay the money back.

[00:11:03] Speaker 04:
But the questions are legal questions.

[00:11:05] Speaker 04:
It doesn't make any difference whether Judge Smith was the decider or Judge Brayden was the decider, because they're legal questions for us to decide to know about.

[00:11:13] Speaker 05:
At the end of the day, there's a legal issue in there.

[00:11:14] Speaker 05:
But there's also, I don't think that, I mean, I would argue, obviously, that you can read these contracts unambiguously.

[00:11:23] Speaker 05:
impose that obligation on them.

[00:11:24] Speaker 05:
But the best you could say is that the contracts maybe are a slight bit ambiguous on that score.

[00:11:31] Speaker 04:
And under those circumstances, you would turn to what the experts say and what people... Well, I don't see that the experts said anything meaningful about how the Memphis clauses would operate in these circumstances.

[00:11:45] Speaker 04:
They just testified that Memphis clauses meant that you could go to the Federal Power Commission.

[00:11:49] Speaker 05:
Well, they did take the position that somebody in the situation of the instrumentalities here would have understood, as everybody else understood, that you're setting a single rate under the tariff.

[00:12:04] Speaker 05:
If that rate is subject to review ultimately by the FERC, and if it turns out that the FERC changes that rate, then obviously you're going to have to go with a different rate.

[00:12:13] Speaker 04:
Yeah, but the only thing the experts can testify to is industry practice, not how they individually would have construed the contract, right?

[00:12:22] Speaker 05:
Right, although some of them were ISO and PX officials.

[00:12:26] Speaker 04:
Right, but what was the testimony about industry practice

[00:12:30] Speaker 04:
that said that these Memphis clauses created an obligation to do anything other than allow resort to the Federal Power Commission.

[00:12:40] Speaker 05:
Well, the clauses themselves only provide a mechanism by which you are not simply bound by whatever the quote market price that gets set in the first instance.

[00:12:49] Speaker 05:
They provide a mechanism for second guessing that.

[00:12:52] Speaker 05:
It's the other provisions that impose the obligation to immediately pay if it turns out for any reason.

[00:12:57] Speaker 04:
So you're not relying on the Memphis clauses?

[00:13:00] Speaker 05:
I rely on them because they provide the context in which you have a FERC determination that is the basis upon which then the subsequent responsibility to pay... But you're not saying that the Memphis Clause has imposed the obligation?

[00:13:11] Speaker 05:
No, they don't.

[00:13:12] Speaker 05:
There's a separate, very explicit obligation imposed on them to pay any amounts they receive that are in excess of the amounts they're entitled to.

[00:13:20] Speaker 05:
And FERC has told us exactly the amounts they're entitled to.

[00:13:24] Speaker 05:
And that's what the court ought to have enforced.

[00:13:29] Speaker 05:
That's what Judge Smith did.

[00:13:30] Speaker 05:
That's what Judge Smith said with respect to the declaratory orders.

[00:13:33] Speaker 05:
I would ask the court to reinstate all of Judge Smith's decision in this case.

[00:13:40] Speaker 05:
If there are no questions, I'll reserve the balance.

[00:13:42] Speaker 02:
Okay, let's hear from the government and we'll save you rebuttal time, Mr. Phillips.

[00:13:52] Speaker 02:
Mr. Sweet.

[00:13:54] Speaker 02:
Thank you.

[00:13:58] Speaker 04:
What's the government's position on the arbitration question?

[00:14:02] Speaker 00:
We didn't seek arbitration because we don't think that these contracts are enforceable by these particular plaintiffs.

[00:14:09] Speaker 00:
They're incorrect when they certainly... No, but I mean there's a dispute here.

[00:14:12] Speaker 04:
Why wouldn't it be covered by the arbitration law?

[00:14:16] Speaker 00:
We don't think that they could bring an arbitration or bring a case in this court because there's no privity between us and them.

[00:14:24] Speaker 04:
Your contention is that you're not bound by the arbitration clause?

[00:14:30] Speaker 00:
Oh, we would.

[00:14:30] Speaker 00:
But the person to arbitrate with would be either all of the buyers or the ISO PX.

[00:14:37] Speaker 00:
That's who we had the contract with.

[00:14:39] Speaker 04:
Well, so why isn't that a concession that if there is a dispute here, it ought to go to arbitration?

[00:14:47] Speaker 00:
Because we think that if there's a dispute here, we're entitled to resolve that dispute with the ISO and the PX.

[00:14:54] Speaker 00:
Those are the people under the contract who we were supposed to deal with, and so we're entitled to deal with them.

[00:15:00] Speaker 00:
Now, they've never been in a party to this suit, so that's the fundamental problem that we have.

[00:15:08] Speaker 04:
But you don't dispute that this would arbitration be permissible under the statute, under the dispute resolution statute?

[00:15:16] Speaker 00:
Yes, although we would have a dispute who brings the arbitration.

[00:15:20] Speaker 00:
Yes, any dispute can be subject to arbitration.

[00:15:26] Speaker 00:
But if I can get back for a moment, the fundamental flaw in the argument of plaintiffs is that FERC never reset or change the crisis.

[00:15:34] Speaker 00:
Here are the tariff provisions that they rely on the Memphis clauses, merely reserve the party's pre-existing rights.

[00:15:40] Speaker 04:
Well, they're not relying on the Memphis clause now.

[00:15:42] Speaker 04:
They've found another provision of the contract that they like better.

[00:15:45] Speaker 00:
Right.

[00:15:46] Speaker 00:
And that provision, intelligently, they leave out the part that says any overcharges are due to the PX, not to the individual market participants.

[00:15:53] Speaker 00:
But there was no overcharge here.

[00:15:55] Speaker 00:
As they said, to have an overcharge, you have to get more than you're entitled to.

[00:15:59] Speaker 03:
Yeah.

[00:16:02] Speaker 03:
You make that windfall argument.

[00:16:04] Speaker 03:
And in response at 52 and 53, you say that during the energy crisis, the WAPA, quote, incurred great cost purchasing energy at inflated prices outside the California organized market and provided that energy without receiving compensation.

[00:16:27] Speaker 03:
I couldn't find the evidence and the record to support those statements.

[00:16:32] Speaker 00:
Your Honor, that's part of the proceedings that we were also buyers of electricity, WAPA and BPA, and we still haven't been paid yet on those transactions that we bought electricity on.

[00:16:47] Speaker 00:
But getting back to my point is that they claimed that there was an overcharge, but to have an overcharge, you have to have received more than you're entitled to.

[00:16:57] Speaker 00:
The agencies received the market clearing price, which is the price they were entitled to at the time.

[00:17:02] Speaker 04:
But that doesn't seem to be directed to the question of privity, which we've been asking about.

[00:17:07] Speaker 00:
No, no.

[00:17:09] Speaker 00:
If your honor is asking about privity with regard to the PX, we never entered into any contract directly with the plaintiffs.

[00:17:16] Speaker 00:
We entered into contracts with the PX, which then entered into separate contracts with the buyers.

[00:17:25] Speaker 00:
And indeed, the IOU buyers are collectively stopped from disputing that there's privity because they successfully took the position that there was no privity in the Southern California Edison and Lynch cases.

[00:17:36] Speaker 00:
Nor was the PX acting as an agent for the buyers under Johnson controls because our obligations didn't run directly to the buyers.

[00:17:45] Speaker 00:
the overcharge provision that they cite clearly indicates that any payments of overcharges are due to the PX, not due to any particular buyers.

[00:17:56] Speaker 00:
Therefore, they're not agent and there was no third-party beneficiary.

[00:18:03] Speaker 00:
In terms of the merits,

[00:18:05] Speaker 00:
If question has a question, the point is that there were no overcharges.

[00:18:10] Speaker 00:
FERC has never reset or changed the rates, so we remain entitled to the charges that we originally had under the market clearing prices.

[00:18:20] Speaker 00:
And City of Reading clearly indicates that FERC didn't change the rates.

[00:18:25] Speaker 00:
It says, quote, we do not agree with FERC's assertion that it has broad authority under Section 206 of the Federal Power Act

[00:18:32] Speaker 00:
to retroactively reset rates that were charged in the California electricity markets during the time in question, October 2, 2000 through June 20, 2001."

[00:18:41] Speaker 00:
End quote.

[00:18:43] Speaker 00:
So FERC never actually changed the rates.

[00:18:46] Speaker 00:
And indeed, before the Ninth Circuit, the plaintiffs acknowledged that that was fatal to their claim.

[00:18:52] Speaker 00:
They state, as the City of Reading case says, the plaintiffs, quote, conceded that FERC's resetting of the rates charged by the non-jurisdictional entities

[00:19:01] Speaker 00:
is the predicate for these pending contract actions," end quote.

[00:19:05] Speaker 00:
That's on page 835 of City of Reading.

[00:19:07] Speaker 00:
Then City of Reading went on to hold that FERC could not change the actual rates.

[00:19:13] Speaker 00:
And all that FERC did was to calculate a hypothetical would-have-been rate to use for purposes of calculating the jurisdictional entities.

[00:19:22] Speaker 00:
That's not the agency's refund obligation.

[00:19:25] Speaker 00:
That's under Federal Power Act section 206b.

[00:19:28] Speaker 00:
But as City of Reading clearly said, that does not reset or change the prices.

[00:19:33] Speaker 00:
FERC's ability to change or set prices is contained in Federal Power Act section 206a.

[00:19:39] Speaker 00:
And that only allows FERC to change prices prospectively, which it did here when it changed the prices effective June 20, 2001.

[00:19:48] Speaker 00:
As City of Reading held, though,

[00:19:50] Speaker 00:
It could not and did not change the prices for the period in question here.

[00:19:55] Speaker 00:
Because it didn't change the prices, there were no overcharges.

[00:19:58] Speaker 00:
The agencies remain entitled to the price they originally charged.

[00:20:01] Speaker 04:
Well, I understand that argument.

[00:20:03] Speaker 04:
What is the government's position if, suppose, Mr. Phillips-Kleinz today initiated an arbitration?

[00:20:12] Speaker 04:
Would that be a timely invocation of arbitration?

[00:20:15] Speaker 00:
I'm not sure, Your Honor, at this point.

[00:20:19] Speaker 04:
Is there any authority as to whether the 2401, the statute of limitations, applies to arbitration?

[00:20:26] Speaker 00:
I don't know the answer to that, Your Honor, I'm sorry.

[00:20:29] Speaker 00:
But in any event, I still think that they would have a standing problem if they brought arbitration.

[00:20:37] Speaker 04:
And again, because they're not... Well, why wouldn't that be for the arbitrators to resolve?

[00:20:42] Speaker 00:
Right, but that's something we would assert if they did.

[00:20:45] Speaker 00:
bring an arbitration.

[00:20:49] Speaker 00:
And then under the law of the case doctrine issue, under this court's Exxon case, the trial court has the discretion to reconsider its own decisions without being constrained by the law of the case doctrine, so long as that hasn't been affirmed on appeal, which wasn't the case here.

[00:21:09] Speaker 00:
And so if your honors have no further questions,

[00:21:13] Speaker 00:
We respectfully request that this Court approve the decision of the Court of Federal Claims for the reasons I stated and on our papers.

[00:21:22] Speaker 01:
See?

[00:21:22] Speaker 01:
Any more questions?

[00:21:24] Speaker 01:
Any more questions?

[00:21:25] Speaker 01:
Okay.

[00:21:26] Speaker 01:
Thank you, counsel.

[00:21:30] Speaker 05:
Your Honor, I'll attempt to be brief.

[00:21:33] Speaker 05:
I think the answer to your question, Judge Steig, with respect to the alternative dispute resolution mechanism, is that if you look at essay 141,

[00:21:41] Speaker 05:
It says that disputes arising out of the just and reasonable rates are not subject to the ADR.

[00:21:47] Speaker 04:
Well, I've read that, but that sounds as though that that clause is saying that the arbitraries won't determine the Federal Power Act question as to whether the rates are just and reasonable, which is, under your theory, not what the arbitraries would be asked to decide here.

[00:22:03] Speaker 05:
I agree with that, although the language is a little squishier, at least in my judgment.

[00:22:06] Speaker 05:
And typically, normally when you're interpreting this kind of language,

[00:22:10] Speaker 05:
to favor arbitration usually read it pretty broadly.

[00:22:13] Speaker 05:
I don't know whether you would narrowly read this kind of language in this context or not.

[00:22:16] Speaker 05:
But at least by way of an explanation, this is clearly involved.

[00:22:20] Speaker 05:
This involves issues arising out of the just and reasonable rates, and therefore seems to me perfectly sensible to take it to the Court of Federal Claims.

[00:22:28] Speaker 05:
If the government had wanted to arbitrate it, I don't know that we would necessarily have fought.

[00:22:33] Speaker 05:
that kind of an assertion, but at least I think at the time we had a good faith basis for presenting it the way we did.

[00:22:39] Speaker 04:
I think it would be helpful if you mentioned cases earlier where you said that an arbitration clause won't be given effect unless one of the parties seeks arbitration.

[00:22:51] Speaker 04:
I think a supplemental letter giving those citations would be useful and then the government could also address that question.

[00:23:00] Speaker 05:
Sure, happy to do that.

[00:23:01] Speaker 05:
With respect to the question of whether or not there have been overcharges in this particular case, the government says there have been no overcharges because we paid the amount that we were required to pay.

[00:23:11] Speaker 05:
But the entire agreement is predicated on the assumption that that first payment may or may not be the amount that ultimately is required by the contract.

[00:23:22] Speaker 05:
And if it turns out for whatever reason, then that's the language.

[00:23:26] Speaker 05:
If for any reason it turns out, then they have to pay that money back.

[00:23:30] Speaker 05:
And the idea as to whom you pay it shouldn't make any difference at this point.

[00:23:34] Speaker 05:
And Judge Smith is very explicit about that in analyzing.

[00:23:36] Speaker 05:
He said that's a question to deal with the remedy.

[00:23:38] Speaker 05:
That's not a question that absolves the government of its duty to pay money.

[00:23:44] Speaker 05:
At this point, they haven't paid a nickel.

[00:23:46] Speaker 05:
uh... toward the uh... toward the overcharges that they were able to collect.

[00:23:51] Speaker 04:
What's your view as to whether it's too late to initiate arbitration?

[00:23:54] Speaker 05:
I'm sorry Your Honor?

[00:23:55] Speaker 04:
What is your view as to whether it is too late to initiate arbitration and in particular whether the six-year statute of limitations would apply?

[00:24:03] Speaker 05:
I would think that the filing of this lawsuit would undeniably toll the time for that if it wasn't necessary.

[00:24:10] Speaker 04:
I thought you'd gotten no equitable telling under 2401.

[00:24:15] Speaker 05:
I mean, it seems to me, if it's not a tolling argument, and clearly we filed this lawsuit, it would seem to me then the court ought to retain jurisdiction, submit the required to be submitted to arbitration under those circumstances and retain jurisdiction in order to enforce the arbitration agreement if need be at the end of the day.

[00:24:34] Speaker 05:
But it seems to me, as I said, we'll provide you with that case law.

[00:24:38] Speaker 05:
But the cases are pretty clear that if neither party seeks arbitration, then the arbitration right essentially falls out of the case.

[00:24:46] Speaker 05:
Again, I would ask the court to reinstate Judge Smith's orders in this case.

[00:24:49] Speaker 02:
While you're there, let's set a time limit for the additional information Judge Dyke has requested.

[00:24:55] Speaker 02:
What makes sense?

[00:24:56] Speaker 02:
Seven days?

[00:24:57] Speaker 02:
Ten days?

[00:24:59] Speaker 05:
We can get it for you by the end of the day, if you'd like, frankly.

[00:25:02] Speaker 05:
But three days is fine.

[00:25:04] Speaker 05:
Why don't we close the business on Tuesday?

[00:25:07] Speaker 02:
It'll be fine.

[00:25:08] Speaker 02:
Does that make sense to you?

[00:25:10] Speaker 02:
Yeah.

[00:25:10] Speaker 02:
All right.

[00:25:11] Speaker 02:
And then a few days thereafter, if the government wishes to respond.

[00:25:15] Speaker 02:
Thank you.

[00:25:16] Speaker 02:
Okay.

[00:25:17] Speaker 02:
Thank you.

[00:25:18] Speaker 02:
Thank you both.

[00:25:19] Speaker 02:
The case is taken under submission.