Bank of New York Mellon v. City of Richmond, California et al

Filing 29

Ex Parte Application re 28 MOTION to Dismiss for Lack of Jurisdiction EX PARTE MOTION TO SHORTEN TIME AND FOREGO HEARING filed by City of Richmond, California, Gordian Sword LLC, Mortgage Resolution Partners L.L.C., Richmond City Council. (Attachments: # 1 Declaration Declaration of Eric P. Brown in Support of Ex Parte, # 2 Exhibit Exhibit A to the Declaration of Eric P. Brown, # 3 Exhibit Exhibit B to the Declaration of Eric P. Brown, # 4 Exhibit Exhibit C to the Declaration of Eric P. Brown, # 5 Exhibit Exhibit D to the Declaration of Eric P. Brown, # 6 Exhibit Exhibit E to the Declaration of Eric P. Brown, # 7 Exhibit Exhibit F to the Declaration of Eric P. Brown, # 8 Exhibit Exhibit G to the Declaration of Eric P. Brown, # 9 Exhibit Exhibit H to the Declaration of Eric P. Brown, # 10 Proposed Order Proposed Order)(Leyton, Stacey) (Filed on 9/20/2013)

EXHIBIT D

Pages 1 - 28
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
BEFORE THE HONORABLE CHARLES R. BREYER, JUDGE
WELLS FARGO BANK, N.A.,

)
)
Plaintiff,
)
)
VS.
)
CITY OF RICHMOND, CALIFORNIA,
)
Defendant.
)
)
___________________________________)

NO. C 13-3663 CRB
San Francisco, California
Thursday
September 12, 2013
10:07 a.m.

TRANSCRIPT OF PROCEEDINGS
APPEARANCES:
For Plaintiff:
BY:

BY:

BY:

BY:

ROPES & GRAY LLC
1211 Avenue of the Americas
New York City, New York 10037
JOHN C. ERTMAN, ESQ.
and
ROPES & GRAY LLC
One Metro Center
700 12th Street, N.W.
Suite 900
Washington, D.C. 20005-3948
DOUGLAS HALLWARD-DRIEMEIER, ESQ.
and
ROPES & GRAY LLP
Three Embarcadero Center
San Francisco, California 94111-4006
ROCKY C. TSAI, ESQ.
and
WELLS FARGO LAW DEPARTMENT
45 Fremont Street
26th Floor
San Francisco, California 94105
THOMAS O. JACOB, ESQ.

(Appearances continued, next page)

Belle Ball, CSR #8785, CRR, RDR
Official Reporter - U.S. District Court
[phone]

APPEARANCES, CONTINUED:
For Defendant City of Richmond:
ALTSHULER BERZON LLP
177 Post Street
Suite 300
San Francisco, California 94108
BY: SCOTT A. KRONLAND, ESQ.
STACEY M. LEYTON, ESQ.
ERIC P. BROWN, ESQ.
STEPHEN P. BERZON, ESQ.
and
CITY OF RICHMOND
City Attorney's Office
450 Civic Center Plaza
Post Office box 4046
Richmond, California 94804-1630
BY: CARLOS A. PRIVAT, ESQ.

For Defendants City of Richmond and Mortgage Resolution
Partners LLC:
LAW OFFICES OF WILLIAM A. FALIK
100 Tunnel Road
Berkeley, California 94705
BY: WILLIAM A. FALIK, ESQ.
For Law Foundation of Silicon Valley, Bay Area Legal Aid,
California Reinvestment Coalition, Housing and Economic Rights
Advocates, and National Housing Law Project:
NATIONAL HOUSING LAW PROJECT
703 Market Street
Suite 2000
San Francisco, California 94103
BY: KENT KANG QIAN, ESQ.
For Securities Industry and Financial Markets Association
and Chamber of Commerce of the United States of America:
SIDLEY & AUSTIN LLP
555 California Street
San Francisco, California 94104
BY: SARA B. BRODY, ESQ.
(Appearances continued, next page)

Belle Ball, CSR #8785, CRR, RDR
Official Reporter - U.S. District Court
[phone]

APPEARANCES, CONTINUED:
For Amicus Curiae Applicants California Bankers Association,
American Bankers Association, California Mortgage Bankers
Association, and California Credit Union League:
DLA PIPER LLP
555 Mission Street
Suite 2400
San Francisco, California 94105
BY: PAUL J. HALL, ESQ.
ISABELLE ORD, ESQ.
Reported By:

BELLE BALL, CSR, CRR, RDR
Official Reporter, U.S. District Court

Belle Ball, CSR #8785, CRR, RDR
Official Reporter - U.S. District Court
[phone]

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THURSDAY, SEPTEMBER 12, 2013

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P R O C E E D I N G S

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10:07 A.M.

THE CLERK:

Calling Case C-13-3663, Wells Fargo

versus City of Richmond, California.

Appearances, counsel?

Pleas approach the podium and make your appearances,
counsel.
MR. PRIVAT:

Good morning, Your Honor.

Carlos Privat

with the City of Richmond.
MR. ERTMAN:

Good morning, Your Honor.

John Ertman

for the Plaintiff Trusts.
MR. KRONLAND:

Good morning, Your Honor.

Scott

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Kronland for the City of Richmond and Mortgage Resolution

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Partners.

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MR. HALLWARD-DRIEMEIER:

Good morning, Your Honor.

Doug Hallward-Driemeier with Plaintiff Trusts.

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MR. FALIK:

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Mortgage Resolution Partners.

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MR. TSAI:

Good morning, Your Honor.

Good morning, Your Honor.

Bill Falik for

Rocky Tsai for

the Plaintiff Trusts.
MR. BERZON:

Good morning, Your Honor.

Stephen

Berzon for all Defendants.

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THE COURT:

Good morning.

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MR. JACOB:

Good morning, Your Honor.

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25

Tom Jacob for

Wells Fargo Bank.
MR. QIAN:

Good morning, Your Honor.

Kent Qian for

Belle Ball, CSR #8785, CRR, RDR
Official Reporter - U.S. District Court
[phone]

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Defendants National Housing Law Project, Bay Area Legal Aid,

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California Reinvestment Coalition and Law Foundation of

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Silicon Valley and Housing and Economic Rights Advocates.

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MR. BROWN:

Good morning, Your Honor.

Eric Brown for

all Defendants.

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MS. LEYTON:

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MS. BRODY:

Stacey Leyton

for all Defendants.

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Good morning, Your Honor.

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Good morning, Your Honor.

Sara Brody on

behalf of the Chamber of Commerce and SIFMA.
MR. HALL:

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Good morning, Your Honor.

Paul Hall for

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the proposed Amicus Curiae applicants, California Bankers

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Association, American Bankers Association, California Mortgage

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Bankers Association, and California Credit Union League.

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15

THE COURT:

Okay.

Good morning, everybody.

I have read the papers that have been submitted.

In

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particular, a -- a submission came from the Defendants

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entitled "Defendants' Supplemental Memorandum," dated today --

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yesterday, pardon me, yesterday -- giving me an update of what

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happened at the Council meeting on -- on September 10th.

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Okay.

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So, it appears -- this is a motion for preliminary

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injunction.

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permission to file briefs.

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address that after I -- the amicus issue after I address the

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other issue, because of what my thinking is on the other

Also a motion in connection with amicus wanting
And I -- I think I would like to

Belle Ball, CSR #8785, CRR, RDR
Official Reporter - U.S. District Court
[phone]

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issue, which is, there seems to be a substantial question as

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to whether or not this motion is ripe for determination.

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Even in light of -- or maybe in particular in light of the

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Council meeting on September 10th, it appears that there are a

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series of steps that are contemplated by the Council to take

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place before the implementation of a program which would

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include -- or not -- eminent domain.

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would look like, and whether it would be the City Council

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doing so or something called a Joint Powers Authority.

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And if it did, what that

And therefore, it appears to me that there are a number of

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steps that can or cannot take place.

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place, then the question is -- and implement a -- implement

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the program or attempt to implement the program, which would

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include eminent domain, then that's the time that the Court

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ought to take a look at it, I think.

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And if they do take

There is no question in the Court's mind that there are

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serious questions raised here.

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intention of the Court by saying that I don't think the matter

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is ripe for determination, to make any finding as to whether

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or not an injunction would be issued, whether there are --

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though it seems at first blush to be serious issues, the Court

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would have to have a hearing on that, in order to determine

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the propriety of granting an injunction.

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25

And, so, it's not the

I'm not offering an opinion as to whether or not if the
program went through as contemplated, I would or would not
Belle Ball, CSR #8785, CRR, RDR
Official Reporter - U.S. District Court
[phone]

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issue an injunction because I think when you say something is

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not ripe for determination, you don't turn around and

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determine it.

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Okay.

So -- isn't that right?

I mean, isn't this a --

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isn't this, as we say in the trade, a no-brainer?

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really?

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passes this thing?

I mean,

I mean -- what happens if the -- if the Council never
What am I supposed to do?

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MR. ERTMAN:

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THE COURT:

Your Honor -Spend months of -- of difficult

10

constitutional searching to try to get the right answer?

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don't think so.

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So, go ahead.

Tell me about it.

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MR. ERTMAN:

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THE COURT:

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I

Yes.
Anybody who opposes -- anybody who says

it's ripe for determination, stand up now, and I'll hear you.
MR. ERTMAN:

Yes, Your Honor.

John Ertman from Ropes

& Gray for the Plaintiff Trusts.
Your Honor, the matter is more than ripe.

There's more

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information that Your Honor doesn't have, because Tuesday

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night was a significant development in this case.

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Defendant submission doesn't fully explain what happened at

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the City Council at all, at the City Council meeting.

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And, the

At the session last Tuesday night, the Council addressed

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eminent domain at length.

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the City Council to rescind the loan offers in this case and

And, and a motion was presented to

Belle Ball, CSR #8785, CRR, RDR
Official Reporter - U.S. District Court
[phone]

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abandon the loan seizure program with MRP.

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Okay, this motion was defeated, five to two.

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Now, the minutes of that hearing aren't available yet, but

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I am prepared to hand up to the Court a summary of what was

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voted on at the hearing.

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copies of that.

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(Document handed up to the Court)

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THE COURT:

Has opposing counsel received a copy of

this?

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MR. ERTMAN:

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MR. KRONLAND:

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I can hand up to the Court two

Yes.
Well, not yet.

(Counsel distributes a copy of document to Defense Table)

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THE COURT:

Not yet.

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MR. ERTMAN:

Yeah.

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16

Okay, well, here it is.

This will be very familiar to

them, Your Honor.
Okay.

What was voted on, Agenda Item 1, okay, where the

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proposal was to direct the city manager to withdraw any offers

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made to trustees and servicers of mortgage loans.

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I won't repeat the whole thing for the record, Your Honor.
THE COURT:
the record.

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MR. ERTMAN:

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THE COURT:

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Well, I think we should make this part of

Okay, then I'll continue on.
No, you don't have to continue on, just

mark it as an exhibit and it will be part of the record.
MR. ERTMAN:

Okay.

Belle Ball, CSR #8785, CRR, RDR
Official Reporter - U.S. District Court
[phone]

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THE COURT:

You can say whatever you want to say, but

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it should be part -- anything that I look at I think should be

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part of the record.

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(List of Agenda Items made a part of the Record)

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MR. ERTMAN:

Right.

Okay.

This proposal to end the

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eminent domain program was voted down, five to two.

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Defendants don't even mention this five-to-two vote in their

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submission to the Court from yesterday.

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The

And it was clear at the hearing, Your Honor, that there is

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a passion in Richmond for carrying out this program.

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could see that all --

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THE COURT:

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MR. ERTMAN:

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THE COURT:

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MR. ERTMAN:

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Sorry, there's a what?
There is a passion in Richmond -Passion.
This is no ordinary government program.

There is a passion for --

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You

THE COURT:

Didn't look like an ordinary government

program to me.

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MR. ERTMAN:

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THE COURT:

No.
And I'm sure there's passion.

I'm sure

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that people care a great deal about their houses, as they

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should.

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they should.

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And their -- and their -- their basic security.

But, passion.
MR. ERTMAN:

Yes.

Belle Ball, CSR #8785, CRR, RDR
Official Reporter - U.S. District Court
[phone]

As

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THE COURT:

Basic constitutional liberties.

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Constitutional rights.

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important.

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All of that is significant and

The question is, if you were -- if you were to say to me,

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"Look, the program is, as constituted, and as -- as voted on

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by the -- by the Council, is -- is constitutionally infirm,

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and therefore an injunction is necessary to stop it in its

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present form because in its present form, it is being

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implemented, or there's an immediate threat to its

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implementation," I would say, "Okay, I guess it's ripe for

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determination."

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MR. ERTMAN:

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THE COURT:

Right.
And that's not -- when I read what --

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unless I read something incorrectly, it said -- and I think I

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should read this -- it said that the local -- that the Council

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voted to direct the staff to work up a set -- to (As read):

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"...to work to set up a Joint Powers Authority

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together with other interested municipalities, as the

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next step forward in the development of this program;

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to confirm that no loans will be acquired by the City

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through eminent domain before coming back to a full

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City Council for a vote; and to continue working with

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MRP to resolve any remaining legal issues."

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There are quite a few remaining legal issues, I would

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suggest.
Belle Ball, CSR #8785, CRR, RDR
Official Reporter - U.S. District Court
[phone]

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But in any event, isn't -- isn't the present status of

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this matter going to require further action on the part of the

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City Council?

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MR. ERTMAN:
Your Honor.

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Yeah.

Not -- not material action,

They have a program, they have a plan --

THE COURT:

Do they have a supermajority who voted in

favor of this?

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That is my question.

MR. ERTMAN:

Yes.

to two on Tuesday night.

Five -- five to two, six -- five

But, it originated back in April.

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In April, the City Council voted six-nothing to proceed with

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MRP, and MRP's loan seizure program.

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At the time, the City Council was presented with the

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purported public use of the MRP program.

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in the Ertman Reply Declaration, Exhibit 8.

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to you.

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And that's submitted
I could read that

So, there's no dispute here over what the proposed -THE COURT:

No, I'm not arguing, or I'm not asking

you questions about the history of this matter --

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MR. ERTMAN:

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THE COURT:

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looking at is:

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Right.
-- at this point.

What I'm -- what I'm

next step?

Where do we go from here?

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MR. ERTMAN:

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THE COURT:

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What is exactly the

Right.
If you are saying to me the next step

will be the institution of eminent domain, then that's, number
Belle Ball, CSR #8785, CRR, RDR
Official Reporter - U.S. District Court
[phone]

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one, not my understanding.
But, if my understanding is in error, I should take a look

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at it.

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-- should review the situation, and perhaps, if appropriate,

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intervene by way of a -- by way of an injunction.

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Because if that's the next step, then the Court should

Are you saying to me that's actually the next step?
MR. ERTMAN:

Yes.

That is what I'm saying.

That is

exactly the next step.

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THE COURT:

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MR. ERTMAN:

Okay.
They have a preexisting plan.

They have

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-- they have a timeline that they have been following since

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they voted six-nothing back in April for this program.

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The timeline is Ertman Reply Declaration H, but I would

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hand up a copy for the Court.

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THE COURT:

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MR. ERTMAN:

Yes.

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THE COURT:

Okay.

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this thing.

Is this the Gantt chart?

MR. ERTMAN:

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THE COURT:

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And now, here I am, I'm looking at

And just tell me when the eminent domain --

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Yes, it is, Your Honor.

Yes.
Looking at the chart, tell me, when does

eminent domain begin?
MR. ERTMAN:

The eminent domain proceeding.
Right.

So, the next step, now that

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they've made loan offers on 624 loans and those offers have

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all been rejected, the next step, if you look down to the

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chart, it says -- you know, and this was generated a few days
Belle Ball, CSR #8785, CRR, RDR
Official Reporter - U.S. District Court
[phone]

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after -- or it was provided to Richmond a few days after the

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six-nothing vote in April.

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Okay.

"JPA approves RON."
That's the resolution on necessity.

And then immediately

afterwards:
"JPA files motion."
And if you look on that chart, these are the next steps,

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Your Honor.

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day, they file a state eminent domain action where they seek

They pass a resolution of necessity, and the next

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the quick take.

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loans, extinguish them, and flip them.

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To irreversibly take possession of these

This is the whole strategy here.
THE COURT:

And, since April --

Well, then, explain to me, in the

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opposition, the opponents say the following thing.

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(As read):

They say

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"The City Council has not adopted a resolution of

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necessity to authorize the use of eminent domain

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authority, or even held a public hearing on whether

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to adopt a proposed resolution of necessity, or even

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given notice of such a public hearing."

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Now, my question to you is:
MR. ERTMAN:

Is that true?

That is true.

But, given their

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commitment to going ahead with the program, that -- that

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issuance of the resolution of necessity is just, at this

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point, a ministerial act.
Belle Ball, CSR #8785, CRR, RDR
Official Reporter - U.S. District Court
[phone]

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THE COURT:

Oh.

Now, let's talk about ministerial

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acts.

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ministerial act of which I'm absolutely aware of is the one

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after the Senate of the United States confirms a nominee to be

5

a federal judge, and the President hasn't made the

6

appointment.

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I'm always interested in them.

Because, the only

It was held in Marbury versus Madison that that act of the

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President appointing a federal judge is a ministerial act.

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That's actually the only one that I'm really -- that is up in

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11

my mind right now.
Now, putting that aside, if you were to say to me that

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this is just like nominating -- appointing a federal judge,

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this is -- this is just the same thing, which means that any

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-- you know, the clerk can issue the notice, and if a clerk

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didn't issue the notice, a -- a writ of mandamus would come in

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or whatever it is, requiring the clerk to do so, that there's

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nothing left other than that, I'll listen.

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On the other hand, if what you are saying to me is it's a

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foregone conclusion in light of the history of what this

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program -- of the -- of the -- of this -- you know, of the

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history of this program, of the discussion and the other acts

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of the board and so forth and so on, that it will go through,

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to that I would say, Okay, you might be absolutely right.

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it's not a ministerial act.

25

of things.

But

It still is subject to all sorts

Including, including, the -- the voice of the -Belle Ball, CSR #8785, CRR, RDR
Official Reporter - U.S. District Court
[phone]

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the public and the affected people lobbying members of the

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Council in an effort to persuade them to their particular

3

point of view.

4

That's called the democratic process.

And I wouldn't at

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all take the position that the democratic process is really

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just a ministerial act.

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MR. ERTMAN:

No, Your Honor.

We're not seeking to

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enjoin meetings of the Richmond City Council -- deliberations

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of the Richmond City Council.

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already voted on this twice.

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ahead in April.

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keep going, notwithstanding all of the many negative concerns

13

about this program that were raised in the seven-hour hearing

14

on Tuesday night.

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Okay.

It's -- at this point, they've
They voted six-nothing to go

They voted five-two last Tuesday night, to

So, there's now been two votes over this.

At this point, okay, what they're arguing to this

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Court is that at the resolution of necessity, there is some

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hypothetical possibility the City Council may change their

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mind.

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Council and all the deliberations been done, and the two votes

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have been taken, okay, that is just pure speculation at this

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point.

And, given the commitment and the history of the

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23

THE COURT:

How many members are there of the

Council?

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MR. ERTMAN:

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THE COURT:

There are seven.
Okay.

And so, a supermajority is

Belle Ball, CSR #8785, CRR, RDR
Official Reporter - U.S. District Court
[phone]

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necessary.

Is that correct?

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MR. ERTMAN:

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THE COURT:

4

MR. ERTMAN:

5

THE COURT:

Yes.
And that would be five.
Yes.
Is it five out of seven present?

6

simply -- is it -- is it two-thirds-present vote?

7

Or five

old sort of test for filibuster.

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9

That's the

Is it the -- is it the -- is it they need five votes to
pass it, even if only six people show up?

Or, if six people

10

show up, they only need four votes to pass it?

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know.

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MR. ERTMAN:

Or, you don't

That, I don't know the answer to.

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always assumed it was five.

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THE COURT:

I've

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answer.
Yes.
MR. PRIVAT:

Good morning, Your Honor.

We would need

five votes to pass that.
THE COURT:

Okay.

So, five votes to pass it.

Okay.

(Reporter interruption)
THE COURT:
to speak slowly.

Sorry.

And it's your -- yeah, you have

You have to speak slowly.

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MR. ERTMAN:

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THE COURT:

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Well, somebody thinks they know the

(Nods head)
Go ahead.

I interrupted you once again,

so go ahead.
Belle Ball, CSR #8785, CRR, RDR
Official Reporter - U.S. District Court
[phone]

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MR. ERTMAN:

Sure.

2

So, Your Honor, given the actual facts of what is

3

happening here, you know, if they're right that ripeness

4

doesn't occur until this resolution of necessity is issued, it

5

would mean that for any unlawful government program, the

6

government could always try to avoid judicial review by

7

claiming they might change their mind at some point and

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reverse course at some point.

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THE COURT:

10

as matter of public policy?

11

legislative bodies act lawfully in -- in -- you know, that is,

12

act with a real sensitivity towards constitutional issues?

But here --

Isn't that a good idea, by the way, just
Isn't it a good idea to have

13

And if they come to their -- to this conclusion, even

14

though their 'druthers might be to do X, Y or Z, they are

15

finally persuaded that they shouldn't do X, Y or Z, and they

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don't have some court ordering them not to do X, Y and Z,

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isn't that a better way of resolving -- isn't that a better

18

way of governance?

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constitutional system?

20

Isn't that a better way, under our

If you could be successful persuading the Council not to

21

go forward on this, even at the last minute, isn't that a

22

better way than having the Court jump in, into basically a

23

somewhat-novel -- and I'm not -- I'm not belittling the

24

seriousness of your motion.

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MR. ERTMAN:

Right.

Belle Ball, CSR #8785, CRR, RDR
Official Reporter - U.S. District Court
[phone]

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THE COURT:

I'm just saying that it's an area that I

2

haven't seen before in this context.

3

certainly think that it's just better for a court not to rule,

4

unless a court should rule.

5

should rule, unless it appears that this eminent domain

6

process is essentially imminent.

7

And I think -- I would

And I don't see why a court

I will tell you, I will tell you, the Court can act very,

8

very quickly in this matter, within 24 hours, there's no

9

question in my mind, were I to grant the Defendant's motion to

10
11

dismiss.
And I -- you know, all you would have to do if it became

12

imminent is simply notify the Court of that fact.

13

have to file a notice of related case, if that happens.

14

would certainly accept the case.

15

address it immediately.

16

MR. ERTMAN:

17

THE COURT:

You might
I

And I would -- I would

Yes, so -So, I don't -- yeah, I appreciate, when

18

people's houses are on the line, I appreciate the fact that --

19

that there is a need for expeditious, immediate response by a

20

court.

21

court and just sort of sits there.

22

You know, it's not the sort of thing that goes to

I don't have a problem with your argument about the

23

immediacy or necessity of relief.

24

becomes clear that immediate relief is necessary.

25

However, that's once it

And that's one of the -- the criteria for a -- for a
Belle Ball, CSR #8785, CRR, RDR
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preliminary injunction or a temporary restraining order, you

2

have to show some immediacy which would justify what is an

3

extraordinary -- relief of an extraordinary nature.

4

MR. ERTMAN:

5

the concern here, because --

6
7

Right.

I think Your Honor identified

(Reporter interruption)
MR. ERTMAN:

If they're right that this doesn't

8

become ripe until they issue a resolution on necessity -- and

9

again, Your Honor, our position is that that's just a one-page

10

piece of paper that just tells what the loans are to be taken,

11

we already know that; tells the public purpose, we already

12

know what that is.

13

back in April, and they've repeated that public purposes

14

multiple times.

15

purpose is.

16

on necessity.

17

They already approved that six-nothing

So, there's no mystery as to what the public

There's nothing new coming from this resolution

But, the critical issue is that the plan all along, you

18

can see from the timeline, is they issue the resolution on

19

necessity at the end of a council hearing.

20

file in state court.

21

they don't want to be here in Federal Court.

22

And they've made clear in their papers,

Okay, and if they're right --

23

THE COURT:

24

MR. ERTMAN:

25

The next day, they

They -- they like it here.
Not -- not -- not what they say, right?

That if -- if they're right that this doesn't become ripe
Belle Ball, CSR #8785, CRR, RDR
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until the resolution on necessity issues, the way their plan

2

works is we likely could never be in a federal district court

3

to protect our constitutional rights.

4

case gets dismissed, they follow their plan, they issue the

5

resolution on necessity.

6

court.

We come back here, then they argue younger abstention.

7

Right?

They say that we're the second-filed case, we don't

8

belong here.

9

Because then, if this

The next day, they're in state

And that can't be the right outcome, Your Honor, because

10

we are entitled to be in federal district court on an

11

eminent-domain-taking case to seek resolution of our

12

constitutional --

13

THE COURT:

Let me ask your worthy opponents there to

14

respond to that particular argument, and only that particular

15

argument.

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17
18
19
20
21

(Reporter interruption)
THE COURT:

You have to identify yourself, so there's

at least an outside chance that -MR. KRONLAND:

Good morning, Your Honor.

Scott

Kronland on behalf of the Defendants.
As I understand the argument, it's that if a resolution of

22

necessity were adopted, after noticed public hearing, a

23

supermajority vote, the City could then file a lawsuit

24

promptly in state court, and the Defendants would then be able

25

to raise all of their arguments in the state court action, and
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they would be able to come here and seek an injunction in

2

federal court.

3

But at that point, the Court might decide to abstain

4

because the state court was an adequate forum.

5

therefore, the Court might decide to abstain.

6

And,

And then, having had this Court determine that the state

7

court was an adequate forum, and therefore, that the Court

8

should abstain, the Defendants would then be suffering

9

irrepairable harm because, like most Defendants, they have to

10

raise their constitutional defenses in a state court action.

11

It -- it doesn't make a lot of sense.

12

defenses in state court actions all the time.

13

Court decided to abstain, it would be making the determination

14

that the action was appropriately heard in state court.

15

if the Court decided not to abstain, it would be hearing the

16

action in federal court.

17

But, there's no rush.

People raise
And if the

And

It's not as if someone files a

18

lawsuit in state court, and the next day the state court holds

19

a trial and issues a judgment.

20

that they have referred to in their papers is a motion on

21

sixty days' notice.

22

Court to decide what to do.

23

THE COURT:

Even the quick-take procedure

There would be plenty of time for this

Let me ask you a question.

One option

24

the Court may have -- though I'm not sure I do, and that's why

25

I'm asking the question -- would be to -- not to dismiss it,
Belle Ball, CSR #8785, CRR, RDR
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but simply to -- to stay it, or to otherwise continue it.

2

issue any type of extraordinary relief at this point.

3

some -- and either if the program is implemented or attempted

4

to be implemented, or whatever that piece of paper is, the

5

necessity and so forth, so arguably it's ripe, I mean, even

6

more arguably than it is today, but truly ripe for

7

determination, then this Court could examine the issues.

8

So my question to you is:

9

MR. KRONLAND:

And

resolution of the problem today?

10

Not

Would that be a satisfactory

No, Your Honor.

11

several reasons.

12

option.

13

Let me give you

matter jurisdiction that's been made.

14

I mean, first of all, it's not a legal

There's a motion to dismiss for lack of subject

Your Honor is right that it's a no-brainer.

It's like

15

challenging the immigration reform legislation before Congress

16

adopted it.

17

of the Court is to announce it lacks jurisdiction, dismiss the

18

case.

19

The Supreme Court's been very clear that the duty

But as a practical matter, I never want to tell the

20

Federal Court it couldn't do something.

21

there is --

22
23
24
25

THE COURT:

Having the case out

My wife doesn't seem to have that

problem.
(Laughter)
MR. KRONLAND:

Well, I've had -- bad experiences.

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THE COURT:

2

MR. KRONLAND:

You haven't met my wife.

Okay.

As a practical matter, having the case

3

out there is an interference with the political process.

4

Other cities are reluctant to join in a --

5

THE COURT:

Well, I think that as a matter of

6

jurisprudence, I think you're right.

7

have that option.

8

with this on their -- their argument.

I mean, I don't think I

I think that I'd either -- would proceed

9

I don't think -- the question of -- an issue has to be

10

ripe for determination for standing purposes, as I understand

11

it.

12

standing, it's not a case in controversy in front of me, and I

13

can't just say, "Oh, I think I'll hold onto this until it

14

becomes a case or controversy, because it's so interesting."

15

And, if it's not ripe for determination, there is no

I can't do that, in my view.

16

MR. ERTMAN:

17

MR. KRONLAND:

18

MR. ERTMAN:

19

THE COURT:

20

I mean, I think that --

You're -That's correct, Your Honor.

I don't think he's right, Your Honor.
Okay, all right.

Wait a minute.

Let me

just -- is that --

21

MR. KRONLAND:

22

THE COURT:

23

MR. KRONLAND:

24

THE COURT:

25

MR. ERTMAN:

That's the law, Your Honor.

Have I got your argument correct?
That is correct.

Okay.

Yes, sir.

We're happy to make a supplemental

Belle Ball, CSR #8785, CRR, RDR
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submission on this.

2

hold the case in abeyance.

3

You -- there is precedent.

You could

Okay.

Our position here is that it's a factual matter.

4

ripe.

5

and start seizing loans.

6

It is

And --

Their next step is to do the resolution on necessity,

7
8

THE COURT:

It's going to happen imminently.

When do you actually think it's going to

happen?

9

MR. ERTMAN:

Well, from -- if you watched the hearing

10

on Tuesday night, you can see -- we'll submit it's any day,

11

very soon.

12

offers.

13

Because that is the next step.

The offers have been rejected.
THE COURT:

Well, but they're talking about creating

14

a joint powers -- what is it called?

15

that's not a five-minute turnaround, is it?

16

They've made the

MR. ERTMAN:

I mean, that's not a -I mean --

That's a red herring, Your Honor.

17

They've been talking about that for months.

18

to bring in other cities, into this.

19
20

It's just to try

It doesn't change the fact that they've committed to go
forward with this program.

21

THE COURT:

22

MR. ERTMAN:

Okay.
So, that's not new news.

And, yes,

23

Your Honor.

24

supplemental submission, because there is precedent to hold

25

this in abeyance, if that's what the Court was so inclined to

So, if we have the ability to do a brief

Belle Ball, CSR #8785, CRR, RDR
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do.

2

THE COURT:

Okay.

Let's end the suspense.

I don't

3

believe it's ripe for determination, for the reasons that I've

4

stated.

5

While it raises serious issues, and I'm sympathetic to the

6

fact that it is raising certain issues, I -- I do not believe

7

it's ripe at this point.

8

dismiss it?

9
10
11

And the question then becomes:

Do I

Or do I somehow stay it?

I believe Defense Counsel's correct that -- that I must
dismiss it.
On the other hand, I'll give you the opportunity -- I'll

12

give both sides the opportunity to submit a supplemental

13

statement.

14

subject.

15

want to write.

16

And, I will rule on Monday.

17
18

I don't need a -- you know, a magnum opus on this

I would prefer -- I'll let you -- you write what you
But I would like it by 5:00 p.m. tomorrow.

MR. KRONLAND:

Your Honor, I -- I'm not -- I

understand Your Honor's --

19

THE COURT:

20

MR. KRONLAND:

Both sides, both sides can do it.
-- supplemental briefing, but I would

21

just direct the Court to Federal Rule of Civil Procedure

22

12(h).

23
24
25

THE COURT:

Well, your magnum opus will be very

short.
MR. KRONLAND:

Per the Supreme Court's decision in --

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in Steel Co where the --

2

THE COURT:

3

MR. KRONLAND:

4

THE COURT:

5

MR. ERTMAN:

6

Okay?

Okay.

All right, thank you very much.
And alternatively, Your Honor, if

Your Honor --

7

THE COURT:

8

MR. ERTMAN:

9

All I want you to do is to do it.

You have an alternative.
Yes.

If Your Honor is inclined to grant

a motion to dismiss, we would like leave to amend the

10

complaint to address all the new facts about ripeness that

11

have come out.

12

THE COURT:

Well, that's another -- that's another

13

consideration.

14

then now, you have something to right about.

15

in that brief that I'm going to get tomorrow.

16

that you have to make a motion and so forth to amend.

17

But, I don't know where we are at this point.

I don't know.

You can put that in your -You can put that
My guess is

These are

18

ideas that I haven't considered.

19

submit what you want to submit by 5:00 p.m. tomorrow, and I'll

20

rule on Monday on whatever you've submitted.

21

If you -- if you -- you can

Okay?

But, with the understanding that I do not -- that I so

22

find that it's not ripe for determination -- that I do find

23

that it's not ripe for determination.

24

to mislead anybody into believing that they should make some

25

other argument about why it's ripe.

Because, I don't want

I don't believe it's

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ripe.

And I've tried to say why I think it is not ripe.

But, then the question is:

What remedy does -- what

3

procedure, what appropriate procedure does the Court follow.

4

Okay?

5
6

All right.

Thank you very much.

MR. KRONLAND:

Thank you for coming in.

Thank you.

7

(Applause)

8

(Conclusion of Proceedings)

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DOCUMENTS

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VOL.

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Belle Ball, CSR #8785, CRR, RDR
Official Reporter - U.S. District Court
[phone]

CERTIFICATE OF REPORTER
I, BELLE BALL, Official Reporter for the United
States Court, Northern District of California, hereby certify
that the
foregoing is a correct transcript from the record of
proceedings in the above-entitled matter.

/s/

Belle Ball____________________
Thursday, September 12, 2013

Belle Ball, CSR 8785, CRR, RDR