CARLSMITH BALL LLP STEVEN M. EGESDAL 4511 IAN L. SANDISON 5597 JOYCE W. Y. TAM-SUGIYAMA 10325 ASB Tower, Suite 2100 1001 Bishop Street Honolulu, HI 96813 Tel No. 808.523.2500 Fax No. 808.523.0842 segesdal@carlsmith.com jtam@carlsmith.com isandison@carlsmith.com FRESHFIELDS BRUCKHAUS DERINGER US LLP RICHARD S. SNYDER, SR. (Pro Hac Vice) DC 486483 ILANA R. KATTAN (Pro Hac Vice) DC 1015189 700 13th Street, NW; 10th Floor Washington, DC 20005 richard.snyder@freshfields.com ilana.kattan@ freshfields.com Attorneys for Defendant HAMAKUA ENERGY PARTNERS, L.P. IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF HAWAII HU HONUA BIOENERGY, LLC., a Delaware limited liability company, Plaintiff, vs. HAWAIIAN ELECTRIC INDUSTRIES, INC., a Hawaii corporation; HAWAIIAN ELECTRIC CIVIL NO. 16-00634 JMS-KJM DEFENDANT HAMAKUA ENERGY PARTNERS, L.P.’S MEMORANDUM IN OPPOSITION TO PLAINTIFF’S MOTION TO STRIKE; (caption continued) Case 1:16-cv-00634-JMS-KJM Document 164 Filed 06/20/18 Page 1 of 43 PageID #: 5227 2 COMPANY, a Hawaii corporation; HAWAII ELECTRIC LIGHT COMPANY, INC., a Hawaii corporation; NEXTERA ENERGY, INC., a Florida corporation; HAMAKUA ENERGY PARTNERS, L.P., a Hawaii limited partnership, Defendants. DECLARATION OF COUNSEL; EXHIBIT A; CERTIFICATE OF COMPLIANCE WITH LOCAL RULE 7.5; CERTIFICATE OF SERVICE Hearing Date: July 9, 2018 Time: 10:00 am Judge: Hon. J. Michael Seabright Related Document: ECF No. 160 Trial Date: August 14, 2018 MEMORANDUM IN OPPOSITION TO PLAINTIFF’S MOTION TO STRIKE Case 1:16-cv-00634-JMS-KJM Document 164 Filed 06/20/18 Page 2 of 43 PageID #: 5228 i TABLE OF CONTENTS I. INTRODUCTION ........................................................................................1 II. FACTS .........................................................................................................5 III. ARGUMENT ...............................................................................................7 A. HHB’s Motion to Strike is Procedurally Impermissible ......................7 B. The Court May Take Judicial Notice of HEP’s Exhibits ...................10 (1) HEP was Not Required to Request Judicial Notice .................10 (2) The Court May Take Judicial Notice of HEP’s Exhibits as Administrative Records and Filings, Government Websites, and SEC Filings ......................................................................11 (i) The Court May Take Judicial Notice of Exhibits M, N, O, Q, S, T, and U to the Third Egesdal Declaration as Administrative Decisions and Filings ...........................13 (ii) The Court May Take Judicial Notice of Exhibit P to the Third Egesdal Declaration as a Government Website ...14 (iii) The Court May Take Judicial Notice of Exhibits A and B to the Tam-Sugiyama Declaration as SEC Filings.........15 C. HEP Submitted the Exhibits to Show the Existence of Prior Statements Inconsistent with HHB’s SAC Allegations .....................16 D. HEP’s Exhibits are Not Hearsay .......................................................21 (1) HHB’s Own Prior Statements in Exhibits M and Q of the Third Egesdal Declaration are Statements of a Party-Opponent and are Not Hearsay ......................................................................22 (2) HEP’s PUC Filings in Exhibits N and O to the Third Egesdal Declaration are Not Hearsay ...................................................23 Case 1:16-cv-00634-JMS-KJM Document 164 Filed 06/20/18 Page 3 of 43 PageID #: 5229 ii (3) The Hawaiʻi State Court Record Listing, Submitted in Exhibit P to the Third Egesdal Declaration, is an Admissible Public Record ....................................................................................23 (4) The PUC’s Decisions and Orders in Exhibits S through U of the Third Egesdal Declaration are Admissible as Administrative Decisions or Reports ...............................................................24 (5) The HEI 10-K Annual Reports in Exhibits A and B to the Tam- Sugiyama Declaration are Admissible Business Records ........26 E. HEP’s Arguments in its Reply Respond Directly to HHB’s Opposition ........................................................................................26 (1) HEP’s Argument Regarding the Purchase Price of its Facility is Not New .................................................................................27 (2) HEP’s Argument in its Reply Regarding HELCO’s Modeling is Not New .................................................................................29 F. The Court Need Not Go Beyond the Four Corners of the SAC to Conclude that the Only Plausible Explanation for HELCO’s Termination of the HHB PPA is Plaintiff’s Own Failures .................30 IV. CONCLUSION ..........................................................................................34 - Case 1:16-cv-00634-JMS-KJM Document 164 Filed 06/20/18 Page 4 of 43 PageID #: 5230 i TABLE OF AUTHORITIES Cases Adaptive Power Sols., LLC v. Hughes Missile Sys. Co., 141 F.3d 947 (9th Cir. 1998) ................................................................................................................ 32 Bartolotti v. Maui Mem’l Med. Ctr., Civil No. 14-00549 SOM/KSC, 2015 WL 4545818 (D. Haw. July 28, 2015)..................................................................... 13 Beech Aircraft Corp. v. Rainey, 488 U.S. 153 (1988)........................................... 24 Cal. Retail Liquor Dealers Ass’n v. Midcal Aluminum, Inc., 445 U.S. 97 (1980) ........................................................................................... 33 Chandler v. Roudebush, 425 U.S. 840 (1976) ...................................................... 25 Dreiling v. Am. Express Co., 458 F.3d 942 (9th Cir. 2006) ...............................3, 15 E. R.R. Presidents Conf. v. Noerr Motor Freight, Inc., 365 U.S. 127 (1961)........ 33 Elohim EPF USA, Inc. v. Total Music Connection, Inc., No. CV 14-02496-BRO (Ex), 2015 WL 12655556 (C.D. Cal. Oct. 1, 2015) .....................................14, 23 Ereikat v. Michael & Assocs., PC, No. 14-cv-05339-JSC, 2015 WL 4463653 (N.D. Cal. July 21, 2015).................................................................................. 15 Gottesman v. Santana, 263 F. Supp. 3d 1034 (S.D. Cal. 2017) .............................. 9 Hispanic Broad. Corp. v. Educ. Media Found., No. CV027134CAS (AJWX), 2003 WL 22867633 (C.D. Cal. Oct. 30, 2003) ................................................. 24 Hu Honua Bioenergy, LLC v. Hawaiian Elec. Indus., Inc., No. 16-00634, 2018 WL 491780 (D. Haw. Jan. 19, 2018) .................................................passim Huffman v. Remstar Int’l, Inc., No. 4:08cv157, 2009 WL 1445967 (E.D. Tex. May 21, 2009)................................................................................... 7 Interstate Nat. Gas Co. v. S. Cal. Gas Co., 209 F.2d 380 (9th Cir. 1953)............. 13 Jou v. Adalian, Civ. No. 15-00155 JMS-KJM, 2017 WL 3624340 (D. Haw. Aug. 23, 2017) .................................................................................... 9 Case 1:16-cv-00634-JMS-KJM Document 164 Filed 06/20/18 Page 5 of 43 PageID #: 5231 ii K.S-A v. Haw. Sch. Dist., Civ. No. 16-00115 ACK-KJM, 2017 WL 6452417 (D. Haw. Dec. 18, 2017)................................................................................3, 14 Keith v. Volpe, 858 F.2d 467 (9th Cir. 1988)........................................................ 24 Kendall v. Visa U.S.A. Inc., 518 F.3d 1042 (9th Cir. 2008) .................................. 31 Knight v. United States, 845 F. Supp. 1372 (D. Ariz. 1993)................................... 8 Lee v. City of L.A., 250 F.3d 668 (9th Cir. 2001), abrogated on other grounds by Crawford-El v. Britton, 523 U.S. 574 (1998)...........................................3, 12, 16 Lopeti v. All. Bancorp, Civ. No. 11-00200 ACK-RLP, 2011 WL 13233545 (D. Haw. Nov. 4, 2011) ...................................................................................... 8 Mack v. S. Bay Beer Distribs., Inc., 798 F.2d 1279 (9th Cir. 1986), abrogated on other grounds by Astoria Fed. Sav. & Loan Ass’n v. Solimino, 501 U.S. 104 (1991)............................................................................................................... 13 Milton H. Greene Archives, Inc. v. Marilyn Monroe LLC, 692 F.3d 983 (9th Cir. 2012).................................................................................................. 17 Muhammad v. Hill, No. CV 17-01137-VBF (PLA), 2017 WL 6520635 (C.D. Cal. Oct 24, 2017), adopted by No. LA CV 17-01137-VBF (PLA), 2017 WL 6512216 (C.D. Cal. Dec. 18, 2017) ...............................................................3, 13 New Hampshire v. Maine, 532 U.S. 742 (2001) ................................................... 17 O’Connor v. Nevada, 507 F. Supp. 546 (D. Nev. 1981), aff’d on other grounds, 686 F.2d 749 (9th Cir. 1982) .............................................................................. 9 Powell v. Fid. Nat’l Fin., Inc., No. C-03-3313 MMC, 2003 WL 22134854 (N.D. Cal. Sept. 9, 2003), aff’d on other grounds, 121 F. App’x 765 (9th Cir. 2005).................................................................................................2, 8 QBE Specialty Ins. Co. v. TLC Safety Consultants, Inc., No. 1:11-CV-00233-SKO, 2012 WL 3062768 (E.D. Cal. July 26, 2012).................................................... 24 Ritchie v. State of Haw., Dep’t of Safety, No. 14-00046 LEK-KJM, 2017 WL 4172500 (D. Haw. Aug. 23, 2017), adopted by 2017 WL 4126982 (D. Haw. Sep. 18, 2017) ................................................................................... 27 Robinson v. Audi Nsu Auto Union AG, 739 F.2d 1481 (10th Cir. 1984) ............... 22 Case 1:16-cv-00634-JMS-KJM Document 164 Filed 06/20/18 Page 6 of 43 PageID #: 5232 iii Satarco Kish Trading, LLC v. Wamar Int’l Grp., LLC, CV 15-06422-BRO (JCx), 2016 WL 5937792 (C.D. Cal. Jan. 6, 2016)...................................................... 14 Schuylkill Energy Res., Inc. v. Pa. Power & Light Co., 113 F.3d 405 (3d Cir. 1997) ................................................................................................... 33 SEC v. Jasper, 678 F.3d 1116 (9th Cir. 2012)...................................................... 26 Shwarz v. United States, 234 F.3d 428 (9th Cir. 2000)......................................... 16 Sidney-Vinstein v. A.H. Robins Co., 697 F.2d 880 (9th Cir. 1983) ......................2, 7 Suzuki v. Helicopter Consultants of Maui, Inc., Civ. No. 13-00575 JMS-KJM, 2016 WL 6275385 (D. Haw. Oct. 26, 2016) ..................................................... 25 Thomas v. Bet Sound-Stage Rest./BrettCo, Inc., 61 F. Supp. 2d 448 (D. Md. 1999) ...................................................................... 9 United Mine Workers v. Pennington, 381 U.S. 657 (1965) .................................. 33 United States v. Brugnara, No. CR 14-00306 WHA, 2015 WL 1907513 (N.D. Cal. 2015) ................................................................................................................ 22 United States v. Sch. Dist. of Ferndale, 577 F.2d 1339 (6th Cir. 1978) ................ 25 Zeus Enters., Inc. v. Alphin Aircraft, Inc., 190 F.3d 238 (4th Cir. 1999) .............. 25 Zf Meritor, LLC v. Eaton Corp., 696 F.3d 254 (3d Cir. 2012).............................. 34 Rules Fed. R. Civ. P. 12(f)............................................................................................... 7 Fed. R. Evid. 201(b)............................................................................................. 12 Fed. R. Evid. 201(c)..........................................................................................4, 11 Fed. R. Evid. 801(c)....................................................................................4, 21, 23 Fed. R. Evid. 801(d)(2) ........................................................................................ 22 Fed. R. Evid. 803(6)............................................................................................. 26 Fed. R. Evid. 803(8)........................................................................................24, 25 Case 1:16-cv-00634-JMS-KJM Document 164 Filed 06/20/18 Page 7 of 43 PageID #: 5233 iv Local Rule 7.4........................................................................................................ 7 Case 1:16-cv-00634-JMS-KJM Document 164 Filed 06/20/18 Page 8 of 43 PageID #: 5234 MEMORANDUM IN OPPOSITION TO PLAINTIFF’S MOTION TO STRIKE I. Introduction Plaintiff Hu Honua Bioenergy, LLC’s (HHB or Plaintiff) statements to the Hawaiʻi Public Utilities Commission (PUC), and other judicially noticeable documents, contradict its antitrust claims against Hamakua Energy Partners, L.P. (HEP) in its Second Amended Complaint (SAC). HHB now requests that the Court strike and ignore, inter alia, HHB’s own previous signed statements to the PUC, in order to deny HEP’s Motion to Dismiss the SAC. Importantly, the Court may dismiss the SAC without relying upon the exhibits. HHB, in its SAC, fails to state a plausible claim under Section 1 of the Sherman Act. This Court has already dismissed Plaintiff’s First Amended Complaint (FAC), which contains substantially the same allegations as Plaintiff’s SAC. See Hu Honua Bioenergy, LLC v. Hawaiian Elec. Indus., Inc., No. 16-00634, 2018 WL 491780 (D. Haw. Jan. 19, 2018). Notably, the exhibits attached to HEP’s Motion to Dismiss HHB’s SAC are identical to the exhibits HEP filed in response to HHB’s FAC. The Court may take judicial notice of HHB’s statements to the PUC, and other exhibits to the HEP Motion to Dismiss and Reply, and read HHB’s SAC in light of assertions HHB made to the PUC in order to obtain approval of its original 2012 Power Purchase Agreement (Original PPA) and 2017 Amended & Case 1:16-cv-00634-JMS-KJM Document 164 Filed 06/20/18 Page 9 of 43 PageID #: 5235 2 Restated PPA (A&R PPA). The Court should therefore deny HHB’s Motion to Strike. First, HHB’s Motion to Strike is impermissible and untimely under the Federal and Local Rules. HHB waited almost two months after it filed its Opposition to HEP’s Motion to Dismiss the SAC, and over one month after HEP filed its Reply, to raise arguments it could have raised-at least with respect to the exhibits attached to HEP’s Motion to Dismiss-in its Opposition. HHB brings its Motion to Strike under Rules 7 and 12(b)(6) of the Federal Rules of Civil Procedure and under Local Rules 7.2 and 7.4. Aside from Local Rule 7.4-which allows for a court to disregard arguments raised for the first time in a reply brief- none of these rules provides HHB authority to strike arguments in, and exhibits attached to, HEP’s Motion to Dismiss or Reply. To the extent that HHB intended to bring its Motion to Strike HEP’s exhibits under Rule 12(f) of the Federal Rules of Civil Procedure, this would also be improper. Rule 12(f) only provides a plaintiff authority to strike pleadings, as defined in Rule 7, and not to strike motions to dismiss or reply briefing. See, e.g., Sidney-Vinstein v. A.H. Robins Co., 697 F.2d 880, 885 (9th Cir. 1983); Powell v. Fid. Nat’l Fin., Inc., No. C-03-3313 MMC, 2003 WL 22134854, at *2 (N.D. Cal. Sept. 9, 2003), aff’d on other grounds, 121 F. App’x 765 (9th Cir. 2005). Case 1:16-cv-00634-JMS-KJM Document 164 Filed 06/20/18 Page 10 of 43 PageID #: 5236 3 Even assuming that Rule 12(f) provides HHB authority for its Motion to Strike, any motion under Rule 12(f) is also untimely as it was not made within 21 days after HHB was served with the exhibits it now seeks to strike. Second, even if HHB’s Motion to Strike is proper procedurally, HHB’s arguments that the exhibits should be struck are wholly without merit because the Court may take judicial notice of each exhibit attached to HEP’s Motion to Dismiss and Reply.1 See, e.g., Lee v. City of L.A., 250 F.3d 668, 688-89 (9th Cir. 2001) (stating that “court[s] may take judicial notice of ‘matters of public record’” (citation omitted)), abrogated on other grounds by Crawford-El v. Britton, 523 U.S. 574 (1998); see also Dreiling v. Am. Express Co., 458 F.3d 942, 946 n.2 (9th Cir. 2006) (US Securities & Exchange Commission filings); Interstate Nat. Gas Co. v. S. Cal. Gas Co., 209 F.2d 380, 385 (9th Cir. 1953) (administrative records and reports); K.S-A v. Haw. Sch. Dist., Civ. No. 16-00115 ACK-KJM, 2017 WL 6452417, at *5 (D. Haw. Dec. 18, 2017) (government documents from government websites); Muhammad v. Hill, No. CV 17-01137-VBF (PLA), 2017 WL 6520635, at *3 (C.D. Cal. Oct 24, 2017) (“federal court, state court, and state administrative filings”), adopted by No. LA CV 17-01137-VBF (PLA), 2017 WL 6512216 (C.D. Cal. Dec. 18, 2017). HEP was not required to request judicial notice for these exhibits; HHB’s Motion to Strike fails to apprehend the Court’s authority to take 1 Throughout this Opposition, HEP addresses only the exhibits that HHB moved to strike. Case 1:16-cv-00634-JMS-KJM Document 164 Filed 06/20/18 Page 11 of 43 PageID #: 5237 4 judicial notice sua sponte on a motion to dismiss, Fed. R. Evid. 201(c), and the Court’s authority to consider HHB’s contradictory positions before the PUC and this Court. The Court therefore has the discretion to take judicial notice of HEP’s exhibits and the statements therein, which are inconsistent with HHB’s SAC. Third, HEP’s exhibits are not hearsay. HEP does not submit the exhibits for their truth, but instead for the Court to take judicial notice of the existence of either the exhibits themselves or of certain statements by HHB therein. See Fed. R. Evid. 801(c). This, by definition, is not hearsay. Regardless, all but two of the exhibits challenged-Exhibits M, P, Q, S, T, and U to the Declaration of Steven M. Egesdal (Third Egesdal Declaration), which HEP submitted with its Motion to Dismiss the SAC, and Exhibits A and B to the Declaration of Joyce W.Y. Tam- Sugiyama (Tam-Sugiyama Declaration), which HEP submitted with its Reply- either are not hearsay at all or fall under exceptions to the hearsay rule, even if offered for the truth of the matters asserted. Fourth, HEP’s arguments in its Reply are not new and do not contravene Local Rule 7.4. HHB raised both the purchase price of HEP’s facility and HELCO’s modeling in its SAC. HEP responded to both allegations in its Motion to Dismiss the SAC. HHB then continued to rely on the incorrect purchase price of HEP’s facility in its Opposition, and raised arguments regarding HELCO’s Case 1:16-cv-00634-JMS-KJM Document 164 Filed 06/20/18 Page 12 of 43 PageID #: 5238 5 modeling in its Opposition. HEP’s arguments in its Reply about these topics directly respond to HHB’s own arguments. For these reasons, as explained in more detail below, HEP respectfully requests that the Court deny HHB’s Motion to Strike and its request for leave to file supplemental materials. II. Facts In its FAC filed on January 27, 2017, HHB alleged that HEP entered into an agreement with the other Defendants-Hawaiian Electric Industries, Inc. (HEI), Hawaiian Electric Company, Inc. (HECO), Hawaii Electric Light Company, Inc. (HELCO), and NextEra Energy, Inc. (NextEra)-to restrain trade in violation of Section 1 of the Sherman Act, and engaged in unfair competition in violation of Hawaiʻi Revised Statute Chapter 480. HEP filed a Motion to Dismiss HHB’s FAC on June 2, 2017, under Rule 12(b)(6) of the Federal Rules of Civil Procedure. HEP attached to its Motion to Dismiss a Declaration of Steven M. Egesdal with seven exhibits. HHB then filed an Opposition to HEP’s Motion to Dismiss HHB’s FAC on July 17, 2017. In response, HEP filed a Reply on July 24, 2017, which attached a Second Declaration of Steven M. Egesdal with four additional exhibits. HHB did not file a Motion to Strike. This Court granted HEP’s Motion to Dismiss HHB’s federal antitrust claims in its FAC with leave to amend. Hu Honua Bioenergy, LLC v. Hawaiian Elec. Case 1:16-cv-00634-JMS-KJM Document 164 Filed 06/20/18 Page 13 of 43 PageID #: 5239 6 Indus., Inc., No. 16-00634, 2018 WL 491780, at *17 (D. Haw. Jan. 19, 2018). The Court held that Plaintiff failed to allege a plausible conspiracy or antitrust injury. Id. at *13-14. HHB filed a SAC on January 29, 2018, which alleged the same implausible conspiracy claim as its FAC. In response, HEP filed a Motion to Dismiss HHB’s SAC under Rule 12(b)(6) of the Federal Rules of Civil Procedure on March 13, 2018. HEP attached the Third Egesdal Declaration with 10 exhibits. All 10 of the attached exhibits were previously submitted as exhibits to HEP’s Motion to Dismiss HHB’s FAC or to HEP’s Reply to HHB’s Opposition to HEP’s Motion to Dismiss the FAC. HHB then filed an Opposition to HEP’s Motion to Dismiss on April 13, 2018, which attached a Declaration of Stephen S. Mayne (Mayne Declaration) and two exhibits: (1) a PUC Order, Mayne Decl., Ex. A, ECF No. 155-2, and (2) a letter from HELCO to the Chair and Members of the PUC, Mayne Decl., Ex. B, ECF 155-3. In response, HEP filed a Reply on April 27, 2018, which attached the Tam-Sugiyama Declaration with two exhibits. On June 6, 2018, nearly three months after HEP filed its Motion to Dismiss, nearly two months after HHB filed its Opposition, and over a month after HEP filed its Reply, HHB filed a Motion to Strike most of HEP’s exhibits and accompanying arguments from HEP’s Motion to Dismiss and Reply. Case 1:16-cv-00634-JMS-KJM Document 164 Filed 06/20/18 Page 14 of 43 PageID #: 5240 7 III. Argument A. HHB’s Motion to Strike is Procedurally Impermissible HHB’s Motion to Strike is procedurally improper. HHB brings its Motion to Strike under Federal Rules of Civil Procedure 7 and 12(b)(6), as well as under Local Rules 7.2 and 7.4. However, none of these rules authorizes a motion to strike portions of a motion to dismiss or reply, except, with respect to a reply specifically, Local Rule 7.4 provides that a court may disregard new arguments raised for the first time. See LR 7.4 (discussing the requirements for oppositions and replies, and providing authority to disregard new arguments from a reply); cf. Huffman v. Remstar Int’l, Inc., No. 4:08cv157, 2009 WL 1445967 (E.D. Tex. May 21, 2009) (considering the plaintiff’s motion to strike affirmative defenses brought under Rule 12(b)(6) as a motion under Rule 12(f) because a Rule 12(b)(6) motion was improper). As none of the rules HHB cites provide it authority for the present motion, HEP assumes that HHB brings its Motion to Strike under Rule 12(f) of the Federal Rules of Civil Procedure. Fed. R. Civ. P. 12(f). By its terms, Rule 12(f) allows a court to strike “from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” Id. (emphasis added); Sidney- Vinstein v. A.H. Robins Co., 697 F.2d 880, 885 (9th Cir. 1983) (holding that a district court’s granting of a defendant’s motion to strike plaintiff’s motion to Case 1:16-cv-00634-JMS-KJM Document 164 Filed 06/20/18 Page 15 of 43 PageID #: 5241 8 reconsider was inappropriate because “[u]nder the express language of [12(f)], only pleadings are subject to motions to strike [and] [t]he [defendants] have cited no cases that have construed F.R.Civ.P. 12(f) as allowing a district court to strike material not contained in the pleadings of the case.”). A motion to dismiss or reply brief in support of a motion to dismiss, and exhibits and declarations attached to such documents, are not pleadings under Rule 7. Fed. R. Civ. P. 7(a) (“Only these pleadings are allowed: (1) a complaint; (2) an answer to a complaint; (3) an answer to a counterclaim designated as a counterclaim; (4) an answer to a crossclaim; (5) a third-party complaint; (6) an answer to a third-party complaint; and (7) if the court orders one, a reply to an answer.”). Because a motion to dismiss is not a pleading, moving to strike a motion to dismiss is improper. See Lopeti v. All. Bancorp, Civ. No. 11-00200 ACK-RLP, 2011 WL 13233545, at *4 (D. Haw. Nov. 4, 2011) (stating that “a motion to dismiss may not be the subject of a Rule 12(f) motion” because a motion to dismiss is not a pleading); Powell v. Fid. Nat’l Fin., Inc., No. C-03-3313 MMC, 2003 WL 22134854, at *2 (N.D. Cal. Sept. 9, 2003), aff’d on other grounds, 121 F. App’x 765 (9th Cir. 2005) (denying a motion to strike a motion to dismiss because “a motion to dismiss is not a ‘pleading’”); Knight v. United States, 845 F. Supp. 1372, 1373-74 (D. Ariz. 1993) (denying plaintiff’s motion to strike defendant’s motion to Case 1:16-cv-00634-JMS-KJM Document 164 Filed 06/20/18 Page 16 of 43 PageID #: 5242 9 dismiss and declarations as improper because a motion to dismiss is not a pleading, and Rule 12(f) only applies to pleadings); O’Connor v. Nevada, 507 F. Supp. 546, 547-48 (D. Nev. 1981), aff’d on other grounds, 686 F.2d 749 (9th Cir. 1982) (“[A] Rule 12(f) motion to strike only concerns striking matters from pleadings and a motion to dismiss is not a pleading.”). Further, a motion to strike exhibits attached to a motion to dismiss is improper, see, e.g., Thomas v. Bet Sound-Stage Rest./BrettCo, Inc., 61 F. Supp. 2d 448, 458 (D. Md. 1999) (holding that the plaintiff’s motions to strike the exhibits attached to the defendants’ motions to dismiss were inappropriate because Rule 12(f) only applies to pleadings, and motions to dismiss are not pleadings), as is moving to strike a reply under Rule 12(f). See Gottesman v. Santana, 263 F. Supp. 3d 1034, 1042 n.5 (S.D. Cal. 2017) (holding that a motion under Rule 12(f) could not be used to strike the defendant’s reply because “[a] reply brief is not a pleading” under Rule 7). 2 Plaintiff’s motion is not only improper; it is not timely. Even assuming, arguendo, that HHB’s motion might have been authorized under Rule 12(f), it was not filed within 21 days of service as required by that Rule and therefore is not timely. Plaintiff could-and should-have raised any objections to HEP’s Motion 2 Plaintiff also did not, and could not, bring its Motion to Strike under Rule 12(h)(2) of the Federal Rules of Civil Procedure, because Plaintiff has not argued that HEP did not state a legal defense. Cf. Jou v. Adalian, Civ. No. 15-00155 JMS-KJM, 2017 WL 3624340, at *3 (D. Haw. Aug. 23, 2017) (noting that Rule 12(h)(2) provides the authority to file a 12(c) motion for “failure to state a ‘legal defense’ to a claim”). Case 1:16-cv-00634-JMS-KJM Document 164 Filed 06/20/18 Page 17 of 43 PageID #: 5243 10 to Dismiss exhibits in its Opposition to HEP’s Motion to Dismiss the SAC, and could and should have raised any objections to the Reply within 21 days of April 27, 2018, when the Reply was filed. Therefore, because HHB’s Motion to Strike is procedurally improper, the motion should be denied. B. The Court May Take Judicial Notice of HEP’s Exhibits Even assuming that HHB’s Motion to Strike was not improper, HHB’s contention that the Court should strike HEP’s exhibits and accompanying arguments is wholly without merit. The Court may take judicial notice of HEP’s exhibits to the Third Egesdal Declaration and Tam-Sugiyama Declaration, and arguments relating thereto.3 (1) HEP was Not Required to Request Judicial Notice Plaintiff’s Motion to Strike rests on the assumption that HEP was required to seek judicial notice for its exhibits in order for the Court to take such notice. See Memorandum in Support of Motion to Strike (Mot. to Strike) at 11 (“Notably, HEP did not seek judicial notice of any of these extraneous materials as ‘matters of public record’ under Federal Rules of Evidence 201.”). That is not the law. Rule 201(c) of the Federal Rules of Evidence clearly provides that “[t]he court: (1) may 3 HHB’s argument that the exhibits were not “cited, referred to or relied upon in the SAC,” Mot. to Strike at 2, is inapposite, as HEP’s exhibits are proper subjects of judicial notice. Case 1:16-cv-00634-JMS-KJM Document 164 Filed 06/20/18 Page 18 of 43 PageID #: 5244 11 take judicial notice on its own . . . .” Fed. R. Evid. 201(c) (emphasis added). HEP therefore was not required to request judicial notice in order for the Court to consider HEP’s exhibits to the Third Egesdal Declaration and Tam-Sugiyama Declaration, or the accompanying arguments. Plaintiff had the opportunity in its Opposition to argue that HEP’s inclusion of the PUC and other materials in its Motion to Dismiss the SAC was improper and that HEP should have requested judicial notice. Plaintiff did not. Furthermore, Plaintiff’s argument that such a request was necessary is belied by its own Opposition, which included PUC filings as exhibits but did not formally request that the Court take judicial notice of those exhibits. Plaintiff’s failure to include a request for judicial notice in its own filing is an implicit admission that the Court may take judicial notice of HEP’s exhibits sua sponte. (2) The Court May Take Judicial Notice of HEP’s Exhibits as Administrative Records and Filings, Government Websites, and SEC Filings The Court may take judicial notice of HEP’s Exhibits M through Q and S through U to the Third Egesdal Declaration, and Exhibits A and B to the Tam- Sugiyama Declaration, because each document falls within a category of documents that courts have held may be judicially noticed. Although a court generally may only consider a complaint’s content when reviewing a 12(b)(6) motion, courts may consider material that has been judicially Case 1:16-cv-00634-JMS-KJM Document 164 Filed 06/20/18 Page 19 of 43 PageID #: 5245 12 noticed without converting a defendant’s motion to dismiss into a motion for summary judgment. Hu Honua Bioenergy, LLC v. Hawaiian Elec. Indus., Inc., No. 16-00634, 2018 WL 491780, at *7 (D. Haw. Jan. 19, 2018) (citing United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003)). This Court has previously taken judicial notice of certain exhibits attached to HEP’s Motion to Dismiss the FAC that are identical to exhibits attached to HEP’s Motion to Dismiss the SAC. See id. at *3 n.5 (taking judicial notice of an exhibit identical to Exhibit P of the Third Egesdal Declaration), *3 n.7 (taking judicial notice of “publicly-available decisions of the PUC,” which would likely include Exhibits S, T, and U of the Third Egesdal Declaration); see also id. at *4 n.9 (citing an exhibit identical to Exhibit N of the Third Egesdal Declaration). Under Rule 201 of the Federal Rules of Evidence, “court[s] may judicially notice a fact that is not subject to reasonable dispute because it: (1) is generally known within the trial court’s territorial jurisdiction; or (2) can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 201(b). Rule 201 permits courts to judicially notice “matters of public record,” and to consider that evidence when deciding on a Rule 12(b)(6) motion without converting the motion to one for summary judgment. Lee v. City of L.A., 250 F.3d 668, 688-89 (9th Cir. 2001), abrogated on other grounds by Crawford-El v. Britton, 523 U.S. 574 (1998) (quoting Mack v. South Bay Beer Case 1:16-cv-00634-JMS-KJM Document 164 Filed 06/20/18 Page 20 of 43 PageID #: 5246 13 Distrib., 798 F.2d 1279, 1282 (9th Cir. 1986)). The Court may take judicial notice of all of the challenged HEP exhibits and related arguments in deciding HEP’s Motion to Dismiss because the challenged HEP exhibits are administrative decisions or filings, documents from government websites, or US Securities & Exchange Commission (SEC) filings, all of which may be judicially noticed. (i) The Court May Take Judicial Notice of Exhibits M, N, O, Q, S, T, and U to the Third Egesdal Declaration as Administrative Decisions and Filings Courts may take judicial notice of administrative records, filings, and reports. Interstate Nat. Gas Co. v. S. Cal. Gas Co., 209 F.2d 380, 385 (9th Cir. 1953) (“We may take judicial notice of records and reports of administrative bodies.”) (citations omitted); see also, Mack v. S. Bay Beer Distribs., Inc., 798 F.2d 1279, 1282 (9th Cir. 1986), abrogated on other grounds by Astoria Fed. Sav. & Loan Ass’n v. Solimino, 501 U.S. 104 (1991) (upholding the district court’s decision to take judicial notice of “state administrative records” in considering a 12(b)(6) motion); Muhammad v. Hill, No. CV 17-01137-VBF (PLA), 2017 WK 6520635, at *3 (C.D. Cal. Oct 24, 2017) (taking “judicial notice of the federal court, state court, and state administrative filings that are matters of public record”), adopted by No. LA CV 17-01137-VBF (PLA), 2017 WL 6512216 (C.D. Cal. Dec. 18, 2017); Bartolotti v. Maui Mem’l Med. Ctr., Civil No. 14-00549 SOM/KSC, 2015 WL 4545818, at *3 (D. Haw. July 28, 2015) (“Matters of public Case 1:16-cv-00634-JMS-KJM Document 164 Filed 06/20/18 Page 21 of 43 PageID #: 5247 14 record that may be judicially noticed include records and reports of administrative bodies.” (citing Barron v. Reich, 13 F.3d 1370, 1377 (9th Cir. 1994))). Consistent with the approach in the Ninth Circuit, this Court has already taken judicial notice of “publicly-available decisions of the PUC.” Hu Honua Bioenergy, LLC v. Hawaiian Elec. Indus., Inc., No. 16-00634, 2018 WL 491780, at *3 n.7 (D. Haw. Jan. 19, 2018). In ruling on the Motion to Dismiss, the Court may, in its discretion, take judicial notice of HEP’s Exhibits M, N, O, Q, S, T, and U, which are PUC orders, decisions, and filings, because all are matters of public record. (ii) The Court May Take Judicial Notice of Exhibit P to the Third Egesdal Declaration as a Government Website The Court may take judicial notice of government documents obtained from a government website. K.S-A v. Haw. Sch. Dist., Civ. No. 16-00115 ACK-KJM, 2017 WL 6452417, at *5 (D. Haw. Dec. 18, 2017) (concluding that “the court can take judicial notice of government documents available from reliable sources on the Internet, such as websites run by the government”); Satarco Kish Trading, LLC v. Wamar Int’l Grp., LLC, No. CV 15-06422-BRO (JCx), 2016 WL 5937792, at *3 n.3 (C.D. Cal. Jan. 6, 2016) (holding that a California Secretary of State website printout could be judicially noticed because “results of record searches conducted on government websites are capable of judicial notice”); Elohim EPF USA, Inc. v. Total Music Connection, Inc., No. CV 14-02496-BRO (Ex), 2015 WL 12655556, at *8 (C.D. Cal. Oct. 1, 2015) (stating that “[g]overnment documents and public Case 1:16-cv-00634-JMS-KJM Document 164 Filed 06/20/18 Page 22 of 43 PageID #: 5248 15 records available from government websites are capable of judicial notice, as are results of record searches conducted on government websites”); Ereikat v. Michael & Assocs., PC, No. 14-cv-05339-JSC, 2015 WL 4463653, at *1 n.1 (N.D. Cal. July 21, 2015) (taking judicial notice of a state court website printout because “[d]ocuments available through government agency websites are often considered appropriate for judicial notice as documents in the public record not reasonably subject to dispute” (quoting Musgrave v. ICC/Marie Callendar’s Gourmet Prods. Div., No. 14-CV-02006, 2015 WL 510919, at *3 (N.D. Cal. Feb. 5, 2015))). The Court therefore may take judicial notice of Exhibit P to the Third Egesdal Declaration, which is a download of state court cases obtained from a search for “Hu Honua” on Hawaiʻi State Judiciary’s Public Access to Court Information, i.e., Hoʻohiki. In addition, this Court has already taken judicial notice of an identical version of Exhibit P that HEP submitted with its Motion to Dismiss HHB’s FAC. Hu Honua Bioenergy, LLC v. Hawaiian Elec. Indus., Inc., No. 16-00634, 2018 WL 491780, at *3 n.5 (D. Haw. Jan. 19, 2018). (iii) The Court May Take Judicial Notice of Exhibits A and B to the Tam-Sugiyama Declaration as SEC Filings Courts may take judicial notice of SEC filings. Dreiling v. Am. Express Co., 458 F.3d 942, 946 n.2 (9th Cir. 2006) (stating that the Court “may consider . . . any matter subject to judicial notice, such as SEC filings”) (citation omitted)). The Court therefore may take judicial notice of Exhibits A and B to the Tam-Sugiyama Case 1:16-cv-00634-JMS-KJM Document 164 Filed 06/20/18 Page 23 of 43 PageID #: 5249 16 Declaration, which are HEI’s 2017 and 2016 10-K annual reports filed with the SEC. Therefore, the Court may take judicial notice of all of HEP’s exhibits that HHB moved to strike. C. HEP Submitted the Exhibits to Show the Existence of Prior Statements Inconsistent with HHB’s SAC Allegations HEP submitted HHB’s own statements to the Court so that the Court may take judicial notice of the existence of statements contrary to HHB’s claims in the SAC. This does not require the Court to take “judicial notice of a fact that is ‘subject to reasonable dispute.’”4 Lee v. City of L.A., 250 F.3d 668, 689 (9th Cir. 2001), abrogated on other grounds by Crawford-El v. Britton, 523 U.S. 574 (1998). The Court need only consider the existence-not the truth-of statements in HEP’s exhibits, as cited in the Motion to Dismiss and Reply, to recognize that HHB alleges facts that are often undermined by HHB’s own prior statements to an administrative body. The Court is not required to accept as true allegations in HHB’s SAC that controvert facts that it judicially notices. Shwarz v. United States, 234 F.3d 428, 435 (9th Cir. 2000) (“In reviewing a Rule 12(b)(6) motion, a court must construe 4 Although the Court does not need to reach the issue of whether the facts within any of the exhibits are in reasonable dispute, HHB’s purported rejection of the truth of its own prior statements to the PUC-the authenticity of which it does not dispute, Mot. to Strike at 11-is unreasonable. Case 1:16-cv-00634-JMS-KJM Document 164 Filed 06/20/18 Page 24 of 43 PageID #: 5250 17 the complaint in the light most favorable to the plaintiff and must accept all well- pleaded factual allegations as true. . . . The court need not accept as true, however, allegations that contradict facts that may be judicially noticed by the court . . .” (emphasis added)).5 Specifically: Exhibit M to Third Egesdal Declaration: HEP cited Exhibit M to show that HHB previously submitted a response to the PUC acknowledging that HELCO’s modeling showed the HHB PPA would increase ratepayer’s costs and, as a result, HHB and HELCO agreed to change the PPA’s untraditional structure. Mot. to Dismiss at 6, 9-10, 24, 35; Reply at 13.6 HEP cited these statements to make the Court aware of HHB’s own statements in a PUC 5 This is also formalized in the doctrine of judicial estoppel under which a court also has authority, at the motion to dismiss stage, to reject allegations advanced by the litigant in a prior judicial or administrative proceeding. New Hampshire v. Maine, 532 U.S. 742 (2001) (granting Maine’s motion to dismiss New Hampshire’s claims due to its contrary factual statements in prior proceedings); Milton H. Greene Archives, Inc. v. Marilyn Monroe LLC, 692 F.3d 983, 993 n.13 (9th Cir. 2012) (“A party can be estopped by statements successfully advanced in both judicial and administrative proceedings.” (citing Rissetto v. Plumbers & Steamfitters Local 343, 94 F.3d 597, 604 (9th Cir. 1996))). 6 HEP also submitted Exhibit M to show the existence of HHB’s own statements to the PUC that it requested milestone extensions from HELCO as early as January 2015, and continued to negotiate with HELCO after March 2016. Mot. to Dismiss at 9, 21; Reply at 10-11. HHB’s continuing negotiations with HELCO are inconsistent with HHB’s allegations of a conspiracy and more consistent with HELCO’s willingness to grant an extension, provided HHB offered the desirable price reduction. Mot. to Dismiss at 22; SAC ¶ 205. Case 1:16-cv-00634-JMS-KJM Document 164 Filed 06/20/18 Page 25 of 43 PageID #: 5251 18 filing, which contradict HHB’s allegations in the SAC that its prices would be lower than those of other companies. SAC ¶¶ 7, 66, 70, 138, 145-46. Exhibit N to Third Egesdal Declaration: HEP cited Exhibit N to show the existence of HEP’s statement about the timeline under which it would receive capacity and dispatch payments, i.e., until 2030. Mot. to Dismiss at 7. This is consistent with HHB’s allegation that the existing HEP PPA expired in 2030. SAC ¶ 174. Exhibit O to Third Egesdal Declaration: HEP cited Exhibit O in its Motion to Dismiss to show the existence of a HEP submission to the PUC from 2013 in which HEP asked HELCO to purchase its facility under a right of first offer years before the alleged conspiracy. Mot. to Dismiss at 7 n.2. This timing is inconsistent with HHB’s allegation of a much later conspiracy involving HELCO’s purchase of HEP’s facility in its SAC. See, e.g., SAC ¶¶ 121, 167, 172. Exhibit P to Third Egesdal Declaration: HEP cited Exhibit P to show the existence and number (28) of state court legal actions brought against HHB. Mot. to Dismiss at 9. The Court has already taken “judicial notice of the existence and number of state court actions” in this exhibit, which was also submitted with HEP’s Motion to Dismiss the FAC. Hu Honua Bioenergy, Case 1:16-cv-00634-JMS-KJM Document 164 Filed 06/20/18 Page 26 of 43 PageID #: 5252 19 LLC v. Hawaiian Elec. Indus., Inc., No. 16-00634, 2018 WL 491780, at *3 n.5 (D. Haw. Jan. 19, 2018). Exhibit Q to Third Egesdal Declaration: HEP cited Exhibit Q to show the existence of HHB’s prior statements in PUC filings that its A&R PPA lowered and restructured its pricing from its Original PPA, and that “[t]he Original PPA had unusually low fixed capacity and O&M charges, and an unusually high per-kWh energy price,” which led to concerns that “the low fixed/high variable structure could have led to the overdispatch of fossil fuel units,” the dispatch prices of which were lower than those in the original HHB PPA. Mot. to Dismiss at 10, 24, 33-35; Reply at 13-14, 18. HEP cited these statements to make the Court aware that HHB made such admissions to the PUC and that these admissions with respect to the Original PPA contradict allegations in the SAC. Exhibit S to Third Egesdal Declaration: HEP cited Exhibit S to show the existence of a PUC General Order with a provision about its authority to review capital expenditures. Mot. to Dismiss at 27-28. HEP’s statement is consistent with HHB’s allegation in its SAC that HECO and HELCO applied to the PUC to recoup the expenditure to purchase HEP’s facility from customer rates. SAC ¶ 172. HHB also cited PUC General Order No. 7 in its Opposition. See Opp’n at 44. Case 1:16-cv-00634-JMS-KJM Document 164 Filed 06/20/18 Page 27 of 43 PageID #: 5253 20 Exhibit T and Exhibit U to Third Egesdal Declaration: HEP cited Exhibit T and Exhibit U to show the existence of PUC decisions that increased the value threshold for the PUC authority to review capital expenditures to $2.5 million. Mot. to Dismiss at 28; Reply at 15, 17. Similar to Exhibit S, HEP’s statements are directly related to HHB’s allegation regarding HECO and HELCO’s application to recoup its expenditures for HEP’s facility. SAC ¶ 172. Exhibit A to Tam-Sugiyama Declaration: HEP cited Exhibit A to respond to Plaintiff’s continued reliance on an incorrect final purchase price for HEP’s facility. See SAC ¶ 178; Opp’n at 3, 13, 19, 22. HEP did not cite Exhibit A to prove the truth of the purchase price, but instead to show the existence of HEI’s public SEC filing stating a different-and much higher-price, inconsistent with Plaintiff’s allegation in the SAC. Exhibit B to Tam-Sugiyama Declaration: HEP cited Exhibit B to respond to Plaintiff’s reliance on the incorrect initial purchase price for HEP’s facility. See SAC ¶ 167; Opp’n at 3, 13, 18, 19, 22. HEP again did not cite Exhibit B to prove the truth of the initial purchase price, but instead to show the existence of HEI’s public SEC filing stating a different price, which is inconsistent with Plaintiff’s allegation in the SAC. Case 1:16-cv-00634-JMS-KJM Document 164 Filed 06/20/18 Page 28 of 43 PageID #: 5254 21 Thus, HEP does not submit the exhibits for their truth, but rather, to show the existence of, inter alia, HHB’s own prior statements to an administrative body that are inconsistent with its allegations in the SAC. D. HEP’s Exhibits are Not Hearsay Rule 801 of the Federal Rules of Evidence defines hearsay as a statement that (1) “the declarant does not make while testifying at the current trial or hearing” and (2) “a party offers in evidence to prove the truth of the matter asserted in the statement.” Fed. R. Evid. 801(c). HEP’s exhibits and referenced statements in its Motion to Dismiss and Reply do not run afoul of the restrictions on hearsay because HEP is not offering the exhibits and referenced statements for the truth of the matters asserted, but instead as evidence of the existence of those statements. Even so, Exhibits M, P, Q, S, T, and U of the Third Egesdal Declaration, and Exhibits A and B of the Tam-Sugiyama Declaration, either are not hearsay at all or fall under exceptions to the hearsay rule, even if offered for the truth of the matters asserted. As a result, HHB’s argument that HEP’s statements are objectionable hearsay, Mot. to Strike at 12, is irrelevant and incorrect. Case 1:16-cv-00634-JMS-KJM Document 164 Filed 06/20/18 Page 29 of 43 PageID #: 5255 22 (1) HHB’s Own Prior Statements in Exhibits M and Q of the Third Egesdal Declaration are Statements of a Party-Opponent and are Not Hearsay Statements of a party opponent are not hearsay under Rule 801 of the Federal Rules of Evidence. Specifically, Rule 801(d) provides that a statement is not hearsay if: [t]he statement is offered against an opposing party and: (A) was made by the party in an individual or representative capacity; (B) is one the party manifested that it adopted or believed to be true; (C) was made by a person whom the party authorized to make a statement on the subject; (D) was made by the party’s agent or employee on a matter within the scope of that relationship and while it existed; or (E) was made by the party’s coconspirator during and in furtherance of the conspiracy. Fed. R. Evid. 801(d)(2); cf. Robinson v. Audi Nsu Auto Union AG, 739 F.2d 1481, 1486-87, 1489 (10th Cir. 1984) (holding that plaintiff’s request to admit defendant’s prior documents submitted to the National Highway Traffic Safety Administration should have been granted under Rule 801(d)(2)); United States v. Brugnara, No. CR 14-00306 WHA, 2015 WL 1907513, at *4 (N.D. Cal. 2015) (holding that a defendant’s prior statement in sworn and unsworn court filings, which the government intended to introduce as evidence, were not hearsay because all of the defendant’s statements were statements by a party opponent). HHB’s prior statements to the PUC, which HEP submitted as Exhibits M and Q to the Third Egesdal Declaration and referenced in its Motion to Dismiss and Reply, are statements that HHB made in its own capacity, through its lawyers Case 1:16-cv-00634-JMS-KJM Document 164 Filed 06/20/18 Page 30 of 43 PageID #: 5256 23 who were authorized to make the statements, or through its employees in the scope of their employment. As a result, these statements are not hearsay even if submitted for the truth of the matters asserted. (2) HEP’s PUC Filings in Exhibits N and O to the Third Egesdal Declaration are Not Hearsay Statements are only hearsay if “a party offers [the statement] in evidence to prove the truth of the matter asserted in the statement.” Fed. R. Evid. 801(c)(2). HEP does not introduce its own PUC filings for their truth, but instead as evidence of the existence of certain statements. Therefore, Exhibits N and O would not be excluded by the rule against hearsay in any event. (3) The Hawaiʻi State Court Record Listing, Submitted in Exhibit P to the Third Egesdal Declaration, is an Admissible Public Record Court records fall under the hearsay exception for public records. Fed. R. Evid. 803(8) (“A record or statement of a public office if: (A) it sets out: (i) the office’s activities; (ii) a matter observed while under a legal duty to report, but not including, in a criminal case, a matter observed by law-enforcement personnel; or (iii) in a civil case or against the government in a criminal case, factual findings from a legally authorized investigation; and (B) the opponent does not show that the source of information or other circumstances indicate a lack of trustworthiness.”); see, e.g., Elohim EPF USA, Inc. v. Total Music Connection, Inc., No. CV 14-02496-BRO (Ex), 2015 WL 12655556, at *8-9 (C.D. Cal. Oct. 1, Case 1:16-cv-00634-JMS-KJM Document 164 Filed 06/20/18 Page 31 of 43 PageID #: 5257 24 2015) (holding that a government website record printout was excepted from hearsay under the public records exception in Rule 803(8)); QBE Specialty Ins. Co. v. TLC Safety Consultants, Inc., No. 1:11-CV-00233-SKO, 2012 WL 3062768, at *18 n.9 (E.D. Cal. July 26, 2012) (holding that a criminal court record is excepted from hearsay under Rule 803(8) as a public record); Hispanic Broad. Corp. v. Educ. Media Found., No. CV027134CAS (AJWX), 2003 WL 22867633, at *5 n.5 (C.D. Cal. Oct. 30, 2003) (holding that the government website records were not hearsay, and were properly authenticated because “records from government websites . . . are self-authenticating”). Exhibit P to the Third Egesdal Declaration-which consists of a list of Hawaiʻi state court records-would not be excluded by the rule against hearsay, even if submitted for its truth. (4) The PUC’s Decisions and Orders in Exhibits S through U of the Third Egesdal Declaration are Admissible as Administrative Decisions or Reports Administrative decisions and reports are generally admissible under the public records exemption to the hearsay rule in Rule 803(8) of the Federal Rules of Evidence, unless the circumstances indicate a lack of trustworthiness. Fed. R. Evid. 803(8); see Beech Aircraft Corp. v. Rainey, 488 U.S. 153, 162-63, 170 (1988) (holding that both the findings of fact, and conclusions and opinions, of trustworthy, public investigatory reports are admissible under Rule 803(8)); Keith v. Volpe, 858 F.2d 467, 481 (9th Cir. 1988) (stating the rule that “public records Case 1:16-cv-00634-JMS-KJM Document 164 Filed 06/20/18 Page 32 of 43 PageID #: 5258 25 and reports” from an investigation authorized under the law are excluded from hearsay under Federal Rule of Evidence 803, unless the opposing party shows the records and reports are untrustworthy); cf. Chandler v. Roudebush, 425 U.S. 840, 863 n.39 (1976) (stating that administrative findings are admissible as evidence in a trial for employment discrimination); Zeus Enters., Inc. v. Alphin Aircraft, Inc., 190 F.3d 238, 241 (4th Cir. 1999) (admitting an administrative decision under Federal Rule of Evidence 803(8)); United States v. Sch. Dist. of Ferndale, 577 F.2d 1339, 1354 (6th Cir. 1978) (holding that the US Department of Health, Education and Welfare’s administrative findings were admissible under Federal Rule of Evidence 803(8) even though they were from a “quasi-judicial hearing”).7 HHB has not challenged the trustworthiness of the PUC decisions and orders, nor could it do so given HHB’s own reliance on PUC decisions and orders in its SAC and Opposition.8 As public records, the PUC decisions and orders cited in HEP’s 7 These cases are based on Rule 803(8)(C), an older version of the public records exception under the Federal Rules of Evidence. Given that the language of the current rule is in substance the same as the prior version, decisions about the old version of the rule are relevant to the interpretation of Rule 803(8)(A)(iii) of the Federal Rules of Evidence. See, e.g., Suzuki v. Helicopter Consultants of Maui, Inc., Civ. No. 13-00575 JMS-KJM, 2016 WL 6275385, at *3 (D. Haw. Oct. 26, 2016) (citing decisions under the older version of the rule). 8 HHB cites to PUC decisions and orders, see, e.g., SAC ¶¶ 57, 91-92, 108, 115-16, 121, and PUC filings in its SAC, see, e.g., SAC ¶¶ 65, 86. HHB cannot ask the Court to consider its citations to PUC decisions, orders, and filings, while at the same time asking the Court to disregard HEP’s citations Case 1:16-cv-00634-JMS-KJM Document 164 Filed 06/20/18 Page 33 of 43 PageID #: 5259 26 Motion to Dismiss and Reply, and accompanying exhibits, are not excluded by the rule against hearsay, even if submitted for the truth of the matters asserted. (5) The HEI 10-K Annual Reports in Exhibits A and B to the Tam- Sugiyama Declaration are Admissible Business Records Business records fall under the hearsay exception in 803(6) for “records of a regularly conducted activity.” Fed. R. Evid. 803(6). HEP’s statements from HEI’s 10-K annual reports in its Reply, and the corresponding Exhibits A and B to the Tam-Sugiyama Declaration, fall under this business record exception. SEC v. Jasper, 678 F.3d 1116, 1122-23 (9th Cir. 2012) (holding that a 10-K annual report was within the business record hearsay exception under Federal Rule of Evidence 803(6) as a “business record of the accounting review”). Therefore, the HEI 10-K statements are not excluded by the rule against hearsay, even if offered for their truth.9 E. HEP’s Arguments in its Reply Respond Directly to HHB’s Opposition HEP has not violated Local Rule 7.4 because HEP’s arguments about the purchase price of its facility and HELCO’s modeling respond directly to arguments HHB itself raised in Opposition to HEP’s Motion to Dismiss the SAC or in its to PUC decisions, orders, and filings simply because they are inconsistent with HHB’s allegations. 9 In addition, HHB itself cites to SEC filings in its SAC. SAC ¶¶ 78 (NextEra’s S-4), 152-53 (HEI’s 10-Q). HHB cannot ask the Court to disregard the content of some SEC filings, but to consider the content of others that align with HHB’s arguments. Case 1:16-cv-00634-JMS-KJM Document 164 Filed 06/20/18 Page 34 of 43 PageID #: 5260 27 SAC. See Ritchie v. State of Haw., Dep’t of Safety, No. 14-00046 LEK-KJM, 2017 WL 4172500, at *2 (D. Haw. Aug. 23, 2017) (denying defendants’ motion to strike plaintiff’s reply and accompanying declaration under Local Rule 7.4 because plaintiff’s reply declaration and exhibits responded to defendants’ arguments in their opposition), adopted by 2017 WL 4126982 (D. Haw. Sep. 18, 2017). (1) HEP’s Argument Regarding the Purchase Price of its Facility is Not New HHB’s contention that “HEP argues for the first time that ‘the final purchase price for HEP’s assets was $76,323,000,’” Mot. to Strike at 12 (quoting Reply at 9- 10), is misguided. HHB raised the issue of the purchase price for HEP’s plant in its SAC when it alleged the plant was ultimately purchased for $55 million. SAC ¶ 178. Contrary to HHB’s argument that the difference in purchase price “is [sic] new argument that HEP did not make in its Motion to Dismiss,” Mot. to Strike at 12, HEP noted in its Motion to Dismiss that the purchase price paid for HEP’s facility was not $55 million, as Plaintiff had alleged. Mot. to Dismiss at 7-8. Further, HHB’s Opposition made allegations of the original purchase price highly relevant by relying so heavily on the difference between the original purchase price and the $55 million alleged in HHB’s SAC. Opp’n at 3, 13, 19-20, 22. HEP not only raised the issue of the incorrect purchase price in its briefs, but HEP’s counsel also notified HHB’s counsel directly that the figure was incorrect. On February 16, 2018, counsel for HEP contacted counsel for HHB to discuss the Case 1:16-cv-00634-JMS-KJM Document 164 Filed 06/20/18 Page 35 of 43 PageID #: 5261 28 alleged $55 million purchase price. In addition to conveying the degree to which HHB’s allegation was off the mark, HEP’s counsel asked whether HHB intended to rely upon that number. Remarkably, rather than engaging in dialogue on whether it intended to rely upon the $55 million or whether the allegation was accurate, HHB chose to reject HEP’s invitation to obtain further clarification on the price. At the end of May, counsel for HEP left a voicemail, and later emailed counsel for HHB in writing that: Per my voicemail to you last week, we believe the $76.32 million sale price for the Hamakua Energy Partners plant is clear. Please give me a call if you do not agree on this point and we can discuss what further evidence we might provide you [to] resolve this in order to focus both sides’ arguments; and preserve both our clients’ and the Court’s resources. Snyder Decl., Ex. A, E-mail regarding “HHB LLC v Hawaiian Electric Industries Inc.” (May 30, 2018). HHB’s Motion to Strike can only be viewed as a rejection of that offer. HHB’s insistence that the Court rely upon its allegation of the $55 million purchase price when evidence of the $76.23 million purchase price has been provided and further evidence has been offered, serves no one’s interests. Despite acknowledging that HEP’s counsel had notified HHB’s counsel that the $55 million figure was incorrect, HHB continued to rely on the incorrect purchase price throughout its Opposition. See Opp’n at 3, 3 n.2, 13, 19, 22. In the Reply, HEP responded directly to HHB’s continued reliance on the incorrect purchase price. Case 1:16-cv-00634-JMS-KJM Document 164 Filed 06/20/18 Page 36 of 43 PageID #: 5262 29 Plaintiff continues to rely on the incorrect figures as a key component of its conspiracy claim in its Motion to Strike. See Mot. to Strike at 6 (“What in fact happened only confirms that without NextEra’s involvement and the LNG plan, and without the conspiracy to terminate HHB’s PPA, HEP’s plant was worth less. It also demonstrates that the HEP asset purchase amount for which HELCO and HEP sought PUC approval ($88 million), which could be passed through to consumers, was far more than HEP’s assets were worth.”). Responding directly to allegations and arguments that are factually inaccurate, and on which Plaintiff continues to rely, does not raise new arguments in contravention of Local Rule 7.4. (2) HEP’s Argument in its Reply Regarding HELCO’s Modeling is Not New HHB’s contention that “HEP also argues for the first time that Plaintiff agreed ‘to change the structure of the HHB PPA, based on the modeling results’ created by HELCO,” Mot. to Strike at 12 (quoting Reply at 13-14), is even more misguided. Contrary to HHB’s assertion that “HEP failed to make the argument in its moving papers, choosing to wait until the Reply so that no opposition would be possible,” Mot. to Strike at 13, HEP actually argued in its Motion to Dismiss that: Plaintiff’s own statements to the PUC confirm that its PPA needed to be restructured and would have increased ratepayer costs, in part, because the HHB PPA’s allocation of payments between capacity payments and dispatch payments was not “traditional.” Third Egesdal Decl., Ex. M, at 15. . . . Plaintiff’s contemporaneous statements acknowledge that Plaintiff and HELCO agreed that it was necessary to change the structure of the HHB PPA to more closely track a Case 1:16-cv-00634-JMS-KJM Document 164 Filed 06/20/18 Page 37 of 43 PageID #: 5263 30 traditional plant finance model by increasing capacity payments under the HHB PPA eleven-fold to around $11 million per year, thereby reducing Plaintiff’s dispatch rates to competitive levels. Id. Mot. to Dismiss at 9-10 (citing Third Egesdal Decl., Ex. M, at 15) (footnote omitted).10 HEP raised the same argument in its Reply, citing again to HHB’s own statements to the PUC, as contained in Exhibit M. HEP’s Reply also responded directly to HHB’s argument that the Exhibit M statement that HHB’s PPA would increase ratepayer’s costs was HELCO’s, rather than HHB’s, position, and HHB disagreed with HELCO’s modeling. Opp’n at 10 n.5, 32 n.8, 38-39.11 HEP’s argument in its Reply therefore is not new and does not contravene Local Rule 7.4. F. The Court Need Not Go Beyond the Four Corners of the SAC to Conclude that the Only Plausible Explanation for HELCO’s Termination of the HHB PPA is Plaintiff’s Own Failures As this Court previously decided, based on the same facts alleged in the FAC (as supplemented by arguments the Plaintiff raised in its first Opposition), nothing in the SAC makes it plausible that HELCO terminated the HHB PPA as a 10 It is hard to see why HHB thinks this argument was not raised previously, when HEP’s Reply cites the same page of the same exhibit as HEP cited in its Motion to Dismiss. 11 Furthermore, prior to its Opposition, HHB itself acknowledged HELCO’s analysis of the costs and benefits of the PPA in its SAC: “HELCO’s decision to terminate the Hu Honua PPA and to reject Hu Honua’s offers to renegotiate the pricing was based on HELCO’s purported analysis of its forecasts of the net benefit or cost of the PPA.” SAC ¶ 139. HHB also discussed the shift in the allocation of dispatch and capacity payments under the PPA. Id. ¶ 137. Case 1:16-cv-00634-JMS-KJM Document 164 Filed 06/20/18 Page 38 of 43 PageID #: 5264 31 result of a conspiracy with HEP. Hu Honua Bioenergy, LLC v. Hawaiian Elec. Indus., Inc., No. 16-00634, 2018 WL 491780, at *15-16 (D. Haw. Jan. 19, 2018). Even if the Court were to strike the challenged exhibits and related arguments from HEP’s Motion to Dismiss and Reply, it would not change the conclusion that HHB’s SAC fails to state a plausible conspiracy claim under Section 1 of the Sherman Act.12 Under the SAC itself, the only plausible explanation for HELCO’s termination of the HHB PPA is HHB’s failure to fulfill its contractual obligations, due to its construction delays, missed milestone dates, and refusal to negotiate sufficiently lower pricing with HELCO in exchange for a milestone extension. See, e.g., SAC ¶¶ 126, 132-33, 135-36, 141, 146-48, 156, 188, 250. HHB instead claims that its PPA was terminated due to a conspiracy involving HEP and the other defendants. However, HHB’s allegations of conspiracy are implausible and its allegations against HEP are nonexistent. The SAC fails to allege even a single fact-any of the requisite who, what, where, and when, see Kendall v. Visa U.S.A. Inc., 518 F.3d 1042, 1048 (9th Cir. 2008)-that links HEP to HELCO’s decision to terminate the HHB PPA. Further, the SAC fails 12 Although HEP would prefer to address only HHB’s arguments to strike HEP’s declarations, exhibits, and arguments in its Motion to Dismiss and Reply, HEP includes a summary of the arguments on the merits because of HHB’s discussion of the merits in its Motion to Strike. Mot. to Strike at 3-6. Case 1:16-cv-00634-JMS-KJM Document 164 Filed 06/20/18 Page 39 of 43 PageID #: 5265 32 to explain how HELCO’s termination of the HHB PPA-HELCO’s wholly unilateral right under the PPA-required concerted action by HEP. The SAC not only fails to allege facts that would constitute a Section 1 agreement, the conspiracy it alleges makes no economic sense. See Adaptive Power Sols., LLC v. Hughes Missile Sys. Co., 141 F.3d 947, 952 (9th Cir. 1998) (“Antitrust claims must make economic sense.” (citing Eastman Kodak Co. v. Image Tech. Servs. Inc., 504 U.S. 451, 468 (1992))). It makes no economic sense that HEP would conspire to reduce competition in a market that it had bound itself legally to exit. Hu Honua Bioenergy, LLC, 2018 WL 491780, at *15 (“Whatever these allegations might mean as to HELCO, they are inconsistent as to HEP’s participation in a conspiracy to restrain trade as to Hu Honua.”) (emphasis omitted). It makes no sense that HEP conspired with HELCO to increase the value of its assets because HELCO agreed to buy HEP in December 2015, months before HELCO terminated the HHB PPA. SAC ¶ 121. It makes absolutely no sense that HELCO would agree to terminate the HHB PPA in order to increase the price HELCO would pay for HEP’s assets, or would conspire to raise prices in a market in which it is the only customer. Furthermore, the only two actions in which HHB alleged that HEP engaged are protected from antitrust liability. First, HEP’s petition in the PUC’s docket for HELCO’s Application for Approval of the HHB PPA in 2012, SAC ¶ 179, is Case 1:16-cv-00634-JMS-KJM Document 164 Filed 06/20/18 Page 40 of 43 PageID #: 5266 33 protected petitioning under the Noerr-Pennington doctrine. See United Mine Workers v. Pennington, 381 U.S. 657 (1965); E. R.R. Presidents Conf. v. Noerr Motor Freight, Inc., 365 U.S. 127 (1961). Second, HELCO’s agreement to purchase HEP’s facility and assets, SAC ¶ 167, is protected under the State Action doctrine. See Cal. Retail Liquor Dealers Ass’n v. Midcal Aluminum, Inc., 445 U.S. 97, 105 (1980) (stating that the State Action Doctrine applies if (1) the challenged conduct is “clearly articulated and affirmatively expressed as state policy,” and (2) the policy is “‘actively supervised’ by the State itself.” (quoting City of Lafayette v. La. Power & Light Co., 435 U.S. 389, 410 (1978))). Finally, HHB has not alleged either harm to competition or harm to Plaintiff. Rates, output, and entry are regulated comprehensively by the PUC and may not be alleged as a source of harm to competition. Where the PUC supervises and approves all aspects of price and output, there can be no harm to competition. See Schuylkill Energy Res., Inc. v. Pa. Power & Light Co., 113 F.3d 405, 413-14 (3d Cir. 1997). In addition, the SAC fails to allege cognizable antitrust injury because Plaintiff acknowledges that HELCO terminated the PPA in part due to Plaintiff’s refusal to lower its pricing sufficiently. See, e.g., SAC ¶¶ 132, 135, 146-47. A loss of profits arising from the termination of Plaintiff, a higher-priced competitor that refused to lower its pricing sufficiently, is not antitrust injury to that higher-priced competitor. Hu Honua Bioenergy, LLC v. Hawaiian Elec. Indus., Inc., No. 16- Case 1:16-cv-00634-JMS-KJM Document 164 Filed 06/20/18 Page 41 of 43 PageID #: 5267 34 00634, 2018 WL 491780, at *13 (D. Haw. Jan. 19, 2018) (“Termination of a higher priced supplier, without more, is not antitrust injury.”); see Zf Meritor, LLC v. Eaton Corp., 696 F.3d 254, 275 (3d Cir. 2012) (noting that “the antitrust laws do not require the courts to protect small businesses from the loss of profits due to continued [above-cost] competition” (quoting Cargill, Inc. v. Monfort of Colo., Inc., 479 U.S. 104, 116 (1986))). Thus, even if the Court disregards the exhibits HEP submitted with its Motion to Dismiss and Reply, and arguments related thereto, HHB still has not stated a plausible conspiracy claim. IV. Conclusion For the reasons stated above, HEP respectfully requests that the Court deny Plaintiff’s Motion to Strike. HEP also respectfully requests that the Court deny Plaintiff’s request to file supplemental materials, as the Court may take judicial notice of the materials without converting HEP’s Motion to Dismiss into a motion for summary judgment. Case 1:16-cv-00634-JMS-KJM Document 164 Filed 06/20/18 Page 42 of 43 PageID #: 5268 35 DATED: Honolulu, Hawaii, June 20, 2018. /s/ Steven M. Egesdal STEVEN M. EGESDAL IAN L. SANDISON JOYCE W.Y. TAM-SUGIYAMA RICHARD SUTTON SNYDER, SR.* ILANA R. KATTAN* Attorneys for Defendant HAMAKUA ENERGY PARTNERS, L.P. *Admitted Pro Hac Vice Case 1:16-cv-00634-JMS-KJM Document 164 Filed 06/20/18 Page 43 of 43 PageID #: 5269
