14 SUPERIOR COURT OF THE STATE OF CALIFORNIA 15 IN AND FOR THE COUNTY OF SAN FRANCISCO 16 SAN DIEGO COUNTY WATER. Case No. CPF AUTHORITY,

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1 1 KEKER & VAN NEST LLP JOHN W. KEKER- # jkeker@kvn.com DANIEL PURCELL-# 3 dpurcell@kvn.com DAN JACKSON-# djackson@kvn.com WARREN A. BRAUNIG- # wbraunig@kvn.com 63 3 Battery Street 6 San Francisco, CA Telephone: (4) Facsimile: (4) DANIEL S. HENTSCHKE General Counsel 9 SAN DIEGO COUNTY WATER AUTHORITY 4677 Overland Avenue 10 San Diego, CA 9-13 Telephone: (858) Facsimile: (858) Attorneys for Petitioner and Plaintiff SAN DIEGO COUNTY WATER AUTHORITY EXEMPT FROM FILING FEES [GOVERNMENT CODE 6103] SUPERIOR COURT OF THE STATE OF CALIFORNIA IN AND FOR THE COUNTY OF SAN FRANCISCO SAN DIEGO COUNTY WATER Case No. CPF AUTHORITY, Case No. CPF Petitioner and Plaintiff, v. METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA; ALL PERSONS INTERESTED IN THE VALIDITY OF THERA TES ADOPTED BY THE METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA ON APRIL,10 TO BE EFFECTIVE JANUARY ; and DOES 1-10, Respondents and Defendants.. SAN DIEGO'S OPPOSITIONS TO MWD'S MOTIONS IN LIMINE Date: Time: Dept.: Judge: Dates Filed: Trial Date: November 4,. 9:00a.m. 304 Han. Curtis E.A. Kamow June, 10 June 8, 12 December, Case Nos. CPF and CPF-12-56

2 I. 4 II III TABLE OF CONTENTS OPPOSITION TO MOTION IN LIMINE NO. 1: LIMITATION OF EVIDENCE TO MWD'S SELF -SELECTED ADMINISTRATIVE RECORD OPPOSITION TO MOTION IN LIMINE NO. 2: EVIDENCE ON PURPORTEDLY UNPLED CLAIMS... 4 A. MWD knows exactly what this case is about, and San Diego is not asserting any cause of action outside its pleadings....4 B. MWD cannot preclude San Diego from raising new details of proof or legal argument to support the basic facts and claims in its pleadings... 6 OPPOSITION TO MOTION IN LIMINE NO.3: WORKING GROUP ALLEGATIONS A. This Court's July 2, 12 Order did not declare MWD's motives irrelevant.....! 0 B. San Diego may offer relevant evidence ofmwd's motives and intentions c. D. Allowing evidence concerning MWD's motives, particularly documents MWD has publicly produced, does not implicate the deliberative process privilege... Allowing evidence ofmwd's objectives and motives in setting its rates would be entirely appropriate, not prejudicial.... IV. OPPOSITION TO MOTION IN LIMINE NO.4: EVIDENCE NOT DISCLOSED DURING DISCOVERY... V. OPPOSITION TO MOTION IN LIMINE NO.5: "JUDICIAL ADMISSIONS" Case Nos. CPF and CPF-12-56

3 1 2 TABLE OF AUTHORITIES Page(s) State Cases 300 DeHaro St. Investors v. Dep 't of Housing 1 Cal. App. 4th 10 (08)... ;..., Barrere v. Somps 1 Cal. 97 (96) Brydon v. East Bay Municipal Utility Dist. Cal. App. 4th 8 (94)... ~... 8 Cal. Assn. of Nursing Homes, Sanitariums, Rest Homes and Homes For The Aged, 9 Inc. v. Williams 4 Cal. App. 3d 800 (70) Citizens for Open Gov 'tv. City of Lodi. 5 Cal. App. 4th 296 (12) City & Cnty. of San Francisco v. Western Air Lines, Inc. 4 Cal. App. 2d 105 (62)... '... City of Palmdale v. Palmdale Water District 8 Cal. App. 4th 9 ()... City of Santa Cruz v. Local Agency Formation Com. 76 Cal. App. 3d 381 (78)... 2, 3 County of Orange v. Barratt Am., Inc. 0 Cal. App. 4th 4 (07)...,... 3 Crowley v. Katleman 8 Cal. 4th 666 (94)... 9 Dong v. Board of Trustees 1 Cal. App. 3d 72 (87)... Elliott v. City of Pac. Grove 54 Cal. App; 3d 53 (75)... 9 Emerald Bay Cmty. Ass 'n v. Golden Eagle Ins. Corp. 0 Cal. App. 4th 1078 (05)... 6 Garcia v. Roberts 3 Cal. App. 4th 900 (09) Higgins v. Del Faro 1 Cal. App. 3d 558 (81) In re Quantification Settlement Agreement Cases 1 Cal. App. 4th 758 ()... Case Nos. CPF and CPF-12-56

4 1 Nasha L.L. C. v. City of Los Angeles 1 Cal. App. 4th 470 (04) Pajaro Valley Water Mgmt. Agency v. Amrhein 3 0 Cal. App. 4th 64 (07)..., R&B Auto Ctr., Inc. v. Farmers Group, Inc. 0 Cal. App. 4th 3 (06)... 5 Rivera v. Div. of Indus. Welfare 6 5 Cal. App. 2d 576 (68) Robbins v. Super. Ct. 38 Cal. 3d 9 (85)... :... ;... :... : San Joaquin Local Agency Formation Comm 'n v. Super. Ct. 2 Cal. App. 4th 9 (08) San Luis Coastal Unified School Dist. v. City of Morro Bay 81 Cal. App. 4th 1044 (00)..., Schweitzer v. Westminster Investments 12 7 Cal. App. 4th (07)... Town of Tiburon v. Bonander 0 Cal. App. 4th 1057 (09)... 2 Urshan v. Musicians' Credit Union 1 Cal. App. 4th 758 (04)... :... Western States Petroleum Assn. v. Superior Court 9 Cal. 4th 559 (95)... 3 Wilson v. Hidden Valley Municipal Water District 6 CaL App. 2d 1 (67) State Statutes Cal. Water Code 10...,, Cal. Water Code... :... Cal. Water Code... Civil Code ~... Code Civ. Proc MWD Administrative Code MWD Administrative Code Evidence Code l1l

5 Plaintiff and Petitioner San Diego County Water Authority ("San Diego") makes this 2 consolidated opposition to Defendant and Respondent Metropolitan Water District of 3 Southern California's ("MWD") five motions in limine. 4 I OPPOSITION TO MOTION IN LIMINE NO. 1: LIMITATION OF EVIDENCE TO MWD'S SELF-SELECTED ADMINISTRATIVE RECORD MWD's first motion in limine is a meritless blanket objection to unidentified "evidence" outside the scope ofmwd's cherry-picked "administrative record." But motions in limine should be directed at identifiable documents or subjects of testimony. To the extent MWD has any legitimate objections to specific pieces of evidence, it should raise those objections in a more defined context at trial, or in response to San Diego's Motion to Augment, so that the Court can avoid considering and deciding issues in a vacuum. In any event, MWD's motion is baseless. As San Diego explained in its opening pretrial brief and its concurrently filed Motion to Augment the record, there is no basis for this Court to limit its review to only those documents MWD attached to its purported "administrative record." That "record" does not correspond to any meaningful universe of documents; it does not contain myriad documents MWD staff and Board members possessed, and could have reviewed or actually did review, in establishing the MWD rates at issue in this case. There is no question that, under any standard of review, the Court may consider not only the documents in MWD's record, but also "earlier studies, reviews and reports, made at the expense of time and money in response to the [agency's] mandate," which should be considered as part ofthe administrative record. City of Santa Cruz v. Local Agency Formation Com., 76 Cal. App. 3d 381,392 (78); see also, e.g., Town oftiburon v. Bonander, 0 Cal. App. 4th 1057, 1076 (09) (earlier materials concerning the same issue are properly considered part of the record); Rivera v. Div. of Indus. Welfare, 5 Cal. App. 2d 576, 589 (68) (where, as here, an agency conducts "substantial 'off record' investigations," their incorporation into the record is "an indispensable condition of fairness"); accord Cal. Assn. of Nursing Homes, Sanitariums, Rest Homes and Homes For The Aged, Inc. v. Williams, 4 Cal. App. 3d 800, 8 (70). Here, with its Motion to Augment, San Diego submitted numerous documents containing information that 1. Case Nos. CPF and CPF-12-56

6 was, or should have been, in MWD's possession when it made the decisions at issue in this case, 2 including a 69 study commissioned by MWD on the same cost-of-service issues presented here 3 and the 99 Raftelis Financial Consulting study that MWD now insists forms the core of the 4 Financial Planning Model, or Rate Model, that MWD uses to set its rates, and thus lies at the 5 heart of this case. See Ex. 74 (VanDen Berg Depo.) at 35:-65:7. MWD has no power to 6 exclude these historical documents from the Court's consideration. See Santa Cruz, 76 Cal. App. 7 3d at Likewise, "evidence that could not be produced at the administrative level in the exercise 9 of reasonable diligence should be admitted" tmder even the most stringent standards of review. 10 See.Western States Petroleum Assn. v. Superior Court, 9 Cal. 4th 559, 578 (95) (quotation marks omitted). Further, "background information" that is useful in "ascertaining whether the 12 agency considered all the relevant factors or fully explicated its course of conduct or grounds of decision," and information bearing on "the accuracy of the administrative record,... procedural tmfairness, and... agency misconduct" should also be admitted. Id at 575 n.5, 579. Many ofthe documents San Diego submitted with its Motion to Augment were concealed by MWD staff despite having direct relevance to MWD's rate decisions, or are useful in determining the accuracy ofthe record and MWD's discriminatory practices. For example, the discovery responses and deposition testimony contain admissions by MWD about the true basis ofmwd's. rates, and the lack of analysis or data supporting MWD' s rate decisions, all of which is information that was exclusively within MWD's possession at the time it enacted those rates and could not have been presented by San Diego as part of the rate hearing. See Western States, 9 Cal. 4th at 578. Courts have admitted such evidence even in more typical "administrative record" cases. See, e.g., Pajaro Valley Water Mgmt. Agency v. Amrhein, 0 Cal. App. 4th 64, 75 (07) (trial court heard, and Court of Appeal considered, "testimony from witnesses for the Agency and Objectors" in deciding whether a water management agency violated Propositions 8 and 62); County of Orange v. Barratt Am., Inc., 0 Cal. App. 4th 4,4-30 (07) 2 7 (opinion of an expert appointed to assist the court "in its determination of the propriety, reasonableness and necessity of the costs incurred" was substantial evidence in support of the trial 2

7 1 court's order that the agency must reduce its fees); Nasha L.L. C. v. City of Los Angeles, 1 Cal. 2 App. 4th 470, 485 (04) (deposition testimony properly admitted and considered in a mandamus 3 proceeding because it could not have been introduced at the administrative hearing "in the 4 exercise of reasonable diligence"). 5 In addition to being premature and vague, MWD's motion to limit this case to the handful 6 of documents selected by MWD is meritless. For all these reasons, and as more fully stated in 7 San Diego's first pretrial brief and Motion to Augment, this motion should be rejected

8 II OPPOSITION TO MOTION IN LIMINE NO.2: EVIDENCE ON PURPORTEDLY UNPLED CLAIMS Based on nothing concrete, and without citing one piece of evidence it seeks to exclude from trial, MWD suggests San Diego might be asserting new causes of action at the eleventh hour, or that MWD is in the dark about the basis of San Diego's claims. This is nonsense. San Diego has explained its claims at length both in its pleadings and in its discovery responses. The arguments that MWD now labels "unpled claims and theories" or "new, different bases for liability" are simply facets of the same causes of action and the same injuries that San Diego has alleged all along: MWD has set unlawful rates that overcharge San Diego for water and do not correspond to MWD's actual costs of service, and has used illegal means to punish San Diego for exercising its right to challenge those illegal rates. As MWD knows, because San Diego explained all this at great length in its responses to MWD's discovery requests, San Diego's rate challenges include three core issues, all of which are welllmown to MWD: (1) MWD' s improper allocation of State Water Project costs, (2) MWD's wrongful inclusion of the Water Stewardship Rate in its "transportation," or wheeling, rate, and (3) MWD's failure to properly account for and assess among its member agencies its standby, or dry-year peaking, costs. Even ifmwd could point to any technical defect in San Diego's pleading, which it cannot, MWD would still not be prejudiced or surprised by San Diego's claims, and California's liberal approach to amendment would allow amendment even after trial to conform to proof. MWD identifies nothing new or surprising that the Court can or should exclude. A. MWD knows exactly what this case is about, and San Diego is not asserting any cause of action outside its pleadings. All of the evidence and theories that San Diego will present at trial fall squarely within the causes of action San Diego has included in its pleadings in this case for years and litigated extensively with MWD. Although MWD claims that San Diego has "frequently shifted its theories of recovery," MIL No.2 at 2, San Diego has not changed its essential claims or causes of action. MWD cites no authority that prohibits San Diego from using new evidence uncovered in discovery to support its factual claims, or from articulating new arguments to support its 4

9 unchanged legal claims. The theories and evidence MWD complains about here relate to the 2 same causes of action that appear in San Diego's pleadings, not any "separate and distinct cause 3 of action" that might require an amendment. Emerald Bay Cmty. Ass 'n v. Golden Eagle Ins. 4 Corp., 0 Cal. App. 4th 1078, 1092 (05) (refusing to allow recovery on a claim for equitable 5 contribution, based on an assignor's contribution rights, where plaintiff had pled only its own 6 breach of contract claim). 7 San Diego's rate-based causes of action have always been based on the simple argument 8 that MWD's rates are unlawful because they do not properly account for the costs MWD incurs in 9 providing its services. Because ofmwd's failure to follow cost-of-service principles, and its 10 misallocation of its costs to its rates, San Diego pays many millions of dollars more than it should for imported water conveyed through MWD's facilities. MWD's own motion concedes that San 12 Diego has always "challenged the legality of MWD' s rates," and that the "gist of SDCW A's [original] Petition/Complaint was that MWD allegedly misallocated certain of its costs to its transportation rates, instead of to its supply rates," violating numerous laws. MIL No.2 at 2-3. As MWD knows from the pleadings and San Diego has confirmed in discovery, San Diego's claims more specifically involve MWD's allocation of State Water Project costs to MWD's various rates and MWD' s so-called Water Stewardship Rate, and how those costs are allocated among MWD's member agencies. Nothing about these claims is new. San Diego's "peaking" claims are also nothing new, and appear in the operative pleadings in both actions before the Court. Leaving one to wonder how it possibly could seek to exclude evidence supporting the peaking claim, MWD's motion admits that "SDCWA included a claim about 'peaking' in its Petition/Complaint in the 12 Action." MIL No.2 at 4. In the 10 Action, San Diego's pleadings also challenge MWD's failure to account properly in its rates for "dry-year peaking," and the "cost of keeping supplies in reserve for a single agency that significantly increases its water purchases during dry yeats." 10 Action TAC at. Moreover, San Diego discussed all these claims, and the factual bases and evidence that support them, at even greater length in San Diego's responses to MWD's discovery requests. Those responses are consistent with, and provide additional detail suppmting, San Diego's 5

10 1 pleadings, as is always the case in litigation. Specifically, San Diego's discovery responses make 2 clear that the rate claim has three main components: (1) MWD 's misallocation of SWP charges to 3 its transportation rates, (2) MWD's Water Stewardship Rate, and (3) MWD's failure to account 4 properly for dry-year peaking. Declaration of Audrey Walton-Hadlock ("Walton-Hadlock 5 Decl.") Ex. 10 (July, SDCWA Special Interrogatory Responses) at 2-6 (SI No.1), (SINo. 2, identifying supporting documents), - (SINo. 4), (SINo. 7), - (SINo. 10), 7 - (SINo. ), - (SINo. ), (SINo. ), (SINo. ), (SINo. 31), (SINo. 35), (SINo. 50), (SINo. 51), (SINo. 57), (SINo. 60), (SINo. 61, identifying supporting documents). MWD has had these discovery responses 10 for over three months, yet omits any mention, much less analysis, of the content of those responses in its motion. 12 Finally, MWD's own pretrial brief disproves any suggestion that MWD is uncertain about what claims San Diego is asserting and what evidence it will use to support those claims. To the contrary, MWD is so well aware of San Diego's claims and their basis that it characterized and discussed each of the three core components of San Diego's rate claims-including the "peaking" theories MWD, in a self-contradiction, now claims San Diego failed to plead-in a filing submitted to the Court on the same day as its motions in limine. See MWD's First Pretrial Brief at (allocation of"swp Transportation Costs"), (Water Stewardship Rate), (pealdng). Rather than simply addressing this issue in its pretrial brief, as the Court asked it to do, MWD filed this meritless motion to exclude B. MWD cannot preclude San Diego from raising new details of proof or legal argument to support the basic facts and claims in its pleadings. In an attempt to justify its ill-formed motion to exclude some unidentified set of "new" claims or theories, MWD points primarily to factual arguments or inquiries raised by SDCW A during the discovery process, which MWD posits do not expressly appear in San Diego's pleadings. See MIL No.2 at 3-4. But MWD offers no authority that required San Diego to include every detail of evidence or every nuance of legal argument in its pleadings at the outset of the case, and San Diego is unaware of any such authority. Indeed, the whole point of discovery 6

11 was enabling San Diego to better understand how MWD set its rates and allocated its costs, what 2 information MWD relied on setting its rates, and the degree to which MWD did or did not base its 3 rates on cost-of-service principles. See Ex. (9//12 Order) at 2:-3:7. 4 MWD's purported examples of"new, different bases for liability'' are just discovery 5 inquiries that support San Diego's existing theories. For example, in its motion, MWD claims to 6 believe that San Diego is (or might be) raising new "claims" based on MWD' s Financial Planning 7 Model, because San Diego took discovery about that model. MIL No. 2 at 3-4. MWD is tilting at 8 windmills. San Diego is not preparing some new cause of action. The deficiencies in Financial 9 Planning Model are simply evidence of the absence of any cost-of-service basis in MWD's rates. 10 See SD First Pretrial Brief at - & n.6. The problems with the model identified in discovery supports the claims San Diego has raised all along: that MWD mischaracterizes its supply costs as 12 transportation charges and makes no effort to proportionately assess charges on the agencies that cause MWD to incur costs. I d. Whether MWD commits these errors by using a defective Financial Planning Model or a dartboard-and there is not much difference between the two- San Diego's claim is still about the legality of the resulting rates. Likewise, San Diego's inquiry into whether MWD ever "trues up" its budgeted costs with the revenues it receives, or with actual costs, does not presage a new legal claim. (MIL No.2 at 3:-4:2). MWD's failure to "true up" its costs is part and parcel ofmwd's failure to ensure that it charges no more than the cost of the services it actually provides. See SD First Pretrial Br. at 3-4. These are not "new, different bases.for liability;" they are additional details and evidence, identified in discovery, supporting claims San Diego has raised since the outset of this case. Quite obviously, a party can rely on evidence and information learned in discovery, and tailor its liability theories as a case progresses, without having to amend the pleadings. This is all San Diego has done. Similarly, MWD's suggestion that San Diego has raised an entirely new theory for its RSI cause of action is absurd. The essence of San Diego's RSI claim is that MWD unlawfully restricted subsidy program benefits funded by the Water Stewardship Rate to penalize members for challenging MWD's unlawful rates, by allowing MWD to terminate benefits to any recipient 7

12 who challenged MWD's rates. The basic wrong here is that MWD punishes its members for 2 challenging its rates, protecting its own misconduct at the cost of its members' constitutional 3 rights and immunizing itself for its violations of California law. MWD claims San Diego alleged 4 only a burden on its right to petition the government, not its free speech rights, and that by 5 referring to speech rights in recent motion papers, San Diego is raising an entirely new claim. 6 MIL No.2 at 4. Again, this makes no sense. The facts ofmwd's unlawful restrictions and the 7 resulting injuries to San Diego are the same either way. So is the essential legal claim: that MWD 8 cannot condition its subsidy programs on a forced waiver of constitutional rights. So is the relief 9 San Diego seeks: invalidation of the RSI clause and an order prohibiting MWD from enforcing it. 10 Of course MWD's unlawful forced waiver impinges on San Diego's speech rights as well as its petitioning rights-after all, petitioning rights merely protect the right to speak freely to a 12 particular government audience. The essence of this claim is the same as always. As MWD's own cited authorities make clear, the basic principle at trial has always been that aparty's "allegations and proofs must agree" and that the evidence must support "the cause of action [a party] has alleged in [its] complaint." Barrere v. Somps, 1 Cal. 97, 102 (96). As this Court previously recogriized in denying MWD's piecemeal motion for summary adjudication on Proposition, a "cause of action" is comprised of a "primary right" of the plaintiff (which means the "right to be free from the particular injury suffered"), a corresponding "primary duty" of the defendant, and a wrongful act by the defendant constituting a breach of that duty. See Crowley v. Katleman, 8 Cal. 4th 666, 681 (94). The primary right that defines a cause of action "must... be distinguished from the legal theory on which liability for that injury is premised," and even when a party offers "multiple legal theories" for recovery, "one injury gives rise to only one claim for relief."' I d. at (emphases added) (citation omitted). San Diego, as "users of a public utility's [] service," possess "a primary right that [tltey] cannot be charged an unreasonable rate for such service and there rests on the city, as a public utility, the corresponding duty not to charge plaintiff an unreasonable rate for such service." Elliottv. City ofpac. Grove,.54 Cal. App. 3d 53,59 (75) (emphasis.added). San Diego need not separately plead every legal theory and evidentiary basis for its claim that MWD 8

13 1 violated that primary right. Indeed, it is ironic that MWD demands separate parsing of legal 2 theories in the pleadings-precisely where that is not required-when their tactic elsewhere is to 3 conflate them. See MWD Br. at : ("under all laws the Court is to assess whether the rates are 4 reasonable"). As MWD's motion makes clear, San Diego is asserting the same primary rights it 5 pleaded originally. 6 Finally, even if San Diego were seeking to introduce new claims requiring an amendment 7 of the pleadings (which it is not), the proper course would not be to preclude those claims, but to. 8 require San Diego to amend the pleadings during or after trial to conform to the proof. In the 9 absence of prejudice, leave to amend must be granted up until, and even during, trial. See, e.g., 10 Higgins v. Del Faro, 1 Cal. App. 3d 558, 564 (81 ). California law permits such amendments "with great liberality," so long as the amended pleading is "based upon the same general set of 12 facts" that supported the claims in the original pleading and the opposing party is not prejudiced by the change. Garcia v. Roberts, 3 Cal. App. 4th 900, (09)~ Prejudice requires actual surprise affecting the ability to defend, not merely a change of details or theories. Thus, where "the same set of facts supports merely a different theory... no prejudice can result." I d. (finding amendment could not add a claim for breach of written contract, when the plaintiffhad previously alleged an oral contract and testified that no written contract existed). As is clear from MWD's motion, which purports to identify and respond to San Diego's rate-based and RSI theories in detail, nothing San Diego has done has caused MWD any surprise, much less prejudice-because the basis of this case is the same as it has always been, and the same basis extensively disclosed in San Diego's discovery responses. The Court should deny this motion-but if there is any question in the Court's mind, it should give San Diego leave to amend, which can easily be accomplished before trial

14 III. OPPOSITION TO MOTION IN LIMINE NO. 3: WORKING GROUP ALLEGATIONS 2 MWD's Motion in Limine No.3 misrepresents this Court's order on MWD's motion to strike portions of the Second Amended Complaint, and argues incorrectly that the motives and objectives of MWD have no bearing on issues before the Court. MWD is wrong on both the facts and the law. Because MWD's motion in limine sweeps far too broadly, the Court should deny it. The Court can address evidentiary issues about particular documents or testimony at trial. As San Diego's First Pretrial Brief makes clear,. San Diego is not attempting to rely on the existence of a "working group," "cabal" or "Secret Society" of member agencies to prove that MWD's rates are unlawful. Nor is San Diego attempting to introduce evidence of the biases or personal motivations of individual members of the MWD Board. But the intentions and motives of MWD itself are directly relevant to multiple issues before the Court, including the validity of MWD 's wheeling rate under the Wheeling Statutes and the constitutionality of the RSI Clause. California case law confirms that the Court can and should consider MWD 's purposes and motives in setting its rates and creating its punitive RSI clause in order to resolve San Diego's claims in this case. A. This Court's July 2, 12 Order did not declare MWD's motives irrelevant. In yet another effort to immunize from review the lack of justification for its - water rates, MWD conflates this Court's brief oral order from July 2, 12-granting in part and denying in part MWD' s narrow motion to strike certain "working group allegations"-with the completely different, much broader question whether the Court may consider MWD's motives and intentions in evaluating, for example, whether MWD's rates are lawful and designed to facilitate wheeling, or whether the Rate Structure Integrity provision is unconstitutional and void. MWD's motion to strike and the Court's prior order addressed only a fewspecific allegations regarding a "working group" ofmwd member agencies (including almost all member agencies except San Diego), referred to by its members as the "Secret Society," established in 09 to coordinate and direct the activities of the MWD Board in connection with the passage ofmwd's -12 rates. SAC~~

15 This Court's oral order reflects both the limited scope of the allegations MWD moved to strike ahd the refusal to decide what particular evidence might be relevant at trial: My tentative view-apart from Prop, I want to hear argument on that-would be as an alternative to striking out the offending words, issue an order that clearly says that the nature of the supposed shadow group, and Metropolitan's view of it, has nothing to do with anything in this case, but instead, discovery will be limited to the nature of the decisions that were made and whether they comply with the applicable legal standards so that we have a clear definition of what's going to happen going forward, assuming we go forward here. I think that would be a better way of handling it. That order would not say that the nature of the group or Metropolitan's view or participation in it is in all contexts irrelevant, but it would require a specific court order from me to get any discovery tlratfalls into that category. That is probably, in my view, a heck of a lot easier than going through and chopping up the Complaint and going forward. It would certainly be easier for a discovery referee to manage what I would have in mind here. So my tentative view is to-tentative ruling apart from the other arguments, would be to recognize it and order that the adjectives, adverbs, and other colorful descriptions are not part of this case, but to strike them and try to recast the Complaint would be too awkward. Make a generic discovery ruling that could be followed by a discovery referee, but reserve the possibility in some context so somehow that those matters could be reasonably calculated to lead to the discovery of admissible evidence, but limit the discovery in that instance to a court order, not a referee -- to come here, not to the referee to get that discovery. That's my tentative view. Walton-Hadlock Decl. Ex. 12 (July 2, 12 Tr.) at 41::-43:1 (emphasis added). After argument, the Court ruled as follows: Motion to Strike, granted in part, denied in part as articulated on the record earlier. I'm not going to chop up the Complaint in the manner that the colorful examples submitted to me suggest because to do so would render it less than useful as an administrative tool regarding matters that are going to require this Court's close attention in the very near future, and it's not necessary to do that. I will issue a discovery order later, but it has

16 nothing to do with the ruling on the Motion to Strike. It will further clarify both the role of the discovery referee 2 and this Court and will provide emphasis on the appropriate standard that I will be using going forward here. That. 3 standard may be emerging as facts are developed. I don't know. 4 I do want to take a look at the motion that I 5 could not hear today. But we will be considering such concepts as if there is substantial evidence in the record 6 of appropriate administrative process and activity, and if there is substantial evidence of, say, an improper motive, 7 what is the legal significance of that? I don't think there are tens of thousands of cases on that point, but there are 8 certainly a Saturday's worth, if not more, on that point. 9 The role of this Court has, I believe, been the subject of lots of appellate authority, and we will be 10 dealing with that as we move along. Jd. at 62:-63:. The Court did not enter any written order following the hearing. 12 Whatever the Court actually decided, it most certainly did not decide, as MWD contends, that "any evidence regarding motive, mental processes, or alleged bias ofmwd's Board are inelevant to these proceedings." See MIL No.3 at 4::. As detailed in San Diego's First Pretrial Brief, documents explaining or detailing MWD's motivations provide relevant evidence on a host of different issues to be decided at trial. The Court's order fifteen months ago did not begin to address the relevance, at trial, of such evidence-certainly not with respect to whether MWD's wheeling rate was established admittedly in contravention ofthe statutory purpose to promote wheeling or whether MWD intended to violate San Diego's rights to petition the courts through the RSI clause. Neither is there any reason for the Court do so today in the abstract. The relevance of evidence about MWD' s motivations in setting its wheeling rate and enacting the RSI clause should be decided on a fact-by-fact, document-by-document basis. B. San Diego may offer relevant evidence ofmwd's motives and intentions. \ MWD's suggestion that the Court may not review evidence concerning why MWD did what it did-its objectives in establishing its rates-is wrong. The case law distinguishes between discovery effmis to invade the "thought processes or motives" of individual legislators or decision makers; see San Joaquin Local Agency Formation Comm 'n v. Super. Ct., 2 Cal. App. 4th 9, 1 (08) (rejecting effort to take depositions of agency commissioners), and 12

17 consideration by the Court of an agency's "objectives" and the "circumstances and conditions out 2 of which they arose." City & Cnty. of San Francisco v. Western Air Lines, Inc., 4 Cal. App. 2d 3 105, 7 (62) (holding that "[p]roper evaluation ofthe preferential charges... and the alleged 4 discriminatory treatment which they generate can only be made in the light of the circumstances 5 and conditions out of which they arose"); see also Brydon v. East Bay Municipal Utility Dist., 6 Cal. App. 4th 8 (94) (evaluating defendant agency's "objective" in adopting the challenged 7 rate structure); The latter subject matter is highly relevant, as the case law makes clear. In 8 Western Air Lines, the Court of Appeal commended the trial court for examining "voluminous 9 evidence dealing with the history of the airport, its growth and development, the purposes and 10 objectives oflong-term leases, and the rate fixing policies ofthe City's public utilities commission." Western Air Lines, 4 Cal. App. 2d at 0. Likewise, in Wilson v. Hidden Valley 12 Municipal Water District, one of the cases cited by MWD in its motion, both the trial court and the Court of Appeal examined the "purpose and motive" of the defendant water district, ultimately holding, in that case, they were legitimate. 6 Cal. App. 2d 1, 6 (67). This Court's obligation to examine MWD's objectives is particularly pointed under the Wheeling Statutes, Water Cod~ 10 et seq. The Wheeling Statutes articulate the "policy ofthe state to facilitate the voluntary sale, lease, or exchange of water or water rights in order to promote efficient use." Stats. 86, ch. 9, 1(d). To that end, the Legislature directed MWD to "act in a reasonable manner consistent withthe requirements oflaw to facilitate the voluntary sale, lease or exchange of water." Water Code. MWD may not charge more than "fair compensation" for wheeling service. Id 10, (c). And any court evaluating a challenge to MWD's wheeling rates "shall consider all relevant evidence, and tlte court sltall give due consideration to the purposes and policies oft/tis article." Id (emphasis added). Whether MWD has complied with these standards is a question reviewed by the Court de novo. See SD Trial Brief at Evidence suggesting that MWD set its Wheeling Rate based on an improper and unlawful objective certainly qualifies as "relevant evidence." See San Luis Coastal Unified School Dist. v. City of Morro Bay, 81 Cal. App. 4th 1044, 1050 (00). As detailed in San Diego's First Pretrial

18 1 Brief, MWD's own documents (both those in MWD's self-selected "administrative record" and 2 others produced in discovery) demonstrate that MWD set its wheeling rate not to facilitate 3 wheeling, as the law requires, but to punish wheeling by "avoid[ing] any rate escalation for non- 4 wheeling member agencies." See Ex. at MWDPRA10104; Ex. 5 at Ex. 31 at 2, 7; 5 see also MWD Answer to TAC (10 case)~ 4. Indeed, MWD's own Pretrial Brief places 6 MWD's objectives at issue, by suggesting that MWD's rates are reasonable in part because 7 allocating costs as San Diego (and the law) demands would raise rates in the future for other 8 member agencies. MWD's First Pretrial Br. at 5:-. 9 These are exactly the sort of objectives and motives the Court is required to consider. For 10 example, in Morro Bay, where a city refused to wheel water because it feared that doing so would cause its rates on other parties to increase, the Court examined those motivations and held they 12 constituted an improper basis on which to base a wheeling decision. 81 Cal. App. 4th at The Court can consider such objectives even in rate cases that do not involve wheeling. For example, in City of Palmdale v. Palmdale Water District, the Court evaluated the water district's motives in choosing one rate structure over another, holding that the Board's stated objective of "rate stability" was an improper justification for choosing a rate approach that was "[inc]onsistent with industry standards." 8 Cal. App. 4th 9, 937 (). The Court in Palmdale invalidated the d~strict's rates. Id; see also San Diego's Pretrial Reply Br., filed concurrently, at -. For the same reasons, the Court should consider evidence of MWD 's justifications and objectives in adopting rates that, on any record, ignore industry-standard cost-of-service requirements. Evaluating MWD's admitted objectives in setting its rates will not require the Court to dig into the mental process and biases ofmwd board members. Neither will it require the Court to rely on the "Secret Society" allegations that were the subject ofmwd's Motion to Strike. Indeed, the only reference to that "working group" in San Diego's 67-page First Pretrial Brief is in footnote 10, which points out that a group of member agencies advocated tabling a change to MWD's allocations of Flexible Storage costs that even MWD staff agreed would more

19 closely align with cost-of-service requirements. See San Diego Trial Brief at & n.10. I MWD's motivations are also relevant to the Court's evaluation of the constitutionality of the Rate Structure Integrity (RSI) Clause. Even MWD concedes that, with respect to this claim, normal discovery principles apply and MWD is not entitled to any deference. MWD Pretrial Br. at 69. Where a government agency like MWD conditions a public benefit-subsidies MWD pays for the development of local water supplies and conservation programs-on the recipient's giving up of its constitutional rights, MWD bears the burden to prove that the condition "reasonably relates to the purposes of the legislation which confers the benefit" and that the "value accruing to the public from imposition of the condition manifestly outweighs any resulting impairment of the constitutional right." Robbins v. Super. Ct., 38 Cal. 3d 9, 3 (85). In other words, MWD's burden fundamentally is to articulate its motives and purposes in enacting the RSI clause, justify that purpose by identifying a relationship between those purposes and the RSI clause, and show that the benefits from the clause manifestly outweigh its obvious burdens. Here, MWD's admitted and undisputed motives for imposing the RSI Clause-to block a legal challenge to MWD's System Access Rate and avoid "potentially significant cost-shifting to other Member agencies," see :Oeclaration of Daniel Purcell in Support of San Diego Motion for Summary Adjudication (Sept., ) Exs. G, H, J & K-demonstrate that the RSI Clause was not, as MWD now contends, enacted to prott;:ct funding for conservation initiatives. Civil Code Section 68, under which San Diego also asserts the RSI Clause is unlawful, similarly instructs the Court to examine whether the "object" of the challenged contractual provision is to immunize a party from legal challenge. While the "object" of the RSI Clause can be discerned from the plain text of the RSI Clause, MWD's undisputed statements that it intended to use the RSI Clause to prevent legal challenges to its rates and punish San Diego for "bit[ing] the hand that feeds" it, I San Diego is not relying on the existence or activities of this group to prove MWD's decision was illegal. The illegality ofmwd's rates is separately established by the fact that the MWD Board ignored the recommendations of its own staff, and industry standards, by failing to follow cost-of-service requirements. But the fact that member agencies were pushing MWD to defer this rate change (because that change, by moving costs from the System Access Rate to the Supply Rate, would lower the Price paid by San Diego under the Exchange Agreement) could be potentially relevant evidence that undermines any post hoc, litigation-based justification MWD might offer for its failure to properly allocate "flexible storage" costs.

20 see Mot. to Augment Ex. 46 (June, 04 Gastelum Memo to member agency managers re Rate 2 Structure Integrity (MWD )), are relevant supporting evidence c. Allowing evidence concerning MWD's motives, particularly documents MWD has publicly produced, does not implicate the deliberative process privilege. MWD also justifies its request to exclude relevant evidence of its decision making with references to the "deliberative process privilege." MIL No.3 at -. But MWD is mischaracterizing what that privilege means. The deliberative process privilege is a "qualified limited privilege" that protects legislators from having to "disclose or to be examined" about why they cast their votes the way they did. MIL 3 at (quoting San Joaquin, 2 Cal. App. 4th at 0). This has no bearing here. San Diego is not trying to take discovery from, or introduce evidence about, MWD's Board members-indeed, during discovery, San Diego explicitly carved out the communications ofmwd Board members from its discovery requests. All the evidence San Diego wants to use to show that MWD's rate decisions are unjustifiable and motivated by discrimination against wheeling, and to show that MWD' s RSI clause was intended to bar San Diego from suing to invalidate MWD's rates and immunize MWD from the consequences of unlawful acts, is public. None of it was withheld by MWD, under the deliberative process privilege or any other privilege. That evidence is not privileged, and MWD has conceded it is not privileged. In any event, ifmwd were asserting privilege-which it has not and may not, at this late stage of the case-it would have to show why the privilege protects particular documents. It may not simply,refer generally to categories of supposedly privileged information. See Citizens for Open Gov 'tv. City of Lodi, 5 Cal. App. 4th 296, 307 (12). As the Lodi court recently made clear, ifmwd wants to assert a privilege, it cannot do so through hand-waving and blanket objections. See id. Instead, MWD must "carry its burden to explain what the public's specific interest in nondisclosure was in. this case." Id. (emphasis in original). D. Allowing evidence ofmwd's objectives and motives in setting its rates would be entirely appropriate, not prejudicial. Without citing any specific documents or facts it seeks to exclude, MWD asserts that the admission of any conceivable evidence concerning MWD' s "motive, mental processes and

21 1 alleged bias" would "create substantial danger of undue prejudice, or confusing the issues, or of 2 misleading the [Court]." MIL No.3 at. But evidence that MWD crafted a wheeling rate in 3 order to discourage wheeling and prevent any change in the rate paid by other member agencies is 4 highly relevant and is neither inflammatory nor likely to mislead. Such evidence is certainly bad 5 for MWD, because it shows MWD has ignored the law-but harm to a litigant's meritless 6 litigation position is not the sort of "unfair prejudice" that Evidence Code 352 seeks to exclude. 7 Moreover, this is a bench trial-and the Court is more than capable of deciding what information. 8 is relevant or not without in limine exclusions. MWD's failure to point to any particular document 9 or information it seeks to exclude only highlights the ambiguous nature of the 'reliefmwd seeks. 10 Ultimately, this motion erects a straw man, then proceeds to knock it down. San Diego's case has nothing to do with the "working group allegations" that were the subject ofmwd's 12 narrow motion to strike and this Court's limited resulting order. San Diego will present evidence about MWD's failure-reinforced through documents, deposition testimony, and discovery admissions-to properly recover through its rates the cost of specific services it provides, or to apportion its costs among the member agencies and classes of service that cause it to incur those costs. The Court should deny MWD's motion for overbroad, blanket evidentiary exclusions and resolve evidentiary issues (including Evidence Code 352 concerns) on an as-needed basis at trial Case No. CPF~ and CPF-12-56

22 IV. OPPOSITION TO MOTION IN LIMINE NO. 4: EVIDENCE NOT DISCLOSED DURINGOISCOVERY 2 MWD's motion to exclude any evidence not timely disclosed in the discovery process is meaningless and should be denied. A proper in limine motion objects to and "allow[s] the trial court to rule on a specific objection to particular evidence in advance of its introduction." Schweitzer v. Westminster Investments, 7 Cal. App. 4th, (07) (emphasis added). But MWD does not identify any particular item or category of evidence that it seeks to exclude. Instead, MWD seems to request an order reciting the uncontroversial rule that it "would be unfair for [a party] to rely upon evidence at trial that [it] refused to produce or identify in discovery." MIL No. 4 at 4. (MWD submitted no proposed order for this or any other motion in limine, so it is unclear exactly what it is requesting.) But that rule should and does apply equally to all parties, without any need for a preemptiv_e Court order. If and when MWD (or any other party) contends that some specific piece of trial evidence was not disclosed in discovery, the Court can evaluate whether this is so, and if so, why it was not disclosed and whether to exclude the evidence at issue. It makes no sense to request such a ruling in a vacuum, as MWD has done here, without reference to any actual evidence, and before the parties have even submitted their proposed exhibit and witness lists for trial. (Under the Court's scheduling order, the parties will submit their exhibit and witness lists with their second pretrial briefs, for the December 10 pretrial hearing. See July, Case Management Order at 3.) Also, because this is not a jury case, the Court can easily address any such issues during trial without making rulings in limine. Moreover, it would make no sense to bar from trial evidence not specifically identified in discovery responses, where MWD 's own production has barely concluded. On October, two days before filing this motion, MWD produced additional documents after the Court rejected some of its claims of privilege. When MWD filed its motions in limine on October, the parties were still negotiating about MWD 's production of additional related documents. And expett disclosures are not required until October, the same day as the filing of this brief. In other words, discovery is not yet over. The parties should agree to serve supplemental discovery

23 1 responses at or around the time they submit their trial exhibit lists. That is the sensible way to 2 handle this issue, which creates no danger of unfair surprise to anyone. In any event, MWD 3 cannot be heard to claim unfair surprise over San Diego's intention to use evidence MWD 4 produced for the first time after the discovery deadline in response to a motion to compel. That 5 would defeat the purpose of the motion and the Court's ruling granting it. 6 San Diego is not planning to introduce any surprise evidence, because none is necessary to 7 prove its case. San Diego will abide by this rule whether or not the Court enters an order on this 8 issue. Likewise, MWD must abide by the same rule and confme its presentation and arguments 9 to disclosed evidence. Without any actual controversy regarding any actual evidence, MWD's 10 motion is a waste of the Court's time and should be den,ied

24 1 v. OPPOSITION TO MOTION IN LIMINE NO.5: "JUDICIAL ADMISSIONS" 2 MWD's Motion in Limine No.5 is defective both procedurally and substantively. It is not 3 a motion in limine at all. Rather than seeking to preclude specific items of evidence, as a motion 4 in limine must, it tries to attack San Diego's entire claim under the Wheeling Statutes. It is a 5 poorly disguised motion for summary judgment, filed in violation of the procedural safeguards of 6 California law and this Court's scheduling order. Even ifmwd had styled the motion as one for 7 summary judgment and filed it in compliance with the law and the scheduling order, it still would 8 be procedurally defective, because it attacks only one narrow slice of San Diego's broader rate 9 causes of action, for MWD's violation of the Wheeling Statutes. 10 But more importantly, MWD's motion is dishonest, mischaracterizing past statements by San Diego that are irrelevant to this case. The issue in this case is not, and never has been, 12 whether the Exchange Agreement is a wheeling contract, subject to the procedural rules of the Wheeling Statutes. The question here is whether MWD's wheeling rates, and the Price charged to San Diego under the Exchange Agreement, must comply with the Wheeling Statutes. As detailed below, the answer undoubtedly is "yes." First, San Diego's challenge to MWD's generally applicable wheeling rates-for charging more than "fair compensation" and failing to facilitate the voluntary sale, lease, or exchange of water or water rights in order to promote efficient use"-has nothing to do with, and does not depend on, the Exchange Agreement. As this Comt decided more than two years ago in ruling lid has a sufficient interest to participate in this case, San Diego has an inherent right to challenge MWD 's wheeling rate because it would be required to pay that rate on any wheeling transaction. Second, MWD has independently committed, in section 5.2 of the Exchange Agreement, to charge San Diego a price no greater than a lawful wheeling rate. That issue is unique to this case and was never addressed, let alone decided, in any prior proceeding. The Comt should deny this motion. Ill Ill Ill

25 1 A. This motion is a procedurally improper summary judgment motion in disguise. 2 MWD is abusing the motion in limine-"a useful procedural tool but one that may not be 3 used to resolve factual issues." R&B Auto Ctr., Inc. v. Farmers Group, Inc., 0 Cal. App. 4th 4 3, 371 (06) (Rylaarsdam, P,J., concurring). "[M]otions in limine deal with evidence," such 5 as whether a particular document may be admitted or a particular witness may testify on a certain 6 subject. I d. at 372. By contrast, a purported in limine motion that seeks to decide an issue by 7 precluding argument generally "is but a disguised motion for summary adjudication." Id "To 8 have the sufficiency of the pleading or the existence of triable issues of material fact decided in 9 the guise of a motion in l.imine is a perversion of the process." Id at 371; see also id at (opinion of court holding that motions in limine may not be used to resolve disputed factual issues); Dong v. Board of Trustees, 1 Cal. App. 3d 72, 84 (87) (distinguishing between 12 motions in limine and summary adjudication motions). MWD's motion doesn't seck exclusion of any particular evidence or trial witness, or even a category of evidence or witnesses. Instead, MWD argues that San Diego should be barred from making unspecified arguments, "including but not limited to that the Exchange Agreement is a wheeling agreemen~ or that the price of water exchanged under the Exchange Agreement violates the Wheeling Statutes." MIL No. 5 at 1. MWD failed to comply with the requirements for filing and serving a summary-adjudication motion under section 437c of the Code of Civil Procedure. See Urshan v. Musicians' Credit Union, 1 Cal. App. 4th 758, (04). That is reason enough to deny this motion. Moreover, even ifmwd had brought this motion as a summary-adjudication motion, that motion would be procedurally improper. Only a month ago, this Court rejected MWD's motion for judgment on the pleadings, which sought summary-judgment-style relief on only one portion of San Diego's first three causes of action, relating to the applicability of Proposition. Citing Villacres v. ABM Indus., Inc., 9 Cal. App. 4th 562, (10), the Court rejected MWD's motion as procedurally defective. Sept., Order at 2. This motion uses the same strategy to attack the applicability Of the Wheeling Statutes and should be denied for that reason as well