UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NORTH CAROLINA WESTERN DIVISION

Transcription

1 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NORTH CAROLINA WESTERN DIVISION R. DANIEL BRADY, ET AL, ) PLAINTIFFS, ) ) V. ) 5:09-CV-449-BO ) XE SERVICES LLC, ET AL, ) DEFENDANTS. ) ) MOTIONS HEARING APRIL 9, 2010 BEFORE THE HONORABLE TERRENCE W. BOYLE U. S. DISTRICT JUDGE APPEARANCES: FOR THE PLAINTIFFS: MR. GARY MAUNEY, ESQ. MR. PAUL DICKINSON, ESQ. MR. JAMES ROBERTS, ESQ. LEWIS & ROBERTS 5960 FAIRVIEW RD., SUITE 102 CHARLOTTE, NC FOR THE DEFENDANTS: MR. PETER WHITE, ESQ. MR. ERIC COTTRELL, ESQ. SCHULTE ROTH & ZABEL MAYER, BROWN TH ST., N.W. 214 N. TRYON ST. WASHINGTON, DC CHARLOTTE, NC MR. EDWARD MAGINNIS, ESQ CREEDMOOR RD. RALEIGH, NC COURT REPORTER: DONNA J. TOMAWSKI STENOTYPE WITH COMPUTER AIDED TRANSCRIPTION Case 5:09-cv BO Document 94 Filed 06/16/10 Page 1 of 33

2 2 1 APRIL 9, THE COURT: GOOD MORNING. YOU HAVE SOME 3 MOTIONS? ARE YOU MR. MAUNEY? 4 MR. MAUNEY: MR. GARY MAUNEY, YOUR HONOR. 5 THE COURT: MR. ROBERTS IS OVER THERE. YOU ARE 6 MR. DICKINSON? 7 MR. DICKINSON: YES, YOUR HONOR. 8 THE COURT: MR. ROBERTS IS FROM HERE. WHERE ARE 9 YOU TWO FROM? 10 MR. MAUNEY: WE'RE BOTH OUT OF THE CHARLOTTE 11 OFFICE OF LEWIS & ROBERTS, YOUR HONOR. 12 THE COURT: OKAY. YOU ARE MR. WHITE? 13 MR. WHITE: I'M MR. WHITE. THIS IS MR. 14 COTTRELL. 15 MR. COTTRELL: YOUR HONOR, I'M SERVING AS LOCAL 16 COUNSEL FOR MR. WHITE. HE'S FROM THE D. C. FIRM OF 17 SCHULTE ROTH. I'M WITH THE CHARLOTTE OFFICE OF MAYER 18 BROWN. WE REPRESENT THE CORPORATE DEFENDANTS AND COUNSEL 19 FOR SOME OF THE INDIVIDUAL DEFENDANTS. 20 THE COURT: YOU ARE MR. JOHNSON. 21 MR. JOHNSON: YES, SIR, FROM POYNER & SPRUILL 22 HERE IN RALEIGH. 23 THE COURT: AND MR. MAGINNIS? 24 MR. MAGINNIS: GOOD MORNING, YOUR HONOR. 25 THE COURT: WHERE ARE YOU FROM? Case 5:09-cv BO Document 94 Filed 06/16/10 Page 2 of 33

3 3 1 MR. MAGINNIS: HERE IN RALEIGH. 2 THE COURT: YOU REPRESENT MR. RIDGEWAY? 3 MR. MAGINNIS: YES, SIR. 4 THE COURT: THANK YOU, ALL. 5 WHAT KIND OF MOTIONS DOES THE PLAINTIFF HAVE? 6 MR. MAUNEY: YOUR HONOR, I BELIEVE THIS MORNING 7 THE COURT HAD CALENDARED PLAINTIFF'S MOTION TO REMAND, 8 ALSO PERSONAL JURISDICTION MOTION WHICH MY PARTNER WILL BE 9 ARGUING. I BELIEVE THERE WAS THE COURT: YOU FILED THE CASE IN SUPERIOR 11 COURT? 12 MR. MAUNEY: THE CASE WAS FILED INITIALLY IN 13 WAKE COUNTY SUPERIOR COURT, YOUR HONOR. 14 THE COURT: AND REMOVED HERE BY THE DEFENDANT? 15 MR. MAUNEY: THAT IS CORRECT. 16 THE COURT: OKAY. AND HOW DO YOU GET TO REMAND 17 IT? 18 MR. MAUNEY: THE BASIS FOR THE REMAND, YOUR 19 HONOR, WAS UNDER -- THE STATED BASIS WAS THE FEDERAL 20 OFFICER REMOVAL STATUTE. 21 THE COURT: BECAUSE THEY CAN'T REMOVE ON THE 22 DIVERSITY AS AN IN-STATE DEFENDANT. 23 MR. MAUNEY: THAT'S CORRECT. AND THERE ARE 24 FOREIGN DEFENDANTS ON BOTH SIDES OF THE V AS WELL, WHICH 25 ALSO DEFEATS DIVERSITY. IN ORDER TO MEET THE FEDERAL Case 5:09-cv BO Document 94 Filed 06/16/10 Page 3 of 33

4 4 1 OFFICER REMOVAL STATUTE, I'LL CREDIT THE COURT WITH HAVING 2 ALREADY READ THE MATERIALS THAT WE SUBMITTED IN TERMS OF 3 THE FACTS. 4 THERE ARE A COUPLE OF FACTS THAT I THINK ARE 5 IMPORTANT THAT WOULD BEAR ON THEIR BASIS OF REMOVAL UNDER 6 THE FEDERAL OFFICER REMOVAL STATUTE. THEY'VE REMOVED ON 7 SOME OTHER GROUNDS. I'LL ADDRESS THOSE VERY BRIEFLY AT 8 THE END OF MY ARGUMENT, BUT THAT'S THEIR PRIMARY BASIS, IS 9 UNDER YOUR HONOR, THE EVENTS IN QUESTION HAPPENED ON 11 SEPTEMBER 16, 2007, AND AT THE TIME THAT THESE EVENTS 12 HAPPENED THE DEFENDANTS, THE INDIVIDUAL DEFENDANTS THE COURT: FEDERAL OFFICER'S AN OUTGROWTH OF 14 SOVEREIGN IMMUNITY. IT GOES BACK TO THAT CASE INVOLVING 15 THE SUPREME COURT JUSTICE IN CALIFORNIA, DOESN'T IT? 16 MR. MAUNEY: IT DOES. MOST OF THE CASES THAT 17 YOU SEEN THE DEFENDANTS CITED DATE BACK TO THE 1800S AND 18 EARLY 1900S WHERE YOU HAVE REVENUE OFFICERS, PEOPLE 19 COLLECTING IRS -- IRS WASN'T THERE THEN, BUT TAXES. WHAT 20 HAPPENED WAS, FOR INSTANCE, IN TENNESSEE V. DAVIS THE COURT: IT'S A SOVEREIGN IMMUNITY-DRIVEN 22 EXERCISE? 23 MR. MAUNEY: IT IS. 24 THE COURT: IF YOU ARE THE UNITED STATES, YOU 25 ARE NOT SUBJECT TO BEING SUED. YOU CAN MAKE THE SUIT BE Case 5:09-cv BO Document 94 Filed 06/16/10 Page 4 of 33

5 5 1 IN YOUR OWN COURT. 2 MR. MAUNEY: THAT IS CORRECT. AND IT HAS SINCE 3 EXPANDED, AS THE CASE SUCH AS WATSON, SUPREME COURT CASE 4 SUCH AS WATSON, MESA, JEFFERSON COUNTY THAT WE CITED, HAVE 5 EXPANDED THIS STATUTE TO COVER CERTAIN OTHER PEOPLE THAT 6 MIGHT NOT OTHERWISE BE CONSIDERED FEDERAL OFFICERS. A LOT 7 OF THIS CAME AS AN OFFSHOOT, LIKE I WAS SAYING EARLIER. 8 THE COURT: THIS IS AN INDEPENDENT CONTRACTOR 9 PROBLEM, ISN'T IT? 10 MR. MAUNEY: IT IS, YOUR HONOR. THE GENTLEMEN 11 THAT ARE THE INDIVIDUAL DEFENDANTS WERE INDEPENDENT 12 CONTRACTORS WHO AT THE TIME THAT THIS HAPPENED WERE 13 OPERATING UNDER A CONTRACT WITH THE STATE DEPARTMENT, 14 KNOWN AS THE WPPS II. AT THE TIME THE EVENTS THAT FORMED 15 THE BASIS OF THE LAWSUIT OCCURRED, THEY WERE OUTSIDE THE 16 INTERNATIONAL ZONE IN BAGHDAD, AGAINST THE WISHES OF THE 17 STATE DEPARTMENT THAT THEY HAD THE CONTRACT WITH. THEY 18 WERE NOT SUPPOSED TO BE THERE AT THAT TIME. THEY WERE 19 DOING THINGS THAT THEY WERE NOT SUPPOSED TO BE DOING AT 20 THAT TIME. 21 NONE OF THESE THINGS WOULD HAVE EVER HAPPENED IF THEY 22 WERE OPERATING WITHIN THE CONFINES OF WHAT THEY WERE 23 SUPPOSED TO BE DOING PURSUANT TO A CONTRACT WITH THE STATE 24 DEPARTMENT. 25 THE COURT: ARE YOU CONCEDING THAT IF THEY WERE Case 5:09-cv BO Document 94 Filed 06/16/10 Page 5 of 33

6 6 1 WITHIN THE COURSE AND SCOPE OF THE CONTRACT THAT THEY 2 WOULD BE FEDERAL OFFICERS? 3 MR. MAUNEY: NO, YOUR HONOR. 4 THE COURT: BUT THAT'S SORT OF WHERE YOUR 5 ARGUMENT IS GOING, ISN'T IT? 6 MR. MAUNEY: NO. MY ARGUMENT IS REALLY FOCUSING 7 ON THE NEXUS REQUIREMENT. IF YOU LOOK AT TWO CASES WE 8 CITED IN PARTICULAR -- 9 THE COURT: WELL, WHY WERE YOU ARGUING THEY WERE 10 OUTSIDE OF THE SCOPE AND DOING THINGS THAT AREN'T WITHIN 11 THE SCOPE IF THAT'S NOT IMPORTANT? 12 MR. MAUNEY: BECAUSE THERE HAS TO BE A NEXUS 13 BETWEEN WHAT THEY WERE SUPPOSED TO BE DOING UNDER THE 14 CONTRACT WITH THE GOVERNMENT AND THE EVENTS THAT HAPPENED 15 IN ORDER FOR YOU TO MEET THE REQUIREMENTS OF THE FEDERAL 16 OFFICER REMOVAL STATUTE. IF YOU ARE GOING TO ACT AT THE 17 BEHEST OR UNDER A FEDERAL OFFICER, YOU ALSO HAVE TO BE 18 DOING SOMETHING THAT'S CONNECTED TO WHAT YOU ARE SUPPOSED 19 TO BE HELPING THE GOVERNMENT WITH. 20 UNDERSTANDING THE PRIMARY FOCUS OF OUR ARGUMENT IS 21 THAT THESE DEFENDANTS LACK THE CAUSAL NEXUS ELEMENT OF , WHICH BASICALLY SAYS, WHATEVER YOU ARE DOING UNDER 23 THE AUSPICES OF THE FEDERAL GOVERNMENT -- THE COURT'S 24 PROBABLY SEEN A GOOD EXAMPLE OF THIS IS MAKING THE AGENT 25 ORANGE CASES, THE NAPALM CASES, WHERE THE GOVERNMENT Case 5:09-cv BO Document 94 Filed 06/16/10 Page 6 of 33

7 7 1 CONTRACTS WITH YOU TO MAKE NAPALM. YOU ARE MAKING THE 2 NAPALM UNDER THE SPECIFIC INGREDIENT LIST AND PER THE 3 INSTRUCTIONS OF THE GOVERNMENT. SOMEONE'S HARMED BY THE 4 NAPALM, SERVICEMEN, SOMEONE ELSE IS HARMED AND SUES, AND 5 THE PEOPLE THAT MADE THE NAPALM SAY WE WERE DOING THIS 6 EXACTLY THE WAY THE GOVERNMENT TOLD US TO DO IT, 7 PERFORMING UNDER A GOVERNMENT CONTRACT AND WE SHOULD ENJOY 8 SOME OF THE SAME TYPE OF IMMUNITY THE GOVERNMENT ENJOYS. 9 HERE, YOUR HONOR, THAT'S WHY WE'RE FOCUSING ON THE 10 CAUSAL NEXUS REQUIREMENT. THERE IN THE AGENT ORANGE-TYPE 11 CASES, YOU ARE ABLE TO SAY WE'RE DOING EXACTLY WHAT THE 12 GOVERNMENT TOLD US TO DO. WE HAD TO MAKE THE AGENT 13 ORANGE, THE NAPALM, THE WAY YOU TOLD US TO. WE DID WHAT 14 WE'RE SUPPOSED TO DO. THERE'S A NEXUS BETWEEN WHAT YOU 15 WERE HIRED TO DO AS AN INDEPENDENT CONTRACTOR FOR THE 16 GOVERNMENT OR WORK FOR THE GOVERNMENT AND WHAT HAPPENED, 17 WHICH IS THE BASIS OR GRAVAMEN OF THE PLAINTIFF'S LAWSUIT. 18 IF YOU LOOK AT THE DYNCORP CASES WE CITED, BOTH WHICH 19 I BELIEVE FROM THE DISTRICT COURT OF DELAWARE, AND THE 20 OTHER CASES THAT WE CITED THAT ARE ALONG THOSE LINES, 21 BASICALLY WHAT THEY SAY IS THERE HAS TO BE THIS DIRECT 22 CONNECTION BETWEEN WHATEVER THE WORK WAS THAT YOU WERE 23 SUPPOSED TO BE DOING FOR THE GOVERNMENT AND THE HARM THAT 24 HAPPENED. 25 HERE, YOUR HONOR, THE REASON I'M BRINGING UP THE Case 5:09-cv BO Document 94 Filed 06/16/10 Page 7 of 33

8 8 1 COUPLE OF KEY FACTS ABOUT WHAT OCCURRED, I DON'T KNOW THAT 2 THERE'S ANY DISPUTE ABOUT WHETHER THE INDIVIDUAL 3 DEFENDANTS WERE OUTSIDE OF THE GREEN ZONE WITHOUT 4 AUTHORIZATION AND THEN ORDERED TO COME BACK AT THE TIME 5 THAT THIS HAPPENED. WHAT THE DEFENDANTS HAVE ESSENTIALLY 6 ARGUED IS WE HAD A CONTRACT WITH THE GOVERNMENT, AND WHILE 7 WE WERE IN IRAQ UNDER THE CONTRACT WITH THE GOVERNMENT, 8 THIS OCCURRED, THEREFORE WE SHOULD BE ABLE TO REMOVE UNDER , UNDER THE FEDERAL OFFICER REMOVAL STATUTE. 10 IF THAT WAS THE CASE, AND THEY CITED A CASE, YOUR 11 HONOR, LALONDE OUT OF THE MIDDLE DISTRICT OF LOUISIANA, 12 WHICH BASICALLY IS THEIR ARGUMENT, THAT WE HAD THE 13 CONTRACT AND THEREFORE ANYTHING WE DID WHILE UNDER THE 14 CONTRACT WE'RE PROTECTED BY IT. WE CAN THEREBY REMOVE 15 UNDER THE FEDERAL OFFICER REMOVAL STATUTE. 16 IF YOU LOOK AT THIS CASE, IT HASN'T EVEN BEEN 17 FOLLOWED BY THE SISTER COURTS IN LOUISIANA OR OTHER COURTS 18 BECAUSE YOU SAY THAT'S MUCH TOO BROAD. THE CASES 19 BASICALLY BOIL DOWN TO, THERE'S A TEXAS CASES WE CITED 20 THAT SAYS THE GOVERNMENT ESSENTIALLY HAS TO MAKE YOU DO 21 IT. YOU HAVE TO BE UNDER THE DIRECTION OF SOME FEDERAL 22 OFFICER. THAT FEDERAL OFFICER ESSENTIALLY HAS TO SAY, GO 23 AND DO THE THING THAT YOU DID THAT YOU ARE BEING SUED FOR. 24 YOUR HONOR, WE WOULD SUBMIT THAT THE MAJORITY, THE 25 MAIN STREAM OF THE CASES, INCLUDING THE TWO CONTRACTOR Case 5:09-cv BO Document 94 Filed 06/16/10 Page 8 of 33

9 9 1 CASES, ONE FROM IRAQ, ONE FROM AFGHANISTAN, THE DYNCORP 2 CASES THAT WE CITED, ARE BOTH DIRECTLY ON POINT AND SAY 3 EXACTLY WHAT I'M SAYING TO YOUR HONOR. 4 SO THE PRIMARY FOCUS OF THE ARGUMENT IS THAT THIS 5 CAUSAL NEXUS DOES NOT EXIST IN THIS CASE. 6 ANOTHER ELEMENT THAT HAS TO BE SHOWN FOR THERE TO BE 7 FEDERAL OFFICER REMOVAL JURISDICTION IN THE COURT IS THAT 8 THERE HAS TO BE SOME COLORABLE DEFENSE UNDER FEDERAL LAW. 9 FOR EXAMPLE, THE BOYLE DEFENSE, THE GOVERNMENT CONTRACTOR 10 DEFENSE, WHICH IS CLOSELY RELATED TO WHAT WE WERE JUST 11 TALKING ABOUT WITH THE NAPALM AND AGENT ORANGE. 12 IN BOYLE, FOR INSTANCE, THE GOVERNMENT CONTRACTED 13 WITH A MANUFACTURER TO BUILD SIKORSKY HELICOPTERS. THERE 14 WAS AN ESCAPE HATCH IN THE HELICOPTER. AFTER IT CRASHED, 15 THE PLAINTIFF SAID THERE'S SOMETHING WRONG WITH THE WAY 16 THAT THIS WAS DESIGNED. AND THE DEFENDANT, THE 17 MANUFACTURER, CAME BACK AND SAID, LOOK, WE DID THIS 18 EXACTLY THE WAY THE GOVERNMENT TOLD US TO, WE COULDN'T 19 HAVE DESIGNED IT ANY OTHER WAY. 20 THAT TYPE OF IMMUNITY, WHAT'S CALLED SOMETIMES THE 21 GOVERNMENT CONTRACTOR DEFENSE, HAS BEEN EXTENDED TO 22 INCLUDE SERVICES THAT WOULD BE RELATED TO THE SAME THING. 23 BUT, YOUR HONOR, HERE, ONCE AGAIN, WHAT'S AT ISSUE IN THIS 24 CASE WAS NOT DIRECTED BY ANY FEDERAL OFFICER, IT WAS NOT 25 MANDATED BY ANY FEDERAL OFFICER. YOU WOULD NOT HAVE THAT Case 5:09-cv BO Document 94 Filed 06/16/10 Page 9 of 33

10 10 1 JURISDICTION AND THEY'VE GOT TO BE ABLE TO SHOW SOME OTHER 2 COLORABLE DEFENSE UNDER FEDERAL LAW. THEY'VE RAISED -- 3 RECENTLY THEY'VE EVEN MADE A MOTION UNDER THE WESTFALL 4 ACT. 5 UNDER THE WESTFALL ACT, YOUR HONOR, THERE'S A 6 SPECIFIC PROVISION IN THE STATUTE THAT EXCLUDES GOVERNMENT 7 CONTRACTORS FROM ITS PROVINCE. SO IF YOU ARE A GOVERNMENT 8 CONTRACTOR, THE SPECIFIC PART OF THE STATUTE SAYS IT 9 DOESN'T APPLY TO GOVERNMENT CONTRACTORS. 10 THEY RAISED THE POLITICAL QUESTION DOCTRINE, YOUR 11 HONOR. THEY SAID, WHAT WE WERE DOING WAS AT THE BEHEST OF 12 THE GOVERNMENT AND IT WOULD INTERFERE WITH SOME TYPE OF 13 POLITICAL QUESTION OR SOME EXECUTIVE MANDATE FROM THE 14 EXECUTIVE BRANCH OF THE GOVERNMENT. 15 THEY CITED AN 11TH CIRCUIT CASE CALLED CARMICHAEL TO 16 THAT EFFECT, WHICH IS AGAINST KBR, ANOTHER GOVERNMENT 17 CONTRACTOR. A MILITARY PERSON WAS INVOLVED IN THE 18 MILITARY CONVOY AND THERE WAS AN ACCIDENT IN THAT CONVOY. 19 THE 11TH CIRCUIT CAME BACK SAID, THIS WAS A MILITARY 20 OPERATION THAT WAS GOING ON, THE MILITARY WAS DIRECTING 21 WHAT WAS HAPPENING. MILITARY WAS INTEGRATED SO IN-DEPTH 22 INTO THE SITUATION THAT WE'RE GOING TO HAVE TO CALL THAT A 23 POLITICAL QUESTION. 24 IN A PARALLEL CASE TO THE ONE THAT'S IN FRONT OF YOUR 25 HONOR, ANOTHER ONE INVOLVING THE SAME INCIDENT IN NISOOR Case 5:09-cv BO Document 94 Filed 06/16/10 Page 10 of 33

11 11 1 SQUARE BACK IN THE NORTHERN DISTRICT OF VIRGINIA 2 COURT DISMISSED THAT OUT OF HAND, ANY TYPE OF ARGUMENT 3 THAT CARMICHAEL WOULD APPLY OR THAT THERE WAS SOME TYPE OF 4 POLITICAL QUESTION AT ISSUE HERE. 5 ALL THAT'S HAPPENED HERE, YOUR HONOR, IS THERE WAS A 6 SHOOTING, PEOPLE WERE NOT WHERE THEY WERE SUPPOSED TO BE. 7 IT JUST HAPPENS THE LOCATION IS IN BAGHDAD, IRAQ. THESE 8 GENTLEMEN ARE, THE INDIVIDUALS DEFENDANTS, WERE NOT HIRED 9 TO OPERATE AS SOLDIERS. THEY WERE NOT PART OF THE 10 MILITARY. WE FILED DOCUMENTS WITH THE COURT WHERE THEY 11 FILED COURT DOCUMENTS, THESE INDIVIDUAL DEFENDANTS, OTHER 12 THAN MR. RIDGEWAY, FILED DOCUMENTS WITH THE UTAH COURT 13 CONFIRMING THAT THIS WAS NOT SOME TYPE OF MILITARY 14 OPERATION THAT WAS OCCURRING AT THE TIME. 15 IN ANY EVENT, UNDER THE XE SERVICES CASE IN NORTHERN 16 VIRGINIA, JUDGE ELLIS THERE HAD VERY LITTLE PROBLEM 17 DISPOSING OF THE POLITICAL QUESTION DOCTRINE. 18 ANOTHER CASE THAT THE DEFENDANTS HAVE ALSO RAISED OUT 19 OF THE D. C. CIRCUIT, YOUR HONOR, RECENT CASE FROM CALLED SALEH. AND WHAT SALEH BASICALLY SAYS IS, IF THE 21 ACTIVITIES OF THE DEFENDANTS ARE INTEGRATED INTO COMBAT OR 22 MILITARY OPERATION, THEY'RE SO INTEGRATED INTO THAT 23 MILITARY OPERATION THAT WE OUGHT TO EXTEND PREEMPTION INTO 24 THAT, THEN WE WILL. 25 BUT IN THIS CASE, THIS CASE IS NOTHING LIKE THE SALEH Case 5:09-cv BO Document 94 Filed 06/16/10 Page 11 of 33

12 12 1 CASE, YOUR HONOR, BECAUSE THERE WAS NO MILITARY ACTIVITY 2 GOING ON. THESE FOLKS THAT ARE THE DEFENDANTS IN THIS 3 CASE WERE NOT UNDER ANY MILITARY CHAIN OF COMMAND, THEY 4 WERE WORKING FOR THE STATE DEPARTMENT UNDER THE WPPS 5 PROTECTIVE SERVICES CONTRACT. THEY WERE SUPPOSED TO BE 6 BODYGUARDS. 7 THE DEFENDANTS HAVE CITED SALEH AS AN EXAMPLE OR AS 8 THE PRIMARY CASE FOR THAT TYPE OF PREEMPTION, WHICH WAS 9 JUST RECOGNIZED MORE OR LESS IN FINALLY, YOUR HONOR, AT LEAST I BELIEVE FINALLY, IN 11 TERMS OF WHAT THEIR ARGUMENTS ARE, THEY'VE ALSO CITED A 12 CASE NAMED GRABLE. GRABLE IS A FAIRLY RECENT UNITED 13 STATES SUPREME COURT CASE. JUSTICE SOUTER WAS THE WRITING 14 JUSTICE FOR THE COURT IN THAT CASE. ESSENTIALLY THERE, 15 THERE WAS AN ARGUMENT BEING MADE ABOUT A TAX ISSUE 16 WHERE -- A COLLECTION OF TAX ISSUE. IN ORDER FOR THE 17 PLAINTIFF TO MAKE HIS CASE THERE, THE PLAINTIFF HAD TO 18 INCLUDE THIS TAX ISSUE AS AN ELEMENT OF HIS CLAIM. AND IN 19 GRABLE, THE COURT SAID, UNITED STATES SUPREME COURT SAID, 20 IF THE CLAIM THAT YOU ARE BRINGING IS SO DEPENDENT ON SOME 21 UNIQUE AREA OF FEDERAL LAW, THEN A COURT COULD EXERCISE 22 JURISDICTION IN THAT CASE. 23 IN THIS CASE, YOUR HONOR, WE HAVEN'T MADE -- THE 24 PLAINTIFFS HAVE MADE NO FEDERAL CLAIMS WHATSOEVER. OTHER 25 THAN THE FACT THAT THERE'S A POSSIBILITY OF APPLYING IRAQI Case 5:09-cv BO Document 94 Filed 06/16/10 Page 12 of 33

13 13 1 LAW TO THIS, THIS IS A TRADITIONAL WRONGFUL DEATH, 2 PERSONAL INJURY-TYPE CASE AS YOU WOULD COMMONLY SEE BEING 3 TRIED IN THE WAKE COUNTY SUPERIOR COURT. EVEN IN THE WAKE 4 COUNTY SUPERIOR COURT THERE ARE OFTEN INSTANCES WHERE 5 FOREIGN LAWS APPLY. THERE'S NOTHING NEW. 6 RULE 44.1 OF THE CIVIL RULES IS JUST ABOUT IDENTICAL 7 AS BETWEEN THE FEDERAL RULES AS IT IS IN THE STATE RULES. 8 GRABLE, YOUR HONOR, EVEN IN THAT CASE, THERE'S A PORTION 9 OF IT THAT SAYS THAT THIS THING WILL BE APPLIED 10 MICROSCOPICALLY BECAUSE WE DON'T SEE MANY EVENTS WHERE 11 THIS TYPE OF JURISDICTION WILL TAKE HOLD. 12 THERE HAVE EVEN BEEN TAX SHELTER CASES AFTER GRABLE, 13 MANY OF WHICH, IF NOT ALL, HAVE BEEN REMANDED BACK TO THE 14 STATE COURT BECAUSE THE COURT SAID, LOOK, THERE ARE 15 FEDERAL ISSUES THAT COME UP IN ALL KINDS OF STATE TORT 16 CASES. OSHA, I COULD THINK OF FIVE OR SIX OF THEM AS WE 17 SIT HERE. OSHA, THE TAX SHELTER CASES, INSTANCES OF TAX 18 LAW OR TAX CODE BEING INVOLVED, AND THOSE CASES HAVE BEEN 19 REMANDED BACK. IT'S A COMMON OCCURRENCE FOR THERE TO BE, 20 AT TIMES, SOME TYPE OF FEDERAL ELEMENT IN A STATE LAW TORT 21 CASE, AND THAT'S WHAT THE CASE IS HERE. 22 SO IN SUMMARY, YOUR HONOR, THE DEFENSE MOVED 23 PRIMARILY ON THE FEDERAL OFFICER REMOVAL STATUTE. THE 24 GOVERNMENT CONTRACTORS CAN SEEK REMOVAL UNDER THOSE 25 CIRCUMSTANCES, WE'RE NOT CONTESTING THAT. BUT IF THEY DO, Case 5:09-cv BO Document 94 Filed 06/16/10 Page 13 of 33

14 14 1 THEY HAVE TO BE ACTING UNDER THE DIRECTION OF SOME FEDERAL 2 OFFICER AT THE TIME OF THE EVENTS IN QUESTION, THERE HAS 3 TO BE A CAUSAL RELATIONSHIP BETWEEN WHAT THEY WERE 4 SUPPOSED TO BE DOING. THE CASES SAY "SPECIFIC DIRECTION," 5 MEANING GO TO NISOOR SQUARE ON THIS DAY AND DO THIS THING, 6 WHICH THEY WERE NOT DOING. THERE'S NO NEXUS WHATSOEVER 7 EXCEPT THE ATTENUATED ONE, WHICH WOULD BE WHAT THEY 8 CLAIMED IN THEIR PAPERS, WHICH IS WE HAD A CONTRACT, IT 9 MEANT WE WERE IN BAGHDAD, THEREFORE WE'RE COVERED. 10 YOUR HONOR, WE WOULD SAY THAT THAT LINE OF CASES, TO 11 THE DEGREE THAT THEY EXIST, IS COMPLETELY OUT OF THE 12 MAINSTREAM. 13 AND FINALLY, YOUR HONOR, THE DEFENDANTS DON'T HAVE TO 14 PROVE THEIR CASE ON THE MERITS AT THIS POINT BUT THEY DO 15 HAVE TO SHOW THAT THEY HAVE A COLORABLE DEFENSE UNDER 16 FEDERAL LAW. WATSON, A UNITED STATES SUPREME COURT CASE, 17 OTHER CASES SAY THAT YOU CAN ONLY TAKE THIS REMOVAL SO FAR 18 AND THAT THERE ARE LIMITS TO IT. EVEN IF IT'S TO BE THAT PART OF IT IS TO BE BROADLY CONSTRUED, AND, YOUR 20 HONOR, THEY ARE NOT ENTITLED TO ANY COLORABLE FEDERAL 21 OFFICER OR OTHER TYPE OF POLITICAL DOCTRINE DEFENSE THAT 22 THEY MIGHT RAISE THAT MIGHT OTHERWISE BRING THEM WITHIN 23 THE CONFINES OF THE FEDERAL OFFICER REMOVAL. 24 WE RESPECTFULLY REQUEST, YOUR HONOR, THAT THE COURT 25 REMAND THIS CASE BACK TO WAKE COUNTY SUPERIOR COURT, WHICH Case 5:09-cv BO Document 94 Filed 06/16/10 Page 14 of 33

15 15 1 IS THE TRADITIONAL PLACE FOR WRONGFUL DEATH AND PERSONAL 2 INJURY CLAIMS. THANK YOU, YOUR HONOR. 3 THE COURT: ALL RIGHT. THANK YOU. LET'S SEE. 4 MR. WHITE, ARE YOU GOING TO SPEAK? 5 MR. WHITE: YES, SIR, IF I MAY. 6 THE COURT: OKAY. 7 MR. WHITE: YOUR HONOR, A LITTLE BIT OF 8 BACKGROUND, I THINK, WOULD BE HELPFUL TO MAKE SURE THAT 9 THE COURT UNDERSTANDS THAT BLACKWATER'S JOB AT THIS TIME 10 WAS UNDER A CONTRACT, THAT SUBCONTRACTORS WERE GRANTED. 11 IT'S AN EXTREMELY DETAILED CONTRACT. IF THAT CONTRACT WAS 12 PUT ON THIS TABLE, IT WOULD STRETCH FROM ONE END TO THE 13 OTHER. THIS IS ONE OF THE MOST COMPLICATED CONTRACTS, ONE 14 OF THE MOST DETAILED CONTRACTS ON THE PERFORMANCE DETAILS 15 THAT I HAVE EVER SEEN, GOVERNMENT CONTRACT OR OTHERWISE. 16 WHAT HAPPENED ON SEPTEMBER 16, IS THESE FOLKS WERE 17 THERE UNDER THAT CONTRACT. THEY WERE PERFORMING THE 18 DUTIES OF THEIR FEDERAL SUPERIOR UNDER THAT CONTRACT. 19 THERE WAS A MASSIVE CAR BOMB ON SEPTEMBER 16, 2007, ON A 20 MISSION THAT HAD BEEN EXPLICITLY AUTHORIZED AND APPROVED 21 AND DIRECTED BY THE REGIONAL SECURITY OFFICER OF THE 22 DEPARTMENT OF STATE. SO THERE'S A GROUP OF BLACKWATER 23 FOLKS WHO ARE OUT WITH A U. S. DIPLOMAT, WHICH WAS THEIR 24 JOB. THEIR JOB WAS TO PROTECT DIPLOMATS OUT ON A MISSION. 25 CAR BOMB EXPLODES. THE JOB WAS TO GET THEM HOME. I Case 5:09-cv BO Document 94 Filed 06/16/10 Page 15 of 33

16 16 1 DON'T KNOW WHERE PLAINTIFF'S COUNSEL GETS THE IDEA THEY 2 WEREN'T ACTING PURSUANT TO THE CONTRACT. WHAT HAPPENED IN 3 THAT CIRCUMSTANCE, JUDGMENTS NEED TO BE MADE ON HOW TO GET 4 THEM SAFELY HOME. 5 THIS GROUP WENT TO NISOOR SQUARE, NISOOR CIRCLE, 6 WHERE THIS INCIDENT OCCURRED, EXPRESSLY TO TRY TO SECURE 7 THAT ROUTE HOME FOR THOSE PEOPLE WHO WERE WITH THE U. S. 8 DIPLOMAT. THEY WERE DOING THE JOB OF THEIR FEDERAL 9 SUPERIOR. THAT'S THE DIFFERENCE BETWEEN THIS CASE AND THE 10 CASES THE PLAINTIFF CITES. 11 THE ELEMENTS OF THE FEDERAL OFFICER REMOVAL 12 JURISDICTION WHICH WE HAVE SOUGHT HERE ARE THAT THE 13 PERSONS ACTED UNDER A FEDERAL OFFICER, WHICH THEY CLEARLY 14 DID HERE. THEY WERE ACTING UNDER THE U. S. DEPARTMENT OF 15 STATE. THAT THEIR ACTIONS WERE UNDER COLOR OF FEDERAL 16 OFFICE. CLEARLY THAT'S THE CASE HERE, TOO. AND THAT 17 THERE IS THE ASSERTION OF A COLORABLE FEDERAL DEFENSE. 18 THE COURT: WHAT'S THE COLORABLE DEFENSE? 19 MR. WHITE: THERE ARE FIVE OR SIX OF THEM. 20 THE COURT: POLITICAL QUESTION ONE OF THEM? 21 MR. WHITE: YES. POLITICAL QUESTION IS ONE. 22 GOVERNMENT CONTRACTOR DEFENSES IS CLEARLY ONE. I DON'T 23 KNOW IF THAT'S LEGITIMATELY IN DISPUTE THAT THAT'S A 24 COLORABLE FEDERAL DEFENSE HERE. 25 IN ADDITION, THERE ARE IMMUNITY -- Case 5:09-cv BO Document 94 Filed 06/16/10 Page 16 of 33

17 17 1 THE COURT: BUT YOU ARE NOT MAKING SOMETHING, 2 YOU ARE PROVIDING A SERVICE. DOES THE GOVERNMENT 3 CONTRACTOR DEFENSE EXTEND TO THAT? 4 MR. WHITE: IT DOES, YOUR HONOR. BOYLE, OF 5 COURSE, WAS A -- 6 THE COURT: PRODUCT. 7 MR. WHITE: THAT'S RIGHT. BUT OTHER COURTS HAVE 8 EXTENDED THE GOVERNMENT CONTRACTOR DEFENSE INTO THE 9 SERVICES REALM. AS A MATTER OF FACT, THE SALEH VERSUS 10 TITAN CASE TALKS ABOUT THAT AS BEING APPLICABLE. THAT WAS 11 AN INTERROGATION CASE. 12 SO OTHER COURTS HAVE HELD THAT THE GOVERNMENT 13 CONTRACTOR DEFENSE CAN BE APPLICABLE TO CONTRACTS FOR 14 SERVICES. 15 ON TOP OF THAT, YOUR HONOR, THERE IS MANGOLD IMMUNITY 16 UNDER THE 4TH CIRCUIT'S HOLDING IN MANGOLD, THAT WOULD 17 POTENTIALLY APPLY HERE. 18 AS THE COURT MAY HAVE SEEN, WE FILED EARLIER THIS 19 WEEK A PETITION FOR SUBSTITUTION OF DEFENDANT UNDER THE 20 WESTFALL ACT, WHICH CLEARLY IS A COLORABLE FEDERAL 21 DEFENSE. AS A MATTER OF FACT, EVEN IF THAT'S A DEFENSE 22 THAT DOES NOT PREVAIL, THE 4TH CIRCUIT RULED IN THE 23 JAMESON CASE THAT REMAND IS INAPPROPRIATE WHEN A WESTFALL 24 CERTIFICATION HAS BEEN MADE, EVEN IF WESTFALL IS DENIED. 25 SO THERE ARE A NUMBER OF FEDERAL DEFENSES THAT ARE Case 5:09-cv BO Document 94 Filed 06/16/10 Page 17 of 33

18 18 1 UNIQUE TO THE SORTS OF CASES THAT ARE HEARD HERE. 2 THE COURT: POLITICAL QUESTION IS A MATTER OF 3 LAW BECAUSE IT'S A SUBJECT MATTER. IT'S A DIMENSION OF 4 SUBJECT MATTER JURISDICTION AND IT EITHER IS OR ISN'T. 5 IT'S NOT FACTUALLY DRIVEN, IS IT? 6 MR. WHITE: YES, I AGREE. 7 THE COURT: YEAH. I MEAN, POLITICAL QUESTION IS 8 THAT IT'S NOT A JUSTICIABLE MATTER, IT'S TEXTURALLY 9 COMMITTED OR COMMITTED TO ONE OF THE COORDINATE BRANCHES 10 OF GOVERNMENT, NAMELY THE EXECUTIVE, AND THAT WITHIN THE 11 CONFINES OF THAT ACTIVITY COURTS CAN'T INTERVENE. 12 MR. WHITE: EXACTLY. 13 THE COURT: THAT'S WHAT A POLITICAL QUESTION IS. 14 MR. WHITE: EXACTLY. IN THIS CASE, IF I CAN 15 JUST PLAY OUT HOW THAT APPLIES HERE. IN THIS CASE, 16 PLAINTIFFS HAVE MADE NEGLIGENT HIRING AND NEGLIGENT 17 RETENTION AND SUPERVISION CLAIMS. ALL OF THE HIRING 18 REQUIREMENTS, ALL OF THE SUPERVISION REQUIREMENTS, ALL OF 19 THE TRAINING REQUIREMENTS ARE IN THIS EXTREMELY DETAILED 20 CONTRACT THAT WAS DONE BY THE DEPARTMENT OF STATE. OUR 21 POLITICAL QUESTION ANALYSIS, WHEN IT'S BOILED DOWN TO ITS 22 ESSENCE, IS THAT IT WOULD REQUIRE THIS COURT TO 23 SECOND-GUESS THE POLICY JUDGMENTS MADE BY THE DEPARTMENT 24 OF STATE WHEN THEY SET UP THAT CONTRACT WITH THOSE 25 INCREDIBLY DETAILED REQUIREMENTS. Case 5:09-cv BO Document 94 Filed 06/16/10 Page 18 of 33

19 19 1 THE COURT: I HAD A CASE IN 1985, SMITH V. 2 REAGAN, THAT WENT TO THE 4TH CIRCUIT AND HAS A PUBLISHED 3 OPINION IN IT THAT JUDGE WILKINSON WROTE. YOU PROBABLY -- 4 IT'S PROBABLY SO OLD YOU HAD NOT LOOKED AT THAT, BUT THE 5 CASE WAS DISMISSED ON POLITICAL QUESTION GROUNDS. IT MAY 6 NOT BE AUTHORITATIVE HERE, BUT IT IS ONE OF THE -- NOT 7 THAT MANY CASES IN THE 4TH CIRCUIT WHERE POLITICAL 8 QUESTION IS THE DOCTRINE AND THE OUTCOME IS THAT -- IF YOU 9 WERE CORRECT, AND I MAKE NO COMMENT ON THAT, IF YOU WERE 10 CORRECT, YOU REMOVE THE CASE BECAUSE YOU HAVE THE 11 AUTHORITY OR CAPACITY TO REMOVE, AND THEN IF YOU SUSTAIN 12 POLITICAL DOCTRINE THE CASE IS DISMISSED. 13 MR. WHITE: THAT'S CORRECT, YOUR HONOR. THAT'S 14 OUR ARGUMENT. 15 THE COURT: THERE'S NO SUBJECT MATTER 16 JURISDICTION. 17 MR. WHITE: RIGHT. 18 THE COURT: IT WOULD BE LIKE REMOVING AND HAVING 19 SOVEREIGN IMMUNITY AND IT'S DISMISSED BECAUSE THERE'S NO 20 WAIVER OF SOVEREIGN IMMUNITY. 21 MR. WHITE: THAT'S RIGHT, YOUR HONOR. WHAT THE 22 FEDERAL OFFICER REMOVAL STATUTE IS ABOUT IS REALLY NOT 23 ABOUT WHETHER THERE'S A DISPUTE ABOUT WHETHER BLACKWATER 24 COMPLIED WITH ITS CONTRACT OR ANY OF THOSE FACTUAL ISSUES. 25 THE QUESTION IS, WHAT'S THE APPROPRIATE FORUM TO DECIDE Case 5:09-cv BO Document 94 Filed 06/16/10 Page 19 of 33

20 20 1 THESE ISSUES. AND THE APPROPRIATE FORUM TO DECIDE THESE 2 ISSUES, WHICH ARE INHERENT FEDERAL QUESTIONS, AND THEY ARE 3 COLORABLE DEFENSES HERE, IS THE FEDERAL COURT. THAT'S 4 WHAT THAT STATUTE IS DESIGNED FOR. 5 THE IDEA THAT IF SOMEHOW THEY HAVE GONE BEYOND THEIR 6 CONTRACT OR THEY'VE ACTED IN SOME WAY, EVEN CRIMINALLY, IS 7 IRRELEVANT TO THE REMOVAL STATUTE BECAUSE THE REMOVAL 8 STATUTE ITSELF, THE REVENUE CASES THAT COUNSEL WAS TALKING 9 ABOUT THAT CAME UP IN THE MID-19TH CENTURY WHERE PEOPLE 10 WERE GOING TO COLLECT ILLEGAL ALCOHOL TAXES. 11 THE COURT: LEGAL ALCOHOL TAX. 12 MR. WHITE: YES. PEOPLE WERE TRYING TO REVENUES WERE BASICALLY TRYING TO SHUT DOWN ILLEGAL 14 ALCOHOL OPERATIONS. 15 THE COURT: YOU SAID ILLEGAL TAXES. THE TAXES 16 WERE LEGAL, THE ACTIVITY WAS ILLEGAL. 17 MR. WHITE: I MISSPOKE. THAT'S CERTAINLY THE 18 WAY THE SUPREME COURT CAME OUT ON IT. 19 THE COURT: YEAH. 20 MR. WHITE: BUT THOSE CASES WERE CRIMINAL CASES. 21 THERE'S AN ACTUAL REMOVAL OF THE CRIMINAL CASE FROM STATE 22 COURT. 23 THE COURT: YEAH. 24 MR. WHITE: WHEN SOMEONE WAS CHARGED WITH 25 GETTING IN A GUN FIGHT WITH THE REVENUE AGENTS, THEY GET Case 5:09-cv BO Document 94 Filed 06/16/10 Page 20 of 33

21 21 1 CHARGED WITH MURDER IN THE STATE COURTS. THAT GETS 2 REMOVED TO THE FEDERAL COURTS. SO THE IDEA THAT IF 3 SOMEBODY IS DOING SOMETHING -- 4 THE COURT: THAT'S THE CASE THAT I THINK STARTED 5 IT ALL, THE CALIFORNIA -- THERE WAS A JUSTICE OF THE 6 SUPREME COURT ON A TRAIN RIDE IN CALIFORNIA AND THE 7 MARSHAL WHO WAS DEFENDING HIM OR ATTENDING HIM DEFENDED 8 HIM AGAINST AN ASSASSINATION AND HE WAS CHARGED WITH 9 MURDER. DO YOU KNOW THAT CASE? 10 MR. WHITE: I DON'T KNOW THAT ONE. 11 THE COURT: I THINK THAT STARTED IT ALL. THEY 12 REMOVED THE CASE TO FEDERAL COURT AND DISMISSED IT ON 13 SOVEREIGN IMMUNITY GROUNDS. 14 MR. WHITE: JUSTICE BREYER'S OPINION IN WATSON 15 ACTUALLY HAS AN INTERESTING HISTORY OF THE FEDERAL OFFICER 16 REMOVAL STATUTE. WHAT HE TALKS ABOUT IS THAT IT STARTED 17 AFTER THE WAR OF 1812, WHICH IS VERY UNPOPULAR IN NEW 18 ENGLAND, AND THERE WOULD BE LOCAL PROSECUTIONS OF PEOPLE 19 WHO WERE INVOLVED IN THE WAR OF THAT'S WHERE THIS 20 CAME FROM. 21 THE FACT IS WHAT WATSON TALKS ABOUT, WHICH I WOULD 22 ENCOURAGE THE COURT TO TAKE A LOOK AT, BECAUSE IT'S A VERY 23 RECENT PRONOUNCEMENT FROM THE SUPREME COURT ON THIS ISSUE, 24 BUT WHAT WATSON TALKS ABOUT IS WHETHER OR NOT THE 25 CONTRACT, OR THE PERSON WHO'S INVOLVED, WAS HELPING TO Case 5:09-cv BO Document 94 Filed 06/16/10 Page 21 of 33

22 22 1 CARRY OUT THE DUTIES OR TASKS OF THE FEDERAL SUPERIOR. 2 NOW, HERE IN THIS CASE THE TASK THAT THESE FOLKS WERE 3 ABOUT THAT DAY, WHETHER THEY DID IT WELL OR POORLY, IS 4 IRRELEVANT FOR THIS PURPOSE, BUT THE TASK THEY WERE ABOUT 5 THAT DAY WAS A JOB THAT WOULD HAVE TO BE DONE BY THE 6 FEDERAL GOVERNMENT OTHERWISE, UNLESS THEY CONTRACTED WITH 7 BLACKWATER OR SOMEONE ELSE TO DO IT. SOMEBODY HAD TO 8 PROVIDE SECURITY FOR THESE DIPLOMATS OVERSEAS. WHAT THEY 9 WERE DOING IN PROVIDING SECURITY WAS RIGHT AT THE CORE OF 10 THE FUNCTION THAT THEY WERE CONTRACTED FOR. 11 NOW, I CONTRAST THAT, YOUR HONOR, WITH -- THERE ARE 12 TWO CASES INVOLVING DYNCORP THAT WERE DECIDED, I BELIEVE, 13 IN THE DISTRICT OF DELAWARE OR CONNECTICUT. I'M DRAWING A 14 BLANK ON WHICH RIGHT NOW. DELAWARE. THAT WERE DECIDED IN 15 DELAWARE RELATIVELY RECENTLY, AND THOSE CASES THAT COUNSEL 16 CITED. 17 THE DIFFERENCE BETWEEN THIS CASE AND THOSE -- FIRST 18 OFF, I THINK THOSE CASES MISS THE MARK A LITTLE BIT ON 19 WHAT THE SUPREME COURT SAID IN WATSON. BUT IN THAT CASE, 20 IN THOSE TWO CASES, DYNCORP WAS THERE PROVIDING A CIVILIAN 21 POLICE TRAINING FUNCTION, BOTH IN IRAQ AND IN AFGHANISTAN 22 IN THE TWO CASES. BUT WHAT THE CONTRACT SAID WAS ONLY 23 THAT DYNCORP HAD A RESPONSIBILITY TO PROVIDE SECURITY FOR 24 THE PEOPLE WHO WERE THERE. IT WAS A GENERALIZED 25 STATEMENT, NO DETAIL AT ALL. Case 5:09-cv BO Document 94 Filed 06/16/10 Page 22 of 33

23 23 1 THIS CONTRACT, ON THE OTHER HAND, AND WE'VE GIVEN THE 2 COURT EXCERPTS OF IT, THIS CONTRACT IS EXTREMELY DETAILED. 3 I WOULD LIKEN THIS CASE, ACTUALLY, TO THE MCMAHON CASE, 4 WHICH IS OUT OF FLORIDA. IN MCMAHON, THERE WAS AN EFFORT 5 TO REMOVE THE CASE BACK TO STATE COURT, OR EFFORT TO 6 REMAND THE CASE, I'M SORRY, BACK TO STATE COURT. AND WHAT 7 THE COURT SAID IN THAT CASE, THERE ARE DETAILED 8 REQUIREMENTS. THERE'S A DETAILED RELATIONSHIP BETWEEN THE 9 DEPARTMENT -- OF THE FEDERAL AGENCY AND THE CONTRACT. 10 SAME THING APPLIES HERE. IF YOU LOOK AT THE 11 CONTRACT, THE ACTUAL ROUTES THAT THEY USE HAVE TO BE 12 APPROVED BY THE REGIONAL SECURITY OFFICE, DEPARTMENT OF 13 STATE. THE MISSIONS ALL HAVE TO BE APPROVED BY THE 14 DEPARTMENT OF STATE. THE WEAPONS THAT THEY USE, THE 15 TRAINING THAT THEY GET, THE TYPES OF VEHICLES THAT THEY 16 USE, THE COMPOSITION OF THOSE VEHICLES, THE PEOPLE WHO ARE 17 HIRED TO DO IT, ALL OF THAT GETS -- IS SPELLED OUT IN 18 EXCRUCIATING DETAIL IN THAT CONTRACT. SO IT'S EXTREMELY 19 DETAILED, REGULATORY FRAMEWORK THAT EXISTS IN THIS 20 CONTRACT. 21 THAT'S THE BIG DIFFERENCE BETWEEN THIS CASE AND THE 22 DYNCORP CASE. FRANKLY, ALL OF THE OTHER CASES THAT HAVE 23 SENT CASES BACK TO STATE COURT, BECAUSE IN THOSE CASES 24 THERE WAS NOT THIS INTENSELY REGULATORY FRAMEWORK THAT WAS 25 OCCURRING. I THINK THIS IS THE CLASSIC CASE FOR SOMEONE Case 5:09-cv BO Document 94 Filed 06/16/10 Page 23 of 33

24 24 1 WHO IS ACTING IN A CAPACITY AS A FEDERAL LAW OFFICER TO 2 HAVE THESE ISSUES HEARD IN FEDERAL COURT. 3 IF THE COURT HAS NO OTHER QUESTIONS. 4 THE COURT: I DON'T HAVE ANY OTHER QUESTIONS. 5 YOU WANT SOME TIME TO REPLY TO SOMETHING? 6 MR. MAUNEY: YES, YOUR HONOR. JUST BRIEFLY. 7 THE COURT: NO, I MEAN IN ONE OF YOUR MOTIONS TO 8 RIDGEWAY'S MOTION TO DISMISS. IS THAT STILL A LIVE 9 MOTION? 10 MR. DICKINSON: YOUR HONOR THE COURT: I'M TRYING TO GET TO THE BOTTOM OF 12 THIS. 13 MR. DICKINSON: YOUR HONOR, THE OTHER THING THAT 14 I UNDERSTAND IS ON THE COURT'S DOCKET TODAY IS JEREMY 15 RIDGEWAY, ONE OF THE INDIVIDUAL DEFENDANTS, HAS MOVED FOR 16 A MOTION TO DISMISS BASED ON LACK OF PERSONAL 17 JURISDICTION. THE COURT HAS NO JURISDICTION OVER HIM TO 18 BE BROUGHT INTO THIS COURTROOM FOR THIS MATTER. 19 WE HAVE MOVED, IN RESPONSE TO THAT, FOR LEAVE TO 20 CONDUCT SOME LIMITED JURISDICTIONAL DISCOVERY TO GET TO 21 THE BOTTOM OF MR. RIDGEWAY'S CONTACTS AND TO DETERMINE, 22 BASED ON SOME LIMITED DISCOVERY, WHETHER OR NOT THE COURT 23 WOULD HAVE SPECIFIC OR GENERAL JURISDICTION AGAINST 24 MR. RIDGEWAY. 25 THE COURT: HOW MUCH TIME DO YOU WANT FOR THAT? Case 5:09-cv BO Document 94 Filed 06/16/10 Page 24 of 33

25 25 1 MR. DICKINSON: TO ARGUE THAT MOTION, YOUR 2 HONOR? 3 THE COURT: NO. 4 MR. DICKINSON: WE ASKED IN OUR MOTION FOR 90 5 DAYS, YOUR HONOR. 6 THE COURT: HOW ABOUT 30 DAYS? IT'S BETTER THAN 7 NO DAYS. 8 MR. DICKINSON: IT'S BETTER THAN NO DAYS, YOUR 9 HONOR, IT IS. WE WOULD LIKE TO AT LEAST SERVE SOME 10 DISCOVERY. 11 THE COURT: YOU PROBABLY FILED THE MOTION WEEKS 12 AGO. 13 MR. DICKINSON: WE DID, YOUR HONOR. 14 THE COURT: OKAY. 15 MR. DICKINSON: OF COURSE, WITHOUT LEAVE FROM 16 THE COURT TO CONDUCT THAT DISCOVERY, WE HAVEN'T BEEN ABLE 17 TO DO THAT. 18 THE COURT: ALL RIGHT. YOU HAVE A PROBLEM WITH 19 THAT? 20 MR. MAGINNIS: I DO, YOUR HONOR, SIMPLY BECAUSE, 21 AS WE FILED IN OUR BRIEF, THE 4TH CIRCUIT HAS SET FORTH A 22 STANDARD THAT THEY'RE REQUIRED TO MEET IN ORDER TO OBTAIN 23 JURISDICTIONAL DISCOVERY, AND THEY HAVEN'T MET IT. 24 THE COURT: WHAT'S THAT? 25 MR. MAGINNIS: THEY HAVE TO -- THE PROCEDURE Case 5:09-cv BO Document 94 Filed 06/16/10 Page 25 of 33

26 26 1 GOES AS FOLLOWS. DEFENSE FILES A PERSONAL JURISDICTION 2 MOTION, ATTACHES AN AFFIDAVIT THAT SPECIFICALLY -- 3 THE COURT: YOU ARE TALKING ABOUT CONTACTS IN 4 INTEREST, RIGHT? 5 MR. MAGINNIS: WELL, IT'S NOT THE CONTACTS 6 ANALYSIS, THAT WILL COME FORWARD IN THE MOTION TO DISMISS. 7 WHAT THIS IS, IS IN RESPONSE TO MR. RIDGEWAY'S AFFIDAVIT 8 THAT SPECIFICALLY CONTROVERTS THEIR JURISDICTIONAL 9 ALLEGATION, THEY ARE REQUIRED, UNDER A CASE CALLED CARE 10 FIRST, 4TH CIRCUIT, 2003, TO SUBMIT THEIR OWN FACTUAL 11 PROFFER OF FACTS THAT EITHER CONTROVERT OUR AFFIDAVIT OR 12 SUPPLY THEIR OWN MINIMUM CONTACTS, SUCH AS THEY'RE 13 ENTITLED TO DISCOVERY. THEY HAVEN'T SUBMITTED ANYTHING 14 THAT RELATES TO MR. RIDGEWAY. 15 THE COURT: OKAY. WHY HAVEN'T YOU DONE THAT? 16 MR. DICKINSON: YOUR HONOR, WHAT WE HAVE IN THIS 17 CASE IS, AND WE ATTACHED AN EXAMPLE, WHAT WE WERE ABLE TO 18 LEARN OF A CONTRACT FROM ANOTHER INDIVIDUAL WHO WAS 19 WORKING FOR BLACKWATER. OF COURSE, WE DON'T HAVE ACCESS 20 TO MR. RIDGEWAY'S CONTRACT THAT HE HAD WITH BLACKWATER. 21 WE DON'T HAVE ACCESS TO QUESTION HIM ABOUT WHAT HIS 22 CONTACTS WERE. WE HAVEN'T BEEN ABLE TO CONDUCT ANY 23 DISCOVERY WITH BLACKWATER TO FIND OUT WHAT HIS CONTACTS 24 WERE. 25 WE LOOK AT MR. RIDGEWAY'S DECLARATION THAT HE Case 5:09-cv BO Document 94 Filed 06/16/10 Page 26 of 33

27 27 1 PROVIDED AND HE TALKS ABOUT COMING TO NORTH CAROLINA. HE 2 TALKS ABOUT GOING THROUGH THIS VETTING PROCESS. 3 MR. WHITE JUST MENTIONED THE LENGTHY CONTRACT THAT 4 BLACKWATER HAD, AND IN THE PAPERS THEY JUST FILED TO 5 SUBSTITUTE THE UNITED STATES, THEY GO IN DETAIL ABOUT THE 6 THINGS THEY ARE SUPPOSED TO DO AND THE TRAINING AND THE 7 VETTING THAT MR. RIDGEWAY IS SUPPOSED TO GO THROUGH. THEY 8 ARE SUPPOSED TO CONDUCT PSYCHOLOGICAL EXAMINATIONS, THEY 9 ARE SUPPOSED TO DETERMINE WHETHER OR NOT -- HE HAS TO DO A 10 MENTAL TEST AND DENTAL TEST AND MEDICAL TEST, AND IF HE 11 WAS HERE IN NORTH CAROLINA DOING THOSE THINGS. 12 ONE OF THE OTHER THINGS THAT WE DON'T KNOW, WHICH WE 13 BELIEVE WE WOULD BE ABLE TO LEARN THROUGH DISCOVERY, IS 14 WHO INITIATED THE CONTACT. DID MR. RIDGEWAY REACH OUT TO 15 BLACKWATER TO CONTRACT HIS SERVICES TO THEM TO GO TO 16 BAGHDAD AND WORK OR DID BLACKWATER CONTACT MR. RIDGEWAY? 17 THAT'S ABSENT IN MR. RIDGEWAY'S DECLARATION THAT HE 18 SUBMITTED. 19 I THINK THAT THE CASE THAT WE CITED FROM THE MIDDLE 20 DISTRICT THAT WHEN PLAINTIFF CAN SHOW DISCOVERY IS 21 NECESSARY IN ORDER TO MEET THE DEFENDANT'S CHALLENGE FOR 22 PERSONAL JURISDICTION, THE COURT ORDINARILY GRANTS THAT. 23 IF THE COURT'S GOING TO GIVE US THE 30-DAYS, WE WOULD LIKE 24 THE OPPORTUNITY TO GO THROUGH AND FIND OUT SOME OF THESE 25 BASIC QUESTIONS. Case 5:09-cv BO Document 94 Filed 06/16/10 Page 27 of 33

28 28 1 THE COURT: I THINK I HAVE A BETTER PICTURE OF 2 IT NOW. I'M GOING TO DENY YOUR MOTION FOR LEAVE TO 3 CONDUCT JURISDICTIONAL DISCOVERY AND ALSO DENY YOUR MOTION 4 FOR EXTENSION OF TIME TO REPLY TO DEFENDANT RIDGEWAY'S 5 MOTION TO DISMISS. I'LL JUST RULE ON IT AS IT STANDS. 6 YOU WON THAT PART OF IT. 7 MR. MAGINNIS: WELL -- 8 THE COURT: YOU DIDN'T WIN YOUR MOTION BUT YOU 9 WON THE OPPOSITION TO HIS TWO MOTIONS. 10 MR. MAGINNIS: SO I'M A LITTLE CONFUSED, YOUR 11 HONOR. 12 THE COURT: LET ME MAKE IT SIMPLE THEN. HE HAD 13 A MOTION FOR LEAVE TO CONDUCT JURISDICTIONAL DISCOVERY. 14 MR. MAGINNIS: CORRECT. 15 THE COURT: I DENIED THE MOTION. 16 MR. MAGINNIS: YES. 17 THE COURT: END. PERIOD. 18 MR. MAGINNIS: SURE. 19 THE COURT: HE HAD A MOTION FOR EXTENSION OF 20 TIME TO REPLY TO YOUR MOTION TO DISMISS. I DENIED HIS 21 MOTION. PERIOD. SO YOU PREVAILED ON THOSE TWO. 22 YOU NOW HAVE A MOTION TO DISMISS THAT'S PENDING. 23 MR. MAGINNIS: YES, YOUR HONOR. 24 THE COURT: I HAVEN'T RULED ON THAT. 25 MR. MAGINNIS: CORRECT. Case 5:09-cv BO Document 94 Filed 06/16/10 Page 28 of 33

29 29 1 THE COURT: I'M NOT GOING TO RIGHT THIS MINUTE. 2 MR. MAGINNIS: RIGHT. I THINK -- I GUESS MY 3 ONLY QUESTION, YOUR HONOR -- 4 THE COURT: WHAT IS IT THAT'S MISUNDERSTOOD 5 ABOUT THAT? 6 MR. MAGINNIS: WHEN ARE THEY GOING TO FILE THEIR 7 OPPOSITION? I THINK THEIR MOTION FOR EXTENSION OF TIME -- 8 THE COURT: IT DOESN'T MATTER WHEN THEY ARE 9 BECAUSE I'M GOING TO RULE ON YOUR MOTION. 10 MR. MAGINNIS: OKAY. 11 THE COURT: OKAY? 12 MR. MAGINNIS: SURE. 13 THE COURT: YOU CAN GO BACK AND HAVE A SEAT. 14 ANYTHING YOU WANT TO SAY FURTHER ABOUT THE REMAND? 15 MR. MAUNEY: YOUR HONOR, THERE WERE A COUPLE OF 16 COMMENTS I WOULD LIKE TO MAKE VERY BRIEFLY. 17 FIRST OF ALL, THERE WAS A COMMENT ABOUT THERE WERE NO 18 FACTS THAT THESE GENTLEMEN, WHEN THE ACTS OCCURRED, WERE 19 WHERE THEY WERE NOT SUPPOSED TO BE. THERE WAS A FACTUAL 20 PROFFER MADE BY DEFENDANT RIDGEWAY WHERE HE SAID THAT THE 21 GOVERNMENT'S EVIDENCE APPROVED RAVEN 23 NOT BEEN 22 AUTHORIZED TO DEPART FROM THE INTERNATIONAL ZONE ON 23 SEPTEMBER 16, SHORTLY AFTER HAVING DONE SO, THE 24 RAVEN 23 CONVOY HAD BEEN SPECIFICALLY ORDERED BY THE 25 REGIONAL SECURITY AT THE UNITED STATES EMBASSY TO RETURN Case 5:09-cv BO Document 94 Filed 06/16/10 Page 29 of 33

30 30 1 TO THE INTERNATIONAL ZONE AS SOON AS POSSIBLE, AND THEY 2 DID NOT. IT GOES ON TO SAY THAT. 3 THE WATSON CASE, YOUR HONOR, VERY SPECIFICALLY SAYS 4 THAT IN THESE CIRCUMSTANCES THERE IS SUPPOSED TO BE A 5 NEXUS BETWEEN THE ACTIONS THAT WERE TAKEN PURSUANT TO THE 6 FEDERAL OFFICER'S DIRECTION AND THE THING THAT YOU ARE 7 BEING SUED FOR. 8 THERE'S A DISCUSSION ABOUT THE PROCUREMENT CONTRACT 9 OF THE WPPS II. THERE'S A CASE THAT WE CITED OUT OF THE 10 EASTERN DISTRICT OF TEXAS, YOUR HONOR, THE FAULK CASE, 11 WHERE IT SAYS HERE -- THE COURT SAYS, "HERE THE LOGIC OF 12 THE FIFTH CIRCUIT'S COMBINATION OF THE ACTING UNDER AND 13 CAUSAL NEXUS PROBLEMS BECOMES APPARENT. DEFENDANTS CAN 14 BURY THIS COURT IN FEDERAL GOVERNMENT REGULATIONS 15 CONTROLLING THEIR ACTIONS, BUT THERE'S NO CAUSAL NEXUS 16 BETWEEN DEFENDANT'S ACTIONS IN RESPONSE TO THIS CONTROL 17 AND THE PLAINTIFF'S CLAIMS." AND THEN IT GOES ON TO SAY, 18 "IN ORDER TO MEET IT YOU HAVE TO ESSENTIALLY SAY THAT THE 19 GOVERNMENT MADE THEM DO IT." 20 THERE'S ABSOLUTELY NO EVIDENCE IN FRONT OF THE COURT, 21 WHICH YOU HAVE TO AT LEAST SET FORTH SOMETHING, YOUR 22 HONOR, TO SUPPORT YOUR REMOVAL, OTHER THAN JUST US TALKING 23 IN COURT, THAT ESTABLISHES REMOVAL JURISDICTION. 24 ONE OF THE THINGS THAT WAS MENTIONED WAS THE WESTFALL 25 ACT, YOUR HONOR. ONCE AGAIN, YOU CAN MAKE A MOTION FOR IT Case 5:09-cv BO Document 94 Filed 06/16/10 Page 30 of 33

31 31 1 IF YOU WOULD LIKE, BUT UNDER USC 28, SECTION 2671, IN THE 2 DEFINITION SECTION, WHICH ENCAPSULATES THE WESTFALL ACT 3 AND THE FEDERAL TORT CLAIMS ACT, EXPLICITLY SAYS, "BUT 4 DOES NOT INCLUDE ANY CONTRACTOR WITH THE UNITED STATES." 5 SO, YOUR HONOR, IN TERMS OF WAS THERE A CAUSAL NEXUS? 6 NO, THERE'S NOT. THAT'S PRETTY CLEAR. THERE'S NOTHING 7 THAT, WHAT THE DEFENDANTS HAVE SHOWN IN TERMS OF THE WPPS 8 CONTRACT, THAT MANDATED THAT THESE GENTLEMEN, THESE 9 DEFENDANTS, LEAVE THE INTERNATIONAL ZONE THAT DAY AND DO 10 WHAT THEY DID. SO THERE'S NO NEXUS THERE. 11 IN TERMS OF THE OTHER COLORABLE DEFENSES THAT THEY 12 WOULD HAVE TO OFFER, YOUR HONOR, IN ADDITION TO THE 13 STATUTE ITSELF, THERE'S NO BASIS FOR THAT. SO THE COURT 14 DOES HAVE THE AUTHORITY TO REMAND. DOESN'T HAVE TO WAIT 15 UNTIL THERE'S BEEN AN EVIDENTIARY HEARING OR A MINI-TRIAL 16 ON THE SUBJECT IN ORDER TO REMAND THE CASE. 17 THANK YOU, YOUR HONOR. 18 THE COURT: THANK YOU. I'M NOT INCLINED TO 19 REMAND THE CASE TO STATE COURT. THAT WILL BE MY RULING. 20 I'LL DO A WRITTEN ORDER TO THAT EFFECT VERY PROMPTLY SO 21 YOU WILL HAVE SOMETHING TO REVIEW. 22 I DON'T KNOW THAT A DENIAL OF A MOTION TO REMAND IS A 23 FINAL ORDER THAT YOU CAN GO TO THE APPEALS COURT WITH. I 24 THOUGHT IT WAS AN INTERLOCUTORY ORDER. 25 MR. MAUNEY: WE AGREE, YOUR HONOR. Case 5:09-cv BO Document 94 Filed 06/16/10 Page 31 of 33

32 32 1 THE COURT: BUT NEVERTHELESS, I'LL GIVE YOU A 2 RULING PROMPTLY. I THINK THAT'S ALL THE MOTIONS THAT WE 3 HAD TO ARGUE TODAY. 4 ALL RIGHT. THANK YOU FOR YOUR WORK. WE'LL BE IN 5 RECESS. 6 MR. MAUNEY: THANK YOU, YOUR HONOR END OF TRANSCRIPT Case 5:09-cv BO Document 94 Filed 06/16/10 Page 32 of 33

33 33 1 CERTIFICATE 2 THIS IS TO CERTIFY THAT THE FOREGOING TRANSCRIPT OF 3 PROCEEDINGS TAKEN AT THE CIVIL SESSION OF UNITED STATES 4 DISTRICT COURT IS A TRUE AND ACCURATE TRANSCRIPTION OF THE 5 PROCEEDINGS TAKEN BY ME IN MACHINE SHORTHAND AND 6 TRANSCRIBED BY COMPUTER UNDER MY SUPERVISION. 7 THIS THE 28TH DAY OF MAY, /S/ DONNA J. TOMAWSKI 10 DONNA J. TOMAWSKI OFFICIAL COURT REPORTER Case 5:09-cv BO Document 94 Filed 06/16/10 Page 33 of 33