filed - hawaii
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SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP ALLEN RUBY (Bar# 47109)RAZA RASHEED (Bar# 306722)525 University Avenue, Suite 1400 Palo Alto, California 94301 Telephone; (650) 470-4500 Facsimile: (650) [email protected] [email protected]
Attorneys for Defendant JENNIFER M. JOHNSON
SHARTSIS FRIESE LLP JOEL ZELDIN (Bar# 51874)DANIEL M. PONIATOWSKI (Bar# 306754)One Maritime Plaza, Eighteenth Floor San Francisco, CA 94111-3598 Telephone: (415)421-6500Facsimile: _ (415)421-2922 Email: [email protected] Email: [email protected]
Attorneys for Defendants and Cross-Complainants SILVERBELT HOLDINGS, LLC and SILVERBELT INVESTMENTS, LLC
SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF SAN FRANCISCO
ELECTRONICALLY
FILEDSuperior Court of California,
County of San Francisco
10/21/2019 Clerk of the Court
BY: RONNIE OTERODeputy Clerk
HAROLD H. ROBINSON IV,
Plaintiff,
V.
JENNIFER M. JOHNSON, an individual; SILVERBELT INVESTMENTS, LLC, a California Limited Liability Corporation; SILVERBELT HOLDINGS, LLC, a California Limited Liability Coiporation,
Defendants.
CASE NO.: CGC-18-567324
DEFENDANTS’ OPPOSITION TO PLAINTIFF’S MOTION IN LIMINE #4 TO EXCLUDE THE TESTIMONY OF DR. CHARLES CICCHETTI
Date: October 21, 2019 Time: 9:30 a.m.Dept.: 206
OPPOSITION TO MOTION IN LIMINE #4 Case No: CGC-18-567324
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SILVERBELT HOLDINGS, EEC, a California Limited Liability Company, and SILVERBELT INVESTMENTS, EEC, a California Limited Liability Company,
Cross-Complainants,
V.
HAROLD H. ROBINSON IV,
Cross-Defendant.
OPPOSITION TO MOTION IN LIMINE #4 Case No: CGC-18-567324
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MEMORANDUM OF POINTS AND AUTHORITIES
Defendants Jennifer M. Johnson, SilverBelt Holdings, LLC (“SBH”) and SilverBelt
Investments, LLC (“SBI”) (eolleetively, “Defendants”) respectfully submit this response in
opposition to Plaintiff Harold Robinson, IV’s (“Plaintiff’) “Motion in Limine No. 4 to
Preclude and/or Limit Improper and Speculative Rebuttal Testimony from Defendants’
Expert Witness Dr. Charles Cicchetti.” (“MIL #4”). As its title suggests, MIL #4 seeks to
entirely exclude the expert testimony of Dr. Charles Cicchetti, who Defendants disclosed as
a supplemental expert pursuant to Section 2034.280 of the Code of Civil Procedure to offer
testimony related to the regulatory approvals process for electricity generation projects in
HawaiT, among other things. (See Rasheed Opp’n Deck Ex. 14 % 7.) Plaintiff argues that Dr.
Cicchetti’s testimony should be excluded as improper speculation because Dr. Cicchetti
cannot predict with certainty whether the Hawai‘i Public Utilities Commission will
ultimately grant regulatory approval to a proposed power plant project on the Big Island of
Hawai‘i that lies at the center of the parties’ dispute. At this point, construction of the power
plant is still ongoing (as it has been for seven years), it does not have needed regulatory
approvals, it has never operated, and it is not in a position to start operating.
MIL #4 relies on a gross mischaracterization of both Dr. Cicchetti’s proposed
testimony, and the issues to be decided at trial, and should be denied. To assist the Court in
understanding why MIL #4 is improper, some background is in order. While that
background will be discussed below. Defendants also refer the Court to their Motion in
Limine #2 to Exclude Evidence of Future Profits Damages from the HawaiT Project, which
discusses many of these same issues in greater depth.
I. Background on the Hawai‘i Project
Defendant Johnson and Plaintiff used to be family friends. (See Rasheed Deck Ex. 1,
First Amended Complaint (“FAC”) 11-13.) In 2010, they decided to invest in real estate
projects together. (See id. 15-16.) Johnson provided the vast majority of the investment
capital for these projects, and Plaintiff managed the investments through a pair of entities.
OPPOSITION TO MOTION IN LIMINE #4 Case No; CGC-18-567324
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SBH and SBI. (See id. 17-18, 22, 29, 57.) The biggest of these investments was in a
project the parties generally refer to as the “Hawaih Project.” (See id. fl 35-44; Rasheed
Decl. Ex. 3, Declaration of Jennifer M. Johnson, 5-9.) The Hawai‘i Project refers to
efforts to retrofit a coal-burning power plant on the Big Island of Hawai‘i into a “biomass”
power plant, which would generate electricity by burning locally-sourced plant matter.
Because it is located on a sparsely-populated island in the middle of the Pacific
Ocean, the Hawai‘i Project’s only chance of being commercially successful is to secure a
long-term contract to provide electricity to the Hawai‘i Electric Light Company (“HELCO”),
the local publicly related utility company. In 2017, after a five-year process, Hu Honua (the
company that manages the Hawai‘i Project) secured such a contract, known as a “Power
Purchase Agreement” or “PPA,” with HELCO, and the PPA was approved by the Hawai‘i
Public Utilities Commission (“PUC”). However, a group of environmental plaintiffs
challenged the PUC’s decision to approve the PPA in court. Earlier this year, the Hawai‘i
Supreme Court sustained that challenge, vacated the PPA, and ordered the PUC to conduct a
new regulatory process, taking into account the Hawai‘i Project’s projected impact on
greenhouse gas emissions, among other things. See Matter of Hawai‘i Elec. Light Co., 445
P.3d 673, 698 (Haw. 2019).
While the seven-year odyssey surrounding Hu Honua’s failed efforts to obtain
regulatory approval for the Hawai‘i Project was playing out, Johnson and Plaintiffs
business relationship soured. In 2018, Defendants terminated Plaintiff as the manager of
SBH and SBI. Johnson claims (and will prove at trial) that the termination was based on
Plaintiffs poor performance, disloyalty, and mismanagement of SBH and SBI’s finances.
Plaintiff claims that the termination was part of a scheme to cut him out of the big profits his
investments (principally the Hawai‘i Project) will eventually earn. Plaintiff wants the Court
to award damages and incentive compensation now, based on investment returns he elaims
the Hawai‘i Project will earn in the future. (See Rasheed Decl. Ex. 2, Ruby MSA Decl. Ex. 7
at 140:15-17.)
4OPPOSITION TO MOTION IN LIMINE #4 Case No: CGC-18-567324
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A key dispute between the parties is thus when, if ever, the Hawai‘i Project will
generate positive investment returns. The answer to this question depends, in large part, on
whether and when the Project will obtain regulatory approval from the PUC, and whether
such an approval survives further judicial review. This is one of the most important issues in
this case, as most of Plaintiff s purported damages are tied to the Hawai‘i Project.
As explained more fully in Defendants’ Motion in Limine #2, California courts have
repeatedly held that “[djamages which are remote, contingent, or merely possible cannot
serve as a legal basis for recovery.” See, e.g., Copenbarger v. Morris Cerullo World
Evangelism, Inc., 29 Cal. App. 5th 1, 11 (2018) (citation omitted); Westside Ctr. Assocs. v.
Safeway Stores 23, Inc., 42 Cal. App. 4th 507, 531 (1996) (same); Cal. Shoppers, Inc. v.
Royal Globe Ins. Co., 175 Cal. App. 3d 1, 62 (1985) (same); see also Grupe v. Glick, 26 Cal.
2d 680, 693 (1945) (when a plaintiffs claim concerns “the operation of an unestablished
business,” the general rule is that “damages for prospective profits that might otherwise have
been made from its operation are not recoverable for the reason that their occurrence is
uncertain, contingent and speculative”); Food Safety Net Servs. v. Eco Safe Sys. USA, Inc.,
209 Cal. App. 4th 1118, 1132 (2012) (“lost anticipated profits cannot be recovered if it is
uncertain whether any profit would have been derived at all from the proposed undertaking”
(citation omitted)); S.C. Anderson, Inc. v. Bank of Am., 24 Cal. App. 4th 529, 536 (1994)
(same). In light of this case law, to carry his burden to prove entitlement to damages.
Plaintiff must show (among other things) that the investment returns he wants from the
Hawai‘i Project are not “remote, contingent, or merely possible.” Proving this will require
Plaintiff to demonstrate to the trier of fact and the Court the Hawai‘i Project is highly likely
to obtain all requisite approvals, and then go on to generate sufficiently concrete and certain
investment returns that could be reduced to a reliable present-day valuation.
Here is where the parties’ experts come in. Plaintiff plans to offer the testimony of
Steven Greenwald, a lawyer from California, to opine that the remaining regulatory
proceedings before the PUC are a mere formality, and the Hawai‘i Project’s ultimate
5OPPOSITION TO MOTION IN LIMINE #4 Case No: CGC-18-567324
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approval is certain and inevitable. At his deposition, Mr. Greenwald testified that he
expected these proceedings to be wrapped by March 1, 2020, although he subsequently
revised that estimate to September 2020 after the PUC issued a new seheduling order
making elear that its evidentiary hearing on the Hawai‘i Project would not even happen until
some unspecified point long, long after Mr. Greenwald’s previously predicted completion
date. (Rasheed Opp’n Deck Ex. 15 at 22:11-25; Rasheed Deck Ex. 4.)
Defendants retained Dr. Charles Cicchetti to analyze Mr. Greenwald’s claims and
opine on the Hawai‘i Projeet’s prospects for regulatory approval. Dr. Cicchetti is himself a
former regulator (he was the ehairman of Wisconsin’s equivalent to the Hawai‘i PUC), and
has spent decades teaching, writing, and testifying about energy regulation. Dr. Cicchetti
proposes to testify that it is impossible to tell whether or when the Eiawai‘i Projeet will
ultimately be approved in light of several sources of uncertainty, whieh include:
• The HawaiT Supreme Court’s order for the PUC to expand the parties and issues to be heard and considered on remand, and uncertainty as to whether a biomass power plant would produce undesirably high levels of greenhouse gas emissions;
• The PUC’s post-remand orders, which evidence an intent to re-open all issues decided in connection with the PUC’s approval of the first Hawai‘i Project PPA;
• Changes in the Eiawai‘i energy market over the last seven years which have rendered the HawaiT Project considerably more expensive than solar and wind alternatives;
• The fact that two of the three PUC members who approved the first PPA have been subsequently replaced by environmental eeonomists; and
• The likelihood that any PUC deeision approving a revised PPA for the Hawai‘i Project will be subject to additional court challenges, which could drag on for years.
(Rasheed Opp’n Deck Ex. 16 at 20:6-10, 73:18-74:5, 83:17-85:5, 93:8-19, 99:6-25, 103:2- 104:10.)II. Dr. Cicchetti’s Testimony Should Not Be Excluded
Against this backdrop. Plaintiff moves to exclude Dr. Cicchetti’s testimony for two
reasons: (i) Plaintiff argues that Dr. Cieehetti laeks relevant expertise that could assist the
trier of fact (MIL #4 at 4:2-11); and (ii) Plaintiff quotes Dr. Cicchetti’s statements saying
that he is not an expert in Hawaiian legislation and eourt processes, and cannot predict what
OPPOSITION TO MOTION IN LIMINE #4 Case No: CGC-18-567324
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the PUC’s ultimate deeision will be on the Hawai‘i Projeet, and argues that Dr. Cieehetti’s
opinions are thus impermissibly speeulative {Id. at 6:3-7:4.) Neither argument has merit.
A. Dr. Cicchetti Is Qualified to Render Expert Opinions in This Matter
Evidenee Code Section 720(a) provides that a “person is qualified to testify as an
expert if he has special knowledge, skill, experience, training, or education sufficient to
qualify him as an expert on the subject to which his testimony relates.” In deciding whether
to admit an expert, the “determinative issues in each case must be whether the witness has
sufficient skill or experience in the field so that his testimony would be likely to assist the
jury in the search for the truth.” Brown v. Co/m, 11 Cal. 3d 639, 645 (1974). If a person is
shown to have such special expertise, it is an abuse of discretion for the trial court to decline
to permit him to testify as an expert witness. See Jeffer, Mangels & Butler v. Glickman, 234
Cal. App. 3d 1432, 1442-43 (1991) (“The trial court will be deemed to have abused its
discretion if the witness has disclosed sufficient knowledge of the subject to entitle his
opinion to go before the jury.”); William E. Wegner, et ah, California Practice Guide—Civil
Trials and Evidence § 11:97 (Rutter Group 2019) (“If the witness is shown to have ‘special’
knowledge of the subject, it is an abuse of discretion to refuse to permit him or her to testify
as an expert.”). Rather, “questions regarding the degree of an expert’s knowledge go more to
the weight of the evidence presented than to its admissibility.” See ABM Indus. Overtime
Cases, 19 Cal. App. 5th 277, 294 (2017) (emphasis in original).
Here, Dr. Cicchetti clearly has special expertise that would assist the trier of fact. As
recounted in Dr. Cicchetti’s CV, which was attached as an exhibit to Defendants’
Supplemental Designation of Expert Witnesses Pursuant to CCP § 2034.280, Dr. Cicchetti:
• Has a Ph.D. in Economics from Rutgers University;
• Was the Chairman of the Public Service Commission of Wisconsin;
• Has taught environmental economics and related subjects as a professor at the University of Wisconsin, Harvard University, and the University of Southern California; and
• Has written dozens of books and articles on energy regulation.
7OPPOSITION TO MOTION IN LIMINE #4 Case No: CGC-18-567324
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(See Rasheed Opp’n Decl. Ex. 14.) There are few people in the eountry as qualified to opine
on potential sourees of uneertainty in the regulatory approvals proeess for energy projeets as
Dr. Ciechetti.
Plaintiff argues that Dr. Ciechetti lacks relevant expertise because he is not an expert
in Hawai‘i legislation and court processes specifically, and instead intends to draw from his
five decades of experience as a regulator and an economist to offer opinions about the
Hawai‘i Project. (MIL #4 at 4:2-11.) However, this criticism goes to the weight of Dr.
Cicchetti’s testimony, and not its admissibility. See ABM Indus., 19 Cal. App. 5th at 294.
Moreover, Plaintiffs expert Steven Greenwald likewise has no relevant experience
with the Hawaih PUC, and thus Plaintiffs criticism of Dr. Ciechetti extends equally to his
own expert. (See Rasheed Opp’n Decl. Ex. 15 at 13:14-14:11 (admitting that Mr. Greenwald
has “nothing in [his] CV relating to the state of Hawaii,” has never “represented clients
before the Public Utilities Commission of the state of Hawaii,” has never appeared in a
Hawaiian court, and does not claim to be “an expert in the laws of the state of Hawaii”).) If
Plaintiff would like to stipulate to excluding Mr. Greenwald’s testimony, and thereby
forfeiting any entitlement to damages related to the Hawai‘1 Project, Defendants will agree
not to call Dr. Ciechetti. Assuming that trade would be unwelcome to Plaintiff, however, it
is enough to note that Plaintiff has provided no reason to question that Dr. Ciechetti has
admissible expertise.
B. Dr. Cicchetti’s Testimony Is Not Improperly Speculative
Plaintiffs second argument is that Dr. Cicchetti’s testimony should be excluded
because he does not know how the PUC will ultimately decide on the Hawai‘i Project’s
renewed application for a PPA. (MIL #4 at 6:3-7:4.) That may have been a valid criticism if
Dr. Ciechetti (like Plaintiffs expert Greenwald) were planning on offering an opinion at
trial as to what the ultimate outcome of the Hawaiian regulatory and legal proceedings will
be. But he has no such plans. To the contrary. Dr. Ciechetti will testify that no one can tell
with any reasonable certainty how these proceedings will play out, not even Mr. Greenwald.
8OPPOSITION TO MOTION IN LIMINE #4 Case No: CGC-18-567324
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In offering this opinion, Dr. Cicchetti will explain the various eonsiderations the PUC must
take into aeeount in rendering its deeision, and why those considerations are complex
enough to support either approving or rejecting the revised PPA between Hu Honua and
HELCO. Dr. Cicchetti will review the recent history of cheaper and more environmentally
friendly projects on the Big Island, and use his experience as a regulator to explain why the
PUC will be reluctant to simply rubber stamp the Hawai‘i Project in light of its potential
environmental impacts, energy production costs, the Hawai‘i Supreme Court’s strongly-
worded remand order, and the looming prospect of additional judicial review. The point of
Dr. Cicchetti’s proposed testimony is to show that Mr. Greenwald is engaging in improper
speculation by asserting that the remaining regulatory proceedings are a mere formality that
will inevitably result in the Hawai‘i Project’s approval, not to repeat the same mistake by
offering improper speculation himself.
CONCLUSION
It would doubtless be convenient to Plaintiff for Mr. Greenwald’s speculations about
the Hawai‘i Project’s regulatory prospects to go unchallenged at trial. But Plaintiff has
provided no basis to exclude Dr. Cicchetti’s relevant and deeply probative insights into the
considerations the Hawai‘i PUC must grapple with in determining whether the Hawai‘i
Project should proceed. For these reasons, the Court should deny MIL #4.
DATED: October jS, 2019
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
By:y
Attorneys for Jennifer M. Johnson
SHARTSIS FRIESE LLP
5cl ZeldinAttorneys for SilverBelt Investments, LLC
and SilverBelt Holdings, LLC
OPPOSITION TO MOTION IN LIMINE #4 Case No: CGC-18-567324
FILED
2020 Sep 2S PM 13:10
PUBLIC UTILITIES COMMISSION
The foregoing document was electronically filed with the State of Hawaii Public Utilities
Commission's Document Management System (DMS).