Preview
ann bw
ELECTRONICALLY
FILED
JAMES P. BENNETT (SBN 65179) Ss ccune br San branciacoet
JBennett@mofo.com 02/26/2019
JOSHUA HILL JR. (SBN 250842) 02/26/2019.
JHill@mofo.com BY: EDWARD SANTOS:
AMANI SOLANGE FLOYD (BAR NO. 301506) Deputy Clork
AFloyd@mofo.com
MORRISON & FOERSTER LLP
425 Market Street
San Francisco, California 94105-2482
Telephone: 415.268.7000
Facsimile: 415.268.7522
MIRIAM A. VOGEL (SBN 67822)
MVogel@mofo.com
MORRISON & FOERSTER LLP
707 Wilshire Boulevard
Los Angeles, CA 90017-3543
Telephone: 213.892.5200
Facsimile: 213.892.5454
KENT L. RICHLAND (SBN 51413 )
Krichland@gmsr.com
GREINES, MARTIN, STEIN & RICHLAND LLP
5900 Wilshire Boulevard, 12th Floor
Los Angeles, California 90036
Telephone: 310.859.7811
Facsimile: 323.330.1060
Attorneys for Petitioner
GOLDEN STATE WARRIORS, LLC
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF SAN FRANCISCO
GOLDEN STATE WARRIORS, LLC, Case No. CPF-19-516542
Volume 16 of 16 [Exs. 145-155]
Petitioner,
EXHIBITS IN SUPPORT OF
v. DECLARATION OF JOSHUA HILL IN
SUPPORT OF GOLDEN STATE
OAKLAND-ALAMEDA COUNTY WARRIORS, LLC’S OPPOSITION TO
COLISEUM AUTHORITY, PETITION TO CONFIRM
ARBITRATION AWARD; REQUEST
Respondent. FOR DE NOVO REVIEW OF ALL
QUESTIONS OF LAW; PETITION TO
VACATE ARBITRATION AWARD
Hearing Date: April 10, 2019
Time: 9:30 a.m.
Dept.: 302
Hon. Ethan P. Schulman
RESERVATION NO.: 02250410-04
i!
HILL DEcL. ISO GSW’s OPP. To PET. TO CONFIRM ARB. AWARD; REQ. DENOVO REV. PET VACATE
sf-1410742
4352Exhibit 145MLITIVATE
REPORTING + TRIAL SERVICES
Transcript of Proceedings:
Oakiand-Alameda County Coliseum Authority
v.
Golden State Warriors
September 10, 2018
P: 877.771.3312 | F: 877.561.5538 | litivate.com
4354Transcript of Proceedings September 10, 2018
AMERICAN ARBITRATION ASSOCIATION
OAKLAND-ALAMEDA COUNTY
COLISEUM AUTHORITY,
PLAINTIFF,
vs. No. 02-17-0006-0157
GOLDEN STATE WARRIORS,
DEFENDANTS.
REPORTER'S TRANSCRIPT OF PROCEEDINGS
BEFORE HONORABLE REBECCA WESTERFIELD (Ret.)
Monday, September 10, 2018
Volume 4, Pages 783 - 872
Reported By:
KATHLEEN WILKINS, CSR #10068,
RPR-RMR-CRR-CCRR-CLR-CRC
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Transcript of proceedings before the
American Arbitration Association, One
Sansome Street, Suite 1600, San Francisco,
California, on Monday, September 10, 2018,
commencing at the hour of 1:59 p.m. thereof,
before me, Kathleen A. Wilkins,
RPR-RMR-CRR-CCRR-CLR-CRC, a Certified Shorthand
Reporter, in and for the State of California.
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FOR THE
FOR THE
APPEARANCES OF COUNSEL
PLAINTIFF:
KEKER VAN NEST & PETERS
633 Battery Street
San Francisco, California 94111-1704
BY: DANIEL PURCELL, ESQ.
EDUARDO E. SANTACANA, ESQ.
LEAH PRANSKY, ESQ.
Telephone: (415) 773-6697
E-mail: dpurcell@keker.com
esantacana@keker.com
lpransky@keker.com
DEFENDANTS :
MORRISON & FOERSTER
425 Market Street
San Francisco, California 94105-2482
BY: JOSHUA HILL, ESQ.
JAMES P. BENNETT, ESQ.
AMANI S. FLOYD, ESQ.
R. BENJAMIN NELSON, ESQ.
Telephone: (415) 268-7464
E-mail: jhill@mofo.com
afloydemofo.com
jbennett@mofo.com
rbnelson@mofo.com
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ALSO PRESENT:
David Kelly, Jason Allen, Scott
Riewerts, Tom Beyer
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INDEX
INDEX OF EXAMINATIONS
PAGE
CLOSING ARGUMENT BY MR. HILL ................-- 788
CLOSING ARGUMENT BY MR. PURCELL ..............- 832
REBUTTAL BY MR. HILL ..... 2... ee eee eee eee 866
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SEPTEMBER, 10, 2018 1:59 P.M.
PROCEEDINGS
CLOSING ARGUMENT BY MR. HILL
MR. HILL: Your Honor, as you know, I'm
Joshua Hill, Morrison & Foerster. Represent the
Warriors. Here with Jim Bennett, Amani Floyd, Ben
Nelson, our client David Kelly, general counsel of
the Warriors, our paralegal, Tom Beyer.
So we prepared a presentation for you,
your Honor, and we're happy also to answer
questions or respond to arguments of opposing
counsel, as you wish.
ARBITRATOR WESTERFIELD: So how do you
all want to set this up in terms of -- have you
talked about any time limit? Did we talk about
that or do you want to --
MR. PURCELL: I don't think we did.
ARBITRATOR WESTERFIELD: How long do you
think you're going to be going? And do you want
to reserve some time for reply or rebuttal?
MR. HILL: I think this is about
45 minutes, give or take. And I would like to
reserve time for rebuttal. I'm not sure how long
Mr. Purcell has in mind for his presentation.
MR. PURCELL: I think we'll be shorter
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than that. I think we'll be around half an hour.
ARBITRATOR WESTERFIELD: I just wanted
some general ideas. I don't think we're under any
kind of tight timeline. Thank you.
MR. HILL: Well, thank you, Your Honor.
Our position from day one has been
straightforward. We've had a straightforward
position as to why the contract should be
interpreted, and we have argued in this case, and
as the Warriors have interpreted for 22 years,
plain language of Section 6.4 supports the
Warrior's interpretation, the key contract
negotiators from both sides support the Warriors!
interpretation, and the party's subsequent conduct
and contemporaneous admissions further support the
Warriors' interpretation.
Now the Coliseum has argued time and
again that this is a simple case on one hand. But
on the other hand, they've worked to tie this
arbitration, we submit, into knots with
conflicting, contradicting, sometimes nonsensical
and evolving positions on the license agreement.
So, Your Honor, what I'd like to do in
this closing statement is untangle that knot and
explain, once again, why Section 6.4 is
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susceptible to only one meaning, and that is the
meaning advanced by the Warriors in this
arbitration.
On July 23rd when we began the
hearing, I said there are three reasons why the
Warriors should prevail in this case. Number 1
is, the plain meaning supports the Warriors'
interpretation, has done so for 22 years.
Number 2, the significance of the change
in language from the MOU to Section 6.4 that Your
Honor has heard so much about during these
proceedings, and we know the MOU will supersede it
by the definitive license agreement. And
Section 5.1(b) of the MOU will supersede it.
Coliseum knew it.
Third point, Your Honor, is that the
subsequent conduct of the parties, sworn testimony
of one of the Coliseum's key witnesses, both
comport with the Warriors' understanding and
long-time interpretation of Section 6.4.
I'll add a fourth reason, Your Honor,
and that is -- that was revealed during the week
that we heard testimony in this hearing room, that
the Coliseum has a burden and they failed to carry
it. And at bottom, the Coliseum wants the
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Warriors to pay the $55 million. They're seeking
a $55 million judgment, in effect. They want that
ruling with no burden on their part, no obligation
to submit evidence. And that's not right.
So the weight of the evidence of the
hearing shows conclusively that the Warriors'
interpretation should prevail and Your Honor
should declare that the Warriors have no
obligation to pay debt service after June 30
2019.
In plain meaning, we're going to talk
about "terminates," the meaning of the word
"terminates." Now, every negotiator of the
license agreement that appeared in this hearing
room understood and agreed on the ordinary and
popular meaning of the word "terminates."
Second to that, the Coliseum has
essentially tied itself in knots to create an
ambiguity where there is none around the phrase
"and after expiration of this license agreement."
We'll explain why the Coliseum's position on that
phrase does not make sense.
And so ultimately, Your Honor, what the
Coliseum seeks to do is have you interpret this
contract in a way that is at odds with the intent
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and the plain meaning of the contract, and that
simply is not right.
So Section 6.4 focused on the first
three words, "if licensee terminates this license
agreement." So that is the trigger for
Section 6.4. So nothing else matters. This
provision does not kick in unless the Warriors
terminate. There are no further obligations. And
so the Coliseum has sought to inject some
uncertainty into the meaning of "terminates" as it
is used here, but it is not uncertain, for reasons
that we will explain.
Now, the Coliseum has made interesting
argument in their post-hearing brief. They write,
"The Warriors have sought refuge in two
grammar-based arguments." They have criticized
the Warriors for arguing the grammar of this
provision. Now, we know from the civil code that
the language of a contract is to govern its
interpretation.
Grammar matters. But the Coliseum
argues there is no difference between the
transitive and intransitive verb "terminate."
They actually write in their brief, in the
post-hearing brief, that there is no support in
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the "dictionary or any legal doctrine" for the
distinction between a transitive and intransitive
verb, the distinction the Warriors are making in
this case, and that could not be more incorrect.
Briefly, we've talked about the
definition of transitive verb versus intransitive
verb. Transitive verb has an object whereas an
intransitive does not. And here, "if licensee
terminates this license agreement," then that
phrase "license agreement" is the object of the
transitive verb "terminates."
The Coliseum has said there's no legal
basis, there's no support in legal doctrine for
drawing a distinction between transitive terminate
and intransitive terminate. Well, here are five
cases. Specialty Rental Tools case specifically
discusses the different meanings of the verb
"terminate," the verb at issue in this case. And
there the Court found that the verb "terminates"
was to be interpreted in the transitive sense, the
same as it is to be interpreted in this case.
The second case on the slide, the Byrne
V Drain, it also speaks to the use of a different
verb. It's the verb "subject" and how it's used
in a city charter. And the Court there also notes
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the difference between the intransitive and
transitive sense.
The third case, People versus Label,
talks about the intransitive and transitive sense
of verbs as used in the health and safety code.
The Potts case focuses on the verb
"operates" as used in a contract and notes that it
can be "either intransitive or transitive and
dictionaries give a number of definitions of each
form."
The Poindexter case draws a similar
distinction between the transitive and
intransitive form of the verb "corrupt" as used in
the United States code.
So simply put, the Coliseum is off base
to suggest that there is no basis in the
dictionary or legal doctrine for the distinction
the Warriors are drawing in this case, and that's
the distinction between the transitive and
intransitive forms of the verb "terminate."
So what we have here on slide 9, Your
Honor, are definitions of the transitive form of
"terminate." Three different sources. They all
define "terminate" in the transitive sense to mean
to bring to an end. Put to an end.
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The example used in the Oxford
dictionary, he was advised to terminate the
contract, and that is how terminate is used in
Section 6.4 of the license agreement.
Now, in contrast, you see the
intransitive form of "terminate" and how the
intransitive form of the verb is defined on
slide 10. And these definitions are different
from the transitive form. In here, "terminate"
means to come to an end, come to an end in time is
one definition, which is akin to an expiration.
So there can be no doubt that
"terminate" as used in Section 6.4 of the license
agreement is used in the transitive sense and
requires the Warriors to bring the contract to an
end before its prescribed term, and every witness
agrees on this point.
You heard from three witnesses
intimately involved in the negotiation of a
license agreement. For the Warriors you heard
from Robin Baggett, former outside general counsel
for the Warriors and now an owner of several
wineries. You heard from Michelle Banks, the
former global general counsel of The Gap, also a
former outside counsel to the Warriors.
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And for the Coliseum, you heard from
Charles Seaman or Charlie Seaman. Has a 40-year
career in negotiating contracts as a deal lawyer.
And you also heard from Deena McClain who was not
as intimately involved in the negotiations of the
license agreement, but she was the Coliseum's
former general counsel and a partner at
Morrison & Foerster.
And the point I'm making here, Your
Honor, is these are not babes in the woods; these
are sophisticated deal lawyers. And all four
witnesses agree that the ordinary and popular
meaning of "terminates" is the one that supports
the Warriors' interpretation.
So Robin Baggett testified that it means
to bring the contract to an end within its
prescribed term.
Michelle Banks testified that 6.4
requires the Warriors to exercise a renewal option
and then terminate.
Charlie Seaman agreed that "terminates"
contemplates an action that brings the agreement
to an end within and before the running of its
prescribed term. Seaman also said "terminates"
refers to a volitional act of a party exercising a
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right which brings the agreement to an end within
its prescribed term.
Deena McClain testified the typical use
of "terminates" means to bring the contract
through a volitional act to an end within its
prescribed term.
So faced with the testimony of both the
Warriors' negotiators and the Coliseum's
negotiators, the Coliseum has sought to inject
uncertainty and confusion into the reading of
Section 6.4, particularly around the phrase "and
after the expiration of this license agreement."
And what we'll explain, Your Honor, is
that that phrase, "after the expiration of this
license agreement" creates no ambiguity in this
contract.
Now, we focused on the first part of
6.4, “if licensee terminates this license
agreement," that is the trigger. And it continues
with this phrase "in any year after the expiration
of the license agreement."
Now, the Coliseum would have you focus
less on "if licensee terminates," just the
trigger, and ask you to focus on this phrase "in
any year after expiration of this license
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agreement." So the Coliseum says that's the
trigger. They say that the fact that Section 6.4
makes reference to "any year after expiration,"
"expiration" is a trigger for Section 6.4, and
that is not correct.
Now, if we go back to their earliest
pleading in this case, and their response to the
arbitration demand, and they refer to Section 6.3
and 6.4 of the license agreement, and they concede
and admit that those two sections are mutually
exclusive. That's what they write.
Then they address the use of the word
"expiration" in 6.4. And they describe the use of
that word just as the Warriors have described use
of that word in this case, as marking a point in
time. And they write here, "expiration, i.e., on
June 30, 2017."
So an expiration is not a trigger. It
doesn't trigger the imposition of obligations
under 6.4. "Expiration" as used in Section 6.4
marks a particular point in time. And that's what
the Warriors have argued, and that's what
witnesses have testified to.
And the reason for that is -- and
there's no dispute. There's no dispute over how
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Section 6 of this license agreement is structured.
It is a three-part structure. There's a first
ten years during which the Warriors have no right
to terminate. And all the parties agree on that.
There's a second ten years, which we have called a
trimester, the second trimester, and the Warriors
have a right to terminate, but if they terminate,
they pay a lump sum fee.
And the parties are in agreement that
Section 6.4 applies to that third trimester. And
that's from July 1, 2017 through June 30, 2027.
And that is the time period during which
Section 6.4 can be triggered if the Warriors
terminate the license agreement. So there's no
dispute that it is a trimester structure under
which there are certain termination rights.
When you accept the structure of
Section 6 as both parties have accepted in this
case, that 6.4 applies to that last trimester, you
understand that the word "expiration" is the only
word in Section 6.4 that makes that clear. It's
the only word in Section 6.4 that limits the
operation of this provision to the third
trimester.
And the author of the edit that inserted
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that phrase into the agreement testified as such.
Michelle Banks' testimony. She was asked about
the phrase "in any year after the expiration of
the license agreement," what does that mean? And
she answered, to create the ten-year period from
year 20 to 30. That's the point of an "any year
after expiration of this license agreement."
That's why it's there.
And Charlie Seaman agrees. He was
asked, Paragraph 6.4 was intended to address the
Warriors' debt repayment obligations during the
period 2017 to 2027?
He says, Yes, I believe so.
And he was asked, And other than in
interpretation of the word "expiration" in that
sense, isn't it true there's nowhere in
Section 6.4 anything that limits its time, its
application to that period everybody seems to
agree it was intended to apply to?
And he says, That's correct, yes.
So we have both Warriors! negotiator and
the Coliseum negotiator agreeing on that point.
Now, in the Coliseum's opening statement, they use
this slide here, and they said there are three
triggers in Section 6.4. And they said the same
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three triggers appeared in 5.1(b) of the MOU. But
we know that in any year after the expiration of a
license agreement could not possibly be a trigger
under 5.1(b).
5.1(b) only -- was only triggered in the
event of an expiration. It would be surplusage to
have that phrase operate as a trigger in 5.1(b),
and when it was transferred to 6.4, it served the
same purpose, to mark a place in time. It did not
become a trigger when 6.4 was drafted when it was
not a trigger under 5.1(b).
We know it was not a trigger, it doesn't
make sense as a trigger because we understand the
story of how it was inserted into 5.1(b). This is
Exhibit 21. This was a draft version of the MOU.
Michelle Banks testified that the phrase "after
the expiration of a new license agreement and
prior to June 30, 2027," which is underlined, was
inserted there to limit the time, to limit the
time at which the Warriors would be responsible
for debt service payments. If the Warriors did
not exercise either of the first two renewal
options, it would be ten years. It would not
extend beyond 2027.
And this is another set of testimony
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from Charlie Seaman on this point. He was asked
about a hypothetical from the Coliseum's opening
statement. And he was asked about a termination
of the license agreement during a renewal period.
And he agreed that if there was a termination
during a renewal period, it would never have been
an expiration, which is another reason why the
Coliseum's argument that expiration, as used in
Section 6.4, is a trigger simply is not correct.
It is there to define a point in time after
20 years, after the 20th year of the license
agreement and before June 30, 2027.
Another reason we know the Coliseum had
never considered expiration to be a trigger is
what Mr. Seaman writes in his April 24th, 1996
memo. He says, We should revert to the language
of the MOU, which makes this paragraph applicable
if the Warriors do not exercise the first and
second extension options.
And so he's writing that if the
agreement expires, then 6.4 is not applicable.
And that is another reason, Your Honor, why
expiration is not a trigger. It defines the time
where the Warriors have not exercised the first or
second extension options. It extends for
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ten years, and as we'll discuss, the May 21st memo
reinforces this point.
On plain meaning, the Coliseum's
interpretation of 6.4 contradicts the plain
meaning of the contract. As we cited these cases
in our closing brief, and we have provided copies
of these cases, I won't belabor this point, but it
is fundamental California law that extrinsic
evidence cannot be offered in a way that
contradicts or is inconsistent with the plain
meaning of the contract. And the arbitrator
should not reimagine the parties' obligations
simply because the Coliseum now, 22 years later,
has regrets about the deal that it entered into.
Now, we heard in the hearing that the
Coliseum now argues that "terminates" for any
reason includes the concept of an expiration. And
so there really is no basis in the law or in the
dictionary or in the record for the distinction
that the Coliseum is attempting to draw here.
That argument is inconsistent with the law, it's
inconsistent with the facts in this case.
It's also inconsistent with the
testimony of the Coliseum's own witnesses,
including Ms. McClain, including Mr. Seaman. Both
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testified as to the meaning of "terminates" as an
action that brings an agreement to an end within
and before the running of the prescribed term,
which is inconsistent with the concept of an
expiration.
Now, the Coliseum has made this
argument. It is not an original argument. It was
made in these two cases. Cases we've cited on
slide 30. We also cited these cases in our
post-hearing brief.
First case there, the Children's
Hospital case. Question before the Court was,
Does "terminate" apply to a contract that expired
by its own terms? Does that word "terminate"
apply to a contract that has expired by its own
terms?
So the Court in the Children's Hospital
case was considering that very issue. And it
writes, Termination as used in this context
denotes an early or premature ending of a contract
as a result of some action undertaken by one or
both parties. Expiration, on the other hand,
refers to the natural conclusion.
And it writes, Put simply, a party may
not -- start over. A party may terminate an
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agreement, but it cannot expire it. And what the
Coliseum is arguing in this case is that
"terminates" would include the concept of a party
expiring a contract. And as discussed in the
Children's Hospital case, and the Specialty Rental
Tools case, that is inconsistent with the meaning
of "terminates."
Now, on this point, "terminates for any
reason." Now, adding the three words "for any
reason" to terminates doesn't change its meaning.
"Terminates" still means what the dictionary says
it means. It still has the ordinary and popular
meaning to bring the contract to an end within its
prescribed term. And so tacking on "for any
reason" to the verb "terminate" does not change
its meaning. It just refers to the rationale for
terminating. The reason for terminating.
And under this license agreement, there
are multiple rationales for exercising a right to
terminate. Under 6.3, there's actually no -- no
rationale is required. Warriors can terminate.
Under 6.4, the Warriors have exercised a
renewal option, they may terminate.
Under 8.2.2, there's a change in the
NBA's constitution and bylaws, et cetera, Warriors
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have a right to terminate.
19.2, if there's damage, say an
earthquake, Oracle falls in on itself, Warriors
can terminate.
24.2.2, if there's a default and the
Warriors have failed to cure it, the Coliseum can
terminate.
Under 24.5, if the Coliseum has
defaulted and has failed to cure that default,
Warriors can terminate.
So these are the reasons for
termination. That's what "terminate for any
reason" means as used in Section 6.4. "Terminate
for any reason" does not mean an expiration.
And we return to the April 24th memo
by Charlie Seaman. When he made comments on 6.4,
he didn't interpret "terminates for any reason" to
include an expiration. In fact, he specifically
pointed out that Section 6.4 did not include an
expiration occurring from the Warriors' decision
not to exercise the extensions.
So to sum up the sort of plain meaning
arguments, Your Honor, the Warriors offer the only
interpretation of 6.4 that's consistent with
dictionary definitions supported by the case law
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that we cite both in our closing brief and that we
have cited in this presentation.
Our interpretation is in harmony with
the negotiator's intent, as they have agreed with
the definition of "terminates" the Warriors have
argued in this case. And the interpretation the
Warriors have put forward is the only meaning to
which the language of the license agreement is
reasonably susceptible.
So if the Coliseum intended for 6.4 to
include the expiration of the license agreement,
you met Charlie Seaman, you met Deena McClain.
Those lawyers were more than capable of drafting
such language to accomplish that goal. That's not
what they did. After the MOU was signed, shortly
after the MOU was signed, the Coliseum changed the
language of the MOU. And that change cemented the
Warriors' right to allow the agreement to expire
and walk away after expiration owing nothing
further to the Coliseum.
And so for the next several minutes,
Your Honor, I'm going to address this point about
the significance and the effect of the change in
language from the MOU to Section 6.4.
The Coliseum has devoted pages of
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briefing and argument to establishing and
documenting the MOU. But the MOU is not the deal.
It was not binding. All the witnesses agree it
was superseded by its own terms and by the license
agreement, and every witness knew it. And the
evidence at the hearing showed that the Coliseum
knew that the Warriors! obligations after contract
expiration were different than what had been
contemplated under the MOU.
We're going to talk about the language
of the MOU and the license agreement, the
integration clause, the other relevant provisions
of the MOU. But first on this point that was
raised in the Coliseum's post-hearing brief. They
talked about the city and the county may not have
approved the license agreement, said there was no
evidence in the record that the license agreement
itself was approved as opposed to the MOU.
And we say and, question mark. The
Warriors cannot be penalized, they should not be
penalized if the government, government actors,
City of Oakland, County of Alameda, didn't do
their jobs, they didn't bring the license
agreement to a vote before the bodies. That
shouldn't affect the Warriors! rights.
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The parties have been conducting
business under the license agreement for more than
20 years. And so we're just not sure what the
Coliseum is suggesting with this argument. They
haven't said this or are they saying there's no
contract between the parties because it wasn't
approved? And in that case, we certainly have no
right to pay debt service.
So the Coliseum appears to argue that if
the city and the county did not approve the
license agreement, but even if the Authority did,
but the city and the county did not, then somehow
we should default to the terms of the MOU, and
that simply just can't be.
So the Coliseum's reliance on the MOU is
simply misplaced. And we know that from the terms
of the MOU itself. By its own terms under
Section 7.2 and 7.4 of the MOU, it has no further
effect upon the execution of the license agreement
and it ceases to have any effect if there is no
license agreement. So either way, the MOU has no
effect and really has no relevance to this case
except for one particular reason, which we'll get
to.
The Coliseum's witnesses agree that the
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MOU superseded and has no effect. Ezra Rapport,
one of the Coliseum's key witnesses, agreed that
the license agreement superseded anything
reflected in the MOU, specifically anything
reflected in 5.1(a) and (b).
Charlie Seaman agreed that the MOU was
superseded and replaced by the license agreement.
And California law has been consistent that
preliminary agreements like MOUs and letters of
intent -- and we cited those cases in our
post-hearing brief, that those types of agreements
have no power to bind the parties unless and
except the parties agreed to be bound. And here
there was no expectation that the terms of the MOU
would survive past either the execution of the
definitive agreement or that the MOU would survive
past May 15th, 1996. There was no definitive
agreement.
And, in fact, this license agreement has
an integration clause in Section 32 of the license
agreement. It constitutes the sole and entire
agreement among licensor, Authority, and licensee
with respect to the subject matter hereof. The
integration clause has significant legal effect,
and the Coliseum's key witnesses understand and
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agree on this point as well.
Ezra Rapport, he was asked specifically
about the integration clause. And he agreed, yes,
the license agreement supersedes it. It would be
chaos to have multiple agreements.
Charlie Seaman was asked specifically
about the integration clause. Captures the
parties' agreement and understanding that 6.4 of
the license agreement supersedes anything
reflected in Section 5.1(b).
And Charlie Seaman responds, That would
be true.
And so because of the integration clause
and the license agreement, the MOU has no
evidentiary value in this case except to
illustrate the difference between the language in
Section 5.1(b) and the language in Section 6.4.
California law is crystal-clear that
where a contract contains an integration clause,
extrinsic evidence is admissible only where such
evidence is consistent with the terms of the
integrated document.
And so here the integrated contract, the
license agreement, supersedes all prior
understandings. And to the extent the Coliseum
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seeks to admit extrinsic evidence, it must be
consistent with the terms of the integrated
document, and that is not what they're doing in
this case, Your Honor.
And the parties had no trouble, there's
no dispute on agreeing to an integrated contract.
The parties knew and understood that 5.1(b) and
the MOU were no longer the deal. Negotiators knew
that the deal had changed.
Now, as an initial matter, one of the
arguments advanced by the Coliseum that the
hearing in both -- in their post-hearing brief,
that somehow the negotiations ceased as of the
signing of the MOU, that it was suspended in
amber, that nothing else happened after
February 21st, 1996, when the MOU was signed,
until July of '96, when the license agreement was
signed. And that's not true. There were
three months of negotiating and drafting leading
to the definitive agreements in this case.
And what we have here on slide 47, Your
Honor, is a time line of documents and events
between February 21, 1996, when the MOU was
signed, and July 15, 1996, which is the effective
date of the license agreement.
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And just to summarize briefly, we see in
March Charlie Seaman writes the letter saying he's
been given the go-ahead to draft the license
agreement, first draft. April 9th, Your Honor
saw several versions of internal drafts at the
Crosby Heafey firm, the firm representing the
Coliseum, showing edits being made to what would
become the definitive license agreement.
April 10th, there is additional
drafting. April 11th, additional drafting.
April 12th, the Coliseum circulates the first
draft of the license agreement. The 15th, there
is correspondence that makes reference to
continued negotiations. The 24th we see Charlie
Seaman's memo to his clients regarding edits to
the license agreement. On the 29th,
Michelle Banks circulates a draft of the
agreement.
In May, we see from Section -- the MOU,
that, as a technical matter, the MOU expires and
has no further effect as of May 15th, 1996.
Later in May, we see the second Charlie Seaman
memo commenting on edits to the license agreement.
In June, Michelle Banks -- we heard
testimony on this -- Michelle Banks circulated
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another markup of the license agreement. And then
the license agreement is effective July 15th,
1996. So there is no basis for the argument that
there were no further negotiations and no further
discussions about the license agreement, about the
substantive terms therein after the MOU was
signed.
And Michelle Banks seconds that notion
in her testimony. She testified clearly,
competently, credibly that there continued to be
negotiations after the MOU was signed, both in her
oral testimony and that is supported by documents
in the record.
Now, on this language that was
changed -- and the evidence in the record shows
that Section 5.1(b) of the MOU was purposely
changed. And when that edit was made, it would no
longer correspond -- Section 6.4 would no longer
correspond to 5.1(b). And Exhibit 30 is Charlie
Seaman's handwritten markup of the draft. This is
from April 9th.
So the Coliseum would argue that, well,
we see that the language was changed, but nobody
22 years later can really remember why the
language was changed so we should just ignore the
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impact of that. And to follow that logic would
disregard the reasons why we have written
contracts in the first place.
So we're not relying on 22-year-old
memories. We have documentary evidence. We've
got a documentary record of these edits being made
and that they were purposeful. And Charlie Seaman
was asked whether the Coliseum would have any
reason -- or would there be any reason for that
change other than at the insistence of Golden
State Warriors in negotiations. And Mr. Seaman
says, not that he recalls.
We submit there is no other reason for
that change other than at the direction of the
Warriors. We know from Mr. Seaman's April 24th
memo that he recognized this was, in fact, a
substantive change. It was a substantive change
to the Warriors' rights.
The Coliseum has barely acknowledged the
existence of the April 24th memo, but this memo
speaks to the heart of the issue in this
arbitration. Do the Warriors have debt service
obligations if they decide not to exercise the
first or second renewal options? And Mr. Seaman
says, No.
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And this was not a secret memo. This
was a memo sent to the entire leadership of the
Coliseum, the city, the county. Everybody knew
what 6.4 meant.
Now, at the hearing, there were efforts
by Mr. Seaman to try to explain away the import of
his April 24th memo. But he admitted that he
has no actual memory of that memo. He admitted
that he was simply reconstructing based on looking
at the memos today.
So really the best evidence of what the
April '96 memo means is what the April 24th memo
says. And what Mr. Seaman writes regarding
Section 6.4 in that memo is that it does not apply
when the Warriors allow the license agreement to
expire. And we know after that change was made in
the first draft that was circulated on
April 12th, it remained.
So we had very sophisticated lawyers
poring over this document for three months and
they never changed the language, even after
Charlie Seaman had flagged the issue.
Now, Mr. Seaman wrote another memo, this
is a May 21st memo, and he does not retract his
conclusion that he made in the April memo. He
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does not state that he was mistaken. He doesn't
say, well, I was wrong in my April memo. He
doesn't say any of that. All he says is that 6.4
is triggered by the Warriors' various rights to
terminate. And we've already gone over the
different termination rights in the agreement.
Now, the Coliseum argued in their brief
that Seaman changed his mind on whether to keep
the revised language because it could be read more
broadly. And that's just simply putting words in
Mr. Seaman's mouth. He said no such thing.
He was asked, Do you have any actual
recollection that the change in language was an
attempt to broaden the scope of Section 5.1(b)?
No recollection.
He was asked, Do you have any
recollection that it was intended to address a
loophole? No such recollection.
And so what we take from Mr. Seaman's
memos, the April memo and the May 21st memo, that
there's an admission that 6.4 only applies after
renewal, there's an admission that 6.4 is not
triggered by expiration. May 21st memo
contemplates that 6.4 is triggered where the
Warriors exercise any right to termination.
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Nothing about expiration. And that 6.4 only
applies to the exercise of termination rights
within a renewal period.
Now, we've also heard from the Coliseum
its argument that it would never have agreed to
this deal, they never would have agreed to let the
Warriors walk away, they call it a $55 million
gift, that that ignores the facts as they existed
in 1996.
We heard from both Mr. Baggett, we heard
from Ms. Banks, we heard from Ezra Rapport, Deena
McClain that the Warriors had options. They had
options in San Jose, they had options in
San Francisco, and both the City of Oakland and
the county were desperate to keep the team.
In fact, the city and county had just
cut the same type of deal with the Raiders.
They've argued that the Raiders deal somehow made
them more cautious when dealing with the Warriors,
but other than some convenient testimony 22 years
later, there's not a single document in the
record, the contemporaneous record, to suggest
that the Coliseum insisted on debt service
payments after expiration because of the Raiders
experience. There's not a document from 1996 when
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the license agreement was being negotiated that
sets forth or supports that argument.
The more probable explanation is the
past was prologue and the Coliseum was comfortable
with the risk that the Warriors would leave
because of what they were getting in return, and
that was an NBA team that would remain in Oakland.
Perhaps they were comfortable because the Coliseum
didn't feel like it was giving anything away,
because as Ms. McClain testified, there was an
expectation that the debt might be retired short
of 20 years. So there was no gift of -- there was
no $55 million gift. And you see that in the
testimony appearing on slide 60.
I want to spend a moment talking about
Ezra Rapport. In the opening statement, the
Coliseum all but stake their entire case on his
testimony. And he was hyped to be the only
witness who would have any recall of the
negotiations. But Mr. Rapport, I submit, Your
Honor, was lost and he was confused and his
testimony was not credible. It was inconsistent
and at the outset, he admitted he didn't even have
much of a role in negotiating the license
agreement.
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There were certain moments in
Mr. Rapport's testimony that highlighted the
absurdity of the interpretation the Coliseum
argues for in this case.
One was Mr. Rapport's insistence that
the Warriors had to, quote, exercise an
expiration, close quote. And he was asked to
point to any term in the license agreement that
would support his testimony, and he was at a loss.
He had invented an obligation that simply does not
exist to justify the Coliseum's interpretation of
6.4.
When asked about the binding nature of
the license agreement, he said it was binding and
he said, well, the MOU would be superseded but not
the deal terms, which doesn't make sense because
you cannot separate the two. And then he
eventually agreed again that the license agreement
supersedes the MOU.
And so Mr. Rapport is not a credible
witness. The best evidence in this case is the
documentary evidence we have in the record of a
purposeful change to Section 5.1(b), plain
language on the license agreement.
Now, Your Honor, I turn to the
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subsequent conduct of the parties after the
agreement was signed. You heard a lot in this
hearing room about WAM and how the WAM deal would
have had the Warriors assume management of the
arena in exchange for paying all the debt service
on the bonds that were issued to renovate the
arena. And the Coliseum understood in those WAM
negotiations that it needed to close a ten-year
gap that would exist if the Warriors left after
20 years after the license agreement expired.
I want to spend a few moments here on a
witness who you didn't see in the hearing room,
named David Stephens. We submitted his testimony
via his deposition video and transcript. And
Stephens was a financial advisor that had been
hired by the Coliseum at the time. He since -- he
now works on Wall Street.
Now, Mr. Stephens, he lives in New York
City, so he was beyond our subpoena power for this
hearing. And unlike Ms. McClain, who was also
beyond the subpoena power, the Coliseum elected
not to bring Mr. Stephens to San Francisco to
testify. And we think that's with good reason.
Now, Stephens was tasked with evaluating
the WAM deal for the Coliseum. He was given
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information by the Authority, by the city, by the
county to assist his review. He had to review the
license agreement. He had to speak with the
Coliseum executives who were responsible for that
agreement. He met with both the Warriors and the
Coliseum representatives in connection with
evaluating the WAM deal. And his contemporaneous
documents support the argument that we've been
making, that the Coliseum knew the Warriors could
walk after 20 years without paying debt service.
And here is Exhibit 59, these are
Mr. Seaman's -- sorry, Mr. Stephens' notes from
March 12th, 1997. And this is a meeting that's
attended by both Coliseum officials and Warriors
officials.
So on March 12th, 1997, Mr. Stephens
is saying the license term is a key issue.
License term is a key issue. Now, why is that a
key issue? We see later in the notes, license
term renewal risk on OACCA.
Now, what's the renewal risk? The risk
is that the Warriors choose not to renew, not to
extend the license agreement, they walk away after
20 years and the debt service is on the city and
county and the Authority. That's the risk that
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Mr. Stephens is identifying in these notes from
March 12th, 1997, and that supports the
interpretation of 6.4 that we have argued for in
this hearing and has been the interpretation the
Warriors have held for 22 years, and is
corroborated by Mr. Stephens' contemporaneous
notes.
In another presentation to the Coliseum
from March 13th, 1997, Mr. Stephens talks about
the license term mismatch. The 30-year term in
the debt doesn't match the 20-year term of the
license agreement. And that's a problem for the
Authority.
In a memo from March 19th, 1997,
Mr. Stephens recommends that the license term be
extended so that the lease would be coterminous
with the debt, and that is to address the same
risk that he identified in his March 12th, 1997
notes, that the Warriors could leave after
expiration with no obligation to pay debt service.
That was a risk for the Coliseum.
In July 21, 1997, he makes the same
recommendation. He reiterates his conclusion that
the license agreement terms should be extended to
match the term of the bonds. In connection with
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the WAM negotiations, the Coliseum witnesses
agree. Ms. McClain said the license would be
extended to be coterminous with the debt. That
would be a good thing because of that risk that
Mr. Seaman had identified.
Now, in this hearing, Ms. McClain said,
well, we didn't -- the risk was not that the
Warriors could leave after 20 years and not pay
debt service; the risk was we would have to
collect the payments for the Warriors and we
thought that was risky.
This is another point in which there's
very convenient testimony 22 years later. There's
no document in the record that supports that
argument .
And Patrick O'Connell, he was a 30-year
auditor-controller of Alameda County. He was
charged with comparing WAM to the license
agreement to figure out whether this was a good
deal for the government. And O'Connell agrees
with Stephens. In his conclusions, he writes, the
Warriors will extend this license to play in the
arena to be coterminous with the final maturity of
the bonds, 30 years.
So they were all focused on extending
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that license term because they recognized the risk
the Warriors could leave after expiration without
paying debt service. And when Mr. O'Connell was
deposed under oath in 1999 before any dispute had
arisen over 6.4, he said the same thing, there was
a provision they would to have pay off the debt if
they left, but that was before 20 years. That was
his sworn testimony in 1999.
Now, given that testimony, the Coliseum
was in an unusual position where it felt the need
to impeach its own witness. They wanted to say,
well, somehow he didn't know what he was talking
about in 1999. This is the auditor and controller
of the county.
In 1997, O'Connell testified under oath
again that he relied on legal counsel to
understand the license agreement. We saw the
testimony he gave in 1999. But in the hearing
room, 21 years later, he says, well, he just
reviewed the license agreement on his own. And we
think the testimony that Mr. O'Connell gives
in '97 and '99, which is closer in time to the
negotiation and signing of the license agreement
and the negotiations around WAM, are the best
evidence of how Mr. O'Connell understood the
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Preview
ann bw ELECTRONICALLY FILED JAMES P. BENNETT (SBN 65179) Ss ccune br San branciacoet JBennett@mofo.com 02/26/2019 JOSHUA HILL JR. (SBN 250842) 02/26/2019. JHill@mofo.com BY: EDWARD SANTOS: AMANI SOLANGE FLOYD (BAR NO. 301506) Deputy Clork AFloyd@mofo.com MORRISON & FOERSTER LLP 425 Market Street San Francisco, California 94105-2482 Telephone: 415.268.7000 Facsimile: 415.268.7522 MIRIAM A. VOGEL (SBN 67822) MVogel@mofo.com MORRISON & FOERSTER LLP 707 Wilshire Boulevard Los Angeles, CA 90017-3543 Telephone: 213.892.5200 Facsimile: 213.892.5454 KENT L. RICHLAND (SBN 51413 ) Krichland@gmsr.com GREINES, MARTIN, STEIN & RICHLAND LLP 5900 Wilshire Boulevard, 12th Floor Los Angeles, California 90036 Telephone: 310.859.7811 Facsimile: 323.330.1060 Attorneys for Petitioner GOLDEN STATE WARRIORS, LLC SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF SAN FRANCISCO GOLDEN STATE WARRIORS, LLC, Case No. CPF-19-516542 Volume 16 of 16 [Exs. 145-155] Petitioner, EXHIBITS IN SUPPORT OF v. DECLARATION OF JOSHUA HILL IN SUPPORT OF GOLDEN STATE OAKLAND-ALAMEDA COUNTY WARRIORS, LLC’S OPPOSITION TO COLISEUM AUTHORITY, PETITION TO CONFIRM ARBITRATION AWARD; REQUEST Respondent. FOR DE NOVO REVIEW OF ALL QUESTIONS OF LAW; PETITION TO VACATE ARBITRATION AWARD Hearing Date: April 10, 2019 Time: 9:30 a.m. Dept.: 302 Hon. Ethan P. Schulman RESERVATION NO.: 02250410-04 i! HILL DEcL. ISO GSW’s OPP. To PET. TO CONFIRM ARB. AWARD; REQ. DENOVO REV. PET VACATE sf-1410742 4352Exhibit 145MLITIVATE REPORTING + TRIAL SERVICES Transcript of Proceedings: Oakiand-Alameda County Coliseum Authority v. Golden State Warriors September 10, 2018 P: 877.771.3312 | F: 877.561.5538 | litivate.com 4354Transcript of Proceedings September 10, 2018 AMERICAN ARBITRATION ASSOCIATION OAKLAND-ALAMEDA COUNTY COLISEUM AUTHORITY, PLAINTIFF, vs. No. 02-17-0006-0157 GOLDEN STATE WARRIORS, DEFENDANTS. REPORTER'S TRANSCRIPT OF PROCEEDINGS BEFORE HONORABLE REBECCA WESTERFIELD (Ret.) Monday, September 10, 2018 Volume 4, Pages 783 - 872 Reported By: KATHLEEN WILKINS, CSR #10068, RPR-RMR-CRR-CCRR-CLR-CRC Page 783 LITIVATE REPORTING + TRIAL SERVICES | 877.771.3312 | litivate.com 435524 25 Transcript of Proceedings September 10, 2018 Transcript of proceedings before the American Arbitration Association, One Sansome Street, Suite 1600, San Francisco, California, on Monday, September 10, 2018, commencing at the hour of 1:59 p.m. thereof, before me, Kathleen A. Wilkins, RPR-RMR-CRR-CCRR-CLR-CRC, a Certified Shorthand Reporter, in and for the State of California. Page 784 LITIVATE REPORTING + TRIAL SERVICES | 877.771.3312 | litivate.com 435624 25 Transcript of Proceedings September 10, 2018 FOR THE FOR THE APPEARANCES OF COUNSEL PLAINTIFF: KEKER VAN NEST & PETERS 633 Battery Street San Francisco, California 94111-1704 BY: DANIEL PURCELL, ESQ. EDUARDO E. SANTACANA, ESQ. LEAH PRANSKY, ESQ. Telephone: (415) 773-6697 E-mail: dpurcell@keker.com esantacana@keker.com lpransky@keker.com DEFENDANTS : MORRISON & FOERSTER 425 Market Street San Francisco, California 94105-2482 BY: JOSHUA HILL, ESQ. JAMES P. BENNETT, ESQ. AMANI S. FLOYD, ESQ. R. BENJAMIN NELSON, ESQ. Telephone: (415) 268-7464 E-mail: jhill@mofo.com afloydemofo.com jbennett@mofo.com rbnelson@mofo.com Page 785 LITIVATE REPORTING + TRIAL SERVICES | 877.771.3312 | litivate.com 435724 25 Transcript of Proceedings September 10, 2018 ALSO PRESENT: David Kelly, Jason Allen, Scott Riewerts, Tom Beyer Page 786 LITIVATE REPORTING + TRIAL SERVICES | 877.771.3312 | litivate.com 435824 25 Transcript of Proceedings September 10, 2018 INDEX INDEX OF EXAMINATIONS PAGE CLOSING ARGUMENT BY MR. HILL ................-- 788 CLOSING ARGUMENT BY MR. PURCELL ..............- 832 REBUTTAL BY MR. HILL ..... 2... ee eee eee eee 866 Page 787 LITIVATE REPORTING + TRIAL SERVICES | 877.771.3312 | litivate.com 435924 25 Transcript of Proceedings September 10, 2018 SEPTEMBER, 10, 2018 1:59 P.M. PROCEEDINGS CLOSING ARGUMENT BY MR. HILL MR. HILL: Your Honor, as you know, I'm Joshua Hill, Morrison & Foerster. Represent the Warriors. Here with Jim Bennett, Amani Floyd, Ben Nelson, our client David Kelly, general counsel of the Warriors, our paralegal, Tom Beyer. So we prepared a presentation for you, your Honor, and we're happy also to answer questions or respond to arguments of opposing counsel, as you wish. ARBITRATOR WESTERFIELD: So how do you all want to set this up in terms of -- have you talked about any time limit? Did we talk about that or do you want to -- MR. PURCELL: I don't think we did. ARBITRATOR WESTERFIELD: How long do you think you're going to be going? And do you want to reserve some time for reply or rebuttal? MR. HILL: I think this is about 45 minutes, give or take. And I would like to reserve time for rebuttal. I'm not sure how long Mr. Purcell has in mind for his presentation. MR. PURCELL: I think we'll be shorter Page 788 LITIVATE REPORTING + TRIAL SERVICES | 877.771.3312 | litivate.com 436024 25 Transcript of Proceedings September 10, 2018 than that. I think we'll be around half an hour. ARBITRATOR WESTERFIELD: I just wanted some general ideas. I don't think we're under any kind of tight timeline. Thank you. MR. HILL: Well, thank you, Your Honor. Our position from day one has been straightforward. We've had a straightforward position as to why the contract should be interpreted, and we have argued in this case, and as the Warriors have interpreted for 22 years, plain language of Section 6.4 supports the Warrior's interpretation, the key contract negotiators from both sides support the Warriors! interpretation, and the party's subsequent conduct and contemporaneous admissions further support the Warriors' interpretation. Now the Coliseum has argued time and again that this is a simple case on one hand. But on the other hand, they've worked to tie this arbitration, we submit, into knots with conflicting, contradicting, sometimes nonsensical and evolving positions on the license agreement. So, Your Honor, what I'd like to do in this closing statement is untangle that knot and explain, once again, why Section 6.4 is Page 789 LITIVATE REPORTING + TRIAL SERVICES | 877.771.3312 | litivate.com 436124 25 Transcript of Proceedings September 10, 2018 susceptible to only one meaning, and that is the meaning advanced by the Warriors in this arbitration. On July 23rd when we began the hearing, I said there are three reasons why the Warriors should prevail in this case. Number 1 is, the plain meaning supports the Warriors' interpretation, has done so for 22 years. Number 2, the significance of the change in language from the MOU to Section 6.4 that Your Honor has heard so much about during these proceedings, and we know the MOU will supersede it by the definitive license agreement. And Section 5.1(b) of the MOU will supersede it. Coliseum knew it. Third point, Your Honor, is that the subsequent conduct of the parties, sworn testimony of one of the Coliseum's key witnesses, both comport with the Warriors' understanding and long-time interpretation of Section 6.4. I'll add a fourth reason, Your Honor, and that is -- that was revealed during the week that we heard testimony in this hearing room, that the Coliseum has a burden and they failed to carry it. And at bottom, the Coliseum wants the Page 790 LITIVATE REPORTING + TRIAL SERVICES | 877.771.3312 | litivate.com 436224 25 Transcript of Proceedings September 10, 2018 Warriors to pay the $55 million. They're seeking a $55 million judgment, in effect. They want that ruling with no burden on their part, no obligation to submit evidence. And that's not right. So the weight of the evidence of the hearing shows conclusively that the Warriors' interpretation should prevail and Your Honor should declare that the Warriors have no obligation to pay debt service after June 30 2019. In plain meaning, we're going to talk about "terminates," the meaning of the word "terminates." Now, every negotiator of the license agreement that appeared in this hearing room understood and agreed on the ordinary and popular meaning of the word "terminates." Second to that, the Coliseum has essentially tied itself in knots to create an ambiguity where there is none around the phrase "and after expiration of this license agreement." We'll explain why the Coliseum's position on that phrase does not make sense. And so ultimately, Your Honor, what the Coliseum seeks to do is have you interpret this contract in a way that is at odds with the intent Page 791 LITIVATE REPORTING + TRIAL SERVICES | 877.771.3312 | litivate.com 436324 25 Transcript of Proceedings September 10, 2018 and the plain meaning of the contract, and that simply is not right. So Section 6.4 focused on the first three words, "if licensee terminates this license agreement." So that is the trigger for Section 6.4. So nothing else matters. This provision does not kick in unless the Warriors terminate. There are no further obligations. And so the Coliseum has sought to inject some uncertainty into the meaning of "terminates" as it is used here, but it is not uncertain, for reasons that we will explain. Now, the Coliseum has made interesting argument in their post-hearing brief. They write, "The Warriors have sought refuge in two grammar-based arguments." They have criticized the Warriors for arguing the grammar of this provision. Now, we know from the civil code that the language of a contract is to govern its interpretation. Grammar matters. But the Coliseum argues there is no difference between the transitive and intransitive verb "terminate." They actually write in their brief, in the post-hearing brief, that there is no support in Page 792 LITIVATE REPORTING + TRIAL SERVICES | 877.771.3312 | litivate.com 436424 25 Transcript of Proceedings September 10, 2018 the "dictionary or any legal doctrine" for the distinction between a transitive and intransitive verb, the distinction the Warriors are making in this case, and that could not be more incorrect. Briefly, we've talked about the definition of transitive verb versus intransitive verb. Transitive verb has an object whereas an intransitive does not. And here, "if licensee terminates this license agreement," then that phrase "license agreement" is the object of the transitive verb "terminates." The Coliseum has said there's no legal basis, there's no support in legal doctrine for drawing a distinction between transitive terminate and intransitive terminate. Well, here are five cases. Specialty Rental Tools case specifically discusses the different meanings of the verb "terminate," the verb at issue in this case. And there the Court found that the verb "terminates" was to be interpreted in the transitive sense, the same as it is to be interpreted in this case. The second case on the slide, the Byrne V Drain, it also speaks to the use of a different verb. It's the verb "subject" and how it's used in a city charter. And the Court there also notes Page 793 LITIVATE REPORTING + TRIAL SERVICES | 877.771.3312 | litivate.com 436524 25 Transcript of Proceedings September 10, 2018 the difference between the intransitive and transitive sense. The third case, People versus Label, talks about the intransitive and transitive sense of verbs as used in the health and safety code. The Potts case focuses on the verb "operates" as used in a contract and notes that it can be "either intransitive or transitive and dictionaries give a number of definitions of each form." The Poindexter case draws a similar distinction between the transitive and intransitive form of the verb "corrupt" as used in the United States code. So simply put, the Coliseum is off base to suggest that there is no basis in the dictionary or legal doctrine for the distinction the Warriors are drawing in this case, and that's the distinction between the transitive and intransitive forms of the verb "terminate." So what we have here on slide 9, Your Honor, are definitions of the transitive form of "terminate." Three different sources. They all define "terminate" in the transitive sense to mean to bring to an end. Put to an end. Page 794 LITIVATE REPORTING + TRIAL SERVICES | 877.771.3312 | litivate.com 436624 25 Transcript of Proceedings September 10, 2018 The example used in the Oxford dictionary, he was advised to terminate the contract, and that is how terminate is used in Section 6.4 of the license agreement. Now, in contrast, you see the intransitive form of "terminate" and how the intransitive form of the verb is defined on slide 10. And these definitions are different from the transitive form. In here, "terminate" means to come to an end, come to an end in time is one definition, which is akin to an expiration. So there can be no doubt that "terminate" as used in Section 6.4 of the license agreement is used in the transitive sense and requires the Warriors to bring the contract to an end before its prescribed term, and every witness agrees on this point. You heard from three witnesses intimately involved in the negotiation of a license agreement. For the Warriors you heard from Robin Baggett, former outside general counsel for the Warriors and now an owner of several wineries. You heard from Michelle Banks, the former global general counsel of The Gap, also a former outside counsel to the Warriors. Page 795 LITIVATE REPORTING + TRIAL SERVICES | 877.771.3312 | litivate.com 436724 25 Transcript of Proceedings September 10, 2018 And for the Coliseum, you heard from Charles Seaman or Charlie Seaman. Has a 40-year career in negotiating contracts as a deal lawyer. And you also heard from Deena McClain who was not as intimately involved in the negotiations of the license agreement, but she was the Coliseum's former general counsel and a partner at Morrison & Foerster. And the point I'm making here, Your Honor, is these are not babes in the woods; these are sophisticated deal lawyers. And all four witnesses agree that the ordinary and popular meaning of "terminates" is the one that supports the Warriors' interpretation. So Robin Baggett testified that it means to bring the contract to an end within its prescribed term. Michelle Banks testified that 6.4 requires the Warriors to exercise a renewal option and then terminate. Charlie Seaman agreed that "terminates" contemplates an action that brings the agreement to an end within and before the running of its prescribed term. Seaman also said "terminates" refers to a volitional act of a party exercising a Page 796 LITIVATE REPORTING + TRIAL SERVICES | 877.771.3312 | litivate.com 436824 25 Transcript of Proceedings September 10, 2018 right which brings the agreement to an end within its prescribed term. Deena McClain testified the typical use of "terminates" means to bring the contract through a volitional act to an end within its prescribed term. So faced with the testimony of both the Warriors' negotiators and the Coliseum's negotiators, the Coliseum has sought to inject uncertainty and confusion into the reading of Section 6.4, particularly around the phrase "and after the expiration of this license agreement." And what we'll explain, Your Honor, is that that phrase, "after the expiration of this license agreement" creates no ambiguity in this contract. Now, we focused on the first part of 6.4, “if licensee terminates this license agreement," that is the trigger. And it continues with this phrase "in any year after the expiration of the license agreement." Now, the Coliseum would have you focus less on "if licensee terminates," just the trigger, and ask you to focus on this phrase "in any year after expiration of this license Page 797 LITIVATE REPORTING + TRIAL SERVICES | 877.771.3312 | litivate.com 436924 25 Transcript of Proceedings September 10, 2018 agreement." So the Coliseum says that's the trigger. They say that the fact that Section 6.4 makes reference to "any year after expiration," "expiration" is a trigger for Section 6.4, and that is not correct. Now, if we go back to their earliest pleading in this case, and their response to the arbitration demand, and they refer to Section 6.3 and 6.4 of the license agreement, and they concede and admit that those two sections are mutually exclusive. That's what they write. Then they address the use of the word "expiration" in 6.4. And they describe the use of that word just as the Warriors have described use of that word in this case, as marking a point in time. And they write here, "expiration, i.e., on June 30, 2017." So an expiration is not a trigger. It doesn't trigger the imposition of obligations under 6.4. "Expiration" as used in Section 6.4 marks a particular point in time. And that's what the Warriors have argued, and that's what witnesses have testified to. And the reason for that is -- and there's no dispute. There's no dispute over how Page 798 LITIVATE REPORTING + TRIAL SERVICES | 877.771.3312 | litivate.com 437024 25 Transcript of Proceedings September 10, 2018 Section 6 of this license agreement is structured. It is a three-part structure. There's a first ten years during which the Warriors have no right to terminate. And all the parties agree on that. There's a second ten years, which we have called a trimester, the second trimester, and the Warriors have a right to terminate, but if they terminate, they pay a lump sum fee. And the parties are in agreement that Section 6.4 applies to that third trimester. And that's from July 1, 2017 through June 30, 2027. And that is the time period during which Section 6.4 can be triggered if the Warriors terminate the license agreement. So there's no dispute that it is a trimester structure under which there are certain termination rights. When you accept the structure of Section 6 as both parties have accepted in this case, that 6.4 applies to that last trimester, you understand that the word "expiration" is the only word in Section 6.4 that makes that clear. It's the only word in Section 6.4 that limits the operation of this provision to the third trimester. And the author of the edit that inserted Page 799 LITIVATE REPORTING + TRIAL SERVICES | 877.771.3312 | litivate.com 437124 25 Transcript of Proceedings September 10, 2018 that phrase into the agreement testified as such. Michelle Banks' testimony. She was asked about the phrase "in any year after the expiration of the license agreement," what does that mean? And she answered, to create the ten-year period from year 20 to 30. That's the point of an "any year after expiration of this license agreement." That's why it's there. And Charlie Seaman agrees. He was asked, Paragraph 6.4 was intended to address the Warriors' debt repayment obligations during the period 2017 to 2027? He says, Yes, I believe so. And he was asked, And other than in interpretation of the word "expiration" in that sense, isn't it true there's nowhere in Section 6.4 anything that limits its time, its application to that period everybody seems to agree it was intended to apply to? And he says, That's correct, yes. So we have both Warriors! negotiator and the Coliseum negotiator agreeing on that point. Now, in the Coliseum's opening statement, they use this slide here, and they said there are three triggers in Section 6.4. And they said the same Page 800 LITIVATE REPORTING + TRIAL SERVICES | 877.771.3312 | litivate.com 437224 25 Transcript of Proceedings September 10, 2018 three triggers appeared in 5.1(b) of the MOU. But we know that in any year after the expiration of a license agreement could not possibly be a trigger under 5.1(b). 5.1(b) only -- was only triggered in the event of an expiration. It would be surplusage to have that phrase operate as a trigger in 5.1(b), and when it was transferred to 6.4, it served the same purpose, to mark a place in time. It did not become a trigger when 6.4 was drafted when it was not a trigger under 5.1(b). We know it was not a trigger, it doesn't make sense as a trigger because we understand the story of how it was inserted into 5.1(b). This is Exhibit 21. This was a draft version of the MOU. Michelle Banks testified that the phrase "after the expiration of a new license agreement and prior to June 30, 2027," which is underlined, was inserted there to limit the time, to limit the time at which the Warriors would be responsible for debt service payments. If the Warriors did not exercise either of the first two renewal options, it would be ten years. It would not extend beyond 2027. And this is another set of testimony Page 801 LITIVATE REPORTING + TRIAL SERVICES | 877.771.3312 | litivate.com 437324 25 Transcript of Proceedings September 10, 2018 from Charlie Seaman on this point. He was asked about a hypothetical from the Coliseum's opening statement. And he was asked about a termination of the license agreement during a renewal period. And he agreed that if there was a termination during a renewal period, it would never have been an expiration, which is another reason why the Coliseum's argument that expiration, as used in Section 6.4, is a trigger simply is not correct. It is there to define a point in time after 20 years, after the 20th year of the license agreement and before June 30, 2027. Another reason we know the Coliseum had never considered expiration to be a trigger is what Mr. Seaman writes in his April 24th, 1996 memo. He says, We should revert to the language of the MOU, which makes this paragraph applicable if the Warriors do not exercise the first and second extension options. And so he's writing that if the agreement expires, then 6.4 is not applicable. And that is another reason, Your Honor, why expiration is not a trigger. It defines the time where the Warriors have not exercised the first or second extension options. It extends for Page 802 LITIVATE REPORTING + TRIAL SERVICES | 877.771.3312 | litivate.com 437424 25 Transcript of Proceedings September 10, 2018 ten years, and as we'll discuss, the May 21st memo reinforces this point. On plain meaning, the Coliseum's interpretation of 6.4 contradicts the plain meaning of the contract. As we cited these cases in our closing brief, and we have provided copies of these cases, I won't belabor this point, but it is fundamental California law that extrinsic evidence cannot be offered in a way that contradicts or is inconsistent with the plain meaning of the contract. And the arbitrator should not reimagine the parties' obligations simply because the Coliseum now, 22 years later, has regrets about the deal that it entered into. Now, we heard in the hearing that the Coliseum now argues that "terminates" for any reason includes the concept of an expiration. And so there really is no basis in the law or in the dictionary or in the record for the distinction that the Coliseum is attempting to draw here. That argument is inconsistent with the law, it's inconsistent with the facts in this case. It's also inconsistent with the testimony of the Coliseum's own witnesses, including Ms. McClain, including Mr. Seaman. Both Page 803 LITIVATE REPORTING + TRIAL SERVICES | 877.771.3312 | litivate.com 437524 25 Transcript of Proceedings September 10, 2018 testified as to the meaning of "terminates" as an action that brings an agreement to an end within and before the running of the prescribed term, which is inconsistent with the concept of an expiration. Now, the Coliseum has made this argument. It is not an original argument. It was made in these two cases. Cases we've cited on slide 30. We also cited these cases in our post-hearing brief. First case there, the Children's Hospital case. Question before the Court was, Does "terminate" apply to a contract that expired by its own terms? Does that word "terminate" apply to a contract that has expired by its own terms? So the Court in the Children's Hospital case was considering that very issue. And it writes, Termination as used in this context denotes an early or premature ending of a contract as a result of some action undertaken by one or both parties. Expiration, on the other hand, refers to the natural conclusion. And it writes, Put simply, a party may not -- start over. A party may terminate an Page 804 LITIVATE REPORTING + TRIAL SERVICES | 877.771.3312 | litivate.com 437624 25 Transcript of Proceedings September 10, 2018 agreement, but it cannot expire it. And what the Coliseum is arguing in this case is that "terminates" would include the concept of a party expiring a contract. And as discussed in the Children's Hospital case, and the Specialty Rental Tools case, that is inconsistent with the meaning of "terminates." Now, on this point, "terminates for any reason." Now, adding the three words "for any reason" to terminates doesn't change its meaning. "Terminates" still means what the dictionary says it means. It still has the ordinary and popular meaning to bring the contract to an end within its prescribed term. And so tacking on "for any reason" to the verb "terminate" does not change its meaning. It just refers to the rationale for terminating. The reason for terminating. And under this license agreement, there are multiple rationales for exercising a right to terminate. Under 6.3, there's actually no -- no rationale is required. Warriors can terminate. Under 6.4, the Warriors have exercised a renewal option, they may terminate. Under 8.2.2, there's a change in the NBA's constitution and bylaws, et cetera, Warriors Page 805 LITIVATE REPORTING + TRIAL SERVICES | 877.771.3312 | litivate.com 437724 25 Transcript of Proceedings September 10, 2018 have a right to terminate. 19.2, if there's damage, say an earthquake, Oracle falls in on itself, Warriors can terminate. 24.2.2, if there's a default and the Warriors have failed to cure it, the Coliseum can terminate. Under 24.5, if the Coliseum has defaulted and has failed to cure that default, Warriors can terminate. So these are the reasons for termination. That's what "terminate for any reason" means as used in Section 6.4. "Terminate for any reason" does not mean an expiration. And we return to the April 24th memo by Charlie Seaman. When he made comments on 6.4, he didn't interpret "terminates for any reason" to include an expiration. In fact, he specifically pointed out that Section 6.4 did not include an expiration occurring from the Warriors' decision not to exercise the extensions. So to sum up the sort of plain meaning arguments, Your Honor, the Warriors offer the only interpretation of 6.4 that's consistent with dictionary definitions supported by the case law Page 806 LITIVATE REPORTING + TRIAL SERVICES | 877.771.3312 | litivate.com 437824 25 Transcript of Proceedings September 10, 2018 that we cite both in our closing brief and that we have cited in this presentation. Our interpretation is in harmony with the negotiator's intent, as they have agreed with the definition of "terminates" the Warriors have argued in this case. And the interpretation the Warriors have put forward is the only meaning to which the language of the license agreement is reasonably susceptible. So if the Coliseum intended for 6.4 to include the expiration of the license agreement, you met Charlie Seaman, you met Deena McClain. Those lawyers were more than capable of drafting such language to accomplish that goal. That's not what they did. After the MOU was signed, shortly after the MOU was signed, the Coliseum changed the language of the MOU. And that change cemented the Warriors' right to allow the agreement to expire and walk away after expiration owing nothing further to the Coliseum. And so for the next several minutes, Your Honor, I'm going to address this point about the significance and the effect of the change in language from the MOU to Section 6.4. The Coliseum has devoted pages of Page 807 LITIVATE REPORTING + TRIAL SERVICES | 877.771.3312 | litivate.com 437924 25 Transcript of Proceedings September 10, 2018 briefing and argument to establishing and documenting the MOU. But the MOU is not the deal. It was not binding. All the witnesses agree it was superseded by its own terms and by the license agreement, and every witness knew it. And the evidence at the hearing showed that the Coliseum knew that the Warriors! obligations after contract expiration were different than what had been contemplated under the MOU. We're going to talk about the language of the MOU and the license agreement, the integration clause, the other relevant provisions of the MOU. But first on this point that was raised in the Coliseum's post-hearing brief. They talked about the city and the county may not have approved the license agreement, said there was no evidence in the record that the license agreement itself was approved as opposed to the MOU. And we say and, question mark. The Warriors cannot be penalized, they should not be penalized if the government, government actors, City of Oakland, County of Alameda, didn't do their jobs, they didn't bring the license agreement to a vote before the bodies. That shouldn't affect the Warriors! rights. Page 808 LITIVATE REPORTING + TRIAL SERVICES | 877.771.3312 | litivate.com 438024 25 Transcript of Proceedings September 10, 2018 The parties have been conducting business under the license agreement for more than 20 years. And so we're just not sure what the Coliseum is suggesting with this argument. They haven't said this or are they saying there's no contract between the parties because it wasn't approved? And in that case, we certainly have no right to pay debt service. So the Coliseum appears to argue that if the city and the county did not approve the license agreement, but even if the Authority did, but the city and the county did not, then somehow we should default to the terms of the MOU, and that simply just can't be. So the Coliseum's reliance on the MOU is simply misplaced. And we know that from the terms of the MOU itself. By its own terms under Section 7.2 and 7.4 of the MOU, it has no further effect upon the execution of the license agreement and it ceases to have any effect if there is no license agreement. So either way, the MOU has no effect and really has no relevance to this case except for one particular reason, which we'll get to. The Coliseum's witnesses agree that the Page 809 LITIVATE REPORTING + TRIAL SERVICES | 877.771.3312 | litivate.com 438124 25 Transcript of Proceedings September 10, 2018 MOU superseded and has no effect. Ezra Rapport, one of the Coliseum's key witnesses, agreed that the license agreement superseded anything reflected in the MOU, specifically anything reflected in 5.1(a) and (b). Charlie Seaman agreed that the MOU was superseded and replaced by the license agreement. And California law has been consistent that preliminary agreements like MOUs and letters of intent -- and we cited those cases in our post-hearing brief, that those types of agreements have no power to bind the parties unless and except the parties agreed to be bound. And here there was no expectation that the terms of the MOU would survive past either the execution of the definitive agreement or that the MOU would survive past May 15th, 1996. There was no definitive agreement. And, in fact, this license agreement has an integration clause in Section 32 of the license agreement. It constitutes the sole and entire agreement among licensor, Authority, and licensee with respect to the subject matter hereof. The integration clause has significant legal effect, and the Coliseum's key witnesses understand and Page 810 LITIVATE REPORTING + TRIAL SERVICES | 877.771.3312 | litivate.com 438224 25 Transcript of Proceedings September 10, 2018 agree on this point as well. Ezra Rapport, he was asked specifically about the integration clause. And he agreed, yes, the license agreement supersedes it. It would be chaos to have multiple agreements. Charlie Seaman was asked specifically about the integration clause. Captures the parties' agreement and understanding that 6.4 of the license agreement supersedes anything reflected in Section 5.1(b). And Charlie Seaman responds, That would be true. And so because of the integration clause and the license agreement, the MOU has no evidentiary value in this case except to illustrate the difference between the language in Section 5.1(b) and the language in Section 6.4. California law is crystal-clear that where a contract contains an integration clause, extrinsic evidence is admissible only where such evidence is consistent with the terms of the integrated document. And so here the integrated contract, the license agreement, supersedes all prior understandings. And to the extent the Coliseum Page 811 LITIVATE REPORTING + TRIAL SERVICES | 877.771.3312 | litivate.com 438324 25 Transcript of Proceedings September 10, 2018 seeks to admit extrinsic evidence, it must be consistent with the terms of the integrated document, and that is not what they're doing in this case, Your Honor. And the parties had no trouble, there's no dispute on agreeing to an integrated contract. The parties knew and understood that 5.1(b) and the MOU were no longer the deal. Negotiators knew that the deal had changed. Now, as an initial matter, one of the arguments advanced by the Coliseum that the hearing in both -- in their post-hearing brief, that somehow the negotiations ceased as of the signing of the MOU, that it was suspended in amber, that nothing else happened after February 21st, 1996, when the MOU was signed, until July of '96, when the license agreement was signed. And that's not true. There were three months of negotiating and drafting leading to the definitive agreements in this case. And what we have here on slide 47, Your Honor, is a time line of documents and events between February 21, 1996, when the MOU was signed, and July 15, 1996, which is the effective date of the license agreement. Page 812 LITIVATE REPORTING + TRIAL SERVICES | 877.771.3312 | litivate.com 438424 25 Transcript of Proceedings September 10, 2018 And just to summarize briefly, we see in March Charlie Seaman writes the letter saying he's been given the go-ahead to draft the license agreement, first draft. April 9th, Your Honor saw several versions of internal drafts at the Crosby Heafey firm, the firm representing the Coliseum, showing edits being made to what would become the definitive license agreement. April 10th, there is additional drafting. April 11th, additional drafting. April 12th, the Coliseum circulates the first draft of the license agreement. The 15th, there is correspondence that makes reference to continued negotiations. The 24th we see Charlie Seaman's memo to his clients regarding edits to the license agreement. On the 29th, Michelle Banks circulates a draft of the agreement. In May, we see from Section -- the MOU, that, as a technical matter, the MOU expires and has no further effect as of May 15th, 1996. Later in May, we see the second Charlie Seaman memo commenting on edits to the license agreement. In June, Michelle Banks -- we heard testimony on this -- Michelle Banks circulated Page 813 LITIVATE REPORTING + TRIAL SERVICES | 877.771.3312 | litivate.com 438524 25 Transcript of Proceedings September 10, 2018 another markup of the license agreement. And then the license agreement is effective July 15th, 1996. So there is no basis for the argument that there were no further negotiations and no further discussions about the license agreement, about the substantive terms therein after the MOU was signed. And Michelle Banks seconds that notion in her testimony. She testified clearly, competently, credibly that there continued to be negotiations after the MOU was signed, both in her oral testimony and that is supported by documents in the record. Now, on this language that was changed -- and the evidence in the record shows that Section 5.1(b) of the MOU was purposely changed. And when that edit was made, it would no longer correspond -- Section 6.4 would no longer correspond to 5.1(b). And Exhibit 30 is Charlie Seaman's handwritten markup of the draft. This is from April 9th. So the Coliseum would argue that, well, we see that the language was changed, but nobody 22 years later can really remember why the language was changed so we should just ignore the Page 814 LITIVATE REPORTING + TRIAL SERVICES | 877.771.3312 | litivate.com 438624 25 Transcript of Proceedings September 10, 2018 impact of that. And to follow that logic would disregard the reasons why we have written contracts in the first place. So we're not relying on 22-year-old memories. We have documentary evidence. We've got a documentary record of these edits being made and that they were purposeful. And Charlie Seaman was asked whether the Coliseum would have any reason -- or would there be any reason for that change other than at the insistence of Golden State Warriors in negotiations. And Mr. Seaman says, not that he recalls. We submit there is no other reason for that change other than at the direction of the Warriors. We know from Mr. Seaman's April 24th memo that he recognized this was, in fact, a substantive change. It was a substantive change to the Warriors' rights. The Coliseum has barely acknowledged the existence of the April 24th memo, but this memo speaks to the heart of the issue in this arbitration. Do the Warriors have debt service obligations if they decide not to exercise the first or second renewal options? And Mr. Seaman says, No. Page 815 LITIVATE REPORTING + TRIAL SERVICES | 877.771.3312 | litivate.com 438724 25 Transcript of Proceedings September 10, 2018 And this was not a secret memo. This was a memo sent to the entire leadership of the Coliseum, the city, the county. Everybody knew what 6.4 meant. Now, at the hearing, there were efforts by Mr. Seaman to try to explain away the import of his April 24th memo. But he admitted that he has no actual memory of that memo. He admitted that he was simply reconstructing based on looking at the memos today. So really the best evidence of what the April '96 memo means is what the April 24th memo says. And what Mr. Seaman writes regarding Section 6.4 in that memo is that it does not apply when the Warriors allow the license agreement to expire. And we know after that change was made in the first draft that was circulated on April 12th, it remained. So we had very sophisticated lawyers poring over this document for three months and they never changed the language, even after Charlie Seaman had flagged the issue. Now, Mr. Seaman wrote another memo, this is a May 21st memo, and he does not retract his conclusion that he made in the April memo. He Page 816 LITIVATE REPORTING + TRIAL SERVICES | 877.771.3312 | litivate.com 438824 25 Transcript of Proceedings September 10, 2018 does not state that he was mistaken. He doesn't say, well, I was wrong in my April memo. He doesn't say any of that. All he says is that 6.4 is triggered by the Warriors' various rights to terminate. And we've already gone over the different termination rights in the agreement. Now, the Coliseum argued in their brief that Seaman changed his mind on whether to keep the revised language because it could be read more broadly. And that's just simply putting words in Mr. Seaman's mouth. He said no such thing. He was asked, Do you have any actual recollection that the change in language was an attempt to broaden the scope of Section 5.1(b)? No recollection. He was asked, Do you have any recollection that it was intended to address a loophole? No such recollection. And so what we take from Mr. Seaman's memos, the April memo and the May 21st memo, that there's an admission that 6.4 only applies after renewal, there's an admission that 6.4 is not triggered by expiration. May 21st memo contemplates that 6.4 is triggered where the Warriors exercise any right to termination. Page 817 LITIVATE REPORTING + TRIAL SERVICES | 877.771.3312 | litivate.com 438924 25 Transcript of Proceedings September 10, 2018 Nothing about expiration. And that 6.4 only applies to the exercise of termination rights within a renewal period. Now, we've also heard from the Coliseum its argument that it would never have agreed to this deal, they never would have agreed to let the Warriors walk away, they call it a $55 million gift, that that ignores the facts as they existed in 1996. We heard from both Mr. Baggett, we heard from Ms. Banks, we heard from Ezra Rapport, Deena McClain that the Warriors had options. They had options in San Jose, they had options in San Francisco, and both the City of Oakland and the county were desperate to keep the team. In fact, the city and county had just cut the same type of deal with the Raiders. They've argued that the Raiders deal somehow made them more cautious when dealing with the Warriors, but other than some convenient testimony 22 years later, there's not a single document in the record, the contemporaneous record, to suggest that the Coliseum insisted on debt service payments after expiration because of the Raiders experience. There's not a document from 1996 when Page 818 LITIVATE REPORTING + TRIAL SERVICES | 877.771.3312 | litivate.com 439024 25 Transcript of Proceedings September 10, 2018 the license agreement was being negotiated that sets forth or supports that argument. The more probable explanation is the past was prologue and the Coliseum was comfortable with the risk that the Warriors would leave because of what they were getting in return, and that was an NBA team that would remain in Oakland. Perhaps they were comfortable because the Coliseum didn't feel like it was giving anything away, because as Ms. McClain testified, there was an expectation that the debt might be retired short of 20 years. So there was no gift of -- there was no $55 million gift. And you see that in the testimony appearing on slide 60. I want to spend a moment talking about Ezra Rapport. In the opening statement, the Coliseum all but stake their entire case on his testimony. And he was hyped to be the only witness who would have any recall of the negotiations. But Mr. Rapport, I submit, Your Honor, was lost and he was confused and his testimony was not credible. It was inconsistent and at the outset, he admitted he didn't even have much of a role in negotiating the license agreement. Page 819 LITIVATE REPORTING + TRIAL SERVICES | 877.771.3312 | litivate.com 439124 25 Transcript of Proceedings September 10, 2018 There were certain moments in Mr. Rapport's testimony that highlighted the absurdity of the interpretation the Coliseum argues for in this case. One was Mr. Rapport's insistence that the Warriors had to, quote, exercise an expiration, close quote. And he was asked to point to any term in the license agreement that would support his testimony, and he was at a loss. He had invented an obligation that simply does not exist to justify the Coliseum's interpretation of 6.4. When asked about the binding nature of the license agreement, he said it was binding and he said, well, the MOU would be superseded but not the deal terms, which doesn't make sense because you cannot separate the two. And then he eventually agreed again that the license agreement supersedes the MOU. And so Mr. Rapport is not a credible witness. The best evidence in this case is the documentary evidence we have in the record of a purposeful change to Section 5.1(b), plain language on the license agreement. Now, Your Honor, I turn to the Page 820 LITIVATE REPORTING + TRIAL SERVICES | 877.771.3312 | litivate.com 439224 25 Transcript of Proceedings September 10, 2018 subsequent conduct of the parties after the agreement was signed. You heard a lot in this hearing room about WAM and how the WAM deal would have had the Warriors assume management of the arena in exchange for paying all the debt service on the bonds that were issued to renovate the arena. And the Coliseum understood in those WAM negotiations that it needed to close a ten-year gap that would exist if the Warriors left after 20 years after the license agreement expired. I want to spend a few moments here on a witness who you didn't see in the hearing room, named David Stephens. We submitted his testimony via his deposition video and transcript. And Stephens was a financial advisor that had been hired by the Coliseum at the time. He since -- he now works on Wall Street. Now, Mr. Stephens, he lives in New York City, so he was beyond our subpoena power for this hearing. And unlike Ms. McClain, who was also beyond the subpoena power, the Coliseum elected not to bring Mr. Stephens to San Francisco to testify. And we think that's with good reason. Now, Stephens was tasked with evaluating the WAM deal for the Coliseum. He was given Page 821 LITIVATE REPORTING + TRIAL SERVICES | 877.771.3312 | litivate.com 439324 25 Transcript of Proceedings September 10, 2018 information by the Authority, by the city, by the county to assist his review. He had to review the license agreement. He had to speak with the Coliseum executives who were responsible for that agreement. He met with both the Warriors and the Coliseum representatives in connection with evaluating the WAM deal. And his contemporaneous documents support the argument that we've been making, that the Coliseum knew the Warriors could walk after 20 years without paying debt service. And here is Exhibit 59, these are Mr. Seaman's -- sorry, Mr. Stephens' notes from March 12th, 1997. And this is a meeting that's attended by both Coliseum officials and Warriors officials. So on March 12th, 1997, Mr. Stephens is saying the license term is a key issue. License term is a key issue. Now, why is that a key issue? We see later in the notes, license term renewal risk on OACCA. Now, what's the renewal risk? The risk is that the Warriors choose not to renew, not to extend the license agreement, they walk away after 20 years and the debt service is on the city and county and the Authority. That's the risk that Page 822 LITIVATE REPORTING + TRIAL SERVICES | 877.771.3312 | litivate.com 439424 25 Transcript of Proceedings September 10, 2018 Mr. Stephens is identifying in these notes from March 12th, 1997, and that supports the interpretation of 6.4 that we have argued for in this hearing and has been the interpretation the Warriors have held for 22 years, and is corroborated by Mr. Stephens' contemporaneous notes. In another presentation to the Coliseum from March 13th, 1997, Mr. Stephens talks about the license term mismatch. The 30-year term in the debt doesn't match the 20-year term of the license agreement. And that's a problem for the Authority. In a memo from March 19th, 1997, Mr. Stephens recommends that the license term be extended so that the lease would be coterminous with the debt, and that is to address the same risk that he identified in his March 12th, 1997 notes, that the Warriors could leave after expiration with no obligation to pay debt service. That was a risk for the Coliseum. In July 21, 1997, he makes the same recommendation. He reiterates his conclusion that the license agreement terms should be extended to match the term of the bonds. In connection with Page 823 LITIVATE REPORTING + TRIAL SERVICES | 877.771.3312 | litivate.com 439524 25 Transcript of Proceedings September 10, 2018 the WAM negotiations, the Coliseum witnesses agree. Ms. McClain said the license would be extended to be coterminous with the debt. That would be a good thing because of that risk that Mr. Seaman had identified. Now, in this hearing, Ms. McClain said, well, we didn't -- the risk was not that the Warriors could leave after 20 years and not pay debt service; the risk was we would have to collect the payments for the Warriors and we thought that was risky. This is another point in which there's very convenient testimony 22 years later. There's no document in the record that supports that argument . And Patrick O'Connell, he was a 30-year auditor-controller of Alameda County. He was charged with comparing WAM to the license agreement to figure out whether this was a good deal for the government. And O'Connell agrees with Stephens. In his conclusions, he writes, the Warriors will extend this license to play in the arena to be coterminous with the final maturity of the bonds, 30 years. So they were all focused on extending Page 824 LITIVATE REPORTING + TRIAL SERVICES | 877.771.3312 | litivate.com 439624 25 Transcript of Proceedings September 10, 2018 that license term because they recognized the risk the Warriors could leave after expiration without paying debt service. And when Mr. O'Connell was deposed under oath in 1999 before any dispute had arisen over 6.4, he said the same thing, there was a provision they would to have pay off the debt if they left, but that was before 20 years. That was his sworn testimony in 1999. Now, given that testimony, the Coliseum was in an unusual position where it felt the need to impeach its own witness. They wanted to say, well, somehow he didn't know what he was talking about in 1999. This is the auditor and controller of the county. In 1997, O'Connell testified under oath again that he relied on legal counsel to understand the license agreement. We saw the testimony he gave in 1999. But in the hearing room, 21 years later, he says, well, he just reviewed the license agreement on his own. And we think the testimony that Mr. O'Connell gives in '97 and '99, which is closer in time to the negotiation and signing of the license agreement and the negotiations around WAM, are the best evidence of how Mr. O'Connell understood the Page 825 LITIVATE REPORTING + TRIAL SERVICES | 877.771.3312 | litivate.com 439724 25 Transcr