[00:00:00] Speaker 04:
Our next case for argument today is 23-1826, Cotter versus the United States.

[00:00:06] Speaker 04:
Is it Ms.

[00:00:06] Speaker 04:
Steve?

[00:00:07] Speaker 04:
Ms.

[00:00:07] Speaker 04:
Steve, yes.

[00:00:09] Speaker 04:
Please proceed.

[00:00:11] Speaker 00:
Thank you, Your Honor.

[00:00:12] Speaker 00:
I have three main points today.

[00:00:13] Speaker 00:
First, the plain language of the Price Anderson Act extends indemnity on its face to parties like Cotter, whose liability for a nuclear incident arises out of or in connection with government contract activity in which the government agreed to provide indemnity coverage.

[00:00:33] Speaker 00:
If the court has any doubts about that plain language reading, the legislative history confirms that.

[00:00:39] Speaker 04:
What is the contract language?

[00:00:42] Speaker 04:
that the activity in this case for which indemnity is sought arises out of or is in connection with?

[00:00:50] Speaker 00:
Your Honor, critically, there's no requirement in the statute or the contract, which incorporates the statutory language, that the activity has to be in connection with the contractual activity.

[00:01:01] Speaker 00:
That's what the court below found, and that was error.

[00:01:04] Speaker 00:
The statute requires that Cotter's public liability has to arise out of or in connection with

[00:01:11] Speaker 00:
the contractual activity.

[00:01:13] Speaker 00:
And here, Cotter allegedly released nuclear materials produced by Malancrot pursuant to the relevant contract for the Manhattan Project and the public liability, meaning the liability from the nuclear incident produced by that.

[00:01:28] Speaker 04:
I don't understand.

[00:01:29] Speaker 04:
The company took radioactive waste and threw it on a landfill without regard for the fact that it would kill many people, which it did.

[00:01:37] Speaker 04:
They were then sued, and they paid out for that.

[00:01:40] Speaker 04:
How is it that I should understand that the government was intending in this statute to adopt responsibility to bear the cost of that kind of action?

[00:01:52] Speaker 04:
So I'm trying to tether the damage that was caused by the action that was undertaken to the language arising out of or in connection with.

[00:02:01] Speaker 04:
I'm trying to see where in the statute that action by your client is tethered to the government's agreement to indemnify.

[00:02:10] Speaker 00:
Sure, Your Honor, and let me be clear, there is a misunderstanding in the government's brief.

[00:02:16] Speaker 00:
The allegations with respect to the landfill are not at issue in this case.

[00:02:20] Speaker 00:
The issue, the public liability here arose from Cotter's possession of the material on the banks of Coldwater Creek.

[00:02:27] Speaker 00:
The allegation is that Malancrot released some of the same material a mile upstream, and Cotter allegedly released some of the same material a mile downstream, and that material created a nuclear incident.

[00:02:38] Speaker 00:
And Cotter and Malancrot were sued as joint torque phasers.

[00:02:41] Speaker 00:
Now to your question about how could the government intend to indemnify acts even if they were negligent, the reason is the statute says on its face that its purpose is to protect the public.

[00:02:52] Speaker 00:
Congress considered

[00:02:55] Speaker 00:
proposition that would have limited indemnity or excluded it if the entity was negligent.

[00:03:02] Speaker 00:
And the government rejected that proposal and enacted this indemnity provision because otherwise it would create a situation where members of the public would be injured by nuclear material that's subject to this act and be left uncompensated by Bankruptcy.

[00:03:19] Speaker 04:
You're largely speculating about why we have the statute we have.

[00:03:22] Speaker 04:
Where in the statute

[00:03:24] Speaker 04:
Does it make it clear that the action at issue here was tethered somehow to this contract in a way that the government intended to?

[00:03:38] Speaker 04:
reimbursed for it.

[00:03:39] Speaker 00:
Sure.

[00:03:39] Speaker 00:
And the goal to protect the public is explicit and codified in Section 2012 of the Act.

[00:03:45] Speaker 00:
The statutory language that affects that purpose is that the liability has to arise out of or in connection with the contractual activity.

[00:03:54] Speaker 00:
Here, Malancrot's contract produced the material at issue, and Malancrot was sued, as I just mentioned, as a joint tortfeasor with Cotter for allegedly releasing the same material into the creek

[00:04:07] Speaker 00:
for one nuclear incident.

[00:04:09] Speaker 00:
That's the connection, Your Honor.

[00:04:11] Speaker 00:
And the purpose of the statute is intentionally broad because otherwise members of the public would be left uncompensated.

[00:04:20] Speaker 00:
The statute says that as long as you have that liability that's in connection with the contractual activity, you're covered.

[00:04:29] Speaker 00:
And the government has conceded that Congress's example of an airplane

[00:04:34] Speaker 00:
that flies into a nuclear reactor because of negligent maintenance, if the entity that's responsible for the negligent maintenance of the aircraft, if they have public liability for that incident, they get indemnity.

[00:04:50] Speaker 00:
But the government can't adequately explain why the entity negligently maintaining the aircraft would get indemnity, but caught or wouldn't.

[00:04:58] Speaker 00:
There aren't any of the tight causal nexus requirements.

[00:05:02] Speaker 04:
Unfortunately, none of that is in the statute.

[00:05:04] Speaker 04:
You're talking about stuff that you perceive from the legislative history, but where is this?

[00:05:10] Speaker 04:
I keep asking you to tether it to the statute, and I guess your tethering is you think the words arising out of her in connection with means anything.

[00:05:17] Speaker 04:
any radioactive byproduct, precursor product, final product, anything, anyone at any point for all time does with it, the government will cover any injury caused by it.

[00:05:29] Speaker 00:
Well, to be clear, yes, Your Honor, but to be clear, there are limitations within the definition of nuclear incident.

[00:05:36] Speaker 00:
A nuclear incident, meaning something that could give rise to indemnity, can only occur with three types of nuclear material that are very highly regulated by the federal government.

[00:05:47] Speaker 00:
And in this case, that material is specific to the Weapons Defense Project and the Manhattan Project.

[00:05:53] Speaker 00:
And the secondary purpose of the statute, which is codified in the statute, it's expressed, this is not speculation, the secondary purpose of the statute is to encourage private participation in the nuclear energy industry.

[00:06:07] Speaker 00:
Congress wanted to, as the court noted below, turn swords into plowshares, take this leftover nuclear material and convert it into useful nuclear energy, which is precisely the function that Cotter served.

[00:06:20] Speaker 00:
that is directly within the face of the statutory language and the purpose.

[00:06:25] Speaker 00:
And the court, we do cite cases like Asimah and Rampour that say that in connection with is sweeping in scope, but you tether it to the statutory purposes.

[00:06:36] Speaker 00:
and the statutory purposes here are apparent to encourage parties like Cotter and Moundcrot, who did get indemnity for this, to have that joint liability that arises be indemnified pursuant to that particular contract.

[00:06:51] Speaker 00:
Remember, the structure of this statute, if you look at it, is omnibus in nature.

[00:06:56] Speaker 00:
It channels liability back to the government.

[00:06:59] Speaker 00:
So you have to identify what is the relevant contract.

[00:07:02] Speaker 00:
Well, the relevant contract here

[00:07:04] Speaker 00:
is the Malincrot one.

[00:07:05] Speaker 00:
It produced the material and their joint torque.

[00:07:09] Speaker 01:
So can I ask, what's your best case that the nuclear waste here arose out of, arises out of, or in connection with the contractual provisions at stake that interprets the statute in the way you suggest it should be interpreted?

[00:07:30] Speaker 00:
If I understand your honor's question, is it with reference to the contract?

[00:07:35] Speaker 01:
Correct.

[00:07:36] Speaker 01:
Just the best case.

[00:07:37] Speaker 00:
Sure.

[00:07:37] Speaker 00:
So the contract incorporates the statutory definition.

[00:07:41] Speaker 00:
And it says that it extends not only to the contractor, but to any other person who has public liability.

[00:07:49] Speaker 00:
And it lays out four ways in which that happens.

[00:07:52] Speaker 00:
One of them is with respect to material produced under the contract.

[00:07:57] Speaker 00:
That's this material.

[00:07:59] Speaker 00:
Does that answer your question?

[00:08:00] Speaker 01:
No, I'm asking for the best case that you can cite us to that interprets the statute in the way you believe it should be interpreted.

[00:08:08] Speaker 00:
Your Honor, this is an issue of first impression.

[00:08:10] Speaker 00:
I can't do that.

[00:08:11] Speaker 01:
And the parties agree it is an issue of first impression?

[00:08:14] Speaker 00:
I believe so.

[00:08:14] Speaker 00:
I'm not aware of any case that the government has cited that has addressed the first strike issue before this court.

[00:08:20] Speaker 01:
Very good.

[00:08:21] Speaker 00:
I understand the court's hesitance to look at the airplane example because it is in the legislative history.

[00:08:27] Speaker 00:
I would note that the government adopts it and that it is a compelling example of just how broad the statute is.

[00:08:34] Speaker 00:
And the statute on its face simply says that if you have liability for a nuclear incident that arises out of or in connection with that contractual activity, then it would give rise to indemnity.

[00:08:48] Speaker 00:
The government agreed to provide that omnibus indemnity in this contract for this material.

[00:08:55] Speaker 03:
If you look at the 1962- Just to be clear, and your view is that the liability for this material never ends.

[00:09:03] Speaker 00:
Well, Your Honor, at some point it will end.

[00:09:06] Speaker 03:
But as long as- Let's assume we're still within the half-life of the material.

[00:09:11] Speaker 00:
Right.

[00:09:12] Speaker 00:
So the indemnity runs with the material because the liability does.

[00:09:16] Speaker 00:
And the purpose of the statute on its face is to make sure that members of the public are not left uncompensated if they're injured by this material.

[00:09:25] Speaker 03:
What, if any, mechanisms

[00:09:30] Speaker 03:
did the government have available to it to try to limit a possibility of damage from this material that it instigated the creation of?

[00:09:44] Speaker 00:
Sure.

[00:09:45] Speaker 00:
Right.

[00:09:45] Speaker 00:
And it did for the defense of the United States, and it wanted to convert it into nuclear energy.

[00:09:50] Speaker 03:
And so to entice the private industry to... This was all material for Oak Ridge?

[00:09:55] Speaker 00:
The Manhattan Project.

[00:09:56] Speaker 03:
For Oak Ridge?

[00:09:58] Speaker 03:
Or for Richland?

[00:09:58] Speaker 00:
It was in the St.

[00:10:00] Speaker 00:
Louis downtown center and then moved to these sites on Coldwater Creek.

[00:10:05] Speaker 00:
The government carefully regulated it.

[00:10:07] Speaker 00:
It required that when the material was sold to the private industry, that it be licensed.

[00:10:13] Speaker 00:
The government came and inspected it.

[00:10:15] Speaker 00:
They had specific parameters.

[00:10:17] Speaker 00:
the entities faced revocation of license.

[00:10:21] Speaker 03:
Do I remember, Cotter had a license for five or six years or something?

[00:10:25] Speaker 00:
About four years for this specific material and it licensed it for that specific site where the government closely regulated and inspected.

[00:10:34] Speaker 00:
It could have faced penalties if the AEC had felt that it needed to.

[00:10:39] Speaker 04:
I need to ask a factual question because I'm just baffled.

[00:10:43] Speaker 04:
brought up the landfill, you corrected me.

[00:10:46] Speaker 04:
And what am I missing?

[00:10:47] Speaker 04:
I'm looking at the complaint, which is at appendix page 31 and 32, that talks about the McClurg plaintiff's allegations and the lawsuit.

[00:10:57] Speaker 04:
And it's all about the Westlake landfill.

[00:11:00] Speaker 04:
It's not about some shared damage done by Mellancrot and Cotter releasing into the water.

[00:11:07] Speaker 04:
So what am I missing?

[00:11:09] Speaker 04:
You corrected me as though I was completely wrong.

[00:11:12] Speaker 04:
And if I am, I'm happy to be corrected, because this is a very dense case.

[00:11:16] Speaker 04:
And I am open to being told that I misread something.

[00:11:19] Speaker 04:
But what did I misread?

[00:11:21] Speaker 00:
Sure, Your Honor.

[00:11:22] Speaker 00:
So the government states that it has to do with the landfill.

[00:11:25] Speaker 00:
And there is a reference to the landfill in the McClurg complaint, which is our underlying liability.

[00:11:30] Speaker 00:
That reference is simply because the allegations in McClurg were that their injury arose from releases of the radioactive material from a site called Laddy Avenue, which is right near Slaps where Malancrot had its material.

[00:11:45] Speaker 00:
They're a mile apart here.

[00:11:47] Speaker 00:
And the allegation is those materials

[00:11:49] Speaker 00:
mingled in Coldwater Creek, and that produced a nuclear incident.

[00:11:53] Speaker 04:
And why do they talk about Westlake landfill?

[00:11:55] Speaker 00:
Right.

[00:11:56] Speaker 00:
So then the landfill allegation comes up.

[00:11:58] Speaker 00:
The reason I'm making that distinction, Your Honor, is because there are ongoing active litigation about the landfill.

[00:12:04] Speaker 00:
That has nothing to do with the settled McClert case.

[00:12:07] Speaker 00:
The allegations with respect to the landfill are merely that in transit to the landfill, a third party had its own contract and was transporting material it had taken from Cotter.

[00:12:19] Speaker 00:
And the allegation when the McClert complaint is limited to that transport function that some of the material was released back into Coldwater Creek on its way to the landfill.

[00:12:31] Speaker 00:
The landfill allegations are completely separate.

[00:12:33] Speaker 00:
The McClurg Coldwater Creek allegations encompass what are called the haul routes, the transit.

[00:12:41] Speaker 00:
And Congress actually stated that transporters who accidentally release nuclear material into a stream would be covered by this indemnity.

[00:12:50] Speaker 04:
Did you just say accidentally release nuclear material into a stream?

[00:12:53] Speaker 04:
Yes.

[00:12:53] Speaker 04:
These are the same people who took it and dumped it at the landfill.

[00:12:56] Speaker 04:
You think they accidentally released it into a stream.

[00:12:59] Speaker 00:
Well, to be clear, there are very good merits... He accidentally put it in the landfill also?

[00:13:05] Speaker 00:
Your Honor, first of all, Cotter was not the one transporting it, and here's the critical part, Your Honor.

[00:13:11] Speaker 00:
We have very good defenses on the merits, and this case was dismissed at the procedural posture.

[00:13:17] Speaker 00:
Our allegations adequately allege that we are a person indemnified.

[00:13:21] Speaker 00:
We will be able to prove the actual entitlement at the merit stage.

[00:13:27] Speaker 00:
I see that I'm well into my rebuttal time, and I respectfully request this court reverse, and I will reserve the remainder of my time.

[00:13:33] Speaker 04:
Thank you.

[00:13:33] Speaker 04:
No problem.

[00:13:35] Speaker 04:
Mr. Roberson.

[00:13:42] Speaker 02:
May it please the court.

[00:13:44] Speaker 02:
This court should reject Cotter's interpretation of section 170D of the Price-Anderson Act.

[00:13:50] Speaker 02:
Cotter presents a novel theory that the mere downstream purchase and possession of radioactive material that had once been the subject of a contract for the benefit of the United States provides an independent downstream purchaser with PAA indemnification.

[00:14:06] Speaker 04:
No matter how far back in time... Let's parse this into two different buckets.

[00:14:10] Speaker 04:
Bucket one for me is who are persons

[00:14:14] Speaker 04:
indemnified.

[00:14:16] Speaker 04:
Is it the government's position that the person indemnified, for example, is only the person with whom they had the initial contract, Malacrot, the contractor?

[00:14:24] Speaker 02:
No.

[00:14:24] Speaker 02:
It's broader than that.

[00:14:27] Speaker 04:
So it includes at least persons in privity.

[00:14:29] Speaker 04:
Sure.

[00:14:30] Speaker 02:
Persons in privity.

[00:14:31] Speaker 04:
And what else does it include?

[00:14:31] Speaker 02:
People who are in nexus with the contracting party with the government.

[00:14:37] Speaker 02:
So for instance, if you look at the Three Mile Island cases.

[00:14:40] Speaker 04:
But here, I mean, Cotter

[00:14:43] Speaker 04:
Let's take out commercial, the middle man, just to make it easier, because I don't know that it matters that commercial bought it.

[00:14:47] Speaker 04:
Suppose Cotter bought this directly from Malancrot.

[00:14:51] Speaker 04:
Cotter is not a person of interest?

[00:14:55] Speaker 02:
Right.

[00:14:55] Speaker 02:
So the notion is, what's the contract?

[00:14:57] Speaker 02:
The contract is between Malancrot and the United States, undertaking a contract for the benefit of the United States.

[00:15:03] Speaker 02:
What is that?

[00:15:04] Speaker 02:
Making, effectively, steps toward a nuclear weapon.

[00:15:08] Speaker 02:
When you sell,

[00:15:10] Speaker 02:
the material and there's nothing else going with it.

[00:15:12] Speaker 02:
It's just a flat out sale.

[00:15:14] Speaker 02:
The activity then is not for the activity for the benefit of the United States.

[00:15:18] Speaker 02:
The activity that then causes the liability is, for instance, the buyer dumping the material into a landfill.

[00:15:25] Speaker 04:
So the activity that causes the liability ties to... I suppose the contract with Malancrot included transportation and disposal of radioactive material.

[00:15:38] Speaker 04:
This is disposal.

[00:15:39] Speaker 04:
That's not good enough to be in connection with the contract.

[00:15:43] Speaker 02:
For Malancrot, if there's a claim against Malancrot, that's possible.

[00:15:47] Speaker 04:
Wait, just to be clear.

[00:15:49] Speaker 04:
Are you telling me that right now, if this exact claim was against Malancrot, not against Cotter, if Malancrot, and at some point, not now, but answer this question first, but then tell me the difference between the lake and the landfill, because I'm really baffled on the facts.

[00:16:03] Speaker 04:
Are you telling me that if this exact

[00:16:06] Speaker 04:
action that Connor undertook, which was the action for which it was found liable, whatever that action is, if Malinckrodt had been the one to undertake it, that it would be indemnified.

[00:16:19] Speaker 02:
that Melancrot is performing a contract with the United States.

[00:16:23] Speaker 02:
If you're going to whether what Melancrot does is reckless, for instance dumping it in a landfill, if Melancrot were to do something reckless, it was still in the performance of its contract with the United States, that was still for the benefit of the United States, and yes, there would be indemnification for Melancrot.

[00:16:40] Speaker 02:
So the distinction, though, is you've sold the material.

[00:16:43] Speaker 02:
The activity that's being undertaken is no longer for the benefit of the United States.

[00:16:48] Speaker 02:
Cotter's activities are taken for Cotter's private commercial use, not for the benefit of the United States, as you're acknowledging.

[00:16:55] Speaker 02:
It's a few steps down, too, in the chain of possession.

[00:16:58] Speaker 03:
You may have addressed this, but to go back to the hypothetical, if the contract between the United States and Malin had come to an end,

[00:17:10] Speaker 03:
But Malancroft still had the material and did the same thing that Cotter was accused of doing.

[00:17:20] Speaker 03:
Indemnity or no?

[00:17:21] Speaker 02:
Well, correct first with respect to honor.

[00:17:25] Speaker 02:
That's counterfactual, because the material is always owned by the AEC, the American Atomic Energy Commission.

[00:17:31] Speaker 02:
Still true?

[00:17:32] Speaker 02:
It was true then.

[00:17:33] Speaker 02:
Yeah, it was true then.

[00:17:35] Speaker 02:
And until it sold, it was the AEC who actually sold the material.

[00:17:39] Speaker 02:
But just going with the hypothetical, if Malancrot has material and the contract's ended, that indemnity still goes on.

[00:17:46] Speaker 02:
And for instance, it had material, it put it in some places that it shouldn't have put.

[00:17:50] Speaker 03:
Even though the contract is done, and so the post-contract activities of Malancrot would still be for the benefit of the United States?

[00:18:01] Speaker 02:
What Malancrot did, which was it'll say it released radioactive

[00:18:07] Speaker 02:
material into the environment, it did that in connection with its contract for the benefit of the United States.

[00:18:15] Speaker 02:
And therefore, whether that contract ends or not, that indemnification continues for what it actually did do.

[00:18:27] Speaker 02:
If there's questions, if you're looking at what the person indemnified does,

[00:18:36] Speaker 02:
What Cotter is doing is they have an untethered definition of a person indemnified.

[00:18:40] Speaker 02:
Person indemnified is located within language 170D that ties a government's indemnity obligation.

[00:18:46] Speaker 03:
Can I ask you this?

[00:18:47] Speaker 03:
Actually, I have a really, really trivial question.

[00:18:50] Speaker 03:
Which version of the statute governs this case, and why?

[00:18:57] Speaker 03:
Well, so it's nobody seems to want to cite, you know, 42 USC.

[00:19:01] Speaker 02:
Well, there's two different versions, but it's the pre-1988 version.

[00:19:05] Speaker 02:
because all the liability arose in that pre-1988 period.

[00:19:12] Speaker 04:
Can you explain what the indemnity, just from a factual standpoint, is about?

[00:19:19] Speaker 04:
Does it have to do with the landfill, or does it have to do with water?

[00:19:22] Speaker 04:
I was struggling to follow the facts.

[00:19:25] Speaker 02:
Just to put the picture on it, there was work done for the atomic weapons production in St.

[00:19:34] Speaker 02:
Louis.

[00:19:35] Speaker 02:
downtown.

[00:19:37] Speaker 02:
They then moved it to the St.

[00:19:38] Speaker 02:
Louis airport area.

[00:19:39] Speaker 02:
It's called Slaps.

[00:19:40] Speaker 02:
At that point in time, it was sold to Continental.

[00:19:44] Speaker 02:
Continental moved it to Laddie Avenue and to then eventually Westlake Landfill.

[00:19:52] Speaker 02:
So Laddie Avenue is a separate place where Mellancourt never owned material at Laddie Avenue.

[00:20:03] Speaker 02:
the material at Laddie Avenue were released at Laddie Avenue and released into the landfill.

[00:20:11] Speaker 02:
So the notion that they were mixed together, no, Malacrite had its radioactive material separately caught her through a chain of command through continental and then commercial discount, became an owner of the material at Laddie Avenue and at the Westlake landfill.

[00:20:28] Speaker 02:
So they're separate.

[00:20:30] Speaker 02:
The claimants in McClurg, they're saying,

[00:20:34] Speaker 02:
We're suing you all, because we've been harmed by this nuclear material you sorted out as to which one of you is responsible.

[00:20:42] Speaker 02:
But the claim is not to determine what the liability of the PAA is.

[00:20:47] Speaker 02:
The PAA liability goes to the contract.

[00:20:49] Speaker 02:
This is a contractual indemnification claim.

[00:20:58] Speaker 03:
Go ahead.

[00:20:58] Speaker 01:
Well, I was going to ask, could I follow up on Judge Toronto's question and hypothetical?

[00:21:03] Speaker 01:
I may be confused, but your response seemed to suggest to me that you were assuming the incident at issue occurred before the contract in his hypothetical had ended.

[00:21:18] Speaker 01:
Was that a fair?

[00:21:21] Speaker 02:
Before the contract had ended?

[00:21:22] Speaker 01:
Correct.

[00:21:24] Speaker 02:
Right.

[00:21:24] Speaker 02:
The contract provides for the indemnification.

[00:21:26] Speaker 02:
The indemnification will continue.

[00:21:29] Speaker 02:
if your work under the contract caused the liability that required indemnification.

[00:21:35] Speaker 01:
For our purposes, does it matter whether the conduct at issue occurred before or after the contract ended?

[00:21:43] Speaker 02:
In our purposes, it certainly doesn't matter because once that material was sold to Continental,

[00:21:50] Speaker 02:
It's no longer part of the Malincrot contract for the benefit of the United States.

[00:21:55] Speaker 02:
So again, their basic thesis is that liability runs with radioactive material.

[00:22:02] Speaker 02:
We're saying liability has to be tied to an event that causes public liability.

[00:22:07] Speaker 03:
Can I just ask one of the points you made in your brief, which is

[00:22:12] Speaker 03:
a real worry that how is the government supposed to try to prevent conduct that would give rise to liability when you're not in privity with the potentially liable party.

[00:22:31] Speaker 03:
Why wouldn't that ability exist by virtue of the license for the source material that Cotter had during

[00:22:42] Speaker 03:
the relevant years.

[00:22:43] Speaker 02:
So that's under 170A.

[00:22:45] Speaker 02:
That is not their claim.

[00:22:48] Speaker 02:
That's first thing.

[00:22:48] Speaker 02:
No, but they had a source material license.

[00:22:51] Speaker 02:
They had a license to have it.

[00:22:53] Speaker 02:
Right.

[00:22:53] Speaker 03:
So why couldn't AEC, yes, still AEC at that time, have said, have come and inspected here what Connor was doing with the material?

[00:23:05] Speaker 02:
Well, I don't think the license

[00:23:07] Speaker 02:
Provides what the terms of the license are and there's no oversight or responsibility Components to that license really right it is like a one.

[00:23:17] Speaker 02:
It's not a record.

[00:23:18] Speaker 02:
It's a one-page document And it basically says we are selling this we're selling it as is and if this is to commercial disk I mean to continental wait a second I'm sorry.

[00:23:28] Speaker 02:
I'm sorry.

[00:23:29] Speaker 02:
I'm sorry.

[00:23:30] Speaker 02:
You're right my apologies so that Connor gets it

[00:23:33] Speaker 02:
from commercial discount, it does have a license.

[00:23:36] Speaker 02:
You have to have a license to own this sort of material.

[00:23:39] Speaker 03:
And the licensor, AEC, doesn't?

[00:23:44] Speaker 02:
The licensor was the NRC, actually.

[00:23:47] Speaker 02:
So there's this distinction.

[00:23:49] Speaker 02:
Not in 1970.

[00:23:52] Speaker 02:
NRC wasn't created until the late 70s.

[00:23:53] Speaker 02:
OK.

[00:23:54] Speaker 02:
All right.

[00:23:55] Speaker 02:
But there's this distinction between licensing under 170A and 170D, and D is contractual.

[00:24:02] Speaker 02:
And that's what we have here.

[00:24:03] Speaker 02:
We don't have a licensing issue.

[00:24:06] Speaker 02:
We have a contractual issue.

[00:24:07] Speaker 02:
And so you look at the language of the contract directly with respect to the statute, or you can look at the third-party beneficiary claim.

[00:24:17] Speaker 02:
And you look there and you see that the language of the third party beneficiary actually incorporates the PAA language.

[00:24:25] Speaker 02:
So you have this notion that it has to be public liability which arises out of or in connection with the contractual activity.

[00:24:34] Speaker 02:
And there's a second section that says arises from or results from a list of items including possessing nuclear material.

[00:24:43] Speaker 02:
What they've done is they've said, well, we don't have to pay any attention to the first part of that requirement under the contract, the arising out of or in connection with the contractual activity.

[00:24:53] Speaker 02:
They say, if we just have the material, that's sufficient.

[00:24:56] Speaker 02:
That basically writes out.

[00:24:59] Speaker 03:
But the theory is that the contractual activity was what instigated the creation of the material.

[00:25:06] Speaker 02:
Right.

[00:25:06] Speaker 02:
So if the theory is that just having the material

[00:25:12] Speaker 02:
sufficient connection with the contractual activity, then we've gone too far.

[00:25:17] Speaker 02:
Because obviously that material didn't come from AEC or from Malkrot to Cotter.

[00:25:23] Speaker 02:
So there's no question about that.

[00:25:25] Speaker 02:
It's way down the food chain.

[00:25:27] Speaker 02:
Not way down.

[00:25:28] Speaker 03:
I mean, there were two intermediaries, one of which was just the commercial.

[00:25:32] Speaker 03:
I mean, one was called commercial, but then the other was the finance company that took it over because of the bankruptcy.

[00:25:38] Speaker 02:
Two steps, Connell commercial discount.

[00:25:41] Speaker 02:
But the point is, by then, there's no question this is a purely commercial transaction.

[00:25:46] Speaker 02:
We're purchasing this from you.

[00:25:48] Speaker 02:
They get an indemnification from commercial discount.

[00:25:51] Speaker 02:
They get the material.

[00:25:52] Speaker 02:
All they get in terms of regulatory oversight is a license.

[00:25:57] Speaker 02:
And so there's no sort of overhang on terms of DOE's not looking over the shoulder and telling them how to

[00:26:04] Speaker 02:
move the material, or how to handle it, any of that sort of stuff.

[00:26:09] Speaker 02:
They really are on their own.

[00:26:11] Speaker 02:
And they're saying, oh, no matter what we do, years later, and for all times, just because material was created with the Malacroix contract, it arises from or is a connection to.

[00:26:23] Speaker 02:
But we're saying it's way too tenuous a connection.

[00:26:26] Speaker 02:
Just because material was created doesn't mean that the public liability for which you're being sued, which is dumping the material in the Westlake landfill,

[00:26:34] Speaker 02:
is not in connection with the Mellancrot contract.

[00:26:37] Speaker 02:
So that nexus is not there.

[00:26:44] Speaker 02:
I'm sorry, any other questions?

[00:26:49] Speaker 02:
Welcome to turn to this notion of strict liability.

[00:26:53] Speaker 02:
One thing they've done in the reply brief is sort of brought the notion that strict liability is enough to bring in the government.

[00:27:01] Speaker 02:
So that's an A, it's a new argument.

[00:27:04] Speaker 02:
And secondly, it sort of goes to the notion they cite Wellkner, which is a Missouri state law, which is about defective manufacturing of crutches.

[00:27:15] Speaker 02:
And in that case, Missouri court said that we say only that the doctrines of a diminishing contribution are applicable in strict products liability cases.

[00:27:26] Speaker 02:
This is not a product liability case.

[00:27:28] Speaker 02:
Can I ask this question?

[00:27:30] Speaker 03:
If this case were to go back and get beyond the Rule 12 stage, would there be issues about whether the government or some private indemnitor has to go first in payment?

[00:27:50] Speaker 03:
Well, there are issues, whether there's injury, in fact... There's indemnified dentin are sitting around, right?

[00:27:55] Speaker 02:
Somewhere in good urotomic or... General Atomic, we believe, based on the SEC file, has indemnified codder.

[00:28:02] Speaker 03:
Is there a... I mean, obviously, we're not there right now, but does one of them have to eat the liability before the other?

[00:28:16] Speaker 02:
I'm not sure, Your Honor, but certainly the way that typically when you do have a contract with the government, and they do ask for like under the licensing, you have to get your private indemnity, and we'll only pay for indemnification in a licensing context when you've secured that private sort of threshold insurance.

[00:28:39] Speaker 02:
So that's another reason why under that licensing paradigm, it doesn't work here.

[00:28:45] Speaker 02:
they didn't have private insurance.

[00:28:49] Speaker 02:
But anyway, the Welkner holding has... I'm out of time, I can see.

[00:28:54] Speaker 04:
Okay, thank you, Mr. Robertson.

[00:28:58] Speaker 04:
Thank you, Your Honor.

[00:29:01] Speaker 01:
Steve, may I ask a question?

[00:29:03] Speaker 01:
It's somewhat unclear to me, is the contract attached to the

[00:29:10] Speaker 01:
to the complaint?

[00:29:11] Speaker 00:
It's not, Your Honor.

[00:29:12] Speaker 00:
It was incorporated by reference and it was provided to the district court and is in the appendix.

[00:29:17] Speaker 01:
Was there an argument made at the District Court that there were facts here that precluded treatment under Rule 12?

[00:29:24] Speaker 00:
Well, Your Honor, that's yes.

[00:29:26] Speaker 00:
Yes.

[00:29:26] Speaker 00:
And the problem here is that the Court made findings of fact on a 12b6 motion.

[00:29:32] Speaker 00:
And it got the facts wrong.

[00:29:33] Speaker 00:
It found that the contract ended earlier than 1967 and that Cotter purchased the material later than 1967.

[00:29:41] Speaker 00:
So their finding is a fact, and that's an independent ground for reversal.

[00:29:45] Speaker 00:
But as to the fundamental question as to whether did we adequately plead, not prove yet, but adequately plead that we're a person indemnified, the government just agreed that Malancrot gets indemnity.

[00:29:58] Speaker 00:
It gets indemnity if it's reckless.

[00:30:00] Speaker 00:
It gets indemnity past the expiration of the contract.

[00:30:03] Speaker 00:
But Cotter doesn't.

[00:30:04] Speaker 00:
They were sued for joint liability for the same nuclear incident.

[00:30:08] Speaker 00:
Judge Toronto, the contract is clear that the obligations of the government extend past the expiration of the contract.

[00:30:15] Speaker 00:
That's why both parties get indemnity.

[00:30:17] Speaker 00:
The contract was for the benefit of the government.

[00:30:20] Speaker 00:
That's why the AEC agreed to enter into that indemnity agreement.

[00:30:24] Speaker 00:
Per the statutory language, that extends, quote,

[00:30:30] Speaker 00:
not only, sorry, quote, to the person with whom the indemnity agreement is executed and any other person who may be liable for public liability, end quote.

[00:30:41] Speaker 00:
That's section 2014.

[00:30:42] Speaker 03:
Can I just ask you a question I asked the government?

[00:30:47] Speaker 03:
Could the AEC, in granting and maintaining the license to Cotter to hold and deal with the source material,

[00:30:57] Speaker 03:
have given AEC some power to influence or control Qatar's behavior with respect to that material?

[00:31:07] Speaker 00:
Not only could they have, they did.

[00:31:08] Speaker 00:
The AEC continually inspected this and in fact inspected these very allegations and found that there was no wrongdoing or violation of the federal regulations that apply.

[00:31:18] Speaker 00:
Those are merits issues that can be tried if this case is allowed to get past the pleading stage.

[00:31:23] Speaker 00:
My final point, I see you're mad uptown.

[00:31:26] Speaker 00:
I may make one final point.

[00:31:28] Speaker 00:
The language here of arising out of or in connection with, that our liability has to be in connection with the contractual activity, that is sweeping in scope, but it is not untethered.

[00:31:40] Speaker 00:
It is tethered by the narrow definition of nuclear incident, which is injury arising out of the radioactive properties of these very carefully controlled, federally regulated nuclear materials.

[00:31:53] Speaker 00:
and by the purposes of the statute to protect the public and to encourage the private participation in the nuclear energy industry.