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"stt_transcript": "Good morning, your honors. This case presents a unique question. The first point we raised was we allege that, well let me back up with some background. Mr. Strickland was charged with aiding and abetting his co-defendant, Elia Rahm, in the possession with intent to distribute more than 500 grams of methamphetamine. Later, a superseding indictment came down adding two firearms charges, felon in possession and possession of a firearm in furtherance of a drug trafficking offense. The case was set for trial in October of 2024. There was a pretrial hearing on the 4th, I believe it was, where the court ruled that certain 404B evidence would be allowed in the evidence. After that, Mr. Strickland entered into a plea agreement where he agreed to plead to an information charging possession with intent to distribute in excess of 50 grams of methamphetamine, the same charge his co-defendant pled to. The problem arose at the sentencing in February 2025 after the judge had accepted the plea and the plea agreement. Mr. Strickland was granted allocution. During the allocution, Mr. Strickland kind of waffled. I suppose in fairness you could say he did a little bit more than waffle. The court found that he was not accepting responsibility for the crime to which he was pleading guilty. The court recessed the sentencing hearing for a couple of weeks and when it reconvened, the court asked Mr. Strickland if his responses would be the same. In other words, would his allocution statements be the same and he said yes. He didn't want to change anything. He wanted to proceed with the plea. He told the judge on several occasions he wanted to proceed with the plea. The judge said, I believe he said I can't sentence him. I believe he said he would entertain a motion to withdraw the plea. Exactly. But then you so moved. Yes sir, at that point we had no alternative. Well that's the question I had for you. Why didn't you have an alternative? Why couldn't you say, Judge, we're entitled to be sentenced. We've pleaded. You've accepted the plea. We want to proceed. Well, we did say that. We told the judge we wanted to proceed. I know, but I mean after he said he would entertain the motion, you had the option, did you not, to say we have no such motion for you? I suppose I could have, yes sir, but we had already made it clear to the court we wanted to proceed with the plea. So the court... Well that's the concern is whether by changing your mind, you might say, and moving to withdraw, you have effectively waived your argument that he was entitled to be sentenced. That's the government's argument, yes sir. So what do you say to that? I would say we haven't waived it because we repeatedly said, albeit before the judge said he was going to reject the plea agreement, we repeatedly said we wanted to continue with the plea. So the court revoked its acceptance of the plea agreement. The plea agreement had already been accepted by the court. Our first point is a question of law, whether the court had the authority to reject the plea agreement after it had been accepted. We say that there's nothing in Rule 11 that allows that course of action after the plea has been accepted. And we cite one of this court's own cases, the Olson case, in support of that proposition. In Olson, admittedly Olson was a Rule 11 C1C plea agreement where the government had stipulated that Mr. Olson would fall into Category 1 in his criminal history and further stipulated that his sentencing guideline range was a certain parameter. After the court received the pre-sentence investigation report, it learned that Mr. Olson was in fact a Category 2 criminal history. And that raised, of course, the sentencing guidelines accordingly, so the court in effect modified the plea agreement and sentenced him in accordance with a Schedule 2 criminal history and the corresponding guideline range. This court held that the court didn't have authority to do that under Rule 11. We contend, by extension, that the court didn't have authority to reject the plea agreement entirely after it had been accepted. Counsel, why would the so-called fraud exception not apply here to allow the district court to withdraw its acceptance? That's a good question. One of the main reasons is because Mr. Strickland didn't perpetrate a fraud on the court. The court specifically held in its remarks that Mr. Strickland's allocution statements were not materially different than the statement of material facts contained in paragraph 4 of the plea agreement. In other words, what he said in allocation did not really materially differ from what he said in the plea agreement. So that, we contend, was not fraud. There's a couple things here in that point. First of all, the plea itself was accepted. And the acceptance of the plea agreement was deferred until the time of sentencing. At the time of sentencing, before the allocution, the judge accepted the plea agreement. Correct. So he's got both those things that he's done at that point, right? Yes, sir. And by accepting the plea agreement, it's taken other charges off the table, right? Yes, sir. When does jeopardy attach? I'm sorry? When does jeopardy attach under those circumstances? Right? Because here's what I'm saying. You've got the Rule 11 argument, but the real question is, after someone's been convicted, because once you accept the plea, they're convicted, and once you accept the plea agreement, which has the effect of dismissing the other charges, has jeopardy attached on those other charges? Yes, sir. Do you have any authority for that? No, sir. Not at the present time. Are the other charges dismissed upon acceptance of the plea agreement or upon entry of a judgment ordering them dismissed? Normally, upon entry, well, upon pronouncement of the sentence, the government would then, assuming the plea agreement went through, the government would then move to dismiss the remaining charges. So, we contend that the court was just not authorized to do that under Rule 11. Now, if the court decides we're wrong, then our argument is that the court should not have allowed those statements made at allocution to be introduced as substantive evidence at the trial. The court allowed Mr. Strickland to withdraw his plea. The court specifically said that it was not finding that Mr. Strickland breached the plea agreement, but he said he found fair and just reasons to allow Mr. Strickland to withdraw the plea. At that point, our contention is that Rule 11F points to Rule of Evidence 410, which specifically says that plea statements and other statements in connection with a guilty plea are not admissible after the plea is withdrawn. So, interestingly, the district court said that the plea agreement and anything said at the plea hearing would not be admissible. It based its ruling on 403. But he did rule that statements that Mr. Strickland made in his allocution were admissible. I contend that 410 doesn't allow that. Number two, that ruling is completely contradicted to the court's ruling that Mr. Strickland did not, he wasn't finding that Mr. Strickland breached the plea agreement. And the court specifically said, not going to allow the plea agreement or any statements made during the change of plea hearing. But he could allow statements made at the sentencing hearing. That, we contend, is inconsistent and directly violates Rule 410 because the plea had been withdrawn at that point and the court did not find a breach of the plea agreement. We made... You say the plea had or had not been withdrawn? Well, the plea had been withdrawn when the court ruled that the statements made at allocution was admissible. There was a... Yeah, even at the time of the trial. Yes, at the time of the trial. Of course it had been withdrawn, yeah. Yeah, there were preliminary motions... But the allocution statements weren't made in a plea bargaining process, were they? No, not directly in the plea bargaining process, but under Rule 410, it says evidence of the following is not admissible against the defendant who made the plea or participated in the plea discussions. A, or excuse me, one, a guilty plea that was later withdrawn is not admissible. A, no low contendory plea. Or number three, a statement made during a proceeding on either of those pleas. The sentencing hearing and the allocution was a proceeding under a guilty plea that was withdrawn. We contend, you know, 410 directly prohibits that. The argument is advanced that that only covers statements made at the change of plea. That the sentencing hearing is no longer, should no longer be related to the plea. The allocution is related only to sentencing. Well, the plea proceeding or the sentencing proceeding, and those statements were made at allocution, that is a proceeding arising from the withdrawal of the guilty plea, as 410A3 prohibits. Well, it says a proceeding on a guilty plea. You think the sentencing allocution was part of a proceeding on a guilty plea? Yes, sir. All right. Does this come up before? Have you found any authority on that? I haven't found any, no, your honor. All right. Thank you. Would you like to save any time for rebuttal? Yes, I would save the remaining time, please. Thank you. You may. Mr. Eaton, we'll hear from you. May it please the court, Kevin Eaton, on behalf of the United States, the district court's judgment here should be affirmed in all respects. On appeal, Mr. Strickland raises two principal arguments, neither of which has a basis given the extensive record here or the governing law that applies. The first is that the district court violated his rights under Rule 11 and due process by rejecting the plea agreement. There are two central errors in the defendant's argument on this point. The first and most important is that the defendant seems to be conflating the issue of the rejection of the plea agreement and the withdrawal of the plea. His briefing on several occasions says that the district court's rejection of the plea agreement compelled withdrawal of the plea. That's simply not true. These are two separate and independent, although related, issues, and Mr. Strickland's conflation of the two leads directly into why the government has argued that the invited error doctrine applies here. If you scrutinize Mr. Strickland's brief, the harms that he's complaining of, the loss of acceptance, the fact that he is now exposed to a broader criminal exposure in terms of the charges that he ultimately faced, those had nothing to do with the district court's rejection of the plea agreement. Can the invited error doctrine apply where the district court refused to sentence him? Your Honor, the district court certainly expressed that it did not believe on this present record it could sentence. And so I think taken in context what the district court was saying was it was not going to sentence on the status quo. In other words, it was not going to sentence Mr. Strickland without making some alteration. One, he could have lost acceptance because the district court had expressed at the first aborted sentencing hearing that the statements that he made were inconsistent with the statements that he had admitted in the plea agreement and the statements in the PSR which he never objected to and which are deemed admitted under this court's rules. So I think taken in context, that's what the district court was saying. Well, I don't know about that because he could have sentenced him just like you said. He said, I'm going to sentence you and you're not getting acceptance. That's not what he did. He said, I can't sentence you at all. Well, Your Honor, the district court ultimately said, and especially expressed this in his order, allowing the defendant to withdraw his plea, that he believed that Rule 11b-3 here was posing an issue, which says that he should not enter judgment unless there was a factual basis for the plea. And so his statements— He had already found a factual basis for the plea and accepted it, right? I mean, and that's the real question. Can you go back and change that? And now, the other point that I see is like, okay, he made the motion to withdraw, and the motion to withdraw creates an invited error in your analysis. But what was he supposed to do? Refuse to withdraw his plea? Seek a writ of mandamus from the court of appeals directing sentencing to proceed? No, Your Honor. I think if you—the record suggests, and in fact the district court explicitly said, he was going to entertain a motion to withdraw the plea. And he went so far as to say, and I don't know how I'm going to rule on that yet. In other words, it was not a, you're going to be forced to withdraw your plea. It simply said, as Rule 11 provides, that if the district court rejects the plea agreement, which he did at that point, he has to afford the defendant an opportunity to withdraw his plea. Nothing obligated Mr. Strickland to accept that. Had Mr. Strickland said, No, Your Honor. I really want to accept this plea and proceed. What if the judge had said, I'm sticking to what I said earlier. I can't sentence you in good conscience. Your Honor, then I think we'd have a different case. What would happen next? If the district court refused to sentence, I think it would have to decide what to do. I mean, I don't know. That's obviously not what happened here. I mean, it was at a sentencing hearing. And so the district court might have, I don't know what the district court would have done at that point. We don't need to speculate, of course, because Mr. Strickland ended up taking the district court up on its offer to withdraw his plea. And so that's not a situation that we had to face because Mr. Strickland ultimately made that choice and, as the government argues, invited any error. Because the harms that he's complaining of did not stem from the rejection of the plea agreement. On its own, that rejection had no independent legal effect. It didn't reduce his acceptance of responsibility. It didn't compel a withdrawal of the agreement. It was only when Mr. Strickland moved to withdraw his plea that we then had the set of events that he now complains about. You know, once you announce the sentence as a district judge, your hands are tied in a lot of ways, right? Is it the same when the judge says, I accept the plea agreement, and then turns around later and says, I don't accept the plea agreement? Is there any... Is the significance of initially accepting the plea agreement very much unlike the announcement of a sentence, or is it similar? Your Honor, I would say it's different in this way. Rule 11, of course, allows the district court to consider the PSR before deciding whether to accept it. And the reason we believe the district court chooses to accept the plea agreement when it does in these kind of sentencings is because he wants to make sure that by the time that we have entered into a final PSR, which is he has resolved any factual objections. For example, had Mr. Strickland challenged any of the facts, he could have resolved all of that before he makes up his mind about whether the plea agreement serves the interest of the public, whether it adequately reflects the seriousness of the offense. Those are all different. And so in that way, Rule 11 operates a little bit differently, at least in the government's view. And that's why... What about the Olson case? Do you read that as saying a judge may not reverse a decision on accepting a plea agreement? Your Honor, Mr. Strickland cites Olson and he cites Scurlock. The problem with those cases are that they are 11C1C pleas. And as this court has said, those types of pleas are inherently different because an 11C1C is binding upon the district court at the time it accepts the agreement. So by extension, this is not a C1C plea. This is an 11C1A plea, and this court has had cases that say that 11C1A plea agreements are not like 11C1Cs and do not bind the district court. What do you mean by bind? So that's what our cases... In the Ingram case, which Judge Erickson, I believe you wrote for the court, this court has said 11C1A plea agreements do not bind to the court upon acceptance. That is unlike 11... What do you mean by bind? Well, in an 11C1C, for example, Your Honor, the plea agreement may say the parties agree that the sentence is 60 months. And if it's made pursuant to C1C and the district court accepts that, then the sentence must be 60 months. Right. Here, it's not a C1C. I understand that a C1A doesn't specify a sentence, but could it bind the court in a different way? This court has said that C1A agreements are not binding upon the court, Your Honor. What about the contractual relationship between the United States and the defendant where there's an agreement to dismiss the charges if the defendant pleads? Your Honor, I would say two things about that. First, this court has said that the analogy with contracts should not be taken to extremes. The second is that the agreement here, the plea agreement he entered into, said that the United States' obligation to dismiss charges arose only after the sentence was imposed. And so that obligation never arose at that point because, of course, his statements kind of created an intervening event, which, of course, necessitated the chain of events that he now complains about on appeal. I think more importantly, this court, as we can tell from the argument, has been presented with a situation that there's no case exactly on point. And I think that really works here to the government's advantage because even if this court does not decide this case at that point on the invited error doctrine, we're only here on plain error review. And, of course, this court has said that any error must be plain. In other words, it must be clear or obvious under this court's law. And despite two rounds of briefing, the only thing that Mr. Strickland can point to are cases from this court dealing with 11C1C pleas. And that's a problem for his argument. Rule 11 on its own does not give an exhaustive list of everything that could possibly happen in a plea situation. That's why we have Rule 11H, which says, if you can't show any harms from this alleged Rule 11 violation, then there is no issue. And that's the government's central premise here. The harms that he's complaining of did not stem from this rejection of the plea agreement after Mr. Strickland, for the first time during his elocution, started expressing his actual innocence. And that's why the government has suggested that this court, one, should apply the invited error doctrine, but, two, even if it does not, why it should say that on plain error review, Mr. Strickland cannot meet those exacting requirements. Simply, he has not pointed to any case from this court that would suggest that the district court erred. And, in fact, this court's cases seem to suggest otherwise because this is an 11C1A plea, not an 11C1C. As to his second argument, that the statements that he made at the time of this aborted sentencing hearing could not be used against him, either because of the privilege against self-incrimination or Rule 410, I think, as this court has pointed out, there's an initial threshold question here because these statements were not made in the course of plea negotiations. They were not made in the course of plea proceedings. This was supposed to be a sentencing hearing and it, by all accounts, looked like a sentencing hearing until the very end when the defendant, again, for the first time expressed that he did not, in fact, do what he had previously pled guilty to doing. Was it a statement made during the proceeding on a guilty plea? No, Your Honor. I mean, in context here, that seems to refer to statements made during, say, a change of plea, you know, a colloquy with the court. That would be a proceeding in connection with a guilty plea. Have you found the authority interpreting that rule? I did not. Not that was exactly on point, Your Honor. As to his privilege against self-incrimination arguments, I don't think anybody disputes that these would normally be prototypical statements of a party opponent. Mr. Strickland has cited the Estelle case as an argument that admitting these statements violated his privilege against self-incrimination. But factually, Estelle, just like the other cases he relies on, are simply not applicable. Unlike in Estelle, Mr. Strickland had counsel sitting next to him. He had been warned through the entirety of the proceedings that statements that he makes could be used against him. And it's kind of nonsensical to ask the district court to have known that despite admitting to these facts in the plea agreement, despite not objecting to any of these facts in the PSR, that for the first time in his allocution, he would suddenly express his innocence. So to suggest that the district court should have been able to predict that and to warn him before he made those statements simply has no support here on the facts. Even if this court were to determine, though, that the district court erred by allowing the government to use those admissions and the statements against interest he made during the subordinate sentencing hearing, the government has argued and continues to argue that any error would be harmless beyond a reasonable doubt. The evidence of Mr. Strickland's guilt on each and every one of the counts was overwhelming. As to the drug counts, the evidence was that he claimed the bedroom as his own in which a substantial quantity of methamphetamine, items of drug paraphernalia, and firearms were found. In fact, there was a box sitting in the bedroom that said Bruce on it. There's no question that that was his bedroom and that those drugs were found in that room. As to the firearm, he admitted in a post-Miranda interview with the detective that the firearm would have his fingerprints on it. And so his claim that these later statements that the district court allowed to be used against him in the government's case in chief were really not the crucial evidence that the jury had in front of it. And finally, as to the 924C charge again, the evidence was that the firearm was found in close proximity on his bed in his master bedroom to a substantial quantity of methamphetamine and to a substantial quantity of items indicative of drug trafficking. And so the evidence here simply was overwhelming as to his guilt. And therefore, even if this court agreed that there was an error in admitting those statements, that error would be harmless beyond a reasonable doubt. Unless this court has any questions, the government is happy to rest on the briefs and the arguments provided here. Thank you. We'll hear a brief rebuttal. Mr. Vowell? Thank you, Your Honor. Your Honor, addressing the harmless error argument as it relates to the admission of the allocution statements at trial, admittedly, there was evidence in the record from which the court or the jury could have found Mr. Strickland guilty. But one important thing is that there is no evidence in the record, that Mr. Strickland and Mr. Rahm agreed or conspired, agreed or abetted each other in the bringing of 12 pounds of methamphetamine. Mr. Strickland, there's no evidence Mr. Strickland knew that was what was going to happen. Mr. Rahm admittedly showed up at Mr. Strickland's house on the morning of the arrest and carried in 12 pounds of methamphetamine. Sometime thereafter, Mr. Strickland walked out of the residence and was arrested. But there is absolutely no evidence that Mr. Strickland knew that Mr. Rahm was bringing 12 pounds of methamphetamine to his apartment that morning. And the admission of damning statements during the allocution had to have had an effect on the jury. Your time has expired. Thank you for your argument. Thank you. Thank you to both counsel. The case is submitted and the court will file a decision in due course. Thank you. Counsel are excused."
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"stt_transcript": "25-2994 Eastern Missouri United States v. Charles Anderson Mr. Glazeman, thank you for accepting the appointment in this case and you may proceed. Of course, Your Honor. May it please the Court, my name is Lucas Glazeman, I'm here for Mr. Charles Anderson. Mr. Anderson pled guilty to two counts of falling in possession of a firearm. He did so conditionally and that he would reserve his right to file a motion to suppress with this Court as to the recovery and the search of his vehicle that resulted in those two firearms being found. Mr. Anderson's Fourth Amendment rights to be free from unreasonable searches and seizures were violated in this case. He was subjected to an unlawful weapons frisk upon stepping out of his vehicle on this day by a Maryland Heights, Missouri police officer. The government has up to this point agreed that that was a violation of his Fourth Amendment rights as did the District Court in affirming the Magistrate Judge's ruling that his rights were violated under the Fourth Amendment when he was subjected to that weapons search. What we're here to discuss today, Judge, and should the Court have questions as to the statement made back at the police station, I'm happy to answer those questions. I'm going to focus mainly today, Judge, on the consent to search and the search of the vehicle that resulted in the firearms that were found and to which he ultimately pled guilty. We're here to discuss what the remedy for Mr. Anderson should be or is upon the violation of his Fourth Amendment rights as a result of the weapons search. Mr. Anderson's car, well Mr. Anderson was requested consent to search his vehicle seven minutes after this illegal search, nine minutes after the illegal search his car was searched and these weapons were found. It is true that that search was by consent. However, we do not believe that consent sufficiently purges the taint of the Fourth Amendment violation that was the illegal weapons search. We believe that the Court, in addressing whether or not the taint of that violation was purged, needs to look at whether or not there's any intervening circumstances or any other attenuation from the Fourth Amendment violation to the actual search of the car in this case. We do not believe that there is sufficient attenuation. How did the frisk bear any relation to the later event? So Judge, I believe the frisk was part of an overall, for lack of a better term, criminal investigation that kind of started at the point when the traffic stop started. The officer testified during the suppression hearing that upon making contact with Mr. Anderson as Mr. Anderson was getting his insurance out of his center console, it's at that point in time in his mind this turned from a traffic stop to a criminal investigation. When Mr. Anderson requested to get out of the car to provide his wallet, he then performed the frisk. We believe that this frisk was part of an ongoing criminal investigation that resulted in the request for consent and the ultimate search of his vehicle. This was one step, the next natural progress of this criminal investigation, we believe it was all part of the same investigation that this officer was doing at that time. Was there any causal nexus though between the frisk and the later events? I believe so, Judge. So the frisk occurred as soon as he stepped out of the vehicle. At that point in time, Mr. Anderson was directed to stand at the back of that vehicle. One could argue that the frisk was still ongoing because he still had Mr. Anderson's property at that point in time. But as they were discussing in the back of the vehicle, and as he was still holding on to his property and standing where he was directed to stand, he was then questioning about the inside of the vehicle. So it's our argument that this is all part of the same sequence of events, that there is a nexus there between that search that was one step and a continuing step of these investigations that the officer was performing. Again, that started with a suspicion when he made contact and ultimately ended in with a request for consent and a search of the vehicle. You know, by the time that he asked for consent, there's a lot of information that the officer has at that point. Nancy's already admitted that there is a gun in the console, that Anderson has already admitted that he's a two-time convicted felon with no right to possess. I mean, at that point, it kind of looks like probable cause is clearly established. So if you do not get to the nexus between the search, the pat-down search, and understand this, it's a pat-down search after somebody says he has a weapon, it's a lawful weapon, but he says there's a knife in my pocket, that doesn't mean that there's no other weapons on him. And at that point, you know, he feels something and he pulls the knife out. I mean, maybe it's not appropriate, but how does that cause all the rest of it? I mean, you know, Anderson's the one that says, you know, can you get my other phone so I can find my proof of insurance? And then Nancy kind of acts oddly to avoid having anyone see what's inside the console. I mean, there's just a lot of things going on, and I don't see how that's caused by a pat-down search that unlawfully seizes a knife. And I understand you've gotten the memorandums here. It's my understanding that the request or the consent was given prior to the conversation that occurred in which he revealed that he was a convicted felon or where it was revealed that there was a firearm in the vehicle. That is my understanding. My review of the video showed me that, Judge. But, you know, to go back to the nexus of it all, I mean, I believe there's a nexus in the sense that Mr. Anderson is still under the influence of this initial Fourth Amendment violation. I believe it's all one deal because he's out of the vehicle. He's searched. Now, I'm, of course, the district court and the magistrate judge have found that that was a constitutional violation. And I'm running with that, Your Honor, and I'm not obviously contesting that portion of it. But we're really talking about what's the remedy for that. And so I think when you have that constitutional violation, he's standing at the back of the car. He's being already questioned about what's inside the car before he's even finished giving him back his property or finished finding his insurance. And it was kind of a hectic situation where the insurance is on one phone and he needs the other phone for a hot spot. I would contest the idea that that was a subterfuge attempt to delay providing the insurance or to delay the search. I think that this questioning and that this consent all kind of occurred at the back of the car where it was a highly police-dominated atmosphere, as was the pat-down search. It was all part of the highly police-dominated atmosphere. There was four, maybe five officers on scene. He was standing between his car and a police cruiser with other cars on the side. There was a barking police dog in the back of the car that he was in front of. He's being questioned and peppered about what's going on inside the car. Admittedly, Mr. Anderson is not a lawyer. He didn't have any time to consult with a lawyer. He wasn't consulting even really with Mrs. Anderson, who was up at the passenger seat. So this happened very quickly. And certainly that highly police-dominated atmosphere, I think, also contributed to why he gave consent. And why that consent ultimately did get to the heart of my argument, as I'm getting close to my time here, is why that consent is not an intervening circumstance that would otherwise purge the taint of that Fourth Amendment violation. So taking that Fourth Amendment violation at face value, we have the temporal proximity. We have the consent. The consent is not sufficient to purge the taint. And then, of course, the third problem, which I'll briefly just touch on before I reserve the rest, would just be the flagrancy of the police officer. Now, I touched on it a little bit at the beginning of this argument in that the flagrancy that I contend is that this is a criminal investigation from the minute he saw Mr. Anderson reach into the glove box. It was no longer a traffic stop at that point. And that the frisk was not because of anything he said about what was in his pocket or anything that he did. It was about furthering that criminal investigation. And I will reserve the rest of my time for rebuttal. But I would ask the court, if you don't hear from me again, to reverse and remand this case for further proceedings. Very well. Thank you for your argument. Ms. Schneider, we'll hear from you. Good morning, Your Honor. May it please the court. My name is Tori Schneider and I represent the United States. A pat search that revealed a legal pocket knife was not the but-for cause of law enforcement's later seizure of firearms or Mr. Anderson's incriminating statements. And even if this court were to find that it was, it was sufficiently attenuated. Judge Calton, as you were asking, Mr. Glazeman, there is absolutely nothing about finding that pocket knife that is the but-for cause or causal nexus to Mr. Anderson nine minutes later consenting to a search of his vehicle. The pocket knife was not seized and it was not discussed again. There is simply no world in which the finding of that pocket knife caused the consent in this case to have been given. And Mr. Anderson makes no effort in his brief to demonstrate that there was. The counsel seems to be arguing that the totality of the circumstances were so coercive that the consent really wasn't valid. Yes, Your Honor. And as the R&R indicated, the magistrate judge found in the R&R that while there were four or possibly five officers on scene, only one of them interacted with Mr. Anderson. The rest stood back. And that the interaction between the officer and Mr. Anderson was conversational and polite. They even engaged in joking. So the fact that there were a number of officers does not render this situation coercive. And from what I gather from counsel's argument is simply a chronology of the events. And just simply that it happened and that it happened in the course of this traffic stop is not a causal or but-for connection. Well, it might be a little more than that. It might be the fact that he was illegally searched contributed to a coercive environment. Possibly. However, as Judge Erickson indicated in his questioning, it is the government's position that that it is sort of our position that that was not an illegal pad search. We did not... It's sort of your position. Well... In what sense? Your Honor, as... You could have argued that it was. Well, we could have. However, this was not an argument that was previously raised. This argument, this theory of suppression was not raised until the objections to the R&R, Your Honor. And so... No, I mean you could have argued on appeal that we should affirm because there wasn't even an unlawful pad now. Yes, Your Honor. I should have put that in my brief. Well, I'm not saying... You're saying now you should have. I agree. Yes, Your Honor. Yes, Your Honor. I'm not taking that view. I'm just suggesting that that would have been the way you could have raised it if you were so inclined. Yes, Your Honor, and I apologize for not doing that. However, I do believe that the record supports the fact that prior to the pad down, Mr. Anderson admitted that he was armed. So I do believe that the court could affirm on that basis, although we didn't ask for that in our brief. Does carrying a legal pocket knife constitute being armed? Yes, Your Honor, I believe a knife would constitute being armed. Again, so we don't believe there's been any nexus shown. However, if there is, any taint has been purged. In this case, we have the three factors. The elapsed time is approximately nine minutes from the pad search to the consent. And this court has stated in multiple cases that that is not an insufficient amount of time. We then have intervening circumstances, namely the voluntary consent of Mr. Anderson, which although counsel may be arguing that the circumstances were coercive with all the officers, he is not actually challenging the voluntariness of his consent here before this court. And then the purpose and flagrancy of the misconduct simply does not rise to the level of applying the exclusionary rule in this case. Even if at best or worst case scenario, if the officer was mistaken about having reasonable suspicion under strife, simply being mistaken about whether you had the appropriate cause is not a reason to exclude evidence. There would be no deterrent effect if the court were to exclude evidence in this case because it simply was just a mistaken good faith belief. Therefore, all the factors do weigh in favor of attenuation. If there are no further questions, the government does respectfully request that this court affirm Anderson's conviction. Thank you. Thank you for your argument. Rebuttal? Yes, Your Honor. Thank you, Judge. The nexus here, I think, even listening to the government's argument, I think it's more than just a timeline. The officer conducted an illegal weapons risk, found a legal pocket knife, and then asked to search the car for yet more weapons. So he's questioning about weapons, finds a legal pocket knife, and now he's asking for consent to search a vehicle for more weapons. Regarding attenuation, I'm not waving or I'm not stipulating to the idea that he voluntarily consented in the way that the law would say he legally voluntarily consented. I think even the cases that the government cites in their brief say that consent, just because somebody consents, doesn't mean that that consent is an intervening circumstance that would purge the taint of a Fourth Amendment violation. Did he consent? Yes, he did consent to the search of the vehicle, but you need to look at the surrounding circumstances and say was that consent an intervening circumstance that would be the type of intervening circumstance that would purge the taint of the Fourth Amendment violation. And finally, Your Honor, regarding the flagrancy of police conduct, because as you know, deterrence is a big issue and one of the main goals of the suppression law, why we suppress evidence in the first place. I don't know that this was just a mistake and we can't, very few times do you probably have an officer saying in here, yes, I did a weapons search explicitly for the purpose of finding something, not because I had a real belief that he was armed. In this case, you can take what he did say during the hearing, which is, I believed that this was a criminal investigation now and not a traffic stop, and then he does a search and then he asks for consent. So I believe that those circumstances surround with what he told you his intent was during that stop. The court can infer from that that his intent was flagrant, not just a mistake. Thank you. And I'd ask the court to reverse and remand. Very well. Thank you for your argument. Thank you to both counsel. The case is submitted and the court will file a decision in due course. Counsel are excused."
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"stt_transcript": "Good morning, may it please the court. Chelsea Wilson on behalf of Richard Ruston. Mr. Ruston was convicted at a bench trial of various drug and gun crimes and as relevant here that included possession with intent to distribute five grams or more of methamphetamine actual. Among our issues on appeal are two issues related to the sufficiency of the evidence on that count and unless the court guides me otherwise I intend to focus on the second of those issues related to the proof on drug quantity. The proof that Mr. Ruston intended to distribute more than five grams of that methamphetamine. The government argues for the first time on appeal that Mr. Ruston intended to distribute that entire amount that he possessed the 5.69 grams he possessed and that is a change of position from trial that's not what they sought to prove at trial or the evidence that they offered at trial. In his opening statement at trial the prosecutor said that Mr. Ruston was a low-level drug dealer selling to finance his own drug usage and they put on extensive evidence that proved up Mr. Ruston's status as a drug user and a user of methamphetamine. That included user paraphernalia, he possessed syringes including a loaded syringe, distilled water for dissolving methamphetamine, cotton balls for shooting up. They also put on testimony that an amount up to three and a half grams might be consistent with personal use but the amount that Mr. Ruston possessed was indicative of somebody that is buying enough drugs to sell some of that off to basically support their habit. That was their detective's testimony. Counsel was the liquid meth in the loaded syringe included in the 5.69 grams? I don't believe it was. I don't, I am not, I'm not entirely sure when it was tested because I don't believe it's included in the lab report. It may have been field tested. I'm just not positive but I don't believe it is included in the 5.69 grams. Well when you say it's not included in the 5.69, the 5.69 is what was alleged in the indictment? Correct and also I don't believe that whatever quantity, I don't know what quantity is in that syringe because I don't believe it was quantity tested at any point and so the 5.69 grams comes from the two vials. There is the, it's not charged. Was the jury limited to the two vials? I think, or could it have considered the liquid? I think they can, I think Judge Wimes could consider the liquid in terms of what he believed it said about Mr. Rustin's status as a user or distributor but in terms of quantity, pardon? I'm not talking about the judge, I thought you were talking about the jury. Well he was, it was a bench trial. Yes sir, and however because we don't know anything about what quantity was dissolved in that syringe, I don't think there was sufficient evidence to include that in order to get over the hump here. Well, well the judge could have considered the amount in the syringe for personal use and the rest for sale though, right? I mean, that's a reasonable inference that could be drawn from the evidence. I don't think it was an inference that could be drawn from the evidence here beyond a reasonable doubt, Your Honor, because of the extensive evidence about the drug usage in this, about the drug usage in this case and because we just don't have any sort of indication of how much would be in there, whether that is, you know, a single dose, a day's worth, we don't have anything like that because I don't believe it was tested extensively. I'll confess I did not read the entire transcript of the trial. Sure. Was there testimony about how much Mr. Rustin was using daily? No, Your Honor, there was not. Their detective testified repeatedly that this evidence was indicative of someone selling drugs to finance his own habit, selling drugs to basically get his drugs for free, selling enough just to get by. And the district court seems to have adopted that selling and using theory. He cited to two portions of Detective Mata's testimony, the testimony that indicated a user who sells small quantities, excuse me, that the evidence indicated a user who sells small quantities to sustain his personal use and that it also indicated intent to sell some portion of the methamphetamine. The district court, however, does not really engage with the quantity issue, unfortunately, in the findings and conclusions. Those are at document 87 and the relevant paragraph is found on page 6. He goes on to talk about various evidence he believes indicates distribution in this case, the gun, the scale, the baggies, and he says that's indicative of drug distribution as testified to by Detective Mata, but then he closes by saying, therefore, the court finds the government proved beyond a reasonable doubt that Rustin knowingly possessed over 5 grams of meth and had the intent to distribute it. And I think if the court reads that paragraph, that conclusion regarding the quantity just doesn't follow from what the court cites. It seems those two issues were just collapsed together. The government cites a couple of cases that it believes speak to this issue and favor them, but neither of those cases actually involved a quantity issue like this. The Gentry case, Ms. Gentry had a pickle jar that had 92 grams of a liquid solution that could have been converted to methamphetamine, and she made two arguments on appeal. One was that that entire 92 gram quantity should not be considered a mixture or substance and therefore that the government did not prove the 50 gram threshold in that case. And then second, that they failed to prove intent to distribute the jar's contents at all. This was in part because everyone conceded that this would produce a user amount of methamphetamine. So the quantity issue in that case was tied up in that mixture or substance issue. It's not the issue we have here. Same with Campos. The government points to Campos because there the quantity was 50.6 grams of methamphetamine, and the government says that if marginal personal use was not enough there, then it's not enough here. But again, the quantity threshold was not at issue in that case. Mr. Campos throughout the litigation maintained that he intended to distribute none of that, that the entire 50.6 grams was his, and so that just was not an issue on appeal. He hadn't raised that in his motion for judgment of acquittal or motion for new trial. The government does cite a case that actually involved this issue. They cite it as to the broader intent issue and then ignore it when we get to the quantity issue, and that's because I think it shows you the type of evidence that the government should present when they put on a borderline case like this where there is evidence of potential drug use. That case is the McClellan case that they cite in their brief. There they found 6.45 grams of crack cocaine among some other drugs, and there were several crack pipes in the house that would be used for consuming crack cocaine. And so in order to prove that Mr. McClellan intended to distribute the entire 6.45 grams and did not intend to use it, they put on witnesses who testified that although they had used drugs with him before, they'd never seen him use crack cocaine. They put on a witness who said she had seen him distribute crack every day. They put on a detective or agent who testified that that quantity was associated with distribution, period, not distribution to support a habit. And they put on 404B evidence of prior distribution. That is the type of case the government needs to present when they put on, when they decide to charge a Here, a rational fact finder has no choice but to reasonably doubt whether Mr. Rustin intended to distribute more than the 5 grams of methamphetamine. I'll reserve the rest if the court has no further questions. Very well, thank you for your argument. All right, Mr. Hurst, we'll hear from you. May it please the court, Ben Hurst for the review of this case would work and how it differs from what the district court was presented with as the fact finder in this case. Here, the question is not, does this court agree, would it have found the same result in the first instance, but rather, thank you, I hadn't even looked at it, but whether any rational fact finder could have gotten to this result. And I think that's the point of the Gentry case that we presented to the court, is it just explains and helps give some context or substance texture to what this court's review looks like. It's not about whether this court would reach the same conclusion in the first instance. The second point on the Senate review is I'd like to point out that the jury, or in fact, this bench trial verdict, fact finder verdict, is entitled to all reasonable inferences. And that comes into play with a number of facts that we haven't discussed yet here today. The fact that the defendant had a gun. This court has said that's foremost in an evidence of intent to distribute. The fact that the defendant had scale. Now, is that capable of two inferences? Certainly. But it's primarily, in this case, because the judge found, beyond a reasonable doubt, more than intent to distribute, more than five grams, it's entitled to the inference that that is indicative of intent to distribute. And a few things that I should consider that weren't discussed earlier. Defendant's statements. He made a couple of statements that were highly indicative of intent to distribute. First, the defendant told the officer that he could purchase whatever amount he wanted. And the reason that the officer, the detective, asked that question is at that time, the detective was trying to figure out if the defendant would be a good candidate for cooperation. And we need to know in that instance, what's going to be unusual for this defendant if he tries to go make a controlled buy on behalf of officers. Well, here, he says, I could buy any amount. Now, any amount is indicative of an intent to distribute. It's indicative of prior distribution, which is indicative of intent to distribute. And furthermore, he said, I have, in fact, previously purchased an ounce or two. An ounce or two, of course, is quite a bit more than 5.69 grams. But the court could rely rationally on that evidence of intent to distribute in finding that the defendant intended to distribute more than 5 grams here. Mr. Hurst, can you point to definitive evidence in the record establishing that the meth in the loaded syringe was not included in the 5.69 grams? To me, that may be the definitive fact in this case. That's correct, Your Honor. It was not included. Well, you can tell me that, but is there something that... The stipulation, there are two exhibits in my mind that I may be getting. I'm confused. Exhibit number 20 is the lab report. The lab report says a crystalline substance, the pure meth, I'm sorry, that is 3.5 grams of methamphetamine pure, and a crystalline substance in another exhibit that's 2.19 grams of methamphetamine pure. So the two vials that made up the amount were 5.69, the 2.19 and the 3.5 were the crystalline substance. Those are exhibits 8 and 10. And in the appendix that we submitted with our brief is the stipulation, and the stipulation also says the two exhibits, 8 and 10, were the quantity that amounted to 5.69 grams. So while there's testimony in the trial transcript that the liquid in the syringe was methamphetamine, it's not included in the 5.69 grams of methaxyl that the judge was presented with as the quantity that we could prove in terms of methaxyl. I think that makes sense because he was charged with methaxyl. Clearly, I think it's fair to infer from the record, because of the testimony of how methamphetamine is prepared for injection, that the substance in the syringe, while including methamphetamine, was actually a mixture or substance. So that makes sense why that's not included. But I would say, Your Honor, I think that's indicative in terms of an argument that the court should have discounted for the personal use amount. I think the court should consider a couple of facts specifically relevant to that. One is, the personal use amount should first discount for the fact that he'd already loaded into the syringe the next amount that he would use. Two, evidence of testimony from the officer, the drug expert, that a typical daily user amount would be one quarter gram to one gram. If you consider that evidence, the court could have reasonably considered it. That's the amount of methaxyl that he possessed was between 22 doses and 5 doses. That's 22 days or 5 days of potential user amounts of drugs. And he told the officer that he hadn't used in the last two days. So the evidence in the record supports the inference that he was not even a daily user of methamphetamine. So if you put that together with the gun, the scale, statement that he had bought an ounce or two of drugs in the past, that he could buy whatever he wanted, that he knew two levels of drug dealers, all of that together supports the district court's conclusion here that the defendant intended to distribute the five grams or more. To me it seems like it's a standard of review case. This is probably the weakest possession with intent to distribute case I've ever seen. I think, I agree the standard review is highly relevant here, Your Honor, and that the court should not be putting itself in the position of Judge Wimes who heard the evidence and the testimony here, but rather considering whether what he did was rational or among the reasonable results in this case. I would just point to, Your Honor, both of those cases, Campos and Gentry, are cases that are similar in closeness. That's why they're discussed in our brief. So I take Your Honor's point, I understand the view there, but I also would say that the traditional evidence that we look for in a distribution case is here with respect to the gun, with respect to scales, with respect to... Well, I think the testimony was somewhat ambiguous and it could support either use or distribution. And so could a reasonable trier fact have concluded that it was distribution? And I, just to be clear, I don't think that the government ever took the position that he wasn't a user. The position was, as the grand jury alleged and as we had to prove at trial, that he intended to distribute five grams or more of methaxyl. So I would just disagree with my colleague that that was never presented before. That's what the indictment says. So when we go to trial on the indictment of five grams or more actual, that is exactly the question that's presented to the court. But we, at the same time, have never said that he wasn't a user. There was clearly his... I mean, there just was evidence of use here. But the question is, was the district court irrational in finding he intended to distribute more than five grams of the actual meth he possessed in light of all the evidence in the case? I'll use the district court was clearly not irrational in reaching that conclusion. Unless the court has additional questions on that, I'm also prepared to submit the remaining two issues on the briefs, but I'm happy to answer questions if the court has them. Fair enough. Thank you for your argument. Thank you, Your Honor. We'd ask the court to affirm. We'll hear rebuttal. Thank you. Respectfully, I think the government is trying to hang its hat on the evidence that goes to the broader intent to distribute, but does not actually speak to this quantity question of how much he intended to distribute. And I think they brought that on themselves, that question on themselves when they presented this case, that as Judge Gross said, was very equivocal as to, you know, this is someone who is using to support a habit. It could go either way. And the problem I see here is that because the evidence was of that nature, the district court was left to speculate, to operate by conjecture as to how much Mr. Rustin intended to use and how much he intended to sell. A couple of points on that. The last couple of days statement was the next day after the arrest, and Mr. Rustin was arrested in the morning of the day that he was arrested. So a couple of days ago would have been the day before the arrest, which does not at all suggest he's not a daily user. Also, the drugs in this case are not packaged up for resale. There are some baggies in there. Those baggies, the quantities that they would hold, would not hold these drugs. And we don't know the quantity that's in the syringe. And so I think the court cannot say, I don't think Judge Wimes could conclude beyond a reasonable doubt that because there's a syringe, that's how much he intends to use and no more. I just do not think, especially with their detective giving what is effectively expert testimony about this being someone who's using to support a habit, I think at that point that's a possibility, but it's a speculative one. It does not rise to the level. It sounds to me like this argument is like the old common law argument that the evidence was an equivocation and that at that point it's not sufficient to be proof beyond a reasonable doubt. I think, oh, go ahead. Is that really what your argument is? It is similar to that, yes, Your Honor. I think this court has case law that says if all that you can do is speculate or conjecture about which way the evidence goes, that that is not sufficient. That's not this court reweighing the evidence and substituting its own judgment. That is a proper standard of review here. So are you suggesting he should have been convicted of a lesser included offense? Yes, Your Honor. How would that affect the sentence? It would reduce the sentence. So it would reduce the mandatory minimum. There would be no mandatory minimum. And it would also, depending on what quantity Judge Wimes concluded was for use versus distribution, it could lower his guideline range by two or four levels or more. It would just depend on. The mandatory minimum, as I understand it, didn't drive the sentence here. The guideline range was substantially higher than 60. It was, but he received, I believe, a low end of the guideline sentence, if I remember correctly. I could be. I know it was a guideline sentence. And the guidelines would be significantly lower if on remand Judge Wimes drew conclusions. Why is that? Would any drugs that were destined for personal use be excluded? Yes, Your Honor. That's under Fraser. I see. So I believe Judge Wimes would need to make some findings about how much he intended to use versus how much he intended to distribute. And then that would drive. You think we said in the Fraser case that personal use quantities are not part of relevant conduct, are not countable in quantity? That's correct. When you're not in a conspiracy case, at least. And we don't have a conspiracy count here. I believe that is what Judge Arnold's opinion in Fraser indicates. I see. Okay. Thank you for your argument. Thank you, Your Honor. Thank you to both counsel. The case is submitted and the court will file a decision in due course. Counsel are excused."
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"stt_transcript": "25-2394 Eastern Missouri, United States v. Rodney McIntosh Good morning gentlemen. Mr. Marsh, we'll hear from you first. Good morning and may it please the court. My name is William Marsh on behalf of the appellant Rodney McIntosh. Because nonviolent force is sufficient to sustain a felony conviction under 18 U.S.C. section 111A, the district court erred in treating Mr. McIntosh's prior convictions as crimes of violence under the guidelines. Because of this, his case should be remanded for resentencing under an appropriate guideline range. This conclusion holds true under both the categorical approach and the modified categorical approach. I believe that the categorical approach is the appropriate vehicle in this case, but I do want to emphasize that Mr. McIntosh prevails either way. As the court is aware, the verdict director submitted to jurors in Mr. McIntosh's underlying 111A trial. Are you saying that the statute is not divisible? It is not divisible as it relates to the 111A felony provision, your honor. It is certainly divisible with respect to simple assault, divisible under this court's precedent with respect to the 111B violations, but when we're talking about the phrase assaults, resists, opposes, impedes, intimidates, or interferes, that is not a divisible string of verbs. That is my position. I think it is consistent with this court's precedent. After I had filed Mr. McIntosh's brief, this court reaffirmed in Crow, which admittedly was unpublished, that 111A defines one crime and six specific ways of committing it. That was taken from a published opinion in United States v. Street, which stood for the same proposition. Not only that, but Street also held that prosecutors are allowed to charge this statute in the indicative of means rather than elements, because that gives jurors the option of choosing separate theories of liability. One juror could convict on the basis of assault, another could convict on the basis of resist, yet another could on the basis of impede. So with that in mind, I think we're dealing with a classic scenario where the statute identifies means rather than elements as it relates to 111A felony violations. Again, we concede completely. Why does charging in the conjunctive mean that there doesn't need to be unanimity? Correct Your Honor, especially given the fact... Correct. I was asking a question. Yes, so... Why does it, why does charging in the conjunctive imply that the jury need not be unanimous? The government always charges in the conjunctive, even if they're elements, separate elements. That is correct Your Honor, but also under this court's precedent, prosecutors are then allowed to instruct jurors in the disjunctive. So while they might indict conjunctively, they are allowed to instruct disjunctively, which is what gives jurors the opportunity to settle on different theories of liability. On this statute? Yes, yes. So generally speaking, this court has stated that disjunctive instructing is appropriate when there's been conjunctive charging. Street allows for the conjunctive charging and in terms of the disjunctive instructing, that's not from street, that's from a different case. So you don't have a case right on this statute that says... No sir. You're trying to... Yes, I'm making that jump Your Honor, and it's U.S. v. Spencer for what it's worth that permits the disjunctive instructing. But as I said before, even though we believe the categorical approach ought to be applied in this particular instance, Mr. McIntosh ought to prevail. Nevertheless, even if this court were inclined to apply the modified categorical approach. Again, the verdict director submitted to jurors at his trial required that he merely cause offensive physical contact and that is a degree of force that fails to cross the violent force threshold required by Johnson. Going back categorically, based on the text of the statute, acts of resisting, opposing, impeding, intimidating, or interfering involving physical contact certainly can be accomplished with minimal non-violent force. One can literally violate this statute by putting their arm in a doorway to block a prison guard from going into a cell. They can violate it by stepping in front of an agent who's trying to arrest an unruly protester. As the Ninth Circuit correctly noted with respect to 111A, the felony provision, one can violate it with any degree of force whatsoever. That certainly doesn't rise to the level of violent force or force capable of causing injury or pain as required under the Johnson opinion. For that reason, every circuit court that appears to have decided this issue has done so in a way that favors Mr. McIntosh's position. In addition to the Dominguez-Morioki case out of the Ninth Circuit, we have the McDaniel case out of the Fourth, which again identified the fact that any degree of force whatsoever is sufficient to violate the statute. We also have the Tenth Circuit too in United States v. AMA, which is a more recent opinion. Again, that is an unpublished opinion, but it is the Tenth Circuit not only saying explicitly that the categorical approach is appropriate in this circumstance, I think it's noteworthy too that they actually relied on Mr. McIntosh's case out of the District of Kansas to reach the conclusion that violent force is not necessary to violate the statute. His was a case in which liquids were thrown. The Tenth Circuit specifically relied on that to conclude that violent force is not necessary. I think it should be telling that the government was not able to cite a single circuit court case that has decided this issue in a manner favorable to its position. In fact, the only case the government could find on point was a District Court decision that didn't even apply the categorical approach or the modified categorical approach for that matter. So I do think that what the government cannot cite works in our favor in light of the fact that other circuits have decided the issue consistent with what Mr. McIntosh would like. As the government would have it, offensive bodily touching or contact establishes only simple assault under Section 111A, thus suggesting that felony This is taken from a case in which this court analyzed 18 U.S.C. Section 113. And we would certainly concede that simple assault has an offensive contact element under that statute, but we're here talking about Section 111A. That is a different statute. That statute has identified dual purposes of not only protecting federal officers, but also preventing the hindrances of their functions. And for that reason, it encompasses more conduct than Section 113. Also, just textually speaking, there's no such thing as physical contact simple assault under Section 111A. In 2008, the statute was amended to state that any physical contact renders the conduct felonious. So there simply isn't physical contact simple assault. So the government's attempt to separate simple assault from felony assault by virtue of the degree of contact required should be unavailing. Suppose you're right about your argument on the guidelines. Could a judge who then found that the assault for the particular defendant did involve violent force take that into account under 3553A? I believe so, Your Honor. I think that a lot more is fair game under 3553A. And you know, the judge has just the entire swath of history and characteristics and all of that to consider at her disposal. If Mr. McIntosh is fortunate enough to go back for resentencing, I think that the judge will have not only that, but she'll have conduct that has occurred subsequent to sentencing. So I think there's a lot more that the court can consider. Obviously, this court cannot consider that underlying conduct as far as determining whether or not we're dealing with a crime of violence because it's going to be elements driven. I would, Your Honor, and I would actually take my seat right now if that's okay, unless the court has further questions. I didn't mean to force you to, but I saw your yellow light is on. It's up to you how to manage your time. I will reserve the rest for rebuttal if I may. Thank you. Mr. Prejewell, we'll hear from you. Thank you, Your Honor. May it please the court. Nino Prejewell on behalf of the United States. Really, the difference between our arguments is the touchstone of force. Unlike other statutory sections, Section 111A requires force as a necessary element. Can't that force be minimal? Your Honor, the force could be minimal, but first we have to, in physical contact cases, the physical contact is a separate element. It's a forcible assault with physical contact. Before we get to the extent of the physical contact, we first have to define physical assault. In Wilkins, this court defined physical assault as, excuse me, an officer so as to inspire fear of pain, bodily harm, or death. Before we even get to what is physical contact within the statute, we have to answer the question, what is forcible assault? Forcible assault is something that inspires fear. Adding physical contact to acts which have inspired fear in an officer trying to do their duties doesn't become any less of a crime of violence. So are you saying a simple touch that inspires fear would be a violent felony? I'm saying that the touch would have to follow a forcible assault. I know, but you just defined forcible assault as some action that inspires fear. Correct, Your Honor. Then you add the mere touching. Yes, Your Honor. If in the act of forcibly assaulting or doing any of the acts of Section 111A, if you then make physical contact, that is a crime of violence, Your Honor. The degree of the touching doesn't really matter because you're doing it in the context of forcibly assaulting. It's not like a simple assault where it's any intentional touching. Not like a simple assault in Section 113. That was a point I was trying to make. Whatever simple assault means in the statute, it's something different than a simple assault in 113 because these are forcible assaults. Your Honor, Yates has defined simple assault as an offer or attempt by force or violence to injure. If simple assault is essentially everything that's not an aggravating factor of Section 111, and those are the other four. With respect to divisibility, Madaris tells us that the statute is divisible. That's why 111B was held to be a crime of violence, using a dangerous weapon or committing serious bodily injury in the course of a forcible assault. If you take a look at Rafiti, which is an out-of-circuit case, but which Madaris relied on, that case states that in order to prove both 111A and 111B forcible assaults, you first have to define, as the district court did in that case, what forcible assault means. They define it in these terms of inspiring fear of pain, bodily harm, or death. It's maybe worded slightly so to speak, on top of which the physical contact occurs. So equating it to walking up to an officer and just touching them, that wouldn't work. I think the examples were putting an arm in a doorway. You'd have to put that arm in a doorway. One, there's no physical contact, so there's a difference there. But two, it would have to be in the context of a forcible assault. Spitting. Walking up to an officer and just spitting at them without any context would not satisfy the statute. Instead, it has to be in the context of a forcible assault. And then, if they make physical contact, you get the sentencing enhancement, which is a crime of violence then, because forcible, simple assaults are misdemeanors. I see some confused looks, and I'm wondering if there are any questions, Your Honors. And I just want to address another point. This is an issue of first impression, Your Honors. If you read Yates, the Eighth Circuit differs from other circuits because we have no contact assaults as well. So that's where the definition of forcibly comes from. In cases where there is no contact, the Eighth Circuit defines forcible assault as inspiring fear. When you add an element of physical contact then to acts which already inspire fear, pain, or bodily injury, you're not making those acts any less violent. And of course, on its own, that definition of forcible meets Johnson's use of force definition. And remember, Johnson was just, I think it was Florida Battery, and it had three ways of being committed, including intentional touching. But this statute is divisible. This Court doesn't even have to define what simple assault means in the statute. It could mean something like 113. It could mean something less than that. For this case, because we have that element of physical contact on top of a forcible assault, that is what renders it a crime of violence because it pushes above the one-year minimum and retains that instilling fear portion. And the last case, or the last point, Your Honor, while this is a case of first impression... So are you saying that this offense qualifies as a use of force or a threatened use of force? Under Eighth Circuit precedent, forcible assault qualifies as both. Forcible assault is not with physical contact. Forcible assault with physical contact would then be just the use of force in the context of putting somebody in fear. So I think forcible assault, even simple assault, would be a crime of violence but for being a misdemeanor because that takes it out of the penalty provision, out of the one-year maximum. But as I understand it, there's no requirement of a particular quantum of force to be used to meet 111B. Is that right? 111A, Your Honor. There are cases, and I forget which ones they are. They say it's a troubling question of degree and the Eighth Circuit has never opined where the point, where that degree begins or ends, where it is on the spectrum. However, what the Eighth Circuit has said, wherever the degree is, if there's no contact, it has to be instilling fear. It has to instill fear of bodily harm. And then you add an element of physical force on top of that. But when you just said that all of the A1 offenses would count but for the misdemeanor penalty, you must have meant that it would count as a threatened use of force. Yes, Your Honor. Exactly. But when I asked you whether McIntosh's offense counts as a use or a threatened use, you said it counts as a use of force. I'm sorry, Your Honor. I skipped over. Yes, his is a use. His is a 111A plus physical contact, which makes it an actual use of force. But in order to count as a use of force, one must use violent force. Isn't that right? Yes, Your Honor. And it is in the context of attempting to use violent force. Wait a minute. Now you're switching to attempt? I'm going back to forcible assault. So it's not like it's just any assault. It's not like forcible assault means the same thing as any assault. It means something narrower. What it means is forcible. So we have to define forcible. How this circuit has defined forcible, the first three elements are forcible and the rest, how it defines forcible is instilling fear. So the jury has to find that element before it goes on to determine whether or not there is physical contact. So it has to find that in this kind of forcible assault, there was physical contact. And so that's why it's not just any unintentional touching. It has to be in the context of a forcible assault, Your Honor. And that's why it brings it beyond a simple assault. That's why, just like Medaris, both types of 111A crimes, and I haven't touched on intent to commit a felony, but that is essentially an aggravated assault, which under the guidelines is also a crime of violence. So both of those are categorically crimes of violence. And that just leaves simple assaults as their own non-violent section because of the misdemeanor portion. Thank you, Your Honors. I see that I have no questions. I just ask that you affirm the decision below. Very well. Thank you. I really just want to make a couple of very brief points. If I understand the government's argument correctly, the position that this physical contact assault requires violent force seems to be predicated on this notion that it also has to inspire fear. I want to be very clear that this Court's precedent states that physical contact or putting someone in fear constitutes a felony offense. So again, the fear is not a necessary component of the physical contact. The physical contact can be to any degree whatsoever, and it doesn't matter whether it inspires fear or not. But would it be a forcible assault if it was just a mere touching? Yes. I mean, it wouldn't be a violent force assault, but there are different gradients of force, Your Honor. Do you think it would be a forcible assault under A-1 if there were a mere touching? Even without violent force, yes, because only physical contact is what is required, and because there are different gradients of force... No, I'm not talking about the physical contact piece now. I'm just talking about the misdemeanor. Oh, the misdemeanor. I don't think that there's any physical contact misdemeanor offense in the statute, Your Honor, because physical contact is touchily identified. I'm not sure the government quite put it this way, but I hear them saying that under Wilkins and Schrader, 1-11 requires a threat of physical aggression that inspires fear. Those are 1-11B cases, Your Honor. Okay, but that's wrong as to 1-11A. You don't need contact with respect to 1-11B. With 1-11A, you do, or you inspire fear, according to this Court's precedent, and that is precedent that predates the 2008 physical contact language. But before then, it was physical contact or inspires fear. Physical contact, standing alone, is sufficient to felonize conduct under this statute. Do you have anything else? I'm out of time, Your Honor. I do not. I would only ask that you remand. Thank you. Thank you for your argument. Thank you to both counsel. The case is submitted. Counsel are excused. Thank you, Your Honor."
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"stt_transcript": "All right, Mr. Chaplain Kramer, we'll hear from you first. Thank you, Your Honor. May it please the Court. Good morning. My name is William Chapman Kramer. I am here on behalf of the appellant, Stephon Verges. There are two issues that are raised in this case, both of which are related to Mr. Verges's base offense level being enhanced as a result of a finding that he was previously convicted of Subdivision IV of Missouri's Unlawful Use of a Weapon Statute and that that offense qualifies as a crime of violence. I intend to primarily focus on the first issue raised in the brief, that despite circuit precedent, this offense should not so qualify. And we recognized from the outset, Your Honors, that this is not new territory, that since pooling was decided in 2009, on multiple occasions, this Court has faced challenges to Subdivision IV's designation as a crime of violence. However, in 2025, the United States Supreme Court decided the case of Delegati, and we submit that that case has now cast a doubt on Pulliam and that this panel is no longer bound by that precedent. And there's really several aspects to Delegati that are important in this regard. And I think the foremost one is what the Court and Delegati is actually doing. Because if you look at the case, while at first blush it may not seem like there's a whole lot there on this issue, they really are engaging with the phrase, another person, in a way that they have not done in previous cases. They are not looking at that phrase in regards to whether or not it modifies another term in the definition, or whether or not it in some way impacts the mens rea. Rather, the Court is directly addressing an argument that a State offense cannot qualify as a crime of violence simply because it does not meet the requirements of another phrase on its own. And in answering that question, the Court does some important things. First off, they make clear that there is a specific agreed upon meaning of that phrase. And then they take that meaning and apply it to the State offense at issue, thereby confirming that yes, on its own, that a State offense must meet those parameters that they have laid out in order to qualify as a crime of violence. The other important aspect of Delegati is by its very nature of not being a plurality opinion. And I think this takes on particular significance within this Court's history of this issue. As in United States v. Larry, the Court had a very similar argument to ours that they were faced with. And that claim was rejected on the basis that Borden was a plurality opinion, and that Justice Thomas' concurring opinion did not rely upon the phrase against the person of another. Well, in Delegati, which is written by Justice Thomas, in footnote 5, he directly addresses this concern, stating that while there may still be disagreement in regards to the mens rea aspect of it, there is no disagreement in that the phrase identifies the object of the force. And this is significant because it represents the Supreme Court coming to some common ground on this issue, which has not always been the case. I guess the concern is whether you agree with it or not, haven't our cases, Pulliam, as the earliest, said that there is an object of the force? I don't think that they necessarily have. And here's why. I mean, I can understand... I mean, there's that one line from Pulliam that's regularly quoted that has been disputed over the years. Sure. You know the line I mean. It goes without saying. Right. When you display a weapon... Displaying an operational weapon before another in an angry and threatening manner qualifies as a threatened use of force against another person. Correct. And Pulliam... If that were correct, wouldn't that comply with Delegati? I don't think it necessarily does. And here's why. It's because... Well, for a couple of reasons. I mean, Pulliam is short. Delegati is short on this issue. I don't think necessarily the shortness of it matters, as far as that goes. But I do think that the concepts that the Supreme Court is doing in Delegati are significantly different from what was in existence before. And I don't think you even necessarily have to go back 16 years to Pulliam to reach that conclusion. If you go back to Borden, just five years ago, there are vastly different views that are presented in the plurality and the dissenting opinions on regards to what this phrase means. And so I think that while there... I don't know if I want to say there that it's unreasonable that Pulliam maybe didn't have that idea in mind of being an object. I think that there is doubt that is casted upon it enough to say that because this is a substantial step that the Supreme Court is taking in regards to coming to this common ground. And then I think the second part to it is the next thing that the Court does with that Delegati is that after they provide this common meaning on it, they take the state offense at its issue and they actually apply that meaning to it. And so in Pulliam, maybe they did, but I don't think that there's anything from the language where you can clearly say that they used this meaning that the Supreme Court has provided to the phrase and then applied that same analysis to the statute. And the only word that is changed in Pulliam from the statute really is the inclusion of the word before. And I don't think necessarily... Before what? Before. You know, the Missouri offense requires... Another? Right. Rather than in the presence of. And I don't think that the word before is enough to necessarily say that they for sure used this same analysis that's laid out in Delegati. And I think it's also important, you know, how they do that because, you know, he has this footnote, but then the body of the opinion expands upon that agreement. And they say that it requires that another person be the conscious object of the force, specifies the required object of the force, involves taking a specific action against a specific person, and then applies that and provides examples of a parent who lets their child drink bleach and that's targeting a particular individual. That's taking a specific action against a specific person. It's a deliberate effort to make the child suffer the bleach's poisonous effects. And so really it's both of those aspects. It's the agreed upon meaning and it's the necessity and process by which they apply that meaning that we think casts doubt upon Pulliam and that this panel is no longer bound. And really that's the first kind of part to this issue. I think the first question is whether or not this panel is bound. And if this panel is not bound, then the panels still have to go forward and actually analyze Subdivision 4 to determine whether it does or does not qualify as a crime of violence. And when you look at Subdivision 4 underneath particularly Delegati, I don't think you can come to the conclusion that it does qualify. And that's whether you look at the plain meaning of the statute or whether you look at Missouri cases interpreting them. And admittedly, not many of these cases are new throughout the history of this decision since Pulliam. The only one that really would be new would be the CS versus Missouri State Highway Patrol. And we don't in any way suggest that that case controls the issue at all. But I do think it has some relevance to the issue. Because what the Missouri Supreme Court also did in 2025 was that they made some commentary on this provision and what the purpose of that provision was. And the language that they used in regards to explaining it is that it was really regulating conduct that was more concerned with risk that endangers others or creates a dangerous situation. And that, I would argue, is more akin to this juxtaposition that is noted in Delegati in regards to specific action against a specific person versus abstract risk to community peace and order. And when you look at the plain meaning of the statute, it doesn't require much. It's a simple, straightforward statute. It's the display of a weapon in the presence of others in an angry or threatening manner. And the only part of that statute that requires another person is in the presence. But it's plain that it cares not what that person's role is. It could be a target, a confederate, an uninvolved observer. You just need somebody else around. And I think it's for sure, there are circumstances where somebody violates this statute that qualify as a crime of violence. But the ultimate question is, does it always require that another person be the conscious object of the force? And I think when you look at the plain terms of the statute, it does not always require that. And that although these cases may predate it, that when you look at them in the light of Delegati, that it also is clear that Missouri cases interpreting it also would support that another person doesn't have to be the conscious object. I would point to State v. Gein, which makes clear that the in the presence element can be satisfied by somebody who undoubtedly is not the conscious object of the force. And other cases have made clear that there are other provisions that would cover these situations where somebody is your specific target. That would be like an assault. Well, assault has an additional element that you do not have to prove under Missouri law. And that's putting somebody in apprehension of immediate physical injury. And I see that I'm out of time, Your Honor. Based on both issues raised in the brief, we would ask that you vacate the sentence and remand for resentencing. All right, thank you for your argument. Mr. Hayes, we'll hear from you. Good morning, Your Honors, and may it please the Court, Michael Hayes for the United States. There has never been any doubt or confusion as far as the government is aware that crimes of violence, including those defined under the Force Clause of the Guidelines, are crimes against people. It's in the very language of the Force Clause, the use of force or attempted use of force or threatened use of force against the person of another. And as Chief Judge Colleton notes, this Court in Pulliam said that, observed that it goes without saying that the Missouri Exhibiting Statute qualifies as a crime of violence under the Force Clause of the Guidelines. And yet, even though perhaps it went without saying in 2009, this Court has had to address the question numerous times since then, roughly a dozen times this question has been presented to the Eighth Circuit. Each time this Court has found again and again that Missouri's Exhibiting Statute is a crime of violence under the Guidelines. In Hudson and prior, 2017 and 2019, this Court noted that there had been no pertinent developments in Missouri law to undermine its decision in Pulliam. There still have been no pertinent developments in Missouri law to undermine Pulliam. In fact, Mr. Vergis cites cases all the way back to the 90s. One Court of Appeals case, the most recent from 1998, in support of their position. This Court has addressed these concerns, these questions, numerous times, has always found that the Exhibiting Statute in Missouri qualifies as a crime of violence. Mr. Vergis now comes forward and says that, well, this Delegati opinion from the Supreme Court, that that should change the equation or that it does change the equation, the analysis. The government submits that Delegati changes nothing. Delegati only reiterated what, frankly, everyone knew previously. That crimes of violence, as I said before, are crimes against people. Delegati clarified that the Fourth Clause requires that a person be the conscious object of the force, but again, that's only what this Court has concluded previously in finding that the Exhibiting Statute qualifies as a crime of violence. Following the Borden case, the 2021 Supreme Court case, this Court addressed the question of the mental state required under the Missouri Exhibiting Statute. And because the Exhibiting Statute requires an offender act knowingly, this Court found that, again, it satisfied the Fourth Clause. This argument on the heels of Delegati, I think, is a repackaging of arguments previously made. The, quote, conscious object language from Delegati actually is from the Borden case. So really nothing has changed. I'd like to make a couple points about the arguments submitted by Mr. Vergis. In their brief, they indicate that Delegati now requires a targeting of a specific person, but it does not. That is not what Delegati says. In Delegati, there was an unusual hypothetical about a mother allowing her child to drink bleach with the intent to harm her child, to allow her child to die. And the Supreme Court in Delegati said that would be an example that would satisfy the Fourth Clause because there's a targeting of a specific person with force. So that was a sufficient set of facts to satisfy the Fourth Clause, but not a necessary set of facts. So targeting an individual with force, yes, certainly that's sufficient. That satisfies the Fourth Clause. But that is not what the Fourth Clause requires. Justice Thomas, in Delegati, while again reiterating this conscious object language, that a person must be the conscious object, Justice Thomas nevertheless said the following, that against another language, at most, at most, requires that another person be the conscious object of the offender's force. But later, Justice Thomas said that the against another language specifies the required object of the force, another person rather than say an animal, and possibly also the mens rea with which the object must be targeted, in parentheses, knowingly or intentionally rather than negligently or recklessly. Here we have a statute which criminalizes the knowing threat of force against another person and that still, per the very terms of Delegati, what Justice Thomas told us, that satisfies the Fourth Clause. Very briefly, Your Honor, on the argument that this Missouri statute applies to ex-convicts and that there are exhibitions of guns that aren't directed specifically at a particular person, but that just create a risky environment. Well, Your Honor, Mr. Vergas can cite no case in Missouri where a conviction has been obtained under that fact pattern where someone is just waving a gun and they create an abstract risk. Always there's a victim in these crimes. The conscious object in an exhibiting case in Missouri requires a victim. And so, while it also... What about the case where there was a shooting in the car? Yes, Your Honor. Somebody in the car? In that case, Your Honor, I think that was the Johnson case. I could be mistaken, but I think it's the Johnson case. There was a person present, I guess. Yes, Your Honor. In that case, the shooting arose from a dispute, an argument, that the offender had with a girlfriend or an ex-girlfriend. He was on the doorstep of her house. She was inside the house. They had this argument, and he turned around and shot into her vehicle. She was not in the vehicle. So, in that case, yes, we have a vehicle, an inanimate object, which is the object of the use of force. But the female who was present, who he had just been yelling at, the offender, she also is the object of the threatened use of force. So, by turning around and shooting into the car, that offender is communicating to that woman who he's yelling at, this is what I'm capable of doing, this is what I'm willing to do, I can take matters into my own hands. That communicates to that woman a threat. And so, that's why he was convicted under the UUW exhibiting statute and not under, say, a property damage statute or the UUW subdivision involving shooting into a motor vehicle. She was the conscious object of that man's anger. His dispute with her is what prompted him to shoot into that vehicle. He wasn't angry at the vehicle, he was angry at her. And that's why, in that case, the statute was satisfied. That's why, in that case, that was a crime of violence under the federal guidelines. The concern is, suppose she hadn't been there. Suppose she was in the house, or suppose she was across town and he was just shooting at her car, but there happened to be a pedestrian down the street who was unrelated to the couple. Understood, Your Honor. Would that qualify as a violation? No, that would not qualify as a violation under the statute. Unless, if the offender was aware of that other person's presence, then it could, but ultimately, that's not the kind of case that's going to be prosecuted in the state of Missouri or that ever has been successfully prosecuted in the state of Missouri. Mr. Verges can cite no case where a conviction was obtained under this subdivision, under those facts. And the Supreme Court in Gonzalez v. Duenas-Alvarez, a 2007 case, the Supreme Court in that case was examining in an immigration, in a deportation case, whether Mr. Duenas-Alvarez had been convicted of a quote, theft offense, as theft, as a theft offense is defined under federal law. And they examined different ways that the California statute could be prosecuted in different ways a person theoretically might be convicted under the California statute. And what the Supreme Court said in 2007 was that, quote, to find that a state law creates a crime outside the generic definition of a listed crime in a federal statute requires a realistic probability, not a theoretical possibility that the state would apply its statute to conduct falling outside the generic definition. And so I think the hypothetical you've presented Chief Judge, is theoretically possible, but practically speaking, very improbable. I would suggest almost zero probability that that, under those facts, first, that the crime would be reported. Second, that a police officer or deputy would book the defendant or the offender under that statute. Third, that it would get through a judge and a jury and survive on appeal. Any one of those steps, I think, is exceedingly unlikely put together. You've addressed the hypothetical. Thank you. Thank you, Your Honor. Thank you for your argument. We ask that the court affirm. Would you care to make a rebuttal? I'd appreciate it if I could. You may. Well, how much, did he use his time? I used my time. I don't have to. I didn't use my time. Very well. Then we'll submit the case as argued and thank you both for your arguments. Thank you. And counsel are excused. Thank you. That concludes the"
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"stt_transcript": "Good morning, Council. Good morning, Your Honours. My name is Lindsay Levitt, and I am representing the appellant for OMNI Hotels. And may it please the Court, I'd like to reserve two minutes for rebuttal, please. All right. My oldest daughter is in junior high, and she studied World War I this year. And one of the unique things about World War I is this concept of trench warfare. And she learned about this territory of land between the opposing army's front lines. And that opposing, that land that no one has claim over is called no-man's land. We've heard that expression before. The litigation equivalent of no-man's land is after discovery closes and before trial starts. And in Arizona, at least, and I don't know how it is in every jurisdiction, but in Arizona, that no-man's land period after discovery before trial can be six months, nine months, a year, or even longer. And so this appeal talks about what happens when new facts and material facts arise during this no-man's land period after discovery and before trial. Counselor, doesn't, thinking about Arizona state procedure, doesn't Arizona have the ability to deal with no-man's land, to impose obligations or address that through court rules or through civil procedure? Why does no-man's land get to form the basis for the claim in this case? Sure. Well, I don't think no-man's land forms the basis, but no-man's land is a reality of what happened. The facts that arose in this case couldn't have been discovered during discovery because they didn't arise until after discovery. But you're right, Your Honor. They could have been discovered at trial, fair to say. They could have been discovered at trial, but how would they have been discovered at trial? Through question and answer? Through examination? Correct. Correct. I mean, in this case, Ms. Tarrin testified about her physical activity. So this was not a topic. It was not before the court in terms of examination. It was opened wide by the testimony and there was free rein to cross-examine on those topics. So why doesn't that address the issue? Well, in Arizona, under Arizona common law, these claims fraud on the court is when, if Ms. Tarrin obtained a judgment by concealing a material fact and suppressing the truth with the intent to mislead the court, and you're right, she did testify about the purported physical limitations that her injury from two years prior supposedly was still causing her and that she feared would continue to cause her. But that's the exact concealment and suppression of fact and non-disclosure that gives rise to our claim for fraud. Was she asked during cross-examination and somehow didn't respond? Because I see this more as a failure to volunteer additional information rather than you said a concealment of information. The whole thing is kind of odd because you're here on a fraud on the court claim and you had a trial in state court and there are procedural mechanisms for kind of attacking what happened there, but now you're here in federal court. I just find that that very odd. And so now we're looking back and you're asking us essentially to render a ruling that overturns a verdict obtained in Arizona state court. I'm not asking this court to overturn that verdict. I'm asking this court to find that it's a question of fact that should be submitted to another jury as to whether Ms. Tarrin committed a fraud on the court. And under Arizona law rule 60, yes, we were permitted to bring an action or file a motion to reopen the case based on this information. But under Arizona common law, which has been around for more than 100 years, this specific claim, and which isn't restricted by rule 60, we're permitted to bring this claim in an independent action in a different court. And that's what we chose. No, I get it. It's odd. I don't recall ever seeing a situation like this where it's not challenged directly before the trial court. You don't get a lot of poll dancing, fraud on the court cases here in the 9th Circuit? Well, I mean, we don't get the unusual. It is unusual, but it's permitted under Arizona common law to bring an independent action. And there's diversity jurisdiction. And that brings me into the point of getting back to Judge Huey's question regarding cross-examination. Was cross-examination limited or curtailed in any way? No, it was not. But the cross-examination was uninformed because the evidence, this new facts that arose during no man's land weren't known. And we've all been and done trials before. You can't cross-examine someone about something that you have no idea exists and would have no reason to question them about. Well, counsel, there was testimony, though. And I think you phrased it a moment ago in terms of testimony about limitations. But there was also testimony about activities, activities including, I think it was yoga and bicycling and weightlifting in very vigorous physical activities. It seems to me it did open the door to that subject matter. And maybe the good conventional wisdom is don't ask a question you don't know the answer to on cross. But nonetheless, that subject matter was before the court. Now, a few minutes ago, you made a lighthearted remark about pole dancing. And I have some concern. In this case, your client is pursuing the plaintiff through the appellate process in Arizona, through this new lawsuit, through this appeal. And I don't know that pole dancing is really different from the other types of activities that you testified about, except that it carries a certain stigma to it in the eyes of some, at least. And so the fact that that pole dancing is really the centerpiece of your case, it just it raises a concern that this dogged pursuit of Ms. Tarrin in this case is, well, it's exposing her to ridicule, candidly. No, and you're right. I should have rephrased it. It's not pole dancing. This is pole fitness. It's a type of exercise. Now, what's important, though, is that this court is focusing on what my client, Omni, could have or should have done better at the trial. And that's what the district court did. And because the district court, in a summary judgment motion, focused on Monday morning quarterbacking, what my client could have done better. That's why we're here and had to file that appeal. And here's why. It's because Arizona common law, which should have been applied to this case, specifically holds that the diligence or lack of diligence of the non-concealing party is not a factor when determining whether fraud in the court has been has occurred. But to answer the question of concealment, we have to ask, did you ask her? I don't think we do, because otherwise you're saying the court, the court may be suggesting that it has to be perjury in order to commit fraud in the court. And we're not saying that we asked her and she lied. We're saying she got on the stand and said two years later, I can't play the violin. I can't hold the steering wheel. I can't put weight on my left hand. I can't play with my bunny. I don't I don't think she. No, I didn't. She said it. That's kind of important, I think, because I suppose if, you know, she said I'm a paraplegic. Now and and then it comes out that she's doing this pole fitness. I think all of us probably wow, that those two things seem inconsistent. And I think I probably would have thought pole fitness was inconsistent with having a hand hand injury. But there is evidence here that apparently you can do it without an arm. And so I'm trying to figure out where are you. You think she had a duty to disclose this without you asking her about it because you you think that pole fitness is inconsistent with the injury she claimed? Is that why? Under Arizona law, there is an ongoing duty to disclose and supplement the record. So, yes. But what we're saying is her. Well, the reason the reason I frame it the way I did is is I'm trying to figure out what other what other things that you would think she had to supplement like that. If you hadn't asked her about weightlifting, which she have to have told you she was still weightlifting. If we had asked her, we would have expected her to testify. No, no, no. I'm saying if you hadn't asked her, because that's the circumstances we have here, what it because that I think we're all familiar with the idea that the fact that somebody's weightlifting doesn't mean they didn't have a pinky injury or have ongoing effects on the pinky injury. So I'm trying to figure out why you think this is. Other than just a general idea, I suppose that we probably all think, which is that pole fitness can't be done with a hand injury, but apparently it can just like some weight fit weightlifting can be. But would you think that she had to disclose the weightlifting if you didn't ask her about it? Her responsibility was to tell the jury the truth about what got the impact of her injury in her life. The jury should have been entitled to hear about the inconsistent and frankly, completely incongruous testimony of her pole fitness. So that's your position, though, that it's so inconsistent. I think I think you're saying, yeah, you can't your positions. So do we have to determine that it is inconsistent or do we just have to think under your view that a jury could determine that it was inconsistent? The latter. Well, then I think that goes to my weightlifting. Then if she hadn't disclosed the weightlifting, because in theory, a jury could determine, yeah, I guess, you know, it seemed like weightlifting, you know, it's a jury might think that I just try to figure out where your standard. It really mean that a lot of stuff would be open to this kind of claim. Well, the tricky thing about Arizona common law is that it provides a handful of somewhat of concepts of what fraud on the court means, concealing material fact, suppressing the truth with the intent to mislead the court. And so it's a question of fact, did her talking about her bunny and and that she may need or hypothesize that she may need surgery one day on her finger. Did that conceal a material fact that barred a real contest before the court when my client didn't know, didn't have any reason to know that she was an advanced level in pole fitness at the time of at the time of trial? All right. You're actually over time, but I know you wanted to save some. So I'll give you a minute back. Thank you, Your Honor. Good morning, Your Honor. Please, the court. My name is Jeffrey Victor. I represent a question that's that's it's sort of a side issue, but kind of maybe because you heard us wondering, like, why is this case in federal court as opposed to is is it possible? It's I don't understand Arizona law. So if there had been a motion to reopen or something for fraud on the court in the Arizona action that that's permissible, if that had happened, did that happen in this case? No, that's what's happened. Would you have gotten in a loss? Would you have been able to tack that on to your attorney's fees? Is that and then maybe they think they won't get attorney's fees in federal court? Is that possibly the reason why they did this or as opposed to just bring it in state court? They filed a motion for a new trial. They filed a motion for remitter. OK, and those were denied by Judge Cone in the Superior Court in Pima County, Arizona. So they went off and then they filed an appeal to the Court of Appeals Division two. So they had their day in court a second time that that didn't go. And they filed a motion to to stay the appeal because they supposedly discovered this posting on the Internet that went nowhere. They didn't get any relief. Then they switched gears and they think, well, maybe it'll be more favorable to just try a different venue, maybe because exactly exactly. Is there an attorney's fees aspect to this? There should be. There should be. There should be. I requested attorney's fees from the district court. The court did not rule on him. And I'm attorney's fees today. This this is the fourth. This is the fourth venue, for lack of a better word, that this case has been to. It's been to Superior Court, the trial court. It's been to the Court of Appeals in the state and the State Court of Appeals. It's been to the U.S. District Court. And now we find ourselves in in the Ninth Circuit Court. So if I may, Your Honor, I'll just touch on some points. I was curious as to why. No, no, those are good questions. Those are excellent questions. So Mr. Leavitt was not the trial attorney in this case. OK, he is the fourth attorney on this case. I've had the trial lawyer in this case, the trial lawyer in this case. The original trial lawyer was a gentleman by the name of Jefferson Collins. He tried the case. He then did an appeal to the Arizona Court of Appeals. Were you Ms. Perrin's trial lawyer? Yes, from day one, from day one all the way till now. So I take it that I didn't reveal the review, the entire trial transcript. I take it that on direct examination, then she testified about her limitations and also testified about her physical activity level, the weightlifting, etc. All that came out on direct, but just not this pole fitness activity. Well, the pole fitness classes were fairly recent prior to the actual trial. I believe the trial was in April of 2020. No, I recognize that. I'm just trying to envision like how this played out. She was on direct examination. You examined her regarding her level of activity, both the limitations as well as what she's able to do. And in the course of that narrative, she wasn't specifically asked about the pole fitness. And so that just never came out. I wasn't aware of it and she didn't bring it up. She answered whatever questions were asked of her. You didn't know about it either? No, Your Honor. She answered whatever questions were asked of her short and to the point. And as is typically done, just answer the question. As for a trial witness, just answer the question. Interesting enough, the appellant in its brief says that she perjured herself. She lied. I have a case that's going to trial next month where the opponent, the witness was asked, have you ever been involved as a party to a litigation? He said, no. I asked him, have you ever testified in any types of hearings or trials, board hearings? He said, no. Most recently, I did a quick search and I found he had been involved in two prior cases where he was a party and he had testified at a hearing, a court hearing, in one of those cases. That's a direct misstatement in response to my questions. That's a lie. But for Mr. Levitt to impugn her character and integrity and say that she lied and she perjured herself, I respectfully, I would ask the court to ask him, show me where she lied in response to a question that trial counsel asked. No, she didn't lie. So then we get to the only question on the table, is this alleged non-disclosure. Is this alleged non-disclosure enough for one to say it's a fraud upon the court? Well, no. There's case law out that says a non-disclosure in of itself is not enough for a theory of fraud upon the court. And the reason being is because the cases rely on the cross-examination of the opposing counsel at trial to come up with and find the non-disclosure. I mean, all they had to do is spend five minutes prior to the trial, which they did, but they didn't do it until afterwards. Now, in all candor with the court, Mr. Levitt told Judge Collins in the oral argument, he told Judge Collins that the omni did not discover and had no reason to discover. And he said it wasn't out there. He said she didn't post it until after the trial verdict. That's not true. And I called him on it afterwards. And I think it's number 48, excuse me, yeah, number 48, where he corrected himself because he represented to the judge in oral argument, Mr. Court, that this was not out there. It was not discoverable. It was not out there until after the jury came back in April of 22. That's not true. So I called him out on it. And then he filed a document. Yeah, you're right. I'll let the court know. It was out there in February of 2022, two months before the trial. But in the papers before the court, he's saying the same thing. He's arguing again that she didn't post this, that it was not discoverable. It wasn't out there on the internet until after the trial. That's not correct. That's disingenuous to say the least. I'm going to date myself here. I've been doing this for over 40 years, both as a prosecutor and as a public defender and now in private practice for many years. The parties live or die or parties sink or swim based on the questions they ask and the questions they do not ask. The parties sink or swim based on preparation and based on diligence. That did not happen here. This comes down to the lazy litigant issue and the fact that they want to do over because they were a lazy litigant. And it wasn't just a lazy litigant in Superior Court. There was no IME. There was a stipulation to the medical records coming in at trial that said an impairment rating of 1 to 19 percent. And then in federal court, they raised the issue of fraud upon the court. OK, go send her to an orthopedist, to a hand specialist to see what she can and cannot do. They didn't do that. OK, go get a Paul fitness instructor or expert to come and testify that it's very demanding. And yes, you have to have full range and full use of your pinky finger in order to engage in these different levels. They didn't do that. In fact, what they tried to do is they tried to turn the dance studio owner, Katrina Wyckoff, into their expert. They tried to get her to say what they're arguing. And she said, no. She said, we accommodate everybody. We accommodate people that are wheelchair bound. We accommodate somebody that doesn't have an arm. And when I was in nationals in competition, I had a rotator cuff tear. You don't need to use and extend your pinky finger to do these exercises. So again, you have this lazy litigant defense. You don't have any experts. You don't have any independent medical examinations. You don't have any witnesses to say anything contrary. Now, he wants us to think that, well, you know, if somebody starts something two months earlier, they got to raise it at trial. OK, no. What he wants is he wants to open the floodgates. And I'll sit down in a minute. He wants to open the floodgates and he wants you to agree with him. And that would open the floodgates for any party that lost the case because they didn't prepare it well. They didn't ask the right questions. That would open the floodgates to, oh, I find something. I think I can argue this and get a whole new trial. No, it's not proper. And this court should award reasonable attorney's fees and costs for us having to come here. If unless anybody has any other questions. Thank you. Thank you for your time. Thank you. I'll be quick. McNeil v. Hoskins, that's a 2014 Arizona Court of Appeals case. Unfortunately, most of these Arizona common law fraud in the court cases arise in a family law context where one spouse is concealing assets from another spouse and the judge makes a decision about alimony or child support based on the assets that are in front of them that they're aware of. In that McNeil v. Hoskins case, the wife did not disclose that her husband had already paid her $85,000 in alimony and the court wasn't aware of that. The husband didn't even know that he had done that because the amounts were just being auto paid. And the wife tried to argue that the husband could have discovered the overpayments and called them to the court's attention at the dissolution trial. And the Arizona court said, although the husband's diligence or lack of it would be relevant to a claim of common law fraud, no such defense applies to a claim of fraud on the court. And all I'm hearing is a spotlight from my friend, is a spotlight on what my client should have done to better trial. And that is not the focus under Arizona law, what a fraud on the court cases. Thank you. Thank you very much, counsel, for both sides for your argument this morning. The matter is submitted and that concludes our argument calendar for the week. Court is adjourned."
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"stt_transcript": "Good morning. Good morning. May it please the court. Matt McCrary on behalf of the plaintiff in this case and I would like to reserve five minutes of my time for rebuttal. All right. At bottom, the preemption question in this case is very straightforward. Are the requirements of plaintiff's state law claims identical to the requirements of federal regulations for toothpaste products? To determine that issue, it's essential to evaluate just what are the requirements of federal law. Here, that federal law being the anti-caries monograph. It has two main requirements. The first is that the product must state in the indications for use section of the label aids in the prevention of cavities, decay, or caries. So assume like two states had, you had to say Ohio and California. I have no idea whether Ohio, but they have a, they both ban non-truthful or misleading advertising. They both only allow truthful or non-misleading advertising. And you were, and you were able to go forward and in California, they were to find that this exact ad is non-truthful, you know, a jury say or something or found that it was, it met California standard or failed California standard. However, in the other state, the other state reached, a jury reached the opposite conclusion or a court did. Yeah. So you're following my hypothetical? I follow your hypothetical, correct. So, so, I mean, do you agree that that is a possibility? Well, your honor, that's always a possibility. I need to know that before we can continue. So, so what you have here still is the same federal standard that's being applied by two different courts. Let me just add, you agree that that could happen, right? Like, okay, so if that happened, and I guess the question I have is if the test is to whether or not the state has the same standard, right, has the identical, not just the same, identical, it's pretty strong language, and two states could reach, like, literally the opposite conclusion. How can we know, like, beforehand that it's an identical standard? It seems to me that, you know, we would know afterwards that they're not, one of those is not an identical standard. And we, we would know if the FDA ever weighed in and said, no, this is fine, which it could do, right, like it did with the mouthwash. It could, and so it's hard, I understand your view is that's identical, but doesn't that kind of prove that we can't know that it's identical? No, your honor, it doesn't, and the Supreme Court actually discussed this in a case I don't think that we cited in our briefing. It's called Enri Palm Wonderful versus Coca-Cola, and it talks about how different states in, can apply the same federal standard. It's still the same uniform national standard, but differing juries in different states may still come to, to different conclusions. Because it's not, it's not, I understand that, like, in theory, I mean, we have law that's different than the, than other circuits on federal standards. So I, you know, that, that, that variation is inherent. That's what the, but this is a little different because it's preempted, unless there's a, there's a savings clause from preemption, if the state has the identical standard. And I understand your argument is it is identical standard because you can't have misleading statements under the federal and you can't have misleading, but the problem, but that kind of ignores the fact that the devil's in the details in a sense of like, if a state determined through a jury that it was misleading and another state determined it wasn't, then one of those would have to be not identical. Well, Your Honor, I would, I would actually look at it slightly differently too. Let me, let me see if I can conceptualize this in a way that it's, that's helpful is that that's sort of mixing the two questions, right? That's the preemption question versus the substantive. Is this misleading question? The preemption question just looks to, is the state law requirement the same as the federal law requirement, right? So we have the federal law requirement that says you can't have misleading anti-cavity claims on your toothpaste. California says you can't have misleading anti-cavity claims on your toothpaste and Ohio says you don't think how that standard gets applied matters at all for the preemption, not for preemption, Your Honor. Correct. Then be that, because whether or not it is actually misleading, is it what the preemption is concerned with? Let me push back on that a little bit. Let me ask you. So if the FDA came out and said this particular, this particular product's label is not misleading under the federal standard, then, then would a state, then would we have to say, well, we don't know whether that's identical. We have to let this case go through. And if a jury finds that it's, yeah, we wouldn't do that. Right. If the FDA came out with a regulation that said you can make enamel restoration claims, then any claim that suggested that that was misleading would be preempted. Absolutely. 100%. What if they like literally sent out a letter to these guys and said, thumbs up. Well, then, then we get into the question of deferring to agency guidance. That's not, you know, that's not official published guidance. Now, if they got into an enforcement action and that enforcement action then went through the courts and it was upheld, that, that could be different, Your Honor. But now we're getting into the question of like Kaiser versus Wilkie. And how much do you defer to, to agency? The point I'm trying to make is I just, I don't know how we can know this is identical. How we can, I mean, your point is it's identical because they're both misleading, but I don't know how we can know that it's identical. Well, Your Honor, in this circumstance, the FDA has determined, let's look at it this way. The FDA has said, look, here's a claim that's not misleading. It's truthful. It's aids in the prevention of cavities, tooth decay, or caries. You can make other cavity prevention claims. We're not sure what of those cavity prevention claims are misleading or not. Instead, we're going to say whatever other cavity prevention claims you can make, they have to be truthful and non misleading. And by the way, they're still subject to section 502 of the FDCA, which says the general misbranding provision, which says labeling can't be false or misleading at any particular, right? So this is essentially the FDA saying, we've looked at this. We know aids in the prevention of cavities is a truthful and non misleading claim. And the rest, we're not going to make a specific list of what is approved and what is not approved. And this court in the, the Reed case, Reed versus Johnson and Johnson case, which we've cited in our briefs has said that courts are competent to determine. When I start talking, thank you. Because I understand where you're going. So I want to, I want to, I'm trying to have a dialogue with you about this. So the problem is, is that the, the, the practical problem I'm concerned about is that under your, your approach to this, you would have state jury say, or state courts deciding whether something was ultimately misleading. And they would, and the only way that would be identical is if that was also what the federal statute barred. And so you're, you basically have, even though you're not deciding the federal standard technically, because you have a jury deciding the state law claim, you are a sent you by, by logic, you must be decided. You have these state juries applying state standards that are actually deciding a federal standard. But, and I, does it, and that seems to go in the face a little bit of, of the point of preemption. Well, your honor, and that is again, discussed in the cook and the palm, wonderful versus Coca-Cola case, right? In our dual federal and state system, even when you're applying a national standard, you're going to have some sort of variability, but the question is, is the standard the same? And the standard that's being applied is going to be the same outcome in any given case. Let me pivot just slightly. One of my concerns is really the procedural posture of this case. We're at the pleading stage. Given these types of claims could preemption be decided at the summary judgment stage? In other words, at this stage, one of the focus is really on reasonable consumer confusion, but even if you survive a motion to dismiss, because at this stage, the preemption claim may be premature. That doesn't mean that the case then goes to trial, right? Correct. I want to get, get back into what I would, how I would separate that your honor is that the preemption question can be decided right now. It's the same standard. And then the question becomes applying the identical federal and state standard of misleading reasonable consumers. Does the claim succeed or fail on the merits that that could certainly be decided at summary judgment. There wouldn't be a preemption determination. That would be your claim fails as a matter of identical and parallel state and federal regulation. Not that it's so the claim doesn't become preempted. It just fails as a matter of federal and state law. But to get back to the first issue that I just, I would like to wrap up with, and then I'm happy to reserve the rest of my time unless the court has more specific questions is that when you have a standard like this, like the false or misleading in any particular or truthful and non misleading claims, that standard is necessarily going to have some variability in the way that it's applied, but the standard is the same, even if the outcome may change. And since the standard is the same, the claim is not preempted. And this court in the Reed versus Johnson and Johnson case was looking at a regulation that itself said you can make quantitative nutrient content claims so long as they're not false or misleading in any way. And the court held that that claim was not preempted. A state claim that is misleading was not preempted. And it also held, this court also held courts are competent to determine whether something is misleading to reasonable consumers without needing guidance from a federal agency. So we don't need the FDA to say affirmatively, this is false or it's, it is misleading. Courts can, courts can do that. Now I'd like to reserve the rest of my time for rebuttal. Thank you. All right. Good morning. Your honors may please to court Jay Lefkowitz for Halion. And I want to begin with judge Van Dyke's question because I think it illustrates why there has to be preemption here. The FDA has reviewed the evidence, approved an indication and didn't just approve it, but also said companies can use alternative language. And the FDA can obviously with its plenary power under section 337 of the FDCA determine whether the language is misleading. And it did that, for example, with sunscreens, where it said in the monograph, you can't use the word sunblock because that would be misleading, but you can't have 50 different states who are applying vague, you know, what does it mean to be misleading as opposed to fixed parallel claims? And that's, I think the core issue here. And in fact, the sentence that grants this additional authority is an important sentence. If that sentence didn't exist, the monograph would simply say, you can use, you must use these words to describe the indication, prevents cavities, prevents carries. And that would be it. And even if there wasn't that additional grant of authority, we would still be able to use additional language and they would be subject to the general misbranding provision, which as the second circuit made clear in creature can't be used to have a state law go after compliance with a specific regulation. The only reason that additional sentence is there and isn't surplusage is because the FDA decided within a regulation that is intended to have preemptive effect to direct companies that they now have a flexible authority to describe the language. And here we know from the backdrop from the NPRM. So the upshot of, of all this, if you kind of follow the logic, cause you heard my be discussing with your colleague on the other side, the upshot is because the FDA says you have to say this and you can say this as long as it's not misleading. You can say something else and they leave you to remove that. Then what this really comes down to is whether or not when you're acting under the secondary part of that, that gives you some flexibility, whether or not something is preempted, a state law action like the one they're trying to bring here is preempted until the FDA says, yeah, that's misleading. Cause I assume that if the FDA said this statement that you thought fell in the second part is, is actually misleading. As soon as the FDA said that was misleading, then you could bring on a follow on state law claim because that wouldn't be preempted, right? Cause it would be identical, correct. And the FDA could bring its own action at that point. And, and, uh, and if the FDA said it's not misleading, then I think it would be, it would be preempted. But here this is in the middle where the FDA just hasn't spoken to it. And I think your position is the FDA silence on something means it is preempted until they say it's misleading. And their position is that the FDA silence on it means until it says it's not misleading, it's preempted. And if it's misleading, then the FDA will have told us that it meets the federal standard. Um, and you could tell from my question, my instinct is that that seems, it seems like that could lead to some bad effects because you could end up with the contrary, contrary things in different States. But, but why is that position wrong that their position? I think there are two different answers to that, if I may, your honor, cause I think this strikes at the heart of the, the whole case. And I want to first look at what the second circuit did in creature, which is a fairly parallel situation. In that case, there was a requirement to describe the net weight and the company described the net weight, but it was clearly done in a way that the plaintiff said is misleading. They said there's two ounces, but you could only access an ounce because of the way you had to squeeze the tube. And the plaintiffs challenged it and said, even if you're within the scope of the regulation, there's this misbranding provision. And in fact, not only is there a broad misbranding, a general misbranding provision, but there's even a specific requirement in the statute that with respect to fill, you can't fill things in a misleading way and label them in a misleading way. And what the second circuit says is no, no, no, no, no, the agency has regulated this. You have done what the agency has said you may do. You can't bring a collateral attack using the misbranding statute because that would essentially be allowing different States to regulate and impose new limitations here. We're not talking about a situation where the language that's being used, for example, says it cures cancer. I think we would all agree that if the language says it cures cancer, why is that? Why is that cures cancer example of the extreme example? What, why does that not a problem for your position? I think, I think, look, there are clearly courts, including courts within this circuit that have said that even that would be preempted. I think that the better, more kind of accurate test to be faithful to what Congress was doing here is to look at where there is a reading of the language that describes the indication, because the very specific grant of authority says you have to describe the indication. You don't go to the misbranding statute for the reason that you pointed out because Arizona could have one interpretation and Ohio could have another. And then you'd have problem council. And I'll ask you the same question that I asked your opposing friend on the other side is really the procedural posture of this case and indication of aid or prevention in cavity. It's clearly permissible, but I don't know whether rebuild, restore repair really fits within that indication. And I don't know that a reasonable consumer would know that. So if we didn't know, what do we do with that? So at this stage, thank you, your honor. I think because there is a proof, a statute that provides for express preemption, the preemption question is a gateway issue. It's a threshold issue. And the courts have said, and the Supreme court in Albrecht said, that judges are uniquely qualified to make those legal decisions. If there were no preemption regulation here at all, and this were just a simple state common law, false advertising case, then you'd be looking at it through a different prism. But when there is a statute on point or a regulation on point that says it is preempted. If you are doing something that is within the scope of the regulation that provides for preemption, then judges are the ones who have to make that threshold determination. And here, I think you can look as... Drawing on what? What? Drawing on what? Drawing. OK, so... On our own personal experiences disregarding what... I mean, I'd like to see in this instance, for example, let's say there's no preemption framework issue here. Usually it goes through summary judgment. You get consumer surveys and the like. You may... They may survive summary judgment. They may not. So in this case, the factual inquiry of whether rebuild, restore, repair, whether that's cavity prevention or not. It's kind of the same factual inquiry that underlies the preemption analysis. But what you're saying, well, judges are supposed to make that call. Do we then draw on our collective experiences in deciding whether that fits within the permissible indication in this case? So the two part answer. The first part is, yes, because it's preemption, you could always in every preemption, every failure to warn case, you could say, well, let's not decide it. Let's let the jury decide whether there should have been an additional warning or not. The whole point of preemption is it's a threshold issue. Courts actually have to make that judgment. Now, the question you asked is, how do you make it? Well, again, Albrecht says that judges are better equipped than juries to understand and interpret agency decisions. Here we have an agency statement in the monograph as to what the indication is, prevents cavities. Then we have the agency's statements of its scientific rationale for that in the NPRM, where it describes how fluoride works to remineralize enamel, to harden enamel, to restore enamel, to get into the enamel and make it stronger. And I think at that point, the court has to say, is this a reading? Can you read those words that are on the label and say this is within the framework of what the FDA has regulated? Not whether there's some conceivable other implication, because the minute you find that it is within the protected scope, a state regulation or a state law or a state jury decision that you can't say that is prohibiting something that the agency has authorized in a preemption statute. And so I think it is a different analysis. The difficulty I have with that approach is let's say we three get together and we talk about our toothbrushing habits and we really dig deep and we end up determining in a 2-3 decision that these words fall within the scope of the monograph, right? And then Judge Huey goes the other way and we all laugh at him. And then one week later, the FTC comes out and says what he said. Right. And then we so that's the problem. It seems weird for us to I understand your position, but it seems weird. I guess that's why I was I was just saying, does the fact that we could that if we adopted the plaintiff's position in this, we could end up in this, it seems like illogical situation where where we literally have one state saying something that's that is not reconcilable with another state is saying. And yet somehow we've we've somehow logically saying that both of those are are identical to what the FTC, which which can't be true. That can't be. And that is precisely why the plaintiff's rationale here would lead to this kind of health. But wouldn't our analysis, if that's the case, would just to be to ask ourself instead of trying to put ourself in the shoes of the FDA, I say FTC earlier, but FDA, wouldn't our analysis just be more of is this something that could be within the scope of this monograph? If so, is preempted unless and until the FDA tells us that it's misleading. Yes. And and in fact, we have some indications of that as well from, again, not legally binding documents, but informative documents. The the warning, the warning letters that the judge referred to in the plaintiffs referred to in the briefing describe companies that have been using various types of fluorides and have different types of warnings. And there are you know, there are letters. And of course, the companies use these phrases and the FDA has not taken action yet. Obviously, in your hypothetical, if tomorrow after you decide the case, the FDA makes a judgment, well, then they will bring an enforcement action. And this case will go away because Halion will be subject to an enforcement action. But for the purposes of the gateway question of preemption, the FDA told companies not just that you can say these magic words, but you also can use other words describing it. They were well aware of all of these phrases that the companies were using. And the plaintiff's position is, yeah, you they allow you to do that. But that but none of that is preempted. Essentially, that is their position, unless and until the FDA comes out and specifically blesses that additionally. The consequence of the plaintiffs and your position is that all of it would be preempted, I think that's kind of. Yes, because the consequence of the plaintiff's position is that second sentence means absolutely nothing. There is never preemption, because no matter what word I use, if I don't use the identical word prevents cavities, if I say it in any other way at all, even though the FDA has authorized me to use other language, they say, well, subject to this misbranding provision, it's a parallel claim in my state and in another state. And now all of a sudden there's no preemption. The whole purpose of that. This is a situation where the FDA decided to provide flexibility to companies. And it's for the FDA to ultimately decide whether a company oversteps. They did that with respect to Sunblock, where they imposed a limitation. And in creature, even though there was clearly a very reasonable claim that that the that the amount of fluid listed on the tube was misleading because you could never squeeze half of the fluid or a quarter of the fluid out. It was deemed to be preempted. The last point I want to make, Your Honor, is if the FDA prohibited the language tomorrow, that would be a new requirement. And it's fine for the FDA to impose new requirements. But plaintiffs are not allowed to impose new requirements or different requirements under state law. So a future FDA enforcement action would be consistent with the court's ruling on preemption. It would be saying federal government can impose new limitations, new requirements, but not a state. If the court has no further questions. I'll rest. Thank you. Thank you. Counsel, can you can you address the, you know, his point that basically under your interpretation, that the second, you know, there's a thing you have to say under the monogram and then there's the flexibility, what they call the flexibility, and that there would be no preemption related to acting under the flexibility. And so then basically the agency is giving you flexibility. But but but subject to policing by the states. And so since which is an agency, I think they would say not policing by the states. Right. Yeah, I'm I'm saying I'm describing your interpretation. Your interpretation would be that this other thing. Yes, obviously, we agree by the courts using the same the same national standard. You can do it in state courts, too, as well. Right. But the same national standard that can't be true. If you end up with Ohio saying this same language is misleading. And you're right. I mean, it's true. If you give manufacturers flexibility to write, I mean, other other this this is an anti cavity toothpaste with sodium fluoride. Right. A lot of manufacturers don't make restore enamel restoration claims. Right. This is a claim that they've decided to make to differentiate their product from other anti cavity products, even though they can't. It's the same active ingredient. It can't do anything that these other toothpastes can't. So you get different interpretations. If if it's the if it's the companies that are essentially regulating themselves in their own claims versus the the states that are doing it through through what is what what they each determine is misleading. So let's say Crest says in normal enamel restoration, that's a misleading claim. We're not going to put that on our products because because we don't want to violate the monograph. And since it's so, I think I'm understanding you, but I just want to make sure that we know where the lines are. So I think, you know, they have a very broad view of the preemption. It is preempting, obviously, the thing that they are required to do. But it's also preempting any basically any action that they can take under the secondary part, unless the FDA comes in and says, no, no, no, that's messy. Like like they did with the mouthwash is your position. I just want to make sure your position, I think, is that any action they take in the discretionary part of it, there is essentially no no preemption. Or am I wrong about is there some way there would be preemption under there or is the preemption does not apply to that? Well, your honor, I think I think, number one, preemption would apply. It's it gets tricky, right? Because what is clear is it has to be a cavity prevention. Give me a circumstance where the preemption would apply. Because when I was reading this, I was saying, well, I think under your position, basically, toothpaste manufacturers can only put the language in the first part, the part that says you have to do this if they want to take to have the safe harbor of preemption, so to speak. They can only use that language. Anything else, they're taking the risk that they get a lawsuit like y'all and which runs in all the the differences between states and the possibility the FDA may, you know, a California jury may hit them with a verdict and they pay. And then two years later, the FDA blesses that language. Right. And I think that then we get into the distinction of what is doing all the work here to limit cases, right? Is it preemption or is it is it the misleading standard? Right. So if somebody said something like helps to fight cavities, how could you argue that that is that is either preemptive? You could say that's just clearly an anti-cavity claim. Or if somebody said, no, that's not an anti-cavity. But if you had a theory, if you had a theory for why that was misleading, would it would that be preempted or would it not be preempted? Again, here, I would say if that gets into the plausibility standard, right, is it plausibly misleading to say that it helps fight cavities? Probably not. Right. And so it's still going to fail at the motion to dismiss stage. And here we have a claim that is that is not helps fight cavities and it's not even helps remineralize teeth. It's rebuilds, restores, repairs enamel. But if your theory doesn't play out at summary judgment, then it falls well within what's permissible. So if it fails, yes, certainly we might not be able to prove that reasonable consumers interpret this as an enamel restoration claim. Maybe reasonable consumers do say, oh, hey, all this is going to do is help me fight cavities, in which case we would lose on the merits of the claim under both. But you would also then be preempted, right? So let's say you lost and the jury said this is not misleading. And well, then it obviously was preempted because it only bans misleading. I think of it more as like subject matter jurisdiction. Right. Let's say you have a set. You allege that there's if it's permissible under the regulations, it's preempted. Right. And so if but it's also permissible, if you could stop. Hold on. It's hard when we talk over each other because I can't hear you and you can't hear me and you're not responding to my concerns directly. So it goes back to what I was discussing with counsel earlier. We're at the motion to dismiss stage. I don't have I don't feel like I have the expertise to figure out whether rebuild and restore constitutes cavity prevention or decay prevention within the indication that's permissible. So you get beyond the motion to dismiss stage at summary judgment if they can provide evidence that eliminates any any really material question of fact, wouldn't the summary judgment ruling be the same as the preemption ruling at that point? The effect would be the same. The case would lose. But I still don't think it's just like if if you allege that you have seventy five thousand dollars in controversy, but ultimately you can't prove damages. It's not that the court lacked jurisdiction. It's that the claim failed on the merits. And I would I would think of it in a similar term. It's not that the claim suddenly becomes preempted at the summary judgment stage. It's that it fails under an identical nonpreemptive state and federal standard. Right. Because it's it's it's not misleading under state law either. It is not prohibited by state law. Both state law and federal law say this claim is fine. So it doesn't become preempted. It just fails. So then the one thing that I'd like to address for the last time is this question of silence. The FDA hasn't said anything about restores, rebuilds or repairs. And this court addressed that circumstance in Astiana. And it said silence does not mean that you have to have that false misleading means a list of specifically prohibited statements. It means false and misleading. And as this court held in Reed, courts are competent to determine that without the guidance from the FDA. Thank you for your time. Are you over time? But just a minute. I want to make sure that everybody gets a chance to have their questions addressed. Thank you. Thank you, Your Honor. The matter is submitted."
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"stt_transcript": "May it please the court. Good morning, Your Honors. My name is Justin Strother from Diamond McCarthy and I represent Unlockd, the plaintiff appellant. There are two areas that I would like to cover in my argument. Oh, thank you. I would like to reserve three minutes for rebuttal, please. All right. I'll try to help you out, but keep your eye on the clock, please. Will do. There are two areas I would like to cover today in my argument. The first is that the district court ruled against Unlockd at the pleading stage on one ground only, and that is, according to the district court, that Unlockd had failed to plead injury to the marketplace and had only pleaded injury to itself. We believe that is demonstrably false. The second area is, while the district court did not address any of Google's other arguments, Google does ask this court to uphold the dismissal on alternative grounds, the primary one being that, according to Google, Unlockd's complaint does not fit into the Aspen skiing exception. So that would be my second area. Moving on to antitrust injury first, the district court wrote that Unlockd, and I quote, offered no factual support from which the court could assume that harm to plaintiff is somehow tantamount to harm to this entire market. Contrary to what the district court wrote, Unlockd not only plausibly pleaded injury to the marketplace, it did so thoroughly and explicitly. What's the market? Digital advertising. What's the breadth of your market? Well, we pleaded alternatively. The breadth of the market is all digital advertising of the main two varieties, which would be on any sort of digital instruments, including mobile phones, which is our case. Nationwide and some other foreign countries as well. Six total countries, but alternatively just the United States. That's a very broad market. Broad is one word, Your Honor. The market is the market with regard to digital advertising. Is it a market where similar products are now currently being offered? Similar, yes, Your Honor. For example, Google still is offering digital advertising through its search mechanisms. So tell me again where the district court erred. You're boxed out of the market, a very big market, in which similar products are still currently being offered. So what's the injury to the market versus the injury to unlock? Certainly, Your Honor. In the digital advertising marketplace, there are two varieties of customers. So I'd like to focus there and demonstrate how the injury reaches those customers, which I think is something that this court's precedent invites. The two varieties of customers are, number one, the end user, the human being who is viewing the advertisement on their digital device. The other variety of customer or consumer would be the advertisers who are buying ad space in which to digitally have their advertisements published to these end consumers. Both of those are customers in the digital advertising marketplace, and both of them were harmed. The two most evident places we point this out in our complaint are with regard to the end user. Unlock's advertising system had the end users receiving rewards. They were monetarily being rewarded for opting into the system where they would view these advertisements. And by 2018, that figure reached $122 million, and it was projected to be almost a half billion dollars in the next five years. After Unlock was banned by Google, that number went down to zero. So that is a demonstrable injury directly to the consumer's pocketbook, and that alone should carry the day. That is one solid injury, and that's all that Unlock has to do. With regard to the advertisers, they were similarly harmed. The advertisers pay a rate for digital advertising that's called CPM, which somehow stands for thousands of impressions, a thousand views of an advertisement. In the years from 2018 to 2022, beginning with Unlock's banning, that price that advertisers paid for similar advertising in the digital advertising marketplace tripled or almost tripled. That is a significant harm felt by the main participants in this marketplace. It has nothing to do with injury to not just Unlock, but competitors similarly situated to Unlock, Your Honor. And so we believe that those two injuries carry the day. There are multiple other injuries through dozens and dozens of paragraphs, but I'm going to move on in the interest of time. I'd like to move on to the Aspen skiing exception. To meet the Aspen skiing exception, Unlock has to plead the following, that a monopolist gave up a voluntary and profitable course of dealing in a way that sacrifices short-term profit that makes no economic sense except to exclude a competitor. And this is precisely what Unlock pleaded. There was definitely a two-year voluntary course of dealing. Google initially approved Unlock's apps and then investigated over a period of a couple of years, intermittently reversing course and saying, we need to know more. This was not just a mechanical review of Unlock's business practices and their app, but face-to-face meetings and conversations in various places, including Dublin, at a very high level. These are not just the people at the very bottom at Google who are every single time Google looked, does Unlock meet our policies, and it found it did. It only reversed course when Unlock became such a big threat and was about to have an IPO, enabling it to become an even bigger threat, to pull more advertisers over to Unlock's superior product and away from Google's inferior product. And I'd like to explain what I mean by that briefly. The way that a digital advertising product can best be reviewed is click-through rate. How many times does someone see an ad and actually click on it and go do something on that? Unlock's click-through rate ultimately not only exceeded the marketplace average, but it exceeded Google's average. And so Unlock became a significant threat and was beginning to be moneyed in the marketplace and was going to be able to threaten more and more Google. This relationship was profitable to Google. Google received somewhere between 20 and 30 percent of the share of Unlock's revenue, and so with Google banning Unlock, Google was itself hurt, and that is what Aspen Skiing asked to have happen. Aspen Skiing also says, but wait, is there a valid business reason that would otherwise explain a monopolist allowing themselves to be financially harmed? Google did in its policy suggest that consumer experience was a policy reason to support it banning Unlock, but that is pretext. And pretext is something that Unlock pleaded in great detail. And I'd like to, I know I'm down to my three minutes, but I'm going to take one more minute, I think. The idea of pretext comes not just from this court's precedent, including in the ImageTech versus Kodak case, and also more recently the coronavirus reporter case in 2023. It goes all the way back to Aspen Skiing. That case went to the U.S. Supreme Court only after a jury trial and not at the pleading stage. And the defendant in that case gave a pretextual reason for refusing to continue to participate in a multi-ski area pass. And one of its reasons was, hey, this is administratively uncumbersome. And that's because we don't want to take coupons at our booths to allow for these multi-area passes to be used. The Supreme Court looked at that and said, I'm sorry, that's pretextual, that's no reason at all. You are using coupons at your other areas. That's exactly the same sort of pretext that Unlock has pleaded here, which is when Unlock was banned, Google did allow a smaller competitor named Poster to continue on. And after Google was banned, and this is another way Google injured itself, Google dug into its short-term pockets to invest in a competitor called Glance that was going to be doing the exact same thing as Unlock. Here, I'll reserve the rest of my time. Thank you. Good morning, Your Honors. May it please the Court, Dee Bancel, on behalf of Appellee Google. The threshold question in any private antitrust case is whether the plaintiff has antitrust standing such that they can seek redress under the antitrust laws. The plaintiff's answer is no. The plaintiff's answer is no. Despite multiple opportunities, Unlock has failed to plausibly allege that it has such standing because it has not plausibly alleged antitrust injury. We therefore ask this panel to please affirm the lower court, and in the alternative, we ask the panel to affirm on the grounds that plaintiffs have failed to plausibly plead a Section 2 violation. Even if all of Unlock's allegations are taken as true, those allegations are insufficient to constitute antitrust injury for four independent reasons. One, as my friend just discussed, Unlock only pled harm to itself, not harm to competition as a whole. Two, its allegations are conclusory, unspecified by any fact, unsupported. Three, even if all of those allegations are taken together and all inferences are drawn in favor of the plaintiff, they do not hold together to plead a plausible theory of injury. And four, Unlock pleads allegations of harm in markets in which they do not participate and which have nothing to do with this litigation. There is no doubt that Unlock's complaint describes losses to itself. It describes its lost partnerships, its lost revenues, its lost potential. But where it fails is when it tries to describe harm to the marketplace. As the lower court aptly wrote, and this is at 3 ER 366, Unlock's injury argument collapses into a single conclusory point. Consumers were harmed because they were unable to benefit from Unlock's innovative business model. There's certainly that, but counsel did talk about the harm to consumers and to advertisers. To what extent at this stage do we consider sort of the magnitude of the harm? I mean, I think the difficulty for their case is the bigger the marketplace with the number of players involved, the harder it is to demonstrate antitrust injury, but it's not only the revenues to Unlock, right? There are some consumer allegations of consumer and advertisers who are deprived of the opportunity to avail themselves of Unlock's services. You're exactly right, Your Honor. They have a real problem here, given that the market they have pled is astonishingly broad, okay? This is a digital advertising market that includes every company that offers digital advertising that can be consumed over the internet in six countries, and they would like this court to believe that the removal of a singular app is going to have any impact on prices, output, innovation. So plaintiff's counsel talked about the rewards, for example, the loss of the rewards to plaintiffs, but they have conceded that every player in this market is a reasonable substitute. If a user cannot get the rewards from they have conceded that they can get similar benefits from any of the players in that very, very broad market. So their legal theory doesn't hold together, and this circuit's opinion in Summers v. Apple is similar in that the theory of harm was not plausible, and this circuit found that that was sufficient to not allow the claim to go forward. In addition, the allegations that do put forth about prices, for example, there is a singular paragraph that talks about prices potentially going up, and the lower court correctly pointed out that is the only paragraph that comes even remotely close to alleging something akin to harm, but there are some real problems with that paragraph. So first, and this is at paragraph 247, which your Honor is at the record at 1ER85. So that paragraph, first, it does not tell us the geographic range in which the prices go up. Second, it doesn't tell us what the precise conduct is that resulted in the supposed price increase. For example, they say, exclusion of unlocked from the digital advertising market and Google's other competitive, anti-competitive conduct. As Judge Gilliam correctly wrote, there is no way to link any harm to any injury. And then the third problem is that we don't know what types of ads within this very broad market supposedly had this price increase. They talk about digital ads for the type that Unlocked was supplying, but of course that is one specific type of advertising in the very broad market that they alleged. And so their allegations suffer from being conclusory and also for not putting together a legal theory that can plausibly plead injury. As the circuit said on this very point, as the circuit said in Liz Shockley, although proof of plaintiff's allegations would establish harm to their business interests, such proof would not standing alone show injury to competition as a whole. Now, as we understand plaintiff's papers, they have two responses. First, they argue that their harm is the antitrust injury. We've already addressed that. Second, they talk about a range of harms that they supposedly suffered in other markets. And here, they import paragraphs from the Department of Justice's complaint in a completely separate litigation in the Eastern District of Virginia. However, Unlocked does not participate in those markets. And this circuit is clear that a plaintiff cannot suffer harm in markets in which they don't compete. And to highlight this point, Your Honor, we would point the court to 2ER156 footnote 4. And that's where the Department of Justice very clearly explains that their markets are limited to web advertising. And within that footnote, they expressly carve out digital advertising, sorry, mobile, digital advertising on mobile apps. And of course, Unlocked only offers advertising on mobile apps. And so, as this circuit has said, a plaintiff cannot allege injury in markets in which they do not compete. Your Honor, I have more that I can say unless this panel has any questions. Otherwise, I'm happy to sit down. Let me see if my colleagues have any additional questions. All right. Thank you, counsel. Thank you. Your Honor, let me begin by saying my friend criticized the one paragraph and said, but there's just one paragraph that talks about price. That's all that we need. In fact, we don't even need price to prove injury to the marketplace, but we did. But I find it not a fair criticism to say, but it was only in one paragraph. That's more than enough. And the criticisms of that one paragraph would go to the weight of that assertion and not the fact or not the quality of whether it was plausible or not. Geographically, that goes to weight. The type of injury or the type of advertisement that was being priced, we clearly pleaded that it was the type that Unlocked was selling. And finally, the effect on the price and what the precise effect was goes to an issue of magnitude of effect, not existence of effect. We believe that under PLS.com, this court's precedent, that removing a nation competitor from the marketplace can itself equal injury to competition. But as counsel has pointed out, and less shockingly, it need not. And so this court can decide on the basis alone that Unlocked was removed that there was injury. However, the court can also decide that that alone does not qualify. We have given this court and other reasons to find that the marketplace was injured. When I hear the lower court or my friend say that there were no allegations of injury to the marketplace, I really don't know how they could possibly say that because they are ignoring what is plainly pleaded there and are dispensing with thorough and plausible pleadings as conclusory when we have metrics and data to back up what we say the injury to the marketplace is. Thank you. All right. Thank you very much to both sides for the argument this morning. The matter is submitted."
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"stt_transcript": "Case No. 25994. Good morning. May it please the Court. My name is Alexander Taubes. I am the attorney for the petitioner appellant Vishal Dhar. This is a case about affirmative misadvice, express misrepresentation about immigration consequences, which the district court found deficient. Just let them get out. My apologies. We want to give you our full attention. Yes. Thank you. Sorry. Go ahead. Thank you. And I also neglected to mention I'm reserving three minutes for rebuttal. Yeah. This case is about expressed misrepresentation, which, as Justice Alito stated in his concurrence in Padilla, can hardly be the basis for a voluntary and intelligent decision. What was the misrepresentation you referred to? The misrepresentation was that deportation as a consequence of this case was linked in any way to Mr. Dhar's sentence. That is, that he would have a better chance of avoiding deportation if he got a probationary sentence as opposed to an incarceratory sentence. Right. And what that does to a defendant is it tells the defendant that if you want to work on your immigration consequences, if that's the thing that's most important to you, plead guilty and start working on sentencing. Pay back the restitution. Get all of, you know, take full responsibility. Beg the judge for a probationary sentence. Because that's the only way you can improve your immigration chances. So he didn't get a — he got an incarcerated sentence. He got a year in jail. True, but — So what was — I don't understand what your argument is. The argument is — The argument was that he was told that, look, if you try to pay back your — pay your fine, pay your restitution and so forth, we may be able to get you a probationary sentence. And the problem is that the harm occurs at the plea because it's at the plea where any battle could be had that could potentially help his immigration situation. Well, at the plea, he was sworn in, right? That is true. He was under oath. And by the way, your client was a wealthy, sophisticated businessman. Is that right? Yes. With a college degree. Yes. Okay. So at the sentencing, he was sworn in. He was under oath. And the judge said under federal law, non-citizens are subject to removal and that removal is presumptively mandatory. And your client said he understood this. And he was told, by my count, eight times that his — the judgment in this case would lead to removal. I don't understand. What did he claim he didn't understand? He didn't understand the meaning of words like presumptively mandatory because those are legal words. That's what his lawyer was there to explain to him. Precisely. And his lawyer misrepresented. The judge asked him whether you've got any questions, whether there's anything you don't understand. And this college-educated, wealthy man said, I understand. Well, you don't know what you don't know. You rely on the people you pay more than $100,000 to tell you what those words mean. Right. And if they tell you that what it means is that it's not for sure, because if you get a probationary sentence, you could avoid deportation. Yeah, but he didn't get a probationary sentence. He was sentenced to jail. So what was the confusion? At the plea, he had a choice. Either try to get a probationary sentence, which admittedly he didn't get, or try to avoid the conviction that would seal the fate of his immigration. The consequences of the plea were made, it seems to me, pellucid in his sentencing memorandum, his own sentencing memorandum. The sentencing memorandum contains quite a bit of hedging and never addresses the point which expressly was represented to him, which is that the sentence, first of all, that the sentence at all would affect deportation, which it does not. But second, that if you achieve what you're trying to get, the sentencing memorandum is clearly making a pitch for probation. So the memorandum says he was taking responsibility, knowing that he likely will be deported from the United States at the conclusion of the matter. And that's, that word might is very important because legally it wasn't. Knowing that he will likely be deported from the United States at the conclusion of the matter. Likely based on what? Likely based on his sentence or likely based on whether or not the immigration authorities are so overworked that they managed to potentially. I'm just going to repeat it and tell me how to read it any other way than if I am told or if you were told, sir, that if you that you're taking responsibility, knowing that you're likely you likely will be deported from the United States at the conclusion of the matter. I think I think that that is certainly clear. Well, likely indicates a probability. It doesn't indicate the certainty legally that nothing that would have happened at that sentencing would have changed the legal status of his immigration case. Likely leaves open the possibility that perhaps if the court does what he asks, it gives a probationary sentence. He will not face deportation. And the alleged misadvice that he was given happened before the hearing, right? Correct. And but after he had agreed, I guess, in principle to enter the agreement. Yes. And so what's your theory as to how the misadvice was prejudicial that if he understood it, he was given all these warnings that were pretty clear before and after. What was the misadvice that somehow trumped what was otherwise made clear before and after? The fact that there was a meeting in April after he had agreed in principle in March, but before the plea in May, which the focus of the meeting was immigration. It demonstrates how important immigration was to him. And according to our side, and there is a dispute which perhaps should be resolved by evidentiary hearing, at that critical meeting, he was told that enough worrying about the plea. The way to avoid deportation is to avoid going to jail. And that sentencing, he says. He didn't avoid going to jail. But he couldn't even have the opportunity to work on his immigration case because once he pled guilty, his fate was sealed whether he went to jail or not. So it made no difference at that point. The constitutional harm was at the plea where he lost any opportunity to any more contest being deported. All he had to say was, I don't – I choose not to plea. I'll go to trial. His lawyers had advised him wrongly about what those consequences would be. What was the wrong advice about the – what was the wrong advice you were converting to? The wrong advice was that he was not told, even if you get probation, you'll still be deported, that it makes no difference whether you get probation or prison. That was a misrepresentation, as the district court found, because the statute does not make any distinction based on probation or incarceration. And so once you think that getting probation might help you with deportation, that holds it open as the only path to avoid it. Whereas in reality, at the time of the plea, the only path to avoid deportation was to take his case to trial or negotiate a different resolution. So he was told wrongly what the only path was. Even though, under the false framework he was given, he would have ultimately been deported anyway, he was given that false framework before his decision. So we'll hear from the government, and you will have three minutes. Mr. Huang. Good morning. Very pleased to court. I'm David Huang, representing the United States. This is a straightforward, ineffective assistance claim to resolve on the issue of Strickland prejudice. I'd like to make two points. First, whatever misadvice that trial counsel allegedly provided about the immigration consequences of Mr. Dar's guilty plea, the district court properly concluded that he suffered no prejudice because of the accurate and consistent advisements that he received multiple times at various junctures during the underlying proceedings. These included the clear advisements in his plea agreement, in his own sworn statement at the plea colloquy, his counsel's own advice before this supposed April 16th meeting, and confirmed by multiple statements in the PSR, in Mr. Dar's sentencing memo, and in the sentencing hearing itself. Mr. Dar's only complaining about his supposed ignorance after the fact, which is not corroborated by any contemporaneous evidence. Second, to the extent there was any misadvice, it was harmless. The alleged misadvice here was conditional. If you don't get prison time, you won't get deported. When you say harmless, you mean there was no prejudice? It's under no prejudice, but I think the concept is almost akin to like a harmless kind of thing because the misadvice never came to fruition in the sense that he did get prison time. So the fact that he is now facing deportation — Mr. Solano, I'm not sure that I understand that. Sure. Because that's not really part of Strickland. Strickland does not have a harmlessness element separate, apart from the lack of prejudice. I agree, Your Honor. It is another argument that the government is making in arguing that there was no prejudice. Sure. That there was no prejudice. And the district court relied on both of these sort of arguments in denying the petition, and because there was no error, the judgment should be a harmless one. So let me ask you a question. Sure. So what if we didn't have the plea—this is the beginning, but go with me. Sure. What if we didn't have the plea colloquy or the sentencing at random? Okay. And suppose that the only evidence that existed that he understood the deportation consequences of this plea was the language of the plea agreement. Would that be enough on its own to assure us that he was not prejudiced? Yes, Your Honor. I think the language in the plea agreement, I think, is very specific. It is not like some of the cases that my colleague at the bar summarizes or has pointed out that those are very generic warnings. The plea agreement here indicates that removal here is presumptively mandatory. Where is the plea? That's at GA-7. Okay. And then, again, in that same waiver, the defendant nevertheless affirms that he wants to plead guilty regardless of any immigration consequences that the guilty plea may entail, even if the consequence is automatic removal from the United States, and that's at GA-8. And so I think if you combine that with Mr. Dar's, the importance of immigration proceedings that Mr. Dar claims that he was considering, I think it is reasonable to conclude that he would have been laser-focused on this waiver provision in the plea agreement. That waiver existed in the drafts that the government sent to defense before April 16th. It was the same language at the plea hearing itself in May of 2024. So both before and after the supposed April 16th meeting, that language was there and did not change. And so we get to the plea hearing, and Mr. Dar is placed under oath. He is sworn to tell the truth, and there is not a peep from him about any misapprehension, any confusion, any questions for the court or for the counsel about immigration proceedings or about this waiver. In fact, he affirmatively indicates that he understands the plea agreement and even in response to the court's specific questioning about this provision, as well as the government's proffer about this particular waiver. So unlike in, say, Lee, which there was contemporaneous evidence where the defendant there would seem surprised and say, what do you mean? I don't understand. I think the Supreme Court rightfully looked at that as indication of what was truly in the petitioner's head at the time of the plea. Here, all we have is Mr. Dar's after-the-fact, self-serving, sworn statements. And as the Supreme Court said in Allison, the sworn statements at a plea hearing are supposed to be treated with solemn respect. And so Mr. Dar cannot pick and choose which sworn statements he likes better. He's kind of saying that the sworn statements at the plea, even though it's a really, really important moment in my life, oh, that was just boilerplate. Those were just generic. Somehow I didn't really pay attention or I relied on my counsel's specific advice, of which there is no contemporaneous cooperative evidence to support that. I'm going to instead say, after the fact, after I got a prison sentence, here are my sworn, here's my sworn affidavit, to sort of paint a different picture. And I think Judge Dunhill was correct in finding there was no prejudice. I think you say just on the first part of the statement that you actually challenge that. Yes, Your Honor. Although today I think maybe prudently you're focused on prejudice. And I think the challenge is premised on the notion that there's no, he has not provided any evidence that this misadvice actually occurred or that Judge Underhill wrongly credited his testimony. I think the error is real. Yeah, I think it's a legal error that Judge Underhill committed. That's what I'm trying to understand. Sure. So I think what Judge Underhill found in his opinion was that he assumed that all, that everything in Mr. Dar's statement's affidavit were true. Yes. He assumed that, he presumed that in the face of the fact that there was no sworn affidavit provided by the government, say from Polsinelli, to sort of counter that. Well, you had the email from Polsinelli. We did, and that was actually obtained by defense counsel. And so we provided that to show that there was no corroboration, certainly, from Polsinelli. Yes, it was not sworn, but that's something the court could have. Remember, the bar is submitting this. This is under Rule 11, right? Correct, Your Honor. And I think Judge Underhill also didn't, I think, properly consider Mr. Dar's own sworn statements in sort of contrast to his after-the-fact affidavit. So your position is that Judge Underhill on the departure from got it wrong? Correct, Your Honor. Instead of assuming, he certainly could have assumed for the purposes of his decision that he just assumed that there was deficiency, or he didn't even need to address that. But he did address that on the merits. But it seemed as if it was an intention with his prejudice findings, because he's saying that he's relying only on this affidavit, the post-plea, the post-conviction affidavit, to find there's a deficiency, right? But then he relies on all this contemporaneous evidence to find that there was no prejudice, and that should have been weighed at the time that he ---- Let me ask you the following, then. Sure. Now that I think somewhat more clearly understand the argument that you're making as to the first prong, is it the government's view that if he is ---- if Mr. Dar is accurately describing the advice that he received from counsel, whoever that was, about the consequences of pleading guilty, is it the government's view that that advice was right or that that advice was wrong? Do you have a view on that? I would agree that if what counsel said was that if you receive a probationary sentence, you will not be deported, I would agree that that was wrong and constitutionally infirm. No question about that. But I think there is ---- as we pointed out in our brief, there is some distinction, I think, between whether someone is deportable as a legal matter and whether someone will be deported, which is the consequence of that. And I think the Dar's arguments throughout sort of mixes and matches deportation with deportability. And so it may be the case, and we don't know for sure, that counsel was advising Mr. Dar about the chances of deportation as opposed to his deportability. And that's never made clear, and we point that out in pages 49 and 50 of our brief. Okay. If there are no further questions. Thank you. Thank you very much. Mr. Taubes. Am I pronouncing that correctly, Mr. Taubes? Taubes. Taubes, Taubes. Thank you, Your Honor. I want to point to two pieces of evidence that came before I was ever retained that I think corroborate this false conditional framework. So this is the V.U.S. We look to contemporaneous evidence to substantiate a defendant's express preferences? Yeah. I believe that at the sentencing, there's two points, one at Government Appendix 154, where Mr. Dar says a real consequence of going to prison is probation. Of going to prison. That's consistent. Where is that? That's at page 154 of the Government Appendix. Okay. And then also in terms of prejudice, the fact that the Court says at pages 172 to 173 of the Government Appendix, the Court asks about the immigration consequences, and nobody seems to know or no clear at the sentencing also. And what that, what it demonstrates is that it was not, pages 172 to 173 demonstrate that it was not the priority of the government to ensure that Mr. Dar was to be deported. The government didn't profess any knowledge about how that was going to be decided. But Mr. Dar has been consistent that throughout, and some of the contemporaneous pre-plea e-mails are talking about immigration and not talking about how long am I going to spend in prison. They're not talking about prison conditions. It's the, you should, at page 8054 of our appendix, you should, his counsel says you should retain an immigration attorney, which is one of the things in Padilla they say you should not be telling your criminal defense clients to do. And then in April, there is this meeting where the consensus is that avoiding prison time will avoid deportation, which is what he says later at his sentencing, that if I go to prison, I will, I will be deported. So he doesn't, look, so that's from, this is the 154. So he says a real consequence of going to prison is deportation. Yes. A real consequence of prison. Not a consequence of his conviction. But that, that's evidence that. I guess, I guess, I guess. When would he know that he was not going to go to prison? Well, he believed that this, a guilty plea in a sentencing hearing was his best chance. He ultimately didn't, he ultimately didn't get what he wanted, but it was his best chance. When in reality, true advice would have told you, your only chance is to fix this Once you plea, nothing's going to change your immigration. So he's prejudiced at that moment of the pleaing where he doesn't know that he's giving up any chance to contest deportation. He is told, by my count, eight different times that it is a strong likelihood of being deported, presumptively mandatory, over and over and over again. What is it he didn't, I don't, you've got to help me. What is it that you think he was misled about? It was that at the time of his plea, he did not realize that nothing that happened after he pled guilty would ever change the immigration consequences. Nothing after pleading guilty could change the immigration consequences for him, that the fate was sealed at that moment. That's what he knew all along. But it's not because when a defendant is facing the decision of whether to plea, they're facing this decision of whether to keep holding out and keep fighting the case or to give up and hope for the best at sentencing. And he didn't know what he was giving up by pleading guilty, because he didn't know that his fate was sealed. And that's what the whole plea agreement told him, page after page. And that's what the plea of colloquy before the judge told him, question and answer after question and answer. The plea agreement also told him that he can rely on his attorneys, which is why right, that he could rely on his attorneys, because right after the presumptively mandatory language, Government Appendix 8, it states that claims of ineffective assistance of counsel are not being waived. Which tells someone, well, if I'm not waiving any claims about what my counsel told me, then I can trust what my counsel told me. So you're saying he went into the plea colloquy and testified under oath, but in his back pocket was the possibility of a 2255? Not knowingly. Is that what you're saying? Not knowingly, but because he was affirmatively misled at that time. You haven't established that. I agree. You really should stop saying that. I agree. Well, it's what the district court found, was that he was misled and that he was given that advice. It's not just me saying that. But additionally, I would agree with Brother Counsel on this point, that perhaps the better course for the district court was to hold an evidentiary hearing, where the court could hear from defense counsel as well as Mr. Garner. How would that fit with the Homelessness Analysis? It would because it would allow the court to assess the credibility of Mr. Darr as to whether he would have held out and insisted on a trial instead of pleading guilty if he had known the true law at the time that he pled guilty. Well, thank you very much. Thank you, Your Honors. I gave you a hard time, but that's our draw. It's greatly appreciated. Thank you, Your Honors. David. Good job. Thank you. "
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"stt_transcript": "cases number 25414 and 25416. Good morning, Your Honors, and may it please the Court, my name is Daniel Noble of KKLLLP, and I represent the defendant appellant Mark Grayson. I did not represent Mr. Grayson below. I'd like to reserve two minutes for rebuttal. In this extremely weak alleged gun toss case, this Court should reverse the conviction for insufficiency of the evidence or, at a minimum, vacate and remand for a new trial based on multiple evidentiary errors that the District Court committed. And, Your Honors, that's where I'd like to start this morning is with the evidentiary errors. Beginning first with Officer Breitman's testimony about why she was not able to recover fingerprints from the firearm in question and why generally, more importantly, it's difficult to obtain fingerprints from firearms. That testimony was the subject of expert testimony that should have been subject to the reliability and other requirements of Rule 702. And instead, over the defense's objection, the District Court erroneously admitted it as lay opinion testimony under 701. Is that kind of common sense? I mean, you know, my iPhone's going to have more fingerprints than, you know, something that has ridges all over it. And it was a question about that sort of intuition, wasn't it? I would disagree, Your Honor. I believe your statement, and it's the argument that the government puts forth in its brief about lay opinion or lay knowledge of the fact that a glossy surface like your iPhone case or your iPhone cover or a mirror would, fingerprints would appear on such a surface. I think that is properly the subject of lay testimony. But that's not what the question was that was posed to Officer Breitman. The question was, is in your experience, first of all, how common is it to recover fingerprints from the surfaces of firearms? The question about recoverability is key because that is expert testimony. The recoverability of fingerprints — Why isn't that anything that just about any NYPD detective would know? It's not something that anybody would know. It's actually very — That's why any New York police detective would know. Yes, Judge Parker. It's not something that is within the kin of any officer's testimony. The forensic ability — Almost. They take new fingerprints all the time. Well, there was no testimony here about this particular officer's experience obtaining fingerprints. She testified she's taken tons of DNA swabs, but there was no testimony elicited to lay any foundation for her experience. And even if it had, that is what 702 is based upon. It's — this Court has said whenever the testimony is based on specialized knowledge or experience, then that is what is subject to Rule 702. And that's Judge Radji's opinion in the Garcia case. I would point her — the Court to. But there are other cases that this Court has held where law enforcement witnesses testify based in part on their experience and opine on the likelihood of something or the commonality of something occurring, that that is expert testimony. And I'd point the courts and — Given the other evidence against her client, what's your theory as to how, if this hadn't come in, the result would have changed? So, Your Honor, that's — the question is whether or not it was harmless or not. And so this was a preserved error. The question was, the standard of review is abuse of discretion. We submit it was abuse of discretion. If the Court were to accept that, then the question is, what are the harmless — was this harmless or not? And there we would point this Court to, again, Judge Radji's opinion in Garcia, which distills out the four factors for harmlessness in this context that the Court must consider. Of those four factors, we would argue that a minimum three of them favor heavily the defense. The first factor is what is the strength of the government's case. And we would submit that the government's case here was extremely weak. Obviously, we've raised an insufficiency of the evidence argument. We argue that, as a matter of law, it was — the jury could not rashly conclude beyond a reasonable doubt on this record that Mr. Grayson possessed the firearm. But setting that aside, the evidence I think the government would even have to concede is one of the weakest toss cases that I've seen. There was no eyewitness testimony. The body camera footage does not show Mr. Grayson's possession. But how wrong is it that it goes to an explanation for why fingerprints were not there? You still have the DNA evidence. But in those two issues — I'm glad you raised that — are intertwined, right? So the DNA evidence itself was extremely weak. The amount that was found on there was extremely weak. The DNA expert was not able to testify that it's an exact match. It was, you know, using the CR — SDR mix technology. And she could not rule out the possibility, which was the defense, that there could have been secondary transfer, right? And that's where the fingerprint evidence comes in. Because the absence of fingerprints is completely consistent with the defense's theory that this was secondary transfer. It would have bolstered the defense case to be able to argue to the jury that the government could not explain why there were no fingerprints. Instead, what did the government have? It had the inadmissible, improperly admitted testimony of a pseudo-expert. The DNA evidence suggested that that possibility of that theory being correct was one in millions. It was actually billions, Your Honor, so 26 billion. And I can see that. But these numbers for the SDR mix technology are astronomical, right? So I would point the Court to — there are other decisions which the government cites in this case of cases where this Court has reviewed SDR mix technology. And then we get into, like, the tens of billions, hundreds of billions range of probability. In those cases, though, there was also other corroboration of possession. And here we would submit there's no evidence of corroboration. The government's case, they admitted DNA evidence here was critical, which is why the fingerprint evidence, the fingerprint testimony, the improperly admitted expert testimony was so important here and so prejudicial. Let me go back to Parker's question about harmlessness. Because he might be right. You know, I've actually put on a number of witnesses, expert witnesses on fingerprinting. And different services have got different difficulties attached to the exercise. Exactly, Your Honor. But let me just go through the facts generally as I understand it. He runs. He's running. And there are at least two officers who see him throw an object. And they go to that particular part of the area where they saw him throw the object. And with their searchlights, their flashlights, they find a gun. And the object that they see, I think, if you can correct me if I'm wrong, appears to them at first sight to be a gun. And that's what they find. And then set aside the fingerprint issue, which I appreciate, but then, you know, there's this DNA evidence that makes it highly unlikely, well, makes it very likely that he touched that gun. Right? I would contest you there because there's the secondary transfer theory, which was not ruled out by the expert, and the government did not definitively prove it. Oh, I understand that. Yeah. But I don't know that the secondary transfer theory helps you. Well, it all goes to the strength of the government's case, right, which is a factor, a very, very important factor that this Court must consider on Garcia in getting to Judge Parker's question about harmlessness, right? And just to go to your question, Your Honor, if I could tick through the issues. The running, it's equivocal, right? So my client had crack cocaine on him. He had prior felony convictions. He'd ran multiple red lights. There's an equivocal, there's an equally plausible explanation for the running other than the fact that, like, they claimed he had the gun, right? So the running doesn't help the government. What is it that this does not help? The officer's testimony was completely incredible. I mean, Your Honor, respectfully, you said they testified that he threw the gun. That's true at trial, but if you watch the body camera footage, one of the officers repeatedly, the one who saw him, like, allegedly, he said drop something. He repeatedly says drop something. And what happens, if you look at the record carefully, when the officer, when they find the gun, his sergeant asks him, so you saw him throw the gun. And that, at that moment, he starts using the verb throw. And from then on, he uses throw. He doesn't use drop. He testifies to throw at trial. The second officer that you alluded to, Your Honor, she testified on the body camera footage, she says it couldn't fit, something couldn't fit under the fence, couldn't fit under the gate. She says that contemporaneously. But that didn't convince you. It might not have convinced us. But the jury accepted all of that beyond a reasonable standard. Well, Your Honor, I think that goes to the sufficiency argument where we understand that the burden is high. But here on this argument about the improper admission of testimony, harmlessness, the Court has to assess the strength of the government's case. And what we're arguing here is it was extremely weak and, therefore, very prejudicial to admit improperly the expert testimony, right? And then just if I could hit the other factors quickly. I see my time is up. But the other question is the importance of the evidence, which I think I've hit. It's extremely important to the defense case. Was it cumulative? No. There was no other testimony about why there were no fingerprints. It wasn't like there was another expert who was properly qualified who testified to that fact, and then you just have this one officer say something. That comes up in some cases. That's not this case. And then the last is the use by the prosecutor. And, yes, we concede, as the government points out, they didn't really highlight this in their summation or the rebuttal. But why not? They didn't have to because they could repeatedly harp on the critical DNA evidence without having to answer the question about why there were no fingerprints, which was extremely important to the defense's theory. And it completely undermined the defense's case. So with that, Your Honor, I'll save my time for rebuttals. Can you reserve some time for rebuttals? Yes. Thank you. Thank you very much. Good morning. Good morning. May it please the Court, my name is Varun Gamaste. I'm an assistant United States attorney in the Southern District of New York. I represent the United States on appeal, as well as in the district court below. This Court should affirm the appellant's conviction on both his latest criminal case and the associated violation of supervised release. On appeal, Grayson makes a sufficiency of the evidence challenge that his conviction was not supported by adequate evidence, and he raises concerns with several evidentiary rulings. All of these are meritless. First, with respect to the sufficiency of the evidence, the jury was presented with ample evidence on which to rely to conclude that Grayson possessed a gun on the evening of August 6, 2023. This, Grayson on appeal, asked this Court to do what it cannot, which is second-guess that jury's assessment of witness credibility and the inferences drawn from the evidence. Second, the district court appropriately exercised this. Let me back up. What's the evidence that he possessed a gun? Of course, Judge Parker. So there's an abundance of evidence in this case. I can walk through it in some detail. Mr. Grayson was driving a car on the night in question. He ran a red light. He was attempted to be stopped by two police officers who were in a vehicle. One of those officers testified at trial as to the nature of the stop. In fact, Mr. Grayson took off, did not stop for the police. He then led police. Consistent with having a lot of crack cocaine on him. What are the evidence of the gun? Eventually, Judge Parker, Mr. Grayson crashed that car on a one-way street going the wrong way. He then took off. He committed a lot of traffic violations. What about the gun? Of course, Your Honor. So there's several pieces of evidence that I would point to specifically. The first is that the two officers were pursuing Mr. Grayson on foot. As they were pursuing him, they made several observations that I think are indicative ultimately of Mr. Grayson having a gun. The first is when he passed the gate in question that is relevant in this case, one of the officers, Officer Alcantara, shouted, police, don't move. You can hear that on the body camera footage. At that moment, he saw, he testified that he saw Mr. Grayson make a downward throwing motion and saw an object leave his hand. The other officer who was pursuing, Officer Wright, similarly said that Mr. Grayson made a throwing motion similar to a Frisbee, flinging a Frisbee downward. And she also testified that she heard the sound of metal hitting the pavement. Subsequent to that, Your Honor, Mr. Grayson was ultimately arrested, but the moment after he was arrested, Officer Alcantara said to his colleagues he dropped something, and he went straight to the spot where they found the firearm, the gate, the playground gate. They searched nowhere else, and within two minutes, they located the gun inside the park. That entire. So why rely on the fingerprint evidence? In other words, you have the DNA evidence. I'm a little, having put on, you know, I mean, if you're right, then I wasted a lot of time putting on expert witnesses to show that, to have a fingerprint evidence admitted. I wasted a lot of time. So why, how is that late testimony? Why couldn't I, when I was, you know, in your position, just say, Officer Maven, is there a likelihood that you could lift fingerprints from a firearm? I don't think so. That doesn't make sense to me. So why isn't that error? I'm happy to address that, Judge Loyer. Okay. So if we look at the testimony itself of Officer Brightman, it was that she unsuccessfully tested the firearm for fingerprints, and based on her experience and the condition of the firearm, the condition of the firearm affects whether she can collect fingerprints. If it's smooth and glossy. Based on what experience? As an ECT officer, Your Honor. What's an ECT? Evidence collection team, Your Honor. And so part of her responsibilities that she testified to is showing up on scene repeatedly. She's done this hundreds, if not thousands of times, collecting DNA and potentially fingerprints from firearms. But she is not herself a fingerprint expert. No, she's not. And she doesn't claim to be, Your Honor. So what are the fingerprint experts at the NYPD headquarters do that's different from what she has? You know, I don't specifically know the answer to that question, Judge Loyer. But I, and I don't want to speculate on that question. But I think what I come back to in determining whether or not her testimony itself was lay opinion or expert testimony is the standard that this Court set forth in Regas, which is that the crux of the analysis is that the testimony resulted from a process of reasoning familiar in everyday life. And if you look at what Officer Brightman testified to, it was something that is purely based on common sense. As I think Judge Park noted before, it is if you touch a glossy surface like a TV or a mirror, you're much more likely to get fingerprints than if you touch a rough surface. A piece of paper. Tell me. Just tell me. What's the likelihood of a fingerprint appearing in a way that, a latent fingerprint appearing in a way that's usable and reliable? Again, I don't think that Officer Brightman testified to what would happen with a piece of paper, But I think that is distinct from a glossy surface like a TV screen or a mirror. I think the crux. Well, what I might suggest is, I don't know that I would rely on the fingerprint evidence. So, on the harmlessness argument, your argument is that it's overwhelming based on the video, which frankly, well, what is your argument with respect to that? It's based on the cumulative evidence that was presented to the jury, Your Honor. I mean, I can't, you know, I looked at this video and it gave me a headache because it's shaking. I understand. So I don't draw anything from that, but you're relying on the testimony? It's several things, Your Honor. It is the DNA evidence, obviously. There are aspects of the body camera that I think are incredibly important. Namely, the audio of Officer Alcantara shouting, police don't move. Additionally, obviously the recovery of the firearm itself is all on body camera footage, Your Honor. That entire sequence is on body camera footage. And then also it's contemporary. But the throwing, I mean, the camera is shaking. So I can't really see anything. That's true, Your Honor. But there is no requirement that there be video evidence of Mr. Grayson throwing a firearm. So you rely on the testimony of that? The testimony of contemporaneous testimony of two different officers about what occurred exactly when Mr. Grayson passed that playground gate, which was consistent across both of those officers. That in conjunction with things like the DNA evidence and the body camera footage showing the recovery of the firearm. And just to go back, I forgot to ask one question about the fingerprints. Can you point to a case where there was affirmative admitted testimony about the likelihood of lifting fingerprints from a firearm as lay opinion testimony rather than expert testimony? You mentioned Vegas. That's not a fingerprint case. Can you point to a case? I cannot point to a case about fingerprints specifically, Your Honor. What we've done in our brief, I think, is contrast this scenario, this specific scenario with examples in which this Court has found that an issue is sufficiently complex such that it is expert testimony. A testimony on the issue is expert testimony. And the case I would point this Court to is Haines. In that case, the police officer testified about the workings, the mechanism of a fuel tank. Something that we would submit is not within the knowledge of an everyday individual, Your Honor. In that case, the officer testified, as I said, about the mechanism, how it operates, and how it would be affected by drugs that were placed within the fuel tank. And I think this Court rightly there found that that was, in fact, the reasoning there, was rightly, was based on that officer's specialized experience. That is not what Officer Brightman testified to. She didn't testify to, for example, the presence of oils on someone's fingers and how that would affect whether or not there were fingerprints put on a firearm. She testified to a very simple proposition, Your Honor. And one that the government submits, as we have in our brief, was not something that the government, or frankly the defense, really pointed to throughout the rest of the trial. It wasn't something that the government ever raised again. And the only time that the defense raised it down at the district court level was in the context of contrasting it with DNA evidence to bolster their argument that there wasn't a sufficient amount of DNA that was collected from this firearm because unlike fingerprints they submitted on a gun that was rough in texture, we would expect there to be more DNA than there was. Can I ask just one more question? Is the harmlessness standard the same as sufficient? Like if, when we're looking at the fingerprint issue to determine if it's harmless, if we find that, if we also conclude that it was there sufficient evidence, does that resolve the harmlessness issue because that's what there was in the evidence or is there a separate inquiry that we have to make? I believe that would resolve it if the court were to find there was sufficient evidence. Absent this fingerprint. Yeah. Correct. It's because there was not something that wasn't there. Exactly. I think the harmlessness analysis even goes further, though, and also looks to such factors as Mr. Noble pointed out in the Garcia case, things like the treatment of the evidence by the prosecutor, the cumulative nature of the evidence as well. And we would submit at the very least the treatment of the evidence by the prosecutor in that analysis falls in the favor of the government. Thank you very much. Thank you, Your Honors. I'd like to begin just with the legal standard, Judge Park. I think it's actually a different inquiry. So, again, I'd point the court to Judge Radji's opinion in Garcia on this question. So it's Federal Rules of Evidence 103, and the court has to determine for the harmlessness, to find harmlessness that it didn't have a substantial and injurious effect on the jury's decision. And we would argue it did here because of the weakness of the government's case. And, Judge Parker, you pressed. But that because of part is just the sufficiency in the first argument. Isn't it the same? Yeah. But there are four factors that go into that inquiry, this Court has said. Again, you know, the strength of the evidence is just one of them. How important was it for the defense? Was it cumulative? And how did the prosecutors use it? So there's four factors that go into it, sufficiency being one or the strength of the case. And so, you know, we would submit, like, listen, they're intertwined inquiries, obviously. So the court has to assess the strength of the case. But we would submit that the harmlessness error legal analysis is separate from the sufficiency challenge. And to get to Judge Parker's question, I didn't hear any evidence from the prosecutor that put the gun in my client's hands, right? There's no eyewitness testimony. The body camera footage doesn't show him possessing a gun. It doesn't even show him throwing anything. The police officer's testimony changed. So he points to Officer Alcantara's testimony. Alcantara testified he dropped something. My client dropped something multiple times. You hear that contemporaneously on the body camera footage. At trial, the story changes. He threw something, to be consistent, right? Officer Wright testified on body camera footage says, it can't go under the gate. It can't go under the gate. Then at trial, she testifies, sure, the gun can go under the gate. The story changes. They're totally incredible. She was impeached multiple times. Not reliable testimony. And in any event, they didn't see him with the gun. The only evidence they have is the weak DNA evidence, the improperly admitted expert testimony that there's no fingerprints. And then you have the gun being found. But that's not evidence that my client possessed it. It was found inside of a park, 12 to 15 feet, underneath a little gap in a fence, 12 to 15 feet in. And the government presented no evidence, no expert testimony or reliable lay opinion testimony, I'd submit, that it's even physically possible. Like, my client is not a Knicks basketball player. He's running up, like, next to the fence, and he tosses something. Officer Wright testified. She heard a clink. She heard something hitting the chain link fence. At trial, again, she changes her testimony. She says it hits metal hitting concrete, right, which is consistent with her theory that somehow my client tossed this gun at full speed across his body. It goes under the fence a few inches of clearance and slides 12 or 15 feet into the park. It's incredible. And so that's why this error is so important. So I'll leave it at that, Your Honor, unless you have any questions. Thank you. Thank you. Okay. Thank you, Judge. Your Honor, may I just clarify one point, which is in response to Judge Park's question, I just wanted to make clear that the – what I was saying about the distinction between the sufficiency of the evidence and the harmlessness error analysis, to be clear, in the sufficiency of the evidence analysis, the court would account for any evidence that may have been improperly admitted, but that's not the case in the harmlessness context. It's two very different analyses. I appreciate that. Thank you, Your Honor. Thank you very much. Thank you both. You will reserve decision."
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"stt_transcript": "251873. Council, good morning. Good morning. May it please the Court, my name is LaDonna Lesher and I represent the Plaintiff Appellant, Kalanisa Wan. Ms. Wan seeks a partial vacatur of an order from the United States District Court, Eastern District of New York that granted summary judgment to Defendant Amazon and dismissed her first cause of action alleging that Amazon violated the New York City Human Rights Law by discriminating against Wan based on her status as a caregiver. Wan's appeal should be granted in its entirety because Wan met her burden under the New York City Human Rights Law. She demonstrated that Amazon treated her less well and that she had inferior terms, conditions, and privileges of employment. So let me stop you there. And I understand and I've come to understand over 15 years that the New York City Human Rights Law is a very expansive law, very protective of employee rights. But Section 8107 of the Human Rights Law makes it an unlawful discriminatory practice for an employer because of a caregiver status of any person to discriminate against such person in terms, conditions. What does because of mean under that Human Rights Law? What does that term mean? Because of her status as a caregiver, it's a protected group that the New York City Council sought to include in the protections of the New York City Human Rights Law, which, as Your Honor mentioned, is broad and it's a remedial statute. And the legislative history behind the statute shows that the City Council was concerned that caregivers were suffering discrimination, particularly in their employment. And particularly as you agree that there's got to be a causal nexus. In other words, that the discriminatory act, whatever it might be, has got to be caused by the fact that someone fits a particular protected characteristic caregiver status here. Because I'm trying to differentiate that and treat it less well there. Well, because it's a broad remedial statute, and as Your Honor mentioned, it's to be interpreted more broadly than its federal and state counterparts. I understand that. Just help me just unpackage the following. I can be treated less well than you, but it's not because of my gender or my race. It's because of something else. I'm just treated less well. So what is because of? What is that term doing? In this particular situation, it's because of their caregiving duties. So in this situation, Ms. Wan worked for Amazon and at the time was a single parent of a seven-year-old son who she had sold custody of. She had requested a schedule modification, minor schedule modification to arrive 15 minutes later than her scheduled start time and to leave work 15 minutes earlier than her scheduled end time so that she could pick up her son from school. Why isn't it, and I think I know where you're going, but if I'm wrong, you'll correct me, I'm sure. Why isn't it, in this case, because she is not seeking an educational benefit as opposed to because she's a caregiver? Because interpreting the statute that way in Wan's situation would render the adding of caregivers to the protection of the New York City human rights law meaningless. If I'm looking at the legislative history, the legislature was very... So let's say the following, and I'm just going to use race. So let's say that I want to benefit from this, but there are a bunch of people who actually benefit from this flexible time policy that Amazon has in place who are of different races, including, by the way, my race. There are black people, white people, and so on. How could you possibly under those, how could I possibly under those circumstances say, well, that's discriminating against me because of my race? If you were treated less well, as Ms. Wan was treated less well, and it was because of... No, no, no, no, but if it's a basket of people, right? Let's take this case. Let's say that, and we don't know, but if it's a basket of people who are seeking education, and some of them are caregivers, some of them are not, but all of them who seek an education, fit the policy, they're fine, and I'm just a caregiver who is not trying to get an education, not trying to get an education. Tell me how that, where is the causal nexus to that? Because the point of adding caregivers to the statute was to protect them when they needed that protection for their caregiving duties, and in this situation, Ms. Wan was denied the same type of schedule request that Amazon decided, made a conscious decision it was going to provide to other employees for non-caregiving reasons, but that it denied to Ms. Wan simply because she needed it for caregiving. So that would be, you give the same response then to Amazon's statement that it would have granted Wan flexible scheduling if she were also a student? Correct. If she, if Ms. Wan had, Amazon admits that it would have granted the schedule request for Ms. Wan if she sought it for herself, but Amazon acknowledges and it admits that it would, the reason it denied it was simply because she needed it for her caregiving duties, and if you look at the legislative history, the strong legislative history, and the testimony that went into deciding the protections that would be afforded to caregivers, they specifically mentioned minor schedule adjustments as being something that caregivers had suffered discrimination on in their employment. Well, is there any evidence of a specific individual, another employee who is similarly situated who received the scheduling request that Ms. Wan asked for? Yes. In the record it shows in the request that we had for admissions, Amazon admitted that it has provided that type of scheduling request for non-caregiving duties to other employees, and that is on page 603 of the record, and 605. It actually goes from 601 to 605. If I recall what you're talking about, that's at a policy level though. I'm wondering if there were any specific individuals who were identified as similarly situated and received the accommodation that Ms. Wan asked for. They specifically admitted that there was at least one other employee that received that schedule modification, that type of schedule modification, that Ms. Wan had requested, but it was for non-caregiving duties. It was for that person to be able to attend school. What page would you point to? That is on the record at A605, and it was A605, and that was an admission that was a response to a request for admissions that was served on the parties. That is at the policy level. I mean, obviously, I think that they are admitting. If you do not seek, if you're seeking the benefit of this policy for any reason, it's not a policy that, frankly, other than the fact that you go to school, you don't get the benefit of the policy. I think what you're saying is that that policy itself is discriminatory, just categorically under the human rights law, and that it should have devised a policy that says what? Well, if they're going to make the conscious decision to have that policy and offer those types of benefits to employees for non-caregiving reasons, then they need to offer it also to employees for caregiving reasons, as the statute requires. Well, but the statute also protects people who fit other categories, so it could say, I'm just kidding, all European Americans. So if you're a white, we're going to give it to you as well. And then the statute or the policy would not, would be rendered meaningless almost, because it would be so capacious. I'm just trying to understand. Again, I'm sympathetic. I'm just trying to understand what you're saying. Well, I would respectfully submit that legislative history is key in this in showing, and also the guidance from the New York City Commission on Human Rights, which is charged with enforcing and administering the statute. They have said that employers are not required to provide reasonable accommodations for caregiving duties, but specifically, they specifically say that if an employer is going to offer a benefit of employment like this type of policy, and they specifically refer to a minor schedule adjustment for non-caregiving duties, then they have to offer that same benefit to caregivers for caregiving duties, because otherwise it would be being treated less well. And I understand my time is up, but I just want to point out to a couple of examples that were given. One, in the commission's guidance, they referred to an employer who, I mean, that had given an accommodation, a schedule adjustment to an individual who was training for a marathon, but denied it to another employee who was needed time to come in late in order to take her husband to chemotherapy sessions. And the commission said that that was discrimination and illegal under the statute. There are other examples as well. And Amazon also has in its schedule, in its temporary schedule policy, adjustment policy, it also allows for religious observance for certain holidays. And this is different than its religious accommodation. So individuals can also apply for that type of temporary schedule adjustment. Now, if Amazon didn't have that policy at all, then we wouldn't be here today. But because Amazon made the conscious choice to offer schedule adjustments to certain employees for non-caregiving reasons, it's discrimination. So just to hone in on this case, so Amazon, as I understand the response, that the specific arrangement that your client sought, which is altering shift start and end times by working through paid breaks while maintaining full pay, I think, was not the sort of scheduled change that Amazon offered to any similarly situated person for any reason. What's your response to that? First of all, they didn't argue that below. What's your response to that? There is absolutely no evidence in the record to support that. First of all, they admit that what the record shows is that they admit that they would have granted Juan's request had she made it for herself and not to be able to take care of her child. So already they've said that they've acknowledged they would have granted the request. Secondly, there's absolutely nothing in the record that shows that Juan was demanding difference to get more in compensation. She actually offered to forego her two 15-minute breaks because she was not satisfied with what she sought to anyone. And I know your first answer is, well, there's no, they didn't argue that, but that's what they're saying. Right, but there's nothing in the record to support that because they said that they would have granted it if she had made the request for herself. And the record also shows that the minor schedule adjustment that she requested is the exact type of schedule adjustment that they show in their temporary schedule adjustment guidelines. It says that employees can apply to have slight modifications to their start and end times for their shifts, which is exactly what she requested. You have preserved three minutes for rebuttal. Yes. So we'll hear you then. We'll hear from your friend on the other side, Mr. Richmond. Thank you. Thank you. Thank you, Your Honors. May it please the Court. Your Honor, I'd like to start where I think your questions were going, and that's what the statute. Well, my questions weren't going anywhere. I was just asking questions. So I'll focus on the because of language in the statute. And I think that this is important, and I think that this is causal, as Your Honor has mentioned. So the question here, and I turn to the same page my friend does. So Appendix 91, Paragraph 35. This is where it's admitted that Amazon would have granted a scheduling accommodation to Ms. Wan had Ms. Wan met the criteria of Amazon's temporary schedule adjustment policy. And I think that resolves this case under because of. So take because of. Let's switch Ms. Wan's status. Let's pretend for a second that she's not a caregiver. She has no caregiving responsibilities. She makes the request consistent with Amazon policy for the reasons there that qualifies for everything. That request is granted. Now let's switch it back. Let's assume Ms. Wan is a caregiver. She has the status, and the statute, 8107, focuses on status. It's because of status. So assume she has the status of a caregiver. She makes the same request to Amazon and says, I would like a schedule accommodation and checks all the boxes in Amazon's facially neutral policy. It is admitted, they admit, that that request would be granted. I think that is enough, Your Honors, to resolve this case on because of. Going further, Your Honors, I think there is a, even if you dig on to the particulars of what she asked for, the particulars of what she asked for deviated from any schedule adjustment Amazon offers anyone for any reason. And I think two documents prove this. So it's Ms. Wan's 56.1 statement. This is at Appendix 97, 98. And then it's Amazon's temporary schedule adjustment policy. This is at Sealed Appendix 14 to 16. Hold on. 14, 16? Yes. Okay. And there are three criteria that I think show why Ms. Wan's request is fundamentally different from anything Amazon offers. So first is duration. If you look at what Ms. Wan requested, so this is paragraph 60 of her statement, she requested a schedule adjustment. We're skipping around here. Okay. Yes. There are two documents I would look at, Your Honor. I would look at Appendix — I've got this, and then I've got paragraph 60. Exactly. So paragraph 60, she said that she requested from day one, she told HR that she would need to change her schedule when her son started school. He was then 7 years old. There's no end date in that request at all. And I would compare that, Your Honors, to Amazon's temporary schedule adjustment policy. That is entirely based — everything is based around end dates and around limits. So the school adjustment policy concerns an employee's own courses. That's limited by semester, by quarter. You must put in requests two weeks before that, and it's subject to various limitations and exceptions. And then if you look at hardships and you look at religious adjustments, those are based by instance or by year, depending on which one you're talking to. So you're saying — you're suggesting that by virtue of the fact that she placed no limitation on her request, as indicated in paragraph 60, she could not have satisfied the requirements of the — was it the temporary hardship? Of any of the — Of any of them. Okay. Of any of the grounds on which — Any of the adjustments. Exactly, Your Honor. The school hardship. Exactly. And that's just one ground. So second ground, I would say, is the mechanism, so what she requested. And here I would look at paragraphs 65 and 66 of her statement. This is where she said that her request consisted of an offer to trade her two paid 15-minute breaks in exchange for leaving early and arriving late so she would — and If you compare that request to Amazon's temporary schedule adjustment policy, that arrangement is not available to anybody for any reason. And, Your Honors, I would go further. In discovery, discovery revealed no example anywhere of anyone working through their break. In her deposition, Ms. Wan was asked, have you ever seen someone work through her break? Her answer was, I don't know. So that is appendix 255. Your friend pointed to your response to her request for admission on page 605. I guess your — it sounds like what you're speaking to now is saying, yeah, but that was broader. That was any kind of a schedule accommodation. The one that she's asking for here is very different. Exactly, Your Honor. The admission there is Amazon has and would grant a schedule accommodation in accordance with Amazon's policy. So if someone comes — and, again, it's admitted that if Ms. Wan comes and says, I'm a caregiver. I would like to attend my own college course. I have a temporary hardship. I have a religious observance. Whatever it is, whatever — Within the time limitation. Right, exactly. It checks every box within the policy. It is undisputed that Amazon would grant that, whether she has the status of a caregiver or not. But that's only two. Well, so far we've only talked about two of, I think, the kind of fundamental core differences in what she asked for versus what is available to anyone. And the third is just eligibility. So this is the reason for it. Amazon's policy is to provide accommodations for certain things. Ms. Wan's request was outside of those things. And I think what she's really asking for is an accommodation. This really is not a discrimination claim. So kind of the difference between the two of them, I think this is important, an accommodation claim is asking the employer to bend its policies, to alter its existing policies to accommodate the need of the plaintiff. Compare that to a discrimination claim. A discrimination claim is saying that there's a benefit that's offered to others, but it's denied to me because of — I mean, there is a religious accommodation element to this, is that right? There is a religious accommodation, yes. And so why not a caregiver accommodation? Is that entirely up to the employer? Well, this is, I think, gets to a point about the overbreath of her theory. So religious accommodation is required by New York City law. And there are other accommodations that are required by New York City law. So if plaintiff is right that by providing any accommodation for any reason or any schedule accommodation for any reason, you are therefore required to provide one for every protected characteristic on the discrimination statute, well — So you would agree that if the New York City human rights law provided for caregiver accommodation, then that would be an easy case? A hundred percent, Your Honor. And I would go to the legislative history, and this is recounted in the district court opinion. So the first draft of this law, this counsel bill, actually included a section on accommodation for caregiver. It actually had a clause that would have required companies to enable a caregiver to perform their caregiving function and to work, and it required a reasonable accommodation. That was struck from the final counsel bill. And I would point out that was struck even after the testimony that my friend cites in her brief. So if you look at the Deena Adams testimony, that was before the counsel ended up striking the accommodations provision. Would you agree, Mr. Richman, that the New York City human rights law is extremely expensive? I agree, Your Honor. It's expensive, but it does have limits, and those limits are on the plain text. And I would point out further that the commission, I think, agrees with us. So if you look at what the Human Rights Commission has said, they've said two things that I think are important. One, there is no requirement to provide accommodations for caregivers. I think everyone agrees on that as a general matter. And then, two, they've talked about what could be discrimination. So, A, they refer to the same benefit. You have to offer the same benefit to one person and deny it to another. And for the reasons that I've discussed, I don't think you have her request, I don't think is the same benefit that anyone else has received. And going beyond that, Your Honors, I would look at Appendix Page 629. So this is the Human Rights Commission. You're making me work here, Mr. Richman. This is the Human Rights Commission's release when this legislation was enacted, and they specifically say that it does not require, quote, special accommodations to caregivers outside the scope of company policy. That is what the Human Rights Commission, how it interprets this. And I think that's exactly consistent with Amazon's position. Ms. Wan, again, it's undisputed, would have received any benefit that Amazon actually offers. She could have showed up. Appendix 91, Paragraph 35, what I started with, she could have showed up and said, I'm a caregiver, I would like the following benefits offered in Amazon's policy, and it is undisputed that Amazon would have granted that to her. And for those reasons, Your Honor, I'm going to ask you a question. So if there's a question about this, about whether when this law was passed by the City Council and the Mayor and so on, it would apply to or prohibit as a matter of discrimination, frankly, sort of the policy, but in this case the denial of Wan's request, what should we do? In other words, should we, for example, solicit an amicus brief from the city attorney? Sounds like you're very confident. Should we certify the question to the New York Court of Appeals, understanding that that engages a bunch of machinery? But it's, you know, in a sense a little hard for us to deal with this. And I'm going to complicate your answer a little bit. Is there any law on this? So, Your Honor, just to start, I don't think that Your Honors need to certify a question or to solicit an amicus brief. I think the answer is because New York law, I think, is clear on this based on the plain text of the statute and, frankly, based on the guidance that has been issued. I think all of that guidance aligns with what we're saying. Now, in terms of law, the law is a little sparse on this, but I would point to her. The reason I ask that is that is usually a reason, unless we are highly confident for us to ask our friends down the street, what's the answer? I think this Court can be highly confident based on the text. Because of means in the discrimination context, it requires a causal connection. I think Your Honor's questions pointed that out. And you could look at precedent more broadly. There's no reason to suspect that New York was using the or New York City was using the phrase because of different than virtually any other discrimination statute. But even, Your Honor, looking to the law, I would look to her lead case. So she cites Chaplin, and this is a New York trial court decision. But I think this gets to the distinction that I'm talking about. There the employer offered, and the Court focused on this, and this was Westlaw page star 8 or 9. And what the Court said is the employer offers ad hoc policy, ad hoc schedule adjustments. It is case by case. And there they had examples of everything. They had dance class examples, divorce examples. In fact, in that case, the employer offered an accommodation only to female employees. And the employer on the record said that he did that because that accommodation is available to, quote, moms. In Chaplin, the dad, a father, sued and said, I should have the same flexible scheduling accommodation. And the Court allowed that to proceed, but allowed it to proceed because the denial changed based on his status. The fact that he was a male seeking accommodations. Let me ask you a slightly related, slightly different question. So it's Judge Gariffis, correct? Judge Gariffis. Judge Gariffis, yes. Judge Gariffis, a wonderful judge, but he, I think my reading is that he did not defer to the legislative history. He didn't really consider it. And I don't know, but I sense that that is probably a violation of New York law somewhere. Is that right, that he decided not to, he declined to really look at the legislative history? I don't think that's right for two reasons. So first, factually, I think Judge Gariffis did look at the legislative history specifically. So he recounted the fact that the original bill had the proposal or had the language for a reason. He considered it, but then he declined to defer to it. So what he declined to defer to was actually some of the guidance documents we've been talking about. Not even guidance. The press releases from the. That's what I'm referring to. Right, okay. So on that, I don't think he is wrong, and I don't think it matters. So first, on him not being wrong, the New York Court of Appeals has said, so I point the Court to Wang v. James as one example, that the courts do not have to defer, need not defer on a question of law. The examples that Ms. Wan points to that involve deference involve some type of application of agency expertise, and it's a mix of facts and law. Here, it's not. We're talking about what does the text mean, divorced from fact, and I think that there is no requirement. That's what you rely on. I'm sorry? That's what you rely on. Yes. And then second, I would say it doesn't matter, because if Your Honors look to any of the guidance she cites, I think all of that guidance supports our position. All of it says there is no requirement to provide an accommodation for care. Thank you very much. Thank you, Your Honor. Thank you, Your Honor. A couple of things that I'd like to point out that my adversary referred to. One, they said that, oh, if Ms. Wan had applied for a schedule accommodation that fit within their policy for caregiving, that they would have granted it. That's completely untrue. I'd like to point the Court to Appendix Page 29, where in their Rule 56. You guys are making me. Sorry. I'll go back and forth. 29, all right? In Amazon's Rule 56.1 statement, they specifically say, Amazon does not offer scheduling accommodations for child care obligations. That proves the point that because this request was for child care or for caregiving, that that's the reason that Amazon denied it. That's the sole reason that they denied it. And there's absolutely no evidence in the record that shows. That's an answer to a specific question. If they've been asked, you know, do you provide an accommodation, first, you're not really, I think, making an accommodation claim. Right here, what's in front of us is a discrimination claim. But, you know, do you provide an accommodation for any other category? They would have said, no. I mean, the accommodation is for those specified in this sealed appendix. Well, the temporary schedule adjustment policy offers certain schedule adjustments, yes, for individuals, certain employees, if they want to pursue their own education. But that's the part that's discriminatory against Ms. Wan because she wanted that same schedule adjustment for caregiving duties. And that's exactly what the legislature has said is discriminatory. I think if she had had a, some, she wanted some educational benefit and to take off some amount of time to go to school, they would not have discriminated against her. They would have accepted that and allowed her to do it, even though she was a caregiver. So how is that caregiver discrimination? Because it is. Unless you're talking to me that the policy, well, how is that caregiver discrimination? Offering that benefit to Ms. Wan for herself renders adding caregiver protection to the statute totally meaningless because they wouldn't be denying her any benefit of her caregiving. Instead, they. Why don't you really, isn't this really about asking for an accommodation? So why don't you go, I'm just asking a question. Why wouldn't, you know, I'm going, wonderful brief by a better balance with these other amici, but why don't you ask the New York City Council to change the law to allow for caregiver accommodation? Well, the New York City. Would that be much clearer? Well, first of all, Ms. Wan was very clear that she was never asking for an accommodation and that she recognized that the New York City human rights law didn't offer accommodations to caregivers the same way it may offer them, for example, for disabilities. But even though the law does not afford for accommodations, it is specifically looking at the guidance from the agencies and looking at the legislative history, it says that the purpose behind adding caregivers to those protections was because they had suffered discrimination in asking for schedule adjustments. And even the guidance that Mr. Richman had pointed to on the appendix at page 629 says, even though it says that employers are not required to make special accommodations for caregivers, right underneath that it says that rather the law requires employers to provide employees leave time and workplace flexibility equally. Equally. That's all Ms. Wan is asking for. She's asking for workplace flexibility equally. And, again, the New York City Commission on Human Rights issued the same type of statement in saying that employers aren't required to provide accommodations the same way they're provided to people. You heard my questions to your friend. You know, you think you're right. Obviously he thinks he's right. Is there anything wrong with asking the New York City, I guess the Corporation Council of New York City, for its views of the New York Court of Appeals? I would actually agree that I think that the Court should certify the question to the New York State Court of Appeals. And I say that because there is some case law on this. There have been a few cases that are in the lower courts, and I would respectfully submit that this Court is required to follow them because this is an interpretation of a state law. And I would also say that these courts have upheld claims for caregiver discrimination in situations just like Ms. Wan's. Mr. Richman's distinction of chaplain is incorrect. The court did not uphold the caregiver discrimination claim there because it was gender. There were some gender claims in that. That's actually my firm's case, so I'm intimately familiar with it. And in that case, the actual caregiver claim was upheld, and summary judgment was denied because of the inequality of these schedule adjustments. There were employees. Thank you very much. Okay. Thank you. Very helpful. We'll reserve the decision, obviously."
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"stt_transcript": "Our next case is 25-2653 In Re Ocugen. Good morning, Your Honors. Jeremy Lieberman from Pomerantz LLP on behalf of Appellants. Your Honor, we respectfully submit that the District Court committed five minutes rebuttal time, please. Sorry. Your Honor, we respectfully submit that the District for finding of lack of materiality. With respect, the Court did so, Your Honor, by analyzing two corrective disclosures and the method that it did so, and the way that it did so, we believe was legally and factually incorrect. With respect to the August 15, 2023 corrective disclosure, the Court found that the fact that the stock recovered within six days was not enough to, found materiality, of which we obviously do not disagree, but the Court held because there was no misstatements in that August 2023 corrective disclosure, it was not actionable. Your Honor, that reasoning is simply faulty. We were not alleging only that the August 15, 2023 corrective disclosure made a misleading statement as well. There were a lot of misstatements before that. This corrects those misstatements. Absolutely, Your Honor. Even if you say there's no misstatement in that particular disclosure, you still have to go back and analyze the other statements and determine whether or not those are material misstatements. 100%. And what the District Court did was, the District Court simply failed to do it, myopically looked only at the August 20, 2023 disclosure, and failed to consider whether or not that disclosure corrected previous misstatements. Let me ask you some questions. So, as I read your complaint, you have four sets of false statements from Q1, 2020 through Q3, 2023. And I want to tell you sort of how I've characterized those. And my question at the end is, am I missing any categories? So, the first is the quarterly and yearly financial statements. The second is the quarterly and yearly financial statements about the effectiveness of the internal controls. The third would be the quarterly and yearly SOC certifications. And the fourth would be the yearly statements about the CanSino Bio Agreements. Am I missing any category? You're not, Your Honor. No. Okay. All right. And I want to understand for the 2020 and 2021 time frame, what are the allegations of materiality? Your Honor, the company did admit that there were material misstatements with respect to internal controls. And also, every inference is that as long as the CanSino Bio Agreement was in place, the method for accounting for this agreement was false and misleading. We have the CW-3 attesting to the fact that there couldn't be any access by any employee to that agreement, to the details of the agreement, the costs and expenses, the implementation of that agreement. And there's no indication from that CW testimony that that changed at any time. He said that was from the outset of the agreement. So, as long as there was CanSino Bio Agreement in place, you have an inability of anyone to go ahead and to check and to verify those numbers. That itself is de facto an internal control failure. Okay. That leads me to two more questions. The first one is, particularly for CW-1, there's some specific statements that are undated. Is there anything we can look at for undated statements to determine what timing we're talking about? Particularly because when we're talking about a period this long, we could be in Q2, Q3. I don't know if we're talking about earnings calls. I don't know if I'm talking about a 10K. I don't know if I'm talking about a Q. What do I look to for the undated statement? It's a very fair question, Your Honor. I think the best inference is the dates of employment. So that if they were employed during a certain time period, there's nothing on the record that would indicate that anything changed from the time they were employed. They're giving a characterization. Well, let me push back on that a little bit. Because for CW-1, CW-1 says, well, it was my job to communicate with R&D, and I used my communications with R&D to create, I think they called it forecast, financial forecast. I'd create the financial forecast, and if the CEO didn't like it, they'd just change it. But then he says, but then they blocked my access to R&D. Everything, all my R&D appointments went off the calendars, and my access was blocked. And that seems to be in like late 2020, early 2023. So I'm looking at this thinking to myself, okay, what does that mean for Q1 2022? What does that mean for Q2 2022? What does that mean for Q3 2022? Am I talking about, does that mean that there were no issues until that point? When do those statements, what does that apply to? I mean, he certainly has, there's testimony from CW-1 regarding the forecasting and the 2022-2023. They failed to account for the fact that the enrollment was actually much lower than they had forecast, and therefore that was going to push off a lot of the expected revenues and earnings. So you do have characterizations on the dates there. To the extent that, there is a question, Your Honor, and I think it's a fair question. There are certain points where there are gaps. I think the way you fill those gaps is this testimony that does get to provide exact dates where we have 2022-2023. You have the testimony by CW-3 who says, from the beginning of Cancino Bio, you never were able to access the books and records, and you have the overall testimony showing this is just, and you have the restatement which says that there is an internal control problem, really going back to all periods. They only restate the prior two years because that's all you're required to do under GAAP, but that doesn't mean that there was not an internal control deficiency. Let me ask you another question about that time. So there's the $4.3 million deficit during that time, $4.6 million deficit during that 2021 time frame. What's the right denominator for that? Is it the $130 million? It may be, Your Honor. Kindly, I'm not prepared on that point. I can tell you that, so with respect to that, you definitely have the internal control failures, and there's no indication that those internal control deficiencies occurred at any later point. Clearly, you have an admission by the company that there was misstatements that occurred in those earlier periods. There's a need to adjust the figures, so those internal control failures occur, really, from the outset of the class period. As far as the materiality of the numbers, I think there is a fair point that under the allegations of complaints, that materiality is not established on the numbers until 2022, 2023. So if that's where Your Honor is going, I think that is a fair point. The internal control failures start from the beginning of the class period. It's clear that that issue from CanSinoBio happened from the outset. It's clear that all CWs attest to the same misconduct occurring through the period. There's nothing to indicate that anything changed from day one to the end of the class period. So that's, Your Honor, how we would look at those allegations. And I apologize, I have a lot of questions. Please, please go ahead. So, your complaint paragraphs 53 to 82, and those are all about, I think, the effectiveness of the internal controls. I just want to make sure that that's what those paragraphs focus on, and they're not alleging some other false statements. I just want to turn to the right. The characterization regarding the, it's a lot of what you get to see, regarding all the forecasting, all the manipulations regarding the forecasting. I think that's fair, Your Honor, to some degree. Although there was a, there are allegations by CW1 with respect to CanSinoBio itself, it talks about how the forecasting was done poorly. Then there's a statement on CanSinoBio. So to that effect, I would say that does reflect also upon the restated figures there as well. We don't, there is a gap to know exactly how the manipulation on the forecasting devolved into how actually the liabilities were misstated, but clearly there's an interrelatedness. And so to that extent, we wouldn't agree that there's no relationship between those, you know, the restated numbers and the fraud alleged with respect to the CanSinoBio forecasting. And then focusing on paragraphs 215 to 218, would you agree that the restatement concerns is really focused on the CanSinoBio agreement? Like it's not concerning anything else. I understand the stocks and I understand the, but I just want to make sure there's no allegations about anything other than CanSinoBio focused. The restatement clearly only impacts as far as we understand the CanSinoBio agreement, and that was what triggered the false misstatements. Now, if I may, Your Honor, turning to the April 1, before we turn there, I'm struggling a little bit with how the August 2023 statements can be on your theory, both misstatements and corrective disclosures at the same time. And I got them in front of me and I'd like you to just parse out the corrective disclosure theory, like what language you're focused on, what's being corrected. Sure. What is being corrected? The market is learning for the first time at the statement that the CFO Vu is leaving the company. We know, we understand now from the CWs what the reasons were for that termination. And when a CFO leaves- What part of the statement is that correcting? The internal controls, Your Honor. We've submitted clearly the internal controls because we know the reason for his resignation. He resigned according to CW1 through CW3 because he felt that the statements were false and misleading. And so because of that, you have a scenario where, and I think it also partially correct for falsity of the metrics as well, but certainly we would say on the internal controls, you have a scenario where the CFO just won't sign onto the papers. And at the same time they announced his resignation, they announced we're not gonna be able to file our Qs on time. And what we know from what was going on behind the scenes was Vu won't sign the papers, he resigns. They go to Andrews, he's not gonna sign the financials. He ultimately- Those sound to me like material omissions. As far as, so is the question now on why it's corrective or on falsity? I'm not seeing it as corrective. I'm struggling there. Your Honor, we had certainly, and there's certainly under descendant authorities that if it touches upon misstatements, you don't need to show, particularly when it's a partial corrective disclosure. We know at the end of the day, there was a massive restatement, but with respect to the August, 2023 disclosure, we would say, Your Honor, the market perceives that there is internal strife with respect to the CFO and it does connect to the published financial statements. And it does then tell the market something about internal controls, which actually corrected itself, which actually turned out to be true down the road. Usually, truth, Your Honor, doesn't come out in a full statement of admission by a company. Usually it's drips and drabs, there's a scandal, there's a resignations, information that there's a late filing, and then I'll get it. Those sound to me like omissions cases. There might be an omission when you say you have proper internal controls, that's a false statement because the internal controls here, Your Honor, were clearly not effective. And when the CFO resigns because he won't sign on to the financials because he thinks they're fraudulent, that is a classic case of poor internal controls. So we think it's clearly, it's partially correcting a false statement. Of course, it's not a full corrective disclosure because the market didn't fully learn what happens. It had to learn that down the road with respect to restatements. And even then, they weren't fully told that, hey, CFO wouldn't sign the papers because he thought it was false and misleading. They asked multiple personnel to sign on to these financials because they thought that they were false and misleading. So we do believe it's a partial corrective disclosure. We think the sentencing case talks about how it's not an issue of a full disclosure, it's an issue of proximate cause. On page 38 to 39 of your, I think it's your opening brief, you say that you're not challenging some portion of the district court's decision regarding the August disclosure. What specifically is that? We're not, we also disclosed as Jehoboam referenced, we had previously said that the disclosure itself was partially false and misleading because they didn't disclose the reasons for Vu's resignation. And your position, you've walked away from that. Primarily we want to focus on the corrective nature and we want to focus the court's attention on that, which we think the third circuit authority clearly makes, allows for a partial corrective disclosure in that instance. We'll turn into the, if I may, I'm behind my time or should I? I took most of it. Fair enough. I'll turn them to the April 1st, 2024 corrective disclosure. And there, the district court held that because the stock started to increase after a few days and May had made up for its losses. There wasn't a, there wasn't a case for, there wasn't proper pleadings for materiality. And we think that, that consistent with what we suggested or in Burlington cases? I think what the court has suggested, but the issue is, is in Burlington cases and, and, and, and most of its jurisprudence thereafter was that, was that when there was no market reaction whatsoever to the disclosure of information, then you potentially had a materiality issue. There's two distinctions here. First of all, there was on April 1st or April 2nd, there was a 10% decline in stock. It does go up a few days later. What's not in the record is how that performed compared to the market. In fact, it actually, it underperformed the market broadly. That's not on the record. And that's, these are questions of fact that the court should look at. And what's also happens is that within a month, the stock goes back, back to down to where it came from. And that often happens when there's a lot of information coming in the stock and there's good news and bad news. It happens to be on April 5th of that very week. They announced positive. What's the appropriate horizon we should look at? I think that I, well, the, the Waco's court actually looks at if there's a sustained recovery, i.e. does it ever go back down? And importantly, with respect to the August disclosure, the district court actually found that because the stock took six days to go back up and it ultimately goes back down several weeks later, he didn't find that there was lack of materiality. Here, we have the same scenario. By May 1st, the stock's right back down again. So I think it's clearly, if you'd have a scenario where, where first of all, there's no stock price decline whatsoever, I think that's something that's a different set of facts. And then also, if you had a situation where the stock simply, you know, remains elevated for, for a significant period of time after disclosure, then that would also be more under the Burlington line of cases. Burlington never considered a scenario, and this would be the first for this court to consider, the company is admitted to materiality. You've got an admission by the, by, by the company. There's a material misstatement of financials, and there's a material misstatement regarding internal controls. So a company says, we've made material misstatements, and yet we have a court saying, no, it's not material. I think that's a very, that's a very strong statement to make, particularly with a record here where there are stock price declines, where there's a further subsequent decline. I think it's far, at this stage of the pleading, it's far too premature to make that determination. I'll reserve the rest of my time, if I may. Good morning, Your Honor. Jay Dubow, from Trautman Pepper Lock, on behalf of defendants. Not surprisingly, we believe that Judge Hodge got it correct, and her opinion was right. Counsel, can I start with Oran Burlington? Yes. Is that case consistent with Basic versus Levington? I'm sorry, I couldn't hear. Is that case consistent with Basic? It's consistent with Basic, yes. Can you tell me why? Because Basic talks about what reasonable investors, what would be important for reasonable investors, as does the TSCV case. And Oran Burlington actually looks at what real investors did. Well, as I understand Basic, in defining materiality, it says, we look at the, whether or not the information would change the total, whether or not it would change the total mix of information available. Correct. Would you describe the Oran Burlington rule as a, well, standard, that's what you called it, as a rule, as a categorical rule? I'm sorry, I'm trying. Would you describe the Oran Burlington standard as a categorical rule? If the stock price doesn't move, there is no materiality. I think that's how the courts have, this circuit has interpreted it, yes. The Supreme Court has a case called Matrix. It was decided unanimously. And that says that a categorical rule would artificially, we're talking specifically about materiality. In that context, there was a bright line rule in the Matrix case, there was a bright line rule about what is material. And the Supreme Court unanimously said a categorical rule that artificially excludes information that would otherwise be considered significant to the trading decisions of a reasonable investor. It rejected that. How does that leave room for yet another categorical rule? Well, this, again, this circuit has treated what the Oran Burlington is different from other circuits. This has the, I think, viewed as the most efficient market viewed circuit, and in an efficient market, which is what we have here, that's what they've pled, it's the real test is what did investors who have their put their money at stake, what happened? Let me ask you this thing. If you have a company that produces drugs, and the company has been disposing that, you know, they're based, you know, they're going to be approved, they've been, you know, had discussions with the FDA, and they're going to be approved for stage two trials. And on the same day, in the same disclosure, they disclose that they've been lying about the FDA discussions about drug one, my example, but also they've gotten approval for drug number two, and the stock price doesn't move. It's your position, I just want to make sure that under our case law, the disclosure regarding the lies about drug one just categorically are not material because the stock price didn't move. In that case, there's additional disclosure, which I think would have to be factored in. That's not our facts. Correct. I think this that's not our facts. That's not the allegations here. Okay, even if Oran Burlington, even if we follow Oran Burlington, can you what is your best case to suggest that Judge Hodge got it right here? That is, do you have a case where we as a circuit have actually ignored a stock price drop immediately after a disclosure? I'm not aware. I'm not aware of one. Okay. There are some cases outside of this. The Third Circuit hasn't ruled that way, but we did cite in our brief, a couple of cases where there were drop, short drop, and then within a few days, the recovery, and those cases were found not a lack of materiality as well. What would be the correct cutoff date that we look to to see if the stock rebounds? Well, I mean, Merck is five days. I think the case is it's four or five days has been the test. And in Merck even, it was a four or five days, and then it dropped afterwards. And that was still, that still held because those later days were not to be considered in the same way that counsel has argued a month later that it dropped. That's really not relevant for these purposes. You look at the four to five days right after the announcement for the time for the market to absorb. And as we noted here, and as Judge Hodge noted, the price went with not only came back, but it actually even exceeded where it had been. Can we go back to the, the multiple disclosure hypothetical of one positive, one negative? How would you suggest that we navigate for Anne Burlington in that scenario? That's a good question, Your Honor. I think, again, we, I'd say we don't, we don't have those facts here. I think if those were the facts, we'd have to look at other, perhaps other elements. I don't know if it would be clear, you know, the question is, is it, I know materiality is something that often is for a trier of fact to decide unless it's so clearly not material. In a case like this, Judge Hodge said it was so clearly not material and we agree. In the case where you posit, where there's some other facts, it may not be, it may not be so clearly not material. Is there language in the two cases that we're talking about that, that gives a court that kind of room to navigate? I think I, I agreed with you earlier when you said that they look like, they read like categorical rules. Yeah, I don't know if it's, I think, again, I think it'd have to, I don't have that case in front of us, but I think we'd have to look at it. I don't, I'm sorry to make your, I don't mean to make your job harder here, but I think we're struggling a little bit with the viability of a categorical rule like that. The hypothetical illustrates one of the problems and I'm just sort of, I'm trying to draw on your expertise to think about what you would ask a district court to do in that scenario. Yeah, again, if I were in that scenario, I'd have to look and see what the other factor, all the other facts, which is a more traditional materiality test, like many of the other circuits have. It may be. Yeah. Yeah. Okay. But again, that's not our facts here. Can you talk to us about the judicial notice, things that you're asking us to do? Sure. And what went on with that in the district court and what you'd like us to do here? So, so we asked the, what was it issues? We asked the, the, the lower court to take judicial notice of an earnings call transcript that took place right after the class period in which following the announcement of the restatement. And then as well as the April 2nd transcript. Yes. And isn't that the one where Mr. Mucinari also disclosed good news about the FDA trials? I think they did. That's correct. And there was a day after the not great disclosure. I think that, I think that's correct, your honor. Okay. So maybe we do have something closer to what I was just describing. That wasn't raised by, that hasn't been raised in this, by plaintiffs in this case, but in the court below or in any briefing here, that may implicate the, I don't know why strategically it was done or not because they've, they've objected vociferously to, to taking judicial notice of that transcript, as well as the three analyst reports who covered the company and we asked to take judicial notice and, and judge Hodge did not address that. She said, well, I don't need to address that for, and take judicial notice for purposes of deciding in making her decision. So it's, it's, was not decided either way. You don't want us to take judicial notice? Oh, I do hear, on your DeNovo, on your DeNovo, just the part you like, I'm sorry, just the part of the transcript that you like. Well, the transcript, the transcript, as well as the analyst reports that, that they didn't, the, you know, the restatement is what was made. They didn't mention it. They didn't ask about it. They didn't mention it. This is what has a, was alleged as the false, the false and misleading information. And it was not even addressed or, or stated in any way by any of the analysts they didn't ask about. So we're not, when we asked to take judicial notice, it's not for the truth of what was said, but for the fact that it wasn't even said. But I, that, that hearsay logic works the same way. First, the fact of something was said, you don't have to believe that the positive announcement was true or that the substance behind it was accurate. It, we would just be looking at it for the fact that it was said and its impact on the market price, wouldn't we? Right. But here again, it wasn't, it wasn't here. We're again, it's, it's wasn't set. It wasn't addressed at all. I'm happy to keep up if you're honest, have other questions about that. I'd like to just address a couple points since I, since I do have some, some time. The, you, you count, you, you were asking council questions about the August 15th, 2023 statement. They, and I think as your honor noted, they conceded in their opening brief that they weren't, they with judge Hodge, there wasn't a false statement, but now they're, what they're claiming is that it's a corrective disclosure. And what that statement said, all it said was that the CFO was no longer at the company. And for somehow they claim that's corrective of all the, all the statements that were made by various confidential witnesses relating and relating to internal controls. What's very important is that this isn't when the company made the disclosures about the restatement in, in nine months later that they, that those statements and the internal controls were limited to just the internal controls in connection with the collaborative arrangement accounting, not some more general statement of problems with internal controls. And, and all the statements that they would like to say were false and misleading before the August 15th, 2023, that they've alleged all relate to that same collaborative arrangement accounting, because that's what was restated. It was a very narrow, it was a very narrow issue. So your position, the only real corrective disclosure, if you will, is the April. Correct. That's, that's, we think that's the only arguably corrective disclosure. And what did it correct? Again, it was very narrow in its focus. It talked about this restatement of a certain accounting and the controls related to that accounting issue. And that was all it said, nothing, nothing, nothing more. And as far as the statement in and when they made that statement, there was arguments made about whether the restatement itself was material and under accounting guidance, as we've noted in our brief restatements required for material accounting issues. But materiality for accounting is not the same as materiality for purposes of securities, federal securities laws under BASIC and TSCB Northway and, or in Burlington. And there you go. Thank you very much. Thank you. Thank you very much. Thank you, your honors. Just to address a few more points that were raised in your my friend, you know, as far as the attempt to cabin the departure of the CFO to the ultimate restatement, I think that that's a very strained reading of the record. The record is CFO won't sign financials. Actually, he won't sign financials four months after the prior CFO Crespo resigned from the company. That's A. B, he doesn't sign the financials. They try to get at least two other employees to sign those financials. They won't sign the financials. The company can't ultimately file its 10Q. And he and the CFO, the former CFO goes to the board and launches investigation. Several months later, you have a restatement to say that that A is not related, is not the proximate cause of B, we think is really is a strained reading the record. And that's what you need incentive, you need a proximate cause. A few other points, as far as the efficient market hypotheses, which is what, you know, the argument defendants that there's some embrace of efficient market hypotheses here, that's unique as to all other circuits, and apparently the Supreme Court is that the efficient market hypothesis is that stocks don't decline for no reason, particularly by material amounts. So when a stock goes down by 10%, after the April disclosure, or 6% after the August disclosure 2023, it went down for a reason. And the reason is, there's no other reason brought to the record by defendants. The reason was, was because of the announcements of the CFO departure in August, and the restatement in April. And so and for the court itself looks at for the court itself contradicted itself by looking at the ultimate horizon several weeks afterwards, with respect to the first corrective disclosure, but decided not to look at that horizon for the second disclosure. So we're operating an efficient market, we've got to look at all of that, we've got to look at the how the stock reacts the day after, multiple, you know, multiple days after, as well as several weeks after, and was there any intervening good news. And we do have on the record here, Your Honor, good news regarding the positive trial, which occurred just that very day thereafter, which is why the stock had recovered merely a mere two days later, after the April disclosure. So we've got to be consistent with the application of the efficient market hypotheses. I think this case is really much different than Burlington. And we're talking about the way the Burlington create a bright line rule, it may be and we're not arguing the same, it might be if you could establish that there was no negative market reaction. When I say market reaction, we have to also look at not just the stock raw stock data itself, but also how the company compared to its indices and net results generally. If there is also ultimately no reaction whatsoever in the several days after a disclosure, then under Burlington, the efficient market hypothesis, you may now have a corrective disclosure, really a loss causation question. Yes, 100% is a loss causation question. And candidly, and I hate to say it, Burlington got it wrong on that. This is a loss causation inquiry. If you want to look at if you want to look at materiality, look at whether or not a reasonable investor want to know something. If you and Burlington has the error there, because it talks about it conflated loss causation materiality. And unfortunately, the district court just continued that conflation by all of a sudden that only analyzing materiality by looking at two dates and statements as opposed to the entire class period. But absolutely, but at least keeping consistent with efficient market hypotheses, you've got to look at everything. And you've got to look at what's moving the market, why declines a certain date. And Burlington's progeny all are dealing with cases that particularly the circuit court level that had no stock price reaction whatsoever. That's that is completely different than a scenario here where there's a huge there's a significant stock price reaction. And there's an admission by the company, this is material, I think that I think it would really be a game stopper and a changer for all of a sudden, despite a company's admission of materiality, and including a stock price reaction, we've got because there was some recovery some days thereafter, we don't have any finding of materiality, particularly when I think there was a mistake on materiality in the first instance. So that's, I think, and another point, we certainly plead in the amended complaint, there's an efficient market. That's something actually, this court or the district court has to make a determination as to whether or not there's an efficient market, it could very well be that the court would find not, there's not efficient market, which would defeat class certification, but our plaintiff still here would have individual claim. So therefore, you can't, it can't just be married. Once the next has been a finding by the district court of an efficient market, which all goes to say was premature for the district court to dismiss this case. I'm in the first place. I rest on my arguments. Thank you very much. Thank you. Castle would also like the transcript. In this case, I'm going to ask you to split the cost talk to the clerk about how you go about ordering the transcript. Thank you very much. Go right there. Thank you."
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"stt_transcript": "25-3157, Schmidt v. Huff. Counsel, are you ready to proceed? I am, Your Honor. Yes. Thank you. Go ahead. May it please the court, my name is Greg Goheen. I represent the defendants in this appeal. I would like to reserve three minutes for rebuttal to the extent I can do so. The present appeal involves the denial of a motion to dismiss that was filed on behalf of several school district employees, which was based on qualified immunity. That's the sole issue that's in front of the court today. Specifically, Plaintiff, who is a parent of a current and former student at a Kansas high school, asserts several claims pursuant to 42 U.S.C. 1983 for damages against certain school officials and their individual capacities for alleged violations of her rights under the First and Fourteenth Amendments to the United States Constitution. The defendants in this case are as follows. Defendant Huff is a superintendent of schools. He is alleged to have been the individual who determined to issue a letter to Plaintiff that's the main issue in this case. And that letter advised Plaintiff in February of 2025 that she was no longer allowed to be on school district property due to some conduct that she engaged in of being in areas of the high school off limits to parents during the evening without permission, moving certain personal items, taking pictures that she had submitted for TikTok to be posted and created a disruption to the school environment. Dr. Huff advised Plaintiff she would not be allowed to be on school property or school events for approximately four and a half months following this incident or until June 30th of 2024 or 2025, rather, I believe. In any event, the district court referred to this as the social media incident. There are two incidents that are involved in this lawsuit. Defendant Booth is the assistant superintendent of schools. His only alleged conduct in this case is that he advised local law enforcement on the no superintendent of schools at the superintendent's direction. Defendant Bell is the high school principal. Defendant Bell was tasked with receiving requests from Plaintiff after the issuance of this letter by the superintendent and determining whether her request to attend certain events or certain or be on school property would be were to be granted. There are no alleged incidents where Plaintiff requested to be on school property or attend an event after this issuance of this letter that were denied. Defendant Chapman is a former school board member and the allegations against him relate to a different incident. The allegations against him relate to a school board meeting that occurred approximately six months or seven months, rather, before the incident in August of 2024. At that meeting and surrounding that meeting, Plaintiff had come to the school board and made comments during open session regarding disagreements with certain school district or school books that were in the school library and read content from those school books to the board during open session. She and Defendant Chapman got engaged in several communications, including during the open comment where Defendant Chapman was critical of Plaintiff's approach, disagreed with her position, and voiced those concerns to her both in the school board meeting as well as in some online and email communications following that meeting. Counsel, thank you for going through the facts attendant to each defendant. I think that's helpful. Let me ask you about Defendant Chapman. So, can you speak to what it is that you think the district court got wrong and be specific as to each prong of the qualified immunity analysis, specifically as to Chapman? So, the starting point is that Chapman, as the court's aware, this is on interlocutory appeal. So, this is not to challenge the court's interpretation of the factual conclusions that it reached out of the complaint or any disagreements as to the factual conclusions. However, the second threshold issue of the qualified immunity analysis, there has to be established law that exists that would put the government official on notice that his or her actions violated the Constitution. And that case law has to be particularized to the facts or circumstances involving the complainant issue. Part of the issue or the problem I have with Defendant Chapman and the dial summary judgment that relates to him is he's essentially being, he's not alleged to have done anything actually to prohibit plaintiff from engaging in free speech. He's not actually alleged to have done anything in retaliation for her having engaged in free speech. In fact, the retaliation claim was dismissed by the district court. What he's alleged to have done essentially is to voice his opposition to plaintiff's comments and engage in the sort of back and forth discussion with her both on social media and in email exchanges. Wasn't Miss Schmidt's microphone muted for the portion of her remarks? I mean, I think that's what the complaint alleges and that's what the district court found. And I'd like to know your thoughts on how we should be thinking about that. Is it your position that Defendant Chapman didn't mute her mic so he hasn't engaged in the kind of particularized conduct we're looking for under 1983? Yeah, there's no allegation in my recollection from the petition that Defendant Chapman had anything to do with her mic being muted or not being turned on correctly. And she was allowed to make comments. He's only alleged to have engaged in, first of all, making his own comments during the same meeting. And then I think he argued with her a little bit during the course of the meeting, perhaps at the end of her comments, as well as post after the meeting, engaging the social media back and forth and the email back and forth. But I don't believe there's any allegation that he specifically was involved in or had anything to do with the fact that her mic may have not been operating correctly during that meeting. And that goes to the whole issue of an individual official is only responsible for his or her conduct. And absent some allegation that he was involved in that or did that on purpose or that he somehow had something to do with that, the only acts he's alleged to engage in are his own speech, which we contend, and contended before the district court, are protected in their own right under the U.S. Constitution. And so you can't really have somebody being held liable for voicing their own opposition or their own speech, even if it's contrary to the speech that's being presented by somebody else. And even if it's in an argumentative fashion, even if it's sort of this back and forth argument, say they've gotten to a knock down, drag out. Who is the appropriate defendant? And I mean, I take it you don't disagree because the complaint alleges that Ms. Schmidt was silenced effectively. She was not heard when she wanted to speak at the board meeting. And so you don't disagree with that, right? I do, only in the sense that although her mic, her allegations of the mic was muted in the mic, there clearly was an issue with the mic. You can hear that. But the recording of the meeting does exist. It was on broadcast. You can hear what she is saying during the meeting. Those present could hear what she was saying. And it is retained on the audio and video recording. OK, well, let's assume that you let's assume you could not hear her. In other words, let's assume that there was a constitutional violation here. Your position is that the law is not particular or specific enough to satisfy the clearly established prong? Or is it your position that the wrong defendant is sued here, that it's not Chapman's? He didn't engage in any unconstitutional conduct. I think it's that he didn't engage in any unconstitutional conduct himself. And he's the defendant who's named in this case. And he's the one who we've asserted qualified immunity on his behalf in connection with this dismissal motion. Was he conducting the meeting? He was not. He was not the chair of the meeting. He was not the president. And you're saying there's no allegation in the complaint that he had anything to do with the mic? That's correct. Did I hear you say, I'm sorry, that you're not making a lack of clearly established argument? No, I am. Yes, you are. In answer to Judge Rossman, I thought I heard you say, oh, we're focused on the, was there a violation? If I did, I misspoke. And I apologize. I didn't mean to say that. You were saying that with respect to the microphone issue, though, weren't you? Your focus on the microphone issue is that he didn't do anything, not that muting the mic. Right. My focus on the microphone issue is he's not alleged to have had anything to do with the microphone itself. The allegations against him, this is why it becomes important from the particularization of facts as to each defendant, is that for qualified immunity purposes, what he's alleged to have done, I'm not aware of any case law that prohibits or would find him to have violated the Constitution based on what he is alleged to have done in the complaint. Are we clear on that? I don't want to make sure I'm misleading the court in some way in the argument. We've got other defendants. As it relates to the other defendants and this other issue regarding the incident that the court referred to as the social media incident, the issue here, again, is really focused on whether there's any clearly established law that, under the context and circumstances alleged that relate to what occurred in this case, that Defendant Huff, Defendant Booth, or Defendant Bell have done anything that the law would demonstrate to them as school officials would be clearly established as violating constitutional rights. And we don't believe there's been any case law that's been cited by either the district court or by plaintiff in connection with any arguments made to the court that does do that for purposes of qualified immunity. What is your understanding of what claims remain in the case? This is, I guess, a housekeeping question, but I was uncertain about that. Maybe you can help me with it. I think the district court, as to the retaliation claim, that was a primary focus of the district court's ruling for both Huff and Bell and Booth, but the court didn't seem to, at least as I read it, didn't seem to rule on some of the other claims in the case. So can you help me with that housekeeping matter? Yeah, I had the same issue when I was reading the district court's order, and I don't think it was intentional by the district court, but the district court clearly did focus on the retaliation claim. That was primarily what was discussed by the district court. I took that to mean, because there was no clear ruling, that the other claims are probably still live as well. And so include those as part of the overall argument on appeal that dismissal is warranted on qualified immunity as to any claims that remain against these individualized defendants. The district court did dismiss the school district, finding that the school district was not liable. For any of the claims and did clearly dismiss the retaliation claims related to defendant Chapman. But as I read the district court's order, it wasn't entirely clear to me what specifically was left in the case, other than it was clear that qualified immunity had been denied as related to these other defendants. As to these other defendants on the specific claims that the court reached, right? Correct. And I am past my three minute, I would like to reserve for rebuttal unless the court's got any specific questions that would like me to answer at this point. I have one more question. If that's all right, maybe maybe judge hearts will give you a little more time. No, you're fine. How should we be thinking about the district court's factual findings as they relate to the injunction? So, you know, in the district court's injunction order, there's specifically a couple of findings that I'm unsure what to do with. And I'd like your take on those. I mean, the district court says the defendants have failed to show plaintiff violated the law or any school policy. At the same time, the court says, well, schools have the right to control access to specific locations without implicating a liberty interest. So I guess the two questions are generally, what do we do with the findings made attendant to the PI? And specifically, what do you make of these findings that I just recited? Yeah, so let me try and break that into two points. And I'm going to run low on time. So if I go over time, please indulge me for a minute or tell me to stop. The first issue is the injunction order is interesting in the context of this case. It was a temporary injunction order. It was issued before we had filed and sought dismissal of the case based on our motions to dismiss. Interestingly, for a temporary injunction, there has to be a finding that there's a merits injunction was granted as to all defendants. And then the court turned around and after hearing the dismissal motion, dismiss the school district, which was one of the defendants finding that there weren't grounds for a claim against the school district. The other thing with the injunction is that obviously the injunction was in place to address the it had nothing to do with the board meetings and it had everything to do with the incident relating to the social media. And as it relates to the social media incident, it was primarily directed at the determination by Huff that she cannot attend school property events until June 30th. And so since that time has passed, that whole injunction is moved at this point as a separate matter. The findings, I think any findings in terms of an injunction hearing are always preliminary and they're always subject to reinterpretation and determination by the court based upon later evidence after evidence has been marshaled in a case. It's on a very shortened record. And so I don't know that those are binding necessarily on the court at all past the injunction hearing itself. Injunction can always be reconsidered. Those findings are not law of the case or anything like that. It can be reconsidered in a motion to dismiss facet. Ultimately, the dismissal that's being sought was purely directed at qualified immunity and purely directed at the pleadings in the case, which are set forth in the complaint itself. And I think that's what the court should focus on as it relates to those findings. Thank you. That's very helpful. Thank you, Mr. Baker. Thank you, Jay. Please, the court. Well, let's start with Chapman. The complaint simply says what Chapman did. And it said that Ms. Schmidt's microphone was muted. Favorable inferences. You can connect the dots. You ask if board member Chapman was presiding board member. No, he wasn't. But he stood up and took over the meeting and read his statement. And so that's his individual participation. He took it over. The other one, if you want us to draw an inference from the fact that he took it over, that he was responsible for the mic being turned off. Is that correct? I think you can make that favorable inference. Then what do you mean exactly by he took it over? It's one thing for him to speak for him for a minute or more. But did he in any other way show that he was? Sure. So here's how that works. You get three minutes. And so when and you get an allotted three minutes, Kerry Schmidt stands up. It's her time to speak. There's no provision in the public comment that hold it, Kerry Schmidt, before you start talking. Let me take over your three minutes and interject something that's going to chill your speech. That's not part of the process. They don't do that to speakers. But Chapman did that. So he read. He says, I kind of know what you're going to say, Kerry. And so let me muddy the water. Let me put you in a bad light. Let me say that you're a pervert. You get sexual pleasure out of reading what I think you're going to read. Now, that is viewpoint discrimination. That chills anybody. And let that be a lesson to all you parents that think you're going to come up here and read literature that's in our library. That has to do with his motive and his intent. Did she end up getting the full three minutes? Was the time given back to her? Actually, she fussed with them because she got muted. She says, nobody can hear what I'm saying. And as Judge Milgram said, the microphone was muted. Closed captioning was unavailable on the district's YouTube page. Said that Chapman's remarks demonstrated disagreed with plaintiff's views. And likely due to those views, he subjected plaintiff to less favorable treatment than other speakers. Namely, one of the things is he made his speech before she talked and put her in a bad light. You don't do that to other speakers. And then we say he muted her. So just with respect to the time she was afforded though, did she end up not being able to speak for three minutes? She could speak the three minutes. She didn't get the full benefit of what the public comment provision. Not because her time was restricted. Is that right? Let me make sure I understand. So she didn't get the benefit you're saying because of the comment that put her in a bad light. Did she also not get the benefit because she was restricted to less than three minutes? Did that happen? Was that even alleged? I don't believe we alleged she was cut off prior to the three minutes. Okay. That benefit she got, but it was skewed as I've said, which is she didn't get the benefit that other speakers get, which is you got an open mic. Everybody can hear you. You get closed captioning. And by the way, I'm not beat up before I get to talk. The defendants argue though that you have no clearly established law that the person, the official can be liable for putting someone in a bad light by speaking beforehand. Do you have any case law to support that proposition? Well, viewpoint discrimination. That's viewpoint discrimination. So one of the tools in a toolbox is I'm going to say bad things about you and that's viewpoint discrimination. Judge Melbourne said that's been clearly established for years and years. And it is. Counsel, can I stop you there? Sure. Haven't we said repeatedly that you can't simply say this is viewpoint discrimination in order for clearly established law to be established? You have to come up with something, a case that had some similar facts, something similar to what you're alleging, that just saying there's viewpoint discrimination is not specific enough. Can you help? Sure. Siemens speaks to, well, Siemens 1 and 2. Siemens 1 says that government may not deny a benefit to a person because of his constitutionally protected interest. So your inquiry is, did they deny a benefit to Kerry Schmidt? Well, they did. They did it over and over and over. And so, and that was because of the things that she said. Now we've called that viewpoint discrimination, but the principle set out in Siemens says that. In Siemens 2, where they came back and tried to get qualified immunity at summary judgment, the panel said at page 1030, school authorities may not penalize students for their speech when that speech is non-disrupted, non-unseen, and not school sponsored. The case then, this becomes a parent speech. So all the policy reasons that they have to impede student speech, would not apply. There's a case out of the Sixth Circuit, McElhaney v. Williams, 81F, 4th, 550, Sixth Circuit, 2023. That case, the court, Sixth Circuit, reverse qualified immunity, and hell, it was clearly established. School official may not retaliate against a parent for the content of his speech, criticizing school personnel. So this is a case where these individual defendants penalized Kerry Schmidt. So can I stop you there? I'm sorry, that's a Sixth Circuit case that you're signing? That is, but it lines perfectly with Siemens 1 and Siemens 2, which simply say, you cannot deny benefits to a parent or a student because of protected speech. And so everything that the defendants did in this case, Chapman did it because of her speech. She was reading protected speech books. Huff said he didn't like what she was saying. And then Booth and Bell, then I call it supersized. They filed police reports. They put more conditions on her to do what other parents could otherwise do. In fact, they went so far as to say that she couldn't even go to church on Sunday at a church on school premises. And Superintendent Huff said, oh, by the way, I'm going to extend this ban beyond gardener property to other school districts, which was incredible. He just said, Let me ask about those allegations. I'd like to focus on Mr. Booth. And what are the allegations regarding his participation in this alleged retaliation? He gave the ban police force. He filed a police trespass report and identified Ms. Sheehan as an offender, even though the complaint alleged no unlawful entry, no victim. You're trailing off. Could you speak more into the mic? I'm sorry, Judge. Even though the complaint alleged no unlawful entry, no victim, no refusal to leave, no crime and no applicable policy violation. Let me say this. The complaint clearly said that Ms. Schmidt did not violate any policies. And that was confirmed in the injunction hearing when Superintendent Huff was handed all the policies, says identify any of that she violated. He couldn't identify one. This goes to Judge Rossman, your question about what to do with the injunction facts. It goes to plausibility. You look at the complaint and look at the favorable inferences. The injunction itself, the hearing will add or support plausibility to what we've alleged in the complaint. But you're going to look at that complaint. Okay, so Booth, the allegations against him, and correct me if I'm wrong, but my recollection is that the only allegations regarding his participation in this is that he forwarded or filed the complaint that went to the police department. Is that correct? Well, he filed a police report himself and he is the person that made the allegations. So like I recited, he gave Superintendent Huff false allegations. You're just saying those allegations. I want to make sure. Did he make false allegations or is it that the allegations didn't rise to the level of an offense? He filed a complaint alleging no crime. So he had committed a crime. Did he say anything in the complaint that was factually false? The conclusion you're saying was wrong because there was no crime. But did he say anything factually false in the complaint? Well, I would say he did misconstrued. He said there was no victim. He misconstrued exactly what she had done. You don't file a police report when no crime has been committed and no victim or anything like that. But the point is their judge, he is giving effect. He's putting something in addition to the Huff ban. He's putting police force and a trespass that he didn't have to do that. Huff didn't do it, but Booth did. So that would chill a person of speech. I want to focus on, not on the consequence of the complaint, but Booth's complicity in that. Did, does the complaint allege that Booth did this on instruction from the superintendent or the principal? I don't know how the complaint necessarily framed that. But if you're asking if it's just following orders, Booth did that act. He participates, that is his actions. So I don't know. But I'll get to the heart of this. I'm just trying to get your position on this. If you do something, but you don't have discriminatory intent, then you're not liable. And you're saying his, I'm sorry, go ahead. You'll never get to that on a motion to dismiss. Intent and motive judge is, I mean, maybe summary judgment. You don't think you have to allege any facts that would imply discriminatory intent? Sure, we've done that. We've done it with respect to Booth. Sure, he filed a police report and there was no crime. That you can infer from that, that he is, that is his actions. That is how he is participating. He knows that Huff, Superintendent Huff, has no policy that she violated. He is going to be the vessel, if you will. Is it relevant to his intent, whether he was instructed to do this or did it on his own initiative? Is that relevant to his intent? I don't think it is. I don't think it is. And you would have to give a favorable inference to Booth to say, to move that gauge on the other side. Maybe, and that's an issue of credibility. Was he motivated because he was instructed or was he, did he have to do it? Could he have refused and said to Huff, I don't want to do this. Don't make me file a police report. So the fact that he did it at a motion to dismiss, favorable inferences, discriminatory intent. Thank you. So, and- Council, what is the, we're talking about retaliation and there's retaliation claims alleged against all the defendants except for, well, for the Chapman one was dismissed. And you have three elements, right? In a retaliation claim, you have to show protected activity and the kind of government action that would chill and motive, right? So can we just, I'd like to have your position on the, on the retaliation claim in that structure. What do you contend is the protected activity here? Well, her protected speech. Okay, but with more specificity, I mean, based on what you've alleged in the complaint, is it that she took pictures? Is it that she sent pictures that were reposted? What is the protected speech exactly as alleged in the complaint? Public comment, she's protected speech. She's not yelling fire in the house. She's just reading books out of the library. That's protected. At the school, she took pictures of things available to students. She then took those photos, sent them to TikTok. That's protected. She didn't do anything. And so those are the protected things that she did. They weren't crimes. They didn't violate any policy. That's all protected. Now, so then that's the protected part of that equation. They tried to ascribe to her the idea that, well, you're responsible for what TikTok does. And Judge Malroom says, no, that's not fair. And there's no indication that Eve from the complaint that Carrie Schmidt wanted anybody to get in trouble with or to be targeted or anything like that. Didn't happen. And so the other protected, and so she was denied benefits because of that. They say it, that's what they say. They didn't say she wasn't, you know, whatever. So that's the protected part. The retaliation, she got adverse consequences up and down the line. That's retaliation. And it's all based on speech. Judge Malroom goes into it. He's talking about that. He said that he didn't like what she said. He didn't like what she posted. Finding images posted to a popular social media account offensive is insufficient reason to strip plaintiff of her rights to speak, associate, and exercise religion. It's unreasonable for a person acting in such a way that such conduct did not infringe upon plaintiff's first amendment rights. And that's all she did. And with that, she was banned from going to other benefits that other parents got to do, which was attend your child's graduation, attend your child's wrestling, all of those things. Can you get the benefit of speaking without getting slandered? All that chills speech. You're more than two minutes over your time. I'm sorry, Judge. I just wanted to make sure, does any member of the panel have any further questions? I'm good. Thank you. Yes. Thank you, counsel. Mr. Goheen, we'll give you another minute. Help if I turn the mic on, I guess. Sorry about that. Thank you, your honors. I just want to touch briefly on a couple of points made to try and get some clarity. One thing is it relates to this police report that Mr. Booth submitted to the law enforcement. Police reports get submitted to law enforcement for a variety of reasons, not necessarily always to report a crime. Obviously, if you're in a car accident, you file a police report. In Kansas, where you have a trespass that is going to attempt to be enforced by law enforcement, there first has to be an advisement to law enforcement that the person is prohibited from being on property. That's the purpose of the filing of the report with the police department. It has nothing to do with reporting a crime. Is that clear in the complaint? How do we know this? Well, the complaint just says that he filed a report with law enforcement. It doesn't say anything that was done untoward in terms of him falsifying information in the report. As counselors points out, he doesn't identify plaintiff as an offender in the report. He doesn't identify a crime in the report. He reports that she is not permitted on school property. And I think that's reflected. I thought that the trespass was attached to the complaint, but I may be mistaken about that. Very briefly, anything else you want to respond to? I don't think anything else, unless the court's got any questions for me. Okay, thank you, counsel. Case is submitted. Counselor, excuse me, I have a question for you, Mr. Goheen. That's an unusual name, at least. Maybe it's not in Kansas. When I was in school, the president of Princeton was a Goheen. Yes. Only very distantly, all the Goheens came into the United States that I'm aware of through Pennsylvania back prior to the Revolutionary War. And then a large number stayed in Pennsylvania area, including the former president of Princeton. My family, there were two brothers and a cousin that moved to Manhattan, Kansas sometime in the 1800s. And there's a handful of Goheens in the state of Kansas that are all resulting from that branch. Thank you. We'll shut down. Why don't the judges stay on a moment? We'll plan our conference. Thank you very much, counsel. Appreciate it."
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"stt_transcript": "Thank you, Madam Clerk. Welcome to the Ninth Circuit Court of Appeals. My name is Morgan Christen. I'm one of the judges on the circuit court. My chambers are in Anchorage, but I'm delighted to be sitting in Portland this week, sunny Portland this week, with two of my colleagues from Phoenix, Judge Hurwitz and Judge Beatty. We have submitted the first case on the calendar, so we won't hear argument in it. It is case number 25-2517, ANATA versus Oregon Department of Environmental Quality. The first case in which we'll hear argument is the United States versus Bigbeaver 25-5656. And counsel, if you give me one minute to shuffle these papers, we'll be ready to hear your argument. All set? I think we're ready. Good morning. May it please the Court. Clark Matthews for Appellant John Bigbeaver. We ask that you reverse and remand for resentencing as the District Court applied the incorrect guideline provision. So we think the correct guideline was 282.3. The District Court applied the cross-reference in 282.3 to go to 282.2. We think that was a mistake. The District Court did that because of the application note 1 and 282.2. We disagree with the District Court's reading of application note and 282.2. But before we get there, as the Court's precedent in Castillo following Kaiser, we have to first determine whether or not aggravated assault is genuinely ambiguous. Let me try this on you because I think your argument rests entirely on the index. Let me tell you why I think that. And then I want to come back to the index. Of course. If we just look at the guidelines, 2.3 says there's a cross-reference. He said if the conduct would be aggravated assault, apply 2.2. We all agree there's no definition anywhere in the guidelines or anywhere else in federal law about aggravated assault. That's right. So we then look at the, again, putting aside the existence of the index, we would say there's no clear definition. Let's look at what the commentary says. And the commentary says strangulation equals aggravated assault. So now you've got to convince me why that isn't the entire world of my analysis. Why isn't it? Right. So if you look at the beginning of the guidelines, it tells you, right, first, we got to find, you know, to determine the correct guideline provision, you look at the offense of conviction, right? And to determine then which provision you apply, it directs you to the statutory index to apply. Yeah. So that's you must be relying on the index then, correct? If there were no index, would you have any argument at all? Well, I, without the index, would I have any argument about whether or not it's genuinely ambiguous? No, I don't. But I don't know how we take the index out of the, I mean, we always use the end. I mean, every time you get it, we're saying the same thing. Your argument rests on the index. So tell me why the index makes you win. Well, because the index tells you what 2A2.2 means. Right. Because it has statutory offenses that correspond to 2A2.2, and it says this is what aggravated assault means. So what we are then, we are, see, an index doesn't say this is what aggravated assault means. All the index says is that the crime for which your client was convicted is sentenced under 2A3. Right? Yes. And then 2A3 says, 2A3 says when you're to be 2A2, we'll go to 2A2. So it seems to me in terms of the structure of the guidelines, it's pretty simple. Now the question is what constitutes aggravated assault? Right. And you're saying we can only look at the index to determine what constitutes aggravated assault? No, I'm not saying, I'm saying the index tells us what 2A2.2 means. Why don't you walk us through your analysis? Just walk us through. Right. So 2A2.2 can be understood by which statutory offenses are assigned to it, right? That's what defines aggravated assault for this purpose, right? These, and these statutory offenses have elements that need to be proven, and that is what makes up the definition. Well, but my problem with that is that 2A3, which is the one that you think applies. Correct. Says it doesn't apply if the conduct would constitute aggravated assault. So even though the index refers you to that one, there's a cross-reference in the guideline itself, not in the commentary. That's right. Which says this guideline directs you to the other one if it was aggravated assault. Right. I think that that's, that's can be explained by a, the common situation we see, right? Where somebody's charged with multiple assaults, right? They plead to one offense, like for example, assault resulting in substantial bodily injury, that corresponds to 2A2.3. But they were also charged with assault involving strangulation. But the cross-reference doesn't say charged with or pleaded to. And in fact, the guidelines are built around your conduct. And what the cross-reference says, if the conduct would constitute aggravated assault, then we apply 2A2. And so where are we missing each other here? So a guideline provision is not resolving around the conduct. A guideline section, right? A guideline section refers to the offense of conviction, right? That's why I think that's... Actually, this section doesn't. That's what we see. This section talks about if the conduct would constitute aggravated assault. It doesn't say if the crime of conviction would. I agree with you, but I'm saying what in the... I understand from the Castillo and Kaiser, we're supposed to really endeavor to try to find out what something means before we go to the commentaries, supposed to put in some work here. Fair enough. And a guideline section, right? Which 2A2.2, the guideline section, that refers to offenses of conviction, right? You don't get to the section itself unless there's an offense of conviction. And that's why I think the statutory index defines what 2A2.2 is. So you're keying to conduct, not to the elements. Judge Beatty's trying to ask a question. Of course. I'm sorry. So would that render the cross-reference superfluous? No, because it is, right? If somebody's charged with multiple offenses in a case, right? They plead to one and another one gets dismissed, right? But the other offense would correspond to 2A2.2. And if the government can prove that that offense exists, that's where the cross-reference works. The problem here is he couldn't have been charged with an offense based on this conduct with something that triggers 2A2.2. That's where we see it. But I also think it's important to kind of consider what exactly this definition is saying. Because, you know, that's where, you know, there's a real expansion here of what is covered by 2A2.2 in this definition. And there's no explanation. There's no acknowledgement that that's what they're doing. And that's why we think it shouldn't also be given deference, because there's no explanation. Hey, this is going to — we're going to sweep in more conduct, right? The commentary is just saying, hey, look, you know, this is — we're making these changes in response to these new statutory offenses. We're assigning this one to 2A2.2. We're changing the definition. There's no further discussion with that. Sir, can I interrupt? We understand your argument, and I'm just worried about — do you want to save some time? I forgot to mention I would love to save two minutes. That's why I'm here. Have a seat. All right. Thank you. All right. May it please the Court. Tim Tatarka of the District of Montana on behalf of the United States. I'll just jump right into the issue of why the — looking to the index of the guidelines can't help in terms of determining whether or not aggravated assault — the term aggravated assault is ambiguous as used in the guidelines. There's a number of problems with that, but we think the primary one, or at least one that is obvious, is there are 41 different statutory references in the index that go to 2A2.2. But of those, all but eight include reference to another guideline as well. And 31 involve a different assault guideline. So in those cases, the Court is required to look to determine — look to the conduct to determine what whether the conduct covers — is more in line with 2A2.2 or 2A2.3, for example. I'm having trouble with that. So let me tell you, if there were no cross-reference in 2A3, would you have an argument? Oh, so — I mean, if there just was 2A3 and 2A2, and he was convicted of sub 7, would you have to apply 2A3? If we were just talking about the offense of conviction, then — I'm talking about take out the cross-reference. Let's assume there's no cross-reference in 2A3. Yeah. If there was no cross-reference — No cross-reference, you could only apply 2A3, or could you not? Because you'd only be looking at that offense of conviction. That's right. But now we have a cross-reference that says you may look at conduct. So it seems to — your case turns on the existence of the cross-reference, does it not? Absolutely. Okay. Now, what he says is — and I want you to — that's the way I'm getting to respond to him. He says the cross-reference doesn't do enough duty here because what it essentially does is expands the scope of 2A2. Well, and I might be misunderstanding Appellant's argument. My understanding, at least from the reply brief, is the Appellant's argument was you have to look to the elements that — basically, that aggravated assault is defined as the elements of whatever crime is listed in the appendix. That's another way to put it. But the point — his point, he'll take it, is that you — 2A2 says — 2A2 has an index that doesn't include this crime, and 2A3 has an index that does. And so in the absence of the cross-reference, I think his argument would be compelling. So I'm trying to figure out what work the cross-reference does. Well, I think the — well, the work that the cross-reference does is it does direct you to 2A2.2. And that's — or it requires — exactly as you said, it requires the court to look to the conduct. Okay. So now if we look to 2A2, the long way of asking the question, we now have the question is why do we apply the commentary? Because — and this is where I tried to start — we apply the commentary because the term aggravated assault is ambiguous. Aggravating means to make more serious, and depends on the context that that's in. There has to be some definition of aggravated assault to apply to get past that ambiguity, to determine what aggravated assault means. And the commentary definition is the right place to look for that. We get past perhaps Kaiser's step one because it's ambiguous. How do you satisfy Kaiser's steps two and three? So step two is that the guideline definition or the commentary definition is reasonable. We think there's no question here that this is — that it was reasonable for the guideline — for the commission to include this as one of the aggravating circumstances. That this is strangulation. This is strangulation, yes. To include strangulation as one of the aggravating circumstances. The guidelines explains that — Amendment 781 explains that the commentary — or that the guideline changes were in response to Congress's recognition of the important — the seriousness of strangulation. Violence against women. It's part of the Violence Against Women Act reauthorization. And the amendment makes clear that it — that the commission was looking at domestic violence situations beyond just strangulation of a partner. And that's clear from the fact that they made amendments not only to 2A.2.2, but also to 2A.6.2, which is in the context of domestic violence, where they again listed strangulation as an aggravating circumstance. Should we — do you think that we should delay our decision in this matter pending the Supreme Court's decision in Beard? I don't think it's necessary to do that. I don't — I think that — I think that the question in that case is whether we go beyond — go beyond Kaiser. Whether we — the commentary — the guidelines commentary should go beyond Kaiser in terms of the deference applied to the guidelines. I don't think there's any question that the guidelines commentary requires at least the deference owed under Kaiser. And I think because we succeed under Kaiser, I don't think it's necessary to put this off. Although the court, of course, could. And not for very long. They granted cert in April. I thought the question was whether Stinson still correctly stated the rule for deference to the commentary. I'm sorry. So I thought the question in Beard was whether Stinson still correctly states the rule for the deference owed to the guidelines, which I guess is similar to what you're saying with respect to Kaiser. Yeah. I do think — and this may be what Judge Christian was saying — is I think that delay, they won't hear the case until — until the fall and then — and then it could take them — But this — but this person's incarcerated now. Correct. And the sentence is what? Eighteen months. I think it's — I was going to say, so he will still be in prison. So, okay. And on that point, the guidelines themselves say the most recent amendments are not meant to be applied to people who are already sentenced. Right? Correct. If this were a do-over, it would be with the — with the existing guideline. Correct. Yeah. So I think we're all getting to the same place in slightly different ways, but that's fine. But I'm not sure we — did we — did we interrupt your sidetracker question? No. Thank you. I don't think we have any additional questions. Great. Thank you very much. Okay. Thank you. We've saved your couple minutes. Thank you, Your Honor. You bet. So I just want to focus on the actual definition in Application Note 1, which I think can be read our way as well as it — so it's a felonious assault that involves — and then it says, et cetera, and then strangulation. How does that cut your way? So I read that as — Strangling, suffocating, or attempting to strangle or suffocate. Right. I think that because it's defining a guideline section, I think that that can be understood as it has to be a charged element of the offense, right? Because we're talking — it's important — we're talking about a guideline section, not a specific offense characteristic. That's a huge difference under the guidelines, right? The guideline provision has to deal with an offensive conviction, right? And you can look at that when you look at the — you know, whether something's sufficiently analogous, right? You know, if there is no, you know, guideline provision especially attached to it, you look at the — whether it's similar to the charged elements. But you said before that you thought this was designed to deal with — I pled to the lesser offense, and I wasn't convicted of the greater offense. So how can we then restrict it to the crime of conviction? Well, because that's just how the — the guideline provision itself can be understood by what the charged offenses are. I understand that. But so you said this was meant to apply to the typical scenario where somebody gets charged with A and B, pleads to B, therefore is not convicted of A. But you said under that circumstance it would apply. But the elements of A had not been established in that circumstance either. The crime of conviction, which you keep referring to, is only the lesser crime. Right, right, right. There's a difference between the offensive conviction and then — and what the charged elements of an offense are. Of course there is. Right? Of course there is. But I'm trying to figure out why you think the guideline cross-reference is limited to the elements of the offense when you've already said that you don't have to be convicted of an offense for the cross-reference to apply. Because it's important that we have charges that — these offenses that Congress has laid out, right, and then they're assigned to different guideline provisions by the Sentencing Commission. And that's what we should be focused on when it comes to finding out what the correct guideline provision is. I ask you the same question I ask your friend on the other side, which is, do you think we should delay pending the decision in Baird? No, Your Honor. He is in custody. His projected release date is October 26th of this year. So I think if we wait, it would be harmless at that point. Thank you. Thank you both for your argument. We'll take that matter under advisement."
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"stt_transcript": "Good morning and welcome to the Ninth Circuit Court of Appeals. My name is Morgan Christen. I'm one of the judges on the circuit court. My chambers are in Anchorage, Alaska, but I'm delighted to be sitting here in Portland this week with two of my colleagues from Phoenix. Judge Hurwitz is on my left, your right, from Phoenix, and Judge Beatty is on my right, your left. I just have a little housekeeping to do before we go on to the first case on the oral argument calendar. We've submitted three cases and I need to announce them. They are United States v. Bounds, case number 24-7253. Olson, 25-434. Armstrong, 25-529. And the first case on the oral argument calendar is United States v. Brown, 25-5757. Counsel, come on up to the podium. I'll just take one second here to get my iPad opened up and get ready. That way we won't have my shuffling of papers on the record. Okay, I'm all set. Peter Lansedale Thank you. Good morning, your honors, and may it please the court. My name is Peter Lansedale and I represent the defendant and appellant in this matter, Mallory Brown. Of my 10 minutes, I would request two minutes to reserve two minutes for rebuttal. Mr. Brown has presented two issues on appeal. First, whether or not he should be permitted to withdraw his guilty plea based on newly discovered evidence. And second, whether or not 18 U.S.C. 2113A, the federal bank robbery statute, is categorically a crime of violence. I'll start with whether or not Mr. Brown is permitted to should be permitted to withdraw his plea. Is that solely based on the newly discovered evidence? Pardon me, your honor. Is that solely based on the evidence? Yes, your honor. We presented a different argument. How is it newly discovered? It is newly discovered. So the the the district court and the government both argue, well, Mr. Brown made these calls. Of course, he knows about them. That's not newly discovered. Our argument is it's not the fact that he made the calls that's newly discovered. It's the fact that the FBI recorded them without telling anyone. But so what? How did they? Oh, please go ahead. No, I'm trying to figure out how the how the calls help him. They weren't submitted to the court. The court couldn't look at them. That's that's a problem. But even accepting your representation of them, how do they help him? Sure. They help him insofar as you have a man here who says, hey, I have these firearms. I'm trying to give them up. He calls the FBI. He calls the marshals. He calls the state AG's office. When you say forgive me for interrupting, but your time is limited. So I'm beginning from the premise that we have a felon who knows he can't possess the firearms and he's calling to say, please come take these firearms out of my possession. Please correct me if I'm wrong, but that's my understanding. That is correct. OK. And so I guess what I wanted to ask was this. I understand that this might mitigate his punishment. I tried to I I was a felon in possession. In fact, he's admitting in these calls that he's, in effect, a felon in possession. I don't know if he ever says I'm a felon, but he's a felon. We know he's a felon and we know he's in possession now from these calls. He wants to, I think, argue to the judge, I'm not such a bad guy because I try to give him up. But as I read the record, he did get to he did get to argue that he did. But he did not get to argue it in front of a jury. Well, but why why is why is that an argument that goes to guilt as opposed to mitigation of punishment? In other words, it strikes me that if one is a felon and one is in possession of weapons, that's the end of the jury analysis. It's not, gee, you're going to give him up at some point. Had you expressed the desire to be rid of them? Right. I think it's the I think the calls demonstrate how he came into possession of them. His mother had passed. They were living together and he was trying to she she passed away. He has them. He can't stay in the apartment. He has to leave. He needs to get rid of it. Doesn't he know that? And I'm getting back to Judge Kristen's question at this point. He knows all that. Uh, he could he could have argued that to the jury with or without the recording of the calls. Right, Your Honor. But there's a difference. And if I can pose a hypothetical to the panel here, imagine you have a defendant who has been charged with some violent crime and he says, well, I couldn't have done it. I have an alibi. I was at a major league baseball game. And then he pleads guilty. And then later, defense counsel discovers, well, the MLB records these games. And at the top of the seventh, there he is. On the Jumbotron. On the Jumbotron. There he is. But that's corroborative. Your argument is that this would have reinforced what he already knew or corroborated what he would have said? It would have corroborated in my experience doing criminal defense, a defendant's unsupported, uncorroborated assertion. I didn't do it. Doesn't hold a lot of evidentiary weight. But wasn't it still uncorroborated if he didn't submit the evidence to the district court? Why did why did he not submit the recorded calls to the district court? Some. We had a few reasons not to some legal, some practical one. I don't I didn't find any cases that said you have to submit the evidence to the district court from a practical matter. I've gone to trial with Mr. Lowney. He is very quick on his feet. He is even better when he has time to think about things. I did not want to submit all of the recordings and open the door to many questions that I the district court have asked that would have revealed our entire defense strategy. But you're asking us to find that they would have made a big difference in your client's decision had he had he had access to them before he pleaded guilty. Wouldn't it be helpful for us to see them? Yes. But we can't because you didn't put him in the record. That's correct. Counsel, what's the applicable standard of review? The applicable standard for review on withdrawing a plea is abuse of discretion. Right. Do you want to go on to your other argument? If the court would like me to, I understand that this this argument is foreclosed by Watson. The only reason we're bringing it up, I think, is to preserve it for appeal, depending on how the panel decides this case. I think Burwell has out of the D.C. Circuit has a good divisibility analysis that goes into the history of when Congress in 1986 changed the federal bank robbery statute to include extortion. Burwell has a good analysis on the syntax there where it's the statute doesn't use semicolons. It uses commas. It's in the same paragraph as the forced violence and intimidation language. It's not broken out into a separate paragraph, let alone a separate subsection. Watson should be revisited. This issue deserves more attention. Watson, in conclusory fashion, says it's divisible. Extortion is a separate crime, separate element, not separate means. But it doesn't go into the analysis that I think this issue deserves. All right. Judge Beatty, anything else to interpret? No. Do you want to reserve the rest of your time? I will. Thank you, Your Honor. Good morning, Your Honors. Brian Lowney, AUSA from the District of Montana. We hear you click on your feet. That's what I hear, Your Honor. I hope to vindicate that opinion. I'm here on behalf of the United States. As the Court noted, I'll address the motion to withdraw the change of plea, as I think that is the major issue in front of this Court. The standard is abuse of discretion there. The District Court made this decision without, I think in part, because they did not have the evidence that defendant talks about being so important to his case. As Your Honors will note, at the excerpt of Record 19, the District Court's order reads, quote, however, despite defendant's possession of the voicemail recordings, defendant did not submit them to the Court as evidence. Interestingly, defendant did not provide any evidence at the hearing whatsoever. As such, there is no way for the Court to determine whether the recordings are indeed exculpatory or whether they are, as the government argued, inculpatory, end quote. Why didn't you submit them? Well, because he's quick on his feet. He is also quick on his feet, Your Honor. I think the Court will see from the way the record unfolded, this was not the central argument that Mr. Brown presented in his motion to withdraw his plea originally, though this is not an appeal in front of this Court now. What he originally said at the District Court primarily was, I want to withdraw my plea because I didn't understand the guidelines. And I think you can see that from the way that the pleadings unfolded. But also, counsel's argument at the motion hearing was, I'll quote again, this is excerpt of Record 80 in lines 8 to 10, counsel said, quote, the thrust of our arguments in our motion and briefing is that Mr. Brown relied on inaccurate advice as to what his guidelines would be, end quote. And then he went on to detail that the guidelines were a lot higher than Mr. Brown expected. And in the briefing coming up to that hearing, there was a brief filed saying he wanted to withdraw his plea. But the focus of that was, I didn't understand what my guidelines were. Then there was a small mention of having some exculpatory evidence that he discovered in the form of talking to three witnesses. That's what is in the briefing. Does the briefing explain who those three witnesses were? The record does not explain that. I can't figure out. Well, maybe I think there is some indication. But let me just ask you why the delay in producing these to the defendant? Well, Your Honor, the government was unaware of them. We became aware of them because the defendant alerted us to them. And then we went to go get them at his request. Now that the underlying agency that investigated this case, this was a case in Northwest Montana that occurred on a train. Eventually, the ATF was called to investigate. These calls that the defendant is talking about were made to the FBI and to local law enforcement, the King County Sheriff's Office in Seattle. So those are the recordings that were eventually produced. The summary of why the government didn't have them is because we weren't aware of them. They were not a part of what the case investigation entailed originally. In terms of timing, how, because I can't tell from this record, how long before the guilty plea were the calls made? Before the guilty plea or before the case was charged, Your Honor? Well, I'm thinking of the guilty plea because his contention is, had my client known about this, they wouldn't have pleaded guilty. So I'm trying to figure out what the gap was. Well, I don't want to go outside the record too much unless the court wishes. No, I don't want you to go outside the record at all. What you're telling us, the reason I can't find out from the record is that it's not in the record? That's right, yes. Well, wait, I don't understand that. Isn't the gap that we're talking about the gap between the date of the arrest and the date of the plea? You know that. To Judge Hurwitz's question, I think I was trying to address when the calls were made and that timeline to when the change of plea. Okay, so I'm asking a different question. I'm sorry, Your Honor. I'm trying to figure out why it took the government so long to find these. The interval, he gets arrested and then he decides to enter his guilty plea. And on the day he entered his guilty plea, apparently he didn't know that we had the equivalent of the photo on the jumbotron that corroborates his story. So how long was that? Did he enter his plea right away? And that's why the government didn't know it had this evidence? Or was there some, what's that interval? Do you know? He entered his plea in January of 2025. Okay. And the evidence, I. And the day on the train when they arrested him was? It was the prior year of January 2024. So then he was indicted mid-year and then he pled shortly thereafter. Okay, and the interval that you were trying to pin down for Judge Hurwitz, that's what you don't know? That interval? I know that personally because I have the calls. I'm just saying it's not in the record. So I certainly can address that if the court wishes. But I, as it's not. That's fine. That's fine. I think we've monopolized. Judge Beatty, do you have more questions? More questions? On the Watson issue, I assume a petition for a hearing in bank is coming. And you'll get a chance to respond on that? Perhaps, Your Honor, yes. As the court knows, the government's position is that this court is bound to follow Watson. I think the reasoning is sound. It is the Burwell case is an outlier decision among the circuits, as the government cited in its brief. The First, the Second, the Eleventh Circuits have found, similarly to the Ninth Circuit, about the divisibility of 18 U.S.C. 2113a. I think that is settled by my view of those cases that address it. Besides Burwell, they have the better argument as to why the statute is divisible. And why it qualifies as a crime of violence in this particular case. I will just note that when the district court was evaluating whether Mr. Brown was offering a fair and just reason to withdraw his plea, one of the things that the district court has to evaluate in the newly discovered evidence prong is whether the new reason is offered in good faith. And I highlight that to say that this reason was not, again, the thrust of the defendant's motion at the district court level. And I think that the district court's finding, particularly the district court says, again, in excerpts of Record 19 and the order, denying the motion to withdraw his plea, quote, the occurrence of defendant's phone calls might be new information to defendant's counsel, but certainly not to defendant, end quote. And reading that order, I think there is at least some inference that this reason is not being offered in good faith. That, in fact, the reason that the defendant is trying to withdraw his plea is because he was surprised that his guidelines range was so high. And now shelters under this argument that this evidence is somehow newly discovered. He also has to show that he subjectively did not know that this evidence existed, which I don't think he can show. But certainly the record doesn't contain evidence of. There's argument from counsel saying he didn't know they were recorded, but there's no evidence of that. There's no affidavit from the defendant. There's no other witness that says that. The calls themselves are not in evidence. And so it would be difficult, I think, for this court to say that the district court's decision was illogical, implausible, or without support and inferences from the record when it denied his motion to withdraw the plea. Lastly, if the defendant satisfies those prongs that it was made in good faith and that he subjectively did not know about this evidence, he also has to show that it was objectionably reasonable not to have known about or anticipated this material as well. And so in that fashion, what he is claiming here, at least in front of this court, is that he called a police agency and could not have anticipated that this was going to be memorialized in some way, which I think is not a reasonable argument to make. When you call an agency like the FBI or even the King County Sheriff's Office, they are making a record of that in some way, whether it's recorded or whether there's a report. That is very clear to people that are engaging with law enforcement that their information that they're giving them is likely to be memorialized in some way. So I don't think it's objectively reasonable for him to say that he couldn't have known about this evidence. And then lastly, I realize I said lastly, now this is really lastly. Even if the court finds all those things, the district court needed to find that the defendant, this reason could have at least plausibly motivated a reasonable person in the defendant's situation not to plead guilty. And so the only evidence in the record that the district court had and that this court has about what these calls say is inculpatory. Now, counsel says there's a dispute about that, that maybe they're exculpatory in some way, but the district court didn't have and this court does not have any way to judge that. Would it have been a defense if he could have shown what he just represented, that his mom died and the guns were in her house and he needed to get them out of there? As I said in the hearing transcript, I don't think it is a defense. I can't see the defense. It is not clear to me what defense that supports. I think there is some argument and mitigation at sentencing, but it is not a defense to the crime. Anything further? No, your honors. Thank you. Thank you. Thank you, your honors. Mr. Lowney zeroed in on the second prong of the Hernandez test that a person could objectively not have anticipated this evidence. And I think the strongest argument that, well, no, a person could not have anticipated this is, one, when I called the FBI, they did not inform me that the call was being recorded. I'm like, okay, sure, maybe the FBI records the calls, but the government didn't even know about them. The government whose job is to go out and gather this evidence and then prosecute the case did not know these recordings existed. But wasn't there a difference in the government's knowledge and the defendant's knowledge and that the defendant knew he made the calls? The government at that point didn't even have reason to believe he'd made the calls. Sure. Right. Right. There is a difference there. And I guess I would just circle back to the jumbotron at the Major League Baseball game. I mean, of course, that hypothetical defendant knew he went to the game. And if he doesn't tell anyone else, well, no, I went to the game. But if you had a video of yourself on a jumbotron, you would have submitted that to the court. Right. I would have. Yeah, that one I would have. And I think one of the reasons that we haven't gotten into yet is the timeline here is important. We file the motion to withdraw. I give Mr. Lowney a call and say, I have a hunch that there might be recordings here. I don't know that they exist. My client doesn't know. Would you look into this for me? And to Mr. Lowney's credit, he jumped on it. But we didn't get these recordings until a few days before the motion to withdraw hearing and after the reply brief in support of that motion had been filed. And so we get them a handful of days before this hearing. I review them and, OK, well, now our entire argument changes. Now it's not just about the guidelines. Now it's just about like, oh, I made these calls. Now we have proof of it. One other thing that I want to end on, if the panel doesn't have any more questions, is that it's ambiguous whether or not this is inculpatory or exculpatory. And prima facie, OK, well, that would support this argument that, OK, well, the district court didn't err. But I would argue to this panel that the Rule 11 standard for withdrawing a plea is supposed to be liberal and applied, or it is supposed to be generous and applied liberally. And I would argue that under that standard, ambiguity should be resolved in favor of the defense. And as Judge Hurwitz asked, if they were so inculpatory, the government could have submitted them. The government had them. On the other hand, if they were so exculpatory, you could have submitted them. Correct, Your Honor. That's our problem making a decision about. And the poor district judge says, well, nobody gave them to me. So how am I supposed to know whether they're ambiguous, not ambiguous, plainly exculpatory or plainly inculpatory? And how do we say she abused her discretion? It's a very high standard. And it's an important issue to your client. So we're really asking for your best shot. Well, my best shot is that the timing here changed our argument just before the hearing. I mean, there are five phone calls. One of them is well over an hour long. I think the timing is helpful to understand as a response to the government's argument that this may not have been in good faith and that you really shifted the focus of the motion. But so I'll grant you that. But we're still here without the evidence. And we still have the standard, right? So we'd have to show that this is new evidence. Your client didn't know, couldn't have known, shouldn't have known about it. And then even if you go with the jumbotron theory, which is that he knew it made calls. He didn't know necessarily that they were recorded. By the time you showed up at the hearing, you knew all that. And so without submitting the evidence, it seems like it's really tough to say that district court abused her discretion. Sure. I certainly understand your Honor's point there. Is it your contention? I'm interrupting you, forgive me. But is it your contention that it would have been, as a matter of law, that it would have been a defense to the charge if these guns had been not his, but in his mom's house and she died and he needed to somehow get them returned or turned in? Yes. So that's a little bit difficult because of Johnson, which says that there is no, there is, may I finish? Yeah, please. Because I don't think it is a defense. And if you think I'm wrong about that, maybe this is the last corner that I haven't fully explored. But what about Johnson? I think under Johnson, which precludes an innocent possession defense, I think that door might be closed. But I do think it would change how a jury views the case. I do think that a jury looking at, okay, his mom dies, he has these guns. What is he supposed to do? Okay. Fair enough. Anything further, Judge Beatty, Judge Hurwitz? Thank you for your argument, both of you. Thank you, Your Honors. We'll take that case under advisement and go on."
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"stt_transcript": "but the next case on the calendar, which is United States versus Taylor 24-6464. Whenever you're ready. Thank you, Your Honor. Good morning and may it please the court Jessica Snyder on behalf of the appellant my Isha Taylor and I'd like to reserve three minutes of my time for rebuttal. Sure. Just keep track of your time. Please. Thank you, Your Honor. You bet in the face of a five count federal indictment. My Isha Taylor exercised her right to a jury trial and was acquitted of the majority of the counts against her. The district court sentencing decisions disregarded the jury's verdict and diminished Miss Taylor's jury trial rights recognizing that I have limited time and many issues today. I'd like to start by talking about the two sentencing errors that implicated Miss Taylor's constitutional jury trial rights and then I'll proceed to the prosecutorial misconduct or be otherwise directed as I can be helpful to this court. Okay. So starting with the acquitted conduct record here confirms that Miss Taylor's sentence was increased based on the acquitted counts not based on the hung count and that's for a couple of reasons here. Even if we buy that even if you persuade us of that could you go to the other problem which is the Mercado case and the date of the effective date of the change? Absolutely, Your Honor. So I think there's two questions there. The most important I believe is this court's path under Miller v. Gammy to making the determination that there's sufficient intervening authority that undercuts the reasoning and theory of the Mercado majority case to allow this court to not be bound by it and I want to touch on that first. Okay. So the circumstances of this case are incredibly unique. What we have here is the Mercado's majority opinion resting its reasoning on the fact that it thinks that the Supreme Court had decided the Sixth Amendment issue in Watts and that is what we know from intervening authority to be undermined at this point and what we have here which is unique is both written opinions by many Supreme Court justices specifically speaking to this issue and action by the Sentencing Commission and their reasoning and their action adopting Amendment 862. Let me stop you for a second. Is there not a concurrence or dissent? If concurrences and dissents worked, the law would be very different because I'd make a lot of them. Do we have an opinion of the Supreme Court that rejects the use of acquitted conduct? Your Honor, we don't have one that comes after Mercado. What we have and the Sentencing Commission wouldn't have done what it did. It wouldn't have needed to if the Supreme Court had ruled otherwise, right? That's right, Your Honor. That's right. Right. They haven't. They haven't. Several of them have lamented the state of using acquitted conduct, but I think that's why the Sentencing Commission took its action. I take Judge Hurwitz's point. The Commission said, well, we might change it, but we're not backing it up. We're not making it retroactive. Well, both. But two points, right? One is that they had to act because the Supreme Court hadn't, didn't have a majority. And then there's the other question, which is the retroactivity. The part that's undermined, Your Honor, by an actual Supreme Court case, but I will note that this predates the Mercado's opinion, is the fact that the Mercado majority thought they were bound by the Watts decision and that the Supreme Court had decided the Sixth Amendment issue and that it said it was permissible under the Sixth Amendment to sentence under acquitted conduct. What we know from Booker and from all of the writings of the Supreme Court since that time is that the Supreme Court decision has to be an intervening Supreme Court decision. That's correct, Your Honor. In other words, we may have got the law entirely wrong at the time, but we're still stuck with our prior decision unless there's something new that tells us. What we have here. Was that, excuse me, was that a yes? Do you agree with that? I do agree. I think that the Miller v. Gammie path requires intervening, intervening authority that undermines the reasoning or theory. It doesn't have to be holding that squarely. I'm not trying to sidetrack you. I just want to make sure you agree with the premise. Go right ahead, please. What I was going to say, Your Honor, is that while we don't, and I don't have a Ninth Circuit case that says that this is permissible. This is different from the other circumstances I've seen Miller v. Gammie approved. But what we have here is intervening action by the Sentencing Commission and state written statements by five Supreme Court justices. To the extent this court doesn't think that's sufficiently binding on this court or sufficiently evidence that the reasoning in the Mercado majority is undermined and wrong, then I would urge this court to refer this issue to the en banc panel for review. Or you can file a petition. Can I just back up a minute? Then you're asking us to look at this change in the sentencing from the Sentencing Commission as intervening authority. Yeah, and we have to meet the Miller v. Gammie standard under your theory, which was, you know, it has to be irreconcilable. And at a minimum, it's not retroactive, right? Reasoning is what's irreconcilable, Your Honor. The reasoning is, and I agree with Your Honor, it's not retroactive. The reasoning is that the Mercado opinion is based on the premise that the court has decided that acquitted conduct sentencing does not violate the Sixth Amendment. I know that. I appreciate that. But what I'm trying to get at is if you're relying on action by the Sentencing Commission to be your intervening event, I guess we'll call it, right? That didn't become effective or hadn't become effective as of the date of this sentencing. So that event, that change from the Sentencing Commission wasn't operative yet. No, Your Honor, that's more relevant to this court considering whether or not it has a path under Miller v. Gammie, not what the district court should have applied. I don't know because this is a bit of a mind teaser to adopt the path. I don't think we've ever done this, have we? Your Honor, I could not find a case. I found cases where the Supreme Court has reasoned about other issues in an actual case that this court has then said was sufficient without having the holding overturned. I have not found a case that mirrors this. Judge Hurwitz and I have taken up a lot of your time on this. Have you found a case that says the Sentencing Commission's statements can be intervening authority? Not specific to the Sentencing Commission. There have been agency actions that have been considered intervening authority in other contexts. The government argues that she wasn't sentenced based on acquitted conduct but based on a hung jury. So how do you respond to that? Thank you, Your Honor. I think the record makes this clear for a couple of reasons, that Ms. Taylor was sentenced based on acquitted conduct, not based on the hung count. The first is the district court's sentencing language itself. Looking to the words of what he held in his sentencing ruling, which was the offense level is, quote, then increased by four points for the possession of a firearm in connection with drug distribution. Drug distribution is most parallel to count three, one of the acquitted counts, which was distribution of cocaine. The government argued that the court in its sentencing materials and the PSR did the same, the court could apply this enhancement based on possession of cocaine with intent to distribute the hung count or drug distribution. The court used the word drug distribution. That associates with count three. And the oral argument at sentencing only further supports that the court was making this consideration. The judge asked specifically the government if it could consider the evidence submitted at trial relating to the acquitted counts, specifically referencing count which was possession of a firearm and furtherance of drug trafficking and said my standards different. I consider preponderance of the evidence as opposed to beyond a reasonable doubt. So he specifically asked about that course. And then his ruling, he used the words drug distribution. You've used about half your time now on this, on trying to convince us that our prior decisions are wrong. And I'm sympathetic to it. But let's assume for a moment that we think we're stuck with our prior decisions and you can move to have us reconsider them in bank. I'd be interested in you addressing the obstruction of justice enhancement and tell me why you think that was improperly applied. Thank you, Your Honor. I want to start by talking about the obstruction of justice enhancement relating to this court's two most recent opinions on point, the Williams case and the whole Romero case, which were decided this year and addressed in our 28J letters. In order, what this court has said recently, reiterating prior reasoning and precedent, is that in order to find the obstruction of justice enhancement based on a defendant's trial testimony, that the sentencing court must explicitly find that the perjury was for the purpose of obstructing justice. That's the willfulness. That's the willfulness, Your Honor. So are you contending there's not sufficient evidence to establish willfulness or are you just contending that the judge never made the appropriate finding? Both, Your Honor. Well, let's, I'd like to direct you to the first one because whatever else, whatever other significance we give to the colloquy between counsel and the court about she knew she was under supervision, I think there's probably enough evidence for a judge to conclude by a preponderance of the that she knew she was lying. My question is a different one. Did the judge actually make the finding? And if he did, or she did, I forgot who the judge was. He did. Why was it, why was it sufficient? Why was it insufficient? Your Honor, the judge did not make the finding that it was for the purpose of obstructing justice here. And the whole Romero and Williams cases talk about the, I just very quickly, I want to mention whole Romero specifically talks about the harmless error standard in this context and is very relevant. But turning to the actual finding that was made, the court said, quote, I do find an increased level of two is appropriate for obstruction, primarily based on the expungement testimony. The prosecutor at the end of the sentencing rule, I think the government recognized, may judge, you haven't said, you haven't said willfulness. So do you, are you finding willfulness and materiality? And the judge said, yes, with respect to expungement, putting aside whether that is sufficient for finding willfulness. What this court has said is that in whole Romero and Williams is that in order to find willfulness, there must be an explicit finding explicit with specificity that the perjury was for the purpose of obstructing justice. Now, let me ask you what the judge then said thereafter and see whether or not, why do you think that wasn't enough? Because the judge essentially said after that, uh, essentially based on the fact that she gave this testimony right after the jury asked the question is, does that establish willfulness or does it only establish materiality? What he said right after the prosecutor asked was with respect to expungement. Yes. Um, they, they, but he said a little bit more, he said with respect to expungement. And then I, I have his exact words here, but we don't have to quote him. And she basically said, because it was given right after, right after the juror question. And so I'm asking you whether that's a finding of willfulness or materiality. It's my, my sense is it's a finding of materiality, but not necessarily of willfulness. I think that's right. Your honor, especially in light in this court's, um, requirement of explicit, an explicit finding that it was for the purpose of obstructing justice. But how does, how I'm sorry to interrupt you, but I will give you the quote because I happen to have it pulled up. Uh, the district judge then said, uh, the findings are based on, on the fact that her testimony did come fairly shortly after one of the juror questions ask about expungement. So I'm not sure how the timing of what she said, um, relates to whether it was material and whether it had the, uh, possibility of impacting the verdict, right? That's the materiality. And if she said it, um, you know, right after the question from the juror or a significant time later, still, that doesn't seem to reflect materiality. It seems to go to whether she did it with intention, whether she was, uh, whether she was massaging her testimony, changing her testimony in response to the question so that she could try to influence the verdict. Two quick responses, Your Honor. First, I think that this court has required specificity and Well, wait, wait, wait. So what you, you also have to keep in mind that our case law must be reconciled with Dunning, which is the Supreme Court's decision on this very issue. We can't overrule it. And so our, our case law has to be interpreted to be, uh, consistent with what the Supreme Court has said on this issue. And the court has said it's preferable for the district court to address each element of the alleged perjury in separate and clear findings. But it's sufficient, it says more, I quote, a determination that enhancement is required is sufficient, however, if the court makes a finding of an obstruction or an impediment to justice that encompasses all the factual predicates for a finding of perjury. So I don't read that to mean that there are magic words required, that the district judge has to say the words intent, purposeful, willful, material. Um, it just has to make the findings that encompass the elements of the perjury. A really quick factual clarification. And then I do want to save the remaining time for rebuttal. In this case, what happened after the jury question is that the prosecutor asked Miss Taylor about expungement explicitly. The prosecutor initiated this, she said. But she's, she's still testified. She did. And she said, it's true. You've never applied to have this expunged. Counsel, now you're talking about whether the judge could have made the finding, whether the record supported the finding. But I understood. So I'm now I'm a little confused about your argument because I don't hear anybody. Well, I'll just speak for myself. I, I, I, I, I take your point about the record. And I think I take Judge Hurwitz's point that the, the, the record would have supported, I think could have supported such a finding. But I understand your argument to be, and this is why you're causing me some confusion, that under Ho versus Romero, we have said, and quite recently in perjury cases, the express requirement for a finding of willful intent means the intent to obstruct justice. And we've reiterated, as I said, very, very recently, the earlier statement that has to be an explicit express finding. So in response, I'm not sure you're really grappling with Judge Beatty's question, which is asking you whether we're bound by this circuit precedent or by the United States Supreme Court precedent. And I'm sorry, Your Honor, I get, I'm getting distracted by that fact because it's been kind of incorrectly characterized. Let's get to it. Let's get to it. Yes, Your Honor, I think that we bound by the, I think the requirement for the explicit finding is absolutely required by this court's precedent. I don't think that's inconsistent with the Supreme Court. And I think it's because of the fundamental concern about chilling defense opportunity to testify on their own behalf. The fact that we need a clear record on this. And I know I'm over my time. Before you sit down, I think this is an easy yes or no question. But you say that a lot. I know. It turns out not to be. But I think your brief only challenges the absence of a finding on willfulness. Am I wrong about that? I think it, Your Honor, I will verify the answer to this before my rebuttal. Fair enough. Hang on, we've got one more question. I'm going to ask another question, Judge Kristen's very kind and generous. I'm sure she'll give you some time for rebuttal. Now I've lost my train of thought. Oh, if we were to agree with you and return the case for resentencing, which guidelines would apply? Your Honor, my understanding is that the current guidelines at the time of the resentency would apply. So guideline 826 would apply in this case. Oh, OK. When you come back, we'll put two minutes on the clock. We took a lot of your time. Good morning, Your Honors. May it please the Court. Sarah Barr, appearing on behalf of the United States. Can I interrupt you right at the top? I guess I just did. My understanding is that if we send this back for resentencing, it's a do-over with the guidelines that were in effect at the time. Is that wrong? I think that's wrong, Your Honor. I thought that too and looked it up yesterday, and I believe it will be the new guidelines in effect now. However. What's your authority for that? My authority is in an email that I sent somebody else and didn't jot down for myself. OK. But I would be happy to provide it to the Court in a supplemental brief. I might actually take you up on that. We get those offers all the time and we say, yeah, except I would like that authority. So go right ahead. I will be sure to do that. And I'll just sort of add, I don't think that the result would be any different because even if the Court relied on the acquitted distribution conduct, that conduct is almost entirely coextensive with the possession with intent to distribute conduct, which was not I'm a lot more concerned about the obstruction and perjury, and I'm not so sure that that wouldn't make a difference. I don't know. OK, great. But are you, do you have the same position vis-a-vis that? Because I think that added two points to the guideline calculation. I'm sorry, I'm not sure I'm understanding your question. My most concern, I'm just one of three, but the thing that I'm most concerned about on this sentencing is the perjury finding or the lack thereof. And so I don't take your argument or your statement to mean that you're saying that that wouldn't make a difference or requires resentencing. Correct. Correct. Yes, absolutely. I'm sorry. It would still be a two, if it were found, it would still be a two-point enhancement. Yes. The base might be different under the new guidelines. Well, I don't think that's right. The base would be the same because of the arson. Right. So that's what I'm trying to figure out, whether your answer to her, to judge. OK, now we're saying three different things. How about if you go on with your argument? And it sounds like we need to get a, but it's a very, it's a yes, no answer that we'll get to about whether, which set of guidelines would apply on remand. So if we remand, how's that? OK, go right ahead. OK, so regarding perjury, I think there's no dispute that the case law says that there must be an explicit finding. There is no case law that says what the form of that finding must be. Can I stop you there? Because you're, I know I just said I wouldn't do that, but you seem to be conceding the point there's a finding or requirement of an explicit finding. Are you relying on Ninth Circuit authority or could you go back to Judge Beatty's exchange with your friend? Sure. Ninth Circuit authority or Supreme Court authority? Supreme Court authority. I think the Ninth Circuit authority is consistent with the Supreme Court authority. I agree there's no magic words. There needs to be an explicit, an explicit finding. There need to be words, enough words. OK, thank you. And so in this case, was there a finding of, do we have all the findings that we need? In particular, we're concerned about willfulness, at least seems like that's where you're getting the questions. Yes, there was a finding in two ways. First, the court explicitly confirmed to the prosecutor, yes, I am finding willfulness pursuant to the expungement testimony specifically. Well, he didn't say that. He didn't say, yes, I am finding willfulness. He said, well, he said yes when the prosecutor asked, are you finding the expungement testimony to be willful and material? Did the judge ever utter the word willfulness? The judge himself did not utter it. What he did in addition to make, to state those explicit words on the record was clearly adopt the government sentencing memo, which contains extensive analysis, citations to the record, citations to this court's case law, citations to the USSG manual. There are timestamp references and quotations to the exact testimony that the government was pursuing. I don't think there's any question that the finding would have been supported here. That's just on my scorecard. Maybe Judge Hurwitz disagrees with me. My question is whether or not the finding was made. Go right ahead. I want to focus on what you had to say. One of the reasons we need a finding, whether it's in magic words or otherwise, is to review the basis for it. And at least in terms of the sentencing, the judge never made a finding of material, of willfulness until the government prompted him. Correct. Yes. And if he, if the government had never prompted him, we would have, I don't think so because we still have the adoption of the government sentencing memo, but it would be a different conversation. It'd be harder. Okay. So he now says yes to the government's question. And then he, and he says, and as to the expungement, Judge Beatty read you the words before, but essentially it was because it came right after the juror's question. Correct. I'm trying to figure out why that supports willfulness. Because remember the defense of Ms. Taylor was, yeah, I was wrong. I thought, I thought the expungement of an eviction or some thing really constituted expungement of the crime. You know, I might not believe her, but I'm out to find her a fact, but doesn't the judge at least have to address her defense and say why I don't believe it. He needs to find that it was willful. And I don't know. No, but is it, is it enough just to say willful when she's posed a very specific defense? I didn't do, this wasn't willful because I was honestly mistaken. If I were the trial judge based on this record, I would reject that in a minute, but I'm not the trial judge and the trial judge didn't reject that. What he said was it occurred in close proximity to the juror question. And I don't find that as having deal deal. I'd like a finding by the trial judge that she wasn't telling them that she, that she was willful. And I'm not sure I can find one. If I may answer that in two ways, number one, I would point you to, let's see the testimony on, or excuse me, not the testimony, the colloquy between the parties and the court about what to do about the jury note. And during that colloquy where the defendant was sitting right there, listening to the whole thing, the court suggested, well, I don't see expungement is relevant in this case. So I'm inclined to tell the jurors it's not relevant. And the government, I think it wasn't. And the government said, hold on a minute, hold on. There might be some relevance here because if her conviction was expunged, then she's not, she's not guilty on counts one and two, right? The defendant is hearing the government say that if the conviction is expunged, she's not guilty on counts one and two. Let's put aside whether that's correct, but go on. Right. But that's what was said and that's what the defendant heard. And then she went up and testified to clear falsities that her federal conviction, that all of her convictions were expunged. That was false. We all agree that was false. I think I'm trying, but why, why does the post proximity establish that she just wasn't mistaken? I think under a preponderance of the evidence standard, the court could make a rational inference that the proximity made it willful. It was also different. That's what I'm having trouble with. Why does the proximity make it willful? The proximity, I don't think it's material at all, but nobody seems to be fighting about that. But why does the proximity make it willful? I may be misspeaking when I say proximity. I think really what's more important is the sequence. It's really more the sequence, the fact that it came after and the judge used the term proximity. But I think in the context of the government sentencing memo, in the procedural history of the trial. Can we also look at, I'm sorry to interrupt you, but earlier in the colloquy, there was an exchange between the judge and I believe it was defense counsel and defense counsel was arguing. It wasn't a knowing misstatement because Oregon has been changing its laws with respect to expungement. And the district judge said, but wait a minute, I have this defendant on supervision for a prior felony. She's been under my supervision. She knows that this hasn't been expunged because she's still under supervision. So that seemed to be another really explicit part that happened during the sentencing colloquy where the district judge was making statements, findings of fact about willfulness. I agree with you, Your Honor. That shows what the court was thinking in its mind. And I think that's relevant. I think it's all- But the problem is that our problem is that our precedent requires an explicit finding. And we've said this for decades now over and over again. And we've also mused, I think on the record about whether that requirement is strictly necessary, but it is our precedent and you don't seem to be pushing back on that. My concern is that this exchange that we're having here today seems to be exactly why we've required these explicit findings because you've got, I think, persuasive, strong arguments about what the judge must have been thinking. And I'm not pushing back on whether the record would have required it, but there's an important First Amendment, the policy reason for the precedent in the first place that I want to reiterate and take your time with that. But isn't this the rub? Isn't this why we have this requirement? Absolutely. I absolutely agree with you, Your Honor. And I think that this case would be much harder for us if we didn't also have the court unequivocally say four different times that it was adopting the government sentencing memo and quote, all of the reasons contained in it as thorough and correct. Okay. So I think that's a strong argument for you. But if we go that route, it just seems to me that we disregard our own precedent that uses the word explicit. And then, of course, this Hogar versus Ramirez case, which is, you know, 2026, very recent case, reiterates that. So help me reconcile those two things, please. I don't think it's disregarding your precedent. Like I said, I think what the precedent is very concerned with is the substance of the findings that must be made. It must be findings of falsity, of materiality and willfulness. But do those work? I think that's the difference that probably Judge Christin and I have in approaching this is explicit findings, when I read Dunning, it says there must be a finding that encompasses all the factual predicates of perjury. But I don't read it to mean the word willful, the word material, the word falsity, that those actual words have to be uttered. The district judge has to say enough that we know that he or she has reached factual findings that support the elements of perjury. I agree with that. Do you agree that that can be squared with our precedent? I do. This court has plenty of precedent. What do you think explicit means? Maybe that's it. Maybe we think explicit is a different thing. I'm not trying to be flippant. I think you're right. I think you're right. Okay. I think explicit means words that allow this court to know whether it is making a finding related to the substance of these elements. And those words can be, I adopt the government sentencing memo for all the reasons contained in the sentencing memo. Could they be, I adopt the pre-sentence report? If the, well, it. They can't, can they? There's cases that say it's not enough to rely on the pre-sentence report. Well, I disagree with you on that. They don't say that it's, the pre-sentence report in that context is, it's insufficient to, as an example of explicitness, they say the substance of the pre-sentence report was insufficient there. So I think if the pre-sentence report in. So why isn't the substance of the government's sentencing memo also insufficient to establish? So the problem with the, with the PSRs in various cases has been it didn't cite the trial testimony or it didn't make findings on willfulness or materiality. There were no facts. It was, it was just insufficiently supporting one or more of the substantive elements. So, so we would argue in that case, or we would agree in that case, the court made an explicit finding, but the finding was insufficient because the PSR doesn't contain enough information required for the, for all three substantive findings. But that's not what we have here because we have the government sentencing memo that is 18 pages, extremely thorough and comprehensive, citing all of the facts, all of the record, all of the case law. Beyond that, beyond the memo, I'm, I would, and I worked in a trial court, so I, I assume this is happens here in trial courts as well, that something happens and the attorneys from one side or the other stand up and prompted the court to avoid reversible error, to avoid an error on the record. Your Honor, you forgot to, did you intend to allow the defendant to speak? Did you mean that finding when you're making a finding, you know, things like that, which seemed to me perfectly acceptable and reasonable so that we don't have needless appeals if something can be addressed on the spot. So I guess the, the implication of, Your Honor, are you making a finding of willfulness and materiality? Yes, in my view, would be the same as yes, I find it was material and willful if the judge had said those words. Is that consistent with what you think happened here and what happens in district court in Oregon? Yes. So let me, let me just play with that scenario a moment, see what your position is. Let's assume that we just get to the end, you know, the judge says, I, I, I'm going to apply the obstruction, the enhancement for obstruction, doesn't say why. The government, by the way, no criticism of the government here, did exactly what it was supposed to do. Said, judge, I think you forgot to address willfulness and materiality. And the judge says, yes, I find willfulness and materiality says nothing else. Would we sustain that? Simply because the record might well support his conclusion. Don't we need something, some basis for his conclusion to review? So what you need is enough of an explanation to satisfy you. We need some court of explanation. Considered the party's arguments and has a reason basis for exercising his, your view is that the, the adoption of the pre of the government sentencing memorandum provides the explanation. Absolutely. I think, I don't know that we would be here if what the court had done was just copied and pasted the government sentencing memo and put it in a written decision and issued it. Counsel, I'm going to stop you there and, but add a minute to your, just keep rolling. I'm going to give you another minute or two to, because we've taken so much of your time on one issue. Can you please address the Mercado issue? Or, I mean, unless you don't want to, I just wanted to give you an opportunity. Yes, no, I'm happy to address it. Does the court have a specific question? I'm concerned about the, the fact that our, our, our case law is what it is. Our precedent was what it was, I guess I should say. And the sentencing guidelines had been amended, but they hadn't been, the new effective date hadn't triggered those guidelines yet. And opposing counsel has got a theory about why the sentencing commission's action can be treated for Miller versus GAMI purposes as undermining. I'm not paraphrasing very well as undermining, so that that new rule should apply here. Sure, I don't, I think there, there may be a set of circumstances where that theory would be valid. I don't think it's this case, particularly because I do think it matters that the sentencing commission did not make it retroactive. And so as a matter of policy, it did not find it needed to correct these issues that it wanted to change going forward. But at the top of the hour, so to speak, you said that if we send this back, that the new set of guidelines apply? I think it does. But again, I don't think, and I will double check and send the case law that I found. What's tricky, of course, is the case law. Much of the case law talks about the guidelines that are in effect on the day the sentencing applied. But when you, when you send it back, of course, I think is, you know, I want that specific. And I thought that's what we object. But, you know, maybe we got it wrong. That's, that's something we'll need to follow up on. But be that as it may, I think Mercado remained our, although many people had lamented it. Do you agree that with Judge Hurwitz's question, when we walk down that path, that the United States Supreme Court doesn't have, never had a majority on that point? That's correct. Okay. Do you have more questions on that? Do you have questions? No. Okay. Thank you. Thank you. Thank you, Your Honor. To first very quickly answer Judge Hurwitz's question, I do think the way we raised the issue on obstruction is we did challenge all of, all of the required court's findings in our opening brief. So just to resolve that issue. I want to talk about why the court's blanket reference, positive reference, and agreement with the PSR and the ascendancy memo aren't sufficient to satisfy this court's precedent for explicit and specific findings in the obstruction of justice context. So this court addressed this issue in Williams. In that case, for the PSR. In that case, the court adopted the PSR pursuant to the, for the obstruction enhancement. And this court found that that wasn't sufficient to satisfy the court's unique concern with these explicit factual findings that need to be made. Well, what did the PSR say in that case? I mean, I think your friend on the other side is suggesting that the problem was that the PSR didn't, even if adopted, the document itself did not include sufficient findings. And Your Honor, the PSR here also did not include sufficient findings. But they're not relying on the PSR in this case. Or simply the PSR, the sentencing memo. They're also relying on the things the district judge said during the colloquy, including answering yes when asked if he was making a finding of willfulness. So, I mean, I don't think this line of it's not good enough to adopt the PSR really gets you over the finish line when there are other things at issue. Certainly, Your Honor. I think the issue that I was trying to address is whether or not it would be sufficient for the court to make a blanket reference about all the issues. He doesn't make it specific to the obstruction of justice finding. He says about all of the contested issues that I find that the PSR and the government's memo have done an accurate job of calculating the guidelines. So if instead of saying that, he had said, I find the three elements, falsity, materiality, and willfulness. And I adopt the reasons in the government's sentencing memorandum about why they were established. What would we have done in that circumstance? Your Honor, I think that's close to satisfying the requirements of this court. I think that... So why is what he did any different? I think what, and I want to say, I think that's close. I don't think that's quite there. Let's assume that I think it gets over the line. Why is this different? The reason that this is different is that the court didn't make the explicit finding of the purpose of obstructing justice anywhere in what he said. And the other reason that it's different is because he didn't say, I'm adopting these specific factual findings or these specific factual references as they apply to this holding. He said, I think they did a correct job, accurate and correct job in calculating the sentencing guidelines, crossing three different contested issues. And so that is not sufficient. It might be, Your Honor, sufficient for the court to make a finding on all of the elements and say, I'm adopting the factual findings as to each of these that the government made in their sentencing memo, but that's not the record we have here. And we also don't have that explicit reference in the sentencing holding or in the materials that were submitted to the court that this perjury was done for the purpose of obstructing justice. And so that's what's missing from this record. Your time is ticking back up. Oh, I'm at the ticking back up point. Thank you, Your Honor. Could you go ahead and wrap up, please? Your Honor, based on the arguments today, and also I would encourage the court to look at the factual record and why it's particularly complex relating to the issue of that reference to close proximity and why specificity really is required. We'd ask the court to reverse or remand for resentencing. Thank you both for your arguments. We appreciate that very much. And we'll take that case under advisement."
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"stt_transcript": "Good afternoon, Illinois Public Court, 1st District Court is now in session, the 6th division, the Honorable Justice Carl A. Walker presiding, case number 25-1219, Safe Zone Services v. Linn-Mathes, Inc. And good afternoon, everybody. I am Justice Carl Walker. I also have here with me Justice Roy Pachinski and Justice Michael Hyman. And I would like to have the attorneys who will be arguing to start by introducing yourselves. Let's start with the appellant. Good afternoon, Your Honor. Christopher Kelleher for the Plaintiff Appellant, Safe Zone Services. Thank you, Mr. Kelleher. And let's go to those who will be arguing for the appellees. I think there will be 2 people arguing. Is that correct? I think we authorized that, I thought. I thought it was more, Your Honor. I apologize. Oh, okay. I think we authorized 2. How many do you have that's going to be arguing? Everybody? Sounds like we all have different parties and different interests. Apologize. Now, I think we gave you a total of 25 minutes though, right? Correct, Your Honor. For all 4 of you. So you're going to divide that up with 6.14 minutes each. Is that how you're going to do it? I believe it's going to be 10 for myself, 5 for Mr. Higgins, 5 for Mr. Weber, and 5 for Mr. Ibaki. Okay. And so, Mr. Jacobson, go ahead and introduce yourself. Let's start there. I apologize for not doing proof, so, Your Honor. Attorney Mark Jacobson, appearing for the appellees, Raimundo Rivera and JLL Construction Services, Inc., or LLC, I believe. Okay. Your Honor, Sean Higgins, appearing for the appellee, Lynn Mathis, Inc. Okay. Good morning, Your Honors. Ben Weber on behalf of appellee Roosevelt Western Currency Exchange, Inc. Good afternoon, Your Honors. Attorney Dominic Herbacci on behalf of defendant appellee Belmont Bank. And so, 5 minutes, 5 minutes, 5 minutes, and 10 minutes for Mr. Jacobson, correct? Correct, Your Honor. We will allow that. We did authorize that prior to today, and we will stick with that. So, we're going to go ahead and let you get started. I will say that we do know the facts of the case. We always read everything, and I want you all to know that we are always open-minded. We don't allow our questions to make you feel that we're leaning one way or the other. We will ask questions that may be some tough questions, but it's not because we're leaning one way or the other. It's because we want to get it right. So, just know that about all the justices. So, with that, we're going to – oh, by the way, rebuttal time. Mr. Jacobson, did you want to do a rebuttal? No. Mr. Kelleher. No, it would be – well, who would it be? Who wanted to save time for a rebuttal? You have 10 minutes. Everybody says 5. Do you want to save a minute for a rebuttal? And Mr. Jacobson, I think you have 10, right? Correct, Your Honor. And do you want to save anything for a rebuttal? Just a second, Justice Hyman. Did you want to save anything for a rebuttal? Yes, if I could reserve one minute, Your Honor. Yeah, you can reserve one minute for a rebuttal. Thank you, Your Honor. Is there the appellee? No, I'm – oh, no. The appellee, Your Honor. Oh, I'm sorry. Yes, you are. No, Mr. Kelleher it is. Yes, I'm the appellee. Mr. Kelleher, you're the appellate. Yes, Your Honor. Okay. I'm sorry. You're correct, Justice Hyman. Mr. Kelleher, are you saving anything for a rebuttal? I apologize. Yes, no problem. I didn't want to interrupt. If I can have four minutes for a rebuttal, Your Honor. Okay, four minutes. Okay. All right. You can have that. Okay. So, Mr. Kelleher, you can go ahead and get us started. Thank you, Justice Walker. Good afternoon. Christopher Kelleher for Plaintiff Appellant Safe Zone Services. With four different defendants, six appellate briefs, and a slew of motions, I recognize there is much to digest with this appeal. I will try to distill this case to its essentials. And this isn't necessarily difficult because I believe this case can be summed up in a sentence. Safe Zone did over $200,000 worth of work but never received compensation. Now, the why is admittedly a bit more nuanced. But even here, I believe the issue can be summed up succinctly. Defendant Rivera furloughed the funds and the remaining defendants accommodated that theft. So, with those two simple factual premises underlying this suit, we respectfully assert the drastic remedy of summary judgment was improper. We assert five factors facilitate reversal. The first two concern the lens through which this court views this appeal. And that, of course, for summary judgment is de novo. Thus, the facts are construed in Safe Zone. Now, Mr. Kelleher, just really quickly, though. There was an email that your client sent saying that he was questioning, I think it was in February, questioning why he would even be receiving these checks and that they should go directly to JLL. How does that relate to your argument right now about this, what you're claiming? Your Honor, the emails, I will admit, are a bit confusing. As I sit here now, I'm still confused by them because there's different messages being sent. There's mixed messages from Mr. Avery from Safe Zone. But there's also, given the context of what was happening, Mr. Avery was very, very frustrated. And he had repeatedly asked Lynn Mathis to provide the checks to him. And essentially, he was being ignored. And so I believe that the email in particular, Your Honor, is talking about, that was sent more out of frustration than anything else. Additionally, to add further confusion to the issue, the project was still ongoing with JLL. Now, by that time, by February, Safe Zone had extricated itself from the project. But JLL was still involved, and there were still payments that had to be made going back for work that was done in the fall, as well as work that was continuing to be done. So the emails from Mr. Avery where he's asserting that payment should be made to JLL can be read in a couple ways. One, again, as I said, he was frustrated with what was going on. He recognized that Safe Zone was not being paid for its work. And then additionally, there was work and payment that should go to JLL. And that was the future, I believe it was approximately $165,000 that was still left on the contract. So there's kind of two underlying points to those emails where he's saying JLL should be paid. Along those lines as well as a corollary to that point, these emails show that there are issues of fact here. What exactly was Mr. Avery intending when he said JLL should be paid? And I recognize a plaintiff can't create issues of fact on their own. But again, given all the emails, the flurry of emails going back and forth between Mr. Avery and Mr. Rivera, as well as between Mr. Avery and Lynn Mathis, it shows that there was not any sort of meaning in the minds. There was confusion. And these are the exact sort of knotty fact-laden questions that we shouldn't resolve here. It should be resolved in front of a jury. And additionally- What is the strongest disputed fact that should have prevented the summary judgment here? There's a few, but if I had to pick one, I would definitely say the confession, as I call it, of Mr. Rivera, that he would be prosecuted for essentially, again, and I don't use this word lightly, but essentially stealing these funds. These funds, he knew, were not meant for him. They were work that was done by SafeZone in September, in October, and therefore was SafeZone. So I would say that that email where, again, Mr. Rivera discredited concedes that he was in the wrong and he would be prosecuted potentially criminally for taking this money. Would one of the issues have to be with the MIPA? Yes, Your Honor, as well. The MIPA, as well as that assignment, as we call it, which was appended, those two documents, to point out, they were drafted by Mr. Rivera's counsel, number one. Number two, they specifically state that Mr. Rivera was waiving all rights to future funds, again, for work that was done by SafeZone. And to be clear, and I- But wasn't there- Go ahead, Justice Simon, you can go ahead. Where is that stated? In paragraph- that would be in assignment- Well, I'll point to the MIPA, paragraph 10, that's in the indemnification, and that says that Rivera would indemnify SafeZone for, quote, all losses, damages, costs, and expenses resulting from these projects, including the EMIC project. That has nothing to do with the past payments. That doesn't say anything about past payments. Well, Your Honor, I would say- I asked you, where is it? You said that there's something in the MIPA that has to do with past payments. Well, I would say that the indemnification in paragraph 10, and then- That's what you're talking about, A? Yes, paragraph 10. And then for the assignment, if I can also point to the assignment, that would be paragraphs 1 and 2, where, again, Mr. Rivera acknowledges that any amounts that he was entitled to have already been received. And, again, that's paragraph 2 of the assignment. And then, of course, in paragraph 1, the assignment says, all future distributions and payments for SafeZone are to be paid to Avery. So the assignment is very clear, as well as the MIPA. But I will again concede that could things have been clearer? Could Mr. Rivera's counsel have drafted things clearer? Yes. Well, if it was so clear, we wouldn't be here years later. Well, that's true. That's true. But, again, the contractual intent, that's an issue, as we pointed out. We cited cases. Those are- You only go to intent if there's an ambiguity, right? Certainly. So you're saying the contract's ambiguous? And I'm not trying to have it both ways. Yes and no, and if I can explain very quickly. The short answer would be no. I don't think that either the MIPA or the assignment are ambiguous. However, could it have explicitly stated that the pre-MIPA receivables should go directly to SafeZone? Yes. So, in essence, it could have been clearer. But at its core, I would say no, neither are ambiguous. They just simply don't explicitly say what happens to the pre-MIPA receivables. Then why don't you lose? This is a very easy case, Coordinator Judge. The SafeZone services will have no interest or involvement with any of these contracts, period. We're done. That's what the judge said. Well, Your Honor- I mean, do you agree with the judge? No, I don't. But, in a sense, that reading is correct going forward. And that was, again, and this is- Well, again, isn't there ambiguity? You say no. But, again, you say I can't have it both ways. But if that isn't ambiguous, the judge didn't see it ambiguous at all. That's correct. But, again, I would point to Paragraph 2 of the assignment in which Rivera acknowledges that all amounts have already been received that he's entitled to. And then in Paragraph 1, again, it directs all future payments for SafeZone to be paid. Well, were they accrued, though, prior to that agreement? Yes, Your Honor. That was for work that was done in September, October, and November. Sorry, go ahead. Right. So, any work that-anything that had already been accrued, he would clearly be entitled to. But I guess my question is that SafeZone waived and relinquished all of its rights, titles, and interests in those certain construction projects, specifically being those listed in Exhibit A, being the Emmett project. So I'm trying to reconcile that with why he would not be entitled to funds related to that project. I understand, Your Honor. And, again, I think part of the problem is, is that the project was ongoing. Things were in a state of flux. Obviously, you know, major-as this was a major construction project, it's not as simple as, you know, getting into a taxi and paying a taxi driver and you're done. This is ongoing work. You know, the payments aren't made for months after. And so for the work, again, once the MIPA- So work done prior to the agreement, probably, arguably, you could say that that money belongs to SafeZone. But once the agreement is in place, at that point, it seems to me that then any funds would now belong to Rivera. Precisely. In that the funds, once, and this is kind of we're splitting hairs here. For the work that was done prior in September and October, obviously, it wasn't paid at that time. It wasn't paid until, obviously, January and February. But that revenue should be paid or those checks should be paid because it was work from September, October. SafeZone was not trying to have it both ways and say, yeah, we get everything for work done later that we're not involved with. Mr. Avery was very clear and specified in emails that for the $165,000 that was left remaining, that was JLL's money. That wasn't SafeZone. And that's where, and again, Mr. Avery could have been a little bit clearer, I think, in some of his emails by just saying, look, we're out of this project. We don't want the money for future work, but we want it for the work that we did in the past. What was the benefit to Rivera in giving up his 49% interest in SafeZone? I think it was more, frankly, I think it was a benefit for Mr. Avery because he, essentially, the two of them, I don't think the partnership wasn't working, I think for either party. I don't think Mr. Avery was happy with Mr. Rivera and vice versa. So I think for both of them, I think as some of the defendants note in the email that they were trying to make a clean break, it just wasn't working. And so I think Mr. Rivera would benefit along with JLL because they would then get the work that SafeZone had been doing. So essentially they were going to step in to SafeZone. Which included the Emmett project, correct? Correct. And those are what the checks were for, right? Yes. Okay, so then what makes it, what creates the problem with him having received those checks? What's the problem that we're missing? Well, a few points. Firstly, those checks, again, they were issued in January and February, but they go back, and there's no dispute about this, they go back for work that was done in September, October, November. So both checks go back to that period prior to the November 9th date or November 6th date? Yes, that is correct. That is correct. And so that's obviously, that's been the catalyst for this suit. I mean, Mr. Avery and SafeZone have been very frustrated that they did this work, and again, it was a lot of work, it was $200,000 worth of work, and the checks, and Lynn Mathis, the subcontractor, excuse me, the general contractor, knew that these payments were supposed to go to SafeZone. And they wrote the first check, the January check, was written to So it wasn't like they thought it should go to JLL, there was confusion. They knew, and Mr. Avery was very clear in his initial emails in December that these payments are supposed to go to him. It's supposed to go to the SafeZone PO box. And so Lynn Mathis, to claim that, well, we weren't sure or we didn't understand, we respectfully disagree with that because, again, they knew that Rivera was not, he was not supposed to get these checks, and that's why they made at least the first check out to SafeZone. Obviously, the second February check, they made out jointly to SafeZone and JLL, but even the second check, both checks had SafeZone on them. So there was no dispute as to who should get this money. If I understand your argument, then, what you are saying is that there is no ambiguity in the MIPA, but you can't read the MIPA without looking at the assignment, and that your argument, tell me if I'm right or wrong, is that the assignment answers the questions before the court. The question before us is, who's entitled to the payments for the work that was completed? Those two checks, you say, uncontested, were for work performed before the closing. Therefore, does those checks go to Rivera or do they go to SafeZone? That's the whole case. Am I right? That is correct, John. Okay. So if I'm right on that, and then your argument is the assignment answers that question, and that's it. If you only look at the one and not the other, you're going to get the wrong answer, and the judge didn't take account of the assignment, which would have clarified who was entitled to those funds for that work that had been completed. Is that your argument? Yes, it is, Your Honor. Okay. Yes. And, again, the assignment, that was obviously appended. It was referenced in the MIPA, so there's no question that that was part and parcel of the MIPA. And going back to your prior earlier question, again, could things have been a little bit clearer? I mean, I guess that's every contract out there. There's always something that could be clearer in hindsight. But, yes, Your Honor, that is our position. And having gone through the massive briefs and documents, am I to understand that as far as the other two projects are concerned, there was no issue with regard to payments, apparently? The only issues on the payments, apparently, had to do with EMIT. Is that correct? That is correct. That is correct. There are the issue of the open invoices. But, yeah, but as far as- Yeah, I understand open invoices and the union stuff and everything else. Right. Right. Did you have anything further, Mr. Kelleher? You can continue arguing. You've got no time. Briefly, Your Honor, I would point out, and as we noted in our motion to the court, we did file one motion, we've had a problem with discerning whether counsel for JLL is actually representing JLL. Again, unfortunately, Mr. Lewis, the owner of JLL, passed away in March during the pendency of this appeal. And even that development, prior to that development, we had argued in our briefs and even in the circuit court that there was no evidence that Mr. Lewis had authorized Mr. Jacobson's representation. So the argument was that Mr. Rivera had retained Mr. Jacobson, but as we note, Mr. Rivera was never an owner, never a manager, never a shareholder of JLL. He was essentially just an employee. And we assert, based on that fact, he had no authority to retain Mr. Jacobson for the JLL Corporation. And again, this is important- The individual who passed away filed an appearance for the entity, JP? Is that what you said? Mr. Lewis, he, no. And he essentially wanted nothing to do with Mr. Jacobson. No, I'm not asking, that's not my question. Oh, I'm sorry. When he was alive, who was representing him, that entity? Mr. Jacobson. Mr. Jacobson? Yeah. When he was alive, Mr. Jacobson was representing him? Yes, yes. And then he passed away? Yes. So why wouldn't Mr. Jacobson still represent him? Well, because Mr. Jacobson, excuse me, Mr. Lewis never wanted Mr. Jacobson- But apparently he did, because what you're saying is, if I understand you correctly, Mr. Jacobson was representing Mr. Lewis before he died. Well, the real question is, is that in the record that he never wanted him? I mean, was there a statement from him as to that? Yes, there is, Your Honor. Yeah, there is, and I can dig that out. But essentially, Mr. Jacobson, excuse me, Mr. Lewis had said he doesn't want to talk to Mr. Jacobson, this attorney, and he said any further, he would sue Mr. Jacobson for harassment if he continued to ask Mr. Lewis about this case. So Mr. Lewis essentially is the way I read it, and this is not in there, but- What did you say, not in there, in where? Well, in the record. We don't want to hear it. If it's not in the record, don't tell us. Okay, well, no, and I understand that. I'm just saying that there's a conflict of interest between Mr. Rivera and Mr. Lewis because- Well, nobody's brought it up. I mean, if Mr. Lewis passes away, that's an individual. The entity continues, and that was represented by Mr. Jacobson. So I'm kind of at a loss for where this is. Well, again, that Mr. Lewis, and I should say JLL more specifically than Mr. Lewis, but JLL essentially didn't answer discovery, and Mr. Jacobson and Mr. Lewis basically didn't pursue this case or defend this case, and so they've essentially had it both ways by Mr. Lewis and JLL not responding to anything, yet they're still being represented. So I would rest on the briefs on that point. But regardless, even if the court disagrees with our position, JLL's brief essentially is a concession. They've ignored Mr. Rivera's forgeries, his scheme of representing himself as safe zone vice president, his admission to falsely operating a safe zone on the MN project after the MIPO was signed, and of course his confession. So the silence on these very, very salient and very dispositive points represents a complete concession. And just really quickly, we know that, I think Avery retained the right to receive payments for work performed on the MN project. My question really is how does that reconcile with the position that the statement that Avery would have no interest or involvement in the contract? Yes, Your Honor. That was going forward. So that was essentially, again, as we previously said, the parties were trying to make a clean break. And so therefore, Mr. Avery, because of, again, his disagreements with Mr. Rivera, basically didn't want anything else to do with Mr. Rivera or this project. So he wanted to make a clean break. Again, going forward, he wanted nothing to do with the MN project. And again, any money that JLL and Rivera earned, that was them. He was not trying to step on anyone's toes. But that seems to be the issue right now. And I realize you're claiming that that was already accrued prior to that time, but that seems to be issue right now is that he does want the money. Well, he wants the money for the work he did. And that's, again, that's kind of the, where the disagreement lies. If that's the case, it would seem that the 49% interest in the company at the time that that money was earned, he still had that 49% interest in the company. So it seems that some portion of that money may belong to him anyway, right? True, but I would point to paragraph two of the assignment in which Mr. Rivera acknowledges that anything he was entitled to he's already received and he therefore waives any rights and claims. Well, looking at that agreement though, Avery also says that it wants nothing to do with the project or anything else. So, I mean, I'm just, I'm not sure that it's all really, really clear. So clarify for us if you can. No, Justice Walker, I agree with you again, and I'm not trying to have it both ways, but by saying it's not ambiguous, but it is ambiguous. But I agree that things could have been clearer here and there are some things that are contradictory in a sense, but I guess what they were trying to do was again, make a clean break. And again, the money that Safe Zone had done, or excuse me, the work Safe Zone had done, they were entitled to payment for that work. And then after November, work done after November 6th, the date of the MIPA and assignment, that work would be, any money earned from that work was Rivera and JLL's. So that's really what it boils down to. Thank you, Mr. Keller. You're actually out of time now. So I'm going to move on to Mr. Jacobson. Thank you, honors. Yeah, thank you. Good afternoon to the court. The appellant, as noted, has filed this lawsuit against all entities who were involved in the creation, handling and processing two checks. That means specifically coming from the Emmett Project. This includes everyone from the issuer of the check. We know all that. We know all that. Let me ask you. So Mr. Avery paid $100. And he gave Mr. Rivera over $200,000. That's your position, right? Not completely. What do you mean? Okay, so it is your position, but not completely. So tell me what's not complete because he paid $100 and he gave up $200,000. What a deal. What a deal. And he didn't even do the work, Mr. Rivera, right? It was all work done. It's uncontested, right? Am I right? Uncontested. It was safe zone work. Is that correct? It was safe zone work, your honor. So he gave up $200,000 under your theory for a $100 payment. Now tell me how that's possible. Because of the fact that this is a divorce between the parties. This is a divorce that was given fulfillment and body and messaging via the MIPA. Specifically within the MIPA, I'm going to cite to page C-195 of volume one. It identifies the three retained projects. Those three retained projects are the MS3. We know what they are. We know what they are. But here's the key part. That's been basically not has been included within the argumentation so far. It specifically says the price of four adjustment. This dollar amount is $388,505. That is the exact dollar amount that is specified within volume one C-169. That is the subcontractor agreement between Lynn Mathis and Safe Zone Services at the time. It specifically identifies exactly what the value of that particular project is. All the projects are actually identified. The only reason why I would disagree with the court's assessment of saying it's $100 and you got $200,000. What a deal. That would be a heck of a deal. I'm not going to use any kind of foul language or anything else, but it would be a heck of a deal. We all know what word I want to use. But it would be this. For the purposes of being able to allow for a complete divorce as specified within the actual terms itself, it allows for the divorce such that 49% that would have been Mr. Rivera's is now Avery's. Free and clear. Safe Zone is his. 100% lock, stock, barrel. Everything else makes it so that he can have that completely. As identified by the court, there are multiple provisions within the MIPA. All of them we can address individually, but I'll bring it right over to the point. It says under paragraph nine, there were particular provisions and requirements, invoices and everything else. To be very blunt, if the Mr. Avery and safe zone intended for those particular invoices or any other work to be retained by safe zone, they would have been included. They are not. I'm not going to say that there is ambiguity such that there's a material issue within the MIPA. The MIPA states what it states. But the argument you just heard, we just heard an argument that he's not arguing in the MIPA. What he's arguing is the assignment. And if you can't look at one without the other. So you're talking about something that he just did not argue. He said, yeah, if you look at the MIPA, it might look. Kind of suspicious, but then you look at what the assignment says. And he says that clarifies. That there was a money owed before. And that safety zone had no. Relationship whatsoever with anything after November six. So any invoices that had any work that accrued before that time. Under the assignment belongs to. Safety zone. That's his argument. Understood your honor. If we're looking at exhibit C one 98. Volume one, that would be the assignment. Those items. That's sitting before me. I haven't. Okay. Just making sure. So that way I have it for the record. Apologize. Those documents are signed at the same time. Concurrent. That also reinforces the concept and the idea, which is being presented here. And that is a divorce. Is to say, but you're not answering my question. My question is. That's even better. It seems to me that helps the argument of safety zone because at the same time. There was this agreement. That said, as it's interpreted. By council for safety zone. That. This provided that any do. Anything do in owing at the time of the closing. Belonged to safety zone. And that Rivera gave up any rights to that. Those, those, those invoices. Respectfully have to disagree because it actually says directs that all projects that are retained. Are retained within the scope of safe zone. I E that anything going forward. Anything after that fact. Anything, any projects or anything else that would be allowed. If that was the case, you were reading it together at the exact same time. The retained projects. Indicates that Emmett project is one that goes with Rivera. It is not a project that retains within safe zone. Mr. Jacobson, are you. Mr. Jacobson. Are you right now telling us though, that the parties did provide a distinction between the future payments and the past payments and the agreement. Cause I'm not sure that that's clear on the agreement. It is that again. Were you the one, by the way, you're the one that drafted the agreement. Correct. No, or was that a different lawyer? Different lawyer. Different lawyer. Okay. All right. All right. All right. Thank you. Paragraph 10. It allows for the indemnification such that it would be for the separation. And basically it allows for the complete. Separation to different types of projects for each one of the different entities that was signed in a particular agreement. It is not a situation where it is saying, well, We're giving wiggle room. Or anything like that. It's literally saying. And the project is one for Rivera. Rivera indemnifies and protects Avery and safe zone against any particular claims that might arise. It is not. It allows for the complete divorce. That is literally the underlying issue here. Is that this. Even in the complete divorce. As Mr. Kelleher argued earlier. Wouldn't there be, there's a portion of those proceeds. Even though the checks were not. Issued until January and February. There's a portion of those proceeds that actually relate back to a time of September and October. That your client would not have been entitled to. I understand what the argumentation would be. However, that brings it back to paragraph nine of the MIPA. Because if those particular items have been contemplated to be retained by safe zone by Avery, They would have been included and identified within the paragraph because that literally would say anything that was an obligation by Rivera or anything that would have fallen outside of the actual purview. That paragraph allows for carve outs. That paragraph allows for the actual distinction. Oh, wait a minute. Going back. I think. Justice Hyman or maybe justice Walker already pointed out. Before the divorce, you're calling it a divorce. Mr. Rivera owned 49% of the business. Correct. Even if you were entitled to any money, you'd only be entitled to 49% of it. Because there's nothing here that says he isn't entitled to 49% of it, but there's nothing there that says he is. So going back to the reality that. Mr. Avery and Mr. Rivera each owned shares in safe zone and Mr. Rivera on 49%. The work that was being done until the split was being done by safe zone, a company that was owned by both of them. So. Assuming for a minute that Mr. Rivera is entitled to any money. It would only be 49% of it. That would be correct. If there was not the MIPA. But the MIPA and the assignment are both very are worded in a way that really complicates matters. And I think that the only clear way to read them is to understand that before the split. There was a 51, 49% ownership interest in safe zone. And there's nothing that changes that in the MIPA or in the assignment, the assignment. Okay. Says Rivera's. Transferring everything. And the MIPA says. Safe zone will have no interest. But. Safe zone had an interest. Before while the work was being done. Under their auspices while they were doing the work. I believe. Let me clarify that. So. At the time prior to the MIPA. Yes. 49 51. That's the distribution between Mr. Rivera and Mr. Avery. For the ownership of season. The MIPA acts as an intervening. Action or intervening state. Or event. You're saying at that point. I don't want my 51% or I don't want my 49%. You can have it. Well, it was basically that. It was 49 and 51. Of the ownership of safe zone. Right. Basically for the potential distribution or anything else. But because the MIPA buys clear lane, which allows for the transfer. Specifically orders that you're transferring. Of the project. From safe zone. Into Rivera. That is it. That's why I'm saying it's an intervening. Action or an intervening event. If it was simply existing without the. Purview or without the actual event. Of the MIPA. Then it would be the 49 51%. The MIPA. Is the actual. The documentation that was entered into by the parties. Oh, again, what you're saying is that this divorce. At the time of the divorce, the 51, 49%. The work that was done by a hundred percent of safe zone. Until this divorce. So, in terms of the MIPA. All goes to Rivera. In terms of the MIPA. Or it all goes to Avery and Rivera doesn't get any of it because. There's there's no. There's no way. I can clarify this because Mr. Jacobson. You are not talking the same language. I understand that Mr. Kelleher and you disagree. As to what's going on here, but it's interesting that you, you. You don't respond to Mr. Kelleher's argument. And I'll tell you what his argument was. Again, it's not. And you keep talking about the MIPA. That was not his argument. His argument today and in the briefs. Is the assignment. And the assignment has a sentence. That. Seems to clarify exactly. What his point is. And work against what you contend because you keep talking about. Paragraph one of the assignment or the MIPA, but sentence two. In the second paragraph. And I'll read it by using the word Rivera. Rather than a sign or because he's defined as a sign. Rivera. Hereby acknowledges. That all amounts that a signer may otherwise be entitled to. From the company. Which we know is safe zone. Have been received. Therefore, no money. Should then go to Rivera. It should 100%. Go to. Safe zone, which is what their position has always been. We did the work. In the assignment provides that he said, I'm not owed anything more. But you say, no, no, no. I'm old for the work that he did. Because of the MIA, but you don't read the assignment. So do you tell me how I'm wrong on that sentence? Mr. Jacobson, you can go ahead. Because I have a question for you really quickly too. And you're almost out of time. Yeah. That particular provision within the assigner hereby acknowledges all amounts of signer may otherwise be entitled to from the company had been received. That is that the. Safe zone is a complete S. I noted again is a complete divorce. It is not a situation where by Rivera could somehow make a claim for any additional proceeds. That safe zone would be receiving. Any kind of amounts that were specified here in the alleged work was completed prior to the MIPA. And would be contemplated at the time of the parties when they entered into the MIPA and the assignment. Okay. You're not reading the words. May otherwise be entitled. May otherwise be entitled. Tell me what that means. Isn't this otherwise. If it's secured any other work. Because of it, as is noted. These are three projects. If they are, if it's a situation whereby. There might've been additional projects or anything else. Any other. I'm talking about this one project. This is all amounts. It doesn't differentiate. It says all amounts. May otherwise be entitled to and from the company have been received. That is what Mr. Avery has been saying over and over again. And is very consistent. And at the very least, it seems that there's a, there's a definite ambiguity when you look at the assignment. I disagree. Under the overall amount here. Or specifically saying all amounts that a signer may otherwise be entitled to from the company have been received. The signer forever waves. Any and all rights to claims to the membership interest assets of the company. Or the related interest here in. Okay. I want to get to sort of an important question here because the circuit courts. Reasoning focus largely. Largely on the ownership. Of the project. And I want to know. How were Avery's allegations concerning the open invoices fully resolved in the. In the circuit court. I believe that that was resolved to an extent in the April one, 2024. Order whereby a judgment was entered against Mr. Rivera. And also I believe Mr. Lewis as well. I'm sorry. You can go ahead and close up. You were breaking up. Oh, I'm sorry. Am I breaking up? I was saying you're out of time, but I do want you to go ahead and close out. Okay. Well, basically it's still at the MIPA is clear. This was again, a divorce between the different parties. This was a situation whereby. Rivera was to take his projects and go this way. Safe zone was to take its projects and anything else that it might have and go this way. It was not a situation where they're continued mixing or anything else. And any projects or any considerations that were made at the time. Or made at the time. That's what was available. On the issues of the. Claims against JLL. As far as a default. That stems from a discovery issue. Again, there's abuse of discretionary standard. And then there's the request for the attorney's fees. Where it increased overall from. Again, they were awarded 29,000, 416, 44. I believe on April 1st, 2024. And at one point they were seeking 433,000, 951. And 53 cents in attorney's fees. The court properly use the Kaiser approach. Again, the implementation of attorney's fees. And the fact that these are granting attorneys fees is an abuse of discretionary standard. And it was held by the court that. These amounts were unreasonable. Given the amount that was actually prevailed. And the fact that these attorneys fees were for every single part of this entire case against every party. Thank you. Mr. Webber. I believe actually judge, we had requested that. Mr. Higgins proceed first, but I'm happy to adjust if. If you want Mr. Higgins to receive first go right ahead, Mr. Higgins. Thank you, judge Walker. Good morning, your honors. I'd like to start today by. Addressing and focusing it on the assignment. That seems to be the court's concern here. The language that Mr. Keleher relied upon here reads a signer here by acknowledges that all amounts that as ignore may otherwise be entitled to from the company. Have been received. The dispute here is whether or not checks that were issued by Lynn Mathis. And the project owner. The January and February checked. Were received. The assignment language talks about amounts from the company. These January and February checks are Mount are not amounts due from the company to Mr. Rivera. These were amounts that were due from Lynn Mathis. This particular sentence does not apply because it only applies to things that were due from safe. So, and the amounts in question are not amounts that are due from. Who was your self contract with. It's with safe zone, your honor. Okay. So I don't understand your, it sounds circular to me. It's safe. So safe zone. That's right. It's safe. So it's not Rivera. It's not LL, whatever. It's safe zone. So why didn't you just pay the check? You did. The first check was to safe zone, right? Both checks were payable to safe zone, your honor. Absolutely. Because that was the appropriate person to pay. Wasn't it. We disagree. We agree to disagree. I mean, what, what is your, why are you supporting? I'm trying to understand why, why is it important for you to support. Rivera. I mean, isn't this fight between Rivera? And Avery, what, what, why are you in the middle of this? Does it matter to you? Your honor, we have the exact same thoughts as you. This is a partnership. I'm trying to figure out why you're here. Okay. I'm trying to figure out why you're here. We agree your honor. I mean, if you tell me, I thought you were going to tell me about why you should be. Well, I think that actually, I think that actually answers all the questions. So thank you, Mr. Higgins. We're going to now move on. We're going to move on to the next item on the agenda. And who's next. Respectfully. Could I have my time? So you can, you can close out. Go ahead. You can close out. I agree with justice Hyman that I think that the position that the three of you are in is just not the same. So you can close out. I appreciate that justice Walker. The two things I would quickly say is. The MIPA, the MIPA. Applies to all rights, titles, and interests in the Emmett project. At the time, the MIPA was executed in November six. There was an outstanding right to payment for work that was previously performed because of the captures all rights, titles, and interests. It must capture the right to payment. That was outstanding at the time of the execution of the MIPA. That does not read the assignment. We've gone over this, right? Is you just talked about the MPA. That's what Mr. Jacobson did. You don't want to talk about what Mr. Kelleher talked about, which is the assignment. And so you tell me what does it mean when the assigner acknowledges that all amounts that a signer may otherwise be entitled to. From. Safety zone have been received. All it doesn't just. You're right. And on November 6th, your honor, those amounts did not include checks that were issued in January and February months after it. No, no, no, no, no, no. Everything's been received. So nothing more would be received. So they wouldn't get those checks afterwards. It's all been received. They got the a hundred dollars. They've received everything. Right. And now there's a divorce. They're separated. And I would point the honor to the first paragraph. It specifically says that this assignment is on account of the membership interest purchase agreement. And that first paragraph that MEPA language is brought in. I hear justice Walker that this is dispute between safe zone. And Rivera. And we respect that. We would just like to point out that there's a lot of evidence of record, including two emails from Mr. Avery as well as deposition testimony in February, right before the February checklist to be issued repeatedly, telling us to pay this to Rivera. So to the extent. And actually we discussed that email earlier, Mr. Higgins. I brought that email up when I was speaking to Mr. Keller. Understood your honor. Well, I'll see the rest of my time. Then I thank you for your attention today. And we appreciate your consideration for the matter. Who's next. Good afternoon, your honors and council may please the court. My name is Ben Weber. I represent Roosevelt Western currency exchange, Inc. One of the appellees as your honors are familiar, Roosevelt Western currency exchange was merely the. The currency exchange that cashed the January check and issue. But in addition to that, the claims made against Roosevelt are specifically, it's one count for aiding and abetting the conversion of that January check as well as. The October city of Highwood check. As your honors are familiar, the trial court ruled or entered summary judgment in favor of Roosevelt, finding it not liable for aiding and abetting the conversion of either check. But very briefly, I would like to emphasize. That certain issues were not raised in this appeal that I think are strongly indicative as to why summary judgment in favor of Roosevelt was proper. The first was that is that plaintiff appellant has not. Asserted any argument. Stating that the trial courts, November order, barring them from offering witness testimony was made an error. Having made no argument about that in their opening brief or in their reply that order or that there, that argument has been waived. So the trial courts order, barring plaintiff from offering any testimony. In support of its claims against Roosevelt. I think lays the ground for the substantive ruling in favor of Roosevelt. Additionally. Plaintiff also does not argue that the trial court aired in entering summary judgment as it pertains to the October city of Highwood check again, even in the reply and nothing today. Plaintiff still has seemingly abandoned that claim. So the summary judgment in favor of Roosevelt as to the October city of Highwood check, I believe should be affirmed. Turning to the January check in issue. Roosevelt's position is somewhat tied. I believe your honors can acknowledge somewhat tied to the ruling. In favor of Rivera as to the conversion count. Aiding and abetting is not a standalone claim. The trial court found that Mr. Rivera under the MIPA. I'm sorry. The trial court found that Mr. Avery pursuant to the terms of the MIPA was not entitled. Was not entitled to the January check. And by Mr. Avery, I include plaintiff safe zone. Because safe zone and Mr. Avery were not entitled to that check. Mr. Rivera was not light was found to be not liable for conversion. And therefore there's no underlying tort that could support. So if we go the other way and we say that there's a issue here, a fact to be tried, then we should reverse on your client. No. No, your honors. That was, that was merely emphasizing the trial court's basis. I would say that. If, if your honors. Affirm the summary judgment in favor of Rivera. So too, should the. So too, should you affirm summary judgment? If we don't affirm on behalf of Rivera. Are you tied to the hip to Rivera? No, we are not judge. And thank you for. Why don't you make that argument? And you only have a second. Actually, you don't need to make that argument. We understand it. You've made it. So we're going to move on. Go right ahead. Yes, sir. May it please the court. My name is Dominic. And I represent the defendant at Peli Belmont bank who respectfully asked this court to affirm the circuit court's grant of summary judgment and Belmont's favor. The past five years of litigation related to the February check could have, and should have been avoided. On July 29th, 2021. We know those things. Belmont pleaded the offense. The affirmative defensive avoidable consequences predicated on safe zones refusal to accept the joint reissuance of the check pre-suit. Safe zone did not answer Belmont banks, affirmative defenses. And on that record, any alleged damages tied to the February check as it relates to Belmont bank were avoidable and summary judgment should be entered in favor of Belmont bank. Under the uniform commercial code. Safe zone fares, no better, your honors safe zone. Sole claim against Belmont was brought pursuant to 404 D of the UCC section D imposes comparative fault consequences only with respect to instruments to which a subsections a or B applies. Accordingly the threshold here as to Belmont bank is threshold. Does the February check fall within a or B. The undisputed record says no. 404 a requires impersonation of identity and not merely acting without authority. Rivera acted in his own name at all times. He was known to the drawer Lynn Mathis throughout the project. Lynn Mathis had a long relationship with JLL and Rivera. The record establishes that. Mr. We agree with you. He was not an imposter. That's what you argue. You argue that really well in your brief. And you're repeating your brief right now. And you've done an excellent job. Thank you. Justice Walker. So in conclusion, the case against Belmont bank turns on threshold requirements of 404. The undisputed record establishes that the February check was intentionally drawn jointly to the jail on safe zone and delivered through a known project contact in Rivera, who at all times acted in his own name. There was no imposter under a no fictitious pay under B because neither a or B apply 404 D is unavailable as a matter of law. For the reasons set forth more fully in the briefs, Belmont respectfully requests that the court affirmed summary judgment in Belmont's favor. Thank you. Okay. Mr. Thank you, justice Walker. I will be very brief. I just want to reiterate the DeNova review and the facts are construed for safe zone. I believe that this dialogue that your honors have had with, with all the council today confirms why summary judgment is improper. What we're digging into the intent of, of the, the litigants in terms of the contract and, and trying to discern the contractual intent, what was, was the assignment controlling versus the MIPA. These again are fact questions that are improper for, for the drastic remedy of summary judgment. And finally, I would just also echo justice Hyman's point about paragraph two of the assignment. And that whole, that whole paragraph, there's two sentences and counsel for Lynn math is focused only on the first sentence. Both sentences are important. And in the second sentence, it says Rivera waves any and all rights and claims to the membership interest assets of the company or any related interest herein. So based again on that clear language in paragraph two of the assignment again, we assert that summary. And thank you. Thank you all for your excellence and your briefs were all very well done and your arguments today have been well done. Thank you. We appreciate your excellence. Thank you. Thank you, your honor."
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"stt_transcript": "Good afternoon, Illinois appellate court 1st district court is now in session. The 6th division, the Honorable justice, a really good chance to keep residing case number 2, 5 dash 1, 2, 3, 5, WP Venture 4 LLC versus Luther village owners Corporation. Good afternoon everyone. I'm just a surveillance can with me. You see my colleagues, just as Michael Hyman, just to see again around before we start. We'll just make it clear that we've read all of the briefs, all of the information, the entire record and the cases that were cited. So, our recommendation, since this is a complicated cases that each of you get to the best point that you can make 1st and work your way down from there for the time that you have allotted before we get really into the meat of things. So, we need to have the attorneys who will be speaking, tell us who they are and who they're representing. So I see on the screen. The 1st person seems to be, I don't, I think it might be Peter rush. Are you representing? Yes, your honor Peter rush representing WP Venture 4. Okay, and next would be Alexander. Good afternoon justices Alexander on behalf of the village owners Corporation, which I'll refer to as. Okay, and then we have Jacob. Good afternoon justices Jacob burger on behalf of 3rd party defendant at the Lutheran home for the age incorporated. Okay, so we'll, we'll start 1st of all. Do all 3 of you intend to speak. Yes, your honor and as a housekeeping matter, I've spoken with Mr burger and we've agreed to divide the time. For WP 4. And then 6 minutes for L. A. J. Okay, that's great. Thank you. And your honor sorry, my apologies just to as a housekeeping matter, I would like to reserve 5 minutes of my 20 for rebuttal. If that would be. All right. Okay. Yeah, sure. Okay, so we'll start with Mr. Kasperi. Thank you justice and may it please the court at summary judgment presented evidence 3 critical facts 1st presented evidence that paid and accepted rent equal to 10% of the fair market value of the land on which Luther village was built from mid 2001 to 2018 for approximately 20 years. 2nd, in 2018 provided obviously a memorandum prepared by his own attorney and intended for his board stating that rent was calculated as 10% of fair market value and 3rd, in late 2017, it's more real estate broker to publish marketing that represented that was calculated as 10% of fair market value. The trial court generally acknowledge all of that evidence. The trial court also correctly projected WP 4 is bona fide purchaser defense given WP 4 new of the very mistake obviously later sued to correct specifically the court found that before could not be a bona fide purchaser as a matter of law because quote WP 4 inquired about section 3.02 of the lease and the rent calculation prior to the purchase and we're told rent should be calculated as if the fraction were 1. End quote, before the record shows, then subsequently bid on finance and paid for rental stream with rank calculated as equaling 10% of fair market value. Well, let me ask why should we let your client say in 2018 that the lease was correct? And then in 2020, you say the lease was wrong. So, in the certificates don't say any, first of all, the certificates do not say categorically one way or the other that how rent should be calculated. In fact, the certificates are facially ambiguous as to the calculation of rent while sections 1 through 3 could be read to suggest that the rent that could be read, I suppose, to say that the rent should be calculated as equaling 10% of fair market value. And then in 2020, you say that the lease was true and correct. And therefore, without any mutual mistakes, we don't agree that it should be read that way. But even assuming that the certificates could be read that way, section 5 of each certificate represents that rent monthly rent is equal to a fixed value that fixed value in both certificates is equal to 112th of 10% of fair market value. In other words, the established certificates are ambiguous as to how rent should probably be calculated because the established certificates themselves are not clear as to the amount or how rent should be calculated. Even if we accept the reading that the trial court made, which is that the established certificates can be read as representing that are implicitly read as representing that. How rent should be calculated, we have another provision in section 5 that makes an explicit representation as to the amount of rent and that amount of rent is equal to 112th of. You still wanted to reform the lease because you say there was a mutual mistake. Correct. All right. So my question was, how does that relate to the establishment? Well, the case merchandise Mart and the other cases cited in the party's briefing make clear that a established certificate can only foreclose a claim if it is inconsistent with that claim and it has to be clear from the established certificate that it is clearly contradictory to the claim. The point that I was trying to explain was that the established certificates here are not clear as to how rent should be calculated and are not clear that the lease does not contain a mistake because they implicitly represent, or at least can be read to implicitly represent, that rent is calculated as 10% of fair market value. Now, the one term in the established certificates that make any specific representation about rent states that rent is equal to an amount. In 2017, I think it's roughly $80,000, $90,000. In 2019, it's roughly $150,000. Both those amounts are equal to one-twelfth of 10% of the fair market value in effect at each of those moments. So the established certificates themselves support, or at least can be read to support, LVOC's claim that rent was equal to 10% of fair market value and, therefore, they cannot contradict LVOC's later reformation claim and, therefore, can't preclude them. The fundamental error that the trial court made was that while she was focused on paragraphs 1, 2, and 3 of the established certificates that make general representations about the lease, she failed to take into account the representation of paragraph 5 of the lease that is the one specific representation of the lease regarding rent. Let's take a step back. The most important thing in this transaction was the amount of rent and how it was going to be calculated. WP4 was purchasing from LHA, the rental stream that LVOC was paying to LHA. That was the deal that they were interested in making. And so did they actually know that that was the stream? And then somebody read the contract and there were questions raised before the estoppel letter, correct? Well, there's evidence in the record that shows that WP4 was explicitly told to assume that the fraction in the lease was one and that rent was calculated as 10% of fair market value. No time did your clients prior to 2020 say anything other than 1%, is that correct? Sorry. We never made any representations regarding what the fraction was equal to. Never made any representations only that they could go on the contract? So LVOC never made any representations to WP4 other than the estoppel certificates that were signed. And as WP4 points out in their briefing, the estoppel certificates were procured for WP4 by LHA. So the estoppel certificates, those are the only affirmative representation. But LHA knew it was 1% for the last several decades. LHA certainly knew that for two decades that LHA had been paying – sorry, let me restart. LHA certainly knew that for the past 20 years that LVOC had been paying rent equal to 10% of fair market value. In fact, LHA's own attorney in late 2017 prepared a memorandum for LHA's board that said rent was calculated as 10% of fair market value. In fact, that attorney actually attached a copy of Section 3.02 to the memorandum that he had prepared. That has colloquially been referred to as the Texan memo, Your Honor, and I'm happy to give you the specific site for that memo. But in 2017, LHA's own attorney was telling its board that the fair market value was 10% times fair market value. Thus, it's no surprise that when WP4 inquired of LHA, or it might have been CBRE, its real estate broker, of what the rent calculation was, they were told, assume the fraction is one, assume rent is equal to 10% of fair market value. That's what – sorry. I understand that. So, excuse me, looking at this, what are the issues? Where are the parties on this issue? It seems that WP4 says that they purchased a contractual right to collect rent as per the lease, and your client says, no, they purchased the rent stream that LHA had been recognizing for decades. You and LHA were working for decades this income stream. Isn't that really what's at issue here? They want to say that the lease, by its very terms, whatever it was at the beginning, if it was misinterpreted too bad, we want to read it the way it could have been read. And you're saying, no, there's been a practice between the parties that's been substantiated, you just mentioned all those ways, for the last 20 years. Your Honor, I actually don't think it matters which of those is correct because our reformation claim is to correct, to go back and correct the lease and to give the parties the initial effect, such that even if WP4 says we get what we asked for, we get the lease, the lease would reflect what the parties originally agreed to, which is 10% of fair market value. It's not that LVOC is saying that WP4 purchased something other than it thinks it purchased. That's not what I said. I said they knew what they were receiving. They were receiving 1%. WP4, on the other hand, before the closing, they knew there was a mistake in there or maybe it wasn't a mistake, but they saw an opportunity to make more money in the lease. That's what I'm saying. The difference is they want to enforce the lease as written, right? They want to enforce, either reform it as a mutual mistake or practice over the last 20 years. Everybody agrees it was 1%. And the lawyers that were involved and all the depositions, everything else, it all showed that that's what was going on. I mean, I think at the bottom line, the key is that WP4 is not a bona fide purchaser. So they're not entitled to that defense. At the end of the day, what WP4 purchased was a rental stream as defined by a lease that contained a mutual mistake. We have now sued in response to WP4's attempt to enforce that lease. We have sued seeking to reform that lease. Am I correct that WP4 never raised this issue with your client until right before the second estoppel certificate? Correct, Your Honor. That is what the record shows, is that WP4 did not have any direct communications with LVOC until I believe it's roughly June of 2019, prior to the second estoppel certificate. So WP4 says, you know, they knew at that point and they still signed this estoppel certificate. That should bar them from their claim. So I think the key point, Justice McNamara, is that WP4 knew about the dispute and still chose to procure a estoppel certificate from LVOC that still said that rent was equal to 10% of fair market value. The 2019 estoppel certificate doesn't say anything about the proper calculation of rent. And that's despite Kay's Merchandise Mart's strong admonition that if you know of a dispute and there is no question that in 2019 WP4 knew that there was a dispute between the parties regarding the proper calculation and amount of rent, there's no question that they knew about that dispute. And yet they procured an estoppel certificate from LVOC that made a representation that rent was equal to an amount, a monthly amount, that is one-twelfth of 10% of fair market value. So in essence, there's no basis for LVOC to object to that estoppel certificate in the fall or late fall of 2019 because the estoppel certificate reflected what it understood was going on, that there was a copy of the lease attached to the estoppel certificate and that rent was equal to 10% of fair market value. I mean, sorry. Turning to the summary, unless there are any more questions with regard to the estoppel certificate, I want to turn briefly to the statute of limitations. Can I just ask you about this section 302? Section 302 talks about the $469,000 as being the denominator. The numerator is the square feet of units on which rent is accruing. And it turns us to Exhibit C. Exhibit C is also roughly $649,000, and it only includes the Phase I buildings. It doesn't name Phase II. So looking at this lease, how would one even know that this project has 700,000 square feet and these two other buildings? Your Honor, frankly, there isn't a way to just look at the lease and know that. You have to do a significant amount of work. You have to do a significant investigation to figure out what rent should be, which is why we suggested in our briefing that what we think happened is that a price per square foot was calculated, or one of the things that could have happened was that a price per square foot was prepared and that that was what was used to calculate rent going forward. Frankly, Your Honor, as we admit, and as we admitted below, the record is wholly unclear as exactly how LVOC calculated rent in 1998 and 1999. And as you just noted, Justice Gamerath, the lease itself is very difficult to figure out the fraction from just looking at the lease. In fact, I'm not convinced that you can do it without doing a significant amount of work. And there's simply nothing in the record to suggest or that shows that LVOC ever did that work. There's no spreadsheet. There's no memorandum. Nobody testified that they calculated the fraction. There's simply just an absence of evidence. Mr. Kasperi, you're running out of time, if you could. Yeah, I'll leave the rest of my time for rebuttal, but I just want to leave the court with two quick things. At the end of the day, this appeal turns from the answers to two questions. First, where there are no questions of facts, as a matter of law, the LVOC knew or should have known that there was an error in the lease prior to September of 2010. And second, can the 2018 and 2019 established certificates be read as contrary to LVOC's reformation claim as a matter of law? Because the answer to both those questions is no. The trial court summary judgment order must be vacated and this case remanded for trial. I will see you all on rebuttal. Thank you. Next, Mr. Rush. Thank you, Justice Paczynski. May it please the court. The first thing is you were told several misrepresentations that there was a dispute between LHA and LVOC as to what the rent was in 2018. There was none. There was an explicit hiatus agreement that dictated what the rent would be and actually wrote the number in it. So when the appellant says WP4 knew all about the dispute and the mistake, there was none. There was no dispute. It is true that the hiatus agreement deleted the multiplier fraction for 10 years. Mr. Rush, where is that hiatus agreement? I read you describe it that way, but is there any document that talks about a hiatus agreement? Actually, yes, there is, Your Honor. First, I think it's attached to the verified complaint as exhibits. I can't remember which one it is. They have it as an exhibit. It's executed by the parties. I'll get the reference for you and provide it to you, but it's literally it is attached to the verified complaint, which means it's real. We also have the deposition testimony of Pastor Abramson and Poulsberg with regard to that hiatus agreement, and they actually signed it. Their signatures are on it. Is this the agreement where they agreed to compromise the fair market value? It is, but I'd also point you to the Pearson memorandum. The Pearson memorandum, which was from 2017, and is part that the parties did not utilize the multiplier fraction from 2009 forward. That was the effect of the hiatus agreement. Now, the reality of this is this was caught by WP4 and several other bidders. Several other bidders realized that LHA and LBOC were not calculating rent in accordance with the rent formula 3.02. They demanded an answer. They not only demanded an answer, but CBRE demanded an answer, and what CBRE got was the hiatus agreement. They said this is why the rent for 2009 and 2018 doesn't match the unambiguous terms of the lease because we have this special side agreement for this 10-year period. Go ahead. The hiatus agreement, as I see it, is the one that compromises on the fair market value and says 10%, correct? This was in response to LBOC saying, hey, times are tough. Can we go down to 7%? And your fair market value is too high. Is this what you're referring to? Yes, and they asked for a break on rent. And break on rent came out to 10% of fair market value, which by definition means that was not the agreement that existed between the parties. Is that really correct? I mean, they compromised on the fair market value, and then the landlord says, no, it's 10%. Can you really say it wasn't so? LBOC said, can you give us 10%? LBOC said 10% is too high. Can you give us 7% or 7.5%? That was rejected. So I didn't see anything in there that said, but we'll still give you a break and give you 10%. The break was on the fair market value. Did I need to explain? Yes, the March 23 letter written by Bill King in 2009 said the current return at this $1,045,000 figure is 11.5%. And that was not, quote, the true intent of the parties. LHA rejected that. They said there is no cap, but we will give you a break. If you read the testimony of Mr. Renetsky, Mr. Palsberg, and Pastor Abramson, they all said it was a rent concession. And even the memorandum from the Pearson memorandum says exactly that. The multiplier fraction was not utilized. That was the discount. It was not utilized in 2009 to 2018. Now, WP... You misspoke, I believe, because I have a letter in front of me. And that is not what Mr. King said. If I have the right letter, which is dated March 23, 2009, I believe is what you said. Right. And it says, I do not believe this was the intent. You said he did not believe that was the intent. That means it could have been the intent. He said he did not believe that was the intent. Right. He did not know, but he is saying he did not believe it. That does not mean it could be the intent. So it was not as if LHA rejected it. When you go, I do not believe it was, maybe it was, maybe it was not. That is how I get at it. They settled on a number that was higher than 11.5%. 11.6. Didn't Mr. King also testify that 1998 was an overpayment due to an accounting error? And they tried to correct it the next year. It was really kind of unclear. But, of course, we are not here to decide facts, nor was the trial court. The question is, is there enough to create a genuine issue of material fact? So with King's letter, in light of his testimony, that the rent was an overpayment due to an accounting error, can you really take that as a firm, clear hiatus agreement? You are mixing, I think, Justice Amroth, you are mixing years. 1998 and 1999 is not subject to the hiatus agreement. In 1998 and 1999, rent exceeded 10% of fair market value. So when rent exceeded 10% of fair market value, that is what we know as one of the instances in which LVOC knew or should have known that the rent formula did not have a flat 10% cap and did not change when phase 2 came in. Because they alone calculated rent, and they alone calculated at 10%. And in both of those years, we have a graph that's included in our appendix. In both of those years, the rent exceeded 10% of fair market value. Both years at their calculation. And then, Your Honor, when they say there's no evidence, we don't know how rent was calculated, their argument for reformation here is a course of performance argument that everybody knew what was going on and agreed to do it. If they don't know how they were calculating rent, how could LHA have been complicit in that such to create a course of performance? Keep in mind, this is an extraordinary remedy of rewriting a lease 40 years after the fact. And at this point, that lease terms are unambiguous. Maybe what you're saying is some of each other is inappropriate. That's what I hear because there are so many issues here that need to be resolved because it's unclear. You just said something that's contrary to what's in the briefs. And that is that there was a stream for a couple decades of 1%. There may have been a little mistake, a hiccup once. But there seems to be a disconnect of what the facts are here. And so maybe it's appropriate then that summary judgment be reversed. No, Your Honor, this case begins and ends with the March 18, 2018 tenant estoppel certificate. No, no, no. Let me ask you about that. So the way you read the estoppel certificate is that if there was a mutual mistake, it can't be corrected. Is that right? No, no. Your Honor, I looked to Excelsior Garage. Excelsior Garage says the purpose of a tenant estoppel certificate is to ascertain what possible claims the tenant has against the landlord. It's to smoke that out, to fish that out. So they didn't know of any claims because they were under a mutual mistake. And you knew, your client, you knew that it might be a higher amount under the lease. So you had information that they didn't have. Would you agree to that? Oh, absolutely not. Absolutely not. All right. Well, maybe that's why we need to have a trial. No, you don't need to have a trial. What they knew was they had a hiatus agreement that set the rent. Did the word hiatus appear in that agreement? Where? The tenant estoppel certificate? No, no, no. You should keep talking about this hiatus agreement. Is that what it's called? Yeah, that's what it was testified to by Roger Postman. But it doesn't say hiatus. Somebody testified to that, but it didn't say hiatus. No, that's how he described it. He described it. So it doesn't say hiatus. That's somebody's impression. People have nicknames for things. Call it a side deal. Call it a side deal. Okay, call it something else. A special giveaway on rent. Call it whatever you want. It was a special side deal that expired in 2019. I go back to that. And where is the compromise on the 10%? Because the record seems to be the compromise on the fair market value, right? It is an admission that they're not following the rent formula. And if I can, Your Honor, this seems to be the center of what we knew. And I'm going to point to you a document that's CS8842 to CS8845. This is the heart of this issue. This is an email from Jeff Whaling in January 11, 2018. Quote, this was after he'd been provided the hiatus agreement by CBRE. This is what he wrote. We should talk to a lawyer about if the past precedent of not following the formula laid out in the lease for the previous rent reset could have any effect on us. Now, the product of that was Mr. Whaling took that to the lender's lawyers at Mayor Brown and Platt and asked the lender's lawyers, we don't know whether we want to buy this. Does this side agreement, this rent concession, this hiatus agreement, does this change the terms of the lease? And it was Mayor Brown and Platt that said, Tenant estoppel certificates are critical to commercial transactions. And you need to get the lessee to tell us all the claims he has against the lessor and whether this document amended the lease. Let me just stop you. The estoppel certificate was something that was in the lease. In other words, didn't LVAC have to sign it or face defaults? Your Honor, prior to this, the tenant had to pay the landlord for tenant estoppel certificates and the landlord had provided them. So, yes, it is a provision that works both ways. Sure, sure. So, your estoppel certificate that you provided to LVAC was consistent with their obligation under the lease, which said, if you're presented with this, here's what you need to sign or you face default. How do you reconcile what counsel just said when they wrote in what the rent was, which was 10%, and they affirmed that nobody was in default? So, they write in 10%, you see it, you take that certificate, and you, too, presumably acknowledge nobody's in default. Several points, Justice Gamer. We can't request the tenant estoppel certificate. We were not the landlord. The landlord requested the tenant estoppel certificate and the bank wanted the tenant estoppel certificate. We were agnostic, so was the bank. The purpose of the tenant estoppel certificate is for LVOC to tell what they wrote in the Pearson memo, whether they have any issues with their landlord, whether they think the lease has been amended, whether they think it's in full force and effect, whether they think it's true and correct. The Pearson memo said it had never been revised. The language had never been revised and that it was a mistake. This was their moment to speak and they didn't. Oh, but you knew there may have been a mistake there. We did not. Well, apparently you did. Apparently you did because that's why you had Mary Brown and Platt involved. I don't see how you can say this. We knew there was a side agreement. We'd been provided a side agreement. Something here that could be fishy and doesn't meet the eye. And you saw an opportunity. I saw some of the correspondents indicated that there was an awareness on your part that there was something, a disconnect between the lease and the 1%. Therefore, you had an idea, you get that estoppel letter, and it's questions before us. If we reverse on the estoppel letter, is there any way that you win? What would be the fallback position? Well, first, Your Honor, if they'd have been. Answer my question on that. I don't want to go back to this. I'm asking if you have a fallback position. We went on the statute of limitations. We went on latches. We went on waiver. We went on. Well, but they see under that, they didn't even know that there was a mutual mistake. That's a question of fact. We tried. Here's how we went with the statute of limitations and the other issues, latches and so forth. Yeah, but there's a complete failure proof. They need contemporaneous evidence of this supposed mistake. And they never raised it. They have a payment for decades at 1%. That's not contemporaneous, Judge. It has to be contemporaneous to 1989. The evidence they're offering you as the course of performance under their own admission doesn't start until 2002. 13 years after the lease was signed and negotiated, after the principal negotiators are dead. That's the course of performance. There's an. I don't know. That could be an issue for the trial court to have to decide, because that's your position. They're also. They're also supposed to provide the language that's missing. They still haven't done it. And in the reply. That's your position. Well, I can show you points in the reply brief where they say two different things. So the question is, which one's the chancellor supposed to say? And if this really was an agreement that was entered. 35 years ago. Why don't they know what it today, what it was supposed to say? Because there was a mutual mistake. You seem to, you don't want to acknowledge. The fact that the position. Their position is there was a mutual mistake and that some way you, if I understand your argument correctly, because of a stop, well, they are unable to raise the mutual mistake. I don't believe that's the law. No. Because the estoppel certificate, that's exactly what it does. It's supposed to get clarity and had that we were agnostic. If they came forward and said, we don't have an agreement on rent. There would have been no loan. There would have been no train. I didn't know that. I didn't know that you could say. The Pearson memorandum confesses that they knew that it was written in March of 2017. It's a year, a year before the tenant estoppel certificate. And it says the word mistake and written onto it. And it says the lease formula has never been revised in 2019. Attached to their complaint. They included a document. It's a 45 of the appendix and C 1662. This is what they said. The way rent was calculated for the first 13 years. I'm going to read it. Calculation of rent in the earlier years. 10% of fair market of the demise land. Times total square feet of the units. Computed divided by four 69. Oh 98. This was the formula used until 2002. That's the formula. That's the way it was written. That's the way it was applied for 13 years. I, my position is under the discovery, under the execution rule. And it was, it was a literary application of the formula. It was a literary application of the formula. But under a course of performance, the course of performance was a literal. Application of the black and white terms. Of the rent formula. For 13 years. And it was LVOC that applied it. And. But the numbers. Don't really support that too. Because if they use that. If they use that number. And. Then they would have been overpaying 10%. But they've been paying 10%. No. It's actually untrue. There were those couple of years that were. 11 and one was 12. But by and large, it was roughly 10%. And. So. So. She calculated rent without ever looking at the lease. So I don't disagree. That they weren't following the lease. I would point out that the 39th amendment. Wasn't signed until. May of 2018. I don't know what they were doing. And to LVOC's credit and their reply. They admit they don't know how they were calculating rent. They don't know where they came up with these numbers. But if you, this court is being asked to reform a lease. Based on a supposed. Mutual course of performance. For which the evidence is lacking. I don't, I don't know how you get there. Okay. Stop there. That's not what we're here to do. We are here on. Finance questions. Summary judgment based on statute of limitations. And these. Certificates. We are not touching. Affirmation. We're looking is there. Material fact. On those two. Correct. Because those were your defenses. So. I think. If we were to reverse. Summary judgment on those points. I think. You know, there's still a long way to go. Before reformation kicks in. But I just want to make that point clear that we are. Here on those two points. Okay. Statute of limitations. And has stopped. We've advanced a third point. And that's a complete absence of failure proof. Which is admitted in the reply brief. If they're going to make a course of performance argument. They have to submit evidence of the course of performance. What they are telling you and what you just heard 15 minutes ago. Is we can't tell you. What the course of performance was for two years. We don't know how we were calculating it. We don't know how we got to these numbers. If they don't know how they got to these numbers. How can that be a constant course of performance, which creates. An impossibly unavoidable conclusion that everybody agreed. It was good. If nobody knew what they were doing. So, no, we don't. Yes. Thank you. If you could just wrap it up. Okay. The point is on the tenant estoppel certificate. The law of Tom's all the law says. When a tenant gets an estoppel certificate, they're supposed to say. All the claims they have. And what any issues they have with the lease. They did not say that they said the lease is true and correct. They said it's in full force and effect. They said it's never been modified and they didn't list any claims. In the Excelsior case, the first district reversed. Because it says the whole point of this. Is for the lender to find out. If the lessee has a challenge to the income stream. And in this case, based on the Pearson memo. They now claim they had a challenge. To the income stream. And they didn't raise it. They were quiet. If you can come back later. And obviate the tenant estoppel certificate, Illinois. By saying, oh, I, I did. I thought of something new and this was a mutual mistake. And King's X, there is no tenant estoppel certificate. You'll never get another loan. There won't be any commercial transactions. That was their moment to speak. They didn't. Had they spoken. None of us would be here. Why? Because a lease. Without a rent term. It's not a lease. It's not marketable. It's not lendable. It's not. Okay. They told you in the. Certificate. What the. And we just heard from counsel. It was one 12th. Of 10%. They also put in. Certificate. They were not in default. So how do you reconcile that? They believed they weren't in default. They believe the. They believe the lease was amended. And the rent was 10%. So therefore. No issue. And they couldn't have said the lease was amended because it wasn't. That's correct. You're right on everything, but one point, your honor. And that is the tenant estoppel certificate. It's a snapshot in time. It concludes a raw number. And Tom's and I believe it's a. Urban site says you don't inquire behind the number as to. The machinations that got into it. And do you know why that number? Was not a default in 2018. Because that's the number from the hiatus agreement. The side deal, the concession agreement, whatever you want to call it. It's not a default. Because they gave them a concession on rent for that 10 years. The question we had. And the question mayor Brown had was. Did that change? 302. And the unequivocal answer in the tenant estoppel certificate. Was no. No. And the unequivocal statement. In the Pearson memorandum was. This has never been revised. It's still there. I just want to read to you. Okay. This supposed hiatus. Which says. We confirm that. We have approved the fair market value of 10.9 million. Period. On November. The ground rent will be calculated. At 10% of the 10.9. Period. Correct. And when does that agreement? 2019. What happens after that agreement? Did they amend the lease? When they hit. But this was. Well, I think there's two sides to this. Because in my view, based on the record. And of course, on into the parties. The compromise was on the fair market value. That's fine. Your honor. But whatever it was. It was over on 2019. And there's no debate. Among any of the parties here today. That document. Didn't rent. Amend the black and white terms of the lease. And the rent formula. So no matter how. Even if they said. 15%. It still would expire in 10 years because the lease. You have to do a fair market value. And that's what they're going to do every 10 years. Well, whatever this side agreement. It's they never listed it as an amendment. Nobody thinks it's an amendment. It had a finite life. And so when you say, well, you finance this at one to one. It's because that agreement. Obviated the multiplier fraction. And when you walk into a bank. With an agreement that says, this is the amount of pay you're going to get. That's all you can finance at that moment. You can't look forward and say, I think this is going to be a whole lot better in three years. The bank says. How are we going to service the income stream now? And all attended to stop a certificate does is put a snapshot in there. It's up to the tenant to say. There's no rent formula. Come stream. And on 2019, we don't have an agreement because I have a reformation. And how do we know they knew they had a reformation claim? The 2017. Which said the language has never been revised. The multiplier fraction is still there. And we didn't utilize it when she says it's not. Utilized in 2009. It can't mean anything other than the hiatus agreement. Which is dated 2009. And which, as you stated, expires in 2019. A year and a half after the tenant to stop. All bets are off after that. We don't know what rent is going to be. There could be a market crash at the building to get condemned. You don't know what rent's going to be. We do know rent's going to be that number in the blank. Until the. And when all the bidders. Inquired as to why. That number didn't match section 302. They were all given. The hiatus agreement. And if you want that email. I'll provide that to you. Oh, I have it. Thank you. I know your weight has your time, but I do have one more question. And that is. Section 302 refers you to exhibit. Correct. Exhibit C. When you add up those figures is roughly 469. And it's the stuff size. The. I'm sorry. Phase one unit. It does not specify those two. Mid-rise buildings on phase two. So I asked. Appellants council. How would we even know that this is 700,000 square feet? Or that these phase two units were supposed to be calculated. Because CBRE put it in their offering. Well, whatever. Doesn't change this lease. No, it doesn't. Also told you point blank. Assume it's one and it's 10%. Yes, because if you're going to finance this deal. In March of 2018. It's one. It's 10% to one. Because the parties didn't. Utilize. The multiplier fraction. Just like Pearson. McGrath. And you to Paul wrote. It's not in there. So, yes, your honor. It was all financed on that. Because I can't tell you what my income is going to be next year. I can't even tell you what it's going to be this year. I can certainly tell you as a fact what it was last year. And so when I go to the bank to get the loan. That's the only number they want. They don't want me to tell them. I think it's real. I'm having a great year. They want to know. What's your income stream? And are we going to have a surprise? That's the word the Excelsior court said. No surprises. And it's up to the tenant to prevent. There's no surprises. The Pearson memo. Demonstrates. They thought. It doesn't even say that. It doesn't even say there was a mutual mistake. It says the lease is written as a rent formula. And it's never been revised. At that moment. That's if they believed. The multiplier fraction was gone. And should be taken out of lease. That's exactly what the lender wanted. That's exactly what we wanted to hear. If they said that. Everybody leaves. They say we don't have a rent provision. We don't have a rent provision. We never came to an agreement. All they had to do was write that. Just attach the Pearson memo. And there's no deal. The case goes away. Nobody's trying to pull a fast one. We wrote an email and said, we can see there's a discrepancy. Is this a problem? And mayor Brennan Platt. Who does hundreds, maybe thousands of these years said, no, the way you handle this, you should get a tenant to stop. That was you going to your counsel. This was not you. Or. This was not us going to our council. This was. Mayor Brown didn't represent. They represented the bank. Yeah. Yeah. I think you're past your. The tenant estoppel certificate. It's for the bank for the lender. And this was the lender's lawyer saying. Get a tenant establishment. Thank you. We appreciate it. Mr. Berger, thank you for your patience. Thank you. Justices. And may it please the court. My name is Jake Berger and I represent the Lutheran home for the H. In addition to the points that Mr. Rush from WP for race to trial courts, grant of summary judgment in favor of LHA and WP for should be. And in favor of LHA and WP for, and again, LVAC should be affirmed for three reasons. First, the 10 year statute of limitations on contract actions. As far as LVACs reformation claim, regardless of whether this court applied the execution rule or the discovery. Second LVACs claim is barred by the equitable doctrine. Lachey, which was one of LHA's affirmative defenses to the reformation claim. And third LVACs reformation claim also fails because LVAC cannot establish at least two essential elements of its reformation claim. The mistakenly omitted contractual term or that the mistake was mutual. Turning to the first. Before you get there. Is there anything that Mr. Rush said that you disagree with? Or do you adapt hook, Your Honor, I generally agree with everything he said. I believe that the estoppel certificates do bar the reformation claim. And I, I believe also that LVAC did not raise any genuine issues and materials back as to the course of performance. So I do adopt those arguments and I'll touch a little bit on the course of performance during my arguments as well. Turning to my first argument on statute of limitations grounds, Your Honor LVACs claim is barred by the 10 year statute of limitations concerning actions on written contracts set forth in section 13-206 of the Illinois code of civil procedure. The key question on the statute of limitations issue is when did LVACs claim accrued for purposes of the statute of limitations and under the execution rules set forth in the opinion case that we said in our brief LVACs claim accrued when facts existed that would have allowed LVAC to maintain a cause of action for reformation. Those facts existed in 1989 when the contract in section 3.0 Isn't that a question of fact, isn't that a question of fact? Shouldn't that be a fact inquiry? Your Honor, in this case, Noah as Sean's in the court's recent decision in Israel versus city of Chicago explained, this issue can be decided as a matter of law where the facts are undisputed and only one conclusion can be drawn from those facts. And with respect to the execution of the contract, it should have been clearly apparent to LVOC on the face of the contract that section 3.02 differed from its understanding of the agreement departments. But apparently it wasn't because there isn't anything in the record that shows that there was this disagreement and it came at it. If you look at what's in the record, it came as a surprise around the time that all the negotiations were going on with regard to the sale of the property underlying property. So for you to say, well, we're not going to look at anything afterwards when you only want to look at one spot. So you get your 10 years, but it seems to me that that is not the end of the question. You have to look at what happened after that as well to see how the parties acted and reacted. And if you look at the luminous materials, there's an argument that this should be heard by a trier effect to find out when they actually should have no. Respectfully. No, Your Honor. There's no tribal issue of fact in this matter, even if the court does apply the discovery rule for several reasons. First of all, LVAC could and should have discovered this error in 1989 on the face of the contract. LVAC does not claim there's a latent defect. LVAC does not claim it was misled early on to believe that rent was, could exceed 10% of fair market value. They're talking about a mutual mistake. So, so, you know, it's not just them. You're putting the onus on them, but it was, it's a mutual with regard to your client as well. So I understand why you're taking the position, but it seems that you can't just talk about them when it's what they're saying is a mutual mistake. And in any event, this argument is justice. Gamma said is. Well, I mean, as far as the reformation, it's great. It's separate, but, but there's digital limitations. It seems is a discovery role as I understand it. And if that's true, then it should be. Tell me why you think it should not be discovered. So if you're on a few reasons, first of all, the course holding in urban sites is critically important here. What urban sites says is that a party must read a contract, both before an execution, because it's charged with knowledge of this of the contract is charged with knowledge of the contractual terms, which means LVAC should have seen right there. And then in 1989 that the memorialized contract differed from their understanding. And you would never have a mutual mistake. Well, you're saying is never have a mutual mistake because you read the contract. How could there be a mistake? No, your honor. That's not what we're saying. What we're saying is that under urban sites and under the execution role, parties should read the contract early on. They should raise disagreements or issues. They didn't have a disagreement. And of course they read it. They've read it several times. I mean, you're saying your client. Didn't read it either. Of course they did. They were going over this contract over and over and it was, it was important for everything that we talked about all along the line. So, you know, did the say that they didn't read it or anything doesn't really sit well when you're talking about a mutual mistake. You can't be, you can't remove that. Your honor. I'm not saying that they didn't read the contract. I'm just saying for whatever reason, they did not. They had the opportunity to discover the mistake then and there both for the purposes of the execution rule and the discovery rule in 1989. But even when did your client discover it? Your honor, we were never told that there was any mutual mistake. Right. You didn't know. And that's exactly why it's mutual. since the issue is a mutual mistake and that we're looking at the statute of limitations, it would seem that this is a question that has to be decided upon the facts. Your honor. It's not a factual issue. There's no genuine dispute of material fact on this because we also have to look at 1998 and 1999 when the rent did go up about 10% of fair market value. The trial court correctly held that that should have put LVOC on notice that rent could and did exceed 10% of fair market value. Even taking into account the alleged overpayment error in 1999, as the record reflects at page 846 of our appendix, even taking into account that overpayment and the reduction in rent in 1999, rent was still 1.14X of fair market value. LVOC offers a number of other justifications and potential ways rent was calculated without reference to the multiplier, such as this price per square footage concept concept on pages 44, excuse me, pages 34 and 35 of their opening brief. But there's no support in the record for any of that, that the parties calculated the rent using anything other than the multiplier. LVOC doesn't cite any record evidence for these alternative theories. The fact of the matter is the undisputed fact of the matter is that rent did exceed 10% of fair market value in 1998, 1999 and should have put LVOC on notice that there was an issue. The issue for purposes of the discovery rule, if the court ultimately holds that the discovery rule applies, is not just whether LVOC knew, it's whether LVOC should have known. And it's undisputed from the record evidence that LVOC should have known in 1998 and 1999. But even if the court looks further at it. What about King's testimony where he said that what is an overpayment due to an accounting error? Your Honor, even if that's accurate, that still would reflect that the true multiplier putting aside the overpayment issue was even higher than 1.14X, right? Because if they paid less in 1998, in 1999 than they did in 1998, the starting figure, taking into account the discount for the overpayment was higher than 1.14X. So even if there was an overpayment in rent, that doesn't change the analysis that LVOC should, knew or should have known in 1998 and 1999 that there was a problem. But even if you look ahead, even if the court looks ahead to 2009, it is undisputed again that LVOC's internal records reflect that there was, that LVOC believed there was the mistake in section 3.02 of the leaf that did not reflect the party's true intent. And that document is in the sealed record at page 8154. It's also page 48 to our appendix where Mr. King's internal talking points in sort of the third section of that, talk about how the return on the fair market value greater than 10% was not the intent of the party. So to some of the other questions that Mr. Rush was asked, it's not just Mr. King's belief that it didn't reflect the original intent of the party. He says right here in AA48, it was not the intent. And of course, Mr. King would know that since he was involved in the original negotiations. And so there's no genuine dispute of material facts that LVOC should have known no later than 1998, 1999 about the potential issues in section 3.02. And LVOC did know about those issues no later than 2009, which would mean even if the court adopts the discovery rule, and the date of that memo, by the way, is March 12th, 2009. That means that as of March 12th, 2019, any claims for reformation of the lease based on mutual mistake would be barred. Simply put, LVOC had plenty of warnings that would have put it on inquiry notice or given it actual notice as acknowledged by LVOC's own documents, that it knew there was a problem and yet it remained silent and did nothing. Turning to my second point, Your Honor, on the latches issue, the claim is also barred by latches because it's very, it's apparent from the record that there was a delay or lack of diligence by LVOC in discovering these issues, I'm sorry, in asserting these issues and or discovering these issues with the lease and LVOC's decision to remain silent caused the parties to suffer severe prejudice and change their course. First, as we've set forth in detail in our brief, important evidence has been lost. LVOC is wholly incapable of explaining, there's no genuine dispute of material fact. They've admitted this. Anything that's not in your briefs, you're repeating your briefs. Is there anything else you want to say? On latches, yes, Your Honor. I want to emphasize the reliance that LVOC's silence caused. This transaction closed as a result of LVOC's silence on the assumption that there was no error in the lease. Had LVOC raised a problem with the lease in 2017 or 2018, when the transaction was closing, the transaction may not have closed. It probably would not have closed. In fact, the testimony in the record was that the estoppel certificate was a conditioned precedent to the transaction closing. Did you present the estoppel certificate to LVOC? Not you personally, but your client. I believe, Your Honor, yes. I believe Mr. Texan sent a copy of the estoppel certificate to LVOC's condo association lawyer, asked that it be executed. There was some internal dissent at LVOC and LVOC's lawyer ultimately told them that the estoppel certificate needed to be signed. But we didn't mandate what LVOC put in that estoppel certificate. Article 17 of the lease requires an estoppel certificate to be delivered, but it says LVOC needs to speak on whether or not the six items listed in article 17 are true. And so it was certainly incumbent upon LVOC at that point to say, we can't sign this. There's a problem or to put in that estoppel certificate that they had a claim related to mutual mistake and reformation. They didn't and the transaction closed as a result. Had they raised that issue that could have been addressed at the time and maybe the outcome of the transaction would be very different. But as the court recognized in Excelsior Garage, the court cannot undo that closing at this point based on the estoppel certificate. So the estoppel certificate in article 17 says, here's what it should contain. And it says lease in full force and effect. It says five things and that mirrors what LVOC gave to you. You gave to them, they filled it out. I don't see anything in article 17 that says, hey, there's a problem. You need to flag it. It says you need to say the lease is in full force and effect. Everybody agrees it is. It says the term of the lease has been modified or amended. It had not been default. And then it says the term of the lease and the date to which rent is paid. And that's it. Who says it's LVOC's obligation to put it in the estoppel certificate? Your Honor, the court's holding in Excelsior Garage says that. Excelsior Garage is very clear that based on the terms of this contract, we can't force LVOC to say what we want it to say. LVOC is free to put whatever it wants in its estoppel certificate about claims for monetary. You were the ones that set out what they had to say. So they had no obligation. You told them what to say, right? So why would they say anything other than what you told them? And they did exactly what you asked them to do. So you're saying you're criticizing them, based on another case, different situation, but you're criticizing them for doing what you asked them to do. And there isn't another sentence they were saying, and whatever. They gave you exactly what the agreement provided. So how can that be wrong? I don't care. That other case is a different situation. Under this situation, they comply. Why not? Your Honor, all of these authorities, all of the authorities that we've cited in our brief require the tenant, the person executing the estoppel certificate for the benefit of the landlord or the lender to investigate potential claims. It's on them to do so and to put those in the estoppel certificate. Otherwise, if the shoe were on the other foot, we would essentially have to give them a checklist of every potential cause of action under Illinois law. And to ask them to confirm that they don't have it. I mean, their position is they weren't aware of any. So it makes perfect sense that there wasn't anything there. And then you say, no, they should have known. So again, we go back to a question of fact that seems to be in controversy. You say one thing, Mr. Rush says the same thing as you, and then we have the appellate. Respectfully, Your Honor, there is no question of fact. All of the underlying facts are not in dispute. The rent did go above 10%. Let's see if that's conceded. Okay. I have a question. Generally, and it goes to. Any party who filed anything under seal. There was a ceiling in the trial court. And of course that goes again to the appellate court. But a judge not in our division entered an order that that continued, but having looked at everything, including your brief, which was filed under seal. Why at all? Shouldn't we just remove the seal? We don't have any objection to the court doing that. Assume all parties agree. We didn't want to put any tenants. I'm not blaming. I'm not blaming you. I just, I'm just asking the question. If it's okay with just, I would, I would ask just the other two parties. If they consent to, because much of this is really old business. Your honor, I would say, you know, we don't have any objection to that. Some of the reasons we did that was it was internal board minutes. I understand. I'm not. That's not my question. I don't. I understand what I was doing. WP4 consents. Okay. How about the. Of course, your honor. We also consent to the. It'll make things easier for the decision to. Slate some of that. So we really appreciate it. And we understand why you did it. And you were perfectly within your confines and you actually, you're very good lawyers. You did what you're supposed to do. So thank you. Thank you, judge. And we appreciate that. If there are any other questions I can answer for the panel, I'm happy to do so. Well, if you could wrap it up, that would be great. Sure. I'll just be brief on my final point. Your honor, which is that there's no genuine disputed material. Fact that LBOC cannot meet its burden of proof on two essential elements of its claim. It cannot supply the missing contract term. It certainly cannot supply contemporaneous evidence of it. The closest LBOC got to supplying the missing term was at the hearing on the motion for the second hearing on the motion for summary judgment below. When Mr. Hogan explained how 36 years after execution of the lease, he would have implemented what he believed was the erroneously admitted or alleged erroneously admitted contract term. Mr. Hogan's or any counsel's suggestion about what to do 36 years later is irrelevant. It's really contemporaneous evidence that matters. And secondly, the mistake was the alleged mistake was not mutual. John Durso, the primary drafter of the lease for LHA. Roger Palsberg, the president of LHA shortly after execution of the lease. The lease, Pastor Abrahamson, who was a former LHA board chair. And Michael Renetsky, who was also a past president of the LHA board. Also, all testified that there was no mutual mistake in the lease. The denominator was never supposed to change regardless of how much square footage was developed. And for those reasons, there is no genuine disputed material fact that there was no mutuality in the alleged mistake. For all these reasons, we respectfully request that this court affirm the judgment to the trial court. Thank you, Mr. Kaspari, if you could keep it brief. Thank you, Justice Patinsky, and I will endeavor to do my best. I know that it's gotten late in the afternoon, so I will be very quick. Just a couple points I want to make. On the point about the estoppel certificates, the estoppel certificates were being procured to close the transaction by parties who knew that there was a potential dispute about the amount of rent. They chose not to include that in the estoppel certificates. It's completely unfair to say that LVOC should have known or should have put that in the estoppel certificates when they affirmed they chose not to do so. On the point of lashes, the trial court didn't address that. So I would say that if there is a question about lashes, that should be addressed by the trial court in the first instance. Turning to the March 2009 letter, I want to just briefly say that the 11.9% has absolutely nothing to do with the multiplier. It had to do with the amount of rent compared to the new FMV, fair market value, that LVOC had received from its evaluator. And so the 2009 letter from Mr. King cannot put LVOC on notice of a mistake in the lease. And finally, I just want to say briefly on the hiatus agreement. With the hiatus agreement, LVOC 4 seems to be trying to have its cake and eat it too. On the one hand, they want to foreclose our claim because we represented that the lease was in full force in effect and had not been modified. On the other hand, they point out a hiatus agreement that isn't listed as one of the amendments to it and clearly would have meant that Section 3.02 was not in full force in effect. At the end of the day, we don't think that there was a hiatus agreement. But at absolute worst, whether or not the hiatus agreement exists is a question of fact that should be resolved by the Supreme Court after this court vacates its summary judgment order and remands the trial. Unless there are any further questions, I will yield. One question. It's been said that there are no undisputed facts. Is that true? Not at all, Your Honor. There are more disputed facts. It would take me pages to list all the facts. But it was said that everything is undisputed. I think counsel was referring to specifically the fair market value in 1998 and 1999. We strongly dispute that rent exceeded 10% of fair market value because the moment that the Phase 2 units began being sold, that should have implicated the fair market value that was listed in the CHS ground lease increasing the fair market value. And there is a host of disagreement as to the proper operation of that. And it goes back to the mutual mistake that the parties made in 1989. Unless there are no further questions, Your Honors, thank you very much for your time and thank you for your consideration. Thank you very much for your excellent arguments this afternoon, your excellent briefs. We will take this matter under advisement and this court will issue an opinion or an order forthwith. In the meantime, this court is adjourned. Thank you. Thank you. Thank you."
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"stt_transcript": "And we will hear first from Mr. Pettit, and you may proceed when you're ready. Thank you, and good morning, Your Honors. I hope to reserve five of my 20 minutes for rebuttal. May it please the court, the district court erred by failing to resolve this case on the party's cross motions for summary judgment because there were no disputed issues of material fact and the relevant contract language was not reasonably susceptible to the interpretations provided by the general partners. This court accordingly can and should exercise its de novo review to reverse the outcome below and enter judgment in appellant's favor. As the court may be aware, the threshold and ultimate issue in this case is whether the partnership desired to accept a bona fide offer from an un... Let me ask you, because I was a little confused from the briefing, what is your position on when it says that the owner shall desire to accept a bona fide offer, what's your view as to who exercises the owner's power with respect to that issue? Who has the power to execute a sale? So the owner obviously is the partnership, and there are four partners in the partnership, two limited partners and two general partners. And our position is that all of the partners have to agree to... I mean, well, the red brief seemed to say that you had conceded the opposite, and then the reply brief seemed to let that go without comment. Am I reading that wrong? Your Honor, I believe that the point that we wanted to make is because none of the partners desired to accept the offer, the partnership could not have accepted the offer. And we made a... Suppose the general managers wanted to accept an offer just, you know, hypothetically, and the limited partners did not. Would the limited partners have the authority, in your view, to block the sale? Yes, Your Honor. If there's a distinction between the exercise of the option, which can be unilaterally exercised against the... Even if the limited partners, you know, want to stay in the partnership. The right of first refusal, our position is that the limited partners have to desire to sell the property. But as Your Honor is sort of picking... And what is that based on? I mean, do we have to go look at the partnership document to figure out who exercises the owner's authority with respect to this issue? Your Honor, yes, you look to the partnership agreement. The partnership agreement is clear that the partnership cannot sell the property unless the limited partners agree. Other than as provided in the option agreement, which lands us back to this question. That's right, Your Honor. And I think that the reason why that parenthetical was included in the partnership agreement was because in the absence of that parenthetical, theoretically, the limited partners could block the exercise of the option because the option involves the sale of the property. And if the partnership agreement says that the limited partners have to consent to a sale of the property, it could undermine the unilateral aspect of the option. However, I don't think that we need to win on that issue, which is why we didn't really focus on it in our briefing. Because the reality is that none of the partners of the partnership desire to accept a third-party offer. And, you know, it's undisputed that the partnership did not desire to accept an offer. My clients repeatedly communicated that they have no interest in selling. And the general partners – How – doesn't that view of this make this language essentially nugatory? It's nice words on a page, but it will never be operative in the real world. If the limited partners have the ability to block the consent or – No, you're reading about what constitutes a desire to accept a bona fide offer. That it has to be a genuine desire to accept a purchase offer from a third party. Correct. That if that's what it means, then this provision is basically never going to be operative. I don't think that's right, Your Honor. I think that – It would mean that the general partner who has the right of first refusal would have to actually want to do the third-party sale, even though that would then trigger the right of first refusal, which looks pretty good by comparison. And so it puts us in a situation that it could only be operative based on a factual impossibility, and therefore it sort of drops off the page. I mean, that seems to be the biggest challenge to your argument. I think there are – so there are a couple of things. So one is there are two general partners, right? Only one of the general partners actually holds the below-market right of first refusal. And so the other general partner presumably doesn't have that conflict of interest and could evaluate the terms of a third-party offer and assess whether that offer would be in the best interest of the partnership to accept. And even – That partner seemed to like the right of first refusal. I'm sorry? That other general partner seemed to like the right of first refusal. That is, I think, a true statement in these factual circumstances. But the reality is under the contract, that general partner does not hold the right of first refusal. And even for Canopy, the party that does hold the right of first refusal, it's not impossible for a general partner that owes fiduciary duties to the partnership to wear two different hats and to look at the actual third-party offer, make an independent assessment as to whether accepting that offer would be in the best interest of the partnership, even though it knows in the back of its mind with its other ropher-holding hat that it would allow it to, you know, to trigger the ropher. And this is – the facts here are actually a very good example of that, where the – well, it was actually not an offer. It was a non-binding letter of intent, which I can get to next. But the letter of intent proposed a purchase of the property for, I believe it was, $45 million. And the broker's opinion of value that the general partners obtained prior to soliciting the letter of intent valued the property between $50 and $60 million. And the broker had suggested to the party that made the letter of intent, you know, why don't you offer $52 million? Now, they didn't. They offered $45 million. And we know that the general partners would not have desired to accept a $45 million offer for the purchase of the property. And how do we know that? We know that because the general partners' principal, David Nahas, I asked him this specifically at his deposition. Would you have – you know, putting aside the ropher, would you have accepted this offer? And they said – and he said, no, I would not have accepted this third-party offer without further negotiations. And then I asked him, and you didn't engage in further negotiations, did you? And he said, that's right. And I said, and the reason why you didn't engage in further negotiations is because you had no interest in selling the property to a third party. Your interest was triggering the ropher. And he said, yes, that's right. And so there are – I mean the question this raises is, was there anything unambiguously in the contract that prevented them from doing that? Because that's your burden, right, to be able to prevail on summary judgment. And so I guess I come back to Judge Collins' question, which is, under your view, what exactly did they need to – your position, I take it, is the right of first refusal is something they can use eventually. It's not completely nuggatory. But so what more did they have to do? They had to basically play along further with the positive offer. They had to engage with them a couple more rounds and get to that point. And then you would say, all right, at that point that was enough process, if you will, that they could then exercise the right of first refusal? So I want to answer your question directly, and then I also want to address the nuggatory – the statement of it being nuggatory because I think that even in the absence of it being exercised, it's not nuggatory. I think it has value independent of its exercise. But what would have to happen is, first of all, there would have to be an actual enforceable offer. And the case law is very clear on that. Even the cases that the general partners rely on, the pathway case and the homeowners rehab case, all say that, you know, at a minimum, an offer needs to be an enforceable offer in order for it to trigger the right of first refusal. That's an independent requirement. On the desire to accept, what we're saying is that there actually has to be an evaluation of the merits of the offer that's being tendered by the third party to assess whether that – accepting that offer would be in the best interest of the partnership. And the fact that there could be a collateral consequence of that analysis and that – All of the partners have to agree for this condition that the owner desires to accept the bona fide? All of the partners have to agree to that? Our position is that all of the partners have to agree, but at a minimum, one of the partners has to feel – has to have a genuine desire to accept. Well, which is it? What's the rule? Is it all of them or is it sufficient if it's just one? It's – I would say that it has to be all of them. I mean because if it's all of them, then the partner who has the right of first refusal is never going to, in fact, subjectively desire the third party transaction. I don't think that – It creates a sort of factual impossibility. Well, I don't think that's right, Your Honor, because, again, I think that Canopy can evaluate the offer on its merits and say if I didn't have this roofer, I would – this would be in the best interest of the partnership. And I also want to point – and I want to talk to this right – the way that this Congress structured this and the way that the parties structured this was they gave the Canopy two rights. One was an option that could be exercised unilaterally and that could be exercised without the limited partner's consent. Without the other general partner's consent, it had carte blanche. If it wanted to exercise – if it wanted to purchase the property, it had a mechanism for doing that. Then it had the Section 6, which is kind of like a standalone section in the purchase option agreement. What that is – and it's a blocking right. Rights of first refusal are, by their nature, defensive, preemptive rights that are only triggered in the event that there's a desire to sell and a desire to sell the property. Now, you may ask, well, then why would you have that in there? What value does it create for the nonprofit to have that right of first refusal in there? Well, the value that it has is that the limited partners have a forced sale right. That forced sale right begins to run on the same day that the right of first refusal begins to run. And in the absence of the right of first refusal, the limited partners could say – could order the general partners, you need to go and sell this property to a third party for fair market value. And then the canopy, the nonprofit, would have to say, oh, well, even though I have a four-year option period, I'm now stuck in a situation where I need to immediately – So, counsel, if this were just a straight-up contractual relationship without the statutory backdrop, there's a lot of merit to your argument about what a right of first refusal means. It feels like it has some kind of established meaning. Congress then uses it in the statute. But as the Sixth Circuit points out, you know, it doesn't really mean what it looks like. Congress had to structure this in a way to avoid certain kinds of tax consequences with the IRS. And it really means something different because, as Judge Collins has pointed out, it will never get exercised and it will frustrate the program that Congress has set up. So what's wrong with that reasoning? So a couple of things. One is that Congress actually engaged in this analysis. They considered whether to grant a below-market option or a below-market right of first refusal. And that's in the Senate reports and the House reports that we cite to in our briefs. And what they said was, if we give the nonprofit a below-market option, it will take away the ownership rights of the investor to such an extent that it will no longer be considered the owner of the property and, therefore, will not have the ability to the tax credits. You have to remember that this tax program was adopted in 1986 as a way of – as part of the larger Tax Reform Act where they were trying to get rid of these passive tax shelters. And so Congress decided we want to make sure that the owner of the property – now, remember, the limited partner is the 99.99% owner of the partnership, and that's how the program is structured. Now, they have to have some ability to ensure that they could have upside potential if the property appreciates in value over the life of their investment. And if we allowed the option to be exercised unilaterally, then they would take away their ability. So Congress specifically understood this. And so that's the reason why this specific agreement, which affirmatively includes the bona fide offer and the desire to accept, can't be interpreted in the way that the general partners advocate. Because if they did, it would essentially – they refer to it as, oh, the ROFR is just a mere technicality. It's just something that you've got to sort of check the boxes of soliciting an offer. But at the end of the day, we get the property, and we get it for the below market price. And Congress said, no, you don't get to – this is the tax code. The tax code doesn't allow you to just say, oh, well, something's a technicality. There's substance that has to be associated with it. Do you want to save time for rebuttal? I would, Your Honor. Okay. Thank you. If there are no questions at this point, I'll save time. Thank you. Thank you. And so we will hear now from Mr. Davenport. Thank you, Your Honor. If it may please the Court, it's a privilege to be here. We've been litigating these types of cases now for more than a decade. And it's a privilege to be here and hearing the questions that you're asking because they are the questions that the courts that we've been before in the past have asked. What does this mean if it can't be meaningfully utilized? At the same time, under California law, it has to be a reasonable reading of the words. And the words that are in here is that the owner shall desire to accept a bona fide offer from an unrelated third party. So the noun phrase that is the object of the desire to accept is not just an offer or not an offer to trigger right of first refusal. It's desire to accept an offer from an unrelated third party. That condition is just not met on the facts. So no one desired to accept the offer from the third party. They desired to accept it for purposes of triggering the roofer, which was consistent with the reason it was there in the first place. And everybody knew going in the original parties made it very clear in our estimation under the limit. It's a desire to have it for purposes attributed. No one desired to actually accept it. I mean, it's weird. Why isn't it written as upon receipt of a bona fide office? Then that would work exactly as you said, but it's just not written that way. It doesn't say that. And so this looks like a case where the words don't fit. But for reasons of congressional purpose, we're supposed to distort the words to come up with something else. That's what this sounds like, because it's the words just are not met. And I can't stretch them so that they're met on the facts of this case. Help me out. Two things to that. One, I believe that may justify why Judge Carter ruled that it was ambiguity and we needed to have a trial and evaluate what was the intent. Because this this is unclear, because, as you say, we have to look behind that to figure out what it means. And so we had a trial on that. The second thing is it also does not say that there has to be a genuine desire to accept. It does not say there has to be a desire to sell. And that's really what they're getting at is they're getting at. There has to be a genuine desire to sell to that third party at a binding enforceable offer. Not desire to have received. Consider it's a desire to accept a bona fide offer from an unrelated third party. How can I read that that that condition was met? Because that condition was met because you had a bona fide offer. It was from an unrelated third party. And the general partner canopy was vested with full authority to express any desire of the partnership. Only canopy can do that as a general partner. The limited partners cannot. They were excluded from any such right under the terms and conditions of the partnership. You disagree with them. You when it says owner shall desire to accept that that power is only the general partners and not the limited partner. I fully disagree with his position. And the partnership agreement makes it manifestly clear that as the general partner, they have full and exclusive authority to manage the partnership for its purposes, which includes the charitable purposes for which the partnership was designed. And that's at Section 2.5 A of the partnership agreement and Section 5.1 A of the partnership agreement. Further, what they're really trying to do is 5.5 says notwithstanding any other provisions of this agreement, the general partners shall not have the authority to do any of the following. One is sell any or all or any portion of the apartment complex or modify or refinance the mortgage, et cetera. Except is specifically provided in this agreement or in the option agreement. And that seems to beg the question. I would say, Your Honor, that's the carve out that you identified earlier, which means they don't have a consent right in their ability to weigh in on whether or not there's a desire to accept. But his response was that when you get to the option agreement, then you you do have a derogation in that there's an absolute unconditional right to exercise the option without the limited partners consent. But is it clear from this language in paragraph six of the of the option agreement that this creates an exception to the requirement to have the limited partners consent to a sale? I believe so, Your Honor. I think when he responded to your question and he suggested, well, the reason that the carve out is there is because of the option component of the option agreement and not the roofer or not the totality of the option agreement. That is not supported by the record, nor is it supported by the plain language of this agreement. Where's the language in the roofer provision in paragraph six? That makes equally clear as the option provision that it can be exercised without the consent of the limited partner. Where's the language in paragraph six about the roofer that makes is equally clear as the language about the option that the roofer can be exercised or rather that the desire to accept the property can be exercised over limited partners objection? I believe it's within the definition of owner because only the owner can express that desire. And the owners is defined as the partnership that sends you back to the partnership agreement, which sent us back here, which is why I'm confused. But the partnership agreement tells us that the voice and decision making authority for the owner is the general partner. And so they work in concert with one another, and I just don't see anything in paragraph six or anywhere in the option agreement that would suggest that. The carve out that we see in five point five be Roman at four is only in relation to the option component of the option agreement, because the carve out specifically says the option agreement. It doesn't say the whole agreement. And so what I think we see happening here is because when you look at five point four be Roman at one, this says that notwithstanding any provision of the agreement to the contrary, but subject to the purchase option and consent rights required by the lender. This further subordinates any right that they may have to force a sale. So he brought up the concept of, well, the roofer could have some value because my client has the right to force a sale. But his client doesn't have a right to force a sale because it's subject to the purchase option agreement, because it's section five point four B two. It specifically says subject to five point one B one hereof. They will have a right to force a sale. So their ability to force a sale is dependent upon whether or not my client exercises the option agreement and or the roofer. So they can't just say force a sale and then that triggers. So under their view of of the agreements, how would this work out in practice? So you just sort of stuck with each other until you all agree to sell. And then at that point, it's inevitably going to be the roofer exercise or how would it work in a practical under their view? Under their view, they will have purchased JP Morgan's position for two and a half million dollars. They will defeat the roofer. They will make it entirely impractical, meaningless, illusory. It'll never be exercised. It will expire and be gone because it's only available for four years after the end of the roofer period. They will then force the sale of the property under that right because the option agreement is gone. And it's the time limited nature that creates because then the deadlock would would run the clock out and then the roofer would disappear. And that's their goal, because then the property can be sold at fair market value and pursuant to the capital transaction waterfall in the agreement. After all, debts and obligations are paid. They get ninety nine point nine nine percent of the equity. And the only reason they get ninety nine point nine nine percent of the equity, as the parties testified below, is because of the roofer. The expectation all along was that the publicly subsidized housing was going to appreciate in value and the nonprofit would be able to realize that value and then give them access to capital. In order to rehabilitate the property after 20 years of operation and pour more money back into the community and into the property, rather than having to come back to public subsidies and ask for more money in order to do things that the public subsidies have already accomplished. So the roofer is a beautiful tool that Congress created back in the 80s to establish this wonderful partnership between public and private institutions creating affordable housing. And when you have organizations like this who come in and say this is our goal, this is what they want to do. They told J.P. Morgan, sell us your positions. And there's a serious risk of litigation. So the value you have is diminished and the litigation is mixed. So they convinced J.P. Morgan, to whom they had a fiduciary duty, to sell their position for two and a half million dollars. Then they turned around and tried to defeat the roofer. And they want this court and every other court that they've been in front of to make it illusory. What steps does Canopy need to take in order to accomplish the roofer? Should we string along the third party buyer, get them close to the table, get them close to the table, we're ready to sign? Oh, we're not going to sign. That wouldn't be enough for them. They say we have to have an enforceable offer that triggers the roofer. That means the partnership has to breach the binding agreement that they want to be the bona fide offer. So when we think that through to its logical conclusion, they're creating another opportunity to remove the general partner to take away the roofer. Because if the general partner had engaged with positive investments and entered into a binding and enforceable purchase and sale agreement, which is what they say is the only way you can have a binding offer, we will breach the agreement. The partnership will be sued. The general partner will be removed because they'll say you breached your duties to the partnership by entering into a binding agreement. That's what they want. Every road that they create is an end point with a roadblock at the end, and there's no way for us to get there. And I think the Sixth Circuit recognized this in the South America case, often referred to it as Pathway because Pathway of Pontiac was the roofer holder in that case. And I think to Judge Bybee's question earlier, I mean, Congress called it a right of first refusal, but it's not a traditional common law right of first refusal because of the minimum purchase price and the nature of that. So you don't need to have these bells and whistles that you have in a common law roofer because the protections are there to make sure you get an offer that will protect the roofer holder. Here you have a partnership. If the offer was $100 million, would that have been enough for them? Probably not because the purchase price doesn't matter. And so we know from the First Circuit decision in the First Tenants Development Corporation, Congress created this special right. They called it a right of first refusal. They wanted to avoid tax implications and problems by having it function like an option. So they said, look, we need to, if there's a manifest intent to sell, you're good. But they didn't define any triggering mechanisms whatsoever in the statute. So what did they do? Three things have to be present. You have to have a qualified nonprofit organization, a qualifying organization, which includes a nonprofit. You have to have it available at the end of the compliance period, not before. And it has to be the minimum purchase price. It can be more, but it can't be less. And if you meet those three criteria, you have a right of first refusal. But it's not mandated. It's sui generis. It has to find its way into a contract. And so the parties are free to negotiate the terms and conditions of their contract. So as you'll see in this case, the guidepost that they created was a desire to accept a bona fide offer, but unrelated third party. Other partnership agreements that are in the record in the various other cases, they don't necessarily include that language. Some just say an offer. Some just say a bona fide offer. Whatever they've done, they've tried to create an opportunity for the general partner to trigger the ROFR. And they all know coming in, just like the original parties to this case knew. The original limited partners knew when this language was agreed to, Canopy was going to be the party making the decision on behalf of the partnership. We get to the end 15 years later, and they accuse them of self-dealing. They accuse them of trying to self-trigger. I think the lower court below looked at the circumstances just like the Sixth Circuit said and said, well, bona fide is undefined in the agreement. Well, what does that mean? There's some ambiguity there. So we're going to have to have a trial. The Sixth Circuit kicked it back down to the lower court to have a trial. It didn't happen because the case settled. Here, Judge Carter said we're going to have a trial on this issue. And when we have the trial, we're going to do it the same way the Sixth Circuit said, within the context of the program, within the context of the original party's intent. We're going to look at the extrinsic evidence, and we're going to try to accomplish what was the intent of the original parties. And the original parties were there. None of his clients were the original parties. Ronnie Thielen, she testified on behalf of Related. She was there. She was actually there at the Mitchell Danforth Commission when the program was put together and the Roper was established, and she went to work for Related. She negotiated the deal on behalf of the limited partner. She said this is what's supposed to happen. Mr. Nahas, he said this is what the LPs told me when they were negotiating. Ted Handel, who was the lawyer for the general partner at the time, said this is what we were told. This is what we were trying to accomplish. This is what we did. And so we get to the end, and they literally have no one who can testify from their client on what the original intent of the parties were because they weren't there. They were formed for the purpose of doing just this, trying to strip equity from affordable housing and require this property and many others like it to be sold at fair market value. And then it is going to be recapitalized through some other process rather than the equity that Congress intended to remain with the property so this would no longer need to be federally subsidized housing. They will have a balance sheet that has access to capital because all of the equity is supposed to remain with the property. And when the Roper holds as it should, the program works and the policy of Congress is effective. Now, I think that's it on my points. I'm sorry. Are there other cases that are pending in district courts in this circuit that raise some of these same issues? Do you know? I don't. There is one. Not in district courts. There is a state court case that we are litigating down in San Diego that implicates many of these same issues. Motions for summary judgment were teed up and now they were not decided. Was the case before Judge Selma appealed to this court? They put a lot of weight on his ruling on that case. Was that appealed to us? It was going to be appealed. Mr. Pettit and I were on that case. We've known each other for years. And Judge Selma made his decision. And the cornerstone of his decision was the Sun America case decided at the district court level. Which got reversed. And that was reversed. And so after Judge Selma issued his decision, a new case started where they were trying to now kick my client out of the partnership based on Judge Selma's rulings. The case before Judge Selma, was that just abandoned or was it appealed? It was basically abandoned. It was a settlement between the parties. It was a settlement. And so no appeal came because of the settlement. Would you just remind me of the circuit scorecard? So the Sixth Circuit decision favors your position. Are there other circuits that have taken the same position? I'm only interested in the circuits. The First Circuit did not have to ultimately reach the question. But it issued a very significant determination on how the roofer works and how the program works and what the intent of the parties. And you find that favorable? Highly. Okay. So you've got dicta. All right. Is there anybody else besides the Sixth? First. Second. How about going the other way? I'm sorry. How about going the other way? How about opposed to you? I am not aware of a circuit case that goes against us. The Seventh Circuit just recently affirmed last week a district court decision in a case involving a general partner's option. It wasn't a roofer case, but the lower court talked about how the program works and the significance of it. But in fairness, that was not a roofer case. Has this gone up to any state Supreme Courts as well? The Massachusetts Supreme Judicial Court and homeowners rehab, we call it the HRI case. That was very favorable for the nonprofit in that case. It then went back a separate case called Tenants Development Corporation, TDC. That went to the Massachusetts Supreme Judicial Court. Has any state Supreme Court gone against your position and in favor of the other side's position? Not that I'm aware of, Your Honor. The cases that I typically – that I believe they kind of hang their hat on, if you will, is the Senior Housing Assistance Group Shag case out of Washington State. And I think when you read the first two pages of that decision, it will inform the court as to why the case landed where it did because the court came out immediately and found credibility findings and unclean hands on behalf of the general partner and whatnot. And everything went against them after that. Are there other roofer cases that are pending in other circuits? I'm going through them in my head, Your Honor. I'm sorry. I don't believe any are pending in other circuits, at least not that I'm aware of. But as I talked about, that case did not go up on an appeal. The Washington case that I just mentioned that they cite, that ultimately did not go up on an appeal, as I recall it. Eastern District of Virginia in the Wesley housing case was decided favorably on behalf of our client. It was not appealed. The Delaware Chancery Court in J.E.R. Hudson issued really an enormously detailed decision on how rights of first refusal work and what's happening in our industry and how things are being disrupted in a very negative way. I think they had over 350 some odd footnote citations. The Chancery Court judge conducted a trial. The procedural posture of that case was a little different. You had two investors fighting with one another in an investment fund because my client down in Virginia had exercised the right of first refusal and acquired the property. And one of the investors in the fund went to the manager of the fund and said, go sue those people or we're going to kick you out of the investment fund. And the manager of the fund said, you're not kicking us out. They did what they were supposed to do. They followed the roofer and they duped it out up there. And the Chancery Court unpacked it all. And I think I'm out of time. And you are. All right. Thank you, counsel. We will hear rebuttal now. Thank you, Your Honor. And I'd like to start by sort of correcting the scorecard, if I might, because I disagree with the proposition that the Sixth Circuit found in favor of the position that's being advocated here. What the Sixth Circuit found was that there was a disputed issue of material fact as to whether the fact that the general partners solicited an offer undercut the bona fides of the offer. And said because under Michigan law, ambiguous contracts have to be resolved, have to go to a jury. We're going to send this down and go to a jury. And in that case, ultimately settled. However, OK, you've tried to distinguish it. Have you got any circuit cases that go in your favor? Yes. So the Sixth Circuit case, for example, the Sixth Circuit. Let's suppose I disagreed with you on that. Do you have any circuit that that squarely holds in your favor? Well, I think other than the Sixth Circuit, the Massachusetts. Well, the Massachusetts Supreme Judicial Court, which I understand is not a federal court, but it's the highest court in Massachusetts, also ruled that. And in both of those cases, there was no affirmative bona fide offer, no affirmative desire to accept in the contract itself. But in the Massachusetts case, they said by the nature of Section 42 I-7 and what Congress was trying to do, it has to be an enforceable offer to trigger the roofer, because otherwise it would have faced the distinction that Congress made between a right of first refusal and an option. And I want to go back to the plain language of this contract because opposing counsel said Congress didn't define right of first refusal and left the parties with the freedom to negotiate what requirements would need to be had in order to trigger the roofer. Here, the parties did negotiate it. They decided to affirmatively include in the contract that the partnership has to desire to accept a bona fide offer from an unrelated third party. Those words have to mean something. And under the opposing counsel's interpretation, they say, oh, well, that's just a guidepost and it's a technicality and you don't really need to honor those requirements. There doesn't have to be a genuine desire to accept. There doesn't have to be an actual offer. And Judge Collins, you asked that question right off the bat, and that's what Judge Selma said in his decision. He said if it's not a genuine desire to accept, then the desire to accept requirement is meaningless. All you'd have to. So counsel, I understand. And the basis of your argument is that that's plainly that's plain language. And we should and we can just stop there by looking at the language. The district court thought it's ambiguous. So now he's going to admit extrinsic evidence. I don't think the district court made a decision about ambiguity. But even if there was a determination that the contract is ambiguous, that still doesn't go to a jury. It only goes to a jury if there are disputed issues of material fact that are relevant to how the contract is. My question is aimed at something a little bit different, which is the admissibility, whether it's a summary judgment or before a jury, of extrinsic evidence of intent. That is people coming in and saying this is what we negotiated and therefore that's what that's how you should interpret this language. OK. Did you have any extrinsic evidence that you admitted? We know we did not. And that's why there is no disputed issue of material fact. They had their witnesses come in and say, well, we always understood that this. Well, first of all, they didn't have any recollection of negotiating this agreement. But they did have testimony that said our general understanding was the roofer could be exercised freely. And the way that under California law it works is you provisionally accept extrinsic evidence to determine whether there's an existence of an ambiguity. In order to find that there is an ambiguity, you have to find that the plain language of the contract is reasonably susceptible to the interpretation that's being offered or that the extrinsic evidence purports to support. And here what they're saying is the extrinsic evidence is that these requirements did not have to be followed. They were just technicalities. And you could just essentially just ignore them because everyone understood. And that cannot be reconciled with the plain language of the contract. And so under contract law in California, in that first step, you say, well, if the plain language is not reasonably susceptible to this interpretation, that's the end of the inquiry. You can't use extrinsic evidence to contradict the plain terms of the contract. All right. Thank you, counsel. The case just argued will be submitted. We thank counsel for their helpful arguments in this case. And with that, we will stand in recess for 10 minutes. All right. This court stands in recess for 10 minutes."
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"stt_transcript": "here. First, from Mr. Davenport, you may proceed when you're ready. Thank you. Good morning, Your Honors. May it please the Court. Scott Davenport for the appellants. I would like to reserve three minutes of my time for rebuttal. Your Honors, this is a case where four individuals were robbed at gunpoint. An in-progress assault with a deadly weapon was called in and officers responded to the one minute. At the time they did, they observed the appellants. They handcuffed them and they placed them into the back of their patrol car. They then turned their attention to the quickly assembling group of onlookers who began to shout at the deputies. After establishing control of the scene and investigating, the officers determined that the appellants were not the suspects of the Okay. Counsel, so I tried to do a timeline and at some point we sort of lose track of things. It's very difficult to tell. So can you sort of walk me through at what point in this process the boys were handcuffed and placed in the back of the police car and how long it was before they were released from the police car? Let me put it to you this way, Your Honor. The question of how long they were in the back is in dispute. Okay. And so we have to accept their version of the facts. Right. I understand that. I appreciate you're acknowledging that. So let's work with their numbers. So tell me how long at the longest then, at what time approximately they are handcuffed and put in the car and what time are they released? They indicate that they are in custody for 25 minutes. Okay. And that would be a roughly from what time? Do you have that time? I don't have that in front of me, Your Honor. Okay. That could be about, it looks like from dispatch that would be about 746 and you think that it's 25 minutes. It's not entirely consistent with the other officer's testimony, with the CAD readouts. Right. It's not, that's not too far from what the others said. Now, during those 25 minutes, they already knew at that point, according to dispatch, it appears that the car has already been cleared. So they don't have the vehicle. There's no white car. It didn't drive itself away. So if, and they've only been told by dispatch of a black adult male. So you don't know whether there's multiple people in the car, but at least one person who had to be in the car is probably still in the car because the car is not present. So at that point, what, why does it take 25 minutes to clear these boys? Honestly, well, again, assuming their numbers of 25 minutes, there was the crowd, there was this burgeoning crowd that they had to deal with. You know. They have five to six officers and Tapali is the one who's going to do all the interrogating. I'm sorry, can you say that again? Well, they've got five to six officers on the scene and Tapali is the one officer who's going to talk to all the boys. Does it take him 25 minutes to interrogate all three boys? Those are the numbers that we're using, Your Honor. Okay. I'm stuck with the numbers. Can you explain why it takes that long? At least one of the boys was not cooperative. That's true. They had to deal with individual at the scene. They were all- Yes, but Tapali doesn't. You have five to six officers on the scene and Tapali is the one who's conducting the interviews. Why does it take Tapali 25 minutes to talk to the three boys who clearly are not adult black males? Well, I think they're determining what happened with everybody's different points of view. There is testimony that both the boys and various other people at the scene indicated that these were not the victims. That information had to be confirmed. You know, it's not unusual that police will arrive, they'll take someone into custody, and let individuals say they were not involved. So the fact that other people at the scene said, these are the people you're looking for- As I understand it, under their version of facts, which we have to take as true, there is a lag between when they claim the officers should have known that objective cause to hold them had dissipated, and when they were actually physically released, which under their view of it, creates an unlawful detention. What's your response to that? I think that it's within the timeframe of being reasonable under the totality, and to the extent it's not, they're entitled to qualified immunity, if there's a mistaken fact as to how long it took to clear. What I would like to... You seem befuddled. Do you want me to expand on that? No, I'm finding your argument after you've answered my question. What I would like to concentrate on, though, is the race-based aspect of this, and the equal protection claim. And in this case, after the officers moved for summary judgment, the appellants asked the court to take judicial notice of the fact that African-Americans were treated differently than other races by the LA Sheriff's Department. The fact that they said it was not reasonably in dispute. This was based on a couple of articles. It's clearly a flawed a ruling that has infected this entire case. The law is clear that the court could take- On a qualified immunity appeal, we can only do questions of law. We can't do issues of fact. So even if we were to conclude that the district court improperly applied the rules of evidence in assessing what the district court could look at, the question would remain whether construing facts in the light most favorable to the plaintiffs. There was what everyone should have recognized was an illegal detention for some period of time before they were released. The issue of equal protection is separate and apart from the detention issue. There's a force issue, there's a detention issue, and there's this equal protection claim that they were treated differently because of their race. And that's the most problematic aspect of this case, in our opinion, and it's something that taints it all the way through. So in your view, if the evidentiary ruling is set aside, then the equal protection aspect of the district court's ruling collapses and that qualified immunity would attach to this? Well, there's no other evidence of any equal protection violation other than what the court took judicial notice of. And this is in the excerpt of record at 1ER18, the judge based the denial of the MSJ on the equal protection grounds on this traditionally noticeable information. Counsel, I have less concern about the equal protection part of this than I do about just the Fourth Amendment question about whether this is a reasonable esoteric stop. So let me take you back to at page 507 of the excerpts of record. There's a very, very confusing document that is a huge listing of a bunch of code, and it's very difficult to tell what this means. But about two-thirds of the way down the page, one of the entries says, pointing a gun at informant, pointing a gun at an informant, DP, which I think is detained person, ran. Okay, so this is obviously something from dispatch or some kind of communication between the officers and dispatch because the pointing a gun is what dispatch told them based on Herrera's conversation with the 911. The next entry says, vehicle over male juvenile. Was that information communicated to the officers on the scene? Herrera tells dispatch, we've got the, we have Herrera tells dispatch, dispatch says, how old was he? I don't know, 17. Yeah, he's been hit by a car. Okay, we've got a male juvenile, maybe about 17, who's been hit by the car. Okay, so this is obviously a victim, not one of the perpetrators. And in this entry, it says vehicle over male juvie. I just can't tell. That's not on the transcript of the dispatch. Was this in some other way communicated to those officers? As I stand here today, I don't know the answer to that. And I apologize for that, Your Honor. I just, I don't know. I wasn't anticipating that aspect of it. While I'm quickly running out of time, I would like to briefly discuss the issue of the use of force in terms of the pointing of the weapons. As it turns out, these individuals were not the suspects, they were the victims, but that doesn't mean the response was unreasonable under the totality of the circumstances. If we had a call from the marshals out there, that men were trying to get into the building, and they had a gun, and within one minute, backup showed up, and they had their guns drawn, and they were pointing at people, it turned out that they were innocent. That doesn't mean that the response is an excessive force violation. It turns out that it might have been wrong, that might still be reasonable under the totality of the circumstances, and certainly the officers would be entitled to qualified immunity. That's what we have here. Now there's, they do have a handcuffing claim from Bogan, and in that one, they say that the cuffs were too tight on several of them. Bogan is the only one I believe that they say he asked to have them loosened, and they weren't loosened. There's nothing I can do about that. I can't get around that, just like I can't get around the 30 minutes. That's his claim. We're stuck with that. But everything else, up until then, there's no basis for an excessive force claim, and I would admit to you that the detention issue is a little more thorny, but that doesn't mean that they're not entitled to qualified immunity. You know, this is not a state law tort claim. This is an intentional civil rights claim, and they have to have that signer, and qualified immunity applies unless the conduct was clearly, there was intent to clearly violate the law, or the officers were just patently unreasonable, and there's nothing to suggest either one of those in this case. This is a textbook example of a qualified immunity case. I'm at a perfect transition spot, so let me preserve the balance of my time, and I will yield to opposing counsel here real quick. All right. Thank you, counsel. We'll hear now from Mr. Morrison. Good morning, your honors, and please, the court. I could walk through this timeline, because I think it's an important thing for the court to understand. What happened is that 737, a broadcast goes out that a black male in a white sedan is pointing a gun at an informant. Mata and Ochoa receive that. They get permission for a code three lights and sirens, and in one minute, they arrive at the scene. At 739, another broadcast is made. That broadcast advises that a juvenile has been run over by the vehicle. And, okay, I did not see that on the transcript. I cited the page to opposing counsel, which is page 507, but this is nearly incomprehensible. I mean, it's just a bunch of code with a very, very brief thing that says VEH, which is vehicle, over M slash juve, so I assume that's male juvenile. But I can't tell whether this was communicated, and it's not in the transcripts of dispatch's communications. I have an additional site, which is also 343, which may be one of the deputies explaining what it means, but I don't know that offhand. What I can tell you is I had that code deciphered by the various deputies, and that's what it means. That's the time that it took place at 739, right? At least one of the on-scene testified that it was their job to monitor the radio for MDD dispatch. Okay, but if they are not communicated this, yeah, so they've got a duty to monitor, but do we know that they heard that anybody heard this? Ochoa and Mata deny hearing it, right? But I want to also make an important point about what happened en route. En route, Ochoa and Mata made a decision based on the nature of the stop and that everyone on scene had to be detained. It's a big part of our Monell case, but it also bleeds into the Fourth Amendment analysis. That is, they weren't confronted with the circumstances in front of them, but they had made a pre-decision to handcuff everybody. And how do I know that? The 911 caller was handcuffed. A person the officers conceded knew was the 911 caller was placed in handcuffs in the vehicle with one of the juveniles, which by the way is a violation of policy in and of itself. You don't put adults in a car with juveniles. Yeah, but we're here on a Fourth Amendment question, not on a policy question. All right, so they get there. They've got Herrera, who is on the phone. The officers testify. They usually assume this is the victim because they usually assume that they're on the phone with 911. Out of an abundance of caution, because there is a gun in the area, they decide that they're going to handcuff him until they can figure this out. They're asked in deposition, yeah, the guy's Hispanic. He's not a black male. And they said, sometimes there are questions with persons of color. We have black Hispanics. So as Mr. Herrera so articulately put it, there was a lot of chaotics going on. Sure. But let's look at the evidence that the usage justified this detention in the first place. One is the white sedan. Between 738 and 743, the white sedan is cleared. Next, they claim that Herrera was descending the stairs with the phone in his hand, pointing nervously upward. Herrera denies that. The 911 call refutes it. He clearly is at the top of the stairs. When deputies come, he says, should I come down? Topoli, who investigated this, said Ochoa and Mata never told him that a frightened Herrera descended the stairs and pointed upwards. Was Herrera put in handcuffs in the back of the car after the white van was cleared? Yes. During the call down. So what happens is, is between 743 and 749, each of the plaintiffs are called down, including Herrera. Does the record show whether the officers on the scene were aware that the white sedan had been cleared? Yes. Came back clear and current. Was broadcast, right? Not connected. It was dropping back to a Herrera, to the owner of Barts. And at what time were the handcuffs taken off and everyone was released from custody? 25 minutes after 749. So whatever that adds up to, right? Because 749 is when the handcuffing takes place. They're placed on the back of a patrol vehicle. 29? 749. 49. Yeah. That's when they report that the situation is stable. Code four, a very telling statement which refutes this claim about a boisterous crowd interfering. You don't call a code four if the scene is not secure. Code four means scene is safe and secure. And look what, by 749, let me just run through this. They've been searched. There's not five to six officers. There's 10 to 15. In fact, the testimony in the record, I think it was Mata who said, it was like the whole department showed up. They had done a protective sweep of the area already. There was nothing at this point connecting these 14 year olds. Okay. All right. So counsel, I think I understand. I mean, the problem is you've got the cars cleared. It didn't drive itself off. We don't have anybody else identified in the car. Although Herrera has told dispatch he thought he saw someone maybe in the back seat reaching into his back pocket and it might have been a gun. This is what gets reported as holding a gun. They're held for 25 minutes. If I add all of this up correctly, that looks like they were held between 749 and 814 by my calculations. Okay. A long time to hold three kids, one of whom is five foot two, according to his, one's five foot six and one's five foot eight, and they're 14 years old. All right. What's your best case that the officers have exceeded any of the reasonableness of a Terry stop? And my concern is that the Terry stop here has clearly been elongated by the conduct of the parents. It's not just that they're disruptive is that at least one of them has told the boys not to talk to the police. And if they're not cooperating, what are the police supposed to do? So give me your best case that would tell us there is no qualified immunity here. Sure. For the unlawful detention, United States versus Ortiz Henderson, right? That's a case where they assume there was reasonable suspicion to detain the suspect. It's a case where individuals indicated the suspect could maybe swallow drugs. It's a case where the defendant lied about his age and someone had ID'd him as selling drugs in the past. But at the point he is strip searched in the coffee shop and no drugs are revealed, they said it was unreasonable afterwards to handcuff and essentially arrest them. And this was an arrest. United States versus Brown, which is a decision I believe by Mr. Justice Collins. In that case, it was determined that when a Terry stop exceeds the scope of the reason for the detention in the first place, it is no longer lawful. The detention is based on searching for a weapon. These boys were searched for weapons, a protective suite. I think the line between a Terry stop and arrest is whether a reasonable person would believe that the detention was indefinite and was not going to terminate. And was there any basis to believe that they were actually going to go to the station house so that this was indefinite? So if you look at United States versus Chamberlain, United States versus Ricardo, there's clear case law that 25 minute detention on the back of patrol car in handcuff constitutes an arrest. In Ricardo D, it was a compliant juvenile was put in the back of the car in handcuffs. And the Ninth Circuit in nearly identical factual situations now twice has indicated that that was unlawful. And I also want to point out in United States versus Brown, you had a compliant detainee, you had officers who outnumbered the individuals, and they were searched with nothing being found connecting them to a crime. And that was determined to be an unreasonable Terry stop. So this was converted into an arrest. At the moment they're handcuffed, they have no basis for that. They have no basis to believe that they had anything to do with the 245. They have parents on scene who are screaming, these are the victims, but 911. Yeah, but they don't have to take the word of the parents. The parents weren't witnesses. They're bystanders. The most interesting person here, who I don't have any records, I couldn't find any records in the ER, is Herrera's wife or his girlfriend. Did she get deposed? No. So we have had trouble locating her. We have recently found her. But the answer is, Herrera testified that she said this, that she actually walked down the stairs, told the deputies, you have the wrong people. And the way it was described by Herrera is that she was like physically moved off to the side. So they're ignoring the 911 callers. And by the way, I do think the parents are witnesses because the kids called their parents. That's why they arrived on scene. Yeah, but this is hearsay. The parents were not witnesses to what happened or where their kids were. But again, it's the totality of circumstances. So the car's been cleared, the boys have been searched, there's nothing. Well, those are relevant. The parents' testimony seems to me to be irrelevant. Understood. I'm just trying to point out all the different ways that these officers have information in front of them that these individuals were innocent. So when do you think the officers should have released them? At what point in the chronology? I think there's no question by the point where they brought them down the stairs, searched them, searched their belongings, did a protective sweep and had nothing connected to the crime, that they should not have handcuffed them and put them in the back of the patrol car for further questioning. And by the way- You don't think they were entitled to question them? I don't. At all? Not in handcuffs, not in the back of that car. I don't. They could question them, but they couldn't be restrained? Because there's no connection to the crime, I think they have to be released. And it's up to the boys at that point, whether or not they want to discuss anything with the officers or not. Our Fourth Amendment jurisprudence allows individuals who don't want to talk to the police that haven't done anything wrong to have that choice. But that choice was taken from them. And again here, there's just a mountain of evidence before they're handcuffed that shows that they're not part of this. And we also have to keep in mind that these are kids. Every minute in the back of patrol car matters. And they were actually held five to ten minutes when the officer subjectively stated that they knew they weren't the 245 suspects. And I asked them why they did that. One said it was part of my training. The other said it was human error. I don't know of any case law when you subjectively believe someone is not the suspect you're looking for that you can keep them in handcuffs five to ten minutes. And at that point, they knew they were a 14-year-old kid. So the 25 minutes is, again, giving all deference to your evidence. If we've got 25 minutes, is Topoli talking to them for all 25 minutes? He's going between the cars is what he did, which elongates the process, right? You didn't have anyone help him do it. Well, there are good reasons for wanting a single officer to hear what the boys are saying to see whether they're contradicting each other. It's fine. But again, at this point, why are they in handcuffs? Why are they in the back of patrol cars? There's nothing connecting them to the underlying crime. They've searched the area. There's no weapons. So do you have any idea how long Topoli was interviewing? Is there a time when Topoli interviewed them over the first 10 minutes of the last 15 minutes? They're just sitting in the cars? So even though Topoli's doing the interview, apparently other officers who were in the patrol cars were asking questions. And the testimony from one of the plaintiffs is one of the women asked them, one of the deputies, female deputies, asked him a question and kind of made a comment like, you're just a kid. You're just a boy, right? So there's other people around that are in these patrol cars that appear to be questioning them. Topoli's the lead investigator, and so he is the one that is going between the cars and ultimately makes the decision when to release them. But again, the deputies admitted they were kept in detention. Five to 10 minutes after subjectively it was agreed among everyone, they were the victim. Does the record show about when Herrera was released? It does not. And I don't know that, but again, he was in the car with one of the boys, which is just a very curious decision. And what does the record show about the justification given for putting him in handcuffs? Just they wanted to control the situation and investigate until they found out exactly what happened. But again, that decision was made before they arrived on scene. And the testimony from Ochoa and Mata is very clear. That's our train. The LA sheriffs have a policy and a T-stop felony, according to them, and we're going to make a big deal as a Monell case, that you need to handcuff everyone in a scene like that until you figure out what happens. How is that? I see how that's relevant to the Monell claim. How do you think it's relevant to the claims here? It just shows that they're not waiting for the circumstances in front of them to guide their actions. They had a predetermined plan and they never deviated from it despite the evidence of innocence they're receiving. And United States versus Ortiz-Henderson versus United States and Nicholson versus City of LA say officers cannot ignore exculpatory evidence. When probable cause and regional suspicion dissipates, you must immediately release someone and at the very least not arrest them. And there was an arrest here, according to Chamberlain and Ricardo D. I want to briefly just address the equal protection claim. We don't need the statistics to prevail on our equal protection claim, but the court didn't take judicial notice of the fact that these boys were discriminated against. It took judicial notice of statistics, which plaintiffs argues raises a genuine issue of material fact. But do you think it's a correct application of Federal Rule of Evidence 201 to declare that the particular academic organization that published the Journal of Personality and Social Psychology is one whose accuracy cannot reasonably be questioned? Is that consistent with what we've said about the scope of Rule 201? I do believe it is. It is an academic peer-reviewed study. And in the past, courts have taken judicial notice of that. But I think your question goes to the weight of the evidence as opposed to sufficiency to raise the issue of material fact. But with respect to that study, that's really more relevant to our Monell claim. It's the government statistics showing disproportionate stops of African-Americans that was more relied upon in terms of making the argument that there was an issue here. But again, you don't need it. There's plenty of other information here, right? These cases are like Title VII cases. So things like pretext, deviation from standard policies, spoliation, all of which were present here, can also show discrimination, right? We think two of the reasons for stopping these boys were fabricated, right? Herrera descending the stairs, one of the boys ducking out of view. Those appear to be pretext. A complaint was made the next day. It was never investigated. There was a ring camera of the incident. It was captured. And they didn't preserve it. These are all things pointing to discrimination that in a typical employment case, we would say, yeah, that gets you over the burden. And again, all right. Thank you, counsel. You've gone over your time. All right. We'll hear rebuttal now. Thank you, Your Honor. I'm not going to belabor the equal protection argument in light of the tenor of the court's questioning. Also, we have not really spent any time on the force issue. And so I won't be addressing that either. What we're left with, I guess, in this case is an issue of the detention. And if this court. Do you have a good case that tells us that that this was these officers should not have known that they're violating the Fourth Amendment? I do not have that. It's got to be clearly established law. There was a reference. I mean, counsel said that among the facts we have to take as true is that at least some of the officers reached the subjective conclusion that the boys were not involved. And yet the detention continued. Do you agree that for purposes of this proceeding, we have to take that fact as true? I. Yes, I think you do. I mean, wouldn't every reasonable police officer know that you cannot continue to detain someone whom you know and have determined is there is not reasonable suspicion to detain? Well, I think there's a difference between knowing and still conducting your investigation. And that's that's the fact that it's convenient to investigation to keep people in handcuffs is not a basis for keeping them in handcuffs if you don't have reasonable suspicion. And no, you don't have reasonable suspicion to continue the detention. Well, I think there's there's a difference between knowing you don't have reasonable suspicion and believing that these might be the probable victims and believing that they might be the probable victims. They get to hold them in handcuffs until they determine that they're victims. I thought they had to hold them so long as they had suspicion that they were involved, that they were that they were the perpetrators, not the victims. I think at this point, what Judge Collins was referring to is they had this subjective belief that these were not the suspects. And then they hold them for five to 10 minutes longer. Why isn't that a violation of a Terry stop? I think at that time, they're still trying to suss out what happened. They might have had this belief. I know, but at that point, they get released while you're still trying to figure out what happens. There is no convenience detention. The Terry stop is tied to reasonable suspicion. And once you know the reasonable suspicion is no longer there, it ends. Understood. Understood. All right. So, look, they've got to show some kind of a case to demonstrate that the officers reasonably should have known, clearly should have known that this was wrong. Do you have anything that in which we have granted or any other court has granted qualified immunity under circumstances that were similar to this? Not to this. I think this one's a little bit unique. And in the absence of that factually specific case under White versus Pauly, unless there's that similar situation, they are entitled to qualified immunity. I'm out of time here, Your Honors. I'm sorry. I'd love to sit up here with you all day. But with that, the appellant submit. All right. Thank you, counsel. The case just argued will be submitted."
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