the most salient point or at least a good starting point with the for the court to understand just what are the various aspects of a flexible creamy unbearable like policy focusing in on one aspect which i think is is really the important point here the various costs and other expenses these  loads these factors of expenses are set out separately in each policy and in the case of a variable annuity there are certain references to those within this perspectives that involves  security aspect of this product that means that when a policy holder or his broker in shopping this very competitive marketplace to determine what are the fixed costs what are the premium loads what are the variable expenses what are the certain income expenses that they rely upon what is stated by the language of the policy here we have i think a very important mission by pacific life in setting the one point five percent federal tax charge as indicated charged last they could have charged more but they didn't and getting it lending it and placing it within the policy in the same case about deliberate and reckless disclosure and concealment by the civic life in order to justify in this competitive marketplace to a reasonable policy holder this is nothing more than like a sales tax trying to think of an analogy and one that i can think of and hopefully it has to stand on its on its legs because i believe that when i order a book through barnes and noble over the internet there is no state sales tax that i purchased that book over the internet and at barnes and noble said that there would be an additional state tax charge associated with that sale it would be my understanding as i think it would be most consumers understanding that that implies some kind of a sales tax charge if barnes and noble's came back if they were sued in such a hypothetical case and if they said well we do know it does have some relationship on our income tax as a consumer i would certainly like to know that it's  rationale and they say that because of the impact of back the back legislation deferred acquisition costs that in effect because they had to capitalize and amortize the acquisition costs now over a ten year period more taxable income no well it could result in more taxable income and that there is a ceiling on the amount of this expense deduction expense doesn't necessarily mean the bottom line of what the income tax they pay a seven point seven percent so great good question your honor because they chose to charge the policyholders one point five percent but there's other companies that charge one percent that disclosed to the say it is a result of back some say nothing some say it's because of increased income tax liability how do we know that other companies say that and what's the relevance of it isn't this motion to dismiss it is emotional just look at the face of the complaint appended one hundred pages of snow insurance industry documents in which they asked the judge to refer to those in trying to determine whether or not the language and in those documents and i'm sorry i can't cite exactly where it was but it was argued in the briefs here they indicate at one point five percent was in effect a discretionary pricing point that decided they could have decided anything and in fact there are other companies it won't be argued i don't believe at this proceeding by learned counsel that there are other variable like contracts all different kinds of charges relating to the imposition of tack was the nation on income tax to what i understand to be their argument and you know tell me if i've got this right i think what they're saying is that this is a matter of semantics they called it a federal tax charge what it really is is a cost that they're allowed to recover under federal tax law right maybe it's a misstatement maybe it's not but it's not material it's it's it's a word w material matter upon which reasonable policy holders based on this language which is ambiguous is material in their decision to purchase or not to purchase or  point yes tax law change yes and i think that's more misleading because the exact language is we reserve the right to change the rate rate wise reimbursement to respond to changes within the law now that why would any policy holder without being told that they're subsidizing the profitability of any insurance company in involves other expenses other deductions other income other write offs one time charges now if a policyholder is told of back then we wouldn't be here but in the language that we have here and something akin to a pass through tax such as a premium tax which is in fact what each state of the union charges for policyholders who are residents of that stadium and i ask you this this is the case requirements is pleading would you be so good as to indication me each one of the elements of sluice which is required and where in your complaint you  i think the pleading requirements are under p s l are a that private litigation securities act and i would we did cite in our opening brief  somewhere in there it's in there i will make that representation i'm very sorry i think it's a case thirty seven every thirty something along those lines if it's thirty thousand there were bullet points your honor and we a two point three five excise tax by the state of california and the same line when using the same language thinks charges is a one point five federal tax charge which is a bogus term because it isn't believe that consumers and especially people who are in the past and people who buy these kind of policies should be told in plain english that the district court said one point five no know i believe what the district court did was they brought this epic life's argument so what so they paid for this policy and they paid the one point five percent and has some relationship to their payment of federal income taxes even though they don't disclose it to the policyholders i don't know if this fair to the district court but i can't read summary order to  district court kind of accepted that this charge could have been made with a different name and maybe we just missed this label yes a misnamed so it either means the in the industry jargon this was called the tax a lot and that so there was no misrepresentation of there was it was immaterial not in the sense that one point five percent of a premium is immaterial legally but in the sense that it could have been charged if described it more precisely i would agree that was a characterization and that i believe the district court made on that and i would argue that that is incorrect because the wrong standard was used it may be immaterial to pacific life but the court didn't touch on what we believe a proper standard of how that language may or may not confuse or mislead a purchaser or to show that what is being asked for this judge in looking at these extremist materials is that in fact there is in this material dispute relating to drafting let's go back to the statute for a minute and silicon graphics because we can affirm on any on any ground supported in the record so if you thought the district court screwed up but that the complaint still didn't meet the requirements excruciating process committees memos decisions as to every piece of language it goes into a policy they know and there's no hiding it because we got that admission from their general legislation on their potential income tax liability only had to do with the senate now that's been played in our complaint there's no confusion by pacific life nor of they ever brought it up as far as i can recall but they don't understand th our claim the placement of the language that was blended within the language involving the state premium tax with other silicon graphics and understanding this i just found the language in that case federal tax charge meet that standard of your complaint meet the standard i mean about that we believe that in our complaint because of the language in the policy consonant with the language in the prospectus its placement and the fact that it is not a federal tax charge it is a it i a discretionary charge relating to their potential payment of income taxes and because of the competitive nature which is not admittedly in our complaint but one in which i also asked that we have you allowed leave to a man and i believe that if we are allowed to leave to a man we would include additional claims relating to the industry in general the knowledge of pacific life as one of the leading players in this field and the fact that they knew and certainly if they record they recklessly disregarded and in fact they deliberately included that language in the policy for the purpose of misleading its policy holders who reasonably would have believed based upon that implication that they were paying some kind of a premium tax it's not it's that simple thank you very much mr singh thank you one point five percent of those premiums to the federal fisc in this case it me will have a series of deductions or other losses which in taxable year mean it pays clear that the average charge being led by the carriers on variable products is between one point two five and one point seven five percent of the supposing they make money in the taxable year very well kept and the average which i don't think we can all minister of mr savior there is an average charge of one point five percent in the industry which we are applying to you in order to shift a cost to the company to you as a buyer you will see that you don't state what basis there is for coming to the language one point five percent federal tax charge right being a loss of a deduction or less of the direction which will eventually you know one point five percent higher effective tax paid but that's not a tax on this federal tax charge what i'm saying is use the same language with respect of the state two point three five percent as you do with the one point five federal charge correct it's  competitors in the language i'm looking at it says there are a few provisions one of them says for each premium pay there's a premium load that consists of a sales lot of two point five percent  sentence together sounds like that certain federal taxes are sort of like the certain state and local premium taxes but as i understand it the state and local re legal obligation to pay a percentage of the premium in state tax whereas the federal tax charge is really an estimated expense to the insurance understand it's probably about a certain report as night follows day if you if the company makes money that still have what it is there a fact issue about how that language would be understood by reasonable investor well if i were reading that i guess i want to put myself into a reasonable investor reads it and they read that language i just that and then they read another provision that  father's me i just i think i'll put my finger on it and then i'll shut off and let you make your argument is what bothers me is that a lot of this depends on these to me and what a reasonable investor good thinker reading  rough the following language and it's more than two or three words that would be we will make a premium charge based on federal tax that's part of the problem here in trying to come up with a perfect description for a site that goes like this we'll charge you the two point three five percent that we have house on to the state of california and we'll also charge you one point five percent to put in our pocket so that we can pay our taxes if we have any but that's not your concern notification to get you your office notification words not your rants going up because depreciation schedules of change but your risk going up because the twenty years so therefore there be more tax on your net income right because depreciation schedule has been lengthened and the landlord will say this is going to affect one hundred dollars difference and you which is a point i think you're trying to make such as investment income or other related income will only come down to figure out what's true that for the company for that particular year with the actual dollar result in terms of the additional that word load and then as the premium load is made up of a sales load my question is is it clear what the word load means and the industry contract ok thank you very much the second you get the last wor in any kind of an industry publication that that the that they get the critic that the federal premium for all tax charge is directly related to income taxes and in fact at the argument at the dismissed page ten mr bacon said the common term for this charge would be a federal tax charge