if you be let me finish please the defendants have taken the position that the defendants who were not subject to the judgment order were nominal defendants against whom you did not  assert claims that you agree with that that is correct so what's in your view what's the way to correct the fact that the underlying judgment order does not address those nominal defendants we actually filed a jurisdictional statement the outset of the appeal where we said that exactly made that exact point better when right ms weiss made her motion suggesting that we had t sufficiently stated what our position was we reiterated the position we've filed a year ago their position is identical to ours i understand th that perhaps in retrospect we should have restated our position in the in our opening brief and what do you think the weight mr theory to cure that is because the underlying judgment doesn't reflect anything with respect to the nominal defendant some there are defendants who are named in the complaint who are not subject to the judge panel and we agree with ms weiss that there is really nothing to cure this is a  nominal defendant as some of the cases we cited had to do with parties that were named only because they were the partnership with a corporation of which the investor was bringing their derivative claims it that they're not or that there's a recovery from a defended it in certain circumstances would go to the partnership and the partnership with distributed here since everything is been dismissed there is no risk of this court imposing liability what would happen is if there was a reversal the case the case would go back to the district court the district court would have all those parties in front of it if there is a recovery subsequently for example mercury fund would be the president would be response to their motion for clarification and the f c c statements we have now made the same statement two times the f c c has made it three times we've crossed referenced their view decided addressing this issue the way i tried to describe it here is incorrect i believe there nominal parties i believe that since there's no risk that this court's going to order in the affirmative relief that there's no need to have them on appeal i think that's the motive behind the case law that both sides of inciting from the outset i don't think it's a real issue at least if the only thing we've ever agreed upon so whether it's really sure not at least both sides have been repeatedly agreeing with each other book a lot has been written about the standard of care that applies here our position is that the appropriate standard of care is a gross negligence standard that tell you agree in order to adapt that standard that  would have to change our case no absolutely not you think the seventh circuit case off provides for that we're not disputing the chicago pacific will cool and deliberate standard we disagree on how it should be interpreted but this is not every receivership this is a receivership which not only was miss weiss made nutmegs receiver but she also was made the general partner of each of the of the investor pools which are all limited partnerships that's not every case in many cases there's a receiver who's only appointed to be a receiver and does not have this second half of being a general partner the other point to be made here is so you think that's the distinction that your view she became a general partner here and because of that the standard should be different than the willful and deliberate that we've applied in other receiver steps ship situations i believe that in this case where she is also a general partner that she's held to the standard should be held to the standard of general partnership the this is  situation where she is now officially the general partner of several illinois limited partnerships in several minnesota limited partnerships we made our arguments that  right to sue a general partner for gross negligence but operation of supplying little water to fill order and i'm looking at paragraph b one and the order over see all aspects of that this mess including made it a general partner it made her a general partner we actually have read that that the receiver shout over see all aspects of not makes operations and business which include but are not limited to serving as a general partner and if that's meant advice or it doesn't say the receiver shall serve as a general part that was the argument we made we had a claim that the appointment order deprived us of a general partner we had made that argument back in two thousand when motion to dismiss was was brief and the district court specifically agreed with us and  disagreed with us and said that the reason we were deprived of a general partner was because we see with the receivership order the appointment of a lawyer made us a general partner if you look at our a six seven dash eight the district court is specifically saying that in response to our argument that the receivership order triggered a right to elect a new general partner that no there's no violation of our right to have a general partner court suggested we if we did not yes we well on in retrospect if the outcome is the she start general partner that's fine so long as we still have the limited partners right actually to a right to sue a general partner if by operation of this a pool appointment order a limited partners right to sue the general partner for gross negligence is  a general partner for gross negligence you can't deprive somebody with statutory right of action without giving that person a right to be heard in opposition to taking away that right so that's that's one part that we believe that as judge lefkow said the court mandated end of the appointment orders the wife assuming we change the position of the general partner these are minnesota in illinois partnerships section  fifty nine b of article twenty eight specifically poor prates by reference apical state law for receivership in bankruptcy trustees i think that this is a very i have not seen any real arguments in opposition to this our second point is that the receiver receivership order imposes a gross negligence standard this is a three way agreement it's the case law on this in the northern district as repeatedly recognized that agreed orders are contracts and that contracts and agreed order should be interpreted as contract unfortunately i overlook this decision it's called service  phoenix if the judge dow decision in the northern district seventy eight f supp thirty eight fifty two this is summarizes all the decisions or most of the decisions which specifically hold that  such as this receivership order is a contract and should be interpreted as a contract so it's a contract that not only did it specify what the standard of care was i e gross negligence it's something you're right about that ok how do you think through the cause of action you brought then are you bringing a a cause of action under illinois or minnesota law or are you bringing a cause of action more for breach of a contract or breach of a standard in an agreement that confers a benefit upon your client such as conflict of federal common law claim but we have we haven't we have alleged that the  standard of care are causes of action re site is the appropriate standard of care both the gross negligence standard as the parties effectively contracted to and that mandated under illinois minnesota law we've alleged that in the alternative if you will but the outcome is the sated still gets you to gross negligence the second circuit hasn't dealt with this precise issue in a case called in a in that case the entities were limited liability companies and the receivership water made the receiver not only receiver of the of the property involved but also the managing member of the limited liability companies bankruptcy filing the second circuit rejected this said that the receivership pact does not trump the limited liability managing member hat the  as the managing member survived the bankruptcy and that the obligations are they apply abilities that that this individual had under the limited liability company law survived  partner are not prompted by her but he limitations on those live those on those obligations that might be inferred from her dual statuses both receiver for the  company its assets and the general partner of the of the companies so let's let's suppose for discussion purposes that you're right about that and let's say gross negligence is standard what's the content of gross negligence number one in the number two what's your single best example of where you think gross gross negligence may have been committed here in the reason i just want you to focus on one or two examples as there was a dozen or so of them or fifteen of them in the briefs ok well i've read a lot of this court's decisions about what gross negligence means and i know that it's a standard that's lower than recklessness and so it is  wilful blindness is it least gross negligence willful blindness may well be recklessness one example is that ms weiss was holding a forty thousand dollars convertible notice based on a ten thousand odd portion a note received the stock and sold that ten thousand portion of the debt for one hundred nineteen thousand dollars of stock basically multiplying her recovery having a recovery you know that was a multiple of twelve that same instrument she could have done that the next day when the market was even better and made more money she could have continued to do but how can you say that's gross negligence or willful blindness when the undisputed evidence shows that before she took that action she looked at the options she sought the advice of the investment adviser to the court had appointed and followed the advice of the investment adviser well we how can that possibly be willful blindness if you don't reply brief this is addressing how can that possibly be willful blindness when the undisputed evidence shows that in making a determination she conferred with the court appointed investment advice or became acted on his advice the court appointment invest a court appointed investment adviser was not being compensated for security sales the court appointed investment advisor then p had an agreement where if m and p brokered the sale of a convertible note or the sale of a judgment there's nothing in the court documents or the appointment order saying that she could not consult with that investment advice or on infests months for the estate but you can not invoke the advice of that investment adviser if it's tainted by an economic bias toward selling the note as opposed to converting the note and selling those that are independent court appointed investment advice or it's your view that investment advisor was tainted and that's why should well known not to rely on h compensated for one type of transaction but not being compensated for another type of transaction that bias prevents the fiduciary from relying on that investment advisor here it's clear that it without any question that an m p which we dispute with an investment advisor we disputed was court appointed but we're focusing on on what its contract with ms weiss was it contract set under it was supposed to consult with concerning the disposition of liquidated assets it would be compensated for illiquid assets it would be compensated for the possibility that an m p would ever receive any kind of compensation and i am at peace so this proposal which is in the record here include a fee at five percent of all liquidated assets  it's not under the category of stock if you if the pages it's our docket it was eighty three twenty eight and exhibit a it specifically designates support in liquidating debt and equity positions which is the language that weiss is now relying on as an advisory service as mr i under your time is up let me just ask you one quick question is that is the kind of knob of your point here that whether you want to call it willful blindness or gross negligence that that she knowingly relied upon in competent it vice on this transaction is to quick answers it was conflicted advice for the reasons set forth in pa twenty seven i reply brief secondly it's your she has the ability to look at the stock prices and do what is third grade second grade level math and realize that whatever these people might be obviously if you're saying she didn't it's not that it's not complected advice but that she didn't get the advice in the first place i believe she never got that advice in the first place i don't believe there's simply no where in the record is is m m p saying you know what don't sell morning around as may please the court i'd like first the very quickly to address judge say needs question about your is there really is no need to to a man and the order all of these defendants who we called those nominal defendants but maybe more importantly in the opinion that preceded by minutes the judgment order judge lefkow said quote this case is dismissed in its entirety so there's no question about the intent of the what the intent of the judge was that the judgment had the language that it has i don't think it needs to be amended the eleventh circuit case that we cited didn't all all plaintiffs in favor of all defendants if you will but i i just have concern that that might be viewed then as a do over that we have to start filing a new one they'd have to file a the admission again it was done in writing it's done here today the willful and deliberate violation of the new shear duty standard is the standard that governs this service it cannot be changed by a district court even the district court in which the case rises and the argument that well she's not really a receiver because she's a par the appointing order said that she was going to be the receiver to take over the business well that had to include the partnerships that were part of the receivership estate and as night follows day she takes that position of general partner if this were  c she take the position of the managing member if it was a corporation she take the position if you will of the board of directors that doesn't mean that the liabilities standards governing l l c these are governed corporations are governing partnerships your position that she has become the general partner or that she is taking on and overseeing the duties of a general partner our position would be the latter that she is overseeing and taking right on the role of the general partner not actually becoming a general partner that's right in order to discharge her duty as receiver she has to run the properties owned by those partnerships and so she does sort of take over those duties and indeed the opening sentences of the appointment order indicate that the receiver shall be the agent of this court and solely the each into this court and acting under this order  and only then go into the duties that she may exercise or powers she may exercise pursuant to her authority as an agent of the courts as a federal receiver that the federal standard  general partner and investment adviser doesn't mean that different standard of agree more with that that's just and that's how judge lefkow viewed the matter she did and it seems to me there's case law support in other circuits where there's sort of this a dual role being exercised that it's the receivership role that is the operative one and so the federal standard of care must apply its ninth circuit cases we don't have any case law on this one so we have to look elsewhere but that seems to be how the other circuits deal with it that's correct although the ninth circuit never did say other than in some dicta that was on explain that maybe it would be different if there was a point in the general order there by you case that you just heard about discuss the standard of care of life all that said was when the matter went into bankruptcy there was no need to appoint of bankruptcy trustee and add another layer of expense when you already have a receiver operating the business and just looking at nine fifty nine b which is the touchstone for why the argument is made that illinois minnesota law was if if they're right that that statute does something more than what it says which is to third federal standards meaning because every receivership deals with property in one state or another so in every situation if they're right state law would trump the federal standard that can't be almost every circuit has weighed in on the standard fiddler grid but in every case there's a federal standard perhaps as judge scudder recognize it's a federal common law standard applicable to a court appointed receivers and that's what wishes those agreed order cases that we also are close those agreed order cases are all in the private party context where the only people affected by the agreed order is going to be the plaintiff the defendant c the receiver in the court but the consequence of that appointing order effects and entire state and the standard of liability that this court has set for this circuit is not only for the protection of the receiver it's for the protection invest the interests of the estate as a whole and all creditors and investors because it wants to protect the receiver from having to defend litigation the luminous litigation that would interfere with those structured for a reason there is almost a doubling down of the word willful not alone and deliberate and in the gen duce a case this core of knowledge or observe that i don't know if it's if they're redundant gentoo suggested that will form deliberate might be redundant i call it doubling down just to make sure that intent is what's required and if you go to gross negligence it's a slippery slope gross negligence versus negligence you'll never get a definition that is a black line definition it would leave to the trier of fact discretion judgment vagueness the willful and deliberate standard among all the other benefits encourage people and people to take these positions would disappear who would go into receivership being told well don't worry about it it's gross negligence standard but how is that really different than negligence other than maybe degree that's very awkward hard for the trier of fact and it would also encourage the kind of suits that we've got here because we hear that the suit is filed thinking that th discretion including almost all of them not all them on the basis of advisors advice now we heard about an alleged conflict there's no conflict the advisor we've gotten paid either way the only reason the advisor did counsel said there is nothing in writing it's just weiss's work well actually it isn't rocket number one eighty two statement of facts paragraphs one seventy six the one seventy seven have the advisory in writing in an email telling us the downsides to doing the conversion said it was hard to justify a current market because this is all trading on a new and remember what the trading is this isn't buying google stock or apple stock or even some small capitalized company on a regular exchange these are penn zero one versus point zero zero two the market's volatile sometimes there aren't buyers even after a conversion this is more like an illiquid asset than a liquid asset because there may not be stock certificate that that's evidence that the inverse so proposed reverse the transaction actually closed but that's not so because new stock certificates were not going to be issued no new stock was going to be obtained by the receiver the receiver was going to be diluted not increased in stock these were certificates for the stock he received or already own but didn't have certificates it wasn't raised here in oregon it was a big part of the briefing was the argument that it was enough to satisfy the wolf and deliberate standard by finding that there was an intentional act that on intentionally caused and that's not what the wording of the rule is the wording of the rule is a violation duties and in that regard the supreme court's geiger's case is very very instructive rejected the argument that local injury meant a willful act that unintentionally caused injury that's the way our rule is worded and that makes sense and if it were otherwise the court standard would be eviscerated because every judgment is intentional defective it's unintentional it was in the judgment so everything that's being challenged here which are judgments were done you know fully and a libera happen much is made out of the fact that in these places in her opinion a judge left college using the phrase intensive arm the state and the plaintiffs turn that into that oh even judge lefkow didn't follow the circuit standard well it's true that she said intent to harm a couple of times but she said at ages nine to ten of her summary judgement opinion she said the standard that she was going to follow and just like remains the governing standard and she then a couple times said intent to harm that did mean she was changing the standard she also repeatedly used otherwise she said quote white wice quote she analyzed one of these twenty one different transaction i don't know that i've ever done this before but if there aren't any other question is i'm going to stop about three minutes early i hope i don't regret doing that later i seen that thank you and our thanks to all counsel the cases taken under