for example that there are parties who are trying to loot the corporation for their own personal benefit or is this conspiracy really just something about who's going to fund the legal fees of officers of the corporation versus the corporations south could you be more specific about what your notion of this conspiracy is the conspiracy the overall objective of the conspiracy was to extract money from and fast pretenses for the benefit of the defendants including to expand and maintain control over k b p how much money i mean if it if they had taken one hundred dollars and put it toward the legal fees would that be enough or just the legal fees or are just it have to be more than that where you are what we've alleged is it would probably have to be more than that a tiny incidental amount of what we've alleged is a systematic ownership that that activity is is the core of the conspiracy and there's no question that we allege the defendants in gauging that bacteria activity there's also no question that we allege that the lawyer defendants absolutely doubt your ira but were alleging is that we have satisfied the elements of rico here the significance of the ethical violation is simply that the lawyer defendants cannot be presumed as a matter of law to simply agree have agreed to an ordinary representation when in fact they didn't engage in an ordinary representation was anything but in ordinary representation we can as a consumer as a matter of law that that sounds like a sound sounds like what you're saying is that the alleging is what makes this a rico violation is that the lawyer defendants agreed with the defendants who were not their clients had no authority to act for their clients to facilitate their operation of k b p s through a pattern or lack of tearing activity  guess you're calling these people the supplemental defendants or some phrase like that and i'm getting the feeling that everything is being stirred up in the same soup somehow and i feel that we need to keep clear what these people but they were not their club that's and that's the key point here on out there would have won a lawsuit by the way just because certainly wolfie's are being paid well it's more than their legal fees being paid i mean it put because allowing that they could not afford to defend this what's helpful is look these are these lawyers defendants where people who knowingly agreed to help the defendants operate k b p through a pattern of racketeering activity get paid for it they work their clients there's no special rule for lawyers or legal services their intent is inferred their motive their mental state is inferred from the circumstances like it is for everybody else there are some special circumstances counsel here let me let me guess phrase what i see is one of the most fundamental problems that i see here and that is your extensive reliance on your allegations to show that the lawyer defendant knew about the the other defendants activities by the fact that th innocents had read your client's complaint and had read the accusations by the polish prosecutor the consequences of your theory seem to point towards the conclusion they aren't what we're saying is not that they were required to believe and it's not just a complaint it's not just the prosecutor statement it's piles of evidence it testable establish their guilt all of which was consistent with the crazy that the defendants were engaged in the case that creates a plausible inference of awareness of the general contours what they're saying is hate we can be held as a matter of lot we have to hold as a matter of law that we disbelieved your in front of them and crucially it they were not their clients the key point to me there is anything they needed in front of them they had accusations we'll talk about the hard drive in a minute i hope but i know there's a strong case they were not their lawyers they had no duty to defend them at all they were what their clients thought it was all i mean as a lawyer don't you inform yourself about the entire situation that your client finds itself in willfully blind to that or that evidence which creates all we're talking about here is is it plausible that they were aware of the general contours of the conspiracy and the only question i ask you was the question here and that has to do with the rule of handled under polish law yes there is some evidence on the record about how derivative claims are handled under polish logic vaguely similar to how it's handled here polish law for example strictly enforce a rule corporate neutrality stricter than in the united states well i do know it did it but i can't answer that question your honor but i do know of central but isn't that rather central here i don't believe rudy's running between any kind of alliance with the individual defendants but is that clear under polish one what is clear under polish law is that derek that certainly under polish law the lawyers had no ability to take any direction from derek lowe where he had nothing to do no firm overlay ship with k p they were not allowed to take any direction from adams which he had been barred from having any role in the management of katie's affairs what were alleging is an agreement between the lawyer defend p however i mean who was then the management board included various times adam switches wife however there is no reason to i'm sorry counsel and who else we've read your briefs please i know you have a lot you want to say but it would be helpful to know this to me rather central to google issue who else was in the management board there who had the power and the polish law to direct the defen during the tenure mr dean or was there mr coe lots was on the management board he had said mr dean or a letter saying hey i'm just confirming that the payments that i'm sending you are for k b p s defense in this case so he was clearly misled as to what happened mr downer didn't respond to that letter from mr karachi but your honor i also believe that given that the case was happening united states and that data out by the polish law could govern the internal across the country that they are adverse parties we were seeking a recovery from the defendants for the benefit of g d p and the latino defendants mean they admitted that their goal was to make the pla hollow even if they could be proven to be true there was a bit in they were not their clients they were trying to obstruct the recovery for their own clients for the benefit of the defendants and i understand that allegation and i certainly understand that it's a very serious ethical allegation i guess i'll go back and say again jumping from the ethical problem to a rico violation needs to be justified in my mind because you know the a r g c isn't in the rico business you know it's it's a different matter altogether and i had understood the broader conspiracy is really serious looting the corporation we had our earlier decision where there's you know verdict in this case your discovery sanctions are giant penalty default judgment that all strikes me is fine you know that's part of that because you agreed with judge hamilton that merely representing a criminal defendant or rico is the course which is performing services for that person and that's exactly right you want to but the difference is when you're representing your own client it is was was was looted here so the actions of the defendants what property was looted here money bank accounts american bank accounts there were dead times there was certainly in a minimum money that would have been a constructive trust for k b p s there's no question about that that was looted and kept here what are we talking about well yeah i mean it the question of whether there's a domestic injury is a factual one day i don't think  at all appropriately for resolution at  and did not articulate a domestic help might enjoy what do you think would have been necessary some statement that funds were leached out of the u s bank account or property was bought it appropriate price or you know what would you be looking for i think it would be side if they actually had a u s bank account that was looted for pusses of the conspiracy that would be a an example of domestic injury if they were conducting but actually brought in real estate in the united states if the company had done so as opposed to what they've alleged which is that some of the defendants took money from poland from the corporation in poland from a polish bank account and took until united states and invested in a night states real estate that's conduct in the united states but that's not domestic injury the injury is felt by the corporation in poland is it anyone suppose it was money laundering you know they take money out of poland and make converted into real estate in the united states in the question of money laundering you'd have to look at the second i j out holding and determine whether it is the type of money laundering that has extraterritorial reach someone money laundering doesn't some and some doesn't so that you'd have to look at both the conduct and the side of the injury and even in that situation judge the side of the injury would be where the company felt the entry which is in its bank account in poland not with the money and it ends up tracing to all right so now i want you to address the conspiracy dimension of this because this is one nine hundred sixty two and if there's a conspiracy claim then what you're looking for is a green and and predicate acts one of the agreement took place in the united states you know you had evidence that there was a meeting everybody sits down has dinner agree salute the corporation is that enough of the u s connection this comes up a lot not just in retail cases it comes up in a trust cases it comes up entered into in the united states is that enough of a link to u s territory to permit a claim to be state owned rico i don't think so i think the agreement has to be to participate in the affairs of territorial reach so it ultimately would depend on the agreement may well provide venue may provide that otherwise satisfy other requirements but under our you have to look to the racketeering acts and you also have to under the with respect to a conspiracy mr michael's got up here and he as they did in that debrief he started with the second half of the broward standard which is knowingly facilitating and judge shah's opinion meticulously went through each of those elements starting with knowledge then agreement and then finally asking what in connection with the agreement what there was an agreement to the same pattern alleged pattern  record turning activity as what was alleged with respect to the underlying polish or stay considers any uncomfortable position of arguing that your clients while not paying particular attention to who they were representing didn't looks it looks like they were hiding invoices and representing people who were not their clients they get kicked off the case at some point he doesn't seem like a great performance actually well lucky or did not  court for a decision whether it's objecting to discovery which ultimately would get resolved by a court and this gets to the questions that were asked earlier mr michaels about who would ultimately win the case let's assume that allegations are correct road was really had defacto clients instead of the actual and nominal client if they had succeeded in winning the case for those de facto clients it would really be no different then any lawyer representing a defendant in a conspiracy case and winning it would be because because they presented evidence that persuaded to the trier of fact that the underlying allegations were in fact not true now whether the lawyers committed some ethical violation we disagree with that but if you assume for argument that they did their remedies potentially for such and such violations but saying that the ethical violation is a rico violation is a knowing agreement with the alleged conspiracy dating back ten years is a five five leap to go but this case really is it is a potentially at most a state law claim for duty or legal malpractise for discouragement of legal fees paid by the corporation that should not have been paid but they didn't want to do that they wanted to get to the promised land the promise land just a try to recover their four hundred million dollars that they are going to have trouble about a recovering apparently so to do that they have to get through two steps they have to say this isn't just set conspiracy about a lawsuit about how to get paid in a lawsuit this is the big mega conspiracy and then they have to get past the causation assure that set forth in the brief even if they establish joining the big conspiracy that have to get past the pinkerton crowd and show that they're entitled to go retroactively and vicariously the damages that were encoded in poland and years before the lawyers got involved in the case they're overreaching in this case i understand why they're overreaching but they are reaching and this is alchemy converting a what is essentially a question of an ethical here and i think that's partly true and partly not true for reasons we've been talking about on by i guess it would be helpful for me if you could try to articulate  he applicable rule here in a way that would leave room for use of rico against lawyers who conspire with their clients to engage in criminal activity if you will enterprise at agra for the court to some of the cases that are in the briefs where lawyers were found to have engaged in in rico some in connection with litigation activities but they were part of a broader pattern of activity with the lawyers were the from this circuit with the lawyer was in business with the client so he the lawyer engaged in some improper behavior in the lawsuit but that was part of a business activity that he was part of i'm familiar with the cases but i guess i'm i mean asking for some help in her to cure leading the line answer the court's question is the standard that judge shot applied of knowing agreement to facilitate to participate in the affairs of men a price for pattern racketeering activity if they're that well pleaded allegations a fact that counsel knowingly knew about the contours of the conspiracy not merely was presented with evidence of it and agreed to that conspiracy as opposed to agree to engage in  of dealing with sham contracts and kickbacks and schemes related to a polish company a company that mr gainer had nothing to do with before his representation of k b p and nothing to do with after his representation of k him to a a a four hundred million dollar judgment that they obtained in twenty fourteen or twenty thirteen and i was a friend twenty fourteen by virtue of his litigation conduct and by virtue of his going arrangement but what that really is is an attempt to tie him to the to the conspiracy by virtue of mere soci action with the conspiracy which this court has said you cannot do as well as by virtue of that most considering the allegations that there are very worst what would be an inadvertent or accidental or negligent association with the conspiracy and again that's something this court doesn't allow so would you like to take a stab at the question judge hamilton asked me it sounds like you're saying that of all he's done is provide a conventional legal services that that's almost as a matter of law not enough of an allegation to tie him to this conspiracy to loot the k b p business entity i would would agree with with my colleague mr feldman that that it's difficult to draw a bright line rule but when you look at the cases what you see is an improvement in the overall conspiracy at a much more detailed level it is not fourteen months of involvement and then you're out you run mr data had no one but if you did really significant things during that fourteen months i mean suppose you know he finds out that these individual defendants are really trying to convert assets of the corporation to their own use he says oh i have a great idea how to do that and meantime technically representing if that were the case i'm not telling you that you have to accept that is the case if that were the case in that situation judge which they have not  knowledge share or agreement but in that situation you have dealt with the conspiracy you know and then you're far closer to a plausible entrance of wrongdoing that they don't have that the plaintiffs don't have here and that is what happens in some of these other gainer they're focused on his litigation conduct to try and tie him to this conspiracy and they also alleged wrongdoing with respect to his going arrangement and i want to just discuss those if i could starting with the billing arrangement ye that is for starters that is not the conspiracy they're alleging that would then go back to your point that you made earlier that that that would be some separate conspiracy not a conspiracy to loot a polish company in poland starting in one thousand nine hundred seventy four and i wanted to know exactly what the conspiracy i makes a difference to how this case comes out yeah yeah i mean there they are trying to allege a different conspiracy at most here which which our client would have defenses to if that case ever came it would be i think would be a state court case not now before the district court of this  court so we do not believe mr dean or did anything that actually misled anyone but even if you assume that that something was was off in the district court did the district court said that something sketchy happened with respect to the going or at least a close race about one point so that that doesn't then equate to a clause one prince of knowledge that the underlying workings wait a conspiracy was was a true and real conspiracy again that goes back to the point made earlier that all they had at that point were allegations which mr dean i didn't have any reason to believe or have to believe and it doesn't show that mr dean or that agreed to join that conspiracy and further so judge it's it's not plausible that mr dean or would would join this conspiracy and join a conspiracy to me going on since one thousand nine hundred one thousand nine hundred seven and then participate in it for fourteen months to help run a group of shareholders who had really nothing to do with before or after this case police another group of shareholders who had nothing to do with before or after this case  ch the dismissal by the district court could be a front and that is that all of the allegations in the complaint against the farm are soley by kerry there are no allegations that anyone at the phone besides mr was aware of the conduct or that the front took a central role in the underlying conspiracy the sole allegation is essentially the same thing you would use an amount practice case to hold a firearm vicariously liable for the malpractise of its attorney in a rico case like this that's not enough and the reason law is set forth in this court's decision and liquid air which makes it clear that in order to hold an the liable for the action of an employee and joining a rico conspiracy you have to be able to show that it was the rico violation that was to benefit the employer not just the case and your typical malpractise case and the ashland oil case the employer that was held liable was centrally involved in the alleged conspiracy first of all there was no question of knowledge because the officer people who really entirely controlled that it was a super payless the trucking company you know robbie asli involved in the conspiracy but also the trucking company was a central part of the scheme to take  all mr de vere was of counsel but beyond that it was it's an issue between the scheme here as you've heard a lot of argument about had to do with all of these real estate transactions in poland and essentially they're saying oh and also we can infer the mr dean or joined into this broader conspiracy because he took direction from the wrong person and he was careless in who he took direction from any helped but you know even if so the fact that you have these predicate acts of course could be charged the firemen were not denying that if a malpractise case were alleged in state court and there was dismissed on supplemental jurisdiction grounds  that the firm could potentially be responsible and in fact if they were approved it certainly would be by that to take responsibility for these predicate acts alleged but it could x and then jump it to this broader conspiracy is really against the nature of responding at superior liability and you can see that in cases like grady which plaintiff site which is a ninth circuit case but really follows the same rules in the seventh circuit that explains the purpose of responding at super is because if you're benefiting from an employee's act you should also be responsible for their mistakes but here this is not legal of the four hundred million dollars that they're trying to pin on the farm and on mr dean and on rock lloyd doesn't have anything to do with the legal improprieties that are alleged by this broad a conspiracy and there's no possible way that joining in this battle conspiracy had any benefit or really any relationship to the foreign business it out and you can see that really in the okie semiconductor case and again the ninth circuit follows the same essential rules on these questions for actions done like on the job of opening up these accounts and such that wells fargo was supposed to be held liable but to take a jump and hold the employer liable for an employee decision to join some question about what should the rule be here the rule is the plausibility rule of the ball in tuam plea have we alleged enough to push across the line between possibility implausibility that the lawyers didn't just goof off and get confused about who their client was but that they knew what they were doing that's the rule they were doing in the sense of we're representing the wrong clients or they knew what they were doing in the sense of we are facilitating a massive conspiracy to loot a corporation facilitating the defendant looting which could be done by doing their bidding in a case where they weren't just not their client but they were adverse to them as a matter of law and the way this ends up shaking out is it the plausibility analysis can carry the weight if you have a case like sin tolo or like if you have a case like colletto where the lawyer is he's representing his own client but they've got this possible that they knew enough and then they facilitated them that's what the rico conspiracy standard it in your us around to speak to your question about the nature of the conspiracy was this all about and as i had said it's a conspiracy to loo t false pretenses for the defendants benefit but the real the what happened in the lawsuit is really just not that different from what was happening before they submit false invoices to k b p for payment the money would end up benefiting them  they were for the benefit of the defendants under the broad pattern test integral there's really no difference between those two certainly not enough difference to say that it's a it's a defense and that's the pattern test isolated event