martin may she's an active district court judge and we're delighted to have hear her here to help us she's every much as part of this court as judged by our office and she has as much a and dust reus visiting judges and more particularly the lat it to have an active district judge with us today first case up as f t c versus universal processing we'll hear first from mr weiner morning your honor you know when a few rule against me and it's weiner but not one that if we could valerie if it is something we can do about this temperature in here out appreciate reflected in the court's order at joint appendix sixteen seventy three and the first line of that part of the order  acknowledges that u p s my client violated the telemarketing sales rules there is no dispute about that this next sentence though says defendants who violate section five of the f t c act are held jointly and several y liable for the total amount of monetary loss the problem is there is no connection between the two and have manifest the first error which she is that and it is a  discretion that by holding u t s jointly and severally liable for a common enterprise to kind of defend its wrongdoing and unjust enrichment it never found that my client protists a pated in the common enterprise absent a finding of participation in the common enterprise there simply is no basis to find joint and several liability for that and that is the issue isn't it i mean you would concede if it was a common enterprise and you a part of it that you would articulated that there is no drop in several law bill idiot proof or at least we haven't and no bonding authority has in the precise circumstances this case so you need to tell us about that well your honor that all the cases that have found that there is joint and several liability have done so on the basis of a finding that there was a violation of section thirteen b of the f t c act a violation alone of the telemarketing sales rules has never been held to thought a violation of the rule was the side common enterprise counsel if your client laded the rule that telemarketing sells world why is that not by itself enough to establish a violation of the act the the rule  force is the act the rule interprets the act the rule says this is part of the probations of the act and your client validated what my client was found to have violated was providing substantial assistance to those who  which is part of the prohibitions that thou shalt not provide substantial assistance but definition when you doctor rule the rule making process it becomes in forcible as part of this my client was never alleged to a violation of the act why isn't an allegation are a charge that your client violated the rule enough to charge your client with having dolly did they have it maybe you're on it but they never were charge of the violation of the act they never had the opportunity to sing or you deliberately missing the question are you do or do i do need to articulate the fourth fact if a violation of the rule is as a matter of the law a violation of the act then alleging a violation of the rule charging it charges a violation of the act it is no meaningful or persuasive response to that syllogism to say that we're never charged with a violation of the act you're dissed denying the conclusion without telling me what's wrong with the syllogism your honor i'm not trying to avoid your question my my my proposition is that no court has ever found it by elation of the to constitute sufficient evidence or a sufficient basis to find a and legit wrongdoer jointly and severally liable for those who have been found specifically liable for a by a late in of the act but the fact that it hasn't happened before doesn't mean that we're not going to do that today so what we need more information on is the reasoning behind why that shouldn't happen because what i've seen is there are examples of common enterprises that have been found to have a liable but just because that's an example of it doesn't mean that that's limited to that particular set of circumstances you are correct that there is no case that says you can't find that there simply are no cases that have done that chapman is a case out of the tenth circuit is a case where the court found that there had been a violation of the telemarketing sales rule but did not extend joint and several liability that was again specific finding that there had been a violation of the act there had been finding that there was substantial assistance but the damages in that case were limited to the damages i think you're lying too much on what's happened in the past because what we're looking at is the future and what the role should be and just because this hasn't happened in the past doesn't mean that given the facts here and the finding of the violation of the rule that these aren't the kind of circumstances that warrant extension or at least clarification that there's no limitation and to this common enterprise area i think that  what will happen is men my fear is that what happens here is that the law becomes a gotcha you don't know you no longer have to show a common enterprise in order to establish or or to research showing several liability you just have to assert and prove that someone is substantially assisted those that were part of a common enterprise you would find one entity with deep pockets you allege you allege that they violated the telemarketing sales rule and you have then hung damocles sword over their head saying and you could be liable for joint jointly and severally with those who have violated the act simply because you provided substantial assistance knowingly are should provided substantial assistance that they wonderful to terror when well i'm not saying it's irrational it may not be irrational your honor but the test but the point is that all the courts that have assessed joint and several liability under the and assume that the violation of the rule is a violation of the act just assume that would it stand a reason then that the x remedies would be on the table for a violation of the rule going to start then i think it's a logical conclusion again i'm not trying to i'm not trying to avoid answering the question i just don't agree with the proposition that a violation of the telemark sales in terms of my understanding of a question meant you don't really a question damages you porson the harm and how would you a question the harm i see a lot of apportioning by profits but that's not how a parchment really works should be based upon the gains to the entity that is being forced to disgorge the the ill gotten gains my client the two doing it in a portion meant analysis would have resulted in my client a finding that my client's total gain in this case was less than seven thousand dollars and the point is that the court never undertook the analysis but i don't see if they had that it would have resulted in a different result fact is that the analysis was never undertaken to give my client the opportunity to present evidence on apportionment there's a two part test that the court undertook with respect to the common enterprise defendants it under to the first the c makes its proffer as to what the damages should be the burden then shifts to the wrongdoer to determine or to present evidence as to how apportionment in its estimation should should be calculated that was never done here there are monies that went to two distinct entities their monies that went to mastercard and visa their monies that went to specific individuals that were part of the common enterprise there was a separate bucket of monies that went to my client and you apportion that based on where the money went and again my client should have had the opportunity to at least make the the profit to the court and have the court undertake the relevant test that to determine where that is if we limit that remain to the amount of money obtained by your client and then that game that your client suppose somebody substantially assisted and didn't gain a penny but there are a critical part of it again i come back to your own at the fact that they are a critical part would make them part of the common enterprise that's simply not the case with my client why is your client not a critical part without these two merchant celts accounts s wouldn't work but if you're on it the scheme wouldn't work on of if they didn't have access to phone lines there was no what let let let like you're saying your client wasn't a critical part i think critical part includes and is defined as a part which is critical to the success and not just told you want your client which is critical to the excess and now you're telling me why they need thumbs up you know answer my question your honor my  substantial participation which justified the finding for violation violating the telemarketing sales rule there was no finding nor was there an allegation that they were part of a common enterprise i'm not saying common in a press i'm saying if the substantial assistance was critical to success of the scheme then why is that not enough your honor that's what justifies the court's finding that they were that they by late at the telemarketing rule and they are responsible for their actions in violating the telemarketing sales rule and for any harm it cost right for the harm that it caused that can be apportioned to it  one hundred percent of the harm that was cost would not have occurred but far there is substantial assistance then why are they not apportioned one hundred percent your honor they may be my client should have the opportunity to present evidence on that and the court what it had should have applied the test what evidence do you need other than the undisputed finding that the merchant selves account were essential for one hundred percent of this success and once you concede what i understood to be undisputed which was that the two martin sales accounts were critical to this success of any part of the scheme any of their losses of the victims what else is there to to find you out of them then there is no distinction between providing substantial assistance for a violation of the t s r and the common enterprise rule for a violation of the f t c act you've just said basically that there is no distinction hearing what are you going to proffer i'm going to show how the money was actually divided between the various tortfeasor so not who caused it but now the money was divided up again your honor if you were going to collapse the distinction and say that effectively my client was part of a common enterprise that was never a part of the court up to the lower courts find that the evidence you're going to present would be solely limbed it would be limited to who got how much out of it on a portion  analysis yes but my client would also have the opportunity presumably to defend against an allegation that it was part of a common enterprise which was never attended i'm talking what would your client have any evidence that it didn't provide the substantial assistance along well let me let me i think there's a little bit of it's a little murky about common enterprise so let me just explain what it is that court to mean when they find that there's a common enterprise all that means is that when defendants have set up a sham corporate structure to hide their activities the court treats those ignores those sham divisions and treats the the m as one entity but that entity is just one actor in the scheme a common enterprise doesn't mean everyone who is involved in the scheme individuals and corporations it just means those it just is a tool to erase those corporate disdain for us it was not part of the common it it was not part of the common enterprise but the common enterprise was one actor universal was another actor the individual how smith was yet another a healthy individual liable along with the corporation that he won't each of them acted separately the individual didn't make all the calls for example and the corporation and it but he was in control of the corporation which did so there was joint several liability in that case in the fourth circuit the f t c versus ross case there was an individual who was in control again of one of the numerous entities which were a common enterprise and so because of her control and participation in the scheme she was jointly liable with the enterprise but she was she's not in the enterprise but and jim merchandise we said court was pretty clear about about happy what the measure of damages are and it is the defendant s apostrophe and you know find another of places where that word is in  a brief and they have moved the the apostrophe from the end to before the yes but washington data resources is the is the standard for determining what the amount of liability i and that's really the only thing that's on appeal here did the district court abuse her discretion when she ordered universal jointly and severally liable with the other actors in this case the general common enterprise type thing or a situation in which you couldn't clearly determine which conduct cost which injuries that's correct w and in fact that the f t c when we promulgated the telemarketing sales rule cited that very cited that very provision and when we created the assisting in facilitating violation that are you saying that we should adopt that clearly as the standard for doing that or are you saying that that's already the standard well i think it's already the standard to the extent that the court can you know articulate it a little bit less in the what is your support for the fact that that is the analysis that the lower court actually applied do you mean lower court applied for seventy six to find if they were acting in concert by as i mean right it seemed a little conclus of the way it was analyzed it did seem like they looked at the facts and then just stated joints i'm a liability in it wasn't clear to me from reading the order that they actually went through a restatement kind of analysis or what actual to to go through the exact analysis because the telemarketing sales rule has sort of baked into it the section four seventy six standard that is the violation of the telemarketing sales rule is assisting and knowingly assisting in facilitating a violation of the rule so once you've done that that is the that is all of the analysis of the other statement and the conclusion is that joint several selling its memberships as if they were health insurance but it didn't do the selling itself it used to telemarketer and in fact it used to telemarketers so although they were separate cases and settled each of those telemarketers was only responsible for the part of the scheme that it was responsible for making the calls the so telemarketer a did it for a while and then we shut them down in a different case  telemarketer became on and then they were part of the same case with i e b which is the corporate which is the corporation and they were jointly and severally liable for i would be the entire scheme telemarketer be was only responsible for the part that they did so in a case like that you would have to do an analysis as to whether the harm was capable of apportionment which as you say of course means whether the har and and i think that our first in the first go round on this appeal we pointed out that they hadn't even really argued against joins our liability but certainly they had the ability there to prevent present whatever evidence they might have that the harm here was a portion of all they were arguing that they should pay less they were arguing that only because they didn't receive or get to keep up all of the proceeds but under russian data resources that the the analysis doesn't take into account it in fact washington resources specifically rejects the idea that they can that universal tend to do it's own business expenses for example the amount that it paid to its agent in this case house net and the amount that it paid to be said master card that doesn't figure into i'm just enrichment well gross revenue that was received by the scheme less the refunds that were got went back to consumers and it sort of gets to the reason for a joint several liability in the first place but that's not really net re loss that's net loss but the victims well in a case like this where the money flows directly from the victim to the defendants they're the ever got to any defendant and what this court affirmed in washington did resources is in that kind of situation there the nobody in the scheme was enriched by the money that none of them got here  undisputed consumer losses in this case that's when the one point seven million dollars that was how much the consumers lost right but we held in washington data resources section thirteen  just said equitable money terry relief is necessary and appropriate to relieve the substantial and undisputed consumer waltz's not didn't say to undo they are substantial and undisputed unjust enrich well of course there is there's nothing wrong with with compensating consumers for the money that they lost in this case and i think that's except that's not the proper measure according to what we said marching today to resource well i mean i'm responding your honor i return to the point that the only cases in which join several liability have been imposed have been based on a finding of common enterprise there was no finding of common enterprise here you are correct your honor that the court below did base not that they if they are they simply are not my client was unjust enrichment for good too if it wasn't richard at all for a total of just over seven just under seven thousand dollars but what he's saying is if you consider the defendant collectively i was asking him that question because i thought an argument could be made and washing day resources that even assuming his position on several law bill to the district court measured consumer loss collective law billeted of all of the defendants as opposed to unjust enrichment and his response as i understand it is it's the same thing in this case it is that certainly is there is nothing in the lower court's decision that would give an indication that it made that conclude they reached that conclusion again your honor we think that the loss here is divisible no different than chapman there is really no basis to say as the court did below that chapman is distinguishable simply because chapman did not involve the payment processor the actions of ms chapman in that case were part of an overall scheme that the court found defrauded consumers you can no more apportion the damages there than i think you can here but the court there and said that she was not part of a common enterprise th damages or tribute able to her war were discrete and separate and apart from the damages as a whole we think that the same analysis could be undertaken here and should have been undertaken here to apportion the  damage that that that befell the can the consumers my client was unjust and rich to the tune of less than seven thousand dollars we know where the money went and we can't we can't identify where the money went the court never undertook the analysis