fraud claim with prejudice and then concluded that in the absence of a federal question jurisdiction over the stake or preach of contract claim he didn't have jurisdiction over that claim and then declined to take supplemental jurisdiction over the remaining claims attention that the apple e's in this matter express it took no position on this issue so just to sum up on this point we believe the court had no jurisdiction to dismiss the state law claims with prejudice when it made the determination that it did not have subject matter jurisdiction over those claims that the second issue i like to dress is somewhat related to the first and as i mentioned the district court concluded it didn't have federal question jurisdiction over the opponent's state law or breach of contract claim and i read this point only to address the supreme court's recent holding in manning which was and i'm sorry merrill lynch be manning which came out soon after our initial brief and the achilles of are you that that man an outright rejects our position and we disagree in manning the court held that federal question jurisdiction arises when a plaintiff's claim rises or falls on a violation of federal law or the point disability specifically to prove violation of a federal duty now here our contract wording manning at declines decide the question whether the claims in that case rose under federal law for for the purposes of federal question jurisdiction honor and the court sort of took a middle road between the two parties positions and seemed to say that well you can't just throw a violation of federal law into your complaint atmospherically and that's your ticket to federal court however if you if your claim rises or falls on whether or not there was a violation of federal law then federal question jurisdiction may lack in our case the breach of contract claim necessarily depends on a showing that the defendant breached federal law specifically a violation in the provision of the subscription agreement that represented that the defendant pure biofuels represented that it complied with the exchange act and so we feel that under manning the district court would have jurisdiction over a breach of contract claim and in fact in many of the court specifically address cases in which a state court because of action is brought to enforce a violated the exchange act and how they violated the exchange act the claim is either going to rise or fall on that exact point and so it wasn't just thrown in there to claim arising out of it out of the reach of violation of federal law to claim arising out of a breach of a promise to follow for certain standard yes so you just have a standard that happens to be federal securities laws and i see on that photo i say you could federalize any state law claimed by simply agreeing to a federal standard understand that you are al yeah so so give me an answer but what i think is that it there's a difference between just a contract saying that we complied with federal law and whether the court needs to actually make a determination as to the interpretation the exchange econd what we're saying is that there was a specific violation of the exchange act how did they preach federal law that's you're the party you claim which is why you were in federal court and that's that's where i thought you were going to start this conversation i mean the prejudice and i don't blame you for starting with actually want to make spend any time on your federal claims you're european state court for certain that so so tell me why the district court was wrong and i long you don't mind your complaint on the federal question is ye  emissions that were made in the public filings so you know over the course of i think was about two years there were several misrepresentations on missions that were made in public phones then the merger occurred by that time and we didn't find out that these were material missions until two years after the merger so by the time that those events that are taking place we had lost all of our state law revenue and in about a law that we had such as not just a derivative claim injunctive relief there allege but for cause ation if that's if that's the theory because by the time the merger occurs and you don't contest this your client had no ability to stop the merger so if i understand your argument correctly and correct me if i'm misunderstanding it you say that the non disclosure of these conflicts of interest in connection with the financing transactions if they had if you'd known about them you could have brought these derivative claims back then but there's a lot of jumps between the bringing of those claims even assuming those statements were misrepresentations and that you've gone forward with those claims and a company engaging or not engaging in a merger some years later the company was materiality of the non disclosure as the link between the non disclosures the loss of our stake remedies and then the of the merger that squeeze the south and i think it was the madison consultants case in which the court held this court held that withheld information is material where the plaintiffs would have had some reasonably effective means of protecting themselves against last had they known the truth about the defendants concealed plans menacing kind of material and bleeding on over and only requires an allegation of but for the claimed misrepresentations or omissions the plaintiff would not have entered into the detrimental securities transaction the stutterer mental securities transaction here being the forced sale and i guess that we didn't know about until well after the merger took place missions are because of the because you listen to him for some stuff well there is a there is a direct link between the two because the acquisition of the requisite amount of shares in order to effectuate the short term merger were accomplished through the material emissions unlike the virginia banks your grace uses from someone other than your own i'm sorry or i purchases from some of the new your clients yes  yes but i guess the point is that if you have did you have the right to interfere with those transactions we did not your honor no but they weren't properly disclosed to us so if they were disclosed properly in the filings then we would have been able to take some action but the fact that they were never disclosed obviously we didn't take action because we didn't know about them and i think that that's the critical distinction between our case in our facts and the line of the bridge in your bank share santa fe and graceland of cases where the misrepresentations were made at a time when the company making them or the misrepresent or making them already had the requisite amount of shares in or in our case they didn't have in the emissions were necessary to was disclosure of the fact that the debt financing could attack surely on default the transfer of shares there was that disclosure right there was your ok on that there was something more that wasn't disclosed and that not there was absolutely no intention to pay on the down and so therefore it was it was itself a scheme to of allow a corporation or an individual to accumulate enough shares to then have control of it to then effectuate the merger which then you guys off you have it you have it exactly right your honor except it was more egregious in that the c e o of the company was also the owner of the company that was the financing companies actually disclose his participation both sides was material yes right now let me ask a question did the debt deal some cells pose a threat to you just to get the existence of the debt deals to death pose a threat to the minority shareholders all along opportunities would present a situation in which your interest in the company would be diluted substantially yesterday and they were financially unreasonable and in some cases the transactions really had no legitimate business purpose i know they're i know there are but i'm just talking about as in terms of what was disclosed correct so all my questions presumed only what was disclosed not what wasn't disclosed they did themselves the deals themselves did represent a threat to  dilution of of your client's value interests in the corporation did they not they did ok and thank you balance between federal and state court jurisdiction judge wesley has already pointed want to out with regard to the breach of contract claim and i'd like to focus on the failure to state a claim and the correctness of judgment merrill's decision in the exercise of his discretion to not allow leave to amend you don't you don't support the offer appellant's argue that there was some misrepresentation in the form of an omission in connection with financing transactions engaged in by the company and f and plainfield at the time of the very first transaction playing field owned almost sixty percent of the outstanding stock of pure biofuels you control the board of directors and the allegation is that mr pinto and f t s the not disclosed to the other members of the board of directors other than the gory set of brothers who are also board members and alleged to be scheme participants that mr pinto had an ownership interest in f d s i don't know if that is material or not i would say not but if it is in fact a related party transactions i would say so what what is fully disclosed in all the s c c filings is that the transaction occurred the trends of the transaction how much was loaned and consideration for what the payment terms the default terms what would happen upon default and the participation of f t s and the much larger participation on a percentage basis of plainfield also an minority shareholders interest was disclosed because of the financing arrangements and what would occur in the event of default and how plainfield would benefit from that yes so completely clear and i think the problem is concede that they knew they would be they could be diluted if there was the requirements of a claim under ten b which is under short form merger where there is no vote said you turned away from i apologize your honor i said the financing transactions were two years earlier and some one case for three years earlier and the company had been dog for a year because they didn't have the terms would be effectuated wouldn't there if they're able to if they were able to plead their with a particular date it's necessary wouldn't that be wouldn't that plead a claim for ten b five because they if as you just told me they could have brought the derivative action at the time of the public disclosure the time that the transactions of disclosure so they knew they had some exposure from it and if and if in if indeed there are facts which perhaps you but not to the short form merger which is the basis of the federal claim today so the only federal claim that they asserted a arises from the short form merger which is a separate transaction  imperative to remember that there were some superseding events so that i mentioned that playing field who participated in those financing transactions who is disclosed as a related party who controlled the board of directors participated in the same percentage basis as did f t yes and their stock interest ran from sixty percent to seventy five percent so the claim arises out of the misrepresentation of the facts of what was going on with regard to the issues the debt but put that to the side go ahead so you say did you say that as plowed plainfield did not affect you see from the allegations of the original complaint and in both of their letters after the dismissal of the complaint is that the operating entity was acquired by a investment fund by the name of not part of those financing transactions at all so you have these two superseding events and that to the extent there was any transaction causation theoretically and i say there was no oaken by those two events the merger transaction is what they rely upon to invoke federal court jurisdiction of what they asserted before judge my ro at the heat time of opposing the motion to dismiss and in the two subsequent letters they tried to link it back to the financing transactions but your honor is your own as that was those were separate transactions i have not mentioned try marine extend correct further tellings to say that there was no disclosure of the related party relationship with tri marine mr pinto is described in the public filings as being the owner of tri memory so that's not an issue so you're talking about the they did in this lawsuit but they did not years earlier although on notice and even now they don't say how they learned this information they don't identify who formulated the scheme when the scheme was formulated the parameters of the scheme how they now the when the scheme was to be implemented and hal they learned about it and why they've waited all this time unlike wilson where a right to appraisal was forfeited because the pla tubes lied on the murdered on the proxy information and tendered their shares to participate despite the not knowing of the force valuation here the plaintiffs haven't done anything they did not attend to their shares or take the cash they should just sat back and waited unless there are more questions thank you transaction causation was established because the pope would never be in the position of a forced seller but for the fraud so it's not limited to just instances where the misrepresentation is in the merger documentary in the proxy statement or anything like th different that because they're the allegation was that there was a class a class a public stockholders who were deceived in connection with the merger forcing at another class b to become a seller and so here that any deception occurred in connection with financing transactions that occurred long ago or fairly long ago and you have to oaks sufficiently allege but for causing a sion that was much easier in mind it was much easier