bars for ever the plaintiffs from alleging their state law claims and by that i mean if counsel i was not to counsel what had filed twelve separate lawsuits based upon the individual alone transaction seven of them never would have even potentially been before a federal court for the simple reason that there were not in excess of fifty lenders who participated in  alleged but i think it was it's clear that if a point it or a group of claims is less than fifty one to plead or avoids to lose that that certainly is their right under the statute and that's really not an issue here i mean the reality is congress has made a determination for its own reasons to bar these types of actions when they're brought in concert you chose to bring this in concert are you contending  that congress didn't have the right to regulate this you challenging that no your honor i guess what i'm saying is is that is that if a complete can if a complaint or a to me you're denying the right of congress to regulate the way i did because you didn't plead the other way had you had you done what you just talked about then we probably wouldn't be here but that's not what you did you brought it all together and the trial court counsel for the defense argues and i'll ask them about it when they're in front of us they argue that in fact that the intent of congress here was to avoid prolonging these kinds of defend that or the case has been removed to the district court under one set of facts as planned in that particular complaint be allowed to amend the complaint to in effect change and by that i mean it in that raises the issue of whether a dismissal with prejudice on a procedural issue is appropriate but it seems to me that's lucy is essentially says and congress has the right to say this i'm out two i guess and get to fifty and your and your in court that does congress why would congress be offended in that circumstance congress didn't say that the general rule noun's by this court by the supreme court that a plaintive is allowed to amend until such time as it's clear that no claim can be stated who's saying that that case contract claims that were asserted in the same complaint but i think the general rule is fairly well established and there's a supreme court case on which the ninth circuit rely forget the exact name but the the rule is that if the plaintiff can state a claim i will have stated backward and a motion to dismiss is appropriate only if the court is convinced that no claim can be stated now if the court's asking the question should the court allow serial amendments and instead of essentially dismissing without prejudice and saying ok well dismissed without prejudice if you can refile in state court in a voice who's the go ahead and do it i say well that and give us that opportunity in this case but it seems to me that if this court is essentially holding their word essentially the statute itself says only if you have an inappropriate or you know more than fifty claims aggregated are the state law claims bar right the second thing is the re is actually the recent  decision and probably pronounce mispronounce name dabba where the court emphasized or or didn't know that it sluice it is not equivalent to a wrist which talks about the weather state law claims are allowed to exist in when the when there are federal claims that mirror it said we will we look at sluice a differently because it's exclusive doesn't say state law claims can't be brought so it's only says you can't put too many together and so there it seems to me that the logical outgrowth of or what not necessarily follows  parties can proceed without going over that unacceptable threshold they should be permitted to and that's exactly what congress set they didn't say that all and maybe they could have maybe they couldn't they didn't say all claims that are based upon deceptive conduct in the international covered securities are barred it was only this aggregation factor and i think that's the reason why plaintiffs should be allowed to proceed if they do not go beyond that i agree what i'm trying to understand and i'll let my coccyx say something here and say that i here's a case that got filed in  the the the last what happened was the that the genesis of both cases arose out of the same basic set offensive replied differently when you went to arizona on  case but but you did that did you not because the first case was not successful i had known you had no role in it so now i know mike mike maybe i should step back in on my client's had i did not purchase before this court and there was so that i mean they're not even they're not even close the similarity is is that the same information is alleged to be the same to to be the deceptive conduct but you know there there is nothing really so can you can you represent to the court that actually the plaintiff's counsel in the one case did not work with your firm in connection with the filing of the arizona case your honor i have to serve them one thing which is i didn't file the initial case so i don't i don't really know based upon i mean i didn't file the first complaint in this case and i can represent this court that except for i think a two minute telephone call i have never spoken with anybody connected with the now  understanding and perhaps believe that counsel here and who did file this case may have talked to you know about the this substantive allegations regarding the deception but i have no personal knowledge of that but there's no over the kate i can represent that the genesis of this case was not the  substituted the end proximately when they when they were disqualified they were disqualified they were disqualified because they had somebody in their firm had represented if they had known that they were misrepresenting us inflating their stock i understand that argument i think there's there's two answers you're right you're wrong one is is that my clients have to be holders of covered securities ok in the in connection with does not wipe out the requirement that they be a holder of a cover to or if they are not a holder of a covered security this slews that doesn't even apply and i've gone through the litany and pointed out there are eight instances for example where you have fraud in the inducement which is not a solution that claimers those the cause of action we have instances where there is no national issue that issue or that ever signed the note that's not to lose the cause of action because you don't have a cover security but then let's go to the to daven itself they have it says in construing in connection with you don't have to have the actual act of the purchase and sale of the covered security to satisfy the in connection requirement but what are the what are the transactions that are holding transactions that are alleged in this complain one there's a series of allegations that the fraud induce them to sleep on their rights with regard to collateral sleeping on your rights with regard to collateral has nothing to do with the purchase and sale of a security that has to do with liquidation of collateral there is one instance i believe where the allegation is that there was a delay in enforcing a guarantee that that was the consequence of the misrepresentations delay in regulate the national securities markets it says a covered security is involved in the national securities market your honor these are garden variety real estate  good morning my name is david for bush i represent the individual defendants in the case i'll be presenting the arguments for the appleby's marilyn's first as dad it dramatically simplifies the analysis of this case  compel to conclusion that the judgment below should be affirmed dab it was a case brought by a broker for merrill lynch he claimed that the that merrill lynch is research department had issued biased analyst reports that it had the effect of inflating the stock prices of the companies that they were writing about he said that he alleged the two harms to himself and to a class of other fellow brokers one that they allegedly held on to chairs that were recommended by the analysts and secondly that when the customers of merrill lynch who he was working with discovered that there had been this biased research that they took their business elsewhere and he lost manipulation of stock prices unquestionably qualifies i love the word unquestionably that is that the this is the identical situation to what was play in this complaint the allegation was that  thought to influence the stock price of a publicly traded company quintessentially the types of communications that are relied upon in federal securities fraud actions that are subject to the p supposedly brought on behalf of lenders to saxon you know there's a lot i mean i'm not going to get into what i think are some of the factual inaccuracies in the allegations but what was alleged was that these people who were lenders to saxton but what is strange exclusively on the f c c filings again you know with the purpose and the fact of informing the public shareholders and the and the earnings before so this is a case of the on all fours with d complaint you perhaps listen to the colloquy i had with your opposing counsel about that issue there are of course someone circuit a circuit cases circuit but the district court cases that have permitted in connection with the purchase or sale of a security and are equally subject to dismissal under sluice up however to answer your question the the the case lot suggests that once a case is properly so an amendment that would be designed to un undo the preemptive effect of the move first action would be inappropriate now the amendment that the district court offered the opportunity to make was not one that we necessarily would have taken away federal court jurisdiction the district court did not give a lot of explanation but in its order it said in the last sentence of the order denying the motion to violation of federal securities laws there had been a lot of discussion about the court actually concluded that the way they played it that that these loan participation interest were securities and so it might be possible if they wanted to and they thought they could to allege a cause of action under the federal securities laws they chose not to do that they chose to go in the opposite direction there and then the complaint says time and time again this is not an action under the federal securities laws we do not want to bring an action under the federal securities laws this action is limited to state law claims only now i thought i heard mr lewis our say something surprising when he was addressing this time and so i was practicing when the reform act was adopted up until that time although you know all the shareholder class actions were filed in federal court it was almost unheard of to have a shareholder securities class action f court after the reform act raised the standard for pleading particularly scienter all the sudden there was a rush to the state courthouses and class actions were being filed over and over again in state courts particular here in federal court i think they wanted they understood however that there were traditionally many fraud actions that were not right as class actions where there might be a pretty between the parties let's take the example of a bank let's say that the bank relies upon a number of things but one of the things the banker lies upon is the f c c fines and i know banks ask for that kind of information when they're extending when they're extending a loan to a public company they look at it they make the loan and they later discovered that there was something false in the f c c filing that they relied upon of making the loan that bank might want to sue not only for breach of contract but for fraud in state court salusa permits to act because it's not a class act salusa wanted to permit kind of the traditional state law of remedies to you know to to continue in the non class action context you know however i mean we can't just think about what congress intended we also have to think about what the congress write and you know that the threshold is very clear you know it's fifty plaintiffs here we had five hundred ok we were ten times over the threshold there was no there's never been any suggestion by mr was are that he wants to you know break it up numerosity requirements were met i mean you know a group of lawsuits if they're all kind of coordinated would would would you have to aggregate the number of plaintiffs together ok but let's say just thirty five people decided to go into state court and fil action against anybody they wanted to there's no way that would be covered by sluicing and it wouldn't matter what they were alleging what kind of fraud and whether or not it was something that affected the the publicly traded securities because they would be below the numerosity level coincide with aig securities transaction whether by plaintiffs or someone else that's what at one twenty six supreme court fifteen thirteen again part of the javits claim even whether or not babbitt or any of his class members traded in that market never sue for fraud in the inducement that decision is wrong for two reasons one of the wage is that for a cover to security and to exist it has to exist at the time of the misrepresentation most of the claims here  if the court had dismissed without prejudice my concern is that some court down the road may find that the dismissal with prejudiced in this case was a dismissal on the merits rather than a procedural dism and i don't know i'm not going to play i'm not trying to play hide the ball and we're not if this case had been dismissed without prejudice under arizona staved saving statute twelve five hundred four i would have six months on seven cases that would never come within salusa to refile so i mean the reality is your honor solution is a is an argument again as it is  something that prevent comparison between the divide a complaint send your complain i know what you said before but i just want to be sure what you understand he alleged that there were dozens of allegations regarding the alleged fraud that were incorporated into this complaint can you represent to the court your knowledge as to whether that is true and where did those where those come from did you get them from somewhere arizona action and i just i just took over on the other hand i'm understanding that your opposing counsel suggested that the charging allegations at least with respect to the fraud are identical in dozens of paragraphs you're i think that may very well be true but yeah but all and all i guess i i thought i was trying to do the question i didn't mean to mislead the court well i think what happened is counsel got ahold of the complaint use that as a starter or the basis if you will for you know that he just pick it up out of the fine lawyer was it given to him by counsel it is handled in the vatican to your knowledge think if i'm i think the correct answer is your honor that they some of the plaintiffs were aware of case and had gotten the complaint either from counsel because of the fact that you know they were involved with the sax the matter or they picked it up in some way was and it was the newspaper so i think that you know i think that if if the courts concerned about the chain of transmission i think that is it but you know i want to concerned about is this you know congress was trying to remedy a particular problem and at least to this judge it makes some difference if what you've got is a hide the ball deal where you have different elections for different jurisdictions see what you can make work what i understood you to say originally was no there's no way and this is this is a whole separate deal i'm understanding now that one way or another the nevada action and certainly some of its allegations are incorporated verbatim apparently in dozens of paragraphs i  think i don't i guess i'm not explaining the difference correctly you're on i didn't mean to represent that there weren't parallel allegations or similar allegations but i meant to say i thought i said was that the circumstance pointers in this case are not the point of going in the vatican i understand that and that their claims are based upon transactions which are totally separate from transactions that were case and it's my understanding of salusa that the it's the transactions that are key not the deceptive conduct that is