tribune media mr entwistle good morning your honor and thank you very much for your time this morning the three of you i'd also like just to take a minute of my time we reside reserve five minutes by the way but i'd like to take  minute just to think your staff frank and matt in particular did a great job with the session remotely and getting us all on board this morning and it's no small feat having having been in probably a one hundred of these arguments since march this is work really seamlessly and as an advocate i really appreciate it so a special thanks to them this is a very unique temby case i know this is a very experienced panel you've seen a lot of ten b claims it is rare that we have a case where all of the underlying conduct from the plaintiff's stamp point is admitted effectively by  tribune defendants in this case there were verified pleading that was filed in the delaware a chance report in that pleading among other things they knowledge that virtually from the moment the merger agreement was sign sinclair which was the counter party to that transaction repeatedly and willfully breached its contractual obligations in spectacular fashion and the amended complaint here in this case is with its descriptions of each and all of those various actions and in fact as we as you have before you in the record as part of the supplemental appendix put in by the  copy of the verify complaint that was filed in the chancery court which goes on in excruciating detail to lay out exactly what happened during the course of this transaction as a practical matter the district court ignored all of those facts instead it assumed wrongly that the statements that were being made by the tribune defendants were simply statements of past actions in other words statements historically of what was said in the merger agreement as opposed to current statements about what was happening in the course of the merger transaction as a practical matter the language that was quoted about agree about sinclair agreeing to take certain steps agreeing to divestitures agreeing to do all of those things was connection with the may th twenty eight hundred dollars thank you now what's telling about that is in each case and especially in the st two cases that was also coupled with the current statement that the merger was essentially proceeding on track in the st case in the in the prospectus that in fact the merger was going to close in the st quarter now keep in mind those statements were made at the end of november and seventeen what's what we know that that tribune knew at that time was that besides the statement i mentioned a minute ago that sinclair had been essentially getting at just now because i think at least to my mind and you can correct me if i'm mistaken this gets to the heart of the issue for me on the ten b claim against tribune where in your complaint do you allege that tribune knew about the relationship entanglements that became the big problem with the f c c first sinclair  and the reason i'm asking that is because i'm trying to figure out if you're of the view and i think you are that that those entanglements had become known to tribune before the end of the candidates that you might point to but i mean or you know paragraphs in the amended complaint but i'm interested if you can point us to sift a clue to where that allegation is that i think you have and you're welcome to persuade me otherwise is that i don't think you're specific enough as to time ok the when part of it so take one  tribune warns sinclair they're proposing these related party sales was incompatible with using best efforts top team prompt regulatory approval you know it's cetera et cetera as tribune expect expected one thirty five the f c c staff expressed frustration ok when exactly tribune knew that in my mind is in him is important on the sufficiency of the pleading given the legal standard that you're under and so the that there's no there's no indication of when tribune came into that knowledge is it before or after that march one two thousand eight hundred and ten k and the reason i the reason that i'm asking that question and i'm pressing you for some detail is if i understand the timeline correctly sinclair is amending its f c c i don't know what they're called submissions or applications you know along the way in other words time is not static here the events are not static times moving and so sort of a continuum as we go through that process and really it as a practical matter you know those are the principal paragraphs you know you're absolutely right that there's a  time line that runs through this and as we as we look at this you know where we have both our complaint and of course we've got the references in our complaint to the complaint that tribune filed  c are sort of all manifest as as early as you know all through all through that early part of february we also know that  process then following that in the beginning of february of that year we have a series of issues day the at the eps the b o j had in fact rejected the valentine's day proposals that have been made in that regard and that these negotiations were all ongoing and it isn't but sinclair visa v the f c c is not so much the question i think what you're saying is it may be fair that there's a lot going on there's a february th submission there's a february th submission all that i in my mind and again i invite you to persuade me that i'm mistaken what matters is what tribune you know about that i agree with you your honor and you know what we do know is is that throughout this entire process tribune was participating in the entire process along with along with sinclair including before the f and that tribune had in fact warned sinclair on numerous occasions in that same time period that pre march time period that these what if the  contingent divestiture trust that it was proposing wouldn't fly it was completely an orthodox it had also made clear to them that these transactions that it was proposing with joint  sales agreements and related complications were all a part of the same problem and were in effect going to be viewed as sham transactions and then of course the f c c responded in kind again during that same period before march and then that takes on a whole new life between march and the may ten disclosure in the tank to where the f rejects a whole series of proposals that were that were made both in terms of the contingent divestiture trust and in connection with fees sham transactions now it is in fact it does if you only look at the at the chancery for comply there is a statement in there by tribune that says that at some point in time it was surprised by the fact that sinclair had made certain misrepresentations now while those misrepresentations because certainly the reference to the administrative judge the none of that change the structure that wouldn't fly and of course the f c c told them the same thing and that the related party sales which were part of the same process would also not fly and that the f c c and of course the d o j as well wouldn't accept these joint sales and related agreements and so all of that is is knowledge the tribune has throughout and of course the complaint as a number of paragraphs that talk about the fact the tribune participated in all of these proceedings before both the f c c and the d o j and the point is is that i think we've we've really pled this sort of dual history as we go through the process and it's very clear that in connection with this process that tribune had an obligation to speak to speak truthfully about this spectacular violation by sinclair on an ongoing basis both before the d o j and the f c c and there is no question that when we finally get to have the truth begin to emerge in july when chairman pi finally speaks about the issues as a bridge as they relate to the f c c that we also have had you know the same conduct that has happened throughout with regard to the d o j going all the way back to the beginning of the process and certainly preceding the nov th prospectus and it and that conduct is detail keeping in mind that not only did they know that that tribune was not going forward with rather sinclair wasn't going forward before the f c c during that period to provide any of the usual regulatory pieces they also of course had all of the issues with the d o j better detail than the complaint then and in aren't those weren't the d o j issues though effectively were from tribunes perspective here i guess i guess the better way to put it is where do you plead to the contrary that sinclair and the justice department have reached an agreement in principle by approximately mid february of eighteen right now there's no a question there was a lot of back and forth and tribune registered its agreement knows a lot or is that you point to i don't there's no doubt you're right about that but with respect to the justice department it sure seems to me from reading the pleading that the fairest inference is that this was wrapped up by the middle of february and then you know you're on it they had to turn a deaf absolutely so that's absolutely not not not the case in the sense that that conclusion which is an argument that was picked up on by the district court actually came out of you know information that was in the chancery court come that was put into the mix by the defendants which is fine but we know from paragraph one hundred and two of that chancery court complaint specifically that the that that paragraph carefully it actually rejected that proposal and there were ongoing discussions that were in fact never resolved even in april when there was a term sheet agreed to tentatively with the with sinclair and the justice department they continued to negotiate divestitures and in particular the st louis divestiture was ultimately rejected and no agreement was ever reach d but certainly by march all that you had was a proposal that was in fact rejected and sinclair and tribune itself acknowledges that ninety two dollars that the discussions were ongoing it didn't end as they say the process and it didn't end the disputation as they call it in that paragraph and so the district court was simply wrong when it reached that conclusion i'd also note the paragraph ninety two  complaint also makes a clear one that's the day that they misread make further misrepresentations to the f c c but it does note that they did that even though the justice undisclosed entanglements that caused concern with the d o j sinclair even as he was proposing these sales would continue to control the stations it was supposedly selling and the delaware complaint on which plaintiffs acknowledged their their complaint is entirely based on makes clear that those entanglements did not come to light until the public comment period the public comment period was ma supplemental appendix page forty nine dollars it talks about the proposed divestitures and the end it says as soon became clear however sinclair's close association with cunningham raised the prospect that it would nonetheless be able to yes let me let me just follow up on on your points there so how do you respond to mr and whistle that the questions i was asking for because it is pretty plain from the overall complaint that it is alleged that tribune was well aware that f c c approval was necessary for this merger to close and tribune was well aware of you know quite a bit of the back and forth that was going on between sinclair and the f c c and that's enough well i think i think the problem implications that are completely separate so there's for example the divestiture the contingent divestiture trust this is the idea that sinclair rather than specifying which stations it's going to sell is going to put something like fifty or more stations into a trust it's going to try to find the best price for different stations and it'll decide later which one it's going to sell and then it'll take back to us that tribune warren was objectionable it also proposed sales to related parties along with you know separate side agreements whereby sinclair we continue to provide programming advertisement and other services to the station ship tribune also warned sinclair against doing that not because there's necessarily anything wrong with it sinclair has sold plenty of stations to cunningham in the past but because it invites extra scrutiny from the that it said what you propose clean divestitures to rd parties sinclair refused to do that they want to head with their related party sales but there's nothing suggesting anywhere in the american plate or certainly in the delaware chairman executive chairman of sinclair time so you know in that tribune you know word against that it's going to very scrutiny we're trying to you know you agree to do everything to get  this merger closed as soon as practicable but what came to later in the public comment period and that's again it's clear in the delaware complaint and in the the h b o is that sole sold stations to kind of him in the past the difference was that earlier in two thousand and eighteen the voting shares of cunningham had been sold at a below market price to a long in spilled over into the f c c period in other words it's not proper to read the complaint as you know there there had been effectively a bookmark put on the d o j issues they were just waiting for the f c c matters to wrap up thank you i do want to address that as well i appreciate that so what's going on is there is a from mid december through mid february there's a back and forth between sinclair and the  it's also letters back and forth between tribune and sinclair were tribune a searching sinclair to accept the d o j as divestiture demands if you look at the delaware complaint lays out this timeline on february so we're getting close and this is progress eighty five through ninety one really we just describing the delaware complaint supplemental appendix thirty to forty day had been demanding divest in old ten market areas at the last minute said ok we'll leave open greensboro this is part of eighty nine was open to letting sinker keep all the stations in greensboro and again tentatively allowing sinclair to divest the c w stations st louis rather than a big four station on target of ninety one you know they're threatened with a lawsuit you know the next day if they don't station in greensboro and we're not satisfied with the c w in st louis so there's some continued you know just gushing about those two market areas and but you know i think it's very clear from the delaware complaint that they had an agreement in principle where they were going to think tribune was going to file a lawsuit it didn't file it they you know there was some discussion of those two market areas  so a little time left i guess let me address last causation as well because it's something that has not been raised yet but i think you know it's pretty clear that there's a big problem with  causation the there's there needs to be complete loss goes ation a direct causal connection between the misrepresentations and he alleged economic loss here there's a connection is clearly missing and the alleged misrepresentations relate to a failure to disclose sinclair's conduct with the d o j and the alleged corrective disclosure is f c c chairman  november offering materials which are the sole basis of the securities act lanes it's impossible that there could have been lost those asian because the you know the alleged corrective information didn't  december for twenty seven to be resold approximately half of its holdings of tribune stock in the secondary offering at issue in the claim plaintiffs asserted a section twenty big a claim under the exchange act was which as the and here st and foremost the district court correctly held d that plaintiffs fail to plead that oak tree was in possession of material nonpublic information and the consolidated amended complaint i would s is a classic must have known pleading on on that score there are no specific facts whatsoever going to where what when of the trees suppose that knowledge there pleading higginbotham case these kind must have known allegations totally unburdened by any specific facts were properly dismissed and should be affirmed the closest that the plaintiffs that access to information cannot be equated to knowledge of information without specific allegations establishing knowledge indeed the district court concluded correctly that the suppose it material nonpublic information did not even exist at the time of the oak tree offering according to plaintiff's own allegations and the delaware complaint upon which they rely the regulatory process with  told december th after the oak tree offering was completed and the rubber didn't really hit the road as the question and colloquy with mr entwistle and mr greenfield makes clear until long after the oak tree offering was completed any fair reading of it factual allegations of the complaint is that the alleged obstructionist olivia lim confrontational conduct did not occur until two thousand and eighteen and as such honor setting aside that the complaint is not believe that establishing tree had none of the information about the status of the merger the complaint the information the complaint alleges was available to be had was not material nonpublic information as a matter of law second your honour's the complaint does not plead that oak tree is a duty to attribute a necessary element of any insider trading clinton there are of course multiple theories of insider of judy rather that a plaintiff may pursue in a insider trading case here the plaintiff elected to pursue the so called classical theory of insider trading which applies to corporate insiders but such a cl possible definition of the term it was a sixteen percent shareholder at the time of sale it no longer had a board representative not that being a single or representative alone insider makes a pla no authority anywhere for the proposition that a party situated like oaktree in this case constitutes a corporate insider such that a claim may be asserted under the classical theory of insider trading there is no on the basis or use requirement under twenty eight dollars all that's required is that you possess material nonpublic information and that's clearly pled in the complaint and that's all that is required the district court imposed any number of new standards that were advocated by the defendants it simply adopted those standards none of which are in the statute or in the law let me turn back to judge s were aware that some player was making the proposal and then of course at one hundred and thirty four dollars which we had been discussing the tribune warned sinclair that proposing these related party cells was incompatible with its obligations under the merger and the tribune defendants were fully aware that these aggressive proposals would slow or altogether stop the process and review and it's critical that we know that the tribune was warning sinclair about using the related party sales and the chancery complaint that want to four want to five and one of six in particular described this in more detail but i know that one of the six of these facts including the fader himself was had no experience whatsoever in the marketplace and that there were these joint kind of threat whistle throughout your honour's thank you very much for your time it's very much appreciate