number one the district court applied the wrong standard for market officials city number two the district court ignored evidence that regardless of whether the market was efficient these plaintiffs themselves did not rely on the integrity the claims were based on trading in an inefficient or a market that did not reflect the accurate value that therefore that plan simply can approve an efficient market in this case is that correct well known number two that is correct your honor with respect to market fish and c we do show or we do argue that the statements by plaintiffs themselves that the market fish and that they were looking for an informational advantage within the markets in which t v i traded shows that the market was not efficient that is correct but also a corollary to that your honor is even if the court were to affirm that the market was efficient these plaintiffs there's evidence in the record that these plaintiffs were trading in securities that they believe were incorrectly priced they were not relying on the integrity of the  so and judge davis did not address that issue i understand isn't there and maybe we'll come back to your first question but it works for that as well are we talking about informational between the types of fish and one should be analyzing at the rule twenty three stage classification i think with with respect to whether or not the market was a fis issue is informational efficiency whether or not it was efficient but with respect to the second issue that i point to which is these plaintiffs and whether they were lying on the integrity of the market it doesn't matter matter whether they thought there was informational if they don't let me ask you on that let's assume you're right these these lead plaintiffs may have been trading for other reasons but does that make them an adequate to represent a class that would not be trading for those other reasons well the issues they represent a class i believe no and that's sounds like a twenty three a issue does it not to pick ality well no actually of the of the people that the ordinary people in the class now actually it is a rebuttal to the argument again i'm making this argument with respect to what these plaintiffs did in the event that the court were to affirm that there is an efficient market i then have the can do it at the class certifications and whether you have to wait until later to do that and we believe exactly we believe that it should be done at the class certification stage should be a rigorous analysis of all the elements necessary for for twenty three certification i mean it is right just just sort of the layout of the big picture almost seems to make when you first look at this from ten thousand feet i guess that you're asking us the quote rigorous analysis and this is sort of the maybe the next case after hydrogen peroxide which my buddy over here wrote how far do you dig into the m or to dig into the merits somewhat but do you go as far as you're suggesting and much as i read hydrogen peroxide and we can talk to the author here but i don't think you go in quite the merits as far as you're suggesting it almost seems to me again big picture that what you're suggesting is the court didn't buy what you were the evidence you were putting out the expert you were putting forth and i guess my question is that the rule twenty three stage do we go any further than that is it really just a clearly erroneous standard for what if now we're talking about whether or not the market was efficient as opposed to what these plaintiffs did or didn't rely on when the issue of whether or not the market was efficient the issue here is that the district court applied the wrong standard that's not your first point absolutely that what judge davis did was  immediate we believe means if you look at the literature and look at the case law means sometimes five ten minutes at least within one trading day and i think it merck we didn't we didn't say that doesn't resign will take is it can be you know shortly thereafter there are examples in the record where the reaction wasn't until four days later my guess is if this court asked mr garner tonight to have an immediate conference and i saw get back in four days you'd say that's not immediate so the third rests on the assumption that there is a nearly perfect market information and that the market price reacts to and reflects available information well if you look at what the lower court did the lower court recognized this and the lower court said that yes theoretically in a perfectly efficient market there should be no significant price movement without some identifiable news event unfortunately the court then went on to just simply tally factors and looked at the price reaction to news with respect to d v r and said well fifty nine percent of the time d v r reacts to news forty one percent of the reactions no identifiable news whatsoever and the lower court says this suggests a relatively efficient market getting back to your question about how deep you have to delve while i believe in hydrogen peroxide there was an issue of whether or not a threshold showing is enough this court said no threshold not enough here suggests that it's relatively efficient seems to me to be some type of at most a threshold showing and this court said that the requirements rule twenty three must be met not just supported by some evidence let's look at this this is what the court did in finding fifty nine percent reaction good enough or suggesting efficiency no cite any legal authority cited two studies that didn't analyze market efficiency didn't perform a cause and effect analysis didn't and those who study is inefficient market is what norm is normally a factual determination is it not well it was the market efficient with respect to ultimately it is the question here is what was the standard and what this judge what judge davis did was he took an amalgam of factors from a variety of district courts and basically just did a tally and said well in my view most of them support would have thought that hayes did adopt them but in any event hayes was on a motion to dismiss and the issue is not whether or not they've caught you look at these factors but through what prism what what lens should the court look at these factors that look to look at the factors of the lens of peel and work that there should be an immediate price reaction to news and then the stock price should reflect news and to say that fifty nine percent is nearly perfect i mean can you imagine if if scott francey said ladies and gentleman what how days just pitched a nearly perfect game he got out two out of every three batters he faced in what world is that nearly perfect so we take issue is back in the fifty's a pretty well again i mean if my kids were to come home of the fifty nine on a test i would say congratulations on a you've got a nearly perfect score you don't you don't need the immediate standard though to prevailing your argument to you and it doesn't have to be almost instantaneous does not have to be almost instantaneous we have we have cited a whole series of corruption cases and and articles which talk about the timing for that but there has to be some reflection of news in the stock price and that just didn't happen here or only happened fifty nine percent of the time with respect to last causation the court made and admittedly made no effort to look at last causation because that's not the law of the circuit is that the reason the court and delve into the well i don't believe the circuit has addressed that issue head on their two circuits that have the circuit in the second circuit understand the fifth circuit in austria the second circuit in solomon and you're asking this court to essentially adopt as i understand i the oster standard and if i heard your earlier argument correctly you want to front load the reliance and the loss of causation determination tree certification is i correct satisfy what you want well actually it really doesn't matter for purposes of this argument because under solomon what the court said was well the law was not clear at the time of certification because what some of those shifts to the defen contend as we as we put in the papers and in fact we showed there's evidence that there is not lost causation as to this entire class but in any event for purposes of this appeal it doesn't matter whether you go with oscar or solomon in terms of having to have a a last causation analysis because the defendants will get an opportunity on remand to present that evidence because the law solomon i believe came out while this rule twenty three was being briefed oscar came out while class was being briefed and i  presumptions here and the question is whether they this is a quote sort of typical securities case it's not like the newton case and i understand you say it's a typical because the efficiency market efficiency argument you have but take us to your arguments on reliance and then back with with respect to the plaintiffs yes with respect to the plaintiff's argument with respect reliance it goes along these lines that if the court were to find that the market for stock and bonds were efficient plaintiffs themselves did not rely on the integrity of the market in general in which d v i was trading and an outsider information well even that even if it's we say because of insider information but in addition to that what they tell what they tout is their ability to get information they say that these markets are informationally inefficient that's their edge says the markets in general and they talk about how they look for stocks that are incorrectly priced and then as to d v r itself they contacted the c e o they contacted you still haven't shown that you didn't defraud the market which includes the rest of the of the class well this is what we're talking about is the fraud on the market presumption of reliance so that what they are doing is that the plaintiffs are using the question i'm asking you let's assume that the lead plaintiffs for whatever reason are not a good fit but if there is a presumption of reliance in light of the basic decision of one thousand nine hundred eight why can't there still be a fraud on the market and those who are the ordinary folks ordinary buyers in that market well if to take the premise of your of your hypothetical which is if there were an efficient market here that just affords the plaintiff that is a piece of affording the plaintiff a fraud in the market presumption of reliance we have the opportunity to rebut that it right and you've had it it seems like what you're trying to do is ok there's a presumption but it's a rebuttable presumption and you're trying to rebut it by saying that the lead plaintiffs here did not rely on on this information but my my question is but what if the rest of the class did the market did this that mean it would seem that we can still go forward with a class of the fraud on the market presumption is that the plaintiffs rely and if we've rebutted that and all i'm saying is i'm taking plaintiff's as a big universe not necessarily to assume your exact there's no one else before the court there's only plainest before the that the market were efficient plaintiffs themselves did not rely on that lower court did not address the evidence of reliance and then in addition the lower court failed to require that they have to prove last causation at the class or vacation stage thank you thank you very much  analysis to determine whether or not the whites accusations that we have trade in fundamental value in an inefficient markets was was credible the record a supports that there was absolutely no support for that accusation in the wants principle brief the way it states that we recognize that several cases of hell that sophisticated institutional investors can still reap the benefits of of presume reliance on the market price even when they claim that such investors routinely do you believe to achieve above market returns accurately price well exactly all investors trade in securities because they believe that the price is either going to go up or down this was just the most sort of statement that was made by by the they never said that they traded information in official markets what they are indicating is that they trade and securities given their work experience and hard work to try to figure out which direction  trading they made these false accusations about our clients trading on inside information judge davis went through a very very rigorous analysis of all the public information that showed that a point to make is that all markets are at some level inefficient economic literature and the courts agree that there is no perfectly efficient market and so out what's direction i know i'm a prospective basis going forward in the future what that direction is going to take let me jump ahead understanding that basic hasn't been adopted by this circuit the point seems to be if and an extended discovery and expend potentially millions of dollars in a case that may later be revisited the certification may later be revisited it seemed  those cases were an attempt to front load the loss causation element at least let's take solomon for example why isn't that a better way  that's a softball your honor this court has already decided that issue and newton and hydrogen and in both cases has squarely decided that last causation is not report of the class certification stage the only requirement is that last causation is susceptible to class wide treatment and in this case as church work or your you acknowledged or indicated this is a typical securities fraud case it's a case where there's undisputed fraud from the beginning of the class period to the end so the entire class period should remain intact there's understood economic loss in this case we don't dispute that investors lost millions and millions of dollars in  let's come at it from a different point of view but if we look at the scope of the of the class and consider the enter now traders people that sold before may twentieth two thousand and three district judge included all of those in the class under duress it would appear that there is no loss for those individuals why should they be in the class and how does why should a district court either through the terminations on the scope of the class or perhaps on a consideration of loss causation perhaps under the second circuit model deal with this front doesn't it make a difference in terms of progress of the dynamics of a class action as to whether your potential classes ten thousand or  million or a million and wouldn't it be a good idea to get this worked out in the beginning insofar as you possibly can on the issue of  that issue was addressed by judge davis in the sense that he did a rigorous analysis of the last causation requirement even though he didn't have to delve into the merits of lost causation he actually went ahead and did that  in analyzing the the parties the missions on the cause and effect factor for market efficiency both sides submitted advanced studies which the court quickly found were methodically and  and in this case the court looked at those and found that on seven different occasions d v eyes stock drops and ethically and it did so and in connection with the frauds that are large in this case you know what about what about the people that sold and sell their stock before the first disclosure well the record supports that that losses economic losses which they don't they twenty yes there were disclosures before may twentieth that relate to the fraud and judge davis correctly determined that there were significant drops in and that's a fact in terms of inquiry that gets to the you know whether or not this court should dull ventoux or require district courts to delve into that that happy fact and sense of inquiry of loss causation of position is not does not have to be shown in order for fraud in the market there there are two apply or two different analysis and to to meld the two is that inappropriate and inconsistent with this court's hydrogen and new decisions rigorously debated before the district court right now in summary judgment judge davis has a tremendous amount of briefs dobber motions adventurous showings and addressing that very issue as well as other issues on lost causation there's no there's no reason for this court to prejudge that ruling and is possibly one the record in this case  been too at least two district court opinions in the southern district of new york that say that solomon rejects oscar there's not a a front loading or even a back loading on the rebuttal side there was no act or opportunity so that was a limited ruling and in and maybe even said that they're allowing a very limited opportunity for the district court to see whether or not those investors relied on the market it's a part of the difference adopted the start of a market there ie in which basic heavily relied on i was correct that you know it's an it's a it's a it's a theory that that operates and works just fine in these types of securities fraud cases allows the defendants to go back and rebut the last causation presumption that there's no language in at nationally there's language against that correct and the lawyer doesn't identify any factual finding that judge davis made that that was erroneous he went through every single factor  and it was a landslide for plaintiffs in this case this was a case where southern of eight factors favor market efficiency on the stock and seven of seven favor market efficiency on the senior notes but it wasn't a close call and  they don't raise any factual determination that was made that was clearly erroneous and actually the district court correctly found that on most of the up and most if not all the evidence or issues there was agreement in in the case of the correlation came up with the same result and in this case the parties agreed that the correlation between news events and stock price movements was fifty nine percent now there was counsel criticizes that level as not being high enough that that is twice the amount of the average of stocks listed on the s and p five hundred index if this court were to find that that was insufficient it would also have to find that over half the if not all of the stocks listed on as a p five hundred also traded in fish market and that's on reasonable in addition to the event studies which were found to be the same by all parties the court found that the actual trading volume there is no disagreement now the way tries to cut it up a little bit and say well you shouldn't include this part of the trading volume but there's no they don't provide any support for that they just try to arbitrarily exclude it so that it comes under the one percent hammer factor suggested to your your poker counsel that it looked as if what the court did was they took the camera factors which i thought are his decision especially in that one had adopted them out and came out differently from the way he would want them to come out and it seemed to me as if i said would that indicate that what you're asking for is the reweigh they the analysis or on the conclusions he reached on each of the factors and as the first circuit stated in excel i'm a dot com and probably monica this that's a determination that should gross then there is no reason to re review those on the point that he's making only is that these these lead plaintiffs are different i mean if you follow that through if he's right with respect to others then might you not be in a newton situation where you really are saying what was required here for every plaintiff is an individualized inquiry and therefore it's not susceptible to being not representative of the class and obviously at some point if you're not representative of the class you have to do individual inquiries for everybody you're under a new type situation where it's not the perceptible being a class a proper class well again that's a factual that tries to predict the future price of the market if you if you wonder these investors inadequate you have to if you will some chalk waves through the market because nobody would be deemed to be adequate sounds to some decision is fine in the sense of allowing the court at the class certification stage well this court hasn't and are tamed a case were they  as a matter of law he would not be opposed to our adopting the solomon formulation is that correct well as a matter of law in terms of if you're referring to some and allowing it is that correct not on the merits of lost causation because that takes away from the jury in the fact finder the determination of the fact and sense of determination of whether or not you can prove off causation but to the chief judge question you don't have a problem if the district court delves in to some aspects at least last causation as part of its calculus in making the certification actually in solomon they gave a few examples of what they meant by that and they said you know if the defendants can show that plaintiffs one of brought those securities regardless of knowing  to try to get into the the fact in terms of inquiry as to whether or not the drop is connected to the problem of statements is an inquiry that should not be done at the class certification stage it should wait until but bear with me if you have a situation where you you have evidence that everybody sold in advance of the disclosure everybody they're all out and that's  causation to some degree which is what i think may stand for planetary basis but in terms of that question that specific question of whether or not people that soul before a certain date know that inquiry is actually one that creates it's going to it's going to be decided as a on a class basis whether or not those people have damages in a case and in this case the record doesn't support the to show in other cases it's a bit more difficult and you need to delve into some of the facts in order for for you to prove it this quarter's has indicated in at least one or two decisions proven for those who got out before the disclosure i think the question is to what extent can you assume that  the market has incorporated that information if the information isn't out doesn't that in effect make the rebuttal easier for the other side well that was assuming you even do you still have a presumption  that there's been a negative effect on the market if the those people got out before the disclosure does it make sense well if the fifth of a fact pattern where people got out that was the first disclosure well then they don't have any evidence of that they don't have any expert opinion on that you just make that that claim without any basis for it and the record clearly shows no provide this court with a cite to the event studies and that's a fourteen forty three to fifty to fifty two which is a september two thousand and two period where there were substantial losses in d  specific news that indicated there was problems here and whether or not there was a connection between that that those disclosures in the drop in the fraud is there's a intensely fact issue that should be oster has some merit and they have all  nick has some narrow application it would be limited to the short selling situation where a person presumably would actually want to see a fraud in the company because there are songs short in the hope and that the price is going to go down and there's some case law that suggest if the person  didn't rely on the market because they would of and hundreds of the transaction knowing of the the fraud then that could be a basis for rebuttal and in short sellers  you would you could say what of salt sold short even if they knew that the price was inflated but i think the the decisions after sl are in terms of criticizing the holding in the sense that both buyers and sellers you know should be included or not excluded because they both reasonably rely on market information is the better wall there were some questions about the standard of review with respect our argument that the court wide wrong stand is on on market officials see and mr karr nuf in discussion with with with your honor discussed whether or not they were asking for a real weighing we're not asking for way our position is that judge davis of applied the wrong standard what is the standard he applied it looked at an amalgam of factors some of which are presumptions themselves and therefore relied on presumptions to find a presumption and he didn't look at them through the lens of peel and merck your honor judge jones you would ask me about the issue  of immediate and there is case law directly on point on that issue as to what immediate is the poly medical case which we cite talks about same day same day trading and that case also polyphonic also talks about the only direct evidence of market efficiency or market inefficiency which is auto correlation and again here judge davis found that there was auto correlation predictability that what your favor yes and and here's the analysis that that that the district court found so again in impala medica there was a filing of an s three there was thirty one percent on the volume there were seven analysts one hundred ninety three market makers in the courts that hold on there's autocorrelation therefore the market's not efficient well judge davis said yes t v i had significant autocorrelation that weighs against the finding of efficiency nevertheless we conclude the d v r i strayed in an official market nevertheless and in our view is not rigorous analysis there's again no timing to to the standard in this court as i don't correlation is that a trumping factor r's well and if they do then the stock is not trading in an efficient market that's unrebutted our evidence on that was on rebutted their expert just said it couldn't conclude are we did put an expert testimony in the judge found that there was no correlation with respect to d v r stock and i mentioned that the judge used presumptions to find presumptions but then he flips with respect to the bonds so on the stock he says well it's rays of new york stock exchange i find that favors but then on the bonds he volume in on the stock he says well one percent i'm going to find there's a presumption here but when we look at the bonds forty percent of the days there's no training at all and again he discounts that so if you use know if this court is going to say it's ok to apply presumptions there was clear error here they weren't applied correctly by judge davis with respect islamic judge stricker that that you mentioned base excited does not like and cited for the proposition that reliance is presumed only where it's logical well here it is not logical mr carr nouther mentioned that his clients didn't trade in informationally inefficient markets but we presented evidence and there is i record that they did exactly that that they traded in markets where information is not officially disseminated it's not logical to presume reliance in this situation and with respect to  lost causation i believe mr carney mentioned both the hydrogen case and the newton case in saying that loss causation is not required a class certification well with respect to the  hydrogen case first in hydrogen the defendant sought to rebut whether its conduct had an anti competitive impact and so the court had actually decide if such impact existed here we presented evidence that they're in and out traitors in fact your honor as has as pointed out that those in the traitors wouldn't have been able to prove last causation and it's interesting actually this may twenty date goes out there if you look at the the briefing in the date may actually be august thirteenth based on what the plaintiffs say and in fact what judge davis has been any event if that they've used one of the name plaintiffs is an in and out trader with respect to with respect to los causation and in the newton case i know just record you're the author of that the new case with newton did not involve far the market or loss causation the issue there that i don't believe the court reached the issue of los plaintiff the first record disclosure if you look at footnote thirteen of judge davis is opinion talks about i believe august thirteenth in which right in footnote thirteen the full scope of the guy's financial troubles weren't revealed until after the final purchase at no time prior to august thirteen the bankruptcy announcement d v i publicly identify any misrepresentations or accounting improprieties  but with respect to what the what the date ultimately is for the purposes of this appeal i believe the issue is should judge davis have delved into was he completely punted on the issue and said he's it's too fact intensive he's not going to look at it he didn't find that there's was causation as the people before may twenty or august thirteenth he didn't find make any findings with respect to loss causation and our position as i as i mentioned in my in my primary argument is that last causation like you are thank you very much