that the proposed alternatives to continued investment would do more harm than good to the plant as a whole and did it require plaintiffs to address that standard to make that showing on the face of the complaint to avoid dismiss we submit that the answer to those questions is yes that is precisely what the plain language of the do not offer decision says and while the plaintiffs continue to quibble with the plain meaning of that language we don't have to guess because complaint that complaint alleges that the defendants had breached their fiduciary duties by failing to pursue the same alternatives that are at issue in this case a public disclosure of negative inside information or halting further purchases of company stock on the basis of that inside knowledge the ninth circuit says sustain that complaint finding that those alternatives would not result in undue harm the plant participants supreme court of course summarily reversed the supreme court made clear that simply identifying those alternatives was not good enough even where a parallel securities fraud case against the same defendants had withstood a motion to dismiss rather the court reiterated that under dieudonne hoffer even in that context of a sustained securities fraud case the plaintiffs had to meet the more harm than good standard they had to allege alternatives that a prudent for do sherry could not have concluded would do more harm than good and they had to do so in the face of the complaint we submit that once it's the chairman that the supreme court met what is said and do in the house for the outcome of this appeal should be clear the district court decision should be reversed as this threshold matter judge ellison simply fail to apply the proper stand there and permitting plaintiffs to amend their complaint allowing the case to proceed he never determined that the complaint was a bully allege that a prudent for do sherry could not have concluded that the plaintiffs proposed alternatives would do more harm than good to the plan as a whole rather he addressed an entirely different question a question which he did not resolve he allowed the complaint to proceed because in his words he could not determine on the basis of the pleadings alone that no prudent for do sherry would have concluded that the plaintiff's proposed alternatives would do more good than harm that's not the test that a prudent fiduciary might have viewed the proposed alternatives beneficial as resulting in more good than harm is simply not enough student hoffer established a far more stringent standard we agree with you that the district court applied the wrong standard   because it would have kept retirees from pulling their money out of it in frozen you couldn't sell the stock in which some of them are living off of you also seem to be saying that the drop in that stock price that would've likely immediately occurred  would have harmed the all the investment that was already in the fund which which of these is and all of them which of these do you see me saying different things which are the real harms that i think the real focus has to be as a supreme court said on what impact would the alternatives have on the existing stock held by the plan would they cause a can comment a drop in the value of that stock because clearly what here because they really have two alternatives their alternative one is making a market disclosure and that really wasn't their principal alternative below their principal alternative was cutting off any future purchases and they did and they said they should do that without making the market disclosure that you could do it secretly without telling the participants themselves and without telling the market as a whole and secondly they suggested that while this secret well the basis for these suspension was secret that the existing shareholders exist and plan participants could continue to sell their stock at the inflated price i think they were focusing on those that factor because they recognize that if there is a market scotia of the adverse negative information it will necessarily cause the the stock the existing block of stock held by the plant to fall in value and that was a very existant market theory that the ninth circuit discussed and amgen and i don't think that was you know we are the supreme court with a set of it that it's going to come out eventually the price is going to go down how do you respond to that i think the supreme court did respond to that issue in the m g m decision number one the ninth circuit essentially infer that really disclosure was always good that it was better to flush out the inflation if you will because that was  that would benefit the plan participants the ninth circuit was right if that was the proper inference that every stock drop complaint would get by the do not offer standard if early disclosure is always that the didn't offer standard means nothing and i would also direct the court's attention to the brief filed by the solicitor general in the duden hall for case itself particularly at pages i believe was twenty eight twenty nine of that  brief where the solicitor general essentially made the argument that early disclosure was always good because you would flush out that inflation you'd get the stock to the right price and you should do that as quickly as good standard because every stock drop case every one and i've done a lot of them over the years has the notion that the stock is artificially inflated and that she would have a duty for do sherry's to the plan this always of it's to stop the plan from acquiring that stock at the artificial price if the supreme court and the solicitor general said that allegation was sufficient to make it into recess stock drop claim supreme court just didn't adopt that standard they could have adopted that standard very easily they said there had to be more and that much more was plausible validations that a prudent for do sherry could not have concluded that the alternatives would do more harm than good but what about one of the alternatives the judge ellison actually rejected the plaintiffs said that the food issues could have increased the liquidity buffer the amount of cash and jealous and said he didn't get into the more harm than good he just as well that would have been violating their their obligations to the plan because there's a five percent women on how much cash you can have in there and they say it actually says you know you can have more than five percent of it that would meet the standard because it wouldn't have these issues of decreasing the stock price growing i don't think that would have had any meaningful impact here but i think judge ellison was certainly correct it seems that the point of the play disposition is that fiduciary should disclose more that here they could fulfill their duties by doing something secretly they would have been changing the nature of the plan investment because  of vestment stated why that equality buffer was in place it was only supposed to be in place as necessary to allow daily trading of the stock but beyond that if the for do sherry's of the plan and they decided when the sell if the if the fiduciary is of this plan had interjected themselves into the process in this fashion and said no more purchases because secretly we have inside knowledge and we think based on the inside now is that we have the plan should invest any further in the stock that would have been a violation of the insider trading rules i think that's the clear implication of what the s e c said  this case they would be taking action they would be interfering in the process based on inside information that's a violation of the rules your honor i see i have time left our point is that if you strip it all the way any of the alternatives they put forward do require a market disclosure of that person but inside information and by definition that disclosure of adverse inside information would cause the stock the fore and this complaint simply has no factual allegations that goes into a comparative analysis and suggest why that why that in evitable the clot in the value of the stock would not have outweighed any prospective benefits that the plan would have had if they were permitted to buy stock at a cheaper price you don't risk reserve the rest of my time for  the motion to dismiss standard and why is that because we allege plausible claims of a breach of producer a duty i think a lot of our discussion today will center around efficient market theory and what happens when there's a disclosure a lot of actually evolved in the employer's stock area since we were here three years ago the much presumption was tossed twenty years of jurisprudence relating that standard was gone and the supreme court in the june hoffer decision struck the presumption of prudence and strongly said there's no presumption in the wrist and with the defendants are trying to argue here with the pellets arguing is that we now are creating a new presumption and judge ellison actually stated in his opinion that defendants reduce for as creating a new presumption a presumption that the alternatives such as freezing the company's stock fund or disclosing insider information would cause more harm than good this is this hypothetical drop in the in the corpus of the fund the plan would lose more as a result of this disclosure and that's based on an inefficient market theory and i think where that's they're going to stop the purchases and they're going to stop the sales there has to be a disclosure there has to be in a case filed that's going to tell the participants why there is a freeze on their company's stock going there is no basis to infer that that's going to cause a drop in the stock of the product price any more than what the market should should cause them to drop the credit will achieve its correct praise there's not going to be an overreaction or an over correction if we take that assumption what will happen is the plan is going to stop purchasing inflated shares of stock the participants are no longer going to be paying too much for their shares of the b p stock fund because the inflation is going to be taken out system very high level executives including mr mckay for example who is the chief of the investment committee high level officer responsible for the gulf of mexico we allege had insider material information that should have been disclosed to the public mr shaw mr du pree same thing we also allege mr hayward was a fiduciary later jealous and rejected our theory and that but he remains a designated officer under the plan so all the players in our case are very high level senior officials with inside material information that should have been discussed in this fact in their investment committee meeting in which they be discussing they should be discussing how do we protect the plan participants that's our job producer is our position is that they have to stop the purchase of inflated shares they have to disclose this harmful information even under the could john extended in the fifth circuit the job of the producer is to protect the plan participants and they know if they don't disclose this information they will be causing harm to the plan participants which very unique about our case is that we also have a plan structure which is actually set up in a way perfectly to provide for this disclosure through the f c c disclosure process and i why is that if you focus on section six point three of the plan the investment committing mr mckay and the disclosure with regard to the material information that's not being disclosed will be provided to the public so this strips away a good part of the defendant's arguments that we have we can't let the third user is just run   and make disclosures by themselves we have to separate schemes of disclosure that's not this case we actually have a plan that is structurally provides for the disclosure of information in a very methodical way and complying with recently ruled in your favor and i read the opinion sort of the district court threw up his hands and said this is my best guess but i have problems with both sides interpretation and he said your view which relies on this sufficient markets theory that it's well it's always better off to get the real market price out there he basically says that would mean the plaintiffs can always get these cases past the pleading stage which is contrary to what the supreme court indicated how do you respond to that with some sort of limiting principle that would still allow the weeding out of these cases and we appreciate that your honor we understand that there's a major focus on how do we stop the meritless cases going through discovery and causing people to spend a lot of money in fighting cases that might not be worth it that's not our case and i think it goes to the unique and circumstances of our case these will be case specific it terminations and here we have unlike j p morgan for example unlike the lehman brothers cases we have insiders on the investment committee with inside material information that should have been disclosed with regard to the safety process systems we also have a circumstance where the materialization of that risk does not incur until two thousand and ten when the deepwater horizon accident occurs there's a three year period so this is a perfect case were factually the early disclosure allegations that we have in the complaint are plausible and makes sense had been hindsight it might have been the better thing but i don't think you can factor the horizon disaster into that you have to look at you know back in two thousand and seven when this decision was made disclose or not disclose a fiduciary at that time could they view it as doing more harm than good not knowing that you know maybe there's a risk of some kind of  o certainty and certainly not something of the magnitude of the spill that let's let's go back into the investment committee meeting and what are they talking about they're talking about disclosing that they're not installing this own mess process  contractor and rigs for example that's not going to club cause a fifty percent drop in the stock at a price that's material inside information jellison has already found that to be material inside information and the market will react in an efficient market way and cause the price to drop to some point and take the inflation out of the stock going forward so the be the early disclosure and there's case law out there that supports the concept that early disclosure is better than l disclosure and it voids it mitigates reputational harm and that's important in this case why not have a number of allegations in a complaint setting forth b p s well known historical background of disasters and accidents and criminal actions and penalties so when they come forward in two thousand and seven and say you know we're going to make things right now we're going to safety over prover profits and we're going install all of these safety systems they don't do it and then they you come out and disclosed to the market by the way we're not we're we're supposed to be on the your messages that we're going to do it but we're not there yet that the disclosure may cause a negative reaction but it's going to only go down the stock would only go down as much as efficient market would cause it to we go to its correct price and instead what happened is participants continue for three years to purchase inflated shares so our facts are very unique it's not morgan case where you have a rogue broker who causes a company to lose six billion dollars and by the time they discover that fact that's over and they're just disclosing that financial regularity or cases it's a safety issue they've knowledge they're not complying with the baker recommendations and they have an opportunity to fix it they can actually issue in a k that will minimize the impact on the stock for the time but they didn't do it with cases why the courts found that they met that standard and i would disagree with the with the peace council with respect to the engine supreme court summary decision sending the case back down and my understanding of that is the amgen underlying complaint was never amended post you know offer to add the doing what they do you have for allegations to it so so i don't think it's really a good comparison i don't think we really have a strong statement from the supreme court as to why they sent it back down other than they have not had a chance to replete that case under the new standards arguments it's important to stress here is we see this a lot in employers die cases is a lot of people say these are just securities cases in disguise but they're not and this is actually a perfect again a perfect example of why they're not in the securities case judge ellison did not certify the crease bill class so as we sit here today the plan does not have a claim of securities claim relating to the  they were invested in prudently and what would they be worth today so we have two different federal statutory schemes that are designed to handle cases like this and there's not one that takes precedence over the other announced in the securities case of one hundred seventy five million dollars but i have not seen i don't think it's public yet the terms of that settlement and to whether to what extent that settlement mean capsulated pre suppose claims we just don't know but  far as we know right now there is no plan there's about one hundred fifty or more opt out securities cases that judge allison is still handling today and that to my knowledge the plan is not one of those  spills and major disasters in my recollection is the recovery plans for example they simply borrowed one from pluto bay and said this is going to nobody figured out that that might not work in texas and you know crack they didn't come up with something so none of that was disclosed so the participants in the plan did not have the information available to them to make informed investment decisions like the rest of the public but they particularly with respect to the plan and i think we probably talked about it last time we were here but under four of four c of a risk there is a duty to provide the investment information to the participants so they can make informed investment decisions are participants yes they had the ability to trade they didn't have the right information to trade and had they received the correct information those are the kinds of things that may have dissuaded them from investing their retirement savings and b p stock in other words that the company is not mr hayward even mr mckay frankly was a designated officer could have caused these disclosures to be made to the world and that would have taken care of the misrepresentation and the emissions that were occurring and that occurred for three years i mean that's an important part of our case this is not you know the earnings are overstated there were channel stuffing that's over with this is a three year period of non disclosures and things only building this is why the early disclosure allegations that we have in our complaint paragraphs two three forty eight and three forty nine are also unique to our case and it's not just speculation we maintain we comply with a quote homilies pleading standards that is the pleading standard here by why actually right now the say the producers are aware of inside information not been disclosed and they don't have the ability to cause a designated officer to disclose the information and they say they go to the officers of the company and say you have to disclose this material information in the office or say no what are they supposed to do the dio and the f c c say well you can come to us and they're like a whistle blower type claim and that's an avenue of relief that offer any and john i'm not sure the court is the best selection of words when they made that when you wrote that the citizen but if you read the decision and look at the underlying oral argument we spend our entire time talking about the more heart no more harm than good standard and i think he was just frustrated with trying to understand how to articulate the standard and i think when he wrote those words i think it was more of a semantics but he was fine in a plausible claim given the circumstances we have if it is order certifying for unlucky to repeal he says that if b p is right about what the standard is you lose the case is over i tell you disagree with him on that i mean are you are you even if they have the right view of the standard that you can still me that is that the efficient market there is not working here at the stock's going to drop more there's going to be some kind of disruption they're not going to understand the disclosure that defies the patient market hypothesis and there's no basis to do that here and a the producers have an obligation and an opportunity to stop further purchases of inflated shares jellison notes as you pointed out that standard would be insurmountable what is the point of even had this if the court by b p is argument they would inside knowledge case that case really dealt with what happens when you're dealing with public information so that's not on forward with the situation that we're dealing with here it dealt with that the other prong of the the dude points out the flaws really in the the complaint the plains of south here because they have no facts to support the notion that the more harm than good standard would be satisfied if you look at their complaint all they have was some generalities they cite a law review article and some general statement that suggests early disclosure is always good if that's the type of factual allegations that meet dieudonne hoffer every take every complaint gets inside the the door now with respect to whether we are suggesting a new presumption we're not what we're talking about is what did the supreme court the stablish in this case the supreme court in didn't offer judge indicated that there was a liability standard here that liability standard is no prudent for do sherry could have reached that conclusion unless the plaintiffs can meet that liability standard unless they can make paul twomey plea terms unless they can show that there is a plausible way to meet that standard on the face of the complaint they lose because they have not come forward with the elements of the cause of action and an element of the cause of action here is satisfying the no are formulation of the no more harm than good test respond to the argument that your view didn't hall for test could be satisfied at least in our view i'm going to fence order i don't have to drive up the the there are themes for these types of cases and i'm sure there can be some extraordinary circus that it would be odd if the supreme court had a standard didn't really matter what happened but we don't we don't have that case here we have a viable company that had a explosion occur caused a lot of negative consequences to the company which have been whether this is a viable company before the explosion in the gulf it's a viable company now and the plaintiffs have to satisfy as i said the more harm than good standard is that what you heard today was entirely new this is a new argument  their argument that well the purchases should have been stopped and sales would have been stop that there should have been a market disclosure of the fiduciary that wasn't the argument they made below what they were suggesting below was that stock this is the purchases should have been suspended but you could have done that secretly and you could have allowed the other participants in the plan to continue to sell their stock that was their theory below they got the s e c the come in with an amicus brief and sometimes you have to watch what you ask will because as c c said their theory just didn't hold water that it was didn't make it it didn't it didn't pass the first prong of didn't fall for it which is that your alternative must be consistent with the federal securities laws i already addressed the question about whether the  market analysis saves the day for that supreme court had that issue before them in didn't offer in the form of the s g s case they didn't buy it but i would say that in this case there was every reason to believe that there could have been a market overreaction if the type of disclosures they're talking about had occurred certainly after the spill occurred he would could expect the market overreaction of the fiduciary of this plan came in and said the stock was unfit for consumption by our own employees and before that given the history of problems that b p had if someone came in and suggested the fiduciary came in and suggested this company's not say there would have been an adverse market reaction