contract signed by each of those brokers euphemistically agreeing to transfer to a new firm and bring their assets and their books of this miss with them worth millions millions not even close not even close the problem with the trustees case your honour's is that they presented one case on liability and a different case on damages the liability case was premised upon the transfer of a distributor list but the damages case was premised on the transfer of the distributor was very clear about what have valued in the case you value to the distributor network i was hired to determine the value of the distributor network he says i concluded the value of the distributor network was three and a half one million approximately i was hired to value the distributor network i was sitting in this morning he says and we talked a lot about these lists of people the genealogy all the information all of that is part of the network so that's part of what i valued but it goes beyond just a list it really relates to the relationships between the distributors the fact that they're working with each other and sometimes for each other it has to do with the relationship between the distributors and the company they work for and ultimately you have this group of people that as an asset if you think of them as that whole network is an asset are able to generate revenue for the company what we were doing is valuation of the network recognizing the laughs between the value of the list their liability claim and the value of the network their damages evidence what the trustee attempts to do and it's breaking before this court is convince the court that the listing and the network are the same it doesn't work it doesn't work there is not legally sufficient evidence of damages because the list and the network simply are not the same they are to you entirely different things with different values let's assume  contest that there was misappropriation of a trade secret to begin with were due to the extent the list was proven to be at your other it can be most appropriate itself so so you say there's a mismatch between liability which would be misappropriation of the list right and damages which you say are minute were measured in terms of the network yes right ok so how would there be a misappropriation of the network then in your view your and i understand that and in the abstract how could they have proved that there is a misappropriation of the network aside from showing this preparation list and all the confidential information i'll do my best ok or had the facts supported transferring the network to mr bush they could have got to talk to the distributor but they could have gotten reached agreements with us distributors to enter into contracts with organic they could have had mr moggs meet with those top level distributors and said look these are the guys these are the what would have transferred is this aspect you know this asset not and the case wasn't tried that way and the case wasn't submitted that way the case was submitted to the jury and if you look at the nd hand out which is trade secret of the america sciences distributor list the measure of damages the remedy for that cause of action is not the value of the network it's the value of the list of what was the to what was lost or distributor list the defendant got a copy of the list not only that her honors american scientists retained a copy of the list what they lost if anything was exclusive use of the list exclusive use they kept it that's important fraudulent transfer claim not come back to that in a moment the evidence of what defendants in the only evidence in the record is the defendant's profit in the amount of approximately fifty seven thousand dollars that's the record evidence of the value to the defendants of the list unjust enrichment fraudulent transfer the same thing the fraudulent transfer claim fails for other reasons but the court charge the jury the trustee alleges the defendant kosher fraudulently transferred the mer sciences distributor list the list the damages for that or the value of the property transferred often damages awards don't make sense and that's a benchmark for excessiveness is often commonsense the numbers don't make sense and co should be paid to what was paid two hundred and fifty thousand dollars three hundred thousand dollars in part to provide the list the trustee thought it's like selling the brooklyn quitclaim the brooklyn bridge i'll take three hundred thousand and four that sure but it could at what they could have said to me that he could have said i'll bring my network or i'll bring something more valuable they're still there still a value associated with it that's a breach of this for you but they didn't end up taking some of the list of making it a network four hundred and fifty four that's always going to i mean you can't force i mean i understand your argument that you can force the people so then you're saying you never could intangibles and intellectual property to supplement research for one hundred and fifty thousand dollars or ghana's profits from useless was fifty seven thousand dollars the trustee settled with yard of the other major distributors for one hundred and ten thousand dollars nowhere in so when the what was own were the cause of action in the trade secrets so for the trustee to later then sue for the saying because of actions of the things that were own and sold by the trustee the trustee can't sell it and then turn around see one that's what happened here three sister real party in interest argument that's not standing article three standing argument well as well it's not a contract you can't challenge the contract between them and who they sold it to so they're saying they're going to reform that or revise it in some way they're not a whole lot you can do about it so how is that something we should consider in the absence of a proper motion because your own with  order and this is not only in a court order this is a court order to which defendants could have objected to that they were they were actually parties to because a court order was entered in an action to which the defense you need to raise this point because we're dealing with an ambiguous court order and we're seeking enforcement not only a court order but a quarter were entered in this in basically the same action because it was entered a bankruptcy action and this is ancillary to it's it's not we're not talking about a contract that we're seeking to force against another party we're talking about an order by the southern district of texas but how know that that changes are already there requires that everything except type things like article three standing which we don't have that here have to be raised in a row fifty motion i think to answer your question about rule fifty or seventy four was an answer i think in fact it was it was made the objection because it was stated because it was oral argument at work when the oral motion objection was made we stated that the trustee did not own the claims so that would have been part of that rule where is where is the i'll have to find you to cite specific to that but during the that defendants received the the the property was never asked and that's important because eleven u s c five hundred and fifty says that we have to that that judgment can be against the initial transfer or the media or assignees this court itself has actually certified to the texas supreme court tough the case in jan v versus g mag about whether or not you know defenses you could have a tough claim that was one of the things that we didn't have the opportunity to do because a jury question that we want that we asked for which was on transferees was it presented we submitted questions such as whether we are media transferees initial transfer is subsequent transfer is all these  issues that give rise to various defenses we don't have that opportunity because there was never a question submitted that we asked for those we objected but there was never submitted to the jury a question asked whether they were good or defendants transferee received or what they were see if in fact mr towels own jury questions and on discretion of the judge was that i think we need these questions without those questions you're left with an you please the court as we appreciated your honour's the overarching question of whether the trustee may avoid a transfer for which the debtor received no benefit and for which the two principles of the company received the only benefit we suggest to the court the answer is yes the trustee may avoid this fraudulent transfer its head and get you three million dollars your honor the methodology of damages is straightforward in this case it's supported by the ai c p a standards the statement on standards for evaluation services subject number one under that and and the expert testified about that list have value if it doesn't translate into actual customers clients or everyo call it does your honor and you have to give me just a moment to explain what this list is because as i understand the argument here there's a legal rendition argument being made out of a semantic game between the distinction of lister's is a network in that game doesn't hold water when you look at what the list is what is before us and this is all framed your honor the question is of the damages what the list is under a misappropriation of trade secret claim in texas under texas law this court's opinion in well logics says the plaintiffs are entitled to adapt their damages theory to fit within the particular facts of the case that's a nineteen or two thousand and thirteen th circuit case this the texas supreme court follows out in the southwest energy production case which says that damages must be flexible and in the magic two imaginative approach following this court's opinion in one thousand nine hundred and four in the university computing case which says each case is controlled by its own peculiar facts and circumstances and in this case those facts and circumstances which are peculiar to the list ask this court to look at what the list consists of if you look at the list in terms of the time spent on it the size and scope of it the compensation that follows from it and the cost that was that was incurred in preparing that list you have not just a list but also a network and that's our position this your honor the record of and with respect to the cost of compiling the list did the expert your i guess your side's expert value that what was the value six point something one million the that the inflation talked about the amount of profit that one could realize from having the list is that right it was an income approach and income a person that was something like seven hundred thousand dollars that's right so i understand the texas a lot as a flexible an imagine damages in this one is the idea that you have this these two distinct valuations and you just allow us to average the two yes your honor that's absolutely right under the statement of standards on valuation services which the ai c p a puts out and to which mr wind gust who is the expert testified to in his affidavit to this blending of the end come in the cost approaches which is at page eighty six dollars of the record under the c p a standards paragraph forty two says the expert quote should correlate and reconcile the results obtained under the different approaches and methods used and that the value weight or person must quote determine whether the conclusion of value should reflect one the results of one valuation or to a combination of the results of more than one valuation approach and method and in this case if you look at just the cost alone that was put into preparing to us which is contra distinctive to a is from mr redmond who's the president who's the chief operating officer of a mirror sciences his malton would say yours still ignoring the difference between the list and the network at the time was spent developing the network can i  come up with a list of potential clients in new orleans by listing every business in new orleans but until i've actually had contact with them they're interested in hiring me as a lawyer saw forto court i don't really have a network but judge chains what if you added to your list  already information the one thousand and ninety nine information who the customers are associated with in terms of that distributor if you also added the genealogy that's associated with the down stream content of the list as to the distributors reaching out to all these people that you see information on the list not just the name and addresses yes and tellingly this is their position in this court is directly at aunts to what they call the or danno gold party told according to washington and this is cited that page forty dollars to sixty dollars i believe of the record on appeal in a case called organic gold versus been to iraq which is a case in washington quote the court in that case  among organic gold's most valuable assets is its sales organization including contact information and customer data within the seals organization that's what they told the court on the on the left coast and in this situation judge there is absolutely no distinction between what our position was here and what their position was in washington there is much more crammed into this list than anything this is like the old days where we'd have a little index card box and on the index card you'd have details about the client so that you could interact with the client more pleasantly in a way that would make them feel that that's right the rol i mean your rolodex in this is in mr wind gusts i'm sorry mr redmond's deposition that was used in response to a motion for summary judgment in the case and didn't make it into the trial testimony but he said the rolodex is the most valuable thing that the company had so if you look at the time the size and the scope of the list what it consists of if you look at the fact that the compensation of all of these distributors is derived precisely from this list the income allegation allocation agreement that america sciences used to page eighty eight of two of the record the policy and procedure manual at page eight thousand eight hundred and six of the record and in fact organic gold's own compensation program which is at pages eight thousand eight hundred and sixty and following of the record all show that the compensation system for the distributors is built off this list and in fact those documents refer not to a network but to a quote customer lists that are protected as trade secrets so you honor this distinction semantically between list and that work doesn't lead anywhere when the court looks at what the list consists of precisely let me address this issue of standing in judge chains i think you've put your finger precisely on it this is not an article three constitutional or jurisdictional standing point the term standing here is used informally as to whether somebody can challenge a contract work order order and i want to give the court the case that i found since the briefing and we didn't write the briefs but in preparing for argument there's a case out of the central district of california which is in the context of a section three  apologize but this this case is d v d credit vs silicon labs the construes this standing argument in the context of a sales order and says that strangers to the contract can strangers to the sale order cannot move to inf is that a stranger to a contract then a sales order cannot enforce that as recent as with regard to somebody who's a party and governed by the order and in this case in about the rule fifty point did they make the that at the charge conference there is nothing in the rule fifty j m s conferences where you make a rule fifty i'm just suggesting there are other procedural contexts where they also failed to raise that point and it's not in their their rule fifty argument to that extent you know i think it has been way something that should have been raised at trial judge gilmore was never given the chance to pass on that issue and so there is no standing to argue this now and in any event even if there were standing if it had been raised if they had made this argument to the trial judge the client the chapter five bankruptcy code claims are carved out and so that section five hundred and forty eight and f a motion to alter judgment on which the judge did in this case you have to remember what happened here is that the verdict was returned on may th on may th without any motions or input from the parties the judge signed a judgment and the judgment the idea had been i believe a correctly strategized by our side that if you have both common law fraudulent conveyance claims any of statutory law  comp fraudulent conveyance claims in the same jury charge it raises the potential for conflict but if you have all the elements that are necessary to formulate a section five hundred and forty eight dollars or a section five hundred and fifty judgment from and you've got all those formulates the basis of the relief and the relief based on those and adds an injunction later in case nothing shocking about that so the judge can grant those kinds of motions in this  deemed that a rule fifty nine approach to legal error by a court quote is a readily available procedure by which a party may seek reconsideration by a court of a number of matters including legal errors made by the court so judge southwick in this court has spoken on the issue of whether a rule fifty nine dollars zip proper procedural vehicle for doing what happened here and that is extending the relief to include bankruptcy code relief which was carved out of the order of sale and which permits the court to do what it does in this case which is of where this fraudulent transfer which we believe is properly valid and if i can use some of the six minutes i still have i'll go get that site well i will say that if you do that you should it at a minimum tell the opposing counsel since you see them or e mail them or text them whatever the current version of contacting opposing counsel is ye of the bankruptcy rules the nonparty cannot enforce or enjoying a sale on a contract or an order approving the sale and that's essentially the street in the context we have here they're not allowed to argue that we can't use the contract of sale or that it's somehow bars are standing so those are those are the arguments we have from the mr rogan back to damages to to the extent as i understand the other side making an evidentiary argument that the damages calculation are not supported by evidence i soon they're making that argument is it a problem free your side that says we have a three million four hundred thousand dollar jury finding on damages and yet it seems like when this list was or network was it was misappropriated it looks like they realized fifty some one thousand dollars worth of profit there right is that a problem is that does that suggest that the damages are not supported by any evidence you know your  honor we don't think it is a problem the the problem here is if anything in terms of what you asked which is is there a proper methodology followed and under came a time or under an abuse of discretion standard that's for the district court to determine whether there is going to be an adequate methodology applied and because it follows the ai c p a because it's based on a weighted adjustment between cost and income approaches and because texas allows a flexible and imaginative approach that must fit the particular facts of the case the the lower amount than the cost to establish that distributor list and that work is compensable as a fraudulent transfer it is for the jury to decide ultimately based on that reliable methodology and for this court to defer as it should to the jury's finding of damages yury is it right to say that the jury essentially follow the recommendation of your expert on damages to the penny here yes absolutely to eating an expert on damages to suggest a different methodology that there was a criticism by that expert of our expert which was voiced to the to the parties that needed to decide that issue and they bought our experts testimony so it's clearly a question of deference not only to the judge's reliability determination but to the jury's factual determination damages unless there are any other questions of get back to the court that's that's true they were prevented from presenting last processed money the trustee objected like your orders i can't crash in the your toilet or you can't question the model and have an expert come in and put on the value of it it doesn't work that way it doesn't work that way and there's a difference between a bentley and a toyota there's a difference between zero and less and a network and i think the average person knows the difference between a bentley and a toyota whereas  testimony needs to be given on whether there is a difference between a list and network and if so what it is and then that's something the jury has to look at your absolutely your honor and that's a problem with the way the case was submitted that's a problem with the but the problem with the case the problem with the case and the reason that there is no legally sufficient evidence of the value of the distributor list which is what the jury was asked to value that's what they were asked in every question what interference with the distributor list ok misappropriation of the distributor a list that's what they were asked the evidence the only evidence that the trustee would put on was the value of the network the bet and as i said mr they could have gotten that much from those people from america sciences to or they could have done that they could have decimated the network and in that case and may have the proper to put on expert testimony of the value of the network he distributors they took them on trips they gave them perks their bottom dinners that's what you do when you build a network you build a network you have people to work with you people who are the people then those people build their businesses and the value of that network is the value of the business is built by those people the list is a value no doubt i'm not here telling you there is no value in the list i have telling you that the value in the list is different from the value of the network and the only evidence the only evidence that they put on the evidence that the jury relied on was evidence of the value of the network can you value list of course can you find a good recruiter if you give them a list of names or brokers at merrill lynch you could call those value of the data that was misappropriated was the value ok they could have said they could have said you took the contract you took the relationship with the neighbor you took everything that we make a profit off and that has a ok so that's your best case that's the one that's coming to market when they get a letter maybe i'll get a letter you're on the well that they keep in mind is that twenty a j is intended to cover cases that come out after briefing not cases you or your predecessor should have found had you done your research so i do think you should write a letter saying this is the case that we cited in court that doesn't mean we will consider it obviously if it was presidential we'd have to have you told us about it or not but it's not presidential but i think since you brought it up i think you have to tell us about it thank you and i rely on everything in the distinction between the list thank you very much wanted we believe which one we believe and that's it filed by tomorrow evening tomorrow by