we're happy to have you here today and we will hear from m employment dispute specifically mr lee was the chief human resources officer for defendant evilly exeter finance corporation now a number of claims were certain in the underlying to support litigation or were before this panel today to address a subset of err in granting summary judgment in finding that the p i use for profit interest units had no value when there is evidence in the record showing that those profit engine interest units in fact had a non zero value for evidence the firm market value in the record i'm sorry or is there evidence of fair market value in the record so there's evidence of value depending on how it's defined their fair market or fair market value or fair value the point is that there is evidence in the record provided by eggs or themselves there's provided throughout the period in which mr li was being recruited and during the time which mr lee was actually employed by exeter all assigning a value now but the contract required for market value caress correction the  spent considerable time trying to create the distinction between the fair market value calculation and potential other calculations and the issue we have is that exeter is valuation of fair market value is a single one page and if you had been in the normal timing so you could have gone behind that and normally also when you have had your competing experts said the valuation on this date is x number and done it in a timely manner not you personally and also couldn't this problem that is present presented have been easily solved by an expert who gave the valuation using the proper methodology  them to show their work show how did you get to the zero dollar value ation and those questions were never really answered there was no evidence showing how that calculation was made and certainly they were not to post when you sit down with them and you say well this stage because we didn't see their work because i get i don't think it's non zero i think it's fair market because you're bringing a breach of contract claim the contract term is fair market value i don't think the issue is whether it had a non zero value what the firm market value i agree with your honor with the exception of the fact that the only evidence we have of the fair market value from exeter is that zero value so that's why i keep mentioning non zero if we had seen their work if we had seen how they came to that zero dollars valuation then that can could have been challenged and that could have been a question but the only evidence we have is that single one page document saying it is worth zero dollars and so for summary judgment were all we have to show is that there is a question about whether that zero dollar value ratio is correct by pointing to the evidence and again the evidence is all from exit or the evidence of non zero values are not speculation it's not created by mr leroy's litigation team or  auditors had value the use at a non zero value and i understand they years of these money carla simulations which is different than fair market value well it's yes it's different in the sense that the methods but it's unclear whether those are simply distinctions or whether there's actually to differences there's no evidence in the record and again this is on their motion for summary judgment so in that the fact that section four point three calls for particular method ology which they refer to fair market value and these  fair value methodology that those will actually lead to such disparate results that one will create the value of the p i use being zero dollars or the other one always always has a value on the use and i think that's what's important here and that's what our point is with respect to whether there's a genuine issue material fact that all points in time exit or not mr li but exit or apply the value to those use well when they were trying to recruit him the testimony of his of the executives at exeter of say that those people use of value and then also b again it's the it's the evidence presented by exeter which begins with a one page evaluation a spreadsheet that was provided to him during the recruitment process by exit or was then c e o mark floyd who was the person recruiting mr lee and that valuation had a series of values applied to the p i use depending on certain exit scenarios and those values were not zero and they weren't even in significant on the low end they were valued at five hundred thousand dollars and at the high end they were valued at five million dollars so that's one piece of evidence and also during the day and that evidence was relevant to the financial statements that evidence was relevant both to whether the evaluation of the p r use of it i mean from the standpoint of the defendant here why it was relevant both with respect to this contract and also with respect to their financials correct and that was that was defendant's representation to people outside of their company to someone that they're trying to rip to recruit saying that these people use have these values depending on the exit values for the parent company and so at no time would they say these values range anywhere from no value to a significant value that's not what was represented they said they value from five hundred thousand dollars a considerable you up to a multiple of that five million dollars and so that valuation is what they believed or at least that's what they were telling everybody that actually show your case you're going to prove your case by using their evidence  correct so their plan yes your honor so they there is credible evidence that can be presented to the jury both in the form of that one pager testimony by the executives and the audit reports that we've discussed provide a range of values for people and that's that's admissible credible evidence of the jury can determine whether those values in fact it would have a p r use in fact had a value as opposed to zero value which is what the only evidence that's really been presented for exeter in favor of their when the company was not doing so well those same audit reports that we discussed a few minutes ago they still value those use at something more than zero dollars if the company was doing as poorly as now exeter's claiming it was doing it would be reasonable to believe that the p i use internally with their own financial auditors would be would be valued at zero dollars and at no time and i think that's really the takeaway when it comes to the value of these p i use and where we are in this in this case with respect to summary judgment every piece of evidence in the record both in terms of the communications between mr lee and mr ford and also e mails and in the offer letter the parties had agreed on those material terms it's an exchange of severance set of a specific amount paid over a specific time in return for an agreed upon non competition subject to conditions so subject to terms and conditions and so you had to meet the terms and conditions which means signing the sheet that had the additional terms and conditions on it cor long competition the mr lee has testified and that's been unrebutted i think it's important to recognize that there's no allegation from exit or that he being mr lee had been informed that he was going to have to be assigned a value and remember there's two things that the appellant and the opponents expert never proved one they never created a fact issue as to the fair market value to they never provided any evidence the fair market value as of the call day and that's important because we have a contract they're suing out of the contract they have to live up to the terms to your green if the question wh might have created after the fact no because at that point there's there's less there's evidence to contradict that there is no fact issue that the value is anything other than zero using fair market value as of the reporting to they used a different methodology the monte carlo method which has a one million past for a one million different valuations number three the duff and phelps audience were not as of the call today so the fact that there may be a different valuation for a different purpose on a different day does not create a fact issue when the contract is clear is it not a jury question that it might be unlikely for for it to be that you assurances about four years hence why you have to take it in the context of which that conversation occurred right there there are no numerous words that the district court focused on this is subject to their will hypotheticals of potentials subject to other agreements programs terms and conditions and as you noted he is a c h r oh he is very sophisticated he had equity at old co so he was well aware when someone says this is a projection of something that could could happen that might happen if we have targets and of course that was almost two years before the date of the firing in the call days so a lot can happen not only r p i use volatile this is a volatile company they are loaning sub prime on autos to an under served market so they're not selling side p i used being volatile and risky and recall that even mr  y testified that he knew that these were risky so not only was sophisticated he knew they were risky and guess what this was a risky business because if the economy goes down the demand for used cars can go up or down accordingly so it was a very volatile situation now on multiple fronts and accordingly he knew with those words of could be possible etc that it wasn't a guarantee in there were certainly  also recall he says he asked for additional information and they didn't give it to him yet he proceeded forward with signing a letter agreement also don't forget that ten months after police started working after he got access to all these financials as a sea level executive what it is he signed amended p i you so i think there's ratification at a minimum certainly if he thought well i've been defrauded now i've looked at financials and my goodness i've been sold a begin to poke or whatever that old saying means in english saying by the way he bought a pig in a pub why the sign up again why didn't he say you lied to me this company is worth nothing i'm quitting and i'm suing and  you know call call the p r use instead he doubled down and signed an amended agreement and we know he had the wherewithal to sign or not sign an agreement because he refused to sign the when they gave him the severance agreement he and equity interests so and by the way he tries to say well that somehow there's evidence that it was some evidence in the record that it was worth p r use worth more than zero ok we know that the call had a mint zero evans testified that they were worth zero and not testified that they were zero they cherry pick some some to some which in a depo about well i think they might be worth something someday but that is not any evidence that the call date they were thin they think of as an zero in fact the evidence is quite to the contrary what about there his argument that the methodology is really thin why i don't know what you know then thicker in the middle of the contract is what it says it is there is no evidence whatsoever that there's ambiguity in the contract such that we would look elsewhere or look to parole evidence and of course that isn't even an allegation they may at the district court level so you may say i don't like the valuation i don't like the methodology well mr leader should know signed up for this job when you knew and you had the agreement that said four point three is we're going to use fair market value as of the call day so you know you can't change the rules of the game after it started to suit your purposes and i think it's important to remember that even at least x for this call valuation he had prior to filing the lawsuit his expert had it from day one and they never once attacked that instead what did the expert do he grabbed illustration that lee was provided for when he was being recorded and illustrates that well if this then this happens if this then this happens and about two years later that didn't happen and he wants to complain and the judge threw out that evaluation methodology by that expert and that's the judge's parag if underdog as a gate keeper for junk science and junk opinions and you know then they go back and say oh my goodness well we're going to file a supplemental evaluation but even then that and that was too late in the judges and toddled to control their scheduling or docket and he excluded it under dover or the scheduling or what then remember the district judge went even further and in the summary judge and said even if i had consider the evidence or the new valuation tried by plaintiffs back spork it doesn't fly because it isn't based on fair market value it isn't based on the time of the call so again it doesn't create a fact issue at historical financial statements and i believe they had three audits from duff and phelps that were for a different purpose using a different methodology ok not what was required of the contract so again it doesn't really matter if wait a minute yes now the auditors what's the use of having an audit if you don't square it up with method true or in the contracts what are the auditors say it's the company's financial stake what i did hear say about whether they were fairly recent that what the author said using gap and the monte carlo methodology that it had to use had a certain value but that is not the valuation method under the contract if we took a different valuation method let's just say assets less liabilities ok and then you divide the number of p r users auditors would be looking at what's the company's exposure under this agreement no they were looking at the overall gap value of the company not they did not evaluate that's a very good point they did not evaluate what the use were worth giving this methodology for this contract get that and that was excluded so the their only evidence before the court in a summary judgment was their experts view of illustration and trying to extrapolate a value not using fair market value to not using fair market value as of the call day and that's why the judge struck that opinion says the greater a fact issue it wasn't the methodology used by their expert i mean st of all that here's the issue the contract look over here the governor there there was some tough discovery battles the magistrate as well as the judge ordered things produced they were produce they didn't file a prompt continuance if they really needed it it wasn't until their expert opinions were struck that they started scrambling and asking for more discovery so you know the judge was well aware that judge lindsay runs a tight ship he's not going to put up with any shenanigans and he saw their request oh we didn't get this we didn't get that the point is these issues were known from day one we produce and they had the evaluation methodology using fair market value before the lawsuit was filed they never i think someone asked a did you ever go to oppose the people on the committee that made the decision and how they came up no they didn't do that so for them to come say well there were some documents out of the thousands and thousands of documents or produce that we think will produce later should have been produced earlier well they have a remedy for that that's follow a motion to compel and they did and they got everything that they said they needed and now they're trying to say oh well because we were slower because a magistrate sanctioned us that that somehow means they didn't have evidence that they wanted that's just not the case so you know throw some dirt over here over there it doesn't matter it's the same red herring where they say oh the judge said that he was fired for cause well guess what the issue isn't whether or not he was fired for cause i mean there was evidence that he was fired for cause but even equipped or even he had this arrangement with old co the point is at the time that he accepted the job with exeter he knew he was no longer employed with there's no detrimental alliance there's no fraud claim because he didn't have any other options all right and he was sophisticated and they gave him the documents he asked for more documents they didn't give it to him he signed anyway and of course we know he signed ten months later and we knew he had the wherewithal the intelligence when not to sign because he didn't he refused to sign the severance agreement when it came out with more details he even signed despite allegedly saying grazes that issue and recall that the district judge said ok we're going to give you extra time appellant to brief this issue so he have all the time of the world if there was additional evidence he needed to settle which i don't believe you asked for any additional of those on the quantum merit he had a chance to brief that and the judge looked at it said i don't see anything there ok i mean again this is not something where you've got an unsophisticated individual  that is lied to and doesn't know better and has other options and change their position and edition a separate reason to defeat quantum error which is exactly what the judge said he comes to this court asking this court for equity and was he have unclean hands you know he had lied to the court in his pleadings he lied in this deposition and we know that then you know also when you talk about no evidence they abandon all of those claims rather than come back and say oh you know i testified earlier that it was a mutual agreement for me to leave and mr dunne has presented the deposition testimony of my boss saying i was fired for cause two months before you ever grounds another words to create a quantum merit yes to go outside the contract i don't think there's a basis for that but i do think that you have alternative grounds in which to deny the quantum arab either hate it just doesn't stand on its own two was a deft different methodology their nose pacific's of the record indicating that they did in evaluation that would anyway be close to the methodology required i mean even years yes men yes ma'am ye there's nothing in it and the district court noted that even leads expert did not adopt or approve that method of the methodology the authors i mean other words if the auditors to some silver bullet to wield its around the contractual provision of this contract why didn't lee's own x work when he did his st reports say well this is really important and i'm going to adopt how they did or anybody else in the firmament since then jane doe got a valuation of zero dollars seven cents a share then i think maybe they had something to work with but there's no evidence and the record of the bill that i'm aware of or in this coverage on that issue well that would make you know whether how many the valuation is done at the time of the call ok and also the other thing is again this is not a record but we know that the p r you was amended so you know that he was operating under one after ten months and that i'm aware of no valuation that was done for any other executive and in fact the testimony of the general counsel and mr nahr was that i think there were zero so there's nothing nothing no despite and remember that's important they deposed the letter to pose a general counsel me part of the issue of the discovery dispute as they were asking for a pretty broad range of discovery now that magistrate didn't agree with us they did agree  said they had full and fair discovery on that issue but i think you have to get your own little safety thing to the expert reports on how reliable they were and the fact that all of them were struck but it the jury can infer that the evidence presented outside of the expert reports that exeter's evaluations were calculations done using the fair market value that's a fair  inference by the jury and expert reports are not necessary to value those those people use and also one of them turned to mr lee's fraud claim relating to the valuation use i'm sorry you're saying the jury could do it's only fair market valuation i missed the point bear well the evidence that we discussed before in terms of the different valuations that were done relating to the p r used by exeter that could be presented to the jury and during can understand that evidence can be used to support the jury's understanding of what the fair market value worked on it at that at that time and the point i was trying to make is that the expert reports that have been struck and certainly were lacking at times those are not necessary for m claim to survive summary judgment or to present to the jury that evidence could be presented jury with or without an expert there with respect to the fraudulent dusun claim i think it's important for this court to recognize that there is no question that the there are material representations of the insider information it seems strange to me that the fact that mr lee decided to try and make it work with the company that he had the desire to make that form of work to make that company better is going to be held against it now as opposed to what i seem to understand that if mr lee realized that he had been defrauded that at that moment he should have said see you guys later i'm taking you to court so the fact that he chose not to do that he tried to make it work in order to so that everybody at the so there could have value in their p r use is now going to testimony that he did not rely on these misrepresentations alleged misrepresentation that he kind of you did you opportunity as he described it in his deposition as outlandish can you clarify all that for me so it really testified that he understand where this is coming from and that's where the reliance comes from is he asked that and the initial response from x or from mr floyd was not well that's the valuation we have that's all i can tell you right now it was you know you break this down when we talk about how the valuations work we can talk about how blackstone comes in and invests in these it has a turnaround time within five and so he did have those questions and those questions were answered and backed up by data and that's why mr lee ultimately support where he accepted those representations before the district court in this whole question of unclean hands really started from the fact that in defendant's original motion for summary judgment unclean hands was not race they move for summary judgment that's an affirmative defense i see my time as i finish it's not like i'm at a house so he has to be paid severance is that something you get because you get confidential information and so he refused to sign the document i don't understand the compensation package from italy was not just the salary it was the salary plus the severance plus other benefits and so it was that exchange of just looking at the severance or just as we just looking at quantum error on the basis of the salary is insufficient the situation because that was not