i note that we have a lot of people sitting here so are you going to be are you the only person arguing on your side i am your honor and then on the other side ok ok ok thank you good morning please the court were proper and the mandate and the second appeal was limited to a prejudgment hearing on damages i'm going to quote that mandate the ninth circuit mandate reads the default judgments and rubicon one two and three are vacated and remembered for a factual determination of damages in those cases that's from the opening brief twenty one and it appears twice actually and in the so even if  default judgment then you still would have to enter it right if there's nothing there there has to be a there was a default order these were affirmed those defaults were affirmed twice by this court the judgment was set aside because of the lack of a prejudgment hearing right oh i understand your argument but it's not the clearest mandate i've ever seen it appeared clear i must say to the plant ok that out was the problem because there were other issues raised in the second appeal as in the first appeal we've tried to lay this out in our opening brief and i'm not going to be able to go through the entire eight year history and the judge had gone back and said ok i'm going to basically reset the clock because the ninth circuit sent it back and said you know the service was adequate and the defaults are in place and the so you need to go back and he really entered the default judgments now inherent or implicit in doing that he would have concluded that there were sufficient if there was a sufficient complaint to support the judgments and the defendants had every opportunity to challenge it and as i read the transfer the record here they never filed a failure to state a claim or challenge the sufficiency of the complaint they challenge other things they challenge a lot of things in the second  appeal including that there was no hearing which i actually think the remains very specific go back and have a hearing but did not raise a defect based on the inadequacy of the complaint so  have a raise something and it's been ruled on it's law of the case if you have not raised it and have the opportunity to do so it's waived and that is an alternative approach to the law i have more problems with the law of the case argument than the mandate because this  some and when you vacate something done there is no law of the case anymore when you're starting over well there's certainly a lot of a case of a jurisdiction and service of summons that validated the default orders that was still there still were orders of default that had been set aside the first time around because of jurisdiction and service a process that were reinstated so i guess there's a couple of elephants in the room here that in terms of that it seems like that one could make the argument that the i don't know how to i guess it would be that we're going to call him i'll call i'm going to call them the defendant and you the plaintiff's ok and that the defendants were being kind of shady about service and all of that and so then finally comes up for that and we say ok no their service and then i have no idea how this got up to three hundred  eighty million dollars when it started with and so then when the ninth circuit side bat then they're kind of go on whoa like you're running the table there and so you know  it seems like the sides are taking extreme positions like there's no service and then my kids three hundred eighty million and they made a five hundred thousand dollar investment and claiming that somehow it's worth three a multiplier of damages but we were not there anymore we're not there anymore the court said you have to have a hearing on damages and that's what we want so in the alternative the court said that the damages for something like what nine hundred  fifteen thousand or something like that i believe that that i cannot recall the exact figure somewhere around there yes it was five hundred and some thousand in economic investment and loss of investment minus the two hundred thousand dollars that us that the usa affiliate had paid troubled so it came out to nine hundred plus slightly under a million we are also contesting the way that was that was compute because of a misunderstanding and a communication between the court and plaintiff's lawyer at the hearing as to how that deduction should occur it was our position that you take if you're rico you trouble the going outside the mandate if that if the district court did it because there was a different judge by then could suspend going on by ten years or whatever so it's a different judge by then i think chief judge moss might be an abuse of discretion as to whether or not but there but we haven't for another problem here it's another procedural obstacle that's called waiver that they waited until twenty sixteen to raise the alleged insufficiency of the pleadings when they had been in litigation about the defaults since two thousand and ten so and through two appeals and two times before the court previous the district court previously before they saw fit to raise these  issues so that's the waiver argument that they simply waived it it's too late we came back for a hearing on the damages that the judge held but it was an expensive know laci and there's a dissonance between coming back for a hearing on damages and then a decision that we're not entitled to any at all because of a deficiency in the pleadings it seems unlikely to me had this case been returned after the second appeal to the same judge that this could have happened because the order that the judge entered after the first appeal very specifically says the defendants had ample opportunity to challenge not only the merits of plaintiff's claims but also the amount of the court's judgment and the defense chose not to seize the opportunity and it has now passed court will not allow defendants to challenge the judgments now that they have deliberately chose not to challenge when they were given the opportunity i think that would put them on notice in the second appeal that if they had a failure to claim that was the basis that needed to be the first hurdle to get the judgments entered they needed to raise that and they didn't and you're arguing that had the court having made those right that's right we have briefed the sufficiency of the pleadings and the issues regarding the sufficiency of the pleadings rather extensively and in the short time i have for argument i am not going to address address those issues and detail about the sufficiency of the pleadings the fact is that the fraud claim had been in existence and answered by the defendants that were in that first case same with the contract claim so they had not allowed not only had they not alleged insufficiency of the pleadings that answered the complaints and those had been if anything pleaded in wars at least in one case pleaded somewhat more extensively than it was in the original pleading if you  if if we accept that the district court can't reach this fish and see if the pleadings tell me what is wrong with the district court's factual findings underlying the damages awards why is that clearly erroneous well the first problem the first problem is that the burden of proof the plaintiff had was a probability probability and the oregon courts have said one of them case that they cited in their response it's not a demanding standard the other thing that we have here is the default setting that as course the seventh circuit said that where the defendant's conduct impedes quantification that must be taken into account and in oregon the lack of prior history the fact that this was this happened at the outset after the investment before profits could be realized should not foreclose a recovery of lost profits in its entirety so what we have is we have here the evidence the plaintive put on that some of which the court did not take into account and i'm going to show it's clearly erroneous right part and you have to show it's clearly erroneous on the factual find well i'm not so sure about that but we've got to agree on  something i believe that the problem here is in the way the court considered the evidence and what it didn't consider and there were aspects of the evidence that the court did not consider at all for instance the fact that the the product here occupied a particular niche in in the market let me i cause i this is a unique sort of situation you seldom have a plaintiff who's getting a default judgment appealing the amount we were kind of hard pressed to find a case where the  and when you look at what happened when they went back and had the hearing in essence in the case for you had a default there there was a bench trial your right to jury trial that's put on the shelf in a different hearing fro judgment and instead of just doing approve appearing where the plaintiffs would come in and show that they had sufficient evidence to support a damage claim that perhaps would get past summary judgment and there for could go to a jury which might properly be the standard for a court then to accept those damages he held a bench trial and had the defendants put on evidence and challenge your just so they basically got all the benefits of a trial denied you a jury trial without ever having we they were in default that is exactly what happened i'm going to point out too that the projections that were put in the silberman business plan were validated by the defendants and that evidence was in and that again the trial court did not just muslim did not look at that particular aspect of it silverman's explanation and his own example of his own history with his own startup and the experts rocker's experience which granted was a higher end product and probably more profit as a result but also had gone very far in a six year period of time you want to save any time for rebuttal you're down to one night i i'm really well aware of that i wanted to make one more comment the standard for proving liability for punitive damages we didn't have to prove liability for punitive damages it was admitted by the default on the intentional fraud i've set out the rightly hill case in detail that's and the statute that governs here that malice and intent to defraud are really the same thing we didn't have to prove it so there was a ground for punitive damages we asked for punitive in three times there was an amount he did three times the amount of the economic losses and there should have been an award of punitive here morning and may please the court mark fleming together with the hall and clear spec for the judgment of the new i do want to address your questions regarding the waiver and i think it's important to refocus and remember the issue before this court is not whether the plaintiffs think that my client's did something wrong but it's whether they have established that chief judge mossman did something wrong and with respect to waiver one could search this record in vain for any mention of waiver before  arche of any cases you bring your claims and you bring them if you don't bring them in the district court you don't get to bring them on appeal if you don't bring them on appeal then it's not that the appellate court didn't consider them it's that they weren't presented and  you've abandoned them you had your clients had every opportunity on the second before the second appeal went up to raise the issue when they were reinstating default judgment to say these judgments can't stand because there is an inadequacy in the complaints and and to the extent that was raised at all the court said no i'm not going to go there and so it could have been should have been raised in the second appeal and it wasn't to be clear just mentioning it we  did mention this point in our reply brief in the second appeal we cited the allen human case and we said that if there is a hearing on damages as we believe there should be one of the things that should be considered is the sufficiency of the pleadings this court didn't say anything about it either way in the mandate which is why chief judge mossman was right to say it had not been decided or foreclosed by the mandate or the law of the case but the point is your honor as your honor has just articulated it that is not an argument that was ever made  technical point it matters because waiver is not a mandatory doctrine it is prudential chief judge mossman would have had the discretion to overlook any waiver if waiver there were and we think there's a good chance he would have done that it was how many chances should these clients have i mean you're on the third appeal here these the pleadings are what they are they've been the same pleadings now since day one and there's been multiple opportunities for your clients to go in and say that judgments were entered twice and there was never an argument that was made that said no you can't do this there were arguments about the amount but not about whether there was this insufficient complaint to support it no the first time there w district court so why wasn't that it why didn't why do you get to do new ones now why is the law of the case those were the ones you raised those are the ones that were acted upon i'd like to be very clear about this judge callahan the only law of the case argument that was made before chief judge  based on the order that was vacated by this court in the last appeal the august twenty third team decision that one was set aside and so he found that that couldn't be lost the case they haven't appealed that decision it's clearly correct so that's the only law of the case argument that's been preserved waiver was not preserved at all it was not made had it been made we would have argued to chief judge mosman that any waiver should be overlooked because of these strong federal policy against default judgments particularly when there are serious that this is somehow their fault you had a judgment was entered a default judgment was entered it was appealed and it was appealed on the basis that there was inadequate service and there was a personal jurisdiction and the court found that there was proper service returned the case and the motion was then brought to reinstate the default judgments at that point why was it not incumbent on the defendants to go ok we are in default the service was proper you're entering default judgment we're going to say that the complaint can't sustain that judgment because it's inadequate and to the extent it was brought up the district court judge at that point said no time has passed that opportunities passed i'm not going to consider a challenge to the merits of the plaintiff's claims so squarely it could have been brought up on the second appeal to the ninth circuit to say that the district court would not consider our challenge to the merits when he reentered the default judgments and if it wasn't raised then why do you get to do it the third time why is that just not shutting the door how many chances should you get to keep attacking these things from different angles is this this is the  angle on which it was attacked in front of chief judge mossman they radio no one before that well the one before that we did mention it in our reply brief to this court and we cited the alan human decision and we said if there's going to be a rehearing a hearing on damages as we believe there should be this is something course the mandate rule is based on what the court actually did decide and did say in its mandate and in this situation there was nothing in the mandate that suggested that the district court's decision on  he had to hold a factual make a factual statement and then as he player as they think it is and as what you think it is i don't think it's really as claris what either of you think well if that's the case judge callahan then the district court is free to decide any standard the legal principle that this court applies is whether the mandate actually foreclose the action the district court took and that's this court so that over and over again in cases like killington and cosette it goes back to the supreme court's decision in sanford for can to go from  default judgment how is this difference important to our consideration of the issue as to whether the district court exceeded the mandate it's highly important your honor so the entry of not not i at how is it important it is important because it's not just my distinctions the distinction of the rules of civil procedure at fifty five a calls for an entry of the fault but then that doesn't automatically mean there's going to be an entry of default judgment entry of default judgment is something that is discretionary with the district court it always has been i don't think that's denied by the plaintiffs that the district court has discretion to decide whether a default judgment should be entered and one of the considerations that needs to be addressed in figuring out whether to do it is is whether the claims are as pleaded in the complaints are actually sufficient to support a default judgment and this court has said that repeatedly and alan newman and cripps and the decision in drove from just earlier this year where this court decided that the the the fail to state a claim on which relief could be granted quote have he found an alternative amount of damages correct your honor we think the plaintiffs have not shown any kind of clear error in either the procedure or the substance of his decision judge bench of ngo there was no demand that this be done as a jury or in any other way the plaintiffs consented to the procedure as it was held judgment whether we should wait wait i know that is the person there is you're done the jury trial issue is set aside because you're in default but should the hearing basically then constitute what's now become a bench trial as opposed to a prove up hearing which is what we talk about when we talk about default judgments because in most cases the defendants aren't they are and the plan of comes then does  prove up of what their damages should be and the court finds that that there is sufficient evidence to support their claim and in this case it looks like the judge mossman put on a complete bench trial i took you know and thought your expert was was more credible than their expert why why should that be the standard why shouldn't a point of who's holding a finding of liability have to put on that kind of level of  hearing to get their damages well first of all i don't think there is any challenge to this procedure below to the extent they opposed our participation in a chief judge lawson said ultimately it didn't matter because the concerns that he had with their evidence would have been the same whether we were there or not and i don't know there were plenty of reasons to disbelieve mr rocker who was cross examined very effectively at the hearing but those are points that he'd sort of recognize just in reading the report he had said he hadn't spent more than three hours reviewing the business plan he hadn't reviewed the entire document he had no basis for even computing lost profits he didn't know how that would be done this is morning and as i understand it was drafted by the parties way before litigation started that both of them signed off on it and said it was a reason and that's not correct no your honor it was not drafted out of the parties it was drafted by the plaintiffs in entirely it was not signed off on there is no evidence that it was signed off on by anyone at the defendants it was interesting david for litigation that this was the business plan that you all went into when you were and when you were deciding to start this this business right this was not a litigation prepared plan that somebody crafted for purposes just of this hearing it was it was pretty litigation you're on i want to be careful with with the phrase you all i don't want to suggest that we that my clients were in any way sort of had signed off on the numbers or anything like that that is a point they tried to elicit at the hearing they tried to ask their their chief witness mr rahman whether mr as well as unction who is a dismissed defendant no longer in the case had actually approve the numbers and to his credit he didn't say that so there is no evidence whatsoever that these numbers were approved that is attorney argument that is unsupported by anything in the record the office that shouldn't have come after the traveling so that this is a situation that was discussed by by judge said if you get five hundred five thousand which is the amount of lost capital they wanted then i should reduce it by two hundred thousand and the plaintiffs say correct and that's on page two sixty of the supplemental exerts of record if what they were actually meant was that the two hundred thousand should be taken off the very end of in that colloquy would not have made any sense because there would not have been any silos he would simply have taken it off the very end when the order came out it said plaintiffs and the defendants agreed that it should come off the five hundred and five thousand they did not in any way suggest that that was they didn't give the the district judge any reason to think that was a misunderstanding of the colloquy they filed a letter in which they tried to take back their concession in a footnote that was in response to a request for a letter in a very different point it wasn't proper when the order came out they again tried to raise the issue by letter they were told by the clerk that they should file a motion for clarification when they filed their motion they abandon this issue they didn't mention it at all and even before this court they have not given you any reason to think the chief judge mosman misunderstood the concession that they made a trial that would be the hearing that would be an abuse of discretion review and they don't even meaningfully brief it they certainly don't have any they don't see any cases to that effect so we think this is a situation where no matter what plaintiffs wish they had said chief judge mossman correctly understood what they said and there's no showing that that was incorrect or interpret it the way t i didn't get a chance to come back to law of the case i want to make sure that the court has our position on that i know judge callahan you had questions about it a lot of the case depends on what exactly has been decided in a previous decision and the only argument that they made below was about the august twenty third team decision which has been set aside and therefore can't be a law of the case she judge mossman decided that to the extent they're trying to make a law of the case argument based on other orders or other previous happenings then i think it collapses with the point that they now are trying to raise for the first time in this court regarding waiver again i think this isn't just a technical point it's something that had they believed was really an obstacle to chief judge mossman addressing these issues it was incumbent upon them to raise it in front of ch claims and also the fact that they not only in themselves of the claims insufficient it's not even clear which defendants they are raised against remember they've been multiple defendants in these cases over the course of the multiple complaints most of them have been dismissed whether for lack of jurisdiction or because they settled or for lack of service a process at this point it was impossible for chief judge mossman when carrying out this court's mandate to make a factual determination of damages to figure out who the judgment should run against without assessing the sufficien was essential to him carrying out the task of this court assigned to him again we respectfully submit he got and he did that as this court directed him to he did it correctly and the plaintiffs have not shown any error in his decision and we would respectfully submit that the judgment should be affirmed thank you notes the court has for the questions thank you thank you your honor ok i'll give you one minute very briefly i would refer the court regarding the amount of damages to the forty five million dollar total that was in the business plan that appears in the opening brief forty six and was supported by mr silverman's testimony regarding the computation damages refers to the amount of economic loss it also refers to the amount that that was the problem when the court said damages mr heller was thinking damages as a total of five hundred thousand it just been talking about but that's not what happens with the reduction for a previous payment finally regarding the law of the case it was mentioned the mandate and the fact that things were not raised earlier was mentioned in the first couple of paragraphs this e r ninety nine is the plaintiff's memo for the hearing i'm going to quote something from the fifth from the fifth circuit that i quoted at my briefing about wall of the case and waiver a party who has chosen not to argue a point on a first appeal should not stand better as regards the law of the case than the one who argued and lost