is actually while this case has been going on for a very long time it's been since one thousand nine hundred three pending since one thousand nine hundred three this issue before you right now is a very very simple issue there's essentially two questions which i'm going to address in my oral argument this morning first did the usa suffer a direct injury or was it just indirectly harmed because of some sort of injury that occurred at the singapore then the second question which is really a case of first impression where the ninth circuit will have the opportunity to lay down a rule which should be followed by everyone going forward is a very simple rule that will be derived from the following question if a corporation is incorporated in the united states and has its principal place of business in the united states and it suffers a direct economic injury is that a domestic injury under the supreme court's understanding of r g r nabisco so i'm going to start with the first one which is a little bit more complicated but still relatively straightforward the second one as you'll see is an absolute no brainer it's going to be very easy for you to determine that this is a domestic injury if we find it's there is no direct injury to united states corporation we do not have to deal with the so question that's correct absolutely correct and so the first question and the essential inquiry about whether or not it's a direct injury is to determine whether or not the usa suffered an is whether the injury is incidental to or an indirect result of a direct injury to the corporation or the whole body of its stock or property if it is those things if the usa the reason why i'm here today is to defend the singapore right sure so what they're saying is they were sending faxes showing that the singapore wasn't didn't have any orders it was showing that they didn't have any revenue coming in from customers who had bought those things were false that was fraud now  i'd like to give you one analogy which i think is the framework to think about this it would be like having a car and the mechanic when you take your car and to get the car fixed sees that oh my gosh this is a beautiful vintage car that is worth hundreds of thousands if not millions of dollars if it runs properly and it's in mint condition so the the mechanic porson sugar into the gas tank and then sends a fed you know a fraudulent carfax report saying that this car had been in hurricane harvey so it suffered some sort of flood damage false so then when those false statements using wire fraud because they sent a fax machine putting putting sugar in a gas tank would not be a predicate rico act but if it was done through you know wire fraud or mail fraud as you know second sort of thing was done to provide false information about the condition of the car and then the mechanic i'd like to buy your car you know i'll offer you a thousand dollars for it because it doesn't run it was in hurricane harvey these things make it basically worthless it costs money to take it off your hands because people have to junk it spend you know money to actually get rid of this car up a thousand dollars for it and the person sells the car that person was defrauded and swindled in the exact same way that the usa was swindled that is what happened here so what is the difference between you know it's gone and your nine million books what's that is exactly what i mean first i worry about that is this supposing i even believe you that this claim might be an individual claim for the corporation in the united states what is the harm experienced by the shareholders now the united states which is different or distinct from the harmons subsidiary suffers on account of the same fraud is totally different here what's the it's own generator and trans transducer products it's not a claim for lost sales it's not a claim for had overhead expenses but he had says not any of those the only thing it is because the singapore wasn't actually being driven it wasn't going out of business the there was false faxes and there was information suggesting that it would be singapore was not being able to sell to the customers that it used to have in the old days but those things  the singapore was actually doing just fine and the reason whether you know you're doing is trying to say this is an individual claim i want to know how i'm going to need term and what the harm is that is experienced by your shareholders in a different from the harm that its subsidiary suffered on the account of the same fraud ok so one very direct way to think about it is the singapore did not suffer any harm whatsoever by the usa getting swindled out of the the singapore can never ever sue anybody well the singapore is the one who was losing all the sales no you're going to singapore is the one from whom all of these things were then sent to another person it was so how can you say they didn't have any suffer any harm because it was sent to entities that became the controlling that controlled would be singapore subsequently but it doesn't matter singapore might have suffered some harm and it's that's why so where in your briefing do you suggest what the damages are and how would they be valued other than share the way in which their value is in your breathing yes i mean i looked it seems to me that in your briefing the total value you have is the difference between the value of the shares after its fraud and the value of the shares before the fraud and i'm still trying again to understand why that isn't the same arm experienced by this by the corporate ok sure let me go back to my analogy maybe this will make it clear why your analogy didn't make it clear to me well let me try one or maybe you better try again ok as i'm looking at what the damages are after everything you've said and i frankly have argued about this with my law for some time as to whether there's even any individual claim at all but when we get to supposing there is one where is the damage alleged the damage alleged is that as nonetheless the difference between the value of the shares that it would have been and the value of the shares after the fraud and that's the that's the damage now you're are what is it then and where is it in your brief shirt it's in our brief we what is  shirt the difference is what my client thought the shares were worth when they were being felt fed false information about the singapore is cut to customers they thought these shares were worth nothing the shares were not actually worth nothing because the singapore had not been damaged to the extent that my client was told the singapore had been damaged so it is like the fake carfax being sent saying that there was a flood and hurricane harvey and this car was damaged the car was not actually damaged in the hurricane harvey that's not reduce the price of the car in any way whatsoever the singapore was still a thriving great business with lots of customers but the false statements that were made to my client mr goods by people that atrium the defendants in this case led him to believe that they would be singapore had lost all of its customers it led him to believe that they weren't being able to collect from the customers that they had delivered stuff to so he thought that his shares were worthless but in fact the singapore was a thriving business that's the that's the shareholder swindling fact pattern that we're dealing with and there's no i don't know are you going to church also though what's that this was not argued down below down below it was strictly our injury is the loss in the value of shares you know yes it is the loss in the value of the shared between what they should have been worth and what we believe they were worth because there was a fraud and how do we know what that is what number do you apply to that that was where the expert analysis came in where we're going to have expert testimony where in the singapore arbitration that is precisely what the singapore arbitration established they said you know what if there hadn't been all these lies told to you mr goodson if you hadn't been defrauded then you would have known that your shares were worth this amount which is nine million dollars more than what you sold them for that's what this case is about now why are we still here because this after you get there yes then i why doesn't spiraling take away all you've got spiralling has nothing to do i just use the minute sparling says suits for harm to the corporation may not form the basis of a civil rico claim exact correct and that's exactly what we have no your honor we're suing because we were swindled out of our shares but i can explain why it's different in any event there's two differences first sparling is a case where there is a shareholder when you have a shareholder it says listen this company had its assets  diverted and taken away or there was other sorts of corporate waste that is a derivative claim of the company and so the shareholders have to bring a derivative claim what we're saying here is that's not what happened in the singapore is just like a car that there was a false carfax report saying that it had been flooded in hurricane harvey it was actually a thriving business and it was doing great at the singapore wouldn't have necessarily been worth less sales were going on the customers were they yes not the fact that they stole the business for their their own business exactly ok i got yes thank you now that wasn't the basis of your winning the arbitration yes it was your own and in fact the best place to find that is on page ten of the defendants opposition brief the defendant's opposition brief footnote one on page ten says follow i was going to read the quote the arbitrator expressly concluded usa was not entitled to any damages for the time after the stock sale because the question when determining us the us is damages is not what leasing poor lost but what the usa itself lost direct injury that the usa suffered just like the singapore arbitration set it just like page ten of the defendants brief says it once we know that then we get to the really easy question where this panel is going to have the opportunity to lay down this rule very clearly the easy question is of evidence a have had several dispositive motions and orders in this case and a previous ninth circuit appeal and before that ninth circuit appeal fact and expert discovery had been closed so we were ready for trial so there is a very well established record usa has always put set forth evidence and alleged that the there was a conspiracy to destroy you the singapore to divert all of you the singapore's business and that's the subsidiary not you the usa and that and it destroyed as a competitor or to end or take it over to depress price so this this new notion of misrepresentations does not fit the record the record establishes singapore orders they diverted the you the singapore customers let me ask you a question was it argued below this record that it wasn't the destruction of singapore business but the misrepresentation by the people who were running singapore business to usa shareholders that the business was being ruined and no cause the injury not to my recollection your honor i mean you know so is something new to an arrest isn't the case well so mr bhandari has always argued that they should get that it's not a securities fraud claim but somehow because they lost their there's evidence that it wasn't the destruction of singapore business but the roots representation by the people who were in the singapore business to the usa shareholders because the injury so take down that note and i don't want to hear orders were stolen the employees there was a mass walkout of employees so there was no misrepresentation about the state of the singapore the state of u t singapore was that as you the usa has always claimed it was destroyed it was quote faced with immediate collapse it was worthless and so because you the usa own one hundred percent of the shares they had to sell those shares at a depressed price to the singapore defense just to note the atrium defendants who were the defendant in this case had no involvement in the sale of the shares they they were not a part of the purchase agreement you know they are alleged to have as assisted in stealing the business of singapore right there alleged to have withheld so but again it this wasn't about misrepresentations that had been destroyed the singapore had been destroyed because everything was taken away from it and what's important again is that the only claim left here is to travel to singapore arbitration award and an as your honor had stated that award a judge that smith i believe that was you that award express singapore officers and directors that the business destroyed one it wasn't being destroyed right your honor well but that's his position again and again i won't go there i'll again but again the evidence has always been that the orders were actually stolen the documents were actually taken the employer i mean there were no employees laughed at in you the singapore anymore no to run the company the so you the singapore had actually been destroyed i mean that's why the sale occurred that's why the price was paid that was paid because there was nothing left of the company again you the usa has always said it was on the verge it was on the verge of immediate collapse there was nothing the employees really did walk out not that they did this representation of that's correct runner yes so and when you look at that i mean that that is that is what you say seeking to trouble here that's all that's left and i i don't need to go into into it unless the court has questions but just to make clear the usa previously alleged additional harm they always try to say we suffered something else we suffered something more the loss of our own orders the loss of our own customers and all of that was dismissed before the previous appeal and it was not appealed by you the usa so the only plane that you say has left is to travel the nine million dollar singapore arbitration award i understand that i guess you got a good conversation with judge pray about the direct injury whether it was director whether it was and supposing it is supposing that you could say it's direct why doesn't sparling's say even in that instance there's nothing because it's all derivative to the corporation and therefore not a rico claim well and sparling does say that sparling says it on says it i mean because the and just as the court found i mean the court below found the depletion of the assets of the singapore which in turn caused the depressed valuation of these shareholder interest that's the harm and so i agree with you your honor sparling does sparling and on both say that is a indirect incidental harm to harm to the harm to you the singapore you the singapore suffered the direct harm well we start frankly as i understand it with feldman or feldman says that if all of the corporations stockholders are harmed solely because their stockholders than the claim is derivative in nature that's what feldman says so then you go to the next thing sparling says that's claims that the corporation was defrauded by a third therefore clearly derivative falling on every stockholder majority a minority like and fell on each other on a per share basis that makes it again derivative and then if i get to rico in the rico context shareholders may not forsee pursue rico claims based on derivative claims and then we're done and he loses i agree your honor and just to emphasize i'm not even talking about direct or indirect i'm just talking about taking the case law applying it to what he says is a direct charge him saying nonetheless you're going well i'd and i agree your honor i mean i mean that's what i was trying to give him to focus on and that's why i want you to talk about how my out of it with that i do well i mean i think that there so we're talking here about injury that derive is derivative of harm to the corporation right and that is considered an indirect injury and under rico rico has a proximate cause requirement and that means you need but for cause right you actually so not all factually injured plaintiffs can bring a rico claim right so even if tribal issue of fact as to what caused what they're certainly not a material issue of fact based on the record in this case again and there are several orders there on fact an expert discovery has been completed and you know you the usa has always itself said that and i understand that you're making a distinction but they've always said all we were compensated for in the singapore are betray ssion was for the loss on the value of our shares so i'm you know my argument to you is that that in itself that being the injury is a nuff to make it indirect so the fact that the damage the injury is the value of the shares loss which reflects the loss to you the singapore and that's what it is isn't a circumstance where you the singapore was completely fine where nothing was wrong with you but giving a warning to the parents but they were completely lying i suppose if it's a circumstance i mean that sounds that sounds like a more traditional securities fraud claim which  we're it's it's like the second to last page i think  brief page fourteen of the reply brief defendants a pelleas argue that you these rico claim is nothing more than a classic securities fraud claim and should therefore be barred while this is also incorrect and they say in other places i believe as well valueless and we were forced to sell our shares at a depressed price i mean that you will find that in the record over and over and over again so to the extent that they're claiming misrepresentations again i'll remind the court it be a jury of defendants who are the defendants here not the singapore defendants had nothing to do with the sale of the shares anyway right they were not parties to it they were not involved in it and then it to the extent that there's talking about taxes those are facts as relating to atriums orders that they allegedly withheld commissions on it would be faxes back and forth about those orders but the evidence has always been allegedly that adrian withheld those commissions actually withheld them didn't pretend to withhold them they just didn't pay them look at the opposition brief page thirty seven of it we argued a very vociferously in front of judge allsup as well where there was an you know a back and forth where i said when we were bamboos the our injury was when we were as to causation was that the misrepresentations or wasn't running the business now yes and our theory on why we sold our shares for less than the worth is you find mr goodson's affidavit which is submitted in the record if you look at page of the record this is a affidavit from catherine yep who was one of the conspirators who testified in paragraph eight the plan to secretly divert customers away from singapore and profit from the  ongoing service of those customers at the expense of the usa was intended to continue indefinitely in the future and then i'm skipping ahead  doing the company in not misrepresenting to shareholders of the company was doing that let me skip ahead to what she says next taking over the singapore was one step in the overall plan for atrium and the employees and officers of the singapore to profit by cutting you the usa out of the picture and preventing future payments to the usa in fact we knew that it might not be possible to take over the us singapore if the us and mr goodson could not be convinced to sell it that is why we set up a who will not yours know the setting up a secret shell corporation and it is not even sales it's setting up as a diversion of the business but if mr goodson knew that all that was happening was tomorrow morning at nine o'clock