the morning made please the court doug whitney for appellant apollo education group with me to counsel table is mark hersh i'd like to reserve five minutes for a bottle if i may in granting summary judgment the district court concluded that national union acted reasonably as a matter of law when it refused to consent to the backdating settlement the district court's decision should be reversed for any and all of the following three reasons first the court applied the wrong legal standard in judging the reasonable mess of national union refusal to consent secondly the district court ignored all of the evidence apollo submitted regarding the objective re backdating settlement third the district court improperly construed all inferences in national unions favor in greenie it summary judgment before you dive into your argument i'd like to ask you a question about your thoughts on certification to the arizona supreme court what the arizona courts have said what mara says what say is seems to me to be central to this case and as you acknowledge our zone of courts have not squarely address the meaning of the phrase shall not be unreasonably withheld in the in the context of a director and officers policy where the ensure that the insured retains the duty to defend should this court certify the question of arizona state law to the arizona supreme court we do not believe there are that certification is is necessary or appropriate here for the following reasons first that the court's decision in morris is not limited duty to defend cases on its face in if you look at the court's decision in morris it says there's a difference between duty defend and duty to pay in this case we're looking at the duty to pay because while the unsure was honoring the duty to defend in that case it was not honoring the duty to pay in a guaranteed way because it issued the reservation of rights and it was a vat issuance of the reservation rights that put the insured  precarious position combined with the fact that the insured was not guaranteed coverage because of the reservation of rights as well as the potential for a judgment in excess of policy limits both those are present here so we don't see i understand your interpretation of mars but marise is not squarely address the issue before this court it does not address the specific language or are highlighted in the question that is correct there is no tension there's no k the arizona supreme court basically adopt that position what is you know we we should look to the court of appeals decision but ultimately the question vs what is the arizona supreme court could do understood your  honor there's another consideration in in thinking about certification and that's would would it be dispositive let's look at courts outside of arizona and how they've looked at the language unreasonably withhold consent we have three very similar duty to advance cases so they're not to defend cases involving settlement of securities class actions two of them then of all national union the exact same policy language in each case national union or the insurer rejected reasonable jury could find that the settlement was objective with reasonable if that's the case it would be unreasonable for the insurer to refuse to consent to subjectively reasonable mean whose perspective we supposed to take so the court in morris and subsequently in tennessee are attending the arizona supreme court has has articulated that standard and it's what a reasonable lee prudent insured in its position given the risks is making is it has to be financial risk the insurer is not required to take on considerations platell issues that don't go to the financial risk in judgment what we have in this case and it's undisputed in the record was highly qualified believe that there was hundreds of millions of dollars in exposure to apollo in the event of a free man trial counsel believed that the settlement posture would be horribly unattractive the hundreds of millions of dollars of exposure was far in excess of a pause in shreds coverage apollo's appellate counsel highly qualified believe that there was at least the fifty percent chance that this court would reverse the underlying dismissal of backing the settlement was reached only after a year's worth of arm's length negotiation before a mediator the national union recommended  only a tiny fraction of a polish potential exposure so whatever i'm not sure that that the expressed opinion of apollo's it's a private counsel i have to assume that person was aware of apollo's insurance coverage and was aware how much was left in the insurance policy so i look at a subtle meant that perhaps not by coincidence winds up reaching agreement at a number that fits neatly with them what's left of the insurance coverage doesn't require apollo to pay more at least on the terms initially agreed my assessment correct your cess meant that was informed by new year at which a very prominent economic consulting firm into may have two thousand and eleven that apollo faced the potential damages in excess of a billion dollars then in september two thousand and twelve so we're talking about a year and a half in advance of any settlement apollo's trial counsel in for national union that liability is going to be at least hundreds of millions of dollars i mean that potentially over a billion in that call with national news coverage coun national unions covers council said there is quote no prospect of downside no no downside exposure no prospect of downside exposure there the question before this  could a reasonable jury find it that was unreasonable to dismiss outright the conclusions of nira the conclusions of highly quite up out highly qualified outside counsel that in fact apo exposure there is nothing in the record to suggest between september two thousand and twelve when that conversation occurred in a national union's final refusal to consent which occurred in october two thousand and fourteen the national union once revisited that off the cuff conclusion that there is no prospect of downside exposure notwithstanding nearest and the meaning of no downside exposure exposure for whom well i  believe based on the record in this case that mr fitz simons who was apollo a national news coverage council was referring to the insureds exposure i think that's a patently and reasonable conclusion if he was referring to national that national union acted reasonably as a matter of law because it did it considered the terms of acting talent and it did not act with unreasonable caprice whim or prejudice it never analyzed in any way whether or not the backdating settlement was objective fully reasonable or any of the factors set forth by the court morrison tenney which say you have to look at what would a reasonably prudent insured in this situation pay with its own money to settle it having to own council sort of monitoring the negotiation did national union yes yes it did outside help and did he offer or he or she offer an opinion as to the reason of this little what the record reflect there is no nothing in the record that national union contemporaneously offered its ration now to apollo as to why they were fus consent if the answering brace brace page seventy eight national union claims that those reasons were explained if you look carefully at the record cites in the national unions answering brief those refer to conversations that occurred in two thousand and twelve in the fall of two thousand and twelve more than a year and a half before the settlement was proposed by the mediator and accepted by apollo there is no contemporaneous explanation of why they rejected those out of hand and the question for this court is could a reasonable jury conclude that national union acted unreasonably in refusing to reasonable settlement the answer to that question has to be yes and that's why the district court is wrong whether you apply morris or whether you apply principles the courts in coverage cases will see what you seem to be importing circumstances in terms of lack of notice or lack of opportunity considered to concepcion objectively reasonable settlement if they do that on reasonably that is not not only a breach of contract but that's a bad faith claim and that's why we think the district court got both financial off you know i about seems to me about expanding mars why doesn't that point to the fact that actually in the context of directors and offices policies where the phrase may please the court my name is ben cooper and i represent national union this courtroom affirmed summary judgment of the district court because as a matter of law because they are undisputed fact it was simply not unreasonable for union to withhold consent for thirteen million dollars settlement of claims that already been dismissed with prejudice in three hundred twenty pages of what could only be considered toward a forced tightly written analysis to me with all respect your honor not of my why it's not ambiguous and why it's there it's stopped because the phrase first of all the person the text of the language is clear which is that you're looking at whether the insurance company unreasonably would help consent and while that phrase may be susceptible could construction the only courts that have construed and the one we cited actually it was a politician it was a schwarz case which says you have to look at the results of the act or decision made by the actor who's subject to that you know is being judged by the reasonable ness and while the settlement itself may be come into that analysis it's part of the  the construction of the statute does the construction of the policy language acted reasonably in other situations where you look at whether insurance companies act unreasonably the arizona courts use a two pronged analysis that the subject of did they have reasonable grounds for doing it and then subjective agrees with those cases are not insurance policy cases that know they are there are insurance cases but they're not considering the word unreasonably but i would say that it doesn't why shouldn't  we ask arizona request that arizona resolve this issue your honor i'm always happy to ask my home supreme court and what they say about this but i think the reason you don't have to in this case under due to defend my insurance company and where the insurance companies both controlling the defense and controlling the the settlement and insurance company does something take some kind of act which puts the insured in a precarious position whether it's denial of coverage which is a damn wrong type agreement that i'm on type situation or in this case a reservation of rights and what maurice said is you have a duty to defend the insurance companies controlling settlement the insurance company there was arguing that you that if the insurance company that insured entering into a  settlement by itself was a breach of the duty of cooperation given that the policy put control settlement in the hands of the insurance company and so the court was trying to come up with a mechanism to handle that dynamic where you have control prevent insureds being defended under reservation of rights for protecting themselves by settling so that is the reservation of rights or in the case of a dam run situation the isle of coverage outright put you put the court and the insurer and what was called a precarious situation one of the economic peril here there was no predicate act whether reservation rights or a breach by the national unit that is that put someone who is being defended at risk does the dynamics w and apollo also had control of the settlement they chose to settle at a point when basically everything was said and done that is this is unlike any of those other cases he cited where you actually have the court ruling and not just ruling but ruling  ever set aside a district court order i have infinite faith your honor and i expressed my fights in the wisdom of the ninth circuit but it is late which which may not one hundred percent of the time coincide with the wisdom of the district judge that is correct but i think this is an extraordinary case if one takes the time to go through the three hundred twenty pages of very tight specific analysis let me i still want to back to the policy language yet under this link the language of the policy to what extent is insurers supposed to take into account the interest of the insured what you honor and in going through that count gives you just in going through the calculus i think the district court recognizes that you have to give equal consideration that's part of the duty of good faith and fair dealing  in all insurance contracts you have to look at what the concern is and you have to balance that but you don't just give way but we will do we know what considerations the the insurance companies coverage counsel had about yesterday there's you know we do what we know with insurers i mean insurance lawyer positions yes there was extensive testimony in the record of about what national union thought why it decided not to consent you know that's not correct we have deposition we're going to look in the record if you could point me yes you can with where we were i could read what coverage councils in the insurance companies coverage counsel yet assessment that's going to tell me what yes insurance companies coverage counsel assess what was a likelihood of what was going to happen it's feel it's two pages forty nine through seven paragraphs forty nine to seventy eight of statement of facts and the appended testimony yes it was not what but one that surmounted in a lot of cases including before this court your honor you have to ask what is the issue of fact and what they put up as two things first a damages number and they're all suddenly talking about near a something you didn't hear about in their briefs in fact there was a political mary analysis that hadn't been adjusted for any of the things in the judge's ruling and their own counsel mr florent said that that number those numbers damages the test is sworn affidavit from the plaintiff's counsel was well actually their damages were in the forty million dollars range and that's the one declaration decide and that's why we sided with declaration so you have to ask well the poet risk you know saying fifty fifty exemplary opinions and his detail analysis of the case law and the facts and say well where was it you get this vague assertion well he kind of flipped from apollo one tell policy three but they never quite same what do you he said there they've identified five it's grants specific grants of active stock options and he said all of these are time barred and he said the rest of the hundred grants they've abandoned  because they don't say anything about them and that was never appealed his holding of the other one hundred or are out because there were no allegations as to them and he says well as to the when there were two kinds of claims that were being disposed of he says well the false of the allegations are improper i can't even evaluate them because they're not particularize you have to redo this he says that they're troubling i don't know why any of these supposed statements are false and so you've got to repla comes back in a pall three in the second amendment complaint and a palm drusus brilliantly by the way in appeal we've got the principal briefs on appeal so it's not conjecture what the appeals going to look like we know how the issues of framed on appeal and they add a six in the second bag quite a six grand and judge group field goes through and he says you know i look at all these things and there's no backdating here there's simply no allegation particular he goes through it all he says there's no back getting in here either that's adequately put so there's just no underlying back to either for the backdating claims or for the curity statements claims that are based on fact so they got to fa and he says that you know i gave them a chance to fix falsity and they come back with this stuff and if you examine the the allegations you can't show that any of these statements are false because there's no connection between the r if you lose on the breach of contract claim you also lose on the bad faith claim no normally bad faith has a higher standard because the standard for bad faith claim particularly first party bad faith claim is is well established in arizona law a bad fai have been shared go forward with national union but for the mediation was that the right legal standard yes it was and in fact we know it was written on february sixth and then it was sent to natural union council so that was absolutely the correct ruling on this is that with the exclusion of those letters what do we have in the record to assess reasonable in this well your honor you could look at the testimony which i've cited judge baez about come out of mediation and start putting out you know redoing the discussions but they didn't you know that stuff is simply under the mediation privilege but there is really a time thank you in light of my brief time on the try to make five quick points i think the most important is to correct mr cooper statement regarding the reservation of rights issue it's undisputed this case that asking me did in fact is your reservation of rights it's a ninety five going five as well as seven eighty eight paragraph two volume five secondly with respect to every guilty issue the district court supplemental excerpt of record page three found this phrase ambiguous but yet failed to construe it in the  required by arizona law that is yet an additional error number three the schwarz case that mr cooper referred to the second circuit look at the second circuit opinion page one forty five of that opinion the test the second circuit adopted not the district court in affirming the judgment against the unsure was could a reasonable jury have found that this settlement reflected a reasonable song and the second circuit said yes and that's enough to affirm the verdicts vat's the standard the second circuit adopted with respect to the reasons that national union's coverage council came up with in refusing to the settlement there is no contemporaneous evidence of that whatsoever the first evidence about their supposed reasons at the time were given in deposition testimony in two thousand and sixteen letters are excluded insurer ignored contrary evidence that's what the record reflects the insurer was given evidence were guarding the risk and appeal given evidence regarding the liability didn't address it and refused to conception i see my time is up