well your argument this morning case fifteen fifteen zero nine the united states bank national association trustee versus the village at lake ridge mr cross mr chief justice may it please the court this case presents a paradigm example nick's question of law in fact it's a poll worker case the historical facts are not in dispute and the legal measure is settled the question today is what what standard of review should govern the application of the legal standard to the undisputed facts  legal standard the legal standard should be didn't over the legal standard is articulated by the ninth circuit it was a two prong test where the parties relationship was sufficiently close that it was comparable to the factors enunciated and want to one thirty one of the bankruptcy code and one of the parties transacted at arm's length to two prong test historically when this court has it has applied prongs that means let's assume the district court had found that this couple was an intimate couple that lived together exchanged payments of their expenses were like a married couple not like the facts right but in fact they in an arm's length way he did do diligence he he thought about it he talked to investors they all said this is a great deal take it so it has the initial arm's  but it is almost an insider relationship because he's essentially married to this woman both elements are required that's fascinating so seem to it's not required with traditional statutory inside statutory insiders we presume that the transaction is ten why don't we make the same presumption if these if these non  are just like insiders with the tests that we have which is settled is the two prong test and with respect to the second element of the test the first test is more of a presumption what's the nature of the party's relationship but the test goes to the nature of the transaction and there's a subsidiary test for arm's length and the question is did the parties transact as if they were strangers it doesn't include intent it's an objective status test you can for example have a close relationship and have an intent to transact with a denied correct so why did you think it was important if you're defending the standard why did you ask us to take the question if you think the standards ok i thought that that when we asked for we asked for certain on that question we thought the standard lacks sufficient definition but since the court denied certain on that question i'm living with it i'm living with the standards that i have that's exactly right the jones that the courts approach to treat to the findings semen under the jones act it's right on point for this case you know there as here there's no definition of semen there's no definition of what is it an insider under the bankruptcy code and there as here the definition of insider in the definition of semen require the application of facts but in those cases the court has drawn a distinction between clear error review attached to historical findings of fact made by the trial judge and de novo review with respect to the guidelines in principle for the application of the statute if you look at mcdermott for example it was the appropriate function of the trial court to determine that the individual was a painter and that he was a member of the crew but through the exercise it innova review the court said you do not need to aid in navigation to qualify for semen status so it sounds to me like you're taking the position that it is a mixed question which means it has elements of both but the standard of review review should turn on which element the court is addressing in other words you can have  both parties to the case agree yes this is the standard of review we agree it's well settled but the facts apply in different ways isn't that the factual part of the mix question and therefore shouldn't those determinations be reviewed for clear in the fact that chief justice roberts the factual portions which are the underlying historical facts favor the trial court should be reviewed for clear but the guidelines and principles that govern the application of the standard to those facts that's to noble review have my hypothetical to the latter are completely agreed upon it's a dispute about facts and therefore that the ultimate determination it seems to me would turn on clear review not in this case your honor because the test lacks definition yes it's a subtle test but it doesn't have sufficient definition when you think do you think the parties are in agreement on the elements or the components of an arm's length transaction or do you think is a question that requires more elaboration that clearly requires more elaboration jurado we are at the supreme court that is there's a dispute between the two parties with respect to whether intent is an element of arm's length that's exactly the type of determination that should be made by the appellate court there's a lack of definition to definition that's that's i don't know if that was the issue the ninth circuit thought it was facing you say of course brute facts or question if the legal standard is a question of law but sometimes implying a label to the brute facts which are undisputed is a question fact is a good case in one circuit you didn't find it because doesn't tell you the answer united states who fifty say putting the label on the fact is a question of fact if you call in a lawyer what does it mean with a statute that's a question of law and the beauty of this case is it's somewhat ambiguous on what it looks like that's a factual question you said so so so we know that what you're telling us so far but what is it about this case that suggests that they were new and the other side were disagreeing in the lower courts you both were  about what's the disagreeing about what's the label but it wants a legal matter not the factual matter of whether the well known phrase arm's length transaction fits on these circumstances which could be a factual matter your honor i would disagree that arm's length is so well known it's unknown among lawyers that's probably true and that's who you're dealing with in this case in this case arm's length is being used as a measure to determine a status it's not a settled it's not a settled fact like in linton and linton the court was looking for a fact a factual determination with respect arm's length here arm's length is a term that's been invented by this and the appellate courts derive from legislative history to say if you satisfy this standard then that is the second prong to measure whether or not you have insider status one of the hardest decisions not arm's length was not invented by the court here arm's length is a legal concept it goes back beyond blackstone it's a familiar legal task for lawyers and it seems to me that the application turns on a variety of factors it's not i would disagree that it's a familiar considerations that we think should be applied in determining whether something is an arm's length transaction and the second opinion says the test is arm's length transaction doesn't talk about considerations or factors just assumes that everybody knows what that arms length is and just says here are the facts in this case and then reaches a conclusion well this either is or isn't an arm's length transaction now it seems to me that on the first case you would have a good reason for saying well when the court tries to elaborate a test and considers factors and considerations those things are more a part of the legal inquiry but when the court just says here's our test now here's the facts and then reaches a conclusion seems like all of those facts they're just facts your honor that your second your second example would be more reflective of trial courts finding arm's length isn't that a fact but it's important to remember here we're not solving for arm's length we're solving for insider status and the arm's length is just a measure to determine insider status and there could be great clarification given to what that measure is we could have four principles that would give greater definition to what arm's length for me so i think you're talking about two separate questions  and it's not your fault that the two are hard to separate because we took one question and we didn't take the other but the issue here is what is the standard of appellate review with respect to the standard that was applied by the ninth circuit i take it that is the question and the ninth circuit standard has two components one is whether it was an arm's length transaction and if the definition of an arm's length transaction is the one that justice ginsburg mansion which i think comes right out of black's law dictionary is it and the kind of transaction in which strangers would engage isn't that a question of fact isn't that very close to a question of pure fact the underlying compliments of the tester questions of fact how did they engage so for the trial in this case the trial court it was a question of fact that there was no negotiation it was a question of fact that they did that there was no due diligence those were questions of fact the question for the appellate court and the question that this case presents is what standard of review should have been applied to determine whether those facts satisfy the statutory measure so that this was so finding which is it was do under the circumstances the lower court in this instance your honor made no determination with respect to whether the parties negotiated at arm's length never mentioned never mentioned arm's length never mentioned if the parties negotiated to strangers it just made the comment that it was the appropriate due diligence for an investment of five thousand dollars which in this case was not this this individual had never seen the property had known nothing about the bankruptcy case paid five thousand dollars for two point seven million dollar colossal lot of strong arguments in this case on the facts but it still doesn't answer why this is not a finding of fact as opposed to a conclusion of left in the hands of a bankruptcy judge who deals with financial transactions all the time no i disagree we're interpret in a statute you know there's no greater provision no more important provision of the bankruptcy code than determining who is and who is not an insider it cuts through everything it determines payment priority it determines your ability to cast with a single vote a plan that will affect the rights of all the other creditors in the case and that determination is should not be relegated to what to tell you the circumstances finding  particular transaction is the kind of transaction in which strangers would engage in a bankruptcy judge who are the power of the court of appeals i believe that the underlying facts are better determined by the bankruptcy judge of the quantum of facts satisfy the statutory measure for the appellate court but there are two prongs here so the first prong of this test is whether the party's relationship is sufficiently close that the relationship is comparable to that in one of one thirty one certainly an appellate court is better position to say what relationship is comparable to want to one thirty one that is not a trial court decision i think you have a strong argument on that but on the on the second part whether it's an arm's length transaction why is it  preferable for a court of appeals panel to decide whether this is the kind of transaction that strangers would engage him so in pierce the court recognized that sometimes findings to develop over time and we may reach a point we may very well between strangers would you i would add for i doubt at least for governing principles what is the transaction marketed did negotiations occur do due diligence occur and in the absence of those three factors was there some indication or finding by the trial court that fair market value was paid giving those for those four contours to what it means to negotiate as if you're strangers would be a great assistance and clarity you know i was reviewing the cases over the weekend and in chandra's justice o'connor writing for the court was reviewing fifty years of history in determining the semen at the semen status and she commented that the absence of definition and clarity of the absence of giving general principles had led the lower courts to create a labyrinth and they've gotten lost in it i urge you not to do the same thing with insider status i can tell you as a practitioner there is no greater safeguard against a cram down plan and then the requirement that there be a non insider class consenting that's impaired that cannot be left to the ad hoc determination of each trial court is particularly troublesome in bankruptcy but if you had a situation where the underlying the legal rule was satisfied if someone was a resident of nevada is that a factual determination reviewed for clear error i'm sorry i didn't understand the question well what you have a statute and the question is is somebody a resident of nevada if he is he gets some benefits if not is determination that he is or is not a resident of nevada reviewed for  clear yes ok now let's say that the determination turns not simply where his residence is but also where his da messiah liz is that determination of resident that he qualifies under the statute still just a question of review for clear which you know what constitutes residence may or may not be clear under the law there may be difficult issues he spends four months in florida or whatever and it what point does that become something that you need to have the novo review of these cases are difficult i mean when you review them it's it's very difficult and typically there's a waiting and the court has said the court has said in cases involving intent credibility motivations those tilt towards the trial court and the trial courts better position and it typically turns on who is better position to make the conclusion in those cases however where and that distinguishes pierce cooder that line of cases they all deal with things that are inherently in the position of the trial court but where that where the issue involves the interpretation of a statute that's the differentiating factor but i agree with you that they're difficult but i think it's pertinent whether they're more difficult for the district judge or more difficult for the court of appeals and it seems to me that a lot of the issues we're talking about here are the sort of things that district court judges and i can see court judges look at all the time but to get the intense factual record on a subsidiary  court of appeals to look at it after the district court has already done it i mean the de novo review simply needs to go through the factual determination the second time i'm not quite sure that that's desirable i'm not suggesting that the appellate court re examine whether they had  romantic relationship or whether or not there was any due diligence i'm suggesting that was for the appellate court to the exercise of the novo review to say whether the existence of that romantic relationship was important or whether the exercise of your diligence was important and they do that  i mean you know it might be important in some instances in some other instances it wouldn't be i mean he had lists five factors and then on you know at the end of this pandemics he has about four or five more factors and i guess he saw the people that he see the people yes ok he heard them he saw them he thinks what is the nature of the relationship and then he lists of about nine different things i mean an appellate court won't see in an appellate court will have a cold record probably can't go into the myriad details that will say in this situation whether it was as if between strangers or whether it was a what do you want them to do appellate courts all the time in the context you know they can i'm not saying you  i understand it why would it be more accurate about whether this is a reason not as if this particular financial transaction was or was not as if between strangers because there's a great level for needed for there is a great need for uniformity in this area and that's another consideration there's a substantial need for uniformity and i'm not doubting that and i'm just doubting whether you could by having dozens of appellate court starting to go through dozens of records and each one is a little bit different in respect to the relationship in respect to any one of these nine different factors in that do you think you're going to get uniformity that's that's what i'm doubting you there are three hundred fifty two bankruptcy judges in this country there should not be three hundred fifty two views of who is and is would we can provide greater we can provide greater defense and would part of your your answer to justice prior be that in this case the subsidiary facts can all be conceded the question is the conclusion to draw from that's correct your honor i wish is that an answer is that an answer didn't we just discussed that at the beginning of what i question didn't i just say sometimes which you seem to agree that applying a label like wild bird or transaction buying a label be all right and what is the difference and why is that difference make a difference here it makes a difference here because the label that's being attached is a statutory conclusion because this is settled we are not solving for arm's length we are solving for whether or not this individual was an insider or not an insider and that's what differentiates it that's what differentiates this case from tiva that your honor wrote the opinion for the court of just two years ago he drew a distinction between a historical fact and a patent term and a statutory term this is a statutory term the cortisol being for who and who enjoys insider status under the bankruptcy code can i ask you a question if drawing on your experience as a practitioner  in this case and i suppose in other cases where this comes up when you say the issue is whether a plan of reorganization is going to be confirmed or whether the debtor is going to be liquidated and from the perspective of bankruptcy judges in your experience what is the dynamic regarding that determination do they have a tendency to try to achieve one result or the other in my experience they have a tendency to be it depends on the jurisdiction some jurisdictions are very pro daughter i would lean towards confirmation bankruptcy is an area where their form shopping is prevalent my concern liked to have had sort on that question but that's true counsel given your articulation i'm not sure how your approach differs from that of the solicitor general the solicitor general stops with you know c h of the test so the solicitor general says that the if the trial court announces the test the appellate review stops there that cannot be the test if you're going to take that approach the test has no meaning if the bankruptcy court had correctly stated the test and then disregarded it and just applied its own test as this court did it took the court took the bench looked out to all the bankruptcy courts in the country and said i conclude that these five factors are sufficient to satisfy the statutory test but nevertheless there was something in the record which would support a clearer finding the ninth circuit's test would have had no meaning so this illicit or general says as long as you say closeness in arm's length the appellate analysis stops there that's never the case when there closeness or arms length are the test would be subject to denote a review so why would we stop there why wouldn't we say what does close and what does arm's length mean are there not just words sometimes there are tests that we think are better formulated at a certain level of generality and then we want you know to case by case by case analysis to figure out what exactly that test means and how it applies in particular circumstances we don't think the right thing is to send out you know a more specific legal test we think that it will be filled in by factual development and that seems what this is is and that's the mistake that the court made for fifty years in interpreting the jones act for fifty years that was a generalized definition that was derived from t and there were no specific contours or principles applied to it and that led to his justice o'connor wrote a labyrinth and the court's got lost in the definition the same thing is going to occur here i am not suggesting no i would lose i'm not suggesting that the court get drawn down into the nuances of arm's length beyond principles but the court clearly articulate basic principles and gods that would allow this statutory measure to have greater clarity i articulated the four and with respect to closeness the nature of the relationships and defining the categories of the relationships saying there were mantic relationship is sufficient to satisfy the presumptions that you're going to take a closer look that's an appellate role that's an easy call we do not need to get down into the weeds of how many dates did they have did they live together with that that is not necessary but a generalized principle would give suffici guidance and that's what differentiates us but it's particularly important because we're interpret in a statute if there are no further questions i'd like to reserve my writing  you guys are thank you mr chief justice and may it please the court petitioners theory requires at least three a poet judges over at least two rounds of appellate review to devote extensive time and resources to recreating an entire evidentiary record and redoing a trial judge fact intensive work i don't think he is articulated his test very simply he wants the circuit court to say what the legal standard is what does closeness me and i guess i've made it he may add some tweaks to it but i think he would say closeness is a relationship that is non between strangers that you have a friendship and romantic or otherwise but it's not between two strangers and arm's length is a transaction in which there has been a market deal we're a market deal being supply and demand and someone's actually done due diligence and what they are demanding seems to that seems like pure questions of law to me and what he's saying is that's what the circuit court to do here it didn't define in any meaningful way what closeness means or what arm's length means even as a black's law dictionary definition  or as a subsidiary definition it didn't give any guy so why aren't why isn't that questions of well your honor we think if the challenge is to the legal standard then it is a question of one attribute to novo which is exactly what the ninth circuit said and did in this case and if you look at page seventeen a petition appendix in footnote fifteen it said that the bankruptcy court applied the arm's length test and it said its entire explanation was why the transaction was at arms length and it described the standard in exactly the way that my friend has and the way that justice ginsburg did this is a question as to whether the transaction arose as if it were between strangers so the question before the court though is what is the standard of review not for challenging the legal definition but for challenging the underlying factual determination as to whether in the real world this transaction actually occurred at arm's length and that is under your view of the case posed there is a case that something have guidance here what is the guiding legal standard and that is it that is this simple is it an arm's length transaction did the parties conduct this in the ordinary course of business in good faith exercising their own independent judgment what was their motivation for the transaction that's the legal test that's reviewed you know it's not really the legal does to go into the ninth circuit right because the the ninth circuit has the arm's length component of its legal test but it also has this question whether the closeness of the relationship with the comparable to that of the enumerated insider classifications in the statute and and how any particular set of facts does or does not meet that of the test does not see much of a factual question well your honor i mean assuming a particular set of facts that everybody agrees to and then the question is well is that sufficiently close that it's comparable to the enumerated insider classifications that doesn't seem like any factual question i've ever heard of well i think it has has a serious factual component actually i would submit that it is still a factual question because the statutory numerated categories create a yardstick it's the benchmark and then the factual question for the court is looking at the  fleeting special narrow circumstances that arise in all the different cases does this particular transaction between these these two people given their relationships the nature of the transaction how well they knew each other how much they go she took place do they look and relative is defined as somebody within the third degree of consing when it and i doubt that i remember this from the bar review but i looked it up and the third degree of consing going to be includes grandparents in law  court did to be very clear is saying gauge in a tally of the circumstances finding which is exactly what the controlling standard requires it's fact intensive so whether they live together and if they share finances those are certain considerations i mean they weren't as close they were not at least as close as a brother or sister in law that not according to the to the bankruptcy court but again too that's only one component of a totality analysis i mean if that's the kind of determination you think we should have we should be deferred to under the clear error standard that's not a very good example is it well your honor i think that if the court is concerned that there are certain degrees of closeness that need a categorical rule that binds all cases then that would be a challenge to the legal standard it would say that as a matter of looking at the problem whether th in conducting a totality analysis as to whether parties are sufficiently close court should take into account certain types of characteristics i so would submit that that ultimately is a factual determination and is highly fact intensive but even if you disagree and you think this is more like a mix question that you need to define the legal standard in need to apply it to the facts of this case under this course functional approach asking which judicial actor is better positioned to decide these questions we think the factors overwhelmingly in favor of clear area why why is that true because i have certainly heard it said as your opponent said in answer to my question that bankruptcy judge is a very strong tendency to want to get plans confirmed and to do what is necessary to get plans confirmed and maybe in the heat of that trying to make sure that the plan can be confirmed and doesn't have to preside over a liquidation there's a tendency to stretch things act in good faith and the code has i don't doubt that they act in good faith but you're saying that there are better you better situated as an institutional matter why is that so i think they're better situated for two reasons one is that bankruptcy judges  expertise in looking at that to tell you the circumstances they're the ones with the front row seat to the witnesses here the bankruptcy judge got to see the demeanor of the witnesses and judge their credibility they're in a far better position to determine motivation intent which we submit determined on the basis of the closeness of the relationship without respect to the arm's length nature of the transaction that's just because the ninth circuit has developed this two part test and there is i can tell it's conjunctive you require both close and lack of arms like other circuits have different verbal formulations and some haven't even weighed in some haven't even weighed in on the question whether there is such thing as a non statutory inside or right and yet here we're being asked to decide what the right standard review is can we do that with any degree of assurance when we don't know what the right legal test is and don't we run the risk perhaps of suit sending the wrong signal to lower courts that we're adopting the ninth circuit or endorsing the ninth circuit's formulation of what the test is well you know i think a couple different points that that the first is there is some degree of difficulty of measuring between two points without knowing what one of them is only seems to me a survey that for me and i've looked at it and i'm not sure i entirely agree so help him give me some comfort on that because i look at like the four circuit for example and they talk about sufficient authority much a closeness that really focused on the closeness aspect  em and then i look at others and they focus more on the arm's length and i agree those are two important factors but the degree of attention given really does seem very different across the circuits you're i think ultimately though the circuits have looked at this and this includes all yours honor if the court would like to dismiss the cases improvidently granted will take the win anyway we got we do think though that i think any standard that the courts adoptable still require a clear area because even if you think the standard has sufficient legal no arms embedded within it it still will ask appellate judges to take the time consuming and inefficient task of real weighing and reevaluating facts and i'm suppose that we could articulate what the right answer is based on a particular understanding of the test and i gather there is little dispute about that we certainly can determine exactly what we are looking at and then make it clear and send it back of the ninth circuit thinks it's tested something else metal will be free to apply the facts under the appropriate standard about test i think that if the court were to remand to you to reconsider under a different test i think that would actually be deciding what the test is to some extent but again i think as for the standard of review the circuit did applied to nova review to the understanding of the legal test so the definition of the test it clearly said is a purely legal in corrie and it applied to nova review in reviewing the bankruptcy court's decision the question before the court right now is is it appropriate to have two rounds of appellate review and again for the five circuits that have banksia poet panels you have six appellate judges being asked to take a highly multifarious fleeting special narrow fact record factual record and reevaluating a factual determination of the bankruptcy judge made clear error shouldn't be passed there are errors and some of them are clear and so why isn't this one of those cases that's what judge clifton was saying which is on these facts you can't sustain a finding of arm's length transaction or a finding that there was a lack of closeness that so even under that standard there has to be some meaning to what those two things mean and some explanation as to why that's this it's that dancing that well that is a fact case specific determination as to whether the ninth circuit correctly applied clear air review in this case and again the question before the court is whether it should have applied clear if you're something else and we respect y disagree with judge clifton's conclusion we think that if you look to the facts as the bankruptcy court found them this was a negotiated transaction dr rob king went back to the to the debtor and asked for more money after he determined his claim was worth more which is what independent parties do you know they go into a bidding war i would have been the very first one going back and forth and saying who's going to pay me the highest amount well it but he what he concluded though is that this is this is a five thousand dollar transaction that he made and so it's perfectly reasonable for someone who is a sophisticated wealthy investor to decide that additional bidding and additional negotiation just simply isn't worth his time but again the relevant question before the court is whether clear ery view in fact applies and  lasted there is not a split on that question your honor every circuit to look at this is understood that whether someone is an insider is a determination about the character of the person as opposed to a characteristic of the claim that they acquired and i think that the easiest way to understand why the ninth circuit's to terminations on that point was correct is if this claim had been acquired at you know an anonymous auction surely it wouldn't matter that the claim head originated with a statutory insider but again that is a question of the court did not agree to reveal and looking at the other factors that this court takes into account and looking at which judicial actor has the better institutional capacity to resolution explains neutral standards that are principles that are applicable to other cases that's the whole function of the judicial process your honor and if the if the relevant issue being shall we say oh that's inefficient we want all just let everybody do everything they want to return to be perfectly clear if the relevant challenge again you have to break it into its constituent parts is to the the norm being applied or to the legal definition of the standard that is a question of law for the court as in one circuit held if the question is whether the facts of this case satisfy that legal standard that's a factual determination and at or maybe a mix question but it's a highly fact intensive process that is not really falling within the you know the heartland of what a public courts typically do and this court didn't find concerns about losing law clarifying benefits to control and high and high mark where it decided to you know exceptional cases under the patent act or an issue in east subpoenas in mclean or and looking at exceptional case findings or or other questions in pierce that there are lots of decision set look in balance the for the competitor the comparative advantages of appellate courts deciding things that are inherently factual and have expertise in doing exactly what they're doing here and that's even if the documentary record is established trial judges are very good at taking a whole collection of facts and evidence an entire record and weighing components against each other and that's especially true where is here it involves questions of motivation and intent and a public court simply isn't situated to on a cold paper record to decide whether these parties looking in their eye really engaged in this transaction because they thought it was in their own self interest or they were colluding or in cahoots with each other and once all the facts are stablished why is it preferable for a bankruptcy judge as opposed to a court of appeals panel to decide whether those facts  distracts from the appellate court's work in addressing the true legal standards when parties are actually challenging the substance of the legal test and in bankruptcy in particular having to an over review encourages additional appeals and that means it will hold up the administr of the state it prevents creditors from getting paid in a prevents reorganization of the dead are which again as congress is concerned with efficiency and finality in the bankruptcy seven but appeals are not always a bad thing oh certainly not and again if it's a challenge to the legal standard then it makes good sense to have to know of a review one way of thinking of this is that once you have the facts and the facts are uncontested and you're trying to figure out whether those facts satisfy a given legal standard or whether they're comparably close to the statutory insiders that what the court is then doing is trying to figure out how important each fact is given the legal test and that sounds like a legal and corey to me  or a you know how important is this fact in terms of what we should be looking to in terms of what the legal test is your honor i disagree and this is why the courts are looking to determine if the parties really were acting as if they were strangers to the transaction and that really turns on the evidence and says some facts in some cases will be more important than others let's say you have a witness and you just don't believe him you think that actually he was colluding with the other side or let's say you have an extensive period of negotiation even if you have an extensive period of negotiation or the transaction is particularly one sided or particularly even these are all considerations that are that are highly fact intensive and saying that we think that one factor in this given case between these parties on these facts has more weight is really something that produces law clarifying benefits it's a factual determination on a given record thank you counsel thank you it was good speech mr chief justice and may it please the court at this point everyone agrees that questions of statutory construction are review did novo and basic historical facts are reviewed for a clear error so that the debate this morning is about how do we understand the bankruptcy courts finding here that two parties operated at arm's length the government's position is not that because that is the test that automatically is for view for clear error as petitioners suggests the government's position is that because this is the type of test that is well established and is familiar and is asking for a pure factual inference that is that finding that comes from that test will be reviewed for error to say about the arm's length part of the test than about the sufficiently close to a statutory insider part so that's correct justice kagan two things first as a general matter as respondents counsel suggested how closeness is defined is so close that you're not operating at arm's length that's how the court of appeals understood it at page fourteen of the petition appendix and again at page seventeen of the petition appendix and so if closeness ultimately just gets folded into the arms length calculus then was this transaction at arm's length is going to be the ultimate determination in that case and that's consistent with how the leading bankruptcy court treatise discusses it that's consistent with how the parties argued this case and so i do think that the result of that is that even if there might be more legal standing questions with respect to closeness it's not really an independent problem of the test so much as folding into it the arm's length test itself is comparable in some ways to this court's decision in commissioner versus duberstein and that case dealt with what is a gift for purposes of the tax code and this court said you know that's not a purer intent question but it is essentially a factual inference drawn from all of the other facts what we're trying to get at is what is the dominant motive for how these parties are interacting and that's going to be a factual and friends and it's going to be reviewed for a clear error we think the same thing applies here is the government have a position we're dealing with cram down safe for purposes of insider status is the claimant rather than the claims so it's an individual or an entity that is an insider not a claim that has an insider status that travels with that with respect to the bankruptcy courts competence here we are not arguing as i think some of these questions have alluded to earlier that the bankruptcy court gets to define the legal rules but if there were a creation of some multi factor test for defining when something is at arm's length we agree that that would be a legal question review don't know but the important thing is that in this particular case the question that received clear air review was the question of what at the end of the day was dr up can trying to do here the majority said this was a speculative investment or at least it could have been a speculative investment and the dissent said this was a clear favor to a friend so it was a fight about motives and that fight about whether under all of the facts dr rabkin should be viewed as having acted and one way or the other is a classic factual and good speed in your brief you put a lot of emphasis on the idea that  question of arm's length transaction is one of intent and you just said again there what would the parties motives but suppose that was not true suppose that our understanding of what is or is not an arm's length transaction is more objective  character would your argument still carry the day we don't disagree that what is or is not an arm's length transaction can actually be more objective when we're talking about intent we mean the same way the court used it  and which is to say this isn't a pure subjective question but the ultimate goal of the test is to get at what is driving these parties and so the goal in an arm's length transaction is is this person commercially disinterested acting like a stranger or is this person operating under a conflict of interest me that's the morning i ask you a question he paid five thousand dollars with no he didn't know what the return on that could or could not be how come it's an arm's length transaction is the only way he makes his money back his voting for the cram down plan meaning doesn't isn't he self interested by definition when he's gone something that depends totally on him voting with the company well he doesn't get paid at all if he doesn't go for it with the company sure just some sort of money or that may be possible i guess the thought could be for example there could be another plan where he would receive more money or he could buy this claim for five thousand dollars and sell it to petitioner for even more money and so there were other possibilities other than voting for this particular plan but i do want to say that type of argument could be an argument for why there may have been clear error here or why this should have been considered an arm's length transaction in the first instance and the government isn't taking a position on whether there was or was not clear error here with somebody is this is an insider seems to be a question of status whether it's a statutory insider or a non statutory insider so how do you get from a question of status to a question that examines the particulars of a particular of the transaction and the motivation of the relationship between the parties sure just that has been how courts have interpreted this i think essentially tried to do is apply and houston generous canon to the statute and say what is the concern with all of these lists and titties and the concern with all of them is that they're going to operate under some sort of conflict of interest and not interact with the debtor in the way that a neutral person would so i think that's how courts have extracted this arm's length test from that as a way of getting at but isn't just a sort of mar correct that in a lot of areas we presume that based on the status of the individual involved or the relationship and we don't make an inquiry into the nature of the transaction at all that's exactly correct and that would be correct if someone were listed in the statute so well so why couldn't that establish other categories that's just the general rule i think maybe an explanation for that is that congress to rue these bright lines in the statutes and that it's somewhat more difficult for courts to draw the same kind of bright lines for things like friendships would be nice to resolve that question first before deciding what the standard review is i mean the government's brief i think i'm really points out and i couldn't agree more that determining the standard or a view of us requires precise identification of the particular question raised on said in that sense we do think the court can still decide the question if it wishes to because the particular question raised on appeal is what is the standard of review to be applied to this fight over whether dr route as we've discussed if it depends upon status that might be a legal looking question if it depends on arms like that might be a more factual looking question and we haven't resolved the relationship between those two or in fact whether both of them are appropriate considerations this court hasn't resolved that but again what it can look to is what the court of appeals actually decided here and the fight in the court of appeals as illustrated by the difference between the majority and the dissent is was this an arm's length transaction was dr rabkin acting as a commercial stranger or was he clearly doing a favor to a friend so this dense is this the government have a view as to what the correct legal test is the government things that the courts of appeals have adopted the correct test again this arm's length determination is consistent with what is in the legislative history it's consistent we think with what all of the listed and t s are why they're all in the statute suppose that dr ronn can miss bartlett had a relationship that was exactly like that of a married couple and something they had gotten married they lived together for a long time they shared finances they had children together  with the transaction would could dr rabkin then not be an insider on the ground that the particular transaction was done in arm's length does that seem right so i would bookmark the possibility that courts could say you are sort of in fact one of in the listed categories you are in fact a married couple even if you are not formally given that title that might be a different inquiry if the courts are not going to be if the courts are not going to do that then we think those circumstances would weigh extremely heavily in the arm's length analysis but may not decide it thank you counsel mr krause four minutes mr chief justice may please the court justice course which i'd like to come to your point the test what we're solving for is who does and does not satisfy insider status under the bankruptcy code that's the question that the court should have applied novo review to the ninth circuit shows its test but if it was going to choose that test it should have applied it through the exercise  review we're not solving necessarily for arm's length for closeness although that's the test that the court enunciated and if that was the test the court enunciated it should have given definition to that test and you think the test is wrong and we didn't take that question that's on us i think the test is inadequate and i think that if you if you affirm without applying to novo review you perpetuate the inadequacy should we even attempt to answer the question though is out of the standard review without first defining it as  government put it the precise identification of the particular question raised on appeal absolutely in every instance when this court looked at the statute and applied the facts of the statute it applies to know to review the alternative is to advocate that you don't care whatever the test is always going to be to know it has to be to know review because statutes have to be consistent consume i don't buy that then what should i do well then i'm in trouble and then you want me to dig the case i think that you go back to just the opinion justice prior wrote in to we distinguish between a material fact and a statutory fact statutes have to be given uniform application what happened here is we allowed through the absence of genova review the bankruptcy court to develop its own test the bankruptcy court did not fall for totality of circumstances here the bankruptcy court went out surveyed the other courts and said these five factors are determinative of insider status that's what occurred now in miller i don't usually read quotes but i think this quote is right on in miller the court wrote one relevant legal principles can be given meaning through the application of particular circumstances of a case the court has been reluctant to give the trier of facts conclusions presumptive force in so doing stripped the federal court of its primary function as an exposure of a wall that's exactly what the appellate court did hear it abdicated its responsibility to enunciate clear standards and to give meaning to the insider status by the exercise of clear error review this should have been decided by the novo review if there are no further questions also in that case thank you counsel cases submitted