approved by the board in a six one vote in concept in august of two thousand and six and october of two thousand and six the board voted on language and voted in favor of the language seven to zero including the representative the representatives of each of the q t s and of the d t b the european representative on the tour european of bylaws put out in the spring of zero seven for some reason did not include this particular change to article twenty three three correct me where you are two separate things one p provides information to its members the primary way is that all information is provided online all of the bylaws are online all the members have access to that the board summaries of board minutes are included online and in november of two thousand and six the property the bylaws including the amendment to article two of the new article twenty three but online was put on with the hard copy or so we did and for some reason the hard copy that went out included an error but in terms of actual notice here there is no issue we know for example that in february of two thousand and seven counsel to the parties provided a hard copy of the bylaws to its client and but and we know that when they filed  and said any trust policy you're out of here i mean assuming you are correct that we if we reject any trust policy aspect then this has to go would have to go back for him to consider all these you know dollar contract law basically is it unconscionable was there notice is this the kind of thing can be imposed by by law i'm i mean those are issues that that aren't before us are there you know i think the record is clear and i don't know that are issues of fact with respect to the fundamental issues there for example that we're we review what the district court did receive course and we decide whether it was right or wrong the district court made no findings with respect to the binding nature of the bylaws or whether it's an conscionable or any of that other than that there were some questions that existed with regard to how it was put in place i don't actually say that this record one thing more which was that it started from a friend fundamentally wrong premise in two ways one it said quote unquote there is a heavy presumption or heavy burden presumption i think against recognizing fee shifting provisions or against these trust fee shifting policy such that it's invalid i'm happy to move right to that in the answer to that is it is not this record as a matter of law in seeking to suggest that extracts from a few shifting provision should be border in essence preempted and the circumstances first point absent some form of express congressional statement preemption a federal statute preempt study law only when congress has set forth a clear and is there necessarily conflict preemption with the the plaintiffs treble damages provision no your honor there isn't and in fact we recognize as parties in the state law have a right to agree to fish shifted provisions mandatory  shifting provisions that's what happened here other than judge sleeps decision there is no federal case concerning the sherman act that would apply such a policy to the contrary we have the right in case in the ninth circuit and we have the analogous if there is bad faith on behalf of a people on behalf of a plaintive but interestingly i mean we could have stopped after saying in the absence of specific legislative authorization fees may not be awarded what we should a cost stop there but we didn't we went on a set of conclusions based on policy considerations of well known that a primary objective of the private trouble damage suit is to provide means for enforcement this instituting private interests actions would be dampened by the threat assessment of defense attorney fees and other costs as a penalty for failure acts free access the courts would need it be denied or penalize i mean this bylaw provision in effect imposes the english system on the issues the question in context of whether a federal court should use its inherent power and in that context it was balancing policy as it saw out of some concern as you just expressed with the issue of whether or not you appl the sherman act on the other hand there's also policy recognizing the say the english rule or the american will we recognize a contract provisions by look provisions that do mandatory fish if they are presumptively enforceable and have a good policy on to themselves and so as a legal matter this instance it isn't balancing the two federal issues it's balancing state law consideration which is different in type as to the practical  would be saying if we went the way judge sleeted we were saying that this that federal antitrust policy trumps state contract law and that's correct and that's not appropriate here in the absence of preemption in terms of the sort of the policy or the chilling part i would say this civil order in a woman's here number one is probably right that when parties agree by contract to have some form of shifting provision it necessarily does have some we could call it chilling i think really the right word to use i would suggest is some miller of effect to try to get parties to work together to avoid litigation and see if there are other routes to pursue and keep in mind that this was a bilateral provision this provided this membership corporation that has to operate worldwide tennis circuit and that ultimately was adopting plan that the third circuit recognized at in strong pro competitive justifications all tamale in order to advance the sport and to take the steps that could affect all of its members this never heard the argument made that officiating priest provision was simply get people to work together pieces one of its members and it loses it has to pay the member it's bilateral if the member sues a t p and it loses and so yes there is some effort to discourage litigation in the membership corporation and make it work together but i'd also say to the extent that takes the baseline if you will and pulls it down a little bit the added incentive that still exist for prevailing plaintiffs in an antitrust case and to bring an antitrust case the incentives for it provided by the clayton act for troubled damages and attorney says still we fully exist and it's still the exact you know level above the fuel the baseline they have that opportunity and as they say the proof is in the proverbial putting we know it can chill in fact three separate parties soot p was holding a series of meetings considering this plan and making changes and it wasn't a matter of these federation specific in no way was this adopted to affect a specific member but a lot of the  have that when when did the disagreements begin you say you know six well i would say in zero six a lot of members throughout the organization a lot of player members a lot of torment members were expressing their concerns about plan about what a lot of plans were being considered the plan itself by the way there's a mistake in brief they say that the plan was adopted in two thousand and six the the brave new world plan was adopted in january of two thousand and seven and the of the hamburg event on by the police was not until the middle of two thousand and seven i think it was june so through that period judge and broke a number of the parties what the plan was going to be was hardly certain many our options were being considered and through that period a lot of the members were expressing their concern so the the all of that was out there but in terms of this fact certainly this is not a case where when some cases have this problem where retroactive y after the facts that are you know the alleged illegal acts somebody attempts to adopt the by law this was done prospectively the act you know it was not until january of zero seven as i say that he adopted the plan i would like to mistake there it's plenary review and i think just leads opinion and her criticisms of it are all plenary in that sense not what you do is just borrow from byron by analogy i mean but in the end his this was a decision under de to to award or not to award fees is reviewed by us for abuse of discretion you know the reasonableness of the phase when it when this case ideally from our perspective goes back to just lead in a city determination on  reasonableness of the future so long as he applies the appropriate standards with respect to reasonable mist that is a that is an abuse of discretion standard but the absolute denial of fees is a legal matter well  again looking at a conversely in the first circuit case of a party that badly you can't award fees not so much the amount of the fees you can award fees you can go against the the american rule and that goes back to the inherent power of the court in those circumstances to allow court discretion to award the fees and you're right that is a discretionary judgment in that instance if they determine that faith that goes to the inherent power issues your honor and i think that's why those cases are distinguish different from the situation when you're dealing either with statutory fees or mandatory fee shifting provisions court good morning i'm robert mcgill i represent the guitar tennis federation with me today is my partner hamish cohen and also representing the german tennis federation is aaron palmer the district court decision should be a firm for any involve contractual the shifting provisions i mean that was it was an individual trying to bring a public and i trust claim and one could easily cabin that case  or distinguish the case for mark ace moreover the delaware supreme court has had a pretty significant history of allowing private ordering you see that in the l l c context etc and why can't parties privately order that hey the usual rules are going to apply here the contract is now in place is that if there is a suit and you lose you pay for several reasons first federal law reigns supreme here for the very reasons that this court said in one thousand nine hundred sixty seven it will want to reign supreme on the state law issues go for state law issues here well they were  law issues your honor but the fact of the matter is what this court said byrom addresses an important legal principle one that's important whether it's delaware or any state in this country that the and i trust laws of the united states have special meaning in effect that should be enforced under a variety of different circumstances sherman act and clayton act but us what byron we said that as a matter of policy but i don't know of any case holding preemption by virtue of the any trust laws because that's really what you're saying we can't just say oh there's policy here and that reigns supreme we need to find a basis for federal law to trump state law and i know in the f a a of course we decide all the time the extent of preemption where there is preemption but here there is no field preemption by virtue of and a trust law there's not even conflict preemption because there is nothing in the n t trust law about defense fees so how do you say i don't know federal law and just as we said we had some dicta and byron i don't think that is sufficient to announce a preemption policy so where do you where what is your statement as to the supremacy what is that based can let's let's move for a moment if we could to the ninth circuit and what it what it had to say specifically on the subject and in the ninth circuit in the iss in case which we have we provided to the court in our briefs said the district what your district judge found in this particular case as to the issues involved here and how they were litigated he was in a special position to make a variety of judgments here's what he said about this particular case he said that here  with respect to this in a trust policy is he said specifically the incentive for instituting private and i trust actions would be dampened by the threat of assessment of defendants attorneys fees as a penalty for failure here principle the policy russian else or the or the supremacy analysis that we're offering here either one there is no what you're saying is basically a preemption reaction because we have state contract law here right so says that that isn't the guiding principle well there's i cannot cite to your honor a supreme court or the united states decision that says this but if i think if you take the body of law which this court first established this third circuit established in the your complete taking advantage of those who have no leverage whatsoever you have a worldwide organization it's the a t p is a not for profit organization which has worldwide members are but when the suit was brought march twenty eighth of zero seven there regardless whether the hard copy of the bylaws noted the new twenty three point three feet that the plaintiffs knew what was being what would be argued against them at some point well we had we had a long week for me as if they lost i'm sorry yeah your honor it in terms of the german tennis federation is council we had those bylaws but in terms of what was provided there isn't some port record evidence that needs to be eliminated here number one in terms of the questions you asked at the beginning the argument the a t p had a policy of not distributing minutes of their board of directors meetings a standing policy all they would give were summaries critical here there are seven dimensions of evidence that the trial court of the district court had number one the district court knew about this policy number two the district court there we knew that there was no summary no summary of the minutes of the october two thousand and six board meeting that was sent to the members which this violence i was purportedly adopted but the website your opposing counsel said noted in the member of zero six that the other things in november two thousand and six oared summary stated only that the board confirmed the new language of article twenty three and then critically there were three other events on may fourth of two thousand and seven the a t p filed its first answer and never  you get a judgement in your or something in your favor or against you a some type of judgement in that context here you don't need a judgement i don't see how it but here you need a substantive basis for the claim you need to do you need to plead that you have a bylaw a contractual right for legal fees that would exist in the terms of the bylaws you would need to submit that there is a jury trial right associated with the bylaws itself was the bylaw under these circumstances appropriately so what you really what you're really saying is they needed to put into their answer that just want to let you know by the way if we win we have a right under twenty three point three to seek are fees to be reimbursed to us they need to file a claim they need to file a claim and that's that's what this court that's precisely what this more to said i mean that means you have to have a prerequisite which is they have to win well and you knew this was coming and the argument you're making is this procedural because you knew when you filed and obviously did your job and there was this possibility and you decided to take that not no problem but you also know that what's coming down the road if you lose their death want to make a claim not at all because we did know your honor for several reasons number one of insulin please would you what would you have bet that they were going to make a claim in june of two thousand and seven you know accord with the protocol of the a t p were all the organizational documents each year are submitted each year two thousand and six two thousand and seven to the worldwide members of the a t p is an official communication here are the organizational documents pertaining to the a t p tour here they are june of two thousand and seven they were not included when the testimony came from a director defendant charles pastoral of the trial in the presence of the district court and all parties he was asked to identify exhibit thirteen seventy seven the bylaws not with article twenty three he gave testimony about those very bylaws as well at the pages we've cited in our brief but that may be a matter for a whole other cause of action after your antitrust case is over but that no district court is going to try that case as part out of the a different contractual provide a totally different cause of action and the merits well it arises out of the bylaws which were a portion of the case and and the bylaws themselves were at least in one part workforce in of the case they had an obligation to plead and respond in relation to the bylaws and i've heard a little bit that i'm looking at the  this was approved by the director correct this change apparently it was approved of by the directors in october of two thousand and six ok now the other members of this did they vote on this they did not just the ready unilateral decision but lord it was and it was not a no summary of that october twenty six was distributed to the members so it was a decision by the board not voted on by the other members that's correct all right in the certificate of incorporation is the board empowered to make a unilateral change of this nature in the articles of incorporat certificate of incorporation i don't often talk in my hand the record of i don't i don't i don't know off the top of my head your honor with the certificate allows that but i do know in terms of delaware substantive law that the board is bound by the by the bylaws it presents to its members and that's the mckinney case which was cited and furthermore that there is an equitable stop associated with any confusing or contradictory information that's provided and critically under the dowson case and there was no answer by the a dowson case it delaware two thousand and two case which says that access and possession of the bylaws does not bar in a stop if i may go back to the initial questions on this via law the by law is not valid as a matter of law under the mckinney case because in june two thousand and seven in the official annual communication by the a t p tour they did not communicate the bylaws as required they're bound by the bylaws they handed us legally second  equitably a stopped and from from in forcing these bylaws because the entire history that was provided in relation to these by law provisions was in the language of the house and case confusing and contradictory and that as the dowson case said in its  se terms quote access and possession of bylaws does not bar these stoppel so as a matter of looking at the biram analysis here there is no valid contract as a matter of law or equity byrom holds true here in all respects and the policy rationales given by this court in byrom apply with full force in effect last points the state law claims were described by the district court in that specific findings and they were all incidental to and in if any extra inexplicably intertwined with the sherman act claim so that would seem to go to the amount but let's go back to the it's not god's question what was the process required under these documents the stipulation corporation and the bylaws for bylaw changes to be made or do you just look to the delaware g c l general corporation law i believe that you look to the to the substantive law of delaware your honor to determine whether the bylaws have been properly properly perma gated and distributed and under that law the by these particular bylaws and article twenty three do not meet the requirements in each of the two respects that i mention stupid of a corporation your honor i think that i think generally speaking that's my understanding of in terms of propagation of bylaws been ordered to carry them forward and have legal effect there are substantive delaware requirements were not met as it's been confirmed by the devoted to an address the what percentage to from are simply a lot of times we said it in paragraph four of our complaint and we and i think the entire proceedings confirmed that this was an end i trust case and our state law claims but of the ten days roughly how much was devoted and i trust and how much was devoted to the state law crimes in our view every day of our presentation was and i trust and i trust violations were predicate to each one of our you didn't you didn't present the did you put evidence in on the state l collaborate on fiduciary duty for example the claim was annoying violation of a then a trust loss conversion the unit trust conspiracy converted our property rights with respect to any interference with our contractual relationships for both federations our principal claimed there was that they had interfered by it and i trust conspiracy and if that was the illegal conduct under that claim so with respect to those three state law claims in a trust thank you thank you for your time ruskin could you could you go to judge my guards questions relating to the how the process that existed was in place before october of zero six for the purpose of changing inconsistent with action taken by the members of the corporation it recognizes that it has that power more to the point here well what were you reading there that's from the chart from the certificate of incorporate you want to read that one more time condition of membership voting position in the bylaws doesn't require member approval no it does not your honor it requires a specific vote of the port for requires a supermajority vote of the board number two there's a provision section three point t condition of membership and it expressly provides that they can amend and that as a condition of membership members must agree to be bound from time to time as there are as there are minutes to the board as there are m three each of these members signed application forms when they joined the tour and in those application forms they agreed to be bound by the pi laws as amended from time to time and number four in june of two thousand and five the parties signed the transfer agreement at the point in time in which q t s purchased twenty five percent of the homburg event and that's found at just five nine three two two three three and there again yet another time they express lee agree to be bound by the bylaws as amended from time to time so in all these ways the way this organization has operated for its more than twenty years in existence i fundamentally by law amendments and operating in that way that's how it's made such a engines and in this type of membership organization when these are active members within the organization that ever presented of government representative representatives on the board this is how the tour has always operated did you describe the extent of the proceedings before judge sleet with respect to this issue was it briefing was there hearing was there evidence you know there was a motion made i fundamental claim that was asserted many of the same facts that existed in the antitrust claims but that claim was founded on the concept that their membership rights were taken away under the violence and so there was a great deal of testimony that dealt with that subject you know i a really testimony here sir fit into three buckets there was some facts that were to the state law claims alone and indeed the plaintiffs themselves called a number of witnesses called the number of board members on the fiduciary duty issues and the like there were most of the facts that probably wrote into both the anti trust and the state well claims and then the other facts that were unique to the state law claims all of those were part of the case part of the reason it's difficult to give a percentage because many of the facts overlay and i would say that even if one adopted the policy argument that was advocated by judge leading the police with respect to the antitrust laws even if one were to do that still you would not apply it to any part of the case other than that which is unique to the federal antitrust proper notice to the rules to the other members and that was not not can you enlighten me on that your honor that there was actual notice here and there's no case adjusting when there's actual notice there's an issue again if you look at paragraph eleven of the complaint at page three two one six of the record they actually cite from a quote from article twenty three they do it again in the amended complaint after they were say they receive the wrong document in june by that mistake the correct document was on line when they received that wrong copy of the bylaws later on when q t s joints the case in the amended complaint paragraph eighteen of the amended complaint at page zero six five seven five of the joint appendix also quotes from article twenty three and as i said before oracle twenty three was a brand new order call it didn't exist before this amendment it dealt with then you were dealt with the attorney's fees provision so there's no case with suggesting that when you have actual knowledge to defendants in private and i trust litigation and i realize there's no contractual provision but if we follow that and then say well they don't consider the state law claims you then go back to the court and the amount of fees awarded could be far far far far less than what you requested well you know i think if you would suggest correctly conclude that federal law doesn't preempt here and direct this to go back to the district court but the  here is a film on them even if they're what doesn't preempt it but to say what if a federal law covers one of our byron decision covers the antitrust goings on the unit trust claims were the the large majority of what was dealt with in the ten days of trial you could foresee possibly or conjecture that the district court even if it awarded fees with regard to the state law claims may be very small and i don't think i would and i suggest nothing should be carved out but that most all that should be carved out where those parts of the case only relate to the antitrust issues and that effect is a very small amount of the case and i'd suggest that in a rematch and it should be clear there aren't issues of motivation or bad faith those are issues that go to enforceability of a contract in this context the issue for the court should be to apply the standard tests for reasonable miss within that framework the judge has discretion to determine what is reasonable but he has to apply the appropriate test of reasonable things you know i have really thought that this case rose and rose and fell on the emmy trust ruling of the court but i'm looking at the ruling now and he made some pretty strong statements also as to what is before him with respect to the corporate bylaw it's entirely possible if we send this but we're to send this back on the antitrust piece he's going to say well i said a corporate bought adopted by law you know there's no case that says you can form the basis for recovery for members to sue the corporation much less in actions where the bylaws are not directly at issue and i also  said you can have attorney's fees based on a by law adopted only after they became a member of the corporation are you asking us to address all those issues as well your honor he did say those things i think the fundamental building was as you recognize and reading it overarching piece was the at the trustees on the other hand as i said to you he did make statements along the way whether one called the ticket or otherwise he was only focused on the bad faith or what he said was a lack of that faith of plaintiff bringing this case that