good morning your honors may it please the court my name is print perry i represent the pillar life settlement funds in evergreen life plan funds as a result of the class action settlement agreement in this case my clients have been divest of personal property five percent of their life settlement fund interests and all of their tort and contract claims against life partners also as a result of the settlement the funds are now defendants in a lawsuit creditors trusts the black diamond life plan fun number sixteen four one five two in which a number of the tort claims specifically fraudulent transfers in texas securities act violations are claims that were assigned by investors to the creditors trust and they were in the class action settlement although the creditors trust defends the class action settlement agreement on the grounds that injunctive in declaratory relief predominate over incidental monetary relief the creditors trust a six hundred million dollars claim against brian porto and scott peterson based on the these assigned claims that are also asserted against my clients as the supreme court strongly implied in wa creditors trust in the class council defend the agreement they are shoehorning individual damages actions into a class action construct because of the incentives that this court predicted in bolen v sears roebuck in two thousand judge lynn's opinion in turn vote be life turn bovey life partners a two thousand and thirteen west law district court opinion contains both the best explanation of the facts issue as well as the best analysis of why the individual claims are released and assign and issue in this class action are not suitable for class action certification even under rule twenty three b three much less under the stricter provisions of twenty three b to mr perry overarching all of this is the fact that there was a reorganization plan and as at the time of the brief being filed it has been substantially consummated obviously a lot of time has passed since the briefs were filed for i believe off an embryo yes december fourteenth almost a year ago yes and explain to us why this appeal isn't moot based on our courts well established precedent  that you didn't seek to stay the reorganization plan it's been substantially if not completely consummated so why isn't this moved the class action settlement agreement in paragraph thirty nine and forty it's first of all it's a separate action in this court has never found equitable moon as in an action separate from the from the underlying bankruptcy case in the second to release that we're seeking here is specifically provided for in the class action paragraphs thirty nine and forty able to record side is to ninety six and then thirdly the the  the class the i'm sorry the bankruptcy court cannot do anything that divest this court of jurisdiction the thirds the third standard for equitable mootness is whether relief requested would affect the rights of the parties not before the court or the success of the plan and the fact is in this case all of the parties to the reorganization are before the court as a as a matter of fact and in the success of the plan all of the money that is this is a little bit different situation all of the money that has been paid out so far has been paid to people who are entitled to it before the plan was consummated and there is no money that would have to be returned or reallocated as a result of this the interest that we seek are all returnable to us at this point and as a result there is no reason to a private funds returnable to you from other parties not from other parties from the creditors trust that they have a five they have five percent of our life settlement investments and they have our claims and causes of action and those have not been those have not been reallocated and so i mean in the pacific lumber case judge jones made the point that federal court should proceed with caution before declining review of constitutional rights under it under a judge created abstention doctrine and our appeal here involves substantial issues of due process in takings why did you seek to stay the de the implementation of the reorganization plan for for two reasons your honor one i believed it would be futile and two it wasn't required under the terms of the class action settlement agreement  and and i would add that is this court road in race kopek which which succeeded in the pacific lumber case the court noted that adverse appellate consequences were forseeable to those who opted to press the limits of bankruptcy confirmation and other rules and this class action most definitely presses the limits of a twenty three b two class and so the consequences were written into the class action settlement agreement the bankruptcy court merely adopted the class action settlement agreement they did not independently adjudicated which distinguishes it from this this court told you no public and republic supplied the show for you didn't appeal that either was that you didn't appeal t bankruptcy conformational no we did not so you're stuck with it we're we're not stuck with it if this because this because again paragraphs thirty nine and forty it provides for the opportunity to to reverse what happened in the reorganization if what happened as a result of the class action settlement i mean this is a separate this is a separate class action it was something over which the bankruptcy court did not have decided that it did not have jurisdiction in fact it didn't because it adjudicates personal toward contract claims that would otherwise not be the interest in the jurisdiction of the bankruptcy court i am and again and again i would point out that the that there are there are no assets of the a state that have been paid to any creditor investor that would have to be returned as a result of this class action this is a this is a unique in fact concerning application of a class action i could we could not find any other case reported anywhere where someone had attempted to use a bankruptcy  a class action to shoehorn it into a bankruptcy reorganization and it is i mean we did consider this we did consider this issue and it did because because the class action settlement agreement provided its own remedy and referring to the referring to the confirmation order in this case it says on paragraph thirty nine if the confirmation order is modified reversed or vacated on appeal then the parties or parties adversely affected by or who oppose such refusal provide or affirm the requested relief modification vacation or appeal show each in their sole discretion have the option to rescind this settlement agreement in its entirety and then it says again y s on the overarching surface ricin the settlement agreement but after the agreement has been consummated through the proceeding that's just a little difficult  comprehend i i agree you know i didn't create the situation i could not come up with any reason why we were required to appeal both when one when the court did not have jurisdiction of this class action and the fact is that the adverse consequences of the class action of the class action being appealed were known at the time the court the court incorporated it into the bankruptcy reorganization and it is because again this is a unique situation because our interests are there and can be returned as a result of this class action settlement say in truth i know you want your five percent something about five percent but what are your interests that you want return we want our we want our five percent returned and we want  be talking about right or proper when we're talking about monetary filmic want to know we're talking about or we're talking about a five percent settlement interests that that has a monitor face face value of a little over two million dollars where's that going to come from it's going to come from the position holders trust that has given us a position holders trust certificate in return for the in return for the five percent continuing position over contribution which is described in the class action settlement agreement you're saying that two million dollars sitting somewhere ready to be returned yes it is there is a position holders trust that is but that is being that is being used  essentially us as operating capital but the the vast majority of the position holders trust is made of people who have contributed their entire life settlement interests in the through the settlement agreement individuals we're going to have to play this individual going to places you know you know you're on it it's created by individuals who whatever you know you know your honor there were about twenty thousand investors for life partners and and a substantial majority of the individuals created contributed their whole interest to the position holders trust but we all have a divisible portion of it it's more or less like a share of stock is returning our share of stock to us as well as our as well as our claims which could not properly be assigned in a in a class action toward in contract claims in a rule twenty three b two class action texas supreme court said it was a security right they did your honor that occurred  that occurred several months after the bankruptcy was filed and it would only declare it a security within under within tex's in this company operated nationwide and for the most part we operate under the one nine contested i i would i would imagine that it is but it is a but is a fact and like you would know of these lawyers sitting here yes yes yes no no i mean we have a position holders trust certificate which can be exchanged for our five action can be returned to us as it can be returned to all the parties from from whom it was wrongly they were wrongly deprived  i i recognize the difficulties of of this situation like we would be in the same city essentially the same procedural posture had we appealed to the class the class action we would just have two cases on appeal rather than one addressing the primary issue that is addressed in this class action settlement agreement and that is whether the individuals can be required to give up their individual toward and contract claims and other personal property without without a opt out opt out and because the class action settlement agreement provides its own remedy we exercise that remedy enter here or exercise our right to appeal in that case interger before the court this court has only decided one case say the wal mart v dukes opinion and that being the texas family protective services case in which the court found the class lacked cohesiveness and they said the court set a new standard which said that class members must have been harmed in essential in the same way and injunctive relief sought must be specific and this and this court dropped the monetary predominant standard more or less in that case the injunctive relief sought in this case was nowhere near specific it is it is certain that that requested the right to opt out and were not were not granted that right i would note finally and i understand that it's a concern for the court but the court has never found it equitable lewdness in a case involving in a case that wasn't a direct appeal of a bankruptcy plan and i could not find in a search of the united states cases and a case as a trustee and i would note that mr espinosa is here in the courtroom today your honor so i think judge barksdale you've put your finger on the key issue here and that is movements equitable judicata those are three threshold doctrines that these at kelley's must overcome in order to reach the merits of their challenge under rule twenty three b two and i would respectfully suggest to the court they've come nowhere or paragraph thirty nine and forty of the settlement agreement as approved by judge mcbride in the district court and is incorporated into the bankruptcy plan of reorganization in a subsequent in an appeal to order by judge nouns now paragraph and thirty nine and forty both speak in terms of parties and parties i'm sorry i'm sorry to interrupt you repeat what you just said you said judgment rod approved this class settlement and then incorporated into the bankruptcy order yes your honor the approval the final judgment in this case was signed by the district court by judge mcbride so there's no question of bankruptcy jurisdiction there the bankruptcy court subsequently and her separate case number separate order it's not appealed and not before this court today entered a plan confirmation order that plans confirmation order has as its linchpin the district court's approval of this class settlement and that linchpin term is not mine it's a term you'll find in the  of the reorganization the successful reorganization of life partners which as your honor noted is now almost a year in can but two paragraphs thirty nine and forty which counsel suggest provide a get out of jail free card they do not parties is a defined term and these people are appellant object doors are not in trump is to within that definition of parties under the settlement agreement indeed the definition of parties settlement agreement is confined to the lead plaintiffs class counsel the chapter eleven trustee subsidiary debtors and unsecured unsecured creditors committee you'll note that that does not fine you have attempted to use remedy paragraphs thirty nine forty that is correct your honor nor would we need to because the triggering event would be a rejection by this court or by another court of this class settlement this is really a boilerplate paragraph it's designed to prevent a class settlement from becoming an individual settlement binding on these individual parties that there's been a class settlement negotiated if the class settlement were to fail for whatever reason we don't want the individual parties who negotiated that settlement to necessarily be bound by it so it's a boilerplate provision found in most class settlement agreements to make sure that if a court rejects the class settlement agreement the parties the individual parties who negotiated that settlement aren't bound by it it's a class settlement not an individual settlement this is mechanical provision designed to prevent that you know divert and transformation of a class settlement into an individual settlement even at that point your position that that would not include the killer object it would not your honor there is no carve out there is i mean i just take a look at the plain language of these provisions your honour's there is no carve out and there's a clear definition of parties that these a are not within and i think once we take paragraph thirty nine paragraph forty off the table this becomes a straightforward application of this court's well established precedence on one movements and indeed if you take a look at the app the third element implicitly the first element is that no stay with thoughts sought of the bankruptcy courts confirmation of the plan no appeal was filed no stay was sought no stay with a percent of pain that's uncontested they concede that that's element want equitable mcness element to this is substantial consummation again it's admitted on the face of the reply brief and even if it weren't it's been almost a year ten months and a lot has happened tens of millions of dollars worth of transactions this successful reorganization that benefits a class of over twenty thousand small investors is proceeding successfully from the third element and the only element on which these  contest is whether the relief requested would affect either the rights of the parties not before the court or the success of the plan well i think quite obviously when you're dealing with a class over over twenty thousand people and the remedy requested is hand and can be repaid and it's not going to affect the twenty thousand class members we certainly dispute that we strenuously dispute but you do so tell us why there are a couple reasons trusts barked at barksdale first of all it's not two million dollars cash in hand it's a two million dollars death benefit from fractional interest in life insurance policies that haven't maturity yet the people covered by the policy haven't died yet and until they do that death benefit isn't paid so it is not cash in hand it is not sitting in some bank account ready to be returned but but more in importantly this is a question about ownership a unified singular definition of ownership and that claim was compromised this is a this is not a contested class settlement this is class certification this is a class settlement where the parties class council in my client compromised on this ninety five five formula and as in any settlement the claims are extinguished to the extent the personal property at issue here is the claims it's no different than any class settlement ever people give up claims to settle cases including class actions i think that's that's just axiomatic and as his elements of other people would be impacted look at the prayer the conclusion was i'm just a texas litigator we say prayer rather than a conclusion where they the relief they seek is the wholesale decertification reversal in remained of this certified settlement class that by definition would affect other people it would affect the other class members but it would open pandora's box because as both the bankruptcy court judge now and judge mcbride pointed out this ownership issue was a critical issue a threshold issue the linchpin issue for this settlement is the ownership issue was resolved in l p i's favor that the lp i owned these policies then these twenty thousand plus class members most of whom are small investors individual investors mom and pop investors if you will would be left i on secured creditors waiting in line to get and he's on the dollar if converse of the ownership issue had been resolved in favor of the individual investors then there would have been huge servicing if she's many of these policies  the premiums would not have been paid it would have been it ministre of chaos this settlement and it's a good settlement took into concern took into account both of those concerns as expressed by judge noms and judge mcbride and it compromised them with a formula that allows maximum recovery for these twenty thousand plus individual investors while preventing administrate of chaos in preventing the the loss of these policies to keep paying the premiums yes and that's exactly right  honor and the premiums are being paid via that five percent mechanism that's part of the value the five percent provides it sets up the trust to service these policies  but i just think it's incredible that there would be any kind any dispute that asking to set aside its last settlement doesn't affect the class members it's almost a tautology of course it affects the class members that's all three elements of aquit there you can easily set aside here moving on to rest judicata the three elements identified by this court in republic supply which council cited in other cases are one same parties there's no dispute that the people are objectors came forward in the bankruptcy confirmation proceeding and participated in that bankruptcy confirmation proceeding raised these objections in the confirmation proceeding to those the second element is court of co earlier i don't believe there's any good faith dispute that a bankruptcy court has jurisdiction to confirm a debtor's plan of reorganization so that court of competent jurisdiction element is also easily satisfied the third element final judgment disposing of the cause of action well the these causes of action that they seek to revive in this court today were explicitly and extinguished on the face of the plan conformation order of the plan conformation order answers the question as to who owns these policies and it answers it based upon the settlement that was confirmed by judge mcbride that's why it's the linchpin of the settlement so it could not be more explicit or it's specific in terms of extinguishing these claims they seek to revive the bankruptcy court clearly intended plan confirmation order to be the last word on the ownership issue and it and it is because it was not appealed and it was not stayed i don't think there is any need to reach the merits of the twenty three p two argument given equitable mootness legal movements and rescue to kata but if this court does wish to address the b two  argument this is a classic b two case it's a declaration of ownership no money is changing hands there's no cool of damages there is a de a declaration of ownership in one subclass and a declaration of situation in the other subclass no monetary damages inserted certainly no individual ised facts specific determination of individual damages any monetary relief simply dental t flows from the determination of ownership the ownership class sought and obtained a declaration of their beneficial ownership rights that's the ninety five five split the rescission class sought in obtained a declaration that they were entitled to receive and now i note none of these objectors fall into that rescission class so i think mr bruno on behalf of the class may address that momentarily but i don't even think that properly before the court  the same relief for all class members based on the same injury the sale of by preposition of these securities of these fractional interests in life insurance policies same injury to all class members no individualized computation of damages no damages at all in to the extent that it is there's monetary relief it could be awarded by a computer it's a mechanical operation based on how much was invested from this court has identified three twenty three b two factors most not zero is one case in which those factors can be found as members all injured the same way i think we meet that standard here second in jet injunctive relief predomina over monetary damages well here there is only non monetary relief declaratory relief injunctive relief and free the injunctive relief must be specific i would suggest it's hard to be more specific than a declaration of ownership or a declaration of rescission that's pretty straightforward it's a ninety five five split on the ownership issue that's one declaration the other declaration is that there's a right over solution that's about as specific as you can get in my view so again i think if the court wants to reach the twenty three d to analysis and i don't think it should based on the threshold issues of mootness and rescue because we've identified i think we easily satisfied the b two analysis i'm a bit confused by the personal property argument that council has raised under texas law under under was i know it claims are personal property every settlement involves the divestiture of cla mr keith langston i'd like to quickly address two issues one the fairness the inherent fairness of the ownership class settled in this case and to the standing of the pallant to challenge t rescission class first of all most class action lawyers stand before the court trying to justify a class action settlement and telling you know that the judges that pennies on the dollar is sufficient for whatever reasons or whatever strategic litigation reach it reasons that they might have had to sacrifice their claims in this case that the settlements being objected to and i'm standing before you explaining why giving up pennies on the dollar for the investors is a bad deal it just isn't inherently it doesn't make any sense their argument in this case not only can these investors get their money back they're going to make a profit the profit isn't going to be as great as they might have thought it was going to be because of the terms of the bankruptcy but when you're faced with a class action case in a bankruptcy proceeding with it with a chapter eleven defendant getting ninety five percent of your your potential profit what you thought you were going to get when you made this investment in the first place seems like a very good result in these these investors and the objectors are all in the same boat everyone on every one had the declaration entered that they were the owners of this security that they invested there's no ambiguity there whatsoever to the problem that the and that the objectors have with this settlement is that they have to give up five percent of their interests that five percent isn't a real five percentage as counsel alluded to it's simply an interest that goes into the position holder trust that they later will be able to cash out for some less some percentage less than five percent  the two rules that they have suggested here are nonsensical i don't don't totally understand them one is as mr credibility to their suggesti that you can't sacrifice you know that sort of objective where you can't sacrifice a personal property claim in a b two settlement we've cited a couple of cases in our papers  they should be allowed to profit from these investments to use the five percent that all of the other investors are contributing so that this reorganized better can do things like pay premiums higher professionals all of the things that are necessary so that they can profit from their investment but they don't want to pay it they want the other pokes to pay the freight so that they can make their profit on their investment there is no there is no suggestion in any of the papers and there couldn't be that there was any collusion or anything like that had with hope with the settlement it was extensively vetted through the the bankruptcy and the district court all of the different constituent constituencies in the bankruptcy  were represented by counsel in fact that the bankruptcy judge required two competing plan proponents to also submit a class action settlement proposals as part of their bed s turning quickly to the issue of standing in order to satisfy the requirements for standing a party has to show that it was directly and adversely affected by whatever the result is that they're challenging in this case the objectors did not elect a rescission they they are not part of the rescission class except to the extent that like everyone else the court declared that they have a right under the texas securities act to resend they did not elect that option so therefore they are not aggrieved in any way and all that all that they would do in and challenging the rescission claim is take away that right from the other investors see my time is wrong thank if you're on to approve the twenty three b two class action settlement in this case is to allow any business that holds legal title for the benefit of others to use those assets to do their own advantage the value of those assets particularly financial institutions often towards the value of the financial institution itself and that's exactly what happened in this case life partners had processed over one point six billion in life settlement claims without putting any of those clients contested ownership of these assets they contested that they were not even supposed to be part of the bankruptcy estate the court the trial court refused to decide refused to decide that issue and instead forced a mandatory non opt out class action settlement on us that divest that of five percent of our interest and that is an improper use of a mandatory class action per se they also required us to assign individual tort and contract claims to the bankruptcy estate and that is a purse a violation of the rule twenty three b two standard as as the court as judge climate sa in the macmanus case the class membership potentially received a poor substitute for individual money damages this is a this is such a this is this is as misused  two classes one can imagine the equitable mootness standard this this court has never applied equitable mootness in order to divest due process or a takings argument the supreme court predicted this issue in wal mart the duke's where it's where it said that due process was an issue in cases like this moreover the supreme court predicted this argument at the very end of wal mart where it said that that the rules enabling act for beds using rule twenty three to  a bridge in a larger modify any substantive right they have used the rule twenty three b to class to bridge our due process rights of bridge our right to contest the claim that the bankruptcy court jurisdiction and they are they are deprived and they are depriving us of our property in violation of twenty three b two we asked the court to reverse the class action certification in render and return it to the