good morning and may it please the court the district court's order trivializes the importance and strength of the attorney client privilege and misconstrues the nature and amount of evidence required to overcome that privilege under the attorney and to the crime fraud exception no court has ever before used a litigation dispute about a claimed oral agreement contradicting the terms of a written contract to pierce the privilege under any standard there is nothing unlawful or a list that in bertelsmann is claimed conduct and plaintiff's evidence at most suggests that barry believed that he could rely on his own unilateral interpretation of the draft contract language which of course was later changed to cut off that very possibility pla inconsistent with their own evidence and that evidence itself was contradicted not only by bertelsmann as representatives as the district court noted but also by barry's own partner and lee deal coun the district courts there was compound it by its belief that it could pierce bertelsmann is provably edge merely by reviewing the plaintiff's evidence only under an extraordinarily lenient no standard and we believe certainly that every context well as the as your honor notes discovery orders normally would be subject to an abuse of discretion standard we readily acknowledge that but in the attorney client of a but it would constitute an abuse of discretion so similarly it's not great with respect to the evidence and we certainly do talk about the evidence there are basic view is that there is no evidence whatsoever and that type of a no evidence argument is normally done on a and i dunno of a basis that it is a question of law whether there's any evidence of a project the scheme here ultimately we do rely on our backup argument somewhat to say that if you thought that there was something here that even then the district court applied the wrong standard and in applying this extraordinarily lenient standard which is simply did the plaintiff put on some evidence that could lead some person i'm going to nor the other side's evidence but did you put on some evidence that could lead a person to believe that we don't think that's an appropriate standard in the civil context now makes perfect sense in the grand jury context because grand juries are surrounded by secrecy it's not an adversarial proceeding and the courts have made clear in numerous cases grand jury cases that we're not going to have many trials and long hearings on this issue but every case that has looked at this until this court until this case has said in the civil context we're going to look at it differently the haynes case from the third circuit says that the enter a general motors case from the eighth circuit  i think it's important to understand the standard that the district court was applying and then it's back up arguments as well i think i think the evidence satisfies that standard as well and at that point what we would like the court to do is review the evidence what is the evidence that the district court relied on when the court said well the three primary pieces of evidence there's mr barry's testimony there's an e mail that he sent and there's there's a memo that was written by missed him after a conversation with m the e mail in the memo contain a conclusion is based on a conversation that took place at that meeting on october twenty fourth so that is the key what happened on october twenty fourth mr berry testified now we have people select the answer to my question they answer the question is there no evidence even under that standard the district court got it wrong because there is no evidence that bertelsmann undertook a fraudulent scheme and because that is the no evidence point the court should review the evidence and resolve it in our favor one thing the striking about this case is that the district judge did not reveal any of the  disputed documents or exchanges or whatever they're going to talk in camera i simply order that they be produced can you explain to me why the district judge did not take this intermediate want documents that relates solely to this one ground of how these documents would be or how the proceeds would be used perhaps for medication expenses they asked for and the district judge gave them all documents related to the negotiation of this contract or so it would seem from the court's order it's a very broad they want to very broad discovery relating to privilege materials and the district court one of the areas the district court engaged in was that it failed to abide by the in furtherance standard it didn't do any review relating to any of the claims communications and in fact because plaintiffs didn't asked for any kind of an camera review and never in their papers really identified claims identifiable communications that they said were in furtherance of this allege are no findings in the record and we think of course that there can't be but i'm certainly we keep whining on wondering off into into specific factual questions in this case it strikes me the difficult questions in front of us have to do with legal standards for example if a primus facie case is enough question is and i suppose you can say as but if it doesn't do that does it have to consider the other party's evidence then before makes a final decision or can you just say well it's a presentation case the end we think the standard should be the initial burden and that even at that point the district court really is obligated to hear the other side's arguments look at their evidence and making even that initial determination as you point out under zola of whether you should look at the documents in the first place we certainly believe one that that's the appropriate standard and it wasn't satisfied at all in this case it's simply couldn't be  i would like to refer back to this meeting because mr varian can you stick for a little longer with judge fernandez question about under what circumstances should the district judge be required under what circumstances if any should the district judge me or acquired to look at countervailing evidence as just a merely from the evidence presented by the moving party well we think in the in the initial review a district court would really be required to evaluate both sides evidence in a civil case where there is an adversarial process has to even under the initial motion look at it before even making that initial determination of whether for instance if a party had requested a camera review even before that you would have to evaluate both sides and it may be given what i think you just told me in camera here is not in front of us because neither party asked for nor seems even out of the asking for it we certainly do not think the record within that discussion of prime aphasia there is in fact an opportunity for the non movement to come and present its evidence present its arguments explain why there isn't any basis for anyone to believe that there's yes getting getting to the basic idea of whether there has been any kind of showing of a prime aphasia case at all again the email and memo that are are in question focused in on mr barry's report about his perceptions of a meeting he then is what happened at that meeting that meeting which is in mr barry's testimony he doesn't say i asked that i be able to use the money for  i just want everyone to understand that i believe that g and a and overhead includes litigation expenses and literally that was that was the entire conversation it went on for two minutes mr barry later makes clear that because he had announced his interpretation of the terms general and administrative and overhead that were in the draft language and because nobody specifically rebutted him that he left the meeting believing that he wanted to use the money for more than we were willing to say it could be used for he was looking for an ambiguity something that would allow him to argue that all right ambiguity comes up in a corporate context all the time it doesn't mean that the other side agreed and there's no evidence that bertelsmann ever said ok go ahead there's no no evidence of that at all i've got a different question which comes at it from the opposite direction what is wrong with using that money for money would have been completely protected by nor pennington it was nothing wrong with it but to we had a subsidiary that really didn't want the money to be used for that purpose and perhaps more importantly we were loaning the money for a particular purpose to shift napster away from what it had been to a fully licensed pay system that's what we wanted the money to be used for we didn't need it to have it in some ways it's so artificial to say well you can't use it for fun and litigation expenses so simply a blip most important thing i think comes out of testimony is not only fact that there was no agreement and that's the foundation of their argument that there was a there was an express agreement and that it was secret and that's the other thing mr barry was under no keep it secret so we don't think that the evident all supports this idea that there was a fraudulent scheme by napster this isn't this is a situation in which there is a corporate transaction negotiated one party is looking for some ambiguity to give him some wiggle room later on and if that becomes the basis for a crime fraud exception then every case that has historically been thought of with relation to you know poor all evidence and  records and the other my partner that you want this is not a case of just record vitiate ing it's one client privilege based on a disputed contractual interpretation it's a case where the district court found there's reason to believe that the camouflage what they needed in order to reduce its risk of liability far resting on the testimony of one witness as girls revised to portray that the district court's opinion is supported by you know right contemporaneous supposedly interested in things like law and what's troubling you hearing and it's it's it's not a very good question it's sort of been in your face question i want to stand is i don't or standpoint anybody in the legal profession wants to drive the attorney client privilege down to such a low level as was done in this case primus facia case only the evidence on one side has to be considered and then boom the privilege is gone don't you in comerica you don't listen the other side don't have to listen the other side but the standard is i think they present enough is kind of like going into a trial where a jury's going to find the facts judges says is there any evidence there that irrational jury listening those facts could decide x and fill out the evidence and it sounds like that that lower standard and having a hard time understanding that that could be the law and why anybody would nature of the adversary system requires the at least be given the chance to come in contest the evidence and see whether in light of whatever they showed me maybe there may be the evidence that the moving proffers is completely out of context and they show that the judge supreme afresh case goes away do you agree that the district court i'm an issue always wrong this record the district court's basic position that the ninth circuit law tells tells the district court and there is indeed the fact that all the court h didn't get that right i think it would be more appropriate for the court to look at both sides evidence before determining if in fact the prima fashion cases are appropriate sound like that be a nice thing to do but you know i have to you know a lot of things are more appropriate but they don't need to be done they're just sort of nice that you think it's nice for that it's required extent the district court thought otherwise you agree that that was incorrect i think that's that's right you're wrong but i don't i think the court was correct that she does not need to hold a mini trial there is no case law that supports that proposition you don't need to come in and weigh the evidence and man that the district judge does allow both sides to present evidence and i saw in that district judge decides whatever is likely to be true based upon a presentation of evidence by both sides well i'm not sure the channel needs necessarily to be read that way so we could argue it based upon for at least from the moment what do you think a good rule as rather than what chan requires i'd appreciate or why i mean it's pretty serious business to say to a lawyer and to the lawyers client open up your files and review all your communications because i don't even think it's more probable than not that you can gauge from the crime product option i think there's a possibility but i don't think it's more probable than not clear about what happens if the district court decides not to do in comparative you but it kind of looks like there's a prime a face you case then you can decide to say no or doing to mary do or you can put the evidence they don't know like maybe that's the standard and now you want to tell us why the facts say that you've met tough standard correct correct that that we had so much evidence in the case not only the contemporaneous case where the company had a pot of money that might be fungible that wasn't a factor napster was flat out of money but for bertelsmann funding so it was critical the only way they could keep point it may take six months may take twenty four months some parts might not immediately we think we can convert napster into a i know i know i understand as i might question you said bertelsmann did not want to be seen in any way as assisting in any they structure the loan to obscure the fact that they were financing litigation activity whether they simply lent the money and they had maybe there was a side agreement or maybe they were there wasn't a let me say it this way saying one thing and doing another may be fraud it may not be fraud and it certainly may not be fraud on the court so why is that fraud on the court under your theory because they repeatedly represented the district court the special discovery master to the bankruptcy court that the promissory note and the terms of the transaction are exactly what's on the face of the documents and none of them money ever went in any way shape or form to supporting the filed ok and they are purely a lender like bank of conceding for the purposes of the discussion for a moment that what they said was untrue why is that fraud on the court because it was knowingly untrue and it was designed to to distance themselves from the actual operation of napster so the court would believe they have or how is it different from almost any of the testimony offered a trial in order to protect yourself which may or may not be true i mean if that's enough to pierce the attorney client privilege well there's not be a lot of work left for lawyers to in terms of handing over their files i mean i'm not i'm not yet i don't yet see how this is different from a lot of litigation behavior that seems not to be fraud on the court because there was never a license just to come in and lying to a court lie repeatedly about what the gave all this money to napster but that wasn't for the purpose of keeping them afloat so they could do big noddy and you know how dumb our courts means to flesh or fully you give me fifty million bucks to do x and so i can and i'm diverting other money to do the litigation instead so everybody knows that can happen that's not too difficult and anyway every dollar you spend to help napster helps napster go on with its evil doing does it not we think it does absolutely bertelsmann is the one contesting in the the court whether the mine went to litigation or not or is it that lawyers are are so tough that would napster said was cheese if we don't parrot lawyers we're really in the bucket but we we can hold off every other all this money and we had nothing to do with child trading you have to understand the statement we have nothing to do us file trading as proprietors on its face has to say they are financing  prove it in addition to the evidence we already have showing that in fact bernstein had everything to do with the file trading is that there was a cover up and the cover up is consciousness of guilt and that is certainly probative evidence of their  intent which is absolutely an element for the for purposes of the copyright infringement case so now we're back to they have to disclose all the attorney client relationship because of what's obvious to everybody in the world i mean they have to disclose everything in the attorney client relationship because some of the money was diverted to litigation expenses and they knew that and that's the whole of the thing right and that's why they've got to do it because not that some of the money was and i would begin by saying that i think that much of the colloquy that just took place demonstrates why the collateral order doctrine doesn't apply here because the the issues with regard to the application of crime fraud doctrine are inextricably intertwined with the merits of the case i think judge fletcher your questions about the you know whether or not this was a fraud or whether or not it was a successful for relate directly to the question of whether or not there was copyright infringement here contributory infringement or vicarious infringement theory and  the cases from the supreme court and the ninth circuit i think make it very clear under those circumstances that the collateral or doctrine should not apply because this court then winds up getting involved in the merits of the case before the case is tried and for that reason we think the court she dismissed this appeal that we've got a fair number of cases in the circuit now in which we have heard on c the various discovery disappears where the issue is privilege yes that's correct your honor but the but the the point is not whether or not the issue was privilege but rather whether the the privilege issue is independent of the merits of the case your honor i think has has decided a couple of cases my involving hideous petition one involving a criminal case united states versus green  in which on appeal there was no relationship between the privilege issue and the merits in both of those cases there was no dispute as to the as to the merits on the appeal the privilege issue was entirely independent and i think that line of cases is distinguishable for that reason here the issue was as i said i believe inexplicably intertwined and may or may not be depending on the nature of the decision for example if we were merely to hold that judge patel applied the wrong standard and said nothing other than that and remanded we wouldn't be touching the merits at all the i guess i have two responses to that the first and more important response is that in fact judge patel applied both standards she applied both the prima facia evidence standard and the preponderance of the evidence standard and she said that under either standard she found that the crime fraud exception applied and i think because of that it really it really doesn't matter and this also goes to the question of the standard of review i think that because she applied both legal standards that her decision was essentially factual now there's another thing to say and that is the clear order doctrine sort of a little checklist says independent of the merits but that's often not true i mean we say that really is you know the supreme court said that the problem of the ninth circuit might be absolute cracked and some people might think so but the ninth circuit has in effect that you can appeal privilege and you can bring it up quietly i mean on a cloud or larger and i'm not so sure the supreme court would go along with that but that's what we thought and this panel is going to have a real hard time fighting that not well executed it's not and it's hard to believe but there's no question that that's what the parties intended when they wrote that promissory note document they wrote those words in there for a reason  very first page now if you're going to get back into the facts i think we don't need to hear him any longer i was going to i was going to wrap up here i was saying that i think that the i was trying to reinforce the point that the near its here i think  you you've saved some time and if you could die i'm sorry i neglected to remind you could identify yourself for the record greg coleman for girls and thank you your honor again we believe that it is important for the court to announce the standard but i do also want to make clear that we also believe that we when under any standard there in the briefs and in or oral argument today there have been a number of statements that purport to be set out as fact and we simply believe again without going through all of them to the record just doesn't bear that out this is not a fraudulent scheme set in motion by bertelsmann we made clear that we wanted our money to be spent to develop a new system mr barry's testimony makes absolutely clear he's the one that came to us when he was told no in that meeting he said well look i just want you understand i'm going to interpret these terms in the contract to allow me to do this and when he was asked later on if the contract was false he said no the contract had those words in and i interpreted those to allow me to do this now that's not that's not fraud by it's not right at all and it's not fraud by it's mr barry seeking an ambiguity that allowed him to use money in a way that he felt he wanted to you know you want since you want to talk about this back to address something it seems troubling that after barry did big n and diverted your funds to litigation i think there's something in the record somewhere that you then gave him another twenty five million that's absolutely true judgment as we did and without going into a lengthy explication of what happened obviously when we found out about it the record is clear that our executives were very irate but at the same time they had to make a tough decision do we soon after and shut them down for breach of contract or do we stay committed to a project that was important to us and that we felt would be for the benefit not only of ourselves but for the industry and they made a tough decision to stick with the project and see if they could get it done that's all there was to it plain and simple that was the decision that there was a lot of water under the bridge there wasn't much we could do about the fact that mr barry had breached our contract but it was still a worthwhile project and thank you yours i thank both sides for the