summary judgment ruling when a trial court is faced with summary judgment regardless of how a result law works regardless of how trust law works the nonmoving party gets the benefit of doubt court is required to accept as true all evidence other than that which a reasonable jury couldn't possibly accept and draw all inferences in favor of the nonmoving party our case has the additional overlay that the district court did not sustain a single evidentiary objection to deal well did make objections but the district court didn't rule on them those objections are out of the case so one hundred percent of our evidence was properly admitted so the question is was there any possible basis on which the district court could refuse to consider one hundred percent maybe should be an on bank review which of course is beyond the power of this panel is that still in a case it well it isn't the case to the extent we can persuade the court to review what on but we've made the argument in order to not hear not from the we don't agree that we violated a risk but this is all about what in commercial case you would call damages so the calculation what wasc if any did the plan suffer and the mathematics of that is there is the revenue sharing that revenue sharing and now it's up to you to show that that revenue sharing actually went to a direct cost so this one a scrimmage here is about the extent to which we offered it miscible evidence of our direct costs compensation is an issue that works in the case but really the question is whether this evidence so and wasn't sufficient to meet whatever standard is required and again in summary judgment we get the benefit of the doubt  dive in i mean you have there are about half dozen at least discrete buckets of damages i think you put in place you're not going to cover them all is the biggest ticket item the cost of the employees  want to just dive into that because i need help with that although the the big picture issue is that the district court the deal well argued in the district court concluded there can't be any doubt about whether these were these expenses were incurred and you need to show up with contemporaneous records and the dalles position on this isn't really entirely clear but the district court adopted the idea that well you really should have contemporaneous time records because recall the retirement service division service two hundred plus plans of the city national plan was the largest one and represented about ten percent of the participants are just top i mean i'm i need help with like the specifics are there two of those seventy employees who only service the city national debt let me get right to that there were two employees whose primary task was to take if they didn't i think one of them actually worked for human resources not the retirement services but their city national employees and they were devoted to these plans that was their primary employment responsibility and the evidence is from a couple of different sources that had those had the city national plan not been part of retirement services division their positions would have been terminated it's also correct that there were about a mr burgess details this in his report there were about seventy employees who work for retirement services division what he did was to take the financial statements the internal financial statements the cost of running that business operation for all the plans he said we have ten percent of the participants leave the city national plan has ten percent of the participants there's about seventy employees so i think the cost of about ten percent of those employees six to seven employees represents the cost of operating and one of the what's the basis for assuming that the right comparison is the sort of the percentage of planned participants as opposed to the number of plans because it's not obvious to me that the amount of time an employee would spend on a day to day basis would correspond directly to the number of participants in a given plan well your honor it's a fair question and i think it's one that a try or a fact would probably wrestle with the question is whether on summary judgment when we have someone with a vast amount experience as mr bridges who compiles the information says in this context this is an appropriate way of evaluating expenses this is what companies do when they evaluate expenses like this if city national was trying to determine the cost of what it cost to run this plant this is the approach they would use it how much do you spend and how do you divide it up that evidence passes the summary judgment test that meets our nonmoving party burden whether or not we can convince a try or fact but the way we presented the evidence we we did not assume that it's exactly ten percent we had two employees that the evidence said worked not exactly exclusively but primarily their positions would have been gone so you got those two people pretty definitely and four to six others so  presentation in the final in the final set of motions was we don't we don't know the exact number but we know it is no less than three we pick the irreducible minimum number of additional employees whose positions would gone if this plan wasn't there so we've got the two that we know are working essentially full time for the plan all you need would be to have any contemporaneous evidence of these expenses there but you could have offered we did offer it the evidence that mr merger used was the bank's internal financial statements that we kept the cost all the costs of operating the retirement services division no we did not have contemporaneous time records  say no business like this and we're talking about time records like lawyers keep you know of six minutes or fifteen minutes or whatever i'm not aware of any business on this planet besides lawyers and accountants who keep time records like that but apparently retirement services director keeping operations are supposed to i should add by the way you know there is no requirement anywhere in the law that that kind of record be kept except some deal  regulations which talk about record keeping and certainly in hindsight it would have been great if we kept those records but as judge what fred said this is a question essentially of proving damages of proving walks it's not a question of whether we a record keeping with quantum and the question is how much did it cost to operate this recordkeeping operation and the records that we used including contemporaneous cost records although not individual employee blame poit time records though those are contemporaneous records and if this were a case involving you know what profits damages any kind of conventional business case that evidence would be  do you have a day different different duty to keep records that an ordinary business no you don't there is no law in a recess in the case law anywhere else and your honor you'll find page forty of our brief right around there we cited some cases in other contexts also arista contexts where the law actually requires record keeping such as wage information when there's a suit back pay or pension contributions you have to keep wage records but if you don't keep them that doesn't keep you from presenting evidence if you do she is free to series are certainly held to an extremely high standard but record keeping of this daily time records of where you do your work again might be a good idea in hindsight but that's not a legal requirement anywhere and what's important about this this whole concept of having to prove the l word or limit the last which is really what are evident you are a burden was of having to do it beyond a doubt essentially the district court imposed a reasonable doubt standard the whole source of this the entire source of that idea is but i'd like to take a moment to explore that decision and it's fantasy it's because they really are what this case is all about kim was a case in which there were some welfare funds as the soup this was in hawaii there were some welfare funds and there were some people called the outer island representatives who were employed by the fund and supposedly working for the fund but they were actually doing work for a union and so there was a violation of illicit fund assets were being  and the suit was to recover the money that had been spent the what happened was that the defense had no evidence demonstrating how much of the outer island representatives work had benefited the fines or as far as the opinion reveals just no evidence at all now the court decided well how do you how do you assess this sort of situation it referred to some cases from other circuits that i'll discuss in a moment but it quite properly said and this to limit that loss or show me that i'm wrong that is an ancient principle that's been around for a long time and when you would apply it in a context as occurred in kim where the defense has no evidence to offer the defense loses in the entire amount becomes the defense lab bill of this in thing happened in potomac though there was no evidence evidence was offered but it was rejected as inadmissible so that evidence was off the table the defense had no evidence but this issue about doubt and approximations has no foundation in kim and the principle case on which kim relied is a case called reverses angle and that's the case that i think we need to look to it's also recent case and what happened in that case is some corporate executives used trust funds to to invest as part of their personal investment strategy they would buy into corporations and corporate controlled battle to me used the funds the trust fund money interests of violation and the court confronted with this found a violation and found that these executives had made profits but the question is do they have to discard one hundred percent of the profits and that is the balance of the court was striking the court didn't say no you have to give up all your money rather the court recognized that there was a very different difficult balancing task between assessing how much of the profits came from the executives own money their own ideas their own strategy and how much had to be discord because it came through the use of the funds money and the court recognize there that the district court may be only i'm quoting from reverse a single page one thirty eight district court may be only able to make a rough approximation it should  resolve down since favor of the plaintiffs and here's the language that was partially quoted in kim this course should avoid the two unfair results of depriving defendants of the profits earned by their own efforts she did case yes in our case the court rejected our evidence because there were no contemporaneous time records and because there was doubt now there there's no time to go through all of this there are components of our evidence as to which we think there actually is no doubt at all it's mathematically exact as my question is did it rejected per se because there were no contemporaneous record or dated accept the evidence but found in one thing anyway it it's hard to say what it said was there were no contemporaneous records and what it said was the evidence is in doubt and what the authorities say and i would ask the court to look not only at lead but it showed in verses in g m which  cite doubt happens in these cases there are no cases there are cases probably as doubt free as almost any a recent case that has ever come before a court but in traditional damages analysis where one has to allocate between the which this court has quoted a couple of times in comparable context including cream records which is cited in our brief under the guise of resolving all doubts against the defendants we will not deny the one fact that stands undoubted now in that case it had to do with the defense contribution to movie production you know played it doesn't get all the profits the defendants made a significant contribution the one fact that stands undoubted in our case is that city national spent millions of dollars running the retirement services division was it two million two and a half three million we can debate that but it was not zero and essentially deciding that it cost nothing to run this operation provides a seven million dollar windfall and by the way the the accounting included money that we never even received but that's a separate issue to allow a seven dollars a month seven million dollar windfall contradicts everything that the authorities on which kim relied stand for i'd like to reserve the rest of my time you have no time left but we'll give you a couple minutes you're over and i can start to tick up of course my fifteen yes yes but we'll give you a government angle but let's hear damages in the statute of limitations can be resolved on the basis of a few core undisputed facts basically the rules and without delving into any of the documentary evidence so you national does not dispute that it hired itself to service its own plan that it paid itself by taking a cut of the plans mutual fund investments through a process called revenue sharing that it regularly received these payments for over a decade without tracking or having any idea of its expenses and that not  so that leaves only one possible circumstance in which these revolutionary pain is could possibly be permissible and that is if they can somehow be required to arise as reimbursement for actual direct expenses incurred by city national and here's the important point as defined in the secretary's direct expense regulation for a week see two regulation and there are two components of that regulation that render these revolutionary payments structurally incapable of qualifying as direct  expense or reimbursement regardless of the nature or quality of the expense evidence the national has marshalled to this point first the regulation requires reimbursement only for actual expenses and because of that requirement that apartment  two people whose exclusive job was to service the city national plans and i actually there were no other employees who did anything right so we could we would be able to isolate exactly what the direct cost of whatever was wrecked expense would be right to figure out their salary benefits and whatnot i guess i don't understand on that if and then they came forward with records that documented this is how much we paid these two individuals you're still saying that that wouldn't be deducted from the damage amount conceivably if it were done properly showing getting reimbursement for employee expenses or printing costs can be done that is certainly possible the problem was how it was done here the structure of this arrangement  qualifying under the regulation as reimbursement for direct expenses the second part of the regulation which i think is it will cost us a bit as well that brander's this structurally incapable of qualifying as direct expense reimbursement is the regulation allows for advances money for a month the fishery incurs expenses that month then at the end of the month period at the end of the period covered by the advance they must account to the plan reconcile their expenses with what they received in advance refunds of the plan any excess application to the hypothetical i pose and i guess that's what i'm missing but we were not talking about advances we're not talking about reconciliation we're talking about we know exactly how much it costs to city national in terms of its own out of pocket payments to in my hypothetical i don't understand why there be any uncertainty about what amount to design that's my next point so these revenue sharing payments cannot qualify as reimbursement for liability purposes so city national is is has  cannot be exempt either by reasonable compensation or by this reimbursement allowance because of that it would be to apply and we're lenient standard of the damages staged to measure direct expenses the same thing that they that they that they argued was excused of the liability stage under the regulation but to apply a more lenient standard that damages staging to say you know even though you did reconcile even though these were tracked you can still get reimbursed for them as an offset would directly undermine the regulation and the for the purpose it serves and so there's nothing to say the standard for how to do this as kim said is silent and so in the face of that silence the courts should apply federal common law and the federal common law rules this court said sally or should be the rule that best comports with a recess regulatory scheme saying well they're not even arguing that point they're arguing that these are a rate reimbursed one of the regulation they're saying that under some principles of what they call conventional evidence that these same expenses should she get credited as an offset against damages and that would this rate the regulation if that were allowed what about the the argument that while that may be so on your summary judgment standard we ought to have a trial on the merits and these and so so as a matter of law these cannot count as reimbursement for direct expenses as for liability or for it well that that is not the basis on which the district court ruled in your favor right you've articulated that as an alternative basis for firmness but my understanding of what the district court said was more along the lines of what judge corrina was alluding to earlier which is just that yeah you've given me some stuff that you claim is sufficiently reliable but and is that you know this is just estimates and averages or whatever the terminology evidence that that's true but that this court can affirm summary judgment on any basis in the record so i don't think we need to necessarily focus on the district courts you know if that's all rush now well just i just take it you made this argument below in the district court simply didn't find it persuasive well the argument was made below that these expenses were not reimbursed one of the regulation and that was why there was no liability for liability for talking about it damages correct yeah well the damages your your argument to us is simply doesn't even matter they could have come up with a mountain of the most reliable evidence in human history and it wouldn't matter because as a categorical matter none of this can be offset and that's why i'm saying that i don't remember the district court finding that argument persuasive at all otherwise there would have been no need to get into whether the evidence was sufficiently reliable you know this report again did not that was that was i was not the basis of their court's decision but again i would say that any any basis in the record to support summary judgment is is permissible  calculate their direct expenses they did it kind of motion study during the investigation where they try to reconstruct what they spent on the plan why the early stage they submitted evidence by taking a pro rata share of you know how much the plant constituted as a proportion of their overall service rather work at the damages stage they then looked at a couple of employees and they did a couple have a hypothetical scenario so it's really all over the math and just as one example printing and mailing costs  that do not all make clear that they're tied to the plan there's one invoice that i can point to that you are eleven seventy three which refers to services being provided by the company the out the third party provider to something like thirty one thousand participants that's way more than were in this it went away from the employee costs and that's fine there are another other buckets but just going back to the two employees at least whose principal duties it sounds like you guys don't dispute were to service the plan wouldn't the at least the majority of their salaries not be subject to offset again it could be i mean in a vacuum if you have employees who were solely dedicated to servicing the plant those could be potentially reimbursable but the problem is the way this was structured these revenue sharing payments were not intended to be a reimbursement and there was no process followed to during the during the time in question to actually reconcile the revenue sharing with the with the expenses and so to then take an offset for some expense that was not reimbursable in the in the first instance with undermine the regulation had they done this properly there so national had options here at the outset of this whole arrangement they could have hired an independent judiciary to approve this compensation arrangement in which case it would not be self dealing in which case they could build themselves a reasonable compensation exemption and they wouldn't be there wouldn't be here today some of the competition was reasonable they also could have actually treated this is reimbursement they could have tracked their expenses received the revenue sharing payments and refunded any money back to the plant is this a is this a backdoor way of getting reasonable compensation exactly this course if this were allowed i mean if you think about it but that's not what happened in the district court i think that's that's the problem it could have said that this is a back way and we don't really care about your documents but the judge apparently delve clearly illegal self dealing and then subsequently them to stage they could just say well i did x y and z so credit me for all these look add up to more than the amount i got in compensation and therefore you know there's no damages that would make a mockery of narratives here and maybe that narrative will ultimately merge but have we short circuited this process at this point well if we take the view that as a legal matter it doesn't really matter but if we don't take that view and we begin we begin to look at these figures which are complicated and all these reports then that the reply mation that was submitted cetera isn't that really more of a trial matter prove what portion of its activities benefit the plan and so you know it's appropriate for the courts take your other this is so insufficient you know it's fair to say you cannot meet that burden even a summary judgment having addressed any questions about specific evidence but i do think there are problems with all of it and if you want to talk about some reply evidence i'm happy to one other question is there anything in the regulation that requires if they do cherie it to do recordkeeping of some sort the answer to just about everything counsel said is section eleven zero nine of the recess and the very well set which requires the defendant to make good the loss to the plan and the very well settled trust law principle which has been incorporated into a recital which is that the goal of eleven nine is to put the plan where it would have been without the violations that means that the plan condemn if the to the extent the plan can demonstrate the cost of running the retirement services division that's not part of the last but the goal here is instead of making good the loss is to  sentially impose a forfeiture either way the theory that you just heard is not the theory on which the case was argued to the district court it was essentially a given that to the extent city national could adequately prove specific direct costs those were deducted from the total of revenue sharing and the deal well conceded some of those costs some of the art cost some of the postage and mailing costs some of the money that city national rebated that is revenue sharing it received that it turned over the plan so this is this idea of an absolute forfeiture because you don't keep records is it simply not how the case was argued below and not how the district court decided look if you don't keep records by choice it can you later argue that we don't have any records and if well we're going to estimate it in other ways that that your opponent has pointed out that on day number one you could have put into place the machinery for keeping records well that would justify their reimbursements that's correct and of course hindsight's a great teacher but the point is to the extent we're able to prove that we don't have to prove it beyond a reasonable doubt we're allowed to used estimates were allowed to use approximations and to the extent there are multiple cost scenarios they can get the benefit of the doubt by maybe the court