america's biggest bank and america's biggest crook in two thousand and fourteen after many years of publicly stating we had nothing to do with made it off j p morgan chase entered into a global settlement agreement with the united states government and with the made off trustee and with some private plaintiffs in which it paid a total of three billion dollars it missing that it at meeting two facts that constituted of the united states government charged as felonious violations willful violations of the bank secrecy act and in addition to giving a statement of facts that laid out the twenty year relationship between the parties including how j p morgan profited greatly from the amounts of money that made off and some of his collaborators kept in the bank and how j p morgan actually took steps to further what made off was doing and made off stated publicly that senior people at j p morgan chase knew exactly what he'd made off was doing we brought suit here on his for violation of section twenty of the securities exchange act the control person provision saying that if you look at all the facts there was a control relationship between j p morgan which was made off slender which was made off so clearing bank through which all of the transactions at issue in his sixty billion dollar fraud went and we sought to merits but i think that could be distilled to a statement that the lower court did not believe it was plausible that a bank like j p morgan chase would involve itself in a fraudulent scheme with mr made off reserved to fatten its opinion but what it said in the oral argument and correctly so was that even if plaintiffs are net winners and all come back to that rather than misleading phrase in a moment they still deposited money with made off in some instances for twenty years or more and are entitled to payment for the loss of beneficial use of that money and that of itself the district court said precluded it from dismissing on damages grounds on the grounds that plaintiffs are net winners right because he said you want a piece of tish's profits well look he also said we existed  t he did speak to the fictitious profit issue in l respond but he also said but i can't dismiss on damages because plaintiffs do have damages for the last beneficial use of the money not for a share of the profits but for the last beneficial use of the money and as long as there is any damage ground stated in the complaint dismissal under twelve b six would be inappropriate now on the fictitious profit point i think we have to point out your honor and it was argued to this court by the made off trustee net winners as as the term is used still have a claim against the made office state it is however in effect to support unneeded claim first all of the net losers are brought up to zero if you will and then the net winners who started zero and the net losers will collect any monies remaining in perry materia but there is no doubt the trustees said the next winners are general creditors of the main office thirty eight now this was all done as you know in the context of a separate liquidation as far as i know j p morgan is not in a separate liquidation it's in very good financial condition and thus just the same as if you had a guarantee who're the primary  a state law type claims it wasn't control person liability that proved to be entirely different so i don't know what the judge called was right or wrong he said they had to be exactly the same i don't know what they have exactly the same but that would seem to me that they have to be similar manipulations and therefore should have done something sooner that's your theory but that's completely different than the theory of the net losers who are all saying that it's a policy scheme made off was paid from one pocket to another that's that's not your theory against j p morgan your honor it's the allegations in the complaint or really the factual allegations taken in large part from the shapiro complaint in point of fact as you know on aiding  abetting in common law terms you have to show that the defendant knew of the wrongful action and took affirmative steps to further it in this instance your honor the the same the witnesses are the case yes on the net was it settled in at loser case the shapiro case yes i believe who are by can check the exact amount but i believe it was the hundreds of billions of dollars you know your red light is on i have a question for you  can you identify any material ways in which the complaint at issue here the judge could have dismissed is different from the complaint in dusek that his dismissal the eleventh circuit affirmed apart from obviously you have different the morning and they please the court john savva is from walk to lipton rosen accounts counsel to appellee j p morgan chase judge codell wrote a comprehensive and thoroughly well reason opinion that i think carefully considered each and every one of appellants arguments and rejected them and is exactly as judge carney just pointed out a moment ago the identical claims brought by the same plaintiffs by the same law firm in the middle district of florida were also rejected after careful consideration by judge steele and then affirmed on appeal by the eleventh circuit and i would  likewise affirm judge code also careful decision dismissing this case this this case has nothing to do with the proposition that they are members of the earlier class they simply are not members of the earlier class and i think judge wesley is right about that here the untimely friedman class action complaint was brought by net winner plaintiffs were never members of the earlier shapiro class and it contains an array of entirely new claims that were never made in the shapiro case so for example in most salient lay the shapiro case the earlier case is all about aiding and abetting breaches of state law there is not a syllable about control person liability under the federal securities laws and there is not a single federal claim brought no rico claim no securities law claim so it's all about state law and aiding and abetting and we know that aiding and abetting as a matter of federal law is viewed very differently from control person liability that's the famous supreme court case the central bank of denver case there is also no allegation in the earlier complaint that j p morgan somehow directed the fraud or raid on the fraud in the way that my adversary says and indeed exactly as judge wesley pointed out a moment ago also they name two new defendants who were never defendants in the earlier action so american pipe does not do them any good even if the supreme court were to somehow decide that this court has been wrong since in the mac to hold that indeed that american pipe tolling does not apply to a statute of repose that would simply do them no good whatsoever judge cotto was absolutely right that they are not helped by american pipe tolling because they were never members of that earlier class and let me explain for events that occurred very publicly in this courthouse that make that crystal clear the distinction is in shapiro they brought net loser claims for nineteen billion dollars in the present case the freedmen net winner case they are seeking damages of sixty four point eight billion dollars those two numbers have had real significance in this very courthouse since two thousand and eleven and let me tell you exactly why number one in two thousand and ten the bankruptcy court in the southern district of new york ruled that the trustee could define the net equity owed to made off investors as only including their net investment that is the cash they gave to made off net of any monies that they got out and so to have capital invested in the made off scheme when it collapsed you had to be a net loser you still had you had to have money that was still in the account the court the bankruptcy court  expressly rejected the measure of damages that my friend wants to advance in my case and that is they rejected the so called last statement method which is the method that says we get everything that was in these utterly fictitious other utterly false last statements that made offs and to us before the collapse the total of this utterly arbitrary number of sixty four point eight billion dollars secondly in august of two thousand and eleven this court affirmed the bankruptcy court and this court was crystal clear that the net investment method the net loser method was appropriate and the court was also quite clear that it would be quote absurd to give legal effect to quote made off machinations close quote by using the last statement method which is the very method my friend wants to advance in this case the second circuit rejected the profits they did not exist at all they were thoroughly made up as this court has over and over again recognized and so what my friend is trying to do is to give legal force in effect and indeed to insist that j p morgan must give legal force in effect to completely made up numbers there were arbitrarily and fictitiously invented by madoff this court at the bankruptcy court level the district court level and here in the second circuit has over and over again rejected them i know that they're not going to get it from the major state but they want to get the money from you yes by giving effect a fictitious numbers that made off made up which this court has over and over again said is not a valid measure of damages however we're not i'm not here really to argue so much about the measure of damages i'm making these points to your honor's to show how clear it was when the shapiro complaint was filed in two thousand and eleven it that in this courthouse people understood that the nineteen billion dollar number was the net loser number that's the number and the only number that the shapiro plaintiffs advance in their complaint and that by contrast the sixty four point eight billion dollar number the net winner number which the second circuit had rejected was never mention in shapiro they don't ask for they don't advance the last statement method they don't ask for sixty four point eight billion dollars it is only the untimely friedman complaint that seeks that sixty four point eight billion dollars and it does so because they are acting on behalf of the net winners but it was clear throughout the shapiro case it was clear to the trustee it was clear to me and it was clear to the very experienced plaintiff's coun advancing the shapiro case that we were not dealing there with net winners we were only dealing there with net losers and their claim for nineteen billion dollars that's why judge code was absolutely right in ruling below that by two thousand and ten and two thousand and eleven as a result of the series of rulings the freedmen plaintiffs were on notice that their claims were not similarly situated to the net loser  plaintiffs and that's why they couldn't have thought that the shapiro claim represented them or that they were included in that class and indeed that's precisely why judge mcmahon who was well aware of this litigation history when she was overseeing the settlement hearing in shapiro was so shocked that the net winners could even claim to have thought that they had been represented in the shapiro class that's why she dismissed their objection and their up opt outs as a nobody she told them you have nothing to opt out of and you have nothing to object to you've you're not in this case there's a further reason why american pipe tolling is not available to these plaintiffs and that is because judge codell correctly observed that it's only available when the earlier filed class action involved exactly the same cause of action subsequently asserted let me briefly address my friend's reliance on cullen and then feel let's put aside for a moment that with respect i think both call and feel are certainly in tension with the holding of american pipe by the supreme court and the clarification two years later by the supreme court in johnson versus railway express agency in one nine hundred seventy five case in which they said the logic of american pipe depended upon the fact that those were exactly the and so they're just really have to be perfect overlap that is not what the supreme court has said the supreme court has said there has to be perfect overlap that was what was true in american play that's what the supreme court said in johnson and indeed yesterday  where the cal pers case was being argued before the supreme court i was in the court room to watch the petitioners the people who you would think are on the side of my friend here actually advance the argument no it has to be precisely the same our claims are precisely the same as the earlier claims that's why we come within american pipe and indeed justice briar at one point yes point blank the question of  would be your view if you have new claims brought subsequently is important i'll read it it's from page twelve of yesterday's transcript before the court mr  not allowed to do that under either our rule or respondents rule it has to be precisely the same that is a direct quote now let's take cullen and then feel at face value for a moment and this is these are prior decisions of this court that seem to suggest that well we can we can they can be a little bit different the the crew even accepting those decisions at face value i think what is critical is and this was really central to what the court was doing in cullen vs marciano that while there were some differences between the later file civil rico claim there and the earlier filed state law claims those differences in the words of the cullen court were quote entirely peripheral close quote and that's from eighty one i'm sorry eight eleven f second at seven twenty here however the earlier state law claims in shapiro as i mentioned at the outset involve aiding and abetting you see that difference therefore is not referral the difference is fundamental and we know that because you literally can't bring an aiding and abetting federal securities law claim  there is no plausible or cogent allegation in the complaint that j p morgan you know one of the largest banks in the world literally actually day to day controlled bernie made  risk sorry well first of all i don't think they established knowledge but it's not enough no control requires far more than mere knowledge and it requires far more than mere influence thank you your honor the question of the class definition the class definition and shapiro was changed at the time that the class was certified to provisionally certified the words net losers for the first time came in to the class to finish and and that was what gave us the realisation that this was not meant to be be half of you or your clients that something i'm not ruling on go out and sue j p morgan which of course is what we did the idea that we could piece the dots together and figure out that because this was a damage amount which by the way was higher than the net losers could possibly be claiming the class therefore couldn't include net winners under the original definition if you look at the complaint and again we cited  in our papers in our briefs there were references in the shapiro complaint to the amount i think at that time that was calculated from the losers plus other damages and unspecified amounts  the in the dominant in the wherefore clauses the net losers the shapiro complaint ask for unlimited damages since class action plaintiffs are wont to do so it is not a correct statement to say oh if we had looked at that complaint the numbers wouldn't have added up and as i say judgment then it was certainly closest to it said we've changed the definition i'm not ruling on whether net winners were were part of a claim or have a claim go out and sue j p can recover and the court went on to say at a minimum you can recover the last beneficial use of the money yes mr savva raise do you have a case to the contrary mr safir rees could not come up with one and the court indicated therefore this would not be an appropriate twelve b six disposition because there was a cognizable damage claim made and lastly for some i lastly if i can go over a little bit but in addition to that part of the damage claim yes the courts i'm not going to try to read it because it's a fairly lengthy quote look at page nineteen of our reply brief which is mr sheehan the maid off trustee counsel explaining to this court why net winners do have a claim and they will be able to partake of the made off of state once all the net winners are brought up to zero that he is not saying that winners have no claim it is simply a question of subordination and your honor if i could just address your point on the merits we don't plead simply that chase had knowledge of all that we do plead that you will find in the complaint allegations that chase told made off how to work a check kiting scheme that he was working with a friend named norman levy and also told him that that scheme has to stop after nine eleven that regulators were too much on their tail and when chase said that even though it was a profitable scheme for made off made off stopped chase controlled his bank account chase lent him money chase could put him in prison i think that's a pretty good indication that they had the power actual power and exercise fact i mean you could make that are you with regard to any large depository at the bank would they have it with knowledge that we have the chase knew what was going on that's what mr madoff says and with the fact that they were involving themselves in these schemes as in the case of the check kiting scheme they were in simply watching it they knew that manufacturers hanover had kicked made which actually is a deposit or because he tried the same scheme there and they saw there was no legitimate business purpose someone's doing doing something like that doesn't doesn't treat control person according to the allegations in the complaint not only to chase no the maid off was doing this they gave him tips on how to structure the deal so it would stay below the radar screen and then they told him to stop and made off stop told made off repay the interest you got from us on that check kiting scheme made off repay the interest and chase was one of the few profiteers from the made off primes it as i say got half a billion dollars in fees directly and also have the beneficial use for close to twenty years of billions and billions and billions of deposits your honor that in my experience ponzi people don't are not