our next case for argument today is in the matter of the sterile cycle securities litigation that seems to have done it ok i apologize mr petrie appeals an eleven million dollars fee based on what was claimed to be four million dollars of lodestar before the motion to dismiss was decided less than one percent of damages alleged damages recovered now the synthetic case requires a district court to emulate a market rate sophisticated on conflicts a client would agree to the court erred as a matter of law when it failed to do that it ignored the st benchmark actual agreements which here show sophisticated clients negotiate rates a fraction as high as what is charged here even with this particular law for instead erred by applying a four factor test divorced from synthroid and even there it erred in applying this four factor test misreading the precedence in the district courts that that it relied upon now mr breast who i could i ask you to address specifically the fee structure in the mississippi does show a different recovery than what the court awarded here but in terms of if we're looking as we usually try to for ex ante negotiat this is this lead plaintiff and class counsel is on the panel of approved law firms correct yes or no why isn't that that what is agreed upon is likely to be exaggerated as we were to impose i understand that if we were but if we were to simply say exhibit here is a pretty good in fact compelling piece of evidence about what a reasonable fee would be under these circumstances we wouldn't even need to worry too much about the pay to play and the fee would be cut by a little less than half that's correct your honor and jack also address mr frank the the nearest study the class council relies upon which seems to show or twenty five percent of the settlement fund in this range looking pretty reasonable among the general population settlements certainly that's what courts impose ex post but that's the full range of settlements those are so that that includes every settlement that's cases and as we showed sophisticated clients rely upon at this stage of the litigation because that affects the level of risk there is substantially less risk before a motion to dismiss is decided  versus after classification motions after summary judgment motions and sophisticated clients agree to those arrangements and courts generally recognize those things but we would say don't go with the nira in part because most of the cases they're using they are not using the seven circuits market emulation techniques and include lots of cases where the fees are dramatically exaggerated in part because  engines and investigation of pay to play arrangements in state street uncovered extraordinary multimillion dollar referral fees the just record aired in holding that there is no evidence supporting such arrangements here when the man next case when the modest discovery requests that petri asked for could have been resolved had the court simply ruled upon it when made motions that waiting seven months to rule on the motion and that sort of bootstrapping this court is held is inappropriate in terms of arguing that delay precludes granting timely requested rel sophisticated clients such as new york funds chicago teachers union agreed to rate substantially lower than the twenty five percent requested here we think discovery would have been very interesting because plaintiffs never deny the existence of other fee splitting fee sharing agreements they merely state that there are no other fee sharing agreements in the record and that's because well we didn't get discovery on the few sharing agreements we think it's entirely possible that the fee sharing agreements here that were in place before we came in and objected were similar to the ones in state street where the local firms were getting twenty percent of the total fee for next to no work or no work at all and if that had been exposed that alone would have justified a lower rate because it would have shown that fee agreement and the interpretation of that because while it's a it's a reasonable question it is incorrect to interpret the fee agreement that way and if you look at the end it's never been interpreted that way and it's turpitude by the mississippi attorney general according to the plain terms of the few agreement if you look at the exhibit b which is on appendix a one hundred and forty eight in you at the very bottom of that it says in this schedule quote recovery refers to the estimated recovery that miss for is awarded as its share of the recovery achieved for the class so in this case miss furze so your schedule in protecting the interests of its beneficiaries and members and allocating risks and benefits right it does your honor yes ok and in this case this per's is acting as a fiduciary in addition for all of the class members correct correct so why is this not then the reasonable gauge to a class and a fee agreement here where the twenty five percent applies to any recovery by misheard up to ten million dollars once you get out of that range the class recovery would be much much larger obvious mispresent recovery more than ten million dollars the class recovery necessarily would be much larger and the fee agreement would then go down based on sort of this mega fun principle of larger recoveries for for the class as a whole now in a case like this year almost any of those any case you know any class action where the recovery is less than ten million dollars for missed hers is probably going to be a larger recovery for the rest of the class and the attorney fees what could go down if that recovery is so large that misreads itself is recovering ten million dollars so it's not apples to apples comparison to answer your question directly the class the discussion was very clear that it says that the recovery refers to the estimated recovery that this person not even mr frank made this argument on appeal there are multiple i would say dozens of securities that conclusion more than that to the feed agreement if it's read that way to apply to the whole class which i think it can't be on is playing terms on which i know it can't be pursuant to interpretations of do want to just say that you know this is this is obviously an appeal under an abuse of discretion standard that claims that the district court abused its discretion when it warned that as your as your honor  the median fee between twenty five million dollars and one hundred million dollars and the median fee was twenty five percent is precisely what the district court ordered here and i will point as well that the fear request was submitted pursu requests to judge easterbrook do you have any response to professor choice article on pay to play in securities class  has relied on it repeatedly in his briefs you lie on the nearest study petri is revived on professor choice study but i haven't seen any discussion of that in your briefs and the district court been established here and is only speculation and in fact was the district court rejected that there is a pay to play arrangement mr brown i would like you to discuss the choice study rather than your arguments about this case i'm sure what mr petri would reply in fact what is reef did say is that it's very hard to establish a pay to play relation with certainty when the district court doesn't let you take any discovery but my invitation to you is this just your opportunity to discuss the choice article rather than something else ok judge appreciate that i mean between argument says the majority article says what it says but in but what the what what is missing from applying the choice article to the facts of this case are that there is a whole nd last time i am inviting you i'm giving you an opportunity a final opportunity to discuss the troy article if you want to discuss the facts of this case that's fine but that means that you will have bypassed for a final time any opportunity to discuss determination that i think that is accurately described in there my real response there is that's a study we have the nearest study which is also out there in the record so that is in the substance of the science of the professor  article i don't have anything to remark upon that in the application of that article to this case i would say that it's completely in a political for multiple reasons st as i said there is in assumes t predicate ok even if it's true the professor joy article doesn't apply here because it assumes the predicate which hasn't been established and it can't be established here because in this case and this is a big hole in the argument particularly when trying to say just record abused its discretion the only political contributions which are public by the way that are alleged to have been made are to the mississippi lead plaintiff there is an entire separate lead plaintiff here institutional investor arkansas teachers and not a sink there's not a single allegation that any political contribution was made to that institutional investor that institutional investor also approved the fee so i'm sorry if you want to be discuss the science of the choice argument but my response to a really vicious person probably would not be to the teacher's retirement system but rather to candidates who exercise political hominum attacks on mr frank are irrelevant and when i look at your statement of issues in the appeal you use the phrase no terry hamilton was that it was supported by publicly reported decisions of other district courts that he was or that he's been accused of professional objector and serial objector that's just a matter of public  record we devoted half of the why does that matter well it may or may not matter that's a fair question we can you think my questions are fair mr brown i'm sorry i was two more your questions or it may or may not matter we we we believe that the appeal la merit it completely fails or so that the court on this record abused its discretion and we oppose the objection in the appeal on the merits of it that being said for instance your honor look at it think about a different way let's say there were fifty objectors here who owns thirty percent of the stock or converse lee if there were two very very large institutional investors like pimco or black rock who were here before the court objecting the court might consider that who the objectors were other courts have done so it is not required it is not determinative it is just a short data point that is before the court that may or may not be considered it is not another another data point would be mr franks rather extraordinary wrecked track record of success in this court you know gentians to class counsel theory enjoyments that are far too cozy i agree with that your honor i put that if you look at all those cases that mr frank has had success on there they involve either coupon cases or they involve cases where there is a very small common fund and this and for instance we want to lose eight hundred thousand dollars comment on the attorneys recovered two million dollars and  rd party was assigned one thousand dollars or one million dollars it's just not like the key here this is a common fund case where we requested and the court approved and all but one class member agreed that the exact fee in these types of cases should be awarded and i should say your honor in defense of the district court the district court didn't just rubber stamp our feet request judge would actually fly specked it and sue a spot the on her own reduced some of the expenses that we asked for and she did agree with one argument that mr frank made where the notice administration cause had to be taking out taken out of the fee to get to net before before the fee with calculated if you want to make i do want to make one point about the state street lawsuit that was reference at the outset it's completely irrelevant here that state street laws he didn't involve my law firm st of all  nd of all the issue there was that there was an undisclosed payment to an attorney that the court never knew about in arkansas the record is undisputed and here there are no undisclosed payments to any every single payment to the penny has been explained to the district court where it's going the methodology behind why it's why it was done so in the room where do we find the current the version of your agreement the agreement with your clients well i believe it exhibit a forty the exhibit a forty three is the one for mississippi your honor ok and was there were there prior versions of that now but for this case this is the agreement  you know so so that's that's the answer there but i but i don't know if there were to be discovered this is your what you're referring to is the settlement agreement right no your honor i was referring to the retention agreement i thought that's what you're asking about it was what i was and we've disclosed the fee sharing so the court were there earlier versions earlier versions of what your honor is sharing agreements what we're just talking about there are no fee sharing agreements in the record there's a there you that's exactly the sort of dance we discussed in our reply brief they say that there are no fee sharing agreements in the record and even now and you can review the tape i want to address near again the universe of cases i think in there is different then i think the critical question is this type of case and mr brown says discuss is the average for this type of case and we would dispute that this is this type of case the near is looking at every single securities case in every single circuit whether or not they use a market emulation or not and as we showed  cases such as this better results before the motion to dismiss is decided yet a much lower rate in a market arrangements and does nothing to distinguish between those types of cases and other cases that are fully litigated that involve discovery and this is a p s l or a case there's no discovery until the motion to dismiss is decided privates curious litigation reform act don't need to use an acronym there we these issues you're going to see a lower rate and indeed we do when you have sophisticated clients such as chicago teachers union which retains bernstein little weights and pays them much less even for a case that's to the miss per's schedule and mr brown has told us no that doesn't apply here that applies only if it applies only to miss per share of any class recovery in your experience would it be unusual to see a lead plaintiff with as much as one percent of the loss in a publicly traded securities fraud case i think that would be very unusual to  of the losses and up to and got ten million dollars that would be a one billion dollars settlement and the agreement would provide for twenty five a few rate for a larger settlements thank you if there are no further questions i think the court understands cannot expect a sophisticated investor to object no sophisticated investor is going to have more than fifty dollars to one hundred thousand dollars of fees at stake and they can't hope to perform the investigation even if they're knowledgeable about these issues they can't hope to perform the speculative investigation into the attorney's fees which might not prevail in the district court and even if it ok with that but you're not going to find for profit institutional investors engaging in that sort of money losing operation for the common good of shareholders i welcome any other questions and if not i'll  mit on the briefs thank you very