morning your honour's please the court steven macand tony a close neuron behalf of netflix this case presents three important jurisdictional converge on the same thing all three issues point to the conclusion that the bankruptcy court lacked the power to decide the state law a contract dispute arising after the former debtor had emerged from bankruptcy and based on a pre contract first the federal arbitration act in the parties arbitration agreement compel that this dispute be decided in arbitration in accordance with this court's decision in m d n a board before you go on mr m k in your reply brief in a footnote you agree that some aspects of the bankruptcy courts water are moot is that correct these specific factual else is moot as a result of the two films having been released there is a provision i believe it is paragraph six of the order which prohibits netflix from pointing out that the specific injunctive provision is no longer an issue because the events have passed it by in addition to the injury over that period of time there are two other aspects of the dispute that survive first there is a bankruptcy court order awarding eight hundred twenty thousand dollars in fees associated with the original ruling second and perhaps of more consequence given the jurisdiction issues here the ruling purports to interpret the parties output agreement which agreement survives for another sixteen months at a minimum and potentially three years depending upon events appellee here relativity has contended in another forum that the rulings of the bankruptcy court constitute a race judicata finding with respect to the parties rights and are because the the fundamental objections that netflix raises here are that the bankruptcy court could not and should not have decided those issues that netflix had a contractual right to have that decided in arbitration and a constitutional right to have it decided by a jury if not in arbitration that rulings race judicata effect is a continuous shadow that makes the longer than the term of the contract but the term of the contract because it's an output agreement goes forward for years to come it there's a seventeen month remaining term  for relativity to deliver films under the contract and then any film delivered under the contract is subject to the contracts terms for the life of the license which is several years beyond that so assuming there was a film delivered in december of two thousand and eighteen the term of the agreement and the implications here would go on for roughly three and a half years when you try to do with a certain number of films it's an output agreement so it  has to do with every film that is delivered by relativity within the the time period that's in question in in theory that could be dozens in theory it could be zero only time will tell but we are stuck with the findings of the bankruptcy court which should not have as we have indicated in our briefs the power to have adjudicated this original pre partition contract dispute a minute those are the big two big issues are there any other issues  the loss of the opportunity to release them early might be somewhat speculative in terms of its impact on the bringing in the future here which would be that they'd have not only for change feature films but they would have to be future films that were where they asked for a delay in their green men on their release date i mean is there is there still that to have to happen with anything in the future it would it's a very good question your honor the specific findings by the bankruptcy court pertain to your film's release as well for you to suffer the adverse effects of this decision right it's broader than that it certainly includes that but it would be any attempt by relativity to modify the terms of the agreement by forcing the amendment bankruptcy court in our view committed three clear errors here first it ignored precedent with respect to the the determination of whether this was a core or non core dispute for the reasons we set forth in our brief we believe this is a non chord dispute it is simply the application of state law contract rights but even if it was trying to apply the discretionary provisions under  bankruptcy court got it wrong again because it didn't apply the hill test correctly the key aspect for determining whether an arbitration agreement conflicts with the bankruptcy code is not whether you fear a result that you don't like it's whether or not congress has expressed an intent to preclude the waiver of judicial remedies you see that clearly in the shearson american express case by the supreme court you see that clearly in the compu credit case by the supreme court where the court held that congressional silence is not enough to support that showing and you see that in hill the question here was whether or not there was any thing in the bankruptcy code that would have clued in this case going to arbitration and there was not the facts here are almost identical to hill in the sense that it is a post confirmation dispute involving a pre partition contract and income that these films would produce and or anticipated refugees and you yourself or to that when you would post this bankruptcy plan just record assumed that it was favorable to how you wanted the bankruptcy treated it is that yes there was going to be this stream a big problem before you could take advantage of the films and that's built into this bankruptcy plan hill and if it were held to be enough it would swallow up the whole core non chord distinction and expressed fear that is it's that is stated in the in the cases every single creditor really provided by the plan and we have now the bankruptcy courts retain jurisdiction to enforce and interpret their own orders which which this planet is i'm missing something in your argument here if there was  a line in the plan that spoke to netflix's release or netflix's rights then there might be some basis to say that the court is interpreted in a provision in the plan or or in forcing a provision of the plan but there is not no one is cited that because it doesn't exist what this is is gee this would be bad for the debtor going forward if the debtor had a lease that contained an escalation clause in the future or the debtor had a borrowing that contained a balloon payment and came in a year two years three years later and said you know it's really harming our ability to operate because we have these onerous economic conditions and that's upsetting our business and delivery to survive we would have that exact kind of economic impact but it would swallow up the films as as dealt with in the bankruptcy plan with the debtors releasing the films make the those films your access and that you get when you get to use the ben economic benefit of them taking them out taking them out of the bankruptcy plan basically i don't think that's factually correct your honor the netflix was not asserting that the films were our asset going into the bank using that in and exaggerated way but that's that's why this is relevant to the plan everyone agrees it's relevant to the plan but relevant to the plan is not the definition of a core dispute related to the plan is not the definition in fact it's the opposite relevant to the plan and related to the plan are in fact the definition of non c disputes a core dispute is defined by whether you are enforcing a bankruptcy specific right when you soon force me to confirm plan is not something that arises in bankruptcy or not in the in the global generic sense we can't say as has been stated here today that the plan assume something or we've swallowed up we've created a condition that can never not be met every single thing that relates to the debt or can be  them not available is is that you're saying they didn't they didn't release them on a particular gate and therefore an hour hour streaming rights kick in and that makes that makes those films less value the argument the bankruptcy plan forward in opposing the plan b your argument for why you were insured was that they were going to you were going to have to wait for release again with all due respect i think that's incorrect the argument in the objection to the plan was that relativity would not give us the required number of films during a specific period of time because they had not done so before and wouldn't do to do so in the next year which of course proved to be correct the bankruptcy court held that the limitation of remedies clause in the contract made that not a breach that we could complain of so the dispute was over whether they had the ability to deliver the required number it had nothing to do with the june release date set for these two films which was a preexisting right of netflix under a preexisting contract the day before and the day after the bankruptcy filing nothing changed the what happened here was that relativity made a mistake and didn't reject the two anyway contracts in the bankruptcy they realized that after they emerged and the bankruptcy judge gave them a do over if you read the order what you see is the bankruptcy court just cancels those two anyway contracts as though they had been rejected when they in fact were not netflix was deprived of its rights under the code under the constitution under the federal arbitration act because the bankruptcy court felt that it was economically important to give relativity a do over and as correct an economic proposition as that may be it's films netflix also expressed the objected to the feasibility of the plan and what judge wiles did during the confirmation process was expressly questioned relativities expert witnesses on the issue of whether it's post bankruptcy slate was manageable in the projected manner and in the projected sequence that the plan provided for in fact netflix's feasibility objection and also its objection to the assumption of the license agreement was predicated on the idea that these films are expensive to produce expensive to market take management where with all to to get to theaters they have to each one of them has to be released under the netflix contract to a minimum of four hundred theaters theatrically and netflix has expressed objection was based on the idea that relativity might not be able to do that and so judge wiles discharging his duty under the bankruptcy code to make an independent finding that this  feasible under took to question relativities witnesses on among other things in the paramount thing was this project was this release schedule doable for relativity he expressed the question relativities bankers and the film industry expert newsweek's offer on whether the films could be released theatrically first and would they be able to obtain the projected revenues netflix ultimately after that testimony decided to withdraw its feasibility objection but judge wells nevertheless have the obligation to make a finding that this plan was feasible and he did that on jurisdiction judge wells was absolutely correct on the merits of the issue but netflix's coun overlooks that prior to that the evidence you're hearing beginning netflix expressed he conceded that the bankruptcy court has the authority to address the judicial stoppel issue the quote from appendix of page four fifty one as netflix's counsel mr merrick certainly with respect to the judicial stoppel issue your honor i can see the court's ability to resolve that issue i think we simply disagree with respect to both the test for judicial stoppel and the facts and  t a bare minimum what that means is that netflix consented to the bankruptcy court making recommended findings and conclusions and consented to the bankruptcy court doing this and not the not the panel the district court in turn on net appeal said that whether judge press has said whether she she reviews the judicial stoppel ruling for abuse of discretion or don't know but she agrees with it and she affirms it and so now netflix has an opportunity to appeal here and that issue is reviewed simply just not the case that a state law contract dispute as judge raggy indicated is not cannot be a core matter the us lines case in addressing a state law contract dispute said that in a post confirmation dispute the question as to whether its core non core turns on the nature of the proceeding and and a proceeding can be deemed as core on the basis of one or two tests either or that is unique to or uniquely affected by bankruptcy proceedings or directly affecting core bankruptcy function this dispute passes that test in all of those problems it is directly affecting the core bankruptcy function as judge wiles indicated of both plan confirmation and asset allocation among creditors this was an important revenue stream to all the creditors not just not relativity the debtor to only only the debtor but to see id bank to r k to the entire committee of unsecured creditors who testified at the hearing acknowledge at the hearing that this revenue stream is important to the u c c it's also in the circumstances of this case the the dispute was unique to or uniquely affected by bankruptcy proceedings because as judge was detailed in his decision the what's at core here is that is that netflix tried to collaterally attacked the confirmation order it represented one thing during the confirmation proceedings that it was immaterial requirement under the contract that only a few actually released films could be streamed by netflix and it expressly said with respect to these two films that there was doubt as to whether they would be available to netflix in two thousand and sixteen because it was there was uncertainty as to whether relativity would release them first netflix's representations in that confirmation proceeding directly contradicted the position that a tried to take after confirmation to take a second way of getting rid of this contract and so that is to do with you have a serious on this issue these these issues that are still outstanding nor do you think that they're also in some way moot we think that they are start standing it's underscored by the conduct of netflix in that it as i just alluded to it took one chance to try to eliminate this contract during to object to assumption it took a second chance after confirmation in connection with what's before us right as an appellate panel you story referred to the output agreement ruling in the eight hundred thousand dollars in fees and potential attempts by relativity to change the outside dates those are the three things that he says continue to be before us and that are not and do you agree with that that lawsuit is no longer pending the the the separate lawsuit in california state court is no longer pending it's been withdrawn the without prejudice but it's been withdrawn the fees application frankly doesn't turn one way or the other on whether the the the outcome is moot if it were to be moot the fees are still collectable as a prevailing party and the aspects of the dispute that remain are that this is has been a contentious relationship of late and this order the bankruptcy courts order governs the parties relationship in ways going forward going beyond these two films there's an expressed provision of the order that says netflix may not stream any films make i think you reserved a little time yes i did thank you your honor i like to note upfront that as we stayed in our briefs we believe that all of the relevant questions here are reviewed in novoa and so we take issue with  adversaries citation to an abuse of discretion standard there we've set forth the citations on the on the correct standard in our brief so i won't belabor them the second issue i'd like to note is that counsel focused on the question in the feasibility determination in the bankruptcy hearing as to whether or not the films could be theatrically released on schedule i want to note that netflix has never objected to the theatrical release schedule that flicks in fact encourage their theatrical release and the earlier the better that was never our issue but the point in dispute here was what day we got to stream them which is a different right under the the contracts the third i would like to point out that there is no contradiction we've made this point repeatedly between a covenant that binds relativity with respect to the nature of the films it must deliver and netfli contract to a right to waive that covenant and accept non conforming goods it's a very basic proposition of contract law we're now on brief number seven or eight in for a number three i've never heard anybody were that we we believe and we've stated this in the briefs that they take that reference out of context the full citation and discussion can be found on page nine six zero one nine six one the record where i spend two entire relativity could come into the court which is a function of whether the close nexus test is satisfied or whether there existed an arbitration agreement between the parties which is a prerequisite gate keeper function of the court in a motion to compel arbitration then those would be things in which the court had initial authority to look at and judicial stoppel would be in front of the court but you can't bootstrap federal court jurisdiction by saying ok i'm going to rule over here when i don't have that initial basis for jurisdiction he can't take away our jurisdiction or he can't claim seventh amendment jury trial rights in that fashion and you will see on nine sixty one sixty one that i split that in some depth with judge watts lastly as i think we we we have said consistently we don't believe that us lines is the appropriate authority here with respect to the application of arbitration we think hill is the correct test us lines as distinguishable because they're the the acid that was at issue was a directly distributed asset in the estate it was the insurance policies for an this defendant here the netflix distribution right is not of a distributed right another important distinction is that when you apply the shearson american express distinction with respect to arbitration in the us line situation the creditors who had been assigned those policy rights and those policy proceeds as part of the distribution would have been precluded from participating in the arbitration over the amount of those recoveries not so here the important creditor here was c i t bank which was undisputedly entitle to receive the fee that netflix would pay there was no dispute that netflix would pay it or the amount of the fee but for a month procedural standpoint c i t bank was entitle to participate in the arbitration agreement because they were a party to that contract and they stated so in the hearing so the there's a huge divergence s lines does not apply here and d n a versus hill should have applied and this case should have been decided in arbitration thank you thank you to natter on your advice and in the last two cases on our calendar today are being