thank you very much good morning it's a great honor and great privilege to come before the ninth circuit and make argument may i also please introduce my law partner the court may require the payment of reasonable attorney's fees in securities cases if the court determines that the case is without merit in our case the distinguished justice gould as the head of the merits panel directed the fees were denied with regard to the underlying lawsuit that we brought alleging that there was a unlawful sale of security specifically with respect to fees incurred in connection with the state and federal securities laws we went back to the district court to have the allocation made and the district court asked the defendants to make that allegation and they came back and said we can't do it a portion of the fees is appropriate and should have been done for three reasons first the merits panel just as cool directed that that be done second the fraud related issues in the case which were the what they could recover on as commissioner sharda term and were relatively minor aspect of the case both he determined at that he was doing this from a different perspective that the district court specifically acknowledged that the district court may be done the allocation piece would probably be different and stated for three reasons why were for time soley spent on the securities claims that burden was on the defendant and a burden was not met and but in response to that did what we what we what we argued as we said it was a failure of proof on their part across the board and for this reason remember commissioner show me his ruling after the ruling was made below and there was a complexity here to the credit of the district court the district court was not the court there heard the underlying motions in the underlying case there were serious there was one motion brought by a number of other defendants all contesting the question of securities law and then these defendants did not bring that motion then there was a new round of motions they brought one motion and then it went up on appeal and they're asking for over four hundred thousand dollars for essentially that one motion twenty seven just one hundred twenty seven of the twenty nine pages of that motion were all about securities so that so on its face there was no we burden was not on us to go through their time records and we couldn't  want to understand your case and if you could help me sort of disentangle the securities came from the from the product claims because that seems to be your main point here the securities cases that the securities case were not the defendants have basically have had to do the same work to defend against the fraud claims you know because they say shared the same sort of factual premises and overlapping legal elements absolutely not and that's what that that is exactly what the commissioner determined when he said the presentation of the issues but so you're relying on the commissioner for your response well i'm relying on underline on the reality of if you look at that's what i'd like for you to do and just take out the commissioner a minute and just tell me why you think they wouldn't have the first of all the motion it's the law says what did they do not what they would have had to do number one they twenty seven of the twenty nine pages that were filed all about the securities and there's a reason for that remember the reason for this is because you want to vindicate as the carver cases you want to vindicate and you want to protect people who are willing to come forward in merit cases this judge will determine and that's the ruling that we really are focused on he determined that our case was meritorious and that there should be no collection of attorney's fees and th case is not just a regular case the securities and exchange commission in her filed an amicus brief in this case because the two hundred million dollars that were raised went to the very heart of the securities laws because there was no registration then after the fact we actually found out the evidence that showed that they were offering the condominiums and the rental agreements at the same time so what we were trying to show was in fact the truth and just recently just in march just that support that they were intertwined the owner of the point is that there's if there's an inner twining as they ruled in the craver case indestructible overlap means you don't get the money for this reason there's a policy issue the policy issue is you want people the in force one of the federal securities laws well i have really heavily as the supreme court has ruled it numerous times things about reasonableness all the issues about the things that were brought up that in again i go back to this the reason that this is so important is because in this isn't just about four hundred fifty thousand dollars this is about ability to live in people's homes this is about sweeping in and taking their wages no one will come forward to vindicate the securities laws if in a case like this were just a school of who was the merits judge justice said no attorneys fees and then we go back and they come up with a backward way to get in and get the hundred percent of what was no fees on the securities claim but fees on the branch of contract but the of thirty percent right and that that's that's fair but they made a decision after placing thirty percent would be a fair portion or i think a thirty percent would be fair had they done this they went back and said no no we're not going to do that we're not when they went back and said oh we can apportion it no way that they couldn't apportion they knew that they had their what the what their but from their own record and what judge with the commission of shah did and they went back and refused to do it and so i mean i think in a case like this these people lost tens of millions of dollars they have sued the other law firm to recover these losses in the beaver case which just came out in march that is before the night circuit  fraud claims just as the district court said below on this order now presented on this appeal the district court's order on this appeal mirrors that ruling the both courts awarded fees on the fraud claims the security claims the fees incurred in relation sorry security claims were denied we can see that point on the supplemental order when we went back and reduced our requests for fees by ninety eight thousand dollars if you look at it does seem you know somewhat equitable that you may receive the bulk of your attorney's fees  r cases where district court could not abused its discretion by making cuts i guess based on that basis well let me first address that the ninety eight thousand dollars was not our initial reduction in fees what was originally built and i will and i will get to the case law that you are referring to as well your honor what was originally billed was five hundred seventy eight thousand dollars four hundred six the pelleas initially reduced that request by one hundred twenty one thousand nine hundred sixteen dollars they made a significant second reduction ninety eight thousand dollars this told approximately a forty percent reduction voluntarily by a pallies in terms of a further request for a reduction or further a portion and that is subject to why discretion by the district court there has been no showing and i was abuse of discretion here the district court has the discretion to apportion peace between the parties to the contract it also has the discretion as to whether to apportion fees related to the claims that are recoverable and are not recoverable the district court looked at her billing statements we submitted all of our billing statements we submitted a declaration of the billing partner who oversaw the have met our burden of proof billing statements are not required by the ninth circuit in or california law we submitted all of them were redacted them we reduce them we performed the work for the district court the district court had our evidence before us in response nothing was provided to the district court by appellants no single entries were challenge they were generalized objections attacking the merits of the underlying transaction contending it was in a legal contract that decision was already squarely determined by the ninth circuit court of appeal and salim a vs tar sadia hotels this is a legal enforceable diminished by appellants there was a core facts of liability all of the responded and so the pallies were grouped together there was no a lumping of liability for all of our clients there was a core group of facts unregistered security there fraud claims were predicated upon the score allegation without the more over the work that was done in the district court for which we sought recovery was not limited to the single motion to dismiss we are entitled to fees in relation to all the work that is done throughout the course of the proceedings this encompasses the research done in relation of the fraud claims the encompasses two of the eight claims i guess or was it a securities fraud claims and then two or six and two clicks into your own so i'm just curious in let me ask this a different way you know fees before the court the district court gave appellant two opportunities to demonstrate to it a different method to apportion fees the district court said you came to the first round the district court said you came to me your only provides provide a generalized objections there were no single billing entries that were challenged you didn't provide me the sufficient evidence as means to a portion these claims i'm going to give you a second chance the district court requests for supplemental briefing when we submit our supplemental briefing we redacted the fees and made a subsequent reduction the what was brought back was another challenge as to the merits of the underlying transaction has been an illegal contract and a generalized objections to the entirety of award they've requested that the entire ward be stricken nothing should be awarded the district court was not given anything as any other method or any other evidence as a means to further apportion the fees yes commissioner shah's order post dated that that ruling but i would like to point out and  good knowledge that the district court did not further apportion the fees and commissioner shaw also referenced the district court's order find noting that it could not for the because the facts and the law were so intertwined between the securities claims and the fraud claims that further apportionment would not happen commissioner shall then defended the district court's order in this regard he quote the presentation of appellate issues was almost entirely devoted to legal analysis and not an explanation of facts or evidence the segregation of claims in issues was difficult in the district court because of the identity of the evidence and facts in this court the claims are predominantly differentiated by the legal analysis this difference provides a basis for allocating or signing a percentage of the work  to the fee fraud fees to thirty percent so he went on what basis again i just can't remember on what basis he said that the securities claims were predominant in did that work for the district court we went back we struck a significant amount of entries that we could identify specifically pertaining to the securities claims if the billing records i assume that the district court reviewed the billing records when it made its ruling to determine that no further allocation was possible because of the overlap in work performed in relation to the securities claims and the fraud claims there was the core basis of the misrepresentation and omission related to whether an illegal were there whether an unregistered security was sold here and there and are you saying that the plaintiffs made no argument in the district court similar to the argument they made of pages fifteen through seventeen of the brief where they have these charts and say that in your motion to dismiss you cited fifty four security cases only for related to fraud etc they did make that kind of argument to the district court i cannot speak to that your honor i don't know that specifically however i do recall that the district court concluded that there were generalized objections that were inadequate made to our requests for fees on the fraud claims court also further found that there were no specific challenges to the billing and trees itself the generalized objections under ninth circuit and california law are inadequate and just to correct the record in terms of the ninth circuit decision recently in beaver vs tar sadia hotels referred to by counsel that's on an entirely different issue and the theory as to whether these were commercial contracts or not has not been reinvented that language is in the purchase and sale agreement before the court and in this record and has been since may two thousand and six when opponents entered into th contracts so this is not it quote unquote new theory that it's brought raised without any relevance here if the court has any further questions thank you disproportionate amount of fees for an issue on which relatively little work was devoted if you go to our pellets supplemental excerpt and look at their motion at one motion they want over three hundred fifty thousand dollars worth of hearing a twenty nine page motion that was filed in the district court twenty seven pages of which are focused on the question of the securities this with the what the case was all about now what were the legal issue and what makes this a legal issue which is and what we argued to the court below we said quote the failure of proof should prove fatal in light of the court's invitation for this evidence showing their fees onto non security causes of action they went back and they said defense attorney state that they have already removed entries that relate directly to the securities issues plainest do not point to specific entries which we didn't based on this the court concludes the issues facts are so int greatly intertwined that apportioning fees would be impracticable if not impossible as a matter of law that is air for which they should receive no benefit because of the carver case it says attorneys fees related by inch intricately overlap than it really overlap to the statutory claims were not recoverable and they're not recoverable because the balancing says well look if you're if we're trying to vindicate and protect people who thirty which was generous but the people that were actually in charge of the litigation knowing that they filed one motion that was twenty nine pages long twenty seven pages of which address the security of this is they didn't make any effort to do that the burden was on them they had the burden of proof let me ask you about the jan case ok because i guess i read that case to take away your reliance on carver and my well i mean i think that if you look  court of appeal decision it's from two thousand and twelve so relatively recent ok it basically says carver didn't apply in circumstances that seem to me indistinguishable with respect to the interplay between the securities fraud claims and the other claims  here you know the case i'm talking about i don't but i but i'm getting the drift of what you say the limit let me go back for the basic thrust of what i'm saying in our case you have a decision by a highly respected strict constructionist of the guess i thought the problem here was just that the fees were overlapping that the work that was done to defend against the securities fraud claims in many ways they were not overlapping your honor there's no way you can look at the record  just commissioner gould said no way he was generous in giving them thirty percent it was not overlapping as he explained all the things that he said were equally true what happened in the district court judge the bra retain the case i have no doubt in my mind that after everything that he had to go through with this case because remember what we're talking about this was a well crafted all out effort to figure out a way to raise two hundred million dollars without registration so there was a lot of legal angles about how they did it and when the securities and exchange commission read it and i bugged their attention they jumped into the case is that this is a hugely significant case because you found out a way to get around the registration provision so that's why you've got to look at it from my perspective from a policy point of view and say ok if we have just a school saying no attorney she's you don't get to go back and say oh i can't do that you have to you have to do it if you don't you don't get rewarded by getting all the money that you otherwise you know had asked for to begin with there was no reduction so they talk about reductions those are all things that they did off line when they came in the first time they asked for this amount of money four hundred five thousand dollars and they got four hundred five thousand dollars there was no redemption once they put the money and that's what they got into say oh we're going to have to give it to you because we can't make a distinction flies in the face of the policy of the justice school you know acknowledged and remember this this was a meritorious case we weren't able to persuade them which is a real disappointment to the bottom of some make a point here that i'm not quite sure i understand you say judge gould you know rendered sedition you're talking about the decision were you were not successful in convincing arguing on appeal that there was some sort of securities fraud here correct no which which case is decision that he made was they applied to him for attorney's fees under section eleven either he had the discretion to say hey you lost this was an emeritus case you have he stepped back said no no no no no you lost but it was a meritorious case you don't get attorney's fees and then he went back and circumvented his decision by coming up with a saying about all we can't tell the difference and circumvented his ruling and that's what justice commissioner show did not do that's what they did do and and the justice below are the court below tried to do the best that it could but it had not heard the hearings and it didn't have the benefit of commission shahs decision which may be a way to proceed on what decision judge gould are you referring to i just want to make ok i'm referring to the decision the judge school made at your volume two to zero seven  courtesy and i very much appreciate the opportunity to thank you very much thank you for your arguments here today the case of solid versus with rock has is now