so let's get let's get right to that point because you don't have a lot of time in this instance the concern that you have is with a past on charge from another entity that is a separate corporation and the disclosure did show the actual amount of the charge accurately as i understand it that the third party vendor charged for the services and the services were actually perform  and if you look at it through their prism they get a billing statement that says proper evaluation expense or property valuation expense separately they get definitional statements from the company about these charges t say these charges are for brokers or other qualified individuals to provide an estimate of the market value of the property another one says pacifically that they'll be using a certified real estate agent in this case the broker got zero to thirty dollars for performing the b p zero zero's because they have a little deal to basically get the listing if the property that goes into foreclosure so they'll get thirty zero to thirty dollars there's one hundred separate legally separate entity they're legally separate entity and so then what service to they perform they don't perform evaluation the property they perform a different service the service they perform we say as management  profit now you know if you are the least sophisticated debtor and you read your statement and you read the explanation they gave to you the only thing you're going to get out of that is that this service where was performed by a broker to passed through all you're suggesting that a debt collector must not only itemized the fees and the cost but also provide a breakdown of the fees and costs associated with third party vendor vendor i will there is no question that what was passed on was adequately given notice about there was one hundred dollars charged but what was the charge for the order thirty was charged for the actual so you  know he's billing will include you know four hundred dollars charged by the plumber separate entity for fixing the bathtub drain and that's you know if that's the four hundred dollars if that's true that the plumber actually charged him four hundred and he charges me four hundred and they did fix the drain why is it deceptive if i don't know you know which employee did it and how many hours it took and what amount of that is profit to the plumber and i mean why is that deceptive it may be incomplete but that's different than deceptive to two things one i think we have to understand the backdrop the backdrop is congress created the f t c put a heightened duty disclosure collectors why did they do it they did it because they want to put it in the hands of this unsophisticated borrower information that would allow them to say well what next step do i did would you would you be making the same human if this third party vendor were you know jane smith incorporated who never you know had any relationship with yes absolutely so you think that you have to inquire of your third party everything that goes into veritably also that you can pass that along if they are performing a different service which all the source did they didn't do the proper evaluation they did something else we say they did some sort of management or something else they're trying to claim it's profit that's really a discovery issue but you have to accept our allegation is true we say it's a management fee ok well why is this important under the data trust th or charge are subject to the reasonable and necessary provision now an unsophisticated debtor could look at the disclosure that says ok it's zero or thirty dollars for the broker it's seventy to one hundred dollars that goes to al source for performing what profit or management fee they can say that's unreasonable but we know that we know for sure that is some market rate because of the decree correct well it's it's not a market rate for you know what what they were actually charging i mean well you know it doesn't really matter if it's a market rate it matters what it is that's all just a minute just a minute listen again to what judge grabbers asking you there's a consent judgment that allows the use of philly and third party entities it's approved as long as the pricing is considered reasonable through an annual evaluation of market services and that's right here in this case so there is a consent judgment the a g s of all of these states who entered into this consent have said that's fine to do what we're doing here as long as it's considered reasonable through an annual evaluation of the market services so that also says they're not allowed to put add on charges or charge i'll just wheel it we already added on here you add every indication complaint you talk about a data access and service agreement what do you mean by kickback and also relatedly in your answer to judge grabbers question that you'd make the same argument if it was a truly independent third party then what's the relevance of the kickback allegation problem well two points one it's it is a fact that there is a kickback and that would be another disclosure that would have to be made how much aqua got out of this secondly is for as the validity of the debt i mean this this court has said in the baker case citing the legislative history for the f t c p a that whether or not the debts valid is irrelevant under six hundred ninety two e i mean the whole purpose is six hundred ninety two e is to heighten the disclosure requirement to say look let's look at what they're charging and for all right the only thing this bar was going to know here is that they're being charged for evaluation the property yet something separate was done by a different entity called all to source that wasn't identified what they did wasn't identified how much they got wasn't identified in this bar were now can't know doesn't have the information to say well ok well maybe this isn't a reasonable or necessary charge and i should challenge it maybe i should go to the c f p b and say boy they weren't complying with the consent order by the markets the relevance of your allegation of a kickback the relevance the allegation the kickback is to four twofold originally it was relevant of course the rico claim but now here it's relevant that if got an additional part of this money they have to disclose that they got part of it and if the if you disclose they got part of it they did this is a couple things one it goes to whether or not the contract was breached it goes to whether or not the c e o of p b order was breached and it's certainly at a minimum which torben says would change what the borrower is going to do in reaction to getting this debt notice they're going to start asking questions and even at those questions lead to the conclusion that the debt is valid and they should pay it it's going to affect how they approach this because it's going to raise questions for them to ask and that's the whole point of the f t c p a that's the whole point of six hundred ninety two we that's what we're trying to redress here thank you counsel i will give you a minute for about only the time comes i asked a lot of questions you good morning your honors in may please the court my name is russell perdue i represent the apple e auckland loan servicing the district court dismissed this case for two separate independent reasons we've spent the morning so far talking about the first of those that  false or deceptive statements under the f t c p a the second is the notice provision of the contract that the geodes did not comply with geodes need to show that the district court got both of those issues wrong in order to to win reverse i'm most interested in the first issue don't we have to assume as alleged in paragraph fifty four of the second minute complaint that there was a kickback well judge sam and i think you rightly identified that paragraph fifty four is all we have on that and there does need to be more than simply the characterization of it as a kickback all paragraph fifty four tells us is that all to source which has been acknowledged to be a separate entity entered into a contract with a in which services were provided and payments were made the fact that two independent corporate entities enter into a contract and one pays the other and it alleges that at some point the contract was terminated that doesn't make that a kickback that makes that payments for services rendered if they would want a ledge that they were actually no valuable services provided we're not at that level based upon the change in two thousand and fifteen right well all it says is well that the contract was terminated and there weren't any public disclosures about some big shake up in their business so therefore the court should assume that there was never any valuable services provided i don't think that that fact plausibly supports the conclusion of a kickback mascot different hypothetical am i correct that if aquaman basically went out and hired people to do property valuations and inspections and then added a markup that's not my case i would take that case and i would tell the client that they have a decent argument so i don't know that you would but it certainly would be a tougher case than this one reason why wouldn't you have to let's say the evaluations cost fifteen to thirty dollars we added seventy dollars and you charged one hundred why wouldn't you have to disclose that markup while one reason why you won it is that paragraph fourteen at the deed of trust states that the lender is the word that it uses can charge fees for property inspections and  property valuations in connection with it and i think that that could in compass and i don't want to get too far down this road i'll go as far as you like but because it's not the case that we have here but i do think that it's reasonable it would be reasonable for a service or to perhaps include some of its own costs now the regulator has said this is not going to be something you guys can make any profit on you have to pass this along this could this not only could you not make a profit if you can't even  a company that was created by the officers argue a ledge of auckland allegedly controlled by the officers and allegedly auckland receives payments back from that company  isn't that just as problematic as if one or a wholly owned subsidiary got some additional payments i can i can see the concern that you have which you would have if for example this service or under this consent order or other obligation to not make a profit says ok well then let's just make up this other company and we'll have them order the services and pay ten dollars and charge us fifty and then we'll pass the fifty on and that company is going to be a total sham and in fact there was a case of bias vs wells fargo that alleged something like that that the affiliate generated false invoices the service or paid the service provider the reduced amount directly paid the ten dollars directly to them but the the affiliate just fabricates a fifty dollar invoice to justify passing fifty dollars on yes that be a problem you couldn't do that that's a sham but here there are facts alleged to say that all to source is a sham entity set up to do that in fact what the allegations of the complaint show is that all to source does provide value the second amount of complaint alleges that all to source negotiates with these service providers and gets discounts on a volume basis that they're in effect it refers to over one hundred thousand b p owes a year doesn't seem to pass on the least allez alleged in the second minute complaint the discount well and i don't know that it has i don't think that it has to do that it is a third party and if it's managing one hundred thousand pos or more a year that takes people that takes equipment that takes infrastructure it can't just pass on that cost directly and i think that judge graber started to get to the unworkability of this duty to disclose you know the plaintiffs are asking for a breakdown and first i want to point out there's no legal authority for that at all no statute no regulation the c f p be looked at this issue the new york department official services looked at the issue of using affiliated for profit service providers and said servicers you can do that as long as it's a market rate we're not going to prohibit you from doing it we're not going to require the disclosures that they asked for so there's no basis for it number one there are cases none of them involve that they all involve an item ization that the jihad has received property inspection fees property valuation fees break it out don't lump it all together but they're asking for a sub item is ation property inspection fees cost profit overhead things like that so there's no legal basis for it number one but number two and the walker case allows specifically affiliated for profit vendors who make a profit a three dollar profit on the property inspection the court said that's  that unworkability got to seem to say well you could use all to source but all to source has to hire its own employees its own w two employees to perform the service a can't hire a third party well where does that where is that said nothing says that nothing requires it but even if all to source did that even if all to source had an army of property inspectors and property value waiters that fee that they charge and pass on is still going to include an element of overhead their real estate their equipment their cars and trucks their marketing and billing department and it's still going include an element of profit all businesses have overhead all businesses are in profit how do you break that down how do you allocate that overhead in the fee to give the break out into is legally required i submit that that is something that isn't workable and if that is going to be brought about if that's going to be something we decide needs to happen going forward we have to rely on regulators to do that to weigh that to figure out all of that complexity as to what you break out private lawsuits are kind of a blunt instrument to cobble together such an exacting disclosure duty i don't think that it's appropriate and here if  court reversed and said no you had to disclose that the answer the question my client would ask me is well how in the world was i supposed to know that and i would have no answer for them because that disclosure duty doesn't exist anywhere i understand the concern if you had a truly sham entity set up specifically to circumvent this requirement that a service or not market up in profit and though that case has been filed in the bias case it got past the motion to dismiss and that resulted in a class wide settlement i have no idea if that's what the service or their did or not but that allegation survived and that was it was dealt with but we don't have those allegations here we have no no facts alleged we have the legal characterization and paragraph fifty four the bare characterization of that as a kickback but we certainly don't have any facts of that we have we know the new york department of financial services and the see if he'd be did an exhaustive investigation into this they raised some flags but they didn't prohibit the conduct that the geodes say should be prohibited they did not require the disclosures that geodesy should be required so this has been looked at and that's in the context of servicing being a heavily regulated industry and nothing like that being required if you want to say anything about the deed of cross notice and off you know i'll say number one the court doesn't need to reach that if it finds no false statement or the f t c p a a can leave it be  the only thing that i'll say about it is you know there's a question does that apply to these types of claims yes it does the language of the provision is very broad it says any judicial action not just contract claims based on conduct so the question is is this conduct under the contract yes it is it's charges that are specifically off by the contract can the service or invoke it when it's said uses the word lender we think that they can section thirteen of the deed of trust says the benefits of the deed of trust can be invoked by a signs of the lender here the service or is that a sign of the servicing rights we cite cases in our brief finding specifically that the service or can invoke either the jury waiver provision second a minute complained and secondly what's your response to the unworkability problem what do they need to disclose especially if out a source had hired its own employees to do the property inspections and valuations what they did the need to disclose  theory well we did allege that the it is a sham it's found in the rico allegations there throughout the complaint a particular paragraph i should focus on i don't have a particular paragraph in mind i can get that  afterwards the second question is workability it's very workable if you have a separate entity that does something different say what they did and how much they got that's very easy here one entity was a broker performed a service god zero to thirty dollars say brokered devaluation zero to thirty dollars management fee to all the source of that valuation seventy two one hundred dollars this gives the information to the bar were to allow them the lease if is to kate a debt or  to not have a disadvantage in charting a course in how they're to respond which is what torben said the course would be i can ask the question why is this seventy dollars for some management when the old broker only got thirty is that reasonable does that violate my contract why did you pay this and it allows the debtor then to chart the course to ask the questions maybe you can lose it's valid in the ability though what if the source did the work itself with its own employees then would you still contend they would have to disclose their costs and their profits and if so how i think the way they would do it then is they would say we did a property valuation this property valuation includes a broker and  internal administrative costs period hundred dollars that's how they would do it if they are a single entity because they got all the money here part of the money went to one entity for one thing the other part of the money went to another entity for the other and they only disclosed half that transaction so where's the borrower the borrowers in the dark the borrower doesn't know how to respond to this or even know to ask a question because he doesn't know about the other entity what they got the money for or that they even got any money thank you c