good morning your honour's eric landau on behalf of appellant james out in but today speaking on behalf of all accounts i would like to reserve two minutes if possible for rebuttal we do so just watch the clock and insider one who trades while in the possession of material nonpublic information is liable only where an independent violation of another provision of the securities laws has occurred as the shareholders conceded on appeal and vera phone before this court and actionable independent underlying violation of the thirty four act must occur to maintain a claim under section twenty capital a in light of this standard the question becomes whether a shareholder may maintain an insider trading claim under section twenty once the underlying violation in this case section b has been dismissed on limitations grounds could you go through twenty eight i think that's seventy one and them show me what words support your interpretation your honor starting with i violate something even if nothing can be done about it i might have run a stop sign in one nine hundred fifty nine was i driving then one hundred sixty nine and one sixty nine nobody knew anything about it but i still violated your honor i would respectfully disagree one may commit an act but to actually violated provision of the statute then one would have to have the plaintiff brings a private cause of action both prove up the elements of the claim and overcome all of the asserted that then says so i believe there is a distinction to be drawn between the act and the violations of my oath here here's what i'm getting at beyond just the verbal and the and commits a misdemeanor and is subject to imprisonment up to thirty days in a five up to one thousand dollars and there might have been a statute of limitations five years on on that as with most crimes then there might have been a civil wrong i sociate it with running a red light and having to do with negligence pursue and the negligence proceed statute might have had a statute of limitations of ten years i can't see why the ten year statute for red light file aiders would not apply even though the predicate red light statute said anyone violates a red light and had a statute of limitations of five years you're on it's matter of policy in common sense and accomplishing purpose of the statute no contradiction your honor again i would disagree with the analysis because twenty capital a contains both the violation aspect and this court as well as the other courts of appeal of talked about the need to establish that independent underlying violation as well as the five year period which the defense would submit is a riposte period under subsection before but isn't your interpretation reading that five year period out of the statute actually no your honor and i'd like to give an example on how that works and then go back to the actual words of the two limitations periods because as you know the leave the twenty  the statute of limitations of discovery statute rather it reads more like a repose period for example if eight section ten b actions were brought either and this is priests are bans ox so we're talking about a one year and a three year statute if a ten the action were brought one day before the one year discovery part expires or one day before the three year repose period expires then you have the underlying predicate violation timely filed at that point a plaintiff who wishes to bring an independent insider trading claim under twenty eight has either an additional four years or an additional two years to bring that claim before the court all there has to be is that viable underlying claim and that gives the plaintiffs additional time in order to file their insider trading claim mr landor you seem to be suggesting that an element of twenty eight is in fact the statute of limitations or let's go back to the predicate claim under ten b five if you give me a citation to any ninth circuit or supreme court opinion that includes the statute of limitations as an element of the cause of action as opposed to an affirmative defense your honor while i cannot give the court under the thirty four act a citation especially under section ten b which makes it one of the elements of the claim rather it is an element under the thirty three act under section eleven and now twelve eight two which of course as you know from the jackson case is of no moment with the twenty eighth because jackson says that a predicate based upon the thirty three act is insufficient you cite t jackson case in your brief so i'm focusing on the thirty four act where is the authority that says that the statute of limitations or if you wish a statute of repose is an element of the claim because otherwise as judge will scan and said it appears that you're trying to read the five year statute of limitations or recalls are you wish to choose to characterize it you're trying to read it right out of the statute well your honor while i am not looking to make it part of the elements of the cause of action i would point out as we didn't our priests that both under music feeler in central bank of denver the supreme court views statute of limitations defenses  of the section ten the liability schemes those for the words use under different circumstances i'll be it but those were the words used by the supreme court in those cases i'm not sure with the words mean the way he is i recall the combination of will see in twelve require defendants to plead the statute of limitations is an affirmative defense so it's quite possible for plaintiffs to plead a case not subject to twelve b six dismissal that's twenty years after the statute of limitations has run its perfectly good its data good claim and the only weakness in it is that it's subject to a motion to dismiss if the defendant remembers to plead the statute and then makes a motion to dismiss based on a your honor this is not a strict pleadings issue because twenty capital a does not simply point to whether or not you complete a crime of they should or state the elements rather it talks about whether or not the twenty capital a claim may be maintained and therefore at any juncture and there is no limitation at any sure along the way whether it's at the pleading stage or summary judgment stage or trial if that ten b action fails then the predicate violation fails and so should the twenty eight case and i'd like to go back to what i think i defense to get what you're saying if you were over time but i've got one more question that i wish i could ask if i understand it all we need to decide is the statute of limitations question in this case we do not have to decide good morning my name is christopher nelson i speak on behalf of the lead plaintiff appellee in this case i think the court has hit on the core flaw in the defendant's argument here and that is that the language all this court needs to consider is what the statute says on its face and here the statute says that the limitations period for causes of action brought under twenty cathay is five years five years means five years and there's no basis for reading anything else into the statute or even reading out the five year limitations as this court has already noted the statutes completely silent as to the issue of whether a predicate violation be timely the statute is absolutely silent about everything that dependence excuse me defendants have contended with respect to their arguments within the cup is it correct incidentally that we do not have to decide anything in this case except the statute of limitations issue that's absolutely correct your honor the only issue that was certified f tory appeal was the question of limitations on the statutory is you you basically have just now taken us through twenty a yes or no and i guess your claim is there's nothing there that says any different violates doesn't mean violates and can be sued upon absolutely are how do you deal then lester nelson with vera phone case with i'm sure you're familiar with that the language they used by the court there  that the shareholders in that case were unable to proceed under a twenty capital a claim when they failed to allege in quote actionable independent underlying violation of the thirty for ak i'm troubled by the word included i don't think that the word actionable means what the feds are arguing that it means here i think every case that's addressed this issue has gone along the lines the court has suggested which is that the allegation of a violation is what cause of action attend the cause of action fail to plead materiality that's an element of the claim that's and that's entirely removed from the limitations period issue which defendants have you're on what i what i asked mr landau about the elements and i gather it would be your position that an allegation concerning the statute of limitations is not an element of in this case a ten b five claim is correct that's correct and equally important is that case citing their phone were not the plaintiff needs to allege an actionable independent violation the words the court used in lipton were must first allege a violation which is exactly what we're arguing here whether the violation is not has nothing to do with whether defendants actually broke the law or whether we can allege that they broke the law and act doesn't become any less real merely because you cannot proceed on that cause of action from your perspective the word violate following up on what kleinfeld so the word violate simply means that they have alleged that the elements of the cause of action correct certainly are i think turning back to the plain language argument i think our reading of the statute is borne out by the cases that have addressed this issue at least ten generally i know there's no court that's been confronted at the circuit court level where the primary violation has expired before the derivative claims brought but the supreme court has spoken a great deal on the purposes behind section twenty a why it was an act and what it means what its purpose was in the lamp case and in that case the court was considering or was trying to establish the limitations period for tenby claims which at that point had no uniform statute in the patients no uniform statute of appro when the court considered twenty eight and ten being within the context of each other the court was looking to twenty eight for possible guidance and setting limitations period for ten b and when the court did that it's specifically rejected what defendants are arguing here they're arguing that there's nothing really different about attendee claim a twenty capital they claim what we've alleged and what we've argued is that the two claims are fundamentally different by their very nature and the courts have recognized that twenty capitally claims are insider trading claims they are clandestine violations they are secret violations they're violations that require a particular level of diligence to ferret out and prosecute which is why congress an act of a five year limitations period for these claims relative to the regular as the courts call it run of the mill claims under section ten b the supreme court specifically referred to the five year limitations period twenty capital a as being enacted to provide greater deterrence detection and punishment of violations of insider trading loss the court continued and said that the five year limitations period was a specific enhanced protection for plaintiffs who had who believe that they had a cause of action for insider trading  you can see if you and i thought our that there must be a predicate violation of some other thirty four act section we can see that there must be a violation and an allegation of a violation we certainly have to plead that the statute was violated but we do not have to plead that claim or rather the predicate claim as timely there's no court that has held what rather has interpreted the statute as meaning what defendant claimed it mean means on the other hand all of these other cases lamp short the short the bellville enron series partners all of these cases talk about the fundamental difference between the two cut two types of claims and why twenty cathay needs a five year statute of limitations this court recognized the jackson case we believe is off point appeal was certified on october twentieth two thousand and four and now this is january eighth two thousand and seven i deeply regret that the volume of work in our court is such that it keeps you waiting over two years hopefully not much beyond two years before you get a decision from this court i'm sorry that that's a fact of life but we will do our best to be sure that now that it has been argued that we will issue a disposition as promptly as as we can the case just ordered just argue with you will be submitted consideration and we will now hear arguments in the next case which is 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