may please the court i'm joseph daley for the appellants pension funds who seek to have the district courts erroneous lead plaintiff order overturned i'll keep an eye on my time but i hope to reserve five minutes for rebuttal runners the district court for one against both the p s a letter is clear statutory text as well as this court's precedent in the cavanagh case that statute mandates that the presumption that the most adequate plaintiff in a class action is that one with the plaintiffs is the size of their financial stake in the controversy and here anchor capital as an investment advisor simply had none it had no financial stake it had no losses in the stock and it had no permission to sue on behalf of its clients who truthfully experienced those losses now the district court seemed to recognize this at first it engaged in several minutes of colloquy with counsel for the guy with franco capital and i would like to take this opportunity just to read some of that colloquy judge mathis says to our counsel now i see i see the language in the declaration saying that you have attorney in fact power but that's not quite as explicit as language in your declaration says that anchor is an attorney with full power and authority to bring suit to recover investment losses do you have any copies of the standard contracts that you enter with your clients and then again mr mr check the council for record capital gives them more call queens as well i've met with the the president the c e o thank you capital mr rice and we talked about those investment contracts and what they mean and how they give him power of attorney and judge matt says well now wait a minute you are slipping over exactly what i'm asking you to establish you are just asserting that they have the power to sue but i need something more than that and finally near the end i want to see some corroboration of the assertion that anchor in fact  it was the intent of the contract that it was to be the attorney in fact and that of course that contract was to be considered under massachusetts law which is very clear a contract in massachusetts is limited to the four corners of the document that can be no implication no inferring from the language of the contract it is what is in the contract that matters and it is that after point that this court's decision in kavanagh says that the district court should have gone to the second putatively plaintiff in amended plan no we did not there was a space of three days within which anchor came in and said you know what judge matsch we understand going to this leave to amend but we are not going to amend would you please enter judgment against us so there was a space of three days happy to go forward with that here's our complex like that you've done that two reasons your honor first we did not just want to file suit on behalf of ourselves we were seeking to meet a class action on behalf of a class of perhaps many thousands of shareholders of wat class certification or perhaps in this case the entry of judgment i think cases subsequent to american public make it very clear that courts are not going to let the american pie polling doctrine allow parties  underneath an unusual animal in that remember we had come in originally and tried to be and tried to be appointed we played it i have no doubt that had we come back in with a second complaint and said to the same just record judge here's a new complaint against watson pharmaceuticals and now we would like to be the lead plaintiffs on behalf of another class and i'm sure you've got a bridge have to disclose to the district court what its motivation was for and we've heard from enough of our clients they don't want to go forward we're a little nervous about the relationship and some bad law getting is deleterious so we're simply going to withdraw and and i thought if that had been true you would have a pretty powerful argument for coming in before judge mason saying  you know we're there we're the runner up in the miss america contest here and when the queen doesn't doesn't her we get to step in where the crown i agree but also interjecting interjecting reason such as we don't have the financial wherewithal good reason at all why didn't you go to judge me and say we're the runner up we want we're going to file a complaint and we now want to be certified as the as the lead plaintiff in this i cannot speak to the litigators strategies that at that time but looking at it from my standpoint i would have thought they would have had great concerns over the district court judge saying you are improperly trying to piggyback a second class action upon a first one it just happens to be pure happenstance that i did not certify that original class action and then dismiss it with prejudice i'm not going to allow you to do this that was the original class action ever certified it was never certified and that was not th and in keeping with z seven that's exactly what we did we waited for final judgment at the same time judge by we had an outstanding mandamus petition pending before this court  had judge mate at that point gone back and done what he was supposed to do under the statute with which was to hold an evidentiary hearing to make a renewed determination of of the plaintiff status no doubt he would have found that the submissions of anchor did not meet the standards and he would have had to turn to the next the plaintiff in line our clients now the judge relied upon some authority from the western district and sylvania to two opinions from the same judge a cases and a case out of the southern district of new york the weinberg case the other decisions themselves contradict with this court's authority and cavanagh and that the judge there felt that the the financial interest of the inventor of the investment advis financial stake and maybe under massachusetts law maker has an obligation to protect that stake is not enough to make that a financial state correct agreed and we're not somewhere you see that with any of anchors customers qualify as purchasers of the security i would say they all qualify as perches i mean i just and there was this distinction in the briefing between with anchor saying you know actually our own clients were not actually purchases here but that has to be wrong on two levels the first when congress enacted the p s l rate it's specifically wanted large institutional investors to come in and take all the litigation as we play this  most if not all large institutional investors use investment advisors whether in house or often out of house like an anchor to actually advise them and guide them on what stocks and bonds to purchase so if that were true if the hyper technical focus upon who actually purchased that particular share were true we would be doing away with an entire category of institutional investors my second point response to that is when you look at that anchor contract i'm sorry i'm not a total loss there i heard woods said but i don't i don't understand how you suggesting to me that if j says you have go ahead and buy it they buy x in the name of trace or in the name of whoever j c puts up the trace is not the purchaser know what that  or i'm sorry if that's the impression i gave that is that is the argument that anchor wants to make and that that is the thing that the anchor has actually made in its briefs that it indeed is the purchaser and perhaps not even its own clients i'm saying both acar could be the purchaser as well and acting as an agent for its clients of course its clients are purchasers and when anchor makes an investment decision it actually tells a crowbar to go buy that stock so there's a third level of purchasers there too but the agency relationship between anchor and its clients there's nothing wrong with anchors clients coming forward to bring suit as purchasers under the securities laws the fact here is that it's quite there's nothing in the record to show that its clients gave anchor the permission to step into their shoes and to claim their three point two million dollars in losses in fact judge mates had before him a declaration from the massachusetts fund that  upon reading the declaration it's clear that they said they had over one million dollars in purchases of what's in stock so their loss is perhaps based on the stock drop in the in class period maybe forty percent of that and i apologize to the court as well as to pose the counsel know they would not have changed the calculation but it also does not change the bedrock fact in this in this entire appeal which is that anchor had no business coming forward in the first place it's an investment agreements with that have been sufficient yes it would we are not saying that you can never say that investment advisor can never come in if an investment advisor has a valid attorney in fact power and it's documented someplace we have no problem with that at all some kind of agency or a grandmother relationship that would give them a sufficient interest massachusetts wants to see specific language attorney thak to in the writing they want to see the duties and the privileges laid out connecticut may say all you have to do is have a complete discretionary account like acar had and that is sufficient to create attorney in fact we would have no problem appellants have two fundamental jurisdictional obstacles that they cannot avoid the first was identified by the court already they simply lack standing to sue from the final or to appeal from the final order of dismissal it did not dismiss their claims fact they had no claims now we all know that standing is the threshold issue in any federal action and only parties to a lawsuit may appeal an adverse judgment but here these pension fund appellants were never parties they never a complaint they never moved to intervene they never sought to file their own claims after the three plaintiff requested dismissal and i submit runner there was more than three days within which they could do so they could have done so at any time before the judgment case the case that they claim they were interested in they would have seen that judge matsch did a smith anchor cavil's complaint and at that point they could have stepped in and found their own claims but they never did classes never certified never certified the claims they are not which extent of the statue of limitations there's issues as to whether that would apply and how long would go i would really need to see their complaint it's possible this point time as we sit here today in pasadena november two thousand and six that it might have expired but they may have the benefit of american pipe i just don't know what arguments they would make for going back around or even after the case was dismissed by judge matsch they never came into the district court and asked to be two to replace anchor capital and they never intervene for purposes of appeal they missed it five ways all they had to do was any one of those to keep whatever claim they had a lot but they never did and once anchor capital dismissed  on the other hand it does appear that after after cavanaugh that r r d seven case that they've got standing to come back in and challenge the original certification that's wrong and that may be a harder road to take but aren't they entitled to take it they did not but they're not parties they never moved for intervention for purposes of this appeal one stick once the court said that you're out you're not the lead plaintiff they have remedies they could have possibly complain correct and what you're the as a disappointed bitter that they had to do anything more than be disappointed that or in order to have standing to feel oh i think that the the u s versus oakland case says that in an analogous situation if they had they sought to intervene and the court denied it they would still need to move the appellate court to intervene for purposes of appeal there's another jurisdictional problem they never addressed and that is the case has moved to go back back to moving to intervene they would have to move this court to intervene if what if there's a in the appeal but there's no appeal ok well that and the circular because they're the ones that want to file the appeal that they can't intervene in their own appeal correct but they could have sought to permission to appeal they could have sought to be deemed as a party for purposes of killing into that here but that doesn't matter what happened down below is what counts and then her father complaint they never moved to intervene they never picked up the ball and once that was not an exhausted remedies argument what i mean what what grounds we have for dismissing that there's no pending case or controversy so they are elite plaintive designation is moot but even if think got past the jurisdictional issues and they have and five ways they haven't they still never show that here's what we would do that's different here are new facts your honor that you have not seen they never present that in fact they don't even appeal from the ruling on the motion to dismiss so they never show that the ruling on the motion to dismiss  more chance but he said you've got rule of an issue that you're be mindful of that we never saw what facts that the pension funds would have that would overcome rule level with after our i've used up i believe about ten minutes of our time and i'll turn the rest over information right correct correct as this is i used to just think that aker was the investor or that the underlying person was the investor down the line person was the investor anchor was the purchaser who it's a tool for their pi's i would agree with that with the in the actual benefit was the stock beneficial owners remain the investors correct and you're suggesting that the beneficial owners are not the people who it was a good investment alternative for their clients to gather the information and made the investment decision so that and that's that in that sense the decision maker who was anchor is the purchaser and on that foundation those who are just who appointed these the status as a purchaser in as rwanda was a statement made by that particular asset manager that he was attorney in fact for their clients now as one who was very clear that they were basing their decision on that language or rather basing the decision on the fact that they complete investment subsequent to that all paired that language respectfully without any analysis so what the courts then confronted with here is the choice of case law predicated on ten b where the acid matches were characterized as purchasers words their financial interest is synonymous with their clients or if you're asking do they have a personal out of pocket loss the answer is no but the law doesn't say lost out of pocket losses as financial interests and i w that if you you could have a scenario where you say in and as a matter like anger as has standing as a purchaser as a decision maker but under this provision of the same statute they would not be able to seek legal status simply because they don't have an out of pocket loss and we the statute was a statutory construction make clear that you have to view the statute as a whole and that reading there reading a financial interest is commensurate visceral business interest that's been claimed to be its real numbers in this case was three point three million dollars so it does allow within the four corners of kavanagh a court to to rank the various applications in the firm and who has the largest financial interest view that argument somewhat is an argument in the alternative of the i think the complete investment discretion gives them the standing on under ten b but the extent there is a discomfort with the notion that ing previous opinions and it will be lines there are certain acts that that can take that are reasonable for a performance of the truss and we would view as a manager he takes money from someone investor who loses money and they maybe they might be able to recover from their client if they can recover something from not that i'm aware of  i think you're looking for a rule to predict in this context where you only have where the green simply says complete discretionary management as long as we have something that complete discretionary management that will satisfy your respective of state law it's my understanding yes now i think if the remit is more particular ised and for example did have a expressed power of attorney then i believe it would be more of an interpretation of state law whether that power of attorney satisfy the state's requirements but here there was no power of attorney there simply was a contract to convey could be discretionary management ever was conceded that that creates a future relationship so   our our my colleague pointed out to the judge the anchor couple didn't have a gun if you have questions about they ultimately would seem to resolve that against you against well but i'm just saying that this is one of the judge's rationales in the real world of money management if they can limit or fully recover the claim losses of their clients keep their clients confidence there's a pretty concrete incentive i mean that's and that was the thinking of the judge at that point the what in pharmaceuticals counsel says that we never try to come in had we been following the case but that's that's the nature of the class action when there's been a lead plaintiff appointed we are allowed we are expected to sit on the sidelines and watch our champion go into battle horse he says we did not bother to come in he said at the three day  dismiss with prejudice but until that class which got a five used to have an obligation to represent your clients and all right yes if they had never if they had never sought class or patient at some point you would have to come in and f but you pointed out earlier judge my view that we actually had two courses to take and we apparently chose to take a more difficult course and that is very early in the litigation we made our best shot of being appointed lead plaintiff not not just not not just our clients but on behalf of the class we were shut down but we were shut down we thought erroneous lee we thought the district court judge floated the language of the statute and this court's decision is in the seven said that we could take an appeal from that  decision once there was a final judgment entered in the case that's what we did i know anchors on part of me i know watson's council is railing against us for not having intervene but to what end i mean what what we supposed to do after having just been told not once but twice within the course of four months that we had no business being there is we play this we certainly couldn't come in as a permissive intervention because that would would live on the district court's discretion and we know what he thought of that we could not come in intervening as of right because we would have to show that whoever was leading the litigation right then was not protecting our interests adequately well that also was already wrapped up in the lead plaintiff skirmish a few months earlier he had listened to our complaints he had seen the non evidence come case starts with a complaint yes i'm sorry i misunderstood i thought you meant we had to have a complaint waiting in the wings i'm sorry yes something worse we file the complaint but then the judge we have to reel reopen i'm sorry let me back up a second the statute says the people that moved for the lead plaintiffs don't even necessarily have to file the complaint you know fine you have to go back and tell the judge to reopen the lead plate of hearings but as you pointed out quite a thicket here and i think that i think we would have to go back in with a newly filed complaint filed on behalf of which you can do now but you've not done which we can do now  now you could go in and file a complaint now tomorrow we wanted this court to straighten out the district court's lead plaintiff order which aggrieved us which we have standing to appeal it right to go matter if you want to and file the complaint s reopen the dismissal they want to dismiss let them dismiss we want to file another complaint that maintains the case and you say ok now with the second they're out as lead counsel with the second counsel yours your clients i don't care who you know i think the fault lies with an investment adviser coming in and saying that it is has attorney in fact you know i mean they asked me that all sorry look they're out of it right they're out of it now who's left you and us interest rates ok now if there's a problem and you're saying oh well that's the way it happened and that's the way it happened well you know don't blame number one or two all right and you're going to take a hard look at case number one or two how do we relapse the filing of case number two by telling judge matsch well one of your decisions  in case one no one was perhaps erroneous sold but they're going to file a one or two you know have to take an independent look at one or two how can we how can we help you with that from here well judge this particular procedur a first one for me but i imagine when they're erroneous discovery waters that then taint the entire remainder of the litigation even litigation has gone forward to its ultimate resolution of what happens then i mean if there's been an erroneous discovery order that they create usually affects one of the parties but then we can always look at the prejudice in other words the bottom line and discovery is really where the party prejudiced how were you prejudiced by this order when it that's gone on before keeps you from doing that so i think the alternative then is to leave that erroneous leap plant decision out there in the federal reporters and it'll be there and we're going to see this issue i think is very much you know you're that concerned about the state of federal law but you've got a client breathing down your neck here too which ought to be a higher concern i think a great deal we have a public opinion