business attending a christmas party and having a brief conversation with strangers to force themselves on him at the christmas party who turned out to be the thompsons as a consequence he now finds himself i understand why you are selectively choosing parts of the evidence for your party but let's broaden the facts a little bit dr slaughter was paid to go to respect to the barcelona issue and the meetings they attended in the check that might have some relevance with respect to secondary liability it certainly doesn't have anything to do with primary liability because it doesn't go to any statement or a consequence of that by finding by saying that the jury could have found that he was a director is totally inconsistent there is no evidentiary basis for finding that dr slaughter when he didn't go against barcelona indeed acted director only the evidence is that there were some meetings in false and third parties and he made a recommendation regarding a chain for one stock split no poached no direction given by dr slaughter or anything else either a alternative grounds even are not challenged by you or are supported by the evidence and the instructions because i don't think under any of the theories the damage award that was entered against and mr chen was sustainable and that goes to this particular fact mr chen was involved as the c f o of this corporation but he was really an employee is duties were severely restricted by mr devote he was in effect a model or the model of revenue for a start up company i think we need to keep that in mind this is a start up company so we're not talking about a company with a book of business with business transactions it's something that's starting up necessarily they're going to be talking about the future and in his case the only basis for liability under any of these theories are to allege statements made in the course of a ten to twenty minute presentation at a marketing meeting on october twenty seventh in response to your question your honor under any one of the theories thomases had made investments in the amount of at least two hundred fifteen thousand dollars before this marketing meeting ever took place so under any of the theories there is no basis for an award of damages against mr chen for those investments said already been made at the instigation of mr sarah just because as i discussed with your learned colleague they had a chance to get their money back on it on march twenty first i mean may twenty first two thousand they were from telling them what the true condition of the company once your honor i think not for this reason the executive the question boils down to whether there was an executive or econ contract under the whole anya's case for  washington securities act but i would ask i would submit to the court the proposition that with the reliance he wrote reasonable on the part of the tunnel since as a basic element of the fraud claim that negligent misrepresentation claim certainly the federal securities and the state security zach claim was their reasonable reliance under these circumstances mr chen was fired by w f and n two weeks after the marketing meeting on october twenty seventh so the statements that were made were talking about statements that were made on october twenty seventh the reaffirmation took place in late may of two thousand we're talking seven months later when the thomason is knew that there were problems with the website of the start up dot com company was it reasonable for them to rely on statements made seven months ago and moreover the evidence seems to be pretty profound in this case that the instigation of mr le sara mr devote champ on the temples and was far more significant far more significant than as a matter of law under the habermann principles and i would submit to the court knowing that my time is short that with respect to the federal securities that claim there is no evidence of any use of the us mail the internet or any other instrumentality of interstate commerce there is a very fundamental aspect of a federal securities act claim that's missing in their proof this was an issue that was confined to statements made at a marketing meeting an oral presentation perhaps we don't know this from the record with a powerpoint presentation but that doesn't rise to the dignity of using the u s mails or the internet and certainly with a higher burden of proof of clear coat and convincing evidence of fraud and negligent misrepresentation no evidence that these statements that were predict sion of what was hoped to be the case for the start up company would amount to fraudulent misrepresentation of an existing fact that would be a basis for these common my theories the fact of the matter is in this case if you look at the record of the background of mr mr chen what he did in this case it's a start up company he made predictive statements at a brief meeting that was the only time he ever encountered these individuals and he was fired two weeks later it's very difficult to get to anything resembling a case under any of these theories in response to judge piousness question you look at the analysis of the district court on the emotions post trial and it's very difficult for me to understand what judge robert was thinking in make a statement and he didn't know at this marketing meeting that investors were necessarily going to be present the only individual who was what was in the market in the present to attract investors well it was these meetings were often held talk about their marketing plans for the company apparently all purpose of that is to get people to to you know that have confidence that was about to happen statement a statement made to isolated statements made of one ten or fifteen minute marketing meeting to a group of people me and thinking about the case has always been a circumstance where this was the perfect scheme that covered all of the basis that had multiple causes and multiple tools and multiple team members this is truly a total next thomason was never would have invested in w n n if they hadn't had confidence in the founder and visionary who was mr beauchamp a successful businessman by all accounts or at least before they learned it differently in the state investigation a and he's not he's not forrester now and that's correct and that the reason i mention him is because it's obvious that he was a driver one of the most primary and significant drivers but the law under both the us essay and under basic that he made on which your clients from the line he was at the christmas party introduced as a director and i would ask the court to look very carefully at the record determined that mr noble's client dr slaughter was not a director of dental plan and that's established as a matter of law and then he goes on to say some other things about other kinds i felt there was plenty of evidence to show that he was held out as a director that's all set that aside though because i'm not the one that makes a determination as to whether or not that goes to the jury the primary point is there are multiple theories of liability ok what  purchased subject to a condition subsequent which is that you can get all your money back unless you have removed that necessarily now because they're trying to kill you well yeah i understand that but i also don't want to i don't want to misstate washington wilsons saying a number of times where our shares are difficult where our share certificates where are our share certificates they were told you investigate share certificates that the property that they invested in was not delivered until may and it was under the auspices of an affirmation or rescission decision in may by which it was able to backfill a number of incomplete representations about the company under under washington law are were the owners even though the certificates have not been delivered they would have the ability to enforce the contract and to enforce the performance of w f at ok but that doesn't change the fact it was an executive or a contract that in fact these shares were dangled over their heads as part of this that would have supported liability on a theory other than the theory that he was a director on any other theory other than right because the jury was instructed as a matter of law that he was not a director and you have not appealed that so he's not a director houses so you have to have some other theory that will support my reality for now the court found that despite the fact that he was not a director he could be liable because he held himself out or was held out as a director so there with equitable theories in nevada and even washington and consistent with a fiduciary in fact theory but let me let me go to something that's even clearer he was an employee he was paid so he's also secondarily liable as an employee more control persons and specifically didn't adopt a culpable person standard it did stay though under the facts behind which are remarkably similar to the facts here that that defendant was a control person and therefore subject to secondary liability of the  a he was not only an investor your honor but he served on the initial board of directors horizon capital and there's plenty of evidence that whether he called himself or not he was paid as a direct that said he's liable if he holds himself out or knowingly allows himself to be held out as director which is a correct statement of law for purposes of the rest of my argument focused i don't want to scribe him directorship we all know the fact of what he actually did that indicated he might have been including a board of directors paycheck literally in the record the statements are in the record surrounding the in the testimony of kelly thomason and katie taylor the sites i have are excerpts of record two about the stock exchange they were talking about the board of directors meeting in barcelona he also talks specifically about the stock split he also talked specifically about about dr slaughter's role in the company what was there's plenty of of of getting mixed up there was plenty of evidence that there were multiple discussions with the thompsons and others with mr slaughter and a number of the other for control for i think you say about the stock sp taylor also had a brief conversation with water about barcelona and she and there was no evidence that when anybody talked about partial one of their talking about anything other than the meetings and in meetings in barcelona there's not a stitch of evidence in the record barcelona meant anything else to anybody at that christmas party or otherwise she also says told him how much she enjoyed meeting a board member this is where we get into our missions which are just as important just as pro and and are equally apt to expose want to liability if by making an omission you are not you're not taking the opportunity to set the record straight on one of the statements that was m company for purposes of investment and even more importantly or as the thompsons testified they had the oversight of a board member or somebody who was acting in an oversight role a fellow investor who is not the founder not the primary sales right and you'll see throughout the record whenever she's home and she talked about barcelona in the stock split that was what she associated dr slaughter with was that fundamental decision that affected their investment they felt he fulfilled the role that everybody feels a director should or someone in that oversight role it control person should which is oversight as a fellow investor what the company was doing there was plenty of circumstantial evidence that by virtue of his participation in constant meetings over a week in barcelona that he knew what was going on with that company also admitted to tell the thompsons that there was no functional web site there were no customers there was no future person but he came to me with mr beauchemin and there were discussions with katie or comments to katie or katie again would indicate to him thank you for being a director or words to that effect so there were there were very few and  swan her say who i don't have a look at in the hearing of tom wilson through both of them i don't have a quote for you but there are there is evidence that and it's perfectly understandable that over the course of several years quotations are no longer found in people's memories but there was there were a number of visits where essentially the same impression that had been given at the christmas party and the same comments about barcelona total mix of everything they heard everything they heard from dr shaw was consistent with everything they heard from everybody else including promotional materials that describe dr slider that he wasn't involved in but nevertheless he two thousand after the executor a contract event completed mr sterile met with kelly thomas and said hey there's no more or there had been and there had been a letter from the company that there is no more board of directors they're just advisors this was after delivery of the share certificates after they had completed the umbrellas now before before you run out of time i have a question about the chin side of the case as well and  arbitration we're in he was complaining that he had been fired from any firm on the company again it wasn't until july of two thousand and speaking with mr will settle that they knew who that employee was and if you take a look at the supplements that were given as part of the affirmation and you know final staff of share certificate delivery the employee was not mentioned and in the first up on the second supplement it just said that litigation had been resolved so they didn't know the identity of who the employees are certainly didn't know to take a look again at instruction thirty because it is an incomplete statement of the ws i say our proposed instruction was a complete statement which had the additional secondary liability closure to the instruction thirty does include he was you may find if it had been complete and said if somebody asked in a role similar to an officer or director which is a statutory basis which we included in ours and it was stricken in the final but it's a complete statement of law so to the extent that slaughter is arguing somehow that he was prejudiced by incomplete instructions or he wasn't a benefit because in fact we were we were prohibited from saying specifically to the jury and you can find slighter liable to want of that yes i say because he acted like a director we have the right to do that we didn't appeal it all i'm saying is the extent there is harm it's it to the extent of the harm it was harm done to the plaintiffs it was an invited error by dr swatter to we briefed us about it in the level of specificity and the fact that the c f o was saying it alone make them more than opinions and projections and proffering and the case law is clear that forwards that forward thinking are forward looking statements can still be misrepresentations of existing fact and if you take a look at the detail of these misrepresentations and who was saying it and the discrepancy between the thompson's ability to know difference and  of no different than very clearly they were they were intended to be relied upon and they were material misrepresentations of existing fact with the website company while he was there he was far more than just somebody showed up and spun hypotheticals in fact he did it at a marketing meeting where he had met investor the record reflects that katie was introduced to him as an investor so you know he was more than a model or he was in fact somebody who supposedly stood by again omissions are nowhere near as clear as representations but they subjected to vigils to the same kind of liability if they're wrong he went along with the charade that he was somehow the former party is window dressing because there was no statement made by dr slaughter regarding in connection with the sale of any security or even regarding to of us you know she did not sing and there is no testimony in the record connection with his welcoming comments at the party there is no authority for the proposition that dr slaughter can be held liable for statements made by boeing and that's even assuming the devotion made it improper principle by which someone who was improperly introduced as a director suddenly challenges instruction part yes and became an argument aren't i don't remember that particular he just advanced right well star from denying that he is a director because of the representational in which he participates and takes ten thousand dollars and a director well known because at as opposed to everybody else in the room there is no testimony from then on that they relied on him being a director by virtue of his raising as he and there is no testimony from them that they were relying upon him to look after their interests or their welfare which is what if it usually does there is no testimony in the record that dr slaughter accepted that role under took that role there is no refusal or failure to correct any statements mr devote chant made that response indicates why there was a flaw in this case the district court's minute order made it very clear that the only basis for liability against mr ch the statements made at the marketing meeting and counsel has relied and has attempted to rely throughout this case on a theory apart from that and that is a flaw in their argument and a basis as to why the the district court i was quite understood that there was an arbitration proceeding taking place and he simply didn't know it was mr chan they knew in july of two thousand and six i think they had an obligation given the fact that this was a small startup company with not a whole slew of employees or over the next they'd already made they'd already made the investment by that time i think but they also knew that tell you mr chen was not of the christmas party mr chen disappeared from sight after the marketing meeting of october twenty seventh thank you thank you