eye on the clock i preceded thank you of the bankruptcy court granted in force and have a settlement agreement in this case that it acknowledged that it did not have jurisdiction to enter on its own action agreement of the parties and those according to design in this in the judge's opinion it would have ended on the third day it settled on the second day and when he rejected on the record the effort to to get out of the settlement he made he said that he would have made findings of fact about what i loosely call misconduct that were entirely consistent with what the your client had stipulated to and if he had made those findings of fact he could have had through the order  t respect we disagree that mr mandelbrot agreed to any misconduct the issue in the trial in the adversary proceeding was the reasonableness of the thorpe trust findings and only those two trust me the problem with the settlement agreement is that was that it went beyond the scope of the pleadings in the case and brought in two other trust that were the subject of the jurisdiction of the northern district bankruptcy court or this is a separate issue but so as to the to the full settlement trust he i don't understand what the problem is with that because the scope of the relief that was granted by the settlement agreement was outside of the scope of the complaint and this authority i don't understand how it was with the scope of the complaint they want that this they want that as this bar the right word they wanted him not to be able to submit to a claim that he was submitting claims that pill use a loose word were not kosher well they wanted to find i find that he was unreliable in filing claims against the thorpe trust the allegations in the complaint had nothing to do with the plant trust which had not even opened for claims yet and had nothing to do with the western trust which was the subject of the northern district bankruptcy court proceeding so are you just challenging that i think that if any terms of the settlement agreement which were material are void then the whole agreement is void under the california law it's clear under the civil code i believe in what it's actually as if you know it's so so your whole argument depends on the fact that the  settlement agreement included to trust that we're in a party through the actual complaint in the in the bankruptcy court and therefore the whole thing goes not just the non parties but also the fact that it sought relief and got relief beyond that the only relief was for requested was a declaration that he was unreliable an equitable relief what happened is that the settlement agreement terminated mr mandelbrot representation of clients that he already had with these long party trus and he also had to transfer those cases to another attorney and he was precluded from finding claims against those trust and they weren't even parties these proceedings they have their own t v p's you answer my question so that your argument is really dependent on the fact that the western i guess it was the plant truss were not originally point as to the proceeding in the quarter in the stipulation cover them i'm sure i think you're right that is one of the bases there are the other b understand that's what you're saying yes that that is one of the bases for their will for the relief the requesting in this court and what they want what role council does the case of golden versus california emergency physicians medical group this was decided after the bankruptcy court's decision correct what role does it play what should role what role should it play and our decision well i think that that case was decided before the district court made its decision in this case it was brought to the attention a i guess some sort of the scream anation having nothing to do with his ability to practice medicine and treat patients and as part of the settlement they gave him money and they said go away in this case with dealing with conduct that's directly related to his competence to practice law and it seems to me that the restriction if viewed in that light is entirely reasonable i think that golden is not materially different because the issue before the court was did section substantial why is a substantial the substantiality is there was no analysis of the bankruptcy court as to what the effect on mr mandelbrot practice was we don't know what we know what the effect was asked of these three  couldn't submit claims phony claims on behalf of or any other claims because he was not regarded as trustworthy to those three trusts with respect we reject the characterization of the claims as mandelbrot had had stipulated to the judge was not entitled to make the findings at that stage of the proceedings under rule fifty two there had been there had been no opportunity by mr mandelbrot to take the stand to introduce his that was his fault he decided to settle the case when the time came for him to take the stand and he entered into a stipulation this wraps the whole trial and then comes back two or three days later and says no i want to withdraw in this case it does he was he was under duress in these proceedings he lost the rest but the rest was that he was apparently losing the case no he had lost confidence in the ability of his attorney to represent and his attorney had managed to get most of this evidence excluded and when did and when did he lose confidence why did why did he pay the judge asked them expressly on the record side from the representation made by the attorney that the people a she was agreeable to him and he said reluctantly agree so that this it's actually sixteen six hundred is intended to protect parties from voluntary agreements that they've made that's the whole purpose of the policy that the problem in this case is it went outside of th this was a settlement and as far as i understand the western trust was a trust that was among other things providing the administrative services to the three trusts that were were parties and the plant trust as i understand it hadn't had and yet open for business in terms of accepting claims but had it into locking into locking maybe too strong a word overlapping number of similar advisors that the other two trusts had and as long as the case was being settled and he was getting benefit i don't know why and as part of a settlement that could not be included don't forget unlike golden which was not in which the in which the penalty had nothing to do which the prevention of for practice his profession had nothing to do with his ability or competence the practice practice medicine here you're dealing with with with a lawyer with issues that reflect on the lawyers comp and it's a practice law in fact i don't understand why there hasn't been disciplinary proceedings brought yet or has there based based on the on the stipulation and the judge's findings well that the only issue  unreliability and its unreliability with respect to the trust that had brought the adversary proceedings that's all that was issued at the trial western and plant were not involved i'd like to get to some points if i may that i had for argument here and i just want to point out that the  asking for an exception in section sixteen six hundred based upon it that it's outside of that this case is outside of the context of non competing employment agreements this case does involve employment mr mann where it had already been employed by individuals to file claims for western and plant trust he was required to transfer those cases to another attorney in precluded from getting any future employment from individuals or law firms that might wish for him to file claims against those who try to strike to these three trusts with and to others when he settled  because of because he was he was not the claims that he was filing with phony or or not or misleading or wrong with disagree with that characterization of let's go back to the golden case suppose that as part of the settlement he acknowledged that he had not treated patients carefully or properly and therefore they didn't want to have anything more to do with them they could not enter into such a settlement agreement no he could not your honor i'd like to reserve the balance of time if i may for rebuttal you can but like yes yes unless there are further questions asked i'm no go you judgment good morning america please the court it's my privilege to represent the thorpe trust in this appeal and you're the bankruptcy court to not abuse its discretion in approving in enforcing a settlement that was reasonably related to protect the trust legitimate interests consequently i ask you this question i practiced law in california for many years and did a lot of sixteen six hundred think of just by covenants not to compete golden clearly extends that beyond the traditional non compete setting but it deals in the concept of a reasonable s as i read the settlement and what the judge said in this case it seemed to me that in a way this perhaps a divisible situation with respect to your clients it seems to me they're clearly barred it's a settlement it's it's reasonable it's as to them but you have the issue of the state bar rule of professional conduct one one dash five hundred and other restrictions that suggests that it's pretty tough unless you get just sparred to bar him with respect to other people what is your position with respect to severability so if if the court upheld this with respect to your client's based on the settlement agreement but found it based on the state bar rule it was on reasonable asked other people what would your position be about that well your honor we believe that the settlement is fully enforceable as to all four trusts and i would like to take a second to me looking through why first to honor the  complaint itself and the action that was brought was based upon a very extensive letter that the trusts had sent to mr mount abroad and that letter was sent on behalf of all three of the text intrusted to may twenty fourth letter it's included in our supplementary excerpts of record at the top five and that letter was written on behalf principally of the two trust that i represent as well as westerners best us and that letter indicated that there was a and i was dismissed without prejudice yes it was dismissed the judge's view at a status conference was that the complaint was premature because the at that point in time the trust indicated a remedy that they were seeking what they sought initially when they fall the complaints was directly toward relief because of the counter accusations that mr mandelbrot had brought that he had indicated that he thought that the trusts were acting corruptly and therefore they were that he might bring claims against them so the trusts in part by the actions in the in the northern district in the southern district to validate the manner in which they had acted and to validate their findings but the point that i'm trying to make here is that western was all tied up in this from the get go first it was part of the letter the western managing trustee was in the courtroom the court made an expressed finding with respect to that western had found that mandel ot was unreliable the judge found in her findings a number six in ten or twenty five and twenty six that the all four trusts had common trustees common futures representatives can claim handling facilities the judge found at finding ten or twenty six that may have a bronze defenses included contentions argument and evidence related to all four of the trusts and as i indicated the may fifth twenty fourteenth letter from  indicated that there was substantial information to support the conclusion that some of the unreliable evidence submitted to the three trusts was fabricated or manipulated intentionally or with conscious disregard for  trusts were acting all four of the trusts were acting to protect themselves from this behavior and they entered into a settlement and i think there are two things with respect to that settlement first there is no california case or a federal case that we have found say that indicates that a nonparty cannot be subject to a settlement by its consent let's say we agree with that i still get back to the point with respect to your clients and your co colleagues clients i get that that seems pretty clear that everybody was informed the judge made certain finding it's reasonable but i'm troubled by the limitation on practice outside of those trusts let me just quickly read the california rule of professional conduct one dash five hundred says an attorney shall not be a party by contract which violate the canons of professional athletes may for that reason be void so with that context why should we with respect to people other than well rule one five hundred has been interpreted authoritatively by the supreme court the california supreme court and howard versus babcock right and the court in that decision annunciation a test that is essentially a rule of reason test and that is that the court said in that case i think it dealt with whether withdrawn partner could solicit clients and things like that so or compete with the firm and the court said that a restraint on competition among partners is permissible only to the extent that it protects the reasonable interests of the business seeking the restraint and that you and that's you your clients clearly i'm talking about people other than your clients well you're honor the with respect whether they're my clients or not those two trusts had substantial reason to believe that they needed protection from mr mandel brought up and therefore this constraint on him is reasonable under one five hundred and it was reasonable for them to seek that protection first because as to western they would already been expressed finding by that trust perhaps that he had not under well i'm not being clear quarrelling with western let's say all four people are coming because they have a they've had dealings with him they don't trust him they want protection i'm talking about people other than the fo mike my understanding is that you're taking the position that this man is not permitted to practice law with respect to claims involving other trusts other defendants i'm sorry your honor i misunderstood the scope of the court's question we do we do not assert any interest in mr mandel brown's ability to practice law with respect to any trust other than the four who are the subject to a settlement if we have polled the agreement with respect to know what element of the contract would have to be separate i don't believe that there is any element there's no element of this contract that purports on behalf of the four trusts that are involved to restrain mr amanda broad's practice  profession can i ask you about the the golden case how was that first frame to the district court your honor the decision came down and on behalf of ourselves we filed a notice of supplemental authority with the district court that i think is included in the c r we indicated at that time that the decision was subject to a request from bank review and request for rehearing and we argued that it was distinguishable in a very very short pleading and then when the decision came final and the mandate was issued there was ultimately in that case i think a limited rehearing or a slight modification to the opinion or something but no on bank review then we alerted the district court to that fact my friends did not make any filing in the district court with respect to that decision but then that is the court is its decision about almost five months after golden came out and  just the court made no mention of the case unless i missed something no your honor i read the court's opinion the same way in that it did not expressly address that case but i think implicitly it did i n the golden case as we've argued is a case that deals with a particular public policy that california has identified actually to public policy is really one covenants not to compete and second the employment relationship there's an entirely different strain of california law that deals with agreements that could have the effect of restraining trade but they do not involve those public policies leaving case is western distillery case and we alluded i think in the brief to that case and there are subsumed cases not all of which cite that case but a whole the same thing the the worker training reimbursement cases and so forth so under california law the way six hundred six hundred is typically interpreted it is you go through two doors see if there's public policy implicated like competition of employment relationship you go through that door but under western distillery if public policy is not implicated you go through another door and the other door asks you whether or not the provision is necessary to protect the reasonably necessary to protect the legitimate interests of the party protected by the provision and so i think the court was implicitly addressing that constellation of arguments when it said that no public policy supports allowing i think and i'm going to misquote it but you know an unreliable claim file or to put the trust corpus at risk and so i think the court  recognized that gordon was there but implicitly directed itself through the other door the western distillery door in finding that the public policy that was at stake with respect to those cases was not present here ok you agree that california law applies i can't think of a reason myself there's conflicting precedent as i view it in the ninth circuit but i can't think of a reason of policy why california law should apply if you want this is a bankruptcy proceeding and deals with essentially a fraud on an entity that was created as a result of a bankruptcy reorganization the the the t  conflicts was designed essentially to deal with conflicts between different states and here we have a settlement agreement that's designed essentially to protect the integrity o the of an entity that's being supervised in bankruptcy and created as a result of a chapter eleven proceeding if you are on a we did not urge an interpretation of the contract that wouldn't depend on state law and didn't find i would say a great deal of helpful case law for the point that the court is making but intuitively it seems correct that  although we argued it somewhat differently the way we viewed it was that the california has no public policy interest and determining whether or not a lawyer is filing improper claims against the nevada trust i mean the happenstance was that the bankruptcy reorganization struck place in california but even if it was a caliph even if the trust was formed in california essentially this this was a this was a trust that was created at the help and aspects those a company that has a special those liability goes into bankruptcy as a chapter eleven proceeding as a result of the settlement that rights from that proceeding these trusts are created to provide money to beneficiaries and here comes a lawyer who's providing sensually phony claims and why isn't that why it is one would think that california would have an interest in making sure that lawyers who practice law don't do these things but why is it that th that this kind of settlement doesn't implicate california law or sixteenth six hundred it would be possible as we mapped it out to conceive of a settlement that might implicate california law and the restraint on tr if it was anti competitive to me but we completely agree that california does not have a public policy interest in this settlement and that six hundred six hundred does not apply you know one last question because your time is running out you're not arguing california plant in western us past us we are urging that the settlement be enforced as to all four of those trusts who made it because each of them is reasonably entitled to be protected from mr mann abroad i would also not funny and i know my time is winding down here just to if i can completely answer your honor that sentence thank you part of the reason why the settlement is reasonable is because all of the trusts gave up substantial claims against mr  thank you just to be clear that we want to make sure that the court appreciates that we have no problem the appellants have no problem with the bankruptcy court entering a judgment within the scope of the complaint in this matter and under the rules that apply should california law apply because the agreement was entered into in california in los angeles i'm sorry so what's california's interest in all this other than an interest in not having people submit phony claims with the lawyers submit phony claims the interest is that well the question needs to be asked with the interest is that california agreements made in california are generally applied you generally apply california law and to the choice of law principles well i think you're saying that there's no there's no federal interest here i think that they were made could you answer the question yes i can i think that there may be a therell interest in another case where th the authority of the court to enter a judgment consistent with the complaint in the case may come into play you know however that's not this case that's not what happened in this case now the section six thousand six hundred may come into conflict with the authority of the federal court at some point but i don't think there's any need for this court to reach that issue in this case in order to make a decision did anyone on either side argue conflict of law issues with respect to the application of california law i know that it was argued in the district court i believe it was also argued by the upheld these in the bankruptcy court and what if anything did either court say about the conflict of law yes in fact that argument can't be regarded as any more than a throw away because it follows an extensive analysis by the upheld these of section six thousand six hundred in their papers that would be their strongest argument if it was my colleague the other have any more questions ok thank you counsel the case just argued is submitted we thank you for