morning morning made please the court my name is alexandra shapiro and i represent stephen raven and raymond on this appeal this court has repeatedly held that because of their punitive nature sanctions under nine hundred twenty seven in the courts inherent powers should be imposed with restraint and discretion and only when the claims are both entirely without color and brought in bad faith here neither condition was satisfied first the district court committed legal error in purporting to find that the amended complaint was entirely without color the court made no specific findings on this point and instead merely reiterated it s conclusion that the amended complaint had failed to state a claim for one of the three claims without explaining why they lacked color and as this court has repeatedly held the fact that a claim fails as a matter of law t has has has previously held that there has to be no chance of success and no reasonable argument to extend the law in order for claim to be entirely without color and here there was a reasonable  would a federal court alter new york law and the circumstances in which the staten court is obliged to follow new well new york long there was a reasonable basis to extend new york to new  york on particularly for these types of torts new york law determines whether there's a duty of care based on policy concerns and is notoriously involving over time just to give an example there are two cases we cite in our brief from the new york court of appeals involving situations where a patient leaves the hospital and then causes a motor vehicle accident in one case the purty case where the patient had had a stroke  and the after effects of the stroke caused her to be unable to drive a car with due care and some was injured the court held that there was no duty of care on the part of the hospital but then in the davis case virtually very similar situation except involved medication given to the patient and the court says there is a duty of care and i think those cases illustrate that this area laws is evolving and it's perfectly reasonable for a plaintiff to try to extend the law and certainly there was a good faith effort to do that here and indeed if the court were to find something like that to be entirely without color and and deserving of sanctions it would chill the zealous representation and advocacy that this court has has held are the one of the reasons that sanctions are supposed to be sparingly implied in only an egregious cases  with regard to the second and that's enough if this court agrees that the claims were not entirely without color then the sanctions order must be reversed because sanctions can only be justified if both prongs of the test are satisfied but in addition the the conduct here did not amount to bad faith and indeed we sent numerous cases at the end of our opening brief of the type of egregious circumstances in which combined to defraud their subscribers with the money going to somebody else i mean that doesn't sound even plausible but but in any event your client became a weird the dow jones had taken steps continue to allege things that are inconsistent with what your client either knew or had a duty to invest your i respectfully disagree i'm saying this is this is the finding and i wouldn't be surprised if you disagreed oh you're on the evidence doesn't support the finding i'm for the following reasons first the ensign records show that at least for a period of six months between july of two thousand and ten and quote unquote early two thousand and eleven it's unclear exactly what month they were talking about down jones had been aware that there was a fraud but was continuing to cash the checks and what our clients were told was that it was only in early two thousand and eleven that dow jones claimed it had started to hold check secondly what's the evidence that they was there although it is true that opponents were aware that dow jones had published notices about this that was later and there were as far as appellants knew at the time there was no evidence that dow jones had been directly contacting affected subscribers and notifying them about the fraud and offering them the opportunity for a refund or otherwise and in fact it's so opponents reasonably believe would somebody want to get their customers mad when they don't get anything and well you know clearly they they they were they were these were customers who were being defrauded who were being ripped off by these f were and indeed in set the two other defendants settled the case and refunded all the money it's scribes and about their leave they refunded all the money they they settle the case in this case in this case the other two defendants in this say and they were funded weren't they refunded subscriptions to defrauded subscribers so your client was home no but it was it first of all it was a putative class action so the settlements went to  people who could have been a class members had the club had the case proceeded to that level down jones apparently according to x record material that it cited since the lawsuit has paid several million dollars to refund money to subscribers so i think it was perfectly reasonable for plaintiffs to believe that they should have notified subscribers so that supes subscribers did not continue to be misled by this fraud once they became aware of it particularly jones i want to touch upon a couple things have already been addressed this is not an ordinary case where we have some simple mistakes or the way it's been for to persuade the appellate briefing is delays in discovery or common garden variety mistakes the plaintiff and the lawyer have made well we actually have here is is pretty sharp conduct we had this is a case about getting a refund you do you agree that if we were to determine that there was a was that the underlying theme for all three claims in the action was that there was a failure to act or a failure to protect theory and what judge or a call for light upon him and his decision is untitled it's abuse of discretion standard here and what he relied upon was there were no facts in the complaint that supported a duty on dow jones to affirmative go out and protect its subscribers from this type of activity and he further noted that in fact between the time of the first complaint and the amended complain that the plaintiff was specifically made aware of extensive efforts that doug jones had undertaken to combat the fraud just rake off a light upon that and saying with those facts it is not plausible there is no color will basis on even just the facts we set aside the law for a moment on the facts that we're known for playing have to continue to press the case that dow jones had failed in some duty to protect its subscribers from this fraud even much respect i mean look there's i take it the part of the argument or maybe i misunderstood was that at some point there was a failure to comply with this the student to fulfill the student or a duty well i think there's there's two questions one is is there a duty was there a duty to protect all and sundry confound on that that there was not a duty so there are three claims there's an aging and abetting the fraud claim and he said the question before us whether there was on this record or basis to believe there might be a duty that there might be some issue about that and i think that's absolutely a question and i think that when we look at what jake judge recounts reasoning was that he already determined there was not a duty and his basis determining that was that there were there was no argument for an extension of the law you touched upon there was no argument that there was the special relationship between a publisher and a subscriber that would get right give rise to the type of duty to protect that's being asserted here and in contrast to the argument that just because there's not a case that supports them they are therefore entitled to make this argument there are formidably cases that go against them that we've cited in our briefing that say as between a publisher subscriber there is not a special relationship that could give rise to this type of duty so it's it really is a situation where they had cases against them but they were nevertheless trying to make an argument that a federal district court judge should extend you do with the eighty you betty the aiding and abetting claim requires that there's substantial assistance between the publisher and the entity actually committing the fraud so here this group of entities that we refer to as c b s and what the court found was there was nothing to suggest that there was an intent on the behalf of dow jones to assist in the fraud and that's what you would have needed to sustain that substantial system intent intent specific  and that's again where he pointed back to the facts that the plaintiff was when made aware of that made it inconsistent to allege that there was an intent to defraud when you're aware that someone's actively trying to combat them what good would it do for the subscriber for down and whatever and the i don't know that there is a precise benefit to the subscriber i'm not sure that's the question so the checks are being held at the direction of law enforcement whether or not that yields a benefit for the subscribers really not the question of whether or not we are then liable to them if i could go back to the bad faith element because i do think it's very important here and it's needs to be made clear exactly what happened so the cases for alleged overpayment or payment for materials that were not received or that were seized at a higher cost in the case specifically against out jones there are five payments that were allegedly made to for parent two for wall street journal three for parents before mr raven filed his amended complaint he received checks from some entity that he associates with c b s that refunded his money for for three of those five payments he withheld that evidence from from the defendant withheld it completely the only way that it came out was we engaged in nonparty discovery c b s made us aware of these checks we went to plaintiff's counsel confronted him with the situation and the response we got was i'm not aware of these checks at all later that afternoon we got a call back that said i am aware of the checks and oh by the way i have them in my drawer the checks were then produced within pursuit addition of mission about how the checks got there why they hadn't been produced whether or not mr reagan actually called c b s in advance of filing his lawsuit are again told no he did not he's never made any contact with c b s and then he had not made any contact with c b s and they sent him checks is his response to us in his rig in the requests for admission responses that he had not made any contact with c b s we later learned that not to be true that when we pursued additional nonparty discovery from c b s entities they produced to us a call log that very clearly showed mr ray that had contact contacted s and he had contacted c b s with respect to a different publication the economist saying i didn't request this publication i want to refund he was advised if you get a refund it will be four to six weeks four to six weeks later he got the three checks i'm talking about so the explanation that's being offered now as to why he didn't why he did not produce that material previously first it was that we forgot second it was in this is in the record we made a decision not to produce those checks because it undermined our case it would impair my ability to be a class action representative markey it was just three checks and five correct yes it why we did what really impair the reality be class representative he'd still be theoretically out some sum of money whether or not it actually impairs his ability class represented would probably be a question of later in the proceedings my point was he made a decision to withhold relevant discovery because he viewed it as impairing his case when you started out saying this is not just  about you know messed up discovery right because it's ignatian the record that it was mid decision to withhold evidence from the discovery process and i think that's not a garden variety situation unless runners have additional questions you not make the statement that was just described he did not your honor that there's a there's this there's an argument that he did not believe that the checks were relevant to whether he could be the class representative that was made but there was no statement that the checks were deliberately withheld what happened was and and actually if i could just go back in context because i think my opponent is trying to mix together this call with c b s and these checks and there's really no evidence that they're connected in any way there was a call in may where which involved completely different publications didn't involve these defendant publishers whereby mr raven had been receiving the economist magazine  did not order and he called and asked them for a refund because he had not ordered that publication and there's a document in the new wonders where i can get a refund he was apparently being charged for it or something like that there's a document in the appendix which is cited in the briefs which is a call log which describes that the call was about the economist it had nothing to do with the publications at issue in this case and then two months later shortly after the complaint was filed these refund checks appeared and the record shows that mr reagan provided them to mr bray yard and then when discovery was produced by mr prager unfortunately neglected for on the theory that that's not what you know consider relevant discovery would have very little purpose your honor i don't think that's one of the record shows with the record shows this morning you know no what i said was that he neglected to produce the checks for it was a mistake it was a mistake it wasn't because he thought they were relevant the the telephone call i think mr raven forgot about it but he didn't consider the telephone call relevant because it didn't involve the publications that issue in this of law enforcement that dow jones chose to hold those checks i just want to remind the court and we discussed this in the reply brief but this is not something that opponents were aware of at the time that's something that was represented in opponents were not aware of that reason at the time you agree on the colorable basis issues that there was no argument made for an extension of new york well no i don't agree at all i think that the the very reason in fact the quote from the oral argument on the motion to dismiss that opposing counsel cited illustrates that there was an argument for extension because the point that mr rader was trying to make was that he was asking the court to extend the law and to assume that the court of appeals might well recognize this proposed extension of the law and there was no precedent for closing the argument on the precedents that down jones cites involve a totally different type of case where the allegation is that there was a false statement in the publication as opposed to that the publisher was aiding and abetting a fraud to defraud subscribers of money so there was well i guess use your your argument will reserve decision