was allowed to set sail without a compass so to speak and i'll start with the last argument first and that's on the punitive damages phase under california law at a minimum the plaintiff is required to present some substantial evidence of financial condition otherwise there's nothing on which to give the jury guidance of w damages award should be the totality of the evidence in this case was presenting pages from a website of shihan when that you first raised this issue with the district court this was raised below at the motion for new trial and judgment as a matter of law and just to give you am i right that it was not in the real fifty a motion your honor i believe it was because it was post the verdict i have said don't believe it was in the rule fifty a motion so i am confused about how it's fair to them after the jury has already had its verdict and you haven't objected to this to raise this issue that maybe could have been solved earlier if it had been raised because he so let me give you background how this issue came up immediately posed verdict the court inqu of counsel how it wanted to proceed plaintiff's counsel indicated it didn't need any discovery or a break it was ready to proceed immediately to trial so at that moment the jury was brought  to trial i'm a little bit confused about what you're saying post the underlying verdict when suranne jury reached a verdict on the underlying causes of action the court took a brief recess and ask counsel at that point their burden is their burden is as a matter of luck that they need to show some evidence of financial condition it's not a requirement that we raise that before had there been like discussion about the jury instructions or anything about what the standard would be up to that  know that's why in fact the our thought was there would be a break during which there is a process under california law where plaintiffs can conduct discovery and determine what evidence it thinks it needs it can take life federal procedure applause federal procedure is how to conduct the trial but not federal procedure not federal substantive law and what evidence needs to be presented i'm not saying that i'm just saying the process so let's give you that california law requires evidence of financial condition i'm just trying to figure out procedurally what happened how did it come up so early in the game and and proceed really and again i understand it is not the defendant's burden to explain how the plaintiff must proceed in terms of proving a punitive damages case the procedure even it in a court of federal court running yes it's a courtroom can provide for the recess and the courting quired inquired of counsel do you need any information we can be forces the defendant we could be have been forced to provide the financials we could have been perforce to present people for deposition on that issue before they were required corey quired to go into that phase plaintiff's counsel said we don't need that and in fact later in the post trial motions on the punitive damages phase said that they didn't obtain the financial say didn't make that request they did they had that opportunity that the court was not pressing them to proceed to the next phase so the burden in this is federal court state court any court it's constitutional that you cannot obtain punitive damages without some evidence of the ability to bear that because the purpose is to punish the defend it as even as plaintiff's counsel or police counsel concedes it's not to destroy the the defendant so the burden was on the plaintiff to present some evidence of financial condition usually there's a rule fifty a motion before  any time to present any or to obtain any evidence plaintiff's counsel and i cannot but there had been not a motion on this issue there's no it sounds like you're saying there had never been a discussion of this issue yet you yes you can't bring a motion when you have no idea what evidence point is going to present i mean our view was there was going to be a recess for a day or two in which case we go through that period of discovery and presentation of evidence but the burden was on elected to proceed without that information in conceit he didn't have that information and i ask you just procedurally so the plaintiff puts on their case whatever it consists of in the punitive damages phase at the close of that evidence did you move for judgment as a matter of law on the issue of punitive damages your honor i don't i honestly don't recollect whether we did move at that time but i do recall that the court had provided it was going to allow for a post trial  argument a briefing on this issue so i honestly cannot recall in the record whether this was a case of the court saying there would be no prejudice to the post trial motions or whether one was brought honestly this stage proceed did you have a chance to argue to the jury on the question this yes we had a quick we had an opportunity to argue to the jury by the question if you had and you had you had that opportunity to have that opportunity to argue we went immediately that entire submission of evidence was the web page and understanding again if the plaintiff doesn't meet its burden it is not our obligation in this is clear laws well to present evidence to counter a failure  argue argue to the jury at that time that they had not met their burden on the proving a financial condition we did not argue that they had failed to present financial condition because that's a legal  s jack to say wait a second california law has an element that you haven't included in these instructions you know california law has a specific requirement that there must be some presentation financial condition but that's not an issue for the jury yet if if there is no presentation that shows financial condition then they have not met their burden as a matter of the law then that is why i asked if that the close of the evidence did you move on that basis you say you're not  post opposing verdict ruling this understand and the court i think the record were bear this out that the court said we're going right into the afternoon after the verdict i get that but so in season so you brought a rule yes why wasn't the presentation of the website that whatever your wealth was in taiwan that none of it could be attached and therefore you your company your client would be able to preserve all that taiwanese wealth and protected from punitive damages why under the california case law because i don't see it in the statute it's on the california case so why isn't that sufficient first of all there was no presentation of what the wealth was in taiwan this is a issue raised for the first time on appeal by defense counsel was not raised below that that punitive damages wouldn't be appropriate in this case this was in response to having failed to meet that burden that was not raised below but i do want to say that the presentation of wealth in taiwan wasn't even given all that  was presented is the size of the factory that this was a worldwide operation and over the course of however many years they've been in business they sold a certain number why is that sufficient this has nothing to do with financial condition i understand that but why isn't that sufficient under california law california for that very reason california requires some indoors where they require a curtain where they require it i've been struggling to find   that gets you know at least appears to be cited some but there are some appears to be some subsequent case law that muddies the monies that question the adams cases the one that  i refer to but subsequent case law appears the money that you know not money at all what it says is a financial statement is not the be all or end all because you can manipulate financial statements but you must have some evidence  point it's said by no rigid standard it didn't eliminate that you must have some evidence of financial condition so you don't need necessarily a financial statement is not a be all or end all but you have to have some evidence of revenues expenses sales over a period of time ability as you see in those cases ability to obtain loans ability to continue selling in the united states you have to have some evidence otherwise you can't have a constitutional determination and by the way that's case law the way up to the u s supreme court so there's no muddying of the water what if there is saying is we're not going to rigidly say that it has to be a financial statement if you look carefully at those cases actually if you look at generally those cases you have to have some evidence you could be kodak at one point was a very big company didn't mean they weren't going bankrupt you know at any particular time so absolutely there was no evidence which is why they concede that there was no evidence their response is because of the taiwanese inability collect in taiwan he won't destroy shihan but that's not that's not the standard whether it would destroy she hung in taiwan is not the standard xiang could be in a precarious balance so the really fun punitive damages that you're seeking is why just a new trial now actually at this point there is no new trial and that's also under the law if you present evidence that fails to meet a burden that's it you don't get two shots at the apple the punitive damages has to go and i have to have by the way that the magistrate judge himself said that this was not financial condition he expressed that he also expressed a gave him pause at the time again pause then so without financial condition he was right the jury was setting sail without a compass and unfortunately i can't get to the first argument because i need to preserve even a moment of anger and damage but can you also make an argument that since california law does not permit punitive damages in a contract action there was no specific award for the toward action or for the fraud action against which punitive damages could be measured which you can't do is say the way you breach the contract was so egregious we're going to award punitive damages must be something separately done so real quickly the two issues in that case where first all of the damages were based on terminating the district distribution agreement that's what i was you know and i didn't know that well in this is the key we don't have to know that because the court limited the verdict and it was a court that did this we offer days authorities the court limited the verdict to only a general verdict so the key is if we don't know that that that that tie so to speak goes to the party that's agreed we have no way of there's no way of showing that any of the other causes of action had separate damage awards and they didn't they were all tied to the trial that happened did you argue we shouldn't even be having a punitive damages trial because this is just a contract case now under under i'm sorry your honor it is a contract case in a fraud case where the the did you say because there was a general verdict we shouldn't even proceed we're done now so no and here's why because if you can present the failure of damages for any other causes of action you're making an argument today that because there was a general verdict with a lot the sum of damages that didn't say if it was for fraud or contract there cannot be punitive damages period is what you're saying no i was responding to the question as to how it how you can know or not know whether any of the damages separate damages were tied to torts right so you're saying you can't i think this  didn't you say we're done here we should not have a punitive damages case because because at that point we don't know what evidence they're going to present in the punitive damages phase they could have tied in that phase these this distinct harm to this distinct tort and therefore you should award it to the jury punitive damages in an amount that would justify that that wasn't done so that can't be done before you even get to it i guess that that would be only if you find from the fraud claim or the tortious interference i do you go to the question of malice run oppression on the issue of the lump sum damage the court specifically said let's have a damage number for each of the causes of action to address might ease concerns and might he said no we don't want that and that's supplemental excerpts of record thirteen and fourteen to address that point now going to the at the initial point there may be some confusion gre didn't i agreed with they they jumped up first i said fine after that but exactly but the judge the argument the judge insisted on a general verdict no the judge did not want one now going to the first point there may be some confusion on how california has this additional element that was put forward by the california supreme court to address california punitive damages first of all the ninth circuit has said this is not constitutional under our due process clause so it has nothing to do with that secondly the issue is for the court the lower court and the reviewing court to evaluate the punitive damage number it's not for the jury to hear there is no requirement that the operation of a rule that is inconsistent with the rule that was developed by the court for a particular purpose here in adams adams absolutely or what the california supreme court has held held in that case was there are three so what we want to be able to do is we want to ensure that it deters conduct but does not destroy the defendant and the courses you can show that it any variety of ways and we're not saying which way you need to meet that proof that this will not destroy the defendant subsequently cases of all involve balance sheet and courts have repeatedly said hey you didn't you didn't introduce a balance sheet therefore you look stupid or do say anything in our case we're a little bit different and the best case that i would refer the court to is roof focus because in the rueful case it was undisputed that the award many exceed or significantly exceeded the entire net worth of the defendant in that case but the defendant had a pension fund a four five million dollars pension fund and the course it look at that can't be touched by any punitive damages h has assets outside the reach of the core therefore therefore it is even if it exceeds it's not worth it is perfectly fine and they can that's for the court to decide and here we have that exact same situation we provided the court with evidence that taiwan the taiwan court will not recognise the punitive damage portion of this case so what is the punitive damage portion of this wants to do business in the united states they must pay the penalty for engaging in this type of conduct but the ovens we showed you know they say this is the web site why should there be why shouldn't there be at and wealth it's zero the evidence shows no assets because what they do and what's and what i believe it's in the record but what was a deuce to trial is that the way they sell all their machines is by letter of credit we need to issue a letter of another they have any financial ability to pay the punitive damage award well if they want to get the way we want the way we plan on doing it is if they want to continue to do business in this country and they're shipping machines here we can go to those customers saying you can't pay a shihan machine until we get this penalty that society has as a basis on those pieces of evidence of what that business is or may be but it doesn't this is where it's interesting this is the first case i've seen involving an international and it what we do know is united states is not close to their biggest their biggest business they have what is it i think seven they have three hundred distributors in seventy countries they have some you  t build these big machines for people who build other machines which are shipped to the united states there is no reason to believe and i think this is what the lower court found there's no reason to believe that this is going to have any impact on their business anywhere else in the world other than the united states because it can't be enforced other them or doing business here magistrate talked about the number of facilities they have in the number of offices i don't see anything about the idea about the law in taiwan not allowing collection so can you show me where you made that argument we didn't raise that argument below but then again the standard but what you're looking at here is what the lower court looked up  are free to make your own determination on that so i'm allowed to introduce that evidence here because you're not necessarily as as adam sus this evidence is for the district court and reviewing court so you are free to consider the evidence that the judgment is not enforceable in taiwan even though it wasn't before because this is a policy issue set forth by the california supreme court so the procedural to consider the defendant's financial condition if that's the standard jury instruction in california and it seems to me out of the saying that's something that the jury should consider i don't understand why both of you are assuming this isn't a question for the jury because when you read adams and the subsequent decisions what they say it's very similar to the b m w analysis that happens in federal court regardless of what the jury does in punitive damages the constitution federal constitution requires federal judges to consider whether or not that award violates due process what california has done is they've specific required specific evidence or types of evidence for the courts and reviewing court it's absolutely a race but if you're looking at the public policy that is being being underwritten here by adams it's fully served here because what adam says is is there a reason in the lower court  at lesser evidence so that i believe this evidence meets the adam's threshold it will deter but i have no reason to believe it will destroy because they have all of these assets overseas they have all the rob most of their operations are overseas this just affects your ability to business here aba i have with your arguments we don't know anything about the liabilities on the other side of the balance sheet and without that the fact that they have this asset or that us it doesn't tell us anything but what you do know is you know what you do know is the vast majority of their business is immune from this judgment so what so it's a zero ever to say that in taiwan where all these assets apparently are let's say that they're underwater by half a billion dollars because they gave her over leverage whatever we don't know anything about the liability side so let's just assume that that's really the case and we don't know because you didn't bother to take discovery that as your opponent said you were title to take so if n today continues to sell multimillion dollar machines all around the world to lots and lots of people and the impact of this punitive judgement on any of that business is zer so there is no way this judgment alone could have any impact on sea home if she hadn't had assets in here except in your argument had assets here and we took assets here they had then your argument all they had their substantial their plant lacked as you just said you're going to try to stop them from delivering products going into the future and the issue was whether or not whether or not we're ever ever able going to be able to do that we can't what we can do is stop customers from paying them for machines but we're not to be able to seize the machines maybe that will destroy them because they need that money i mean i don't understand how you can both collect it also say it has no impact on them because because they do the vast majority of their business outside the united states there's been no showing there's no evidence and no reason to believe if you look at the claims here is we weren't doing much business in the united states and that's why they terminated us because they were doing such better business everywhere else and they should be able to sell the other people here that clearly shows that they're not dependent on us business and they don't understand why other countries can sell a lot more than the united states so the decision here is do you have a reason to believe that this judgment will have any impact on that company's viability and there's no reason to be because even if you looked up that they terminated us they sold little or nothing into the united states and only sold it to our customers it's not like oh we're going to go take a three week break to do some discovery on punitive damages in order to you know make the proof secondly what did you ask for one day for one deposition that the typically  did coverage or in the discovery phase of this case then before the trial even happen while it's for the fundamental reason that adams and subsequent cases held she hong is a privately held company in taiwan i'm go they don't have i been that i doubt they have audited financial certainly think so how i have no way of knowing you could have asked and then have them respond and if they don't respond maybe you have some argument that there should be some presumption against them or something but if you didn't ask how do we have any idea maybe they would have answered you i agree i could have discovery there could have been requests for financial statements at the time when we're at we're on friday afternoon the jury wanted to go home there was no five hundred employees we sell thousands of these machines everywhere all over the world we were a very large company they were the largest exporter of the evidence is well they're the largest exporter of these types of machines in taiwan  so that was that was our evidence we didn't have any we should could we have that evidence yes under rufo do we need that evidence no under adams do we need that evidence no because this  judgment cannot touch any of the actual assets of this company so the impact of the punitive award on their assets is zero it at best we can hope in the future of preventing other costa merced from doing business with them that may want to cause them to pay the judgment but i don't think it's actually if it's all done by letter of credit i don't believe we can  moments when the money goes across the sea we can seize it and as the evidence is in the record is if the title of above the machine transfers in hong kong when it hits the dock here we can't seize that machine  most of what counsel just argued is off the record this idea we're continuing to sell there's no evidence was presented to the jury at that time about a continuation as so what sales or even worldwide whether the sale of the verdict said they could present it to the court that's why doesn't need to be in the jury instructions no and this is where my second point is this is where i failed you because i didn't understand your honor what you were saying the instruction says the jury can can must consider the financial condition what i thought you were saying is there should be some instruction on what that evidence must be because california law says you must have some in addition a financial condition it doesn't go that far legally that's just a legal standard have you met your burden and the jury had a web page that was it a web page that said how big their facility is in taiwan that they have worldwide distributors and the evidence to the jury why don't you say there's an element of the jury instructions there's an element they presented no evidence on where we argued to the jury that there wasn't any evidence sufficient to to meet their standard but that's not the legal i mean that doesn't do anything the jury could say we disagree we without an instruction that says which maybe that should be the case in the future you have to present financial statements and read the new sourses obligations your honor i have done punitive damages phases you ask for a recess of a day or two  the courts give it juries live with it and you can get discovery right there we had the personnel that were there present to conduct the discovery during the pre trial phase they could tori's they could have taken depositions could as asked for leave of court to get whatever information they want to determine the impact their response was we don't need it we're ready to go now and how can we say that a six million dollar ward which closely matches the underlying verdict really just wasn't hey let's just throw in six million when i say setting sail without a compass i'm not a say a sailor but i know that's dangerous and that's what happened here thank you counsel thank you