those all the plaintiffs are retail investors who have played a single count for breach of contract against their broker t d ameritrade there's all the plaintiffs allege that t d ameritrade promised to quote consider a wide variety of factors and quote all orders submitted by t d ameritrade retail investors were ready to one of three order internalizes or exchanges all of which did make payments for order flow and as a result investors orders were subject were expose rather to high frequency traders and as detailed in the complaint at high frequency traders are toxic as counter parties for retail investors they're more sophisticated they move more quickly as a result play have suffered from fifteen years ago in the green case individual transactions of government securities discordant would be measured by the order flow payments that defendants wrongfully received as a result of their know in an opportunistic breach of ways yes right using a lot hold the reason in and out in the holding went to whether so called hold or claim so prior to the supreme court's decision in blue chips at the time of the contract holder a holder claim is something different a holder claim is in the context of an investor who holds securities in a public company our clients are not investors or at least not soon in their capacity as investors in t d ameritrade they're suing in their role as customers and so what dab it was talking about was prior to nine hundred seventy five in the supreme court's decision and blue chip stamps it was possible for an investor someone who would purchase shares the company later makes a misrepresentation and the investor argues well i held on to my shares in reliance on that misrepresentation dab it was addressing whether that they're your plan your clients were holders of investments at the time they entered into the relationship and they were looking to different position than than the other people you're here from today we're challenging only the misrepresentation element and it's because this is all the plaintiffs we were the first to file and as all the plaintiffs alone allege only a breach of contract claim and fifteen years court made was combining all of the actions together so at the same time in the same order that it held that our case was precluded under sluice if you read the facts section of the district court's opinion it's drawn entirely from a different action which is the klein case filed after hours which expressly did allege claims under the federal securities laws and so i think the district court went astray in reasoning that because it was possible to plead a federal securities claim under the same facts therefore our claim in the other appellants who are here today connection with prong it didn't address the misrepresentation prong here that not our our clients don't concede the in connection with the problem we argue that there's simply no misrepresentation and if you look at page each complaint and each complaint has to rise and fall on its own merits and so if you look at the only place in defendant's brief where they dye and identify any allegations from the zola complaint that they say state a misstatement or a page twenty the first and i think it's really their core argument is the contractual promises self and i think that simply proves too much if it's the case that any promise in a contract is really a representation and then you simply couldn't have a breach of contract case  salusa and then the second is our allegation that investors in fact didn't know that their orders were being sold to the highest bidder essentially and again if not disclosing a breach of contract actually an omission then again it becomes impossible to prove plead a breach of contract case in the securities arena without falling without falling under salusa that can't be the law and i think the second circuit decision and cain gate state law of duty been alleged there was actually independent of the contract terms and so it really was a fraud or misrepresentation claim in disguise here our claim is very closely tethered to the language of this is the language of the contract we're not  required t d ameritrade to consider those factors on an order order order by order basis and that the evidence suggests that's not what happened so i think it's different from holtz in that respect in goldberg they went even further goldberg had the original complain close by simply noting that this this is far afield from what this is that's right so so goldberg was there was an allegation about a breach of the duty of candor and again that's not present  here i'll just say if the court finds promises made in a contract or actually representation is for purposes of salusa it's effectively immunizing brokers mutual funds others in the securities industry from class actions involved in their contract and i don't think that's what congress intended covered security the misrepresented misrepresentation must quote be material to a decision by one or more individuals to buy or sell a private security and reconcile that with the statement in debit the statement in chapter that we do not modify d jedward repeatedly emphasized that the transaction to look at when determining whether a misrepresentation is in connection with the purchase or sale is the transactions involving the securities themselves the court stated there must be a connection that matters with misrepresentation makes a significant difference to somebody is the solution to purchase or sell a covered security now that the sentence had borne argued for a broader test that was rejected by the majority but wasn't supported by dab it was loose would doing i guess i would look out the other way around is that the sat is saying look at these things look at the way the child born narrowed the holding in debit and i think what's significant  hundred sixty six i believe it also has the material it's a dab it also held the materiality stand which in fact in dab it never used the word material but it was making that that clear and so the court with the every one of these cases concerned a false statement that was material to another individual's decision to purchase or sell a private security that it said page ten sixty seven each of these cases involve purchases or sales induced by the fraud and so if i can make three quick points about the relationship with debit i think the court said it wasn't modifying that but i think it's fair to say that it was clarifying that the connection must be material to the decision to purchase or sell covered security and i think where it was not  only well that the claims involve a misrepresentation or a mission is what is alleged with regard to not that the purchase or sell a specific securities but to induce the investors to use t d ameritrade as a broker which is a separate  say ok you're going to be my broker but i'm not going to do anything for two months maybe and maybe i mean that's not likely that's not a realistic scenario if you're going to go to a broker because you want to stop an account you want to start to trade and you do other company has nothing to do with t d ameritrade its promise to use best execution for all trades and that's that that's the difference here and that's where we're chadron talks about a connection that matters to the decision to purchase or sell securities and that's just not not the situation here that's not enough for the question this is and these these kinds all relate not to the price of that the cost or the charge to the customer it's the way the traders actually execute it correct it's both so the breach of contract claim  fraud where there are cases that are talked about merely enabling the fraud or that the somehow the price is that that the misrepresentation had some impact on the price but in order for there to be in connection with the misrepresentation has to induce the thick challenges that the or when to speak about the sluice or requirements of misrepresentation and omission and in connection with for the misrepresentation omission i'm going to reserve the majority  time for rebuttal and adopt the argument of counsel for zola on the in connection with prong briefly because we were just talking about it i would i want to point out that  horn in connection with requires a cause ality element there has to be causal connection and material causal connection between the fraud and someone's to decision to purchase so  but the misconduct violating best execution isn't connected with his decision to go out and buy microsoft to take the risk of a microsoft security to pay the price he agreed to pay for the microsoft trade but that relationship did not cause is not material to the plaintiff's decision to bar any particular securities and what i want to point out is that t d ameritrade says the same look at their ford it has to be material to someone's decision to buy particular to security not material to decision to trade through t d ameritrade for scottrade versus some of the broker it has to be material to i want to buy microsoft because it fits within my my security buying strategy because i like the price because i like the risk it has to be material to that decision not material to who you can trade through not case and i would ask the court to take judicial notice of this document this is their rule twenty six f report defendants agree with us defendants say that the misrepresentations concerning best execution were is twenty six f report i would ask the court to take judicial notice of this on its own motion it is document one twenty two filed by the parties in the klein case in the district because that's where so much of the time was spent the language that is in connection with what we're talking about here is the guts the very pipes through which trades in what are admitted to be covered securities happened they're claiming that we're making and i'll get to this in a minute what are clearly misrepresentations omissions or engaging in deceptive conduct with respect to the mechanisms through which trades their trades in covered securities happened if in connection with has any meaning at all related to the english use of those words that surely is in connection with and i would add also judge logan where you began  earlier about the fact that what they're seeking to recover our discourse many of the fees that only happen when true when trades in covered securities actually happen further punctuates the point and that's i think why not only did the seventh circuit say in fact out loud and holds that allegations relating to best execution are clearly in connection with forced looser purposes but in it does it usually says so but what it never got us never does is it says i'm not doing it but then on the down low it doesn't and my mind you it's not only to have it that would the plaintiffs position on in connection with which strike a to very important prior decisions of its of its own silently while saying out loud it's not changing anything would be a remarkable holding of this court and i think it would be i would be and and with and with respect to other courts that are cited in the briefs that they say you know chad born broke new ground it's true chad one broke new ground but a broken ground on the question that was in front of job which is simply whether a claim that doesn't involve anyone except the fraudster have obtaining direct or indirect ownership interest and covered securities can be covered by salusa here that's not an issue everybody agrees with that  so again i just don't think there's anything there with respect to in connection with asperger materiality which was the subject of the for a last point i would say this what matters from the point of view of materiality in a in any in any kind of fraud or negligent misrepresentation claim is which are real with respect to the decision and here it would be with respect to the decision that's in connection with the is the decision to go with t v ameritrade the f c c in their amicus brief and dab it pointed out as judgment lawyer pointed out that if you don't you don't sign up with a broker just to sign up with a broker you sign up with a broker to engage in transactions in corporate securities and so anything that has an impact on that decision and it in that material to that decision is material in connection with a trade a covered securit transaction so what do you say to the argument that there could never be a breach of contract calling yeah so that's what i was going next i don't think that's true we don't have an issue with freeman we don't think there's anything there's a problem with freeman freeman was a case about cost of insurance and what what the phrase cost of insurance universal life policy means and sure there are lots of ways to breach of contract to do it there are lots of ways to do it what matters in every case as this court has said over and over and over again and what every other court agrees what matters is not the label breach of contract or as as you heard from the zola plaintiffs this morning pure breach of contract you know you don't you know you don't change the underlying conduct that's alleged to be lawful just because you slap unlawful that's just because you slap a particular label on it in freeman the nature of the dispute was everybody agreed cost of insurance was the standard but nobody was sure  whether what was being practiced was in fact the kind of industry standard for what cost of insurance means there was a it was a speech about that that has nothing to do with saying i'm going to do x and never never meaning to do x and the conduct complaint this is why it doesn't matter that the district court resolved this case all it wants all of these cases all once so that's all we need to high frequency traders in the market centers that work with them are engaged everybody agrees with that and in fact in their reply briefs the plaintiffs all accept that the practices at that they're alleging are a problem by high frequency traders in the market centers are a deceptive or manipulative feed the trades we feed our retail investor flow to those market centers to the h f t's because we want the money we're willing to chase the money that those entities are willing to pay for it we're willing to put our interests ahead of our obligations to our customers this is their obligation and our our own contractual obligations now and we do this knowing that that's what we're doing and we do this with  eyes wide open and we even according to the allegations in the complaint try to keep it as secret as possible now now the court in chain gate and other courts have made clear that if you're complicit in the deceptive or manipulative conduct of others you're covered that the claim is covered by salusa and here i would say it's even more than the allegations even more than complicit we're we're the we're doing this we're participating actively by giving the fuel to this engine of manipulation but the plaintiffs are alleging is going on that's the allegations obviously we dispute that and all of that but that's the story as a story of all the complaints and when that when that kind of underlying contract and just says it's a breach of fiduciary duty it's still a mage a misrepresentation or omission or deceptive or manipulative device and you didn't hear anything about deception or manipulative device from the plaintiff there earlier ultimately that's all you need to know to affirm the sluices judgment below i'm happy to talk about conflict preemption if your honour's would like but we think this is a pretty solid sluice a preemption case we think it's a very very strong conflict preemption case as well in light of the f c c long study of this issue greater than twenty years consistently eyes wide open coming looking at the fact that they  recognized that there is a potential for conflict of interest but they also recognize the potential for efficiency and competition in the market for execution of traits that they want to take advantage of and their solution across a variety of administrations for for well in excess of twenty years has been disclosure increased disclosure over time and i can talk about how i think i believe that the very potentially varying state law standards and especially potentially  standards as applied by juries and trials would mock with what the f c c considers a very important uniform national system that's going to promote efficiency but if there are no further questions  every breach of contract or state run of the mill for you sherry duty case and that's what we have here in fact it is right on point with the ninth circuit decision in the freeman case that was a breach of contract case where the parties disputed does the conduct violate a certain terms of the contract or does it not plaintiff said the conduct violates it and defend it said don't have to prove misrepresentations we don't have to prove non disclosures all we have to prove is that we're right the conduct is a breach or their right the conduct is not a breach so we don't fall within the misrepresentation or omission requirement of the  that requires you to act in a certain way go out and investigate which of the training then use are best for its client and there's particular steps that the common law requires it just to take doing this trade by trading you're in no or trial no we're not doing a trade by trade they can group trades but for the trades as grouped they nonetheless have to take certain steps to determine the best trading then you are allegations and what we would prove a trial is that they did not take those steps and that they violated best execution t d ameritrade position is that its conduct did not violate mr execution so it's not going to be with a saturday to say what they disclosed or didn't disclose i cannot think of any difference i cannot think of any difference what you or your porn assesses whatever label you put on a fraud misrepresentation breach of contract whatever it all gets down to what you're just talking about best execution of the security how can you have an execution that isn't in connection with the purchase a sale of a security well that's going back to in connection with requirements as opposed to what is the underlying conduct underlying i mean you you're putting a lot of different labels on it but at the end of the day it's best execution everybody seems or grab that and execute any only execute if you buy or sell security  what i meant is that i think you're not talking about the in connection with requirement or sluice as opposed to the misrepresentation or mission requirement for the in connection with i think you do have to slice it as soon as we  say you can't just say well these things are connected to approach her and the selection of a broker is connected with your ultimate purchase yes but i think the charge parties you have to you have to look with more discrimination you have to look to not something they can disclose away it's not something they can wave by law they're required to to use best execution and the customer doesn't even have to know that duty exists they still are obligated by law