all right our second case for this morning is cow bill against keller williams realty and when you're ready mr silver let people clear out of the courtroom you may come  and leaders l l c which is a business that she owns with her husband the the issue in the case we believe is very narrow it involves enforceability of a liquidated damages provision contained in a settlement  agreement the district court ever gated this provision and we respectfully believe that it was contrary to the facts to texas law which the parties agree apply and the district court agreed and to  some very important public policies so it seems to me well what your take for court was that the claims for professional opportunity future income  and barest man and reputation were too speculative and remount to constitute actual damages and that there was no evidence of any find that the liquidated damages provision it least in part was in it in forcible in that the damages were difficult to measure at the time of contracting if not impossible to calculate but at least let me intervene here maybe this can inform also your answer to joe drovers question it seems to me your biggest problem lies in texas law  pains me to say so being from texas i think that that is the issue because many jurisdictions will simply look at a liquidated damages clause at the time it's entered into and assess it from that light but texas appears to take a second look at the back end to see if it remains a reasonable measure of damages in light of what the actual damages were in texas doesn't seem to like it when the gap gets too big and i think that's what the district court judge was looking at that's why he was taking a second look at the factors the judge rolls in or is talking about and if that's what texas law is then whether we like it or not that's the law we follow judge and we have no problem following that law and we think that under the law that the liquidated damages provision is in enforceable part is correct one at twenty million dollars project was never asked for twenty million dollars never and what the court said is well i glean that because there were two thousand disclosures and it's ten thousand dollars per disclosure you're seeking twenty million we  not what we were anticipating was we moved for partial summary judgment as to liability and then we felt that that if we prevail we then would move as to the issue of how many occurrences there were which really is the issue do you think there was maybe one occurrence now judge that would just be ten thousand dollars and we probably wouldn't we would not be sure of that and that's really what this boils down to is this issue of occurrences in our opinion if you look at the helix case it's almost the same as our case you have a agreement you have a confidentiality provision you have a breach it was provided to two people and they submitted affidavit saying we have nothing to do with this doctor's recruit ensuring we're on involved we destroyed this we never talked to anybody about it it had no impact on us the doctor who was the plaintiff said i don't know how this affected me and nevertheless under those circumstances the texas appellate court enforce this provision we have in this case our facts are better in the sense that keller williams never talked to any of the two thousand people that received this disclosure as far as we know maybe they did talk to them and got bad information but in the record in terms of their burden which is the key it is their burden to show that the actual damages and the liquidated damages that there's this enormous gap we don't understand first of all how the court could find that there were no actual damages how this fall apart after these disclosures and it goes through a number of things and acknowledges as well the difficulty of proving a negative it's very hard for one side to to do that and that he does find that there's more than just an absence of evidence i think he tries to put the burden on keller williams judge i i believe that the court respectfully made various statements in this ruling that are a little bit confusing because he does say that the burden is on keller williams but then he goes on to say well look at what keller williams did they asked the plaintiffs what are your damages and she said i can't calculate them however but were william supposed to company supposed to meet that burden under texas law to show that the opponent actually was not injured or perhaps you know maybe actual damages or are nominal or something well it depends on the case of the  law is that you have uncertainty everybody agrees on that it's reputational damage lost opportunities and the burden to demonstrate that is shipped it's allocated to the williams it's not allocated to us we did not have to prove error in applying law that was relevant to a prebreathe clause when this case involves a post breach clause but if we were to hold there was such a distinction in the law why would this case be considered a post breach situation the breach here it seems to me involving the disclosure was unknown at the time the clause was agreed upon and occurred after that agreement so the nature of the breach was unknown at the time doesn't that make it a pre preach prevention as opposed to a situation for instance and ball where the breach had already occurred and the  about the damages if i could go back up but but you wanted to answer your question there is a law and it is derived from the will list and treatise has been applied by some ports that where there is a settlement agreement a conflict of a court that it should be treated differently because at the time the parties are together and are trying to figure out a resolution of an underlying dispute and the concerns a court may have about well you're setting up a provision up front that refers to damages and that there has to be some activism it doesn't apply where you have here a party that is self described as the largest real estate company in north america with ninety thousand agents multiple lawyers teams of lawyers working on this and they agreement itself is an agreement so it's contract number two and one of the provisions of the settlement agreement was the confidentiality clause in the settlement agreement and so what's breached it isn't anything about contract number one it's hoping to have a range of occurrences to allow the courts to select one we did not get to that point but it terms of the the issue about the the a application of well it's been our point really is that the judge in ruling to what degree did apply this comparison of the underlying case and the settlement to the liquidated damages which is similar to what's done in willesden when you look at the underlying case but you look at the claims which we assess which we contend are very very valuable claims that were settled for a million dollars in large part because our client wanted it over and did not want this further disclosed and that's inherently agreement and the bargain was here's the money no more talking about this or why i can go forward with this business which is based on referrals so let me ask you this question though looking at the district judges opinions at the bottom of page five carrying over to more than half of page six is the language of the disclosure document that you're concerned about all of that seem to me to be matters of public record except for perhaps the last sentence i guess just with respect to the last sentence so that's what we have to focus on isn't it in terms of assessing actual damages everything else is public no your honor it is public and it's public that there was information submitted to the f t c and it might be available if somebody went to look for it as opposed to sending this disclosure directly to these people but that they're you run into the fact that they're required under all these franchise protection statutes to disclose things like this your honor maybe not the last sentence i don't think they were yes wired to say anything about the amount of money but there's most of this they have to disclose there's a real issue about the disclosure they just say w we have to disclose and they never demonstrated with these two thousand people that they should have disclose this information to them want they never did it but also very importantly in the district court agreed to this was important is under the settlement agreement to the extent that there's disclosure there's an obligation to the party justice closing it to have the recipient sign off on the confidentiality paragraph twelve of the agreement they did not do to do that and and just of course found that that was a breach notably in in this disclosure it says right on it we encourage you to take this disclosure and show it to other people to show it to lawyers to show it to accounts it's right in this disclosure this in from there's actually nothing in the record  that these two thousand people knew any of this information and the confidentiality does not apply to simply to the settlement terms it applies to the allegations in the case and i really important i guess i'm just having a lot of trouble thinking the case was under seal and it was lifted in connection with this appeal but this this information was not public through the lawsuit it was public through the f t c to the extent that there is a requirement and we and we agree that that's in compliance with the contract to the regulators have potentially out there and you can access it but the point is what was contracted for here was you have a business a real estate business it's so heavily dependent upon referrals that's how our client became the number one sales person there she has this network of people it's growing growing and she doesn't want this particular disclosure going right directly targeted to this person who could be a referral source as opposed to that person going and looking potentially and finding this information that's what was contracted for that's what they agreed to now and that's what they breached so i have a completely probably non pregnant question that that why does it hurt her for the other franchisees to know that she won a considerable settlement from keller williams i could invision it hurting her you could have a situation where you have a realtor having lunch with someone say no did you hear janet got a million dollars from our franchise or and not liking it and not wanting to upset the franchise or thinking that she had made all this money there are so many reasons that it and that the issue is judge that it is not possible to measure this damage it also in our opinion is not reasonable to say that there were no damages there's a definite difference between being unable to measure the damages and there not being damages and we believe with the end of the day what harmed us is the arrogant behavior of something what we would like is how would that be well your honor the ten thousand dollars we believe per currency is is fair and reasonable and if the court agrees that it's a matter of how many occurrences and what we had intended to do if we question what do you define an occurrence as your opponents say maybe it's two hundred million if it's two thousand disclosures per year times ten years what did seem quite extreme fear i don't know what it depends on what we're claiming and so what we would do is were hoping to do is to say ok there's a way different ways you could look at this so give us some of them well some of them are as an example you have say five maybe ten disclosures to various people who are part of a franchisee each one of them getting a disclosure perhaps that should count as one that would be one matis or one disclosure to coldwell banker in one disclosure to yes somebody else and we would see no trophies we would try to have that be one that would bring the number down substantially we'd have another one where we say well in this instance and they've admitted to this you just sent us off for informational purposes you have no no basis to say that it was required so we could put together the two different disclosures that clearly were not required and shows that that the issue is and the concern we have is how do they benefit from multiple breaches that's the problem we have is they breached it too much and there's something unfair about that and we're conscious  hundred million dollars is not reasonable we would not ask for two hundred million dollars but frankly twenty million where you have a woman making three million dollars a year and her career is greatly affected by this and there is at last thing i'll say a kind of my lights on is there is the plaintiff's testimony which the court just regard where you have some financial information is provided by keller williams about these gross revenues but the profitability of the business went down and there is testimony in the record from the plaintiffs based on her her experience her background it's credible testimony and it does it end of the court disregard and we don't think that that was legitimate research the rest of my time  good morning your honor i would urge the court to keep two points in mind in deciding this case first the reason that the district court concluded that cleanup's demand was for twenty million dollars was because he ran the math provided to plaintiffs and also that the plaintiffs provided to this court the plaintiffs i have taken the position that page eighteen of their reply brief as they did below keller williams contractually allowed disclosure to governmental authorities did not excuse that two thousand and contractually precluded confidentiality breach us that was the number in their header and in their argument that is the same position that the plaintiffs took below before judge purports on the cross motions for summary judgment their claim was twenty million dollars and that appears for example at docket ninety five page eighteen where they again say there were two thousand breaches because keller williams made this disclosure not just to the regulators but to the franchisees whom the regulators protect and over there only asking for twenty million it did seem to me quite a stretch for you to take the position in your brief that it was two hundred million i mean we don't have to make them completely unreasonable and it does also seem to me that if texas law allows this look back you know at the time that the liquidated damages are sought i think that's the essence of this problem i don't think anybody thinks that this was all that easy to figure out i think initially ten thousand dollars was a fairly decent estimate of what damages could be that's what you look for in liquidated damages that when you have this look back then two things become critically important one is how good is the evidence that keller williams presents out of the lack of actual damages have to be and i think there's some problems with your evidence and the other problem is what what is that request because if if the delta if the the difference between the request you know was a million versus ten thousand maybe that would be one thing one hundred thousand men i can think of all sorts of numbers and as you play with it the look back becomes more more and deferential to the clause yes rather and for that reason i would like to focus on judge question about what were the actual damages here judge course properly placed the burden on keller williams and he commented in his opinion that the keller williams board that burden keller williams had to move to compel twice for if the natural documents including the tax returns and in the information that discovered it concluded that there had been no harm to the plaintiff so the court unpack that in two wa first to your question what was the logical harm of someone knowing that ms cottle and her franchise had earned a million dollars through the settlement and the amount was required under  c f r rules of the f t c rule because it's immaterial term of a settlement between a franchisee and a franchise store and all the footnotes explain that the amounts are included in that but in examining what was the logical harm the court said the court can discern no logical harm that would befall the plaintiff from someone knowing that she had achieved a settlement of over a million dollars in the settlement for that reason causation w serious problem for the plaintiffs a low because all of the damage that they were asserting came from the their terminations as a keller williams franchisee after that was just launched your usual usually confidential settlement between a franchise or and a franchisee be disclosed and that is why and in this case we understand that the exception was written for disclosure to regulators and governmental authorities as required by law at that point the information became public under the applicable statutes and the sun sunshine laws some of the regulators including minnesota and california posted the f t v s on line and it's available from the minnesota department of commerce i check yesterday to make sure the link was working and so this public information the the regulators deem important for a franchise the approach spect franchisee to understand what the relationship is between a franchise the war and its other franchisees it's based on the blue sky laws and it's material to their decision whether to invest in a franchise so why why did the split between insurance company and keller williams have to be there because the description had to be of the amount the franchise or paid under the regulations so that's why they had to specify what came from whom documents that type of aspirational damage claim is appropriately disregarded and that is exactly what happened here if i can point it out to the court because in addition to the lack of the logical harm there was lack of actual harm that the claim of injury for example we take lost revenues ms cottle testified that she had acted in the year of the disclosure of two thousand and thirteen gross revenues of more than two million dollars but she only earned half a million she surmised that she lost the difference one point five million but the actual unrebutted sales figures established that she and her company received two thousand and thirteen gross revenues the year of the disclosures not of five hundred thousand but of two point seven million that was two million more than she expected that charges that page in a setting where but where keller williams and its executives vehemently denied that there had been any damage or any justification for the underlying claims so the settlement is the settlement that resolves her terminations as a keller williams representative of some tight shand she's had that administrative role as i recall she did so that's what that's settling and then in the course of those discussions there's a question  fifty thousand and ten thousand some numbers they come up with a number and i don't think we look into parole evidence about that it's in there and it's ten thousand so the real question is why  in the face of all of this vagueness why don't we just enforce the liquidated damages provision that's what there for there is certainly some loss and she makes the point which i think has some force that you can look at what she did her but she thinks she would have earned more and texas examined that in detail in the two thousand and fourteen opinion in the s p l case in that case the court said we take this look back and compare the damages stock which in this case for twenty million dollars for two thousand breaches and we compare them to the actual damages suffered and where there is an unbridgeable chasm where there's a discrepancy we invalidate the liquidated damages clause and the plaintiff then pursues actual damages in the s p l case the actual damages were six point one million and the liquidated damages would have been nearly thirty million on the challenger to such a clause to investigate the actual damages and demonstrate the on the reasonableness which is what we present at the court with here but less but but the  fourteenth century i don't like texas ever has i mean usually people are allowed to agree especially you know these are business people reluctant gree what damages will be if there's a bridge you think you were due to our perception of circumstances fraud or something to say well you agreed to pay this but you read a texas looks but we're whereas here up thirty six twenty million dollars and have said has suffered no discernible actual harm from the regulators and franchisees knowing that she recovered more than a million dollars there's an injustice that texas law guards against and that is what why is half a day demonstrated that the amount was not a reasonable forecast of the just compensation at the time of contracting as opposed to let us say evidence that the amount was not a reasonable estimate of the actual damages after the breach but i don't think there is a challenge in this case to judge a chorus his conclusion that sitting at the settlement table for dispute number one this seemed like a reasonable number for an unspecified breach it applied to any kind of breach any disparagement anything at all which to access takes says as a caution so really where we are is at the look back the third step that texas imposes which is to measure the proportionality between the actual damages and the liquidated damages side so the biggest problem there really is that it  keller's burden to show that that disparity was wrong and there was not very much evidence in front of the court on that point let me see if i can provide some record cites that that may help guide through an extensive transcript because when keller williams obtained after the motions to compel the financial documents and deposed the thirty b six witness what we learned was the actual on rebutted sales figures that were untethered to her to miss cottle surmised that she had lost money in two thousand and thirteen she had earned two point seven million which was point seven million more than she expected of gross figure though yes it is and on the net revenues which follow the statements of fact described as the boldest misstatement of all because she claimed a reduction from two thousand and twelve to two thousand and thirteen but counted the million dollar settlement payment as part of her net revenues for two thousand and twelve so if you take that out her earnings actually went up in two thousand and thirteen on a net basis and as this court has probably noticed at pages nineteen and twenty of the opening brief from the appellant's the increase in net expense that she's describing of having to pay agents more and losing agents came from the terminations of her franchise in her words from the  i think the word is the last of the affiliation with the keller williams brand which happened at the end of two thousand go back for a second to judge rove news question if the agreement is sensible defensible and so on when it's made would have to be some extraordinary subsequent event unanticipated the by the parties that made now obviously we've had these cases years ago you can have a situation because of a natural disaster wiping out say the defendant or the  it's just not possible to it's not reasonable to try to of forces agreement but if nothing happens and you have resize apparently not your honor it's not in in the f p l record nor is that anything that the court looked at in texas so they took this third step look back and judge her course did here following exactly the reasoning of the texas supreme court and concluded that where there were no actual damages where there was speculation as to last for furloughs no names no records and that what the district court concluded and that is what we found because for example plan of claims that others thought less of her when in fact the evidence at docket one twenty point one was her own admission in her own words that she had an incredible reputation ranks as one of the top agents in the country sells more than ninety million dollars in real estate it isn't on her website yes it is yes exactly so the allegations of damages are are essentially mythical they are speculative as judge rovner pointed out and in her questioning there isn't even anecdotal evidence there was one note that she had been asked to sell an interest in the palo alto franchise but there was no evidence that she ever did sell it that it what the price was was it again or a loss none of this i thought you also were making the point that she had to sell it anyway because of a conflict of interest related to the dispute that was resolved at settlement not because of anything else if she's complying with that contract yes and so the court did not abuse its discretion in looking at this really go what they're doing with this i move them peacefully there is a case cited in our materials i think it's the mcgill case in which there was a real estate closing document and there was a penalty of returning three times the earnest money in a court invalidated invalidated that is on a reasonably disproportion to any actual damages so judge the course applied settle texas law when he and validated this liquidated liquidated damages provision and  he also had other reasons this court could affirm him because the dissemination of already public information should not be a basis for cognizable damages and the only disclosures here were of material that had already become public and there's there's one issue i just want to mention before i sit down and that is i was surprised by some of the statements their plaintiffs made in the first three pages of the reply brief i believe they accused us of misleading the court playing fast and loose with the record and engaging in a game of three card monte and i have practiced before this court for many years i can assure the court that our started our citations were meticulous including our citations to the december fourth conversation before the deal was signed where counsel for the settlement counsel for ms cottle and settlement counsel for keller williams had a conversation in which miss coddles counsel said why do you need this anyway you're just going to have to disclose it in your f t yes in fact they did we have  say i might have misspoken but what i intended to say that we have not asked for twenty million we have spoken to them that there is two thousand disclosures we believe it should be twenty million but your honor i just a couple things on tax how are you asking for the million right now well i don't know if the appropriate place to do it but we did see yesterday now we believe are entitled to twenty million we have in a case before the district court we believe that it's not all or nothing and the only it's appropriate for the court to try to estimate the actual damages and compare that with the twenty million i don't think it's reasonable i believe texas law under certain circumstances requires it but not here because it's only required were actual damages can be shown in the helix case it's right on point there's no suggestion there that damages have not been or the actual damages are insufficient it that case is it is virtually the same factually the only difference is we have multiple breaches multiple occurrences and that should not be a benefit to keller williams the f b o case the reason the liquid d damages provision was invalidated was because of the forecast that was the reason the forecast was if you breach you have to pay the lesser of fifty dollars per some unit or some figure a market value under texas law as control here i believe the court would have a hard time with a twenty times multiple but i don't believe it's that hypothetical is reality because the actual damages cannot be demonstrated here because of the reputational injury lost opportunities cannot be measured as the parties agreed up front they agreed and all we want is that keller williams be bound to that they agreed that these damn just could not be measured then after the fact they breach massively and they say you can't measure these we know we can't it's your problem not our problem and they did not meet that burden if you look at the helix case it's impossible to reconcile that case with what judge court acted in our opinion  e to measure them i believe you'd have to go to two thousand people and the people that they then communicated to or encouraged to communicate to no you don't have to do that it's just you just interview  going to go to everybody over a hardship because the real estate inherently is unique you have commissions that vary per earth the property so it's just inherently this this is a situation where it's as difficult as it can be to measure that's why we have provision and everybody agreed and they're in the real estate business and they know that the largest real estate company in north america is trying to get away from a contract we just want to enforce the contract they can write thank you very much thanks to both coun