[00:00:01] Speaker 05: All right, Counselor, you may proceed. [00:00:05] Speaker 05: Good morning. [00:00:06] Speaker 05: May it please the Court. [00:00:07] Speaker 05: Jonathan Ellis on behalf of LPL Financial. [00:00:11] Speaker 05: FNRA Rule 13804 creates a narrow exception to the otherwise mandatory arbitration regime for disputes like this one between FNRA members. [00:00:20] Speaker 05: This proceeding began in July of 24 when a mayor prize invoked that exception and a purported effort to maintain the status quo [00:00:28] Speaker 05: until an arbitration panel could be convened to hear its assertions of trade secrets misappropriation against LPL. [00:00:35] Speaker 05: The district court immediately and we think rightly recognized that no such injunction was warranted, most obviously because the alleged misappropriation occurred when some 30 advisors had transferred their business from Ameriprise to LPL between 2018 and 2021, between four and seven years ago. [00:00:53] Speaker 05: as the district court put it, the ship has already sailed and there is no basis for concluding that any imminent harm to Ameriprise's trade secrets is likely. [00:01:02] Speaker 05: Nevertheless, one year later, the district court entered an order, the one on appeal here, that purports to be based on a narrow compromise that the parties reached to address unrelated and, in our view, unfounded concerns by the district court about data privacy for Mayor Price's mostly former customers. [00:01:19] Speaker 05: The July 18th order is invalid and should be vacated for several independent reasons. [00:01:24] Speaker 05: First, it exceeds the court's authority under Article III and Rule 13804. [00:01:28] Speaker 05: It intrudes into the merits and discovery of a pending arbitration that has been pending for a year and has a panel been assigned for months. [00:01:36] Speaker 05: It was entered without providing LPL an opportunity to be heard or respond to Ameriprise's arguments about the scope of the stipulated order, and it well exceeds the narrow compromise that the parties reached in the stipulated order. [00:01:49] Speaker 05: Now, although Ameriprise claims in this court that all this is necessary to protect its trade secrets and its former customers' privacy, [00:01:56] Speaker 05: It hasn't been coy elsewhere about what really is going on. [00:01:59] Speaker 05: A merit process told the arbitrators more than once that the value of the July 18th order to it is the discovery that it affords it outside of the arbitration process. [00:02:08] Speaker 05: Indeed, it has described that information as critical to its claims in arbitration. [00:02:12] Speaker 05: But the district courts have no authority under Rule 13804 to superintend discovery impending Fenner arbitrations. [00:02:19] Speaker 05: No authority to issue partial but seemingly permanent merits relief outside of the arbitration proceeding. [00:02:24] Speaker 05: No authority to issue injunctions to enforce privacy rights of third parties, not before the court, who are perfectly capable of asserting those rights themselves, and no authority to enter expansive injunctive relief months after offender arbitration has begun. [00:02:37] Speaker 02: So let me jump into the question here. [00:02:39] Speaker 02: Oh, go ahead, Judge Clifton. [00:02:41] Speaker 03: Probably the same kind of question. [00:02:42] Speaker 03: Has the arbitration panel been asked to or spoken to the question of discovery? [00:02:48] Speaker 05: The arbitration panel is managing discovery as we speak. [00:02:51] Speaker 05: The last day to issue discovery requests is actually today, and they will resolve any disputes the parties have about that discovery. [00:02:59] Speaker 05: Our point is only that that discovery should be overseen and controlled by the arbitration panel, not by the district court. [00:03:08] Speaker 03: In your view, is there any role from the court at this point now that the panel is formed and proceeding? [00:03:14] Speaker 05: So we think that the way that rule 13804 injunctions are supposed to work is just to manage that process, the interim period between when a party comes to the court. [00:03:23] Speaker 05: asks for an injunction to maintain the status quo until that arbitration panel could be seated. [00:03:29] Speaker 05: That has now happened, and we think that the role of the district court has fallen away. [00:03:33] Speaker 05: Now, I want to be clear. [00:03:35] Speaker 05: LPL agreed to the stipulated order and did not appeal the stipulated order. [00:03:38] Speaker 05: We're not asking for this court to relieve us of our obligations under the stipulated order or even to vacate that injunction. [00:03:45] Speaker 05: Our point is only that the court can no longer come in and interpret that order in a way that is different than the parties meant to the agreement that the parties entered into and then intrude into the pending arbitration, both in the merits and the discovery that's being overseen by the panel. [00:04:00] Speaker 02: And when you were referring, just to keep things straight here, the stipulated order was the one in 24, not the July 18, 2025. [00:04:07] Speaker 02: That's correct. [00:04:09] Speaker 05: The stipulated order is at ER 185. [00:04:11] Speaker 02: Of the of the experts of our excerpt of record the first one the first one get it to me by 3 p.m.. That one that's the one okay, that's the one so Here's my question is that we have the advisors in this case and the advisors are saying they should have been in this case At least as of that hearing in July Hypothetically if we agree with them And we say you know what you should have been allowed to intervene then because it's your phones are the ones being imaged or computers or whatever it is and [00:04:40] Speaker 02: What happens in this case? [00:04:42] Speaker 02: If that was where we would decide, we would then vacate the July 18th order. [00:04:46] Speaker 02: That would be a separate reason to vacate the July 18th order. [00:04:48] Speaker 05: That is an independent reason to vacate the July 18th order that the advisors have advanced. [00:04:52] Speaker 05: I would urge the Court to reach our arguments about the July 18th order. [00:04:56] Speaker 05: In particular, at least I'd ask the Court to reach the arguments about the scope of the July 18th order. [00:05:01] Speaker 05: We do think that there's a fundamental disagreement between the parties about what that [00:05:04] Speaker 05: meant, and we think that we've been fully briefed here in a way that it didn't get to be fully briefed below. [00:05:10] Speaker 05: And we don't think there's really any doubt that the stipulated order was limited to the bulk upload tool. [00:05:14] Speaker 05: If I could take a minute to kind of walk the court why that matters. [00:05:17] Speaker 05: So we agreed in the December 12th order to a search, to a deletion, and to the production of the bulk upload tool. [00:05:28] Speaker 05: We did that because although we thought the court's concerns were unwarranted and injunction shouldn't issue, we thought they were real. [00:05:34] Speaker 05: And we didn't have much concern about that. [00:05:37] Speaker 05: The bulk upload tool is a transfer tool that we provided to advisors in order to move their business from Ameriprise to LPL. [00:05:45] Speaker 05: Those transfers occurred between 2018 and 2021. [00:05:48] Speaker 05: The value of that tool going forward to the advisors is very minimal and therefore to LPL and its customers. [00:05:54] Speaker 05: We were comfortable agreeing with that. [00:05:56] Speaker 05: The July 18th order, the one that's on appeal here, [00:05:59] Speaker 05: It doesn't say anything about the bulk upload tool. [00:06:01] Speaker 05: Instead, it requires the search for the production and the deletion of any information that is related to or associated with former Ameriprice customers, including those customers who are now LPL customers. [00:06:14] Speaker 05: That's a big difference in scope. [00:06:16] Speaker 05: And one that's going to make a difference to the way that our advisors provide advice to their current clients, and therefore to our customers. [00:06:23] Speaker 05: If you can think about the way that this works, advice is given to a client about all sorts of things. [00:06:29] Speaker 05: And there can be documents, historical documents. [00:06:31] Speaker 05: that pre-existed the move from the advisor's move from Ameriprise to LPL that are still relevant to the device that they are providing. [00:06:39] Speaker 05: And the record shows that some of that information is only available on their devices and is not on the LPL servers and indeed not even in the client's possession. [00:06:49] Speaker 05: And they need that information. [00:06:51] Speaker 05: That's the crux of our dispute and our objection to the July 18th order. [00:06:56] Speaker 05: That is not what we enter into and that imposes burdens that we did not, that we cannot accept. [00:07:07] Speaker 05: Now, my friend points to a couple of different things in the stipulated order that he says it should be limited. [00:07:15] Speaker 05: It was never limited to the bulk upload tool. [00:07:17] Speaker 05: I don't take him to object to our reading of the July 18th order, but he says the stipulated order has always meant more than the bulk upload tool. [00:07:26] Speaker 05: Principally, he points to paragraph four of that order. [00:07:28] Speaker 05: That is the one that is really the crux of the dispute here, the one that requires the search, production, and deletion of information. [00:07:35] Speaker 05: And he says that that document, that paragraph, only refers to customer information and non-customer information. [00:07:41] Speaker 05: It doesn't mention the Bokoplo tool. [00:07:43] Speaker 05: And that's true, but that's because the customer information and non-customer information are defined terms in the stipulated order. [00:07:49] Speaker 05: If you look at the first paragraph of the stipulated order, it says that customer information is [00:07:54] Speaker 05: certain financial customer information, one bucket of information about which two things are true. [00:07:59] Speaker 05: The first is that it was retained by the advisors when they moved from Ameriprise to LPL. [00:08:03] Speaker 05: And second, it was transferred via the bulk upload tool. [00:08:07] Speaker 05: And then if you look at a couple of paragraphs later, it defines what non-customer information is. [00:08:11] Speaker 05: And that is, again, information transferred via the bulk upload tool from individuals who never became LPL customers. [00:08:19] Speaker 05: So when you look at paragraph four and you see that it refers to any customer information or non-customer information, [00:08:23] Speaker 05: That is information limited to the bulk upload tool. [00:08:26] Speaker 05: Indeed, that's how the District Court understood this order. [00:08:28] Speaker 05: Even at the beginning of the July 17th hearing, there's an exchange in which makes it pretty clear that the District Court read that stipulation to refer only to the bulk upload tool. [00:08:38] Speaker 05: You look at this is on our ER again, second volume, page 41, lines 23 to 25. [00:08:47] Speaker 05: The District Court makes clear that she's asking only about the bulk upload tool. [00:08:51] Speaker 05: When LPL's counsel, my colleague, tried to address information beyond it, she redirected and said, no, we're talking about just the bulk upload tool. [00:08:58] Speaker 05: Is that available on the LPL server? [00:09:01] Speaker 05: We confirmed that it is. [00:09:02] Speaker 05: And then turned to the advisors and said, I therefore reject your ground for intervention that says that this order is going to impede on your ability to do your job. [00:09:11] Speaker 05: because you can get to all of the information that will be deleted pursuant to the stipulation on LPL servers. [00:09:16] Speaker 05: We think that the district court was correct in reading it that way and then aired when it expanded it later on in the hearing where we were not able to provide the arguments that we would have provided and have provided to this court. [00:09:26] Speaker 02: So let me ask you one more question before you sit down. [00:09:29] Speaker 02: So in that July 2025 order, there are also paragraphs 9 and 10 which [00:09:36] Speaker 02: Don't really affect Ameriprise directly. [00:09:38] Speaker 02: It's more of an LPL question. [00:09:39] Speaker 02: But I wanted to get your take, because you've thought a lot about this case. [00:09:41] Speaker 02: You've been on this case for a while. [00:09:43] Speaker 02: I'm not familiar with a practice where a court can sanction someone who's not a party to the litigation, or the court can order to do something that's not a party to the litigation. [00:09:54] Speaker 02: But again, are you aware of any authority that allows that to happen? [00:09:58] Speaker 05: I'm aware of no authority, Your Honor, and I haven't seen Mayor Price point to any authority for that position. [00:10:04] Speaker 05: Okay, thank you. [00:10:05] Speaker 05: Yes. [00:10:05] Speaker 03: Let me ask one more question. [00:10:07] Speaker 03: I'm using your time, but we do have flexibility today. [00:10:11] Speaker 03: Could you tell me what order you would want or what decision you would want from this court? [00:10:18] Speaker 03: The case will remain alive because we stay rather than dismiss. [00:10:23] Speaker 03: But what is it you would seek from us? [00:10:26] Speaker 05: We were looking for an order that vacates the July 18th order. [00:10:30] Speaker 05: We provide several grounds for that, to that effect. [00:10:33] Speaker 05: And then beyond that, we would like some guidance from the court about the meaning of the stipulated order. [00:10:38] Speaker 05: We have been trying to comply with our obligations under the stipulated order since it was entered. [00:10:42] Speaker 05: And we have not been able to accomplish that because there is such a disagreement between the parties about whether that stipulated order is limited to the bulk upload tool. [00:10:50] Speaker 05: I think if the court were to interpret that, [00:10:52] Speaker 05: order and resolve that question, it would be very helpful as we go back down and we try to fulfill our obligations under the stipulated order. [00:11:01] Speaker 03: Should it be for this court or the district court to interpret that order or is that something that's passed to the arbitration panel? [00:11:09] Speaker 05: So I am comfortable with this court interpreting that order. [00:11:12] Speaker 05: The district court of course hasn't interpreted that order. [00:11:15] Speaker 05: Insofar as it's if it's limited to the bulk upload tool as we did I have again we didn't appeal that order We're not trying to get out from the obligations of that order I think you that the advisors might have a different view on that particular question but but as I say we are not we are comfortable complying with the stipulated order as Limited to the bulk upload tool. [00:11:34] Speaker 00: I want to ask you one quick thing as well. [00:11:36] Speaker 00: I'm sorry Judge Clifton. [00:11:37] Speaker 00: Did I cut you off? [00:11:38] Speaker ?: I [00:11:38] Speaker 03: I was about to say thank you. [00:11:40] Speaker 00: Oh, OK. [00:11:41] Speaker 03: Thank you, and have at it. [00:11:42] Speaker 03: Thank you. [00:11:44] Speaker 00: Thank you. [00:11:44] Speaker 00: Can you talk to me a little bit about your motion to seal? [00:11:48] Speaker 05: I guess it's not before this court, Your Honor. [00:11:50] Speaker 05: I guess I don't have. [00:11:53] Speaker 00: I thought there was, and I apologize if I have this confused, that there was issues with reputational harm. [00:12:01] Speaker 02: That's the advice. [00:12:02] Speaker 00: Oh, the advice. [00:12:02] Speaker 02: I'm sorry. [00:12:03] Speaker 02: Thank you. [00:12:05] Speaker 02: Well, I guess you can ask that question. [00:12:07] Speaker 00: Yeah, that'll be my next one. [00:12:08] Speaker 02: Preview. [00:12:09] Speaker 00: Thank you. [00:12:10] Speaker 02: All right. [00:12:10] Speaker 02: Thank you very much. [00:12:11] Speaker 02: We'll go ahead and give you that. [00:12:12] Speaker 02: I think you requested three minutes rebuttal. [00:12:14] Speaker 02: We'll give that to you. [00:12:14] Speaker 02: Thank you. [00:12:26] Speaker 04: Good morning, your honors. [00:12:27] Speaker 04: George Freeman. [00:12:29] Speaker 04: May it please the court on behalf of the advisors. [00:12:33] Speaker 04: No one should be forced to surrender his or her rights without notice, without consent, and without a say. [00:12:41] Speaker 04: Yet that's exactly what happened to the advisors here. [00:12:44] Speaker 04: The district court ordered them to submit to an invasive and improper forensic review that was negotiated without their knowledge or input. [00:12:54] Speaker 04: Then when the advisors asked to intervene to protect their rights and to move the matter to arbitration where it belongs, the district court said no. [00:13:02] Speaker 04: depriving them of their rights under the Federal Arbitration Act. [00:13:06] Speaker 04: We're asking that this court reverse the denial of the motion to intervene and remand with instructions to stay the proceedings pending arbitration. [00:13:17] Speaker 04: And I'll start with the motion to intervene. [00:13:20] Speaker 04: In denying that motion, the district court made two critical errors. [00:13:26] Speaker 04: It erroneously concluded the motion was untimely, and it erroneously concluded that the stipulated order doesn't impair the advisor's interests. [00:13:37] Speaker 04: Both errors require reversal. [00:13:40] Speaker 04: First, timeliness. [00:13:41] Speaker 04: The most important consideration regarding timeliness is prejudice. [00:13:45] Speaker 04: The district court considered prejudice, but it applied the wrong test. [00:13:49] Speaker 04: For starters, the district court focused on the future. [00:13:52] Speaker 04: The prejudice test focuses on the past. [00:13:55] Speaker 04: It's retrospective, not prospective. [00:13:57] Speaker 04: The district court says it was seeking to prevent the unauthorized disclosure of confidential customer information. [00:14:04] Speaker 04: The district court concluded there was a quote-unquote time urgent need to protect that information and that the advisors had been acting too slowly to protect it. [00:14:13] Speaker 04: This was clear error. [00:14:16] Speaker 04: The advisors had protected this information without fail [00:14:20] Speaker 04: ever since they had left Ameriprise, two to six years before Ameriprise filed suit. [00:14:27] Speaker 04: The record contains no evidence of a single data breach during that period. [00:14:34] Speaker 04: And even after Ameriprise sent out a data breach notice seven months ago, not a single customer has complained. [00:14:44] Speaker 04: The other flaw in the district court's prejudice analysis is it mistakenly focuses on potential harm to third parties, harm they might suffer. [00:14:53] Speaker 04: The relevant prejudice is the actual harm, if any, the plaintiff suffered from the delay in filing the motion to intervene. [00:15:02] Speaker 04: Here, no one has, no one can identify any prejudice that a mayor prize suffered as a result of the advisors filing their motion [00:15:12] Speaker 04: in May of 2025 instead of earlier because none exists. [00:15:18] Speaker 04: Unable to identify any prejudice, Ameripass argues this course effectively abandoned the prejudice test in the Chevron case and replaced it with a bright line test for timeliness of five months and goes on to say that the advisors simply missed the deadline. [00:15:38] Speaker 04: But that's not what Chevron says. [00:15:40] Speaker 04: The putative intervener there, an insurer, knew from the outset that the defendant could not protect its interests, even so it took no action. [00:15:51] Speaker 04: Only after the plaintiff had obtained an $18 million default judgment did the insurer take any action. [00:15:59] Speaker 04: Vacating the default judgment, however, would have prejudiced the plaintiff. [00:16:03] Speaker 04: The determining factor in Chevron was prejudice, not the mere passage of time. [00:16:09] Speaker 04: Just a few months ago, moreover, this court in the Chatelaine v. CS pharmacy case reaffirmed that prejudice is the most important consideration in determining timeliness. [00:16:20] Speaker 04: Given the absence of prejudice here, the district court's finding of untimeliness is an abuse of discretion. [00:16:27] Speaker 04: Next, protectable interests. [00:16:29] Speaker 04: The district court found the forensic examination would not impair any of the advisors' protectable interests. [00:16:35] Speaker 04: We've identified four. [00:16:37] Speaker 04: Let me just ask you to focus here on one of those. [00:16:40] Speaker 04: The right to arbitrate. [00:16:43] Speaker 04: The advisors have a right to arbitrate the propriety, nature, and scope of any forensic review. [00:16:50] Speaker 04: The stipulated order, July 18 order, and the denial of the motion to intervene, deprive them of this right. [00:16:57] Speaker 04: A right the Supreme Court has repeatedly insisted is a product of the important, the strong federal policy favoring arbitration. [00:17:08] Speaker 04: No basis exists for ignoring this policy. [00:17:12] Speaker 04: or for failing to find that the advisor's right to arbitrate is a protectable interest. [00:17:18] Speaker 04: Because the district court erred in finding untimeliness and no protectable interests, this court should reverse the denial of the intervention, especially given this court's mandate that Rule 24 of the Federal Rules of Civil Procedure should be applied liberally in favor of intervention. [00:17:37] Speaker 04: And the panel should do one more thing. [00:17:39] Speaker 04: The Supreme Court has been emphatic. [00:17:42] Speaker 04: Matters that are subject to binding arbitration should be moved, quote, out of litigation and into arbitration as quickly and easily as possible. [00:17:54] Speaker 04: The only way to do that here is to reverse and remand with instructions to stay the proceedings in their entirety pending arbitration. [00:18:03] Speaker 04: While appellate courts ordinarily don't address and resolve issues on appeal that haven't been addressed and resolved below, there is a well-established exception to this rule, and that exception applies here. [00:18:15] Speaker 04: The exception is for cases where the issues to be resolved on remand [00:18:19] Speaker 04: are purely legal. [00:18:21] Speaker 04: An exception is particularly appropriate in those cases where, as here, the issues to be resolved on remand can be decided with a straightforward application of controlling precedent. [00:18:33] Speaker 04: Here, there are only two issues the district court need consider. [00:18:37] Speaker 04: Indeed, only two issues the district court may consider on remand. [00:18:42] Speaker 04: Whether the advisors and a mayor prize have a valid agreement to arbitrate, [00:18:46] Speaker 04: and whether that agreement applies to Ameriprize's demand for a forensic review. [00:18:52] Speaker 04: The answer to both is yes. [00:18:54] Speaker 04: And that's even without applying the strict rule the Supreme Court first adopted in 1983 in the Moses H. Cohn case, the rule that all ambiguities be resolved in favor of arbitability. [00:19:07] Speaker 04: Applying the Moses H. Cohn. [00:19:10] Speaker 03: Let me follow up with the question that I posed earlier because I want to be clear I understand [00:19:17] Speaker 03: there appears to be a distinction between the position taken by you and LPL. [00:19:24] Speaker 03: You want to speak and have reason to speak to the denial of the motion to intervene, not so much for them. [00:19:30] Speaker 03: The second part and what I wanna focus on is when asked what path we should follow, what order LPL sought, council was prepared to leave the stipulated order in place [00:19:47] Speaker 03: asking us to interpret it in a certain fashion. [00:19:51] Speaker 03: Do I understand correctly that you're basically saying we shouldn't venture down that path. [00:19:56] Speaker 03: We should instruct the district court to stay everything and defer to the arbitration panel for questions such as that. [00:20:04] Speaker 04: Yes, your honor. [00:20:05] Speaker 04: We believe that the law requires the panel to go further. [00:20:08] Speaker 04: We believe that once this court considers the issue, which it will invariably consider [00:20:14] Speaker 04: in ruling on the motion to intervene under the harmless error doctrine, you're going to look at, is the ruling harmless? [00:20:20] Speaker 04: And you're going to conclude, no, it's not, because there are two questions to be asked. [00:20:24] Speaker 04: One, is there a valid arbitration agreement that exists, and does it apply to Ameripaz's demand for the forensic exam? [00:20:30] Speaker 04: And you're going to see that once you answer those questions, yes, there's nothing left to be done. [00:20:35] Speaker 04: And the reason why for that, Your Honor, [00:20:38] Speaker 04: is because section three of the Federal Arbitration Act says those are the two questions a district court must ask. [00:20:44] Speaker 04: Once it concludes the answer is yes, it has no discretion. [00:20:47] Speaker 04: It's mandated to refer the proceedings to arbitration. [00:20:53] Speaker 04: So that's the case here, Your Honor. [00:20:56] Speaker 04: You're going to be answering those two questions. [00:20:59] Speaker 04: We would ask you to do it under the exception to the no review rule and simply under the harmless air doctrine. [00:21:07] Speaker 04: So when you look at it from either perspective, the answer to the two questions is the same. [00:21:11] Speaker 04: And the answer given section three of the Federal Arbitration Act is remand with instructions to stay the entire proceedings. [00:21:21] Speaker 04: And I'm going to elaborate a little further on that, Your Honor. [00:21:26] Speaker 04: The Supreme Court, in talking about the discretion under Section 3, has said that the district court is, quote, unquote, impervious to discretion, or that the Section 3 mandate is impervious to discretion. [00:21:40] Speaker 04: You must stay the entire proceedings. [00:21:45] Speaker 04: And there's another reason for the panel to reach the same conclusion. [00:21:52] Speaker 04: And that's because when properly classified, the stipulated order and the July 18 order are mandatory injunctions that violate Rule 1308. [00:22:05] Speaker 04: These injunctions are particularly disfavored in general and specifically in this context. [00:22:12] Speaker 04: Under Federal Rule 13804 and the Court's equitable discretion, in this context, [00:22:19] Speaker 04: Courts may only issue prohibitory injunctions, injunctions designed to preserve the status quo pending arbitration. [00:22:26] Speaker 04: And that's what the district court was authorized to do here, either under 13804 or under the equitable discretion rule. [00:22:34] Speaker 04: It wasn't permitted to go further. [00:22:36] Speaker 04: You may only issue a mandatory injunction when there is a, quote, unquote, urgent need to prevent extreme danger. [00:22:45] Speaker 04: We have shown that there was no danger at all. [00:22:48] Speaker 04: under these circumstances, much less extreme danger. [00:22:51] Speaker 04: So there was no basis for the district court to issue a mandatory injunction to begin with. [00:22:56] Speaker 04: There certainly is no basis for continuing that mandatory injunction going forward, given that the arbitration panel was selected and has been actively involved in this case since earlier this year. [00:23:10] Speaker 04: Significantly, the arbitration panel has set a discovery to schedule. [00:23:15] Speaker 04: As Mr. Ellis noted, I think that the schedule ends today in terms of propounding additional discovery. [00:23:21] Speaker 04: It's ruled on multiple discovery motions. [00:23:23] Speaker 04: It's actually scheduled motions to dismiss in the case. [00:23:27] Speaker 04: And it's set the hearing on the merits to begin next fall. [00:23:30] Speaker 04: So the arbitration panel is in a position now to do everything the court would otherwise be in a position to do. [00:23:36] Speaker 04: And 13804 says the court's merely to step in to provide interim relief until the arbitration panel is in a position to act properly. [00:23:45] Speaker 04: So there's nothing left for the district court to do. [00:23:47] Speaker 04: There's nothing left that the district court needs to do. [00:23:50] Speaker 04: In light of those two things, in light of Section 3 of the Federal Arbitration Act, the law really mandates that the panel reverse and remand with instructions to stay the entire proceedings. [00:24:04] Speaker 02: One question for you, because we are a little over time. [00:24:06] Speaker 02: The same question I had for previous counsel. [00:24:09] Speaker 02: Paragraphs 9 and 10 of that July 2025 order that says that they could sanction your clients if they don't turn over their phones, for example. [00:24:20] Speaker 02: Are you aware of any case law that would permit a district court judge to sanction someone who's not a party to the litigation? [00:24:26] Speaker 04: We're not aware of any, Your Honor. [00:24:29] Speaker 04: And if I may add one point to that. [00:24:33] Speaker 04: We reached that conclusion early on, too, that the court had no authority to do that. [00:24:37] Speaker 04: And that's an additional reason why we would say that the stipulated order, going back to December, is a mandatory injunction, at least is to us, because what the district court did in July is indicative of, I think, the district court's view of the authority it had over us with respect to the stipulated order. [00:24:52] Speaker 04: So it would be a mandatory injunction as to us as well. [00:24:55] Speaker 04: Thank you, Your Honor. [00:24:56] Speaker 02: All right. [00:24:56] Speaker 02: We'll go ahead and give the same thing with three. [00:24:58] Speaker 02: Thank you. [00:24:59] Speaker 04: Okay, great. [00:25:08] Speaker 01: Thank you, Honors. [00:25:08] Speaker 01: Good morning. [00:25:09] Speaker 01: I'm Dan Lawton, appearing on behalf of the Appellee AmeriPrize Financial Services LLC. [00:25:17] Speaker 01: I'd like to address four points this morning. [00:25:20] Speaker 01: The first is the fatal procedural flaw in LPL's appeal that deprives this court of jurisdiction to hear the appeal. [00:25:31] Speaker 01: The second is the correctness of Judge Oda's enforcement order of July of this year when juxtaposed with FINRA Rule 13-804. [00:25:42] Speaker 01: The third is the untimeliness, the true untimeliness of the advisor's intervention motion, which Judge Oda correctly denied. [00:25:49] Speaker 01: And the last is the practical effect of the vacator and reversal that the appellant's request to this Court. [00:25:58] Speaker 01: We start with the main fact of these appeals, which is the lack of an appeal from an appealable order on the part of LPL. [00:26:08] Speaker 01: And this is something really that I think is the elephant in LPL's room. [00:26:13] Speaker 01: The court knows by heart, I'm sure, could recite what Section 1292 says, the jurisdiction it provides to this court for review of interlocutory decrees when it comes to injunctions. [00:26:26] Speaker 01: orders, granting, continuing, dissolving, or modifying injunctions are, of course, appealable. [00:26:33] Speaker 01: So do we have an order of that nature before this Court in LPL's appeal? [00:26:39] Speaker 01: And the answer is no. [00:26:40] Speaker 01: The July order does not grant, dissolve, or modify an injunction. [00:26:47] Speaker 01: It interprets. [00:26:48] Speaker 01: And that word is important here, and I use it purposely. [00:26:52] Speaker 01: because that's the word Judge Oda used to describe what she was doing. [00:26:57] Speaker 01: She said, this is the court's interpretation of the stipulated order, the consent decree of December of 2024. [00:27:07] Speaker 01: District courts have the power and they should, they must have the power to interpret and enforce their own injunctions when people don't comply with them. [00:27:18] Speaker 03: And I just called it an injunction. [00:27:19] Speaker 03: So why isn't this [00:27:22] Speaker 03: within the category of injunction. [00:27:24] Speaker 01: I didn't hear the first part, Your Honor. [00:27:26] Speaker 01: I'm sorry, can you repeat? [00:27:27] Speaker 03: You just used the word injunction to describe this. [00:27:31] Speaker 03: That seems to fit the statutory requirement to give us jurisdiction. [00:27:36] Speaker 01: Your Honor, I'm afraid I wasn't quite clear. [00:27:38] Speaker 01: When I used the word injunction to antecedent or what I was referring to was the consent decree of December 2024. [00:27:45] Speaker 01: That was an injunction. [00:27:49] Speaker 03: And in this case, the district court decided to interpret because the parties plainly had very different understandings of what was sort of a strong arm, but stipulated order. [00:28:00] Speaker 03: So she comes in and says, this is what it's going to mean. [00:28:03] Speaker 03: That sure looks to me like an order. [00:28:08] Speaker 03: You can call it interpreting, but modifying or clarifying or specifying the terms of an injunction. [00:28:15] Speaker 03: And I don't understand why that doesn't become an appealable order. [00:28:19] Speaker 01: because, Your Honor, of the language of Section 1292, which doesn't use the word interpreting. [00:28:26] Speaker 01: Congress chose the words it chose and put them in that statute, and interpreting is not one of those words. [00:28:34] Speaker 01: And this really brings us... Why isn't it modifying? [00:28:37] Speaker 03: Because it certainly modifies the understanding that LPL professed that it had. [00:28:42] Speaker 03: It was a very contested decision made on July 8th. [00:28:47] Speaker 03: It's not like the parties were on the same page. [00:28:50] Speaker 03: So why isn't it modifying the understanding of the parties to say in the court's words, this is what this means? [00:28:58] Speaker 01: Because it really doesn't add anything substantive to the consent decree of December 2024. [00:29:05] Speaker 01: It interprets it and it sets deadlines. [00:29:08] Speaker 01: And the only reason it does that is because recalcitrant parties who, and I think that's a fair term to describe the appellants, [00:29:16] Speaker 01: in their conduct below in the district court could not bring themselves to comply with what they themselves had agreed to. [00:29:24] Speaker 01: And I said the elephant in the room earlier, and Your Honor raises the use of the term injunction, LPL fought very hard to avoid using that word when it came to the consent decree. [00:29:38] Speaker 01: They struck out. [00:29:39] Speaker 03: If it quacks like a duck, why don't we take it as a duck? [00:29:43] Speaker 01: Exactly. [00:29:44] Speaker 01: And this is where that duck leads us. [00:29:48] Speaker 01: If the consent decree is an injunction, and it most certainly is because it quacks like a duck and walks like a duck, then there was a period of 30 days within which LPL had to appeal from that injunction. [00:30:00] Speaker 01: And they, for reasons known to themselves, I don't know them, they did not do that. [00:30:07] Speaker 01: Now, it's not important to this court why [00:30:10] Speaker 01: they didn't avail themselves of the right to appeal within that 30-day period after December of 2024. [00:30:17] Speaker 01: What's important is that they did not avail themselves of that opportunity. [00:30:22] Speaker 01: And this court has seen consent decrees before and there's plenty of them in the federal reports. [00:30:28] Speaker 00: Council, can you spell out for me please? [00:30:30] Speaker 00: I'm a little confused at your interpretation. [00:30:33] Speaker 00: What did Judge Oda specifically change or reinterpret in her order? [00:30:40] Speaker 00: That was interpreting the stipulated order. [00:30:42] Speaker 01: She set deadlines and the consent decree or the stipulated order. [00:30:47] Speaker 01: I think those terms are interchangeable. [00:30:49] Speaker 01: Didn't set hard deadlines. [00:30:51] Speaker 01: She set hard deadlines in the enforcement order, the July 2025 order. [00:30:58] Speaker 00: And what would happen if you didn't meet those hard deadlines? [00:31:01] Speaker 01: If you didn't meet those hard deadlines, you would be in contempt of the district court and Judge Oda could [00:31:08] Speaker 00: Imposed sanctions as Judge Owens pointed out okay, and was it also directed as to LPL LPL was also Potentially going to be on the hook for sanctions if they didn't meet those hard deadlines. [00:31:18] Speaker 01: Yes So Where does all of all of this leave us where all of this leaves us is whether you call it equitable estoppel Whether you call it a failure to appeal from an injunction that December 2024 order [00:31:34] Speaker 01: whether you call it an appeal from a non-appealable order to July 2025 order, the LPL appeal is DOA in this court. [00:31:45] Speaker 03: Let me ask you about the question that Judge Owens has raised with regard to the proposed interveners who did not have an opportunity, did not stipulate to that order, but are now subject, according to the terms of the July 8 order, to sanctions for failing to comply with an order that they weren't part of. [00:32:06] Speaker 03: Why isn't the inability of the investment advisors to participate in that process enough by itself to open the door to challenge here? [00:32:19] Speaker 01: Your Honor, the answer is twofold. [00:32:20] Speaker 01: The first part of the answer is Rule 65, which makes parties acting in concert with parties enjoined essentially bound by that injunction. [00:32:32] Speaker 01: These advisors, all of them, [00:32:35] Speaker 01: Parties that were and are acting in concert with LPL and so according to subdivision D2 of rule 65 They are bound by Judge Oda's order. [00:32:46] Speaker 02: What finding has there been made that they were acting in concert? [00:32:51] Speaker 01: There is no specific finding isn't that a problem I? [00:32:55] Speaker 01: Don't think so your honor and here's why because this record has plenty of material in it and [00:33:01] Speaker 01: Whereby this court could find that they were acting but the district court never made any finding under rule 65 correct She didn't make an express finding that they were acting in concert. [00:33:13] Speaker 02: That's right However, it's clear that they were okay, and I understand the next argument, but it's just to be clear in this record I've read all the transcripts, and I don't remember ever seen a discussion of rule 65 and in concert That's a You're absolutely correct [00:33:29] Speaker 02: Absolutely right, so let's assume that one doesn't work. [00:33:31] Speaker 01: We said you said you had another point Yes, the second point the second part of the twofold is in the excerpts of record starting at page 12 this is er 12 and What are you referring to or is it a pleading or hearing? [00:33:46] Speaker 01: It's a pleading your honor It's it's part of the excerpts of record and it is a memo dated March 14 2025 sent by Council for LPL [00:33:57] Speaker 01: and Council for a Mayor Prize jointly to Council for the individual respondents in the arbitration case. [00:34:06] Speaker 01: And those respondents at that time certainly included the advisors because they'd been added on New Year's Eve, December 31, 2024, as parties to the arbitration. [00:34:19] Speaker 01: That memo puts the lie to this idea that the advisors didn't know what was going on. [00:34:25] Speaker 01: They're strangers to all of this. [00:34:26] Speaker 01: All of this is happening out of their eyeline and behind their backs. [00:34:30] Speaker 01: It's not true. [00:34:31] Speaker 01: This is language approved by counsel for LPL saying you've got nonpublic customer PII such as Social Security's numbers and dates of birth. [00:34:42] Speaker 01: There's a stipulated order signed by the court. [00:34:45] Speaker 01: There's a forensic examiner. [00:34:46] Speaker 01: You've got to preserve all metadata. [00:34:48] Speaker 01: We've created a questionnaire for you. [00:34:50] Speaker 01: A certification is the formal title of that document. [00:34:53] Speaker 01: It's really a questionnaire. [00:34:55] Speaker 01: A copy of the certification must be completed. [00:34:57] Speaker 01: It goes on. [00:34:58] Speaker 01: And this is found at pages 12 and 13 of the excerpt of record, and then the certification with all the questions follows. [00:35:05] Speaker 02: This is the SER or the ER? [00:35:07] Speaker 02: This is the... Your excerpt of record? [00:35:10] Speaker 01: No, Your Honor. [00:35:11] Speaker 02: There are three parties here, so when you say excerpts of record, which one are we referring to? [00:35:16] Speaker 01: This is the appellant's excerpt of record. [00:35:19] Speaker 02: So not the appellant, so this is LPLs you're saying? [00:35:21] Speaker 01: Yes. [00:35:22] Speaker 01: Okay. [00:35:23] Speaker 01: And the low numbering, the two-digit number shows up because they were the first to file excerpts of record, so it's a two-digit number. [00:35:30] Speaker 01: But this really illustrates the reality, and I think this court does take account of reality, that [00:35:39] Speaker 01: All of these advisors work for LPL. [00:35:42] Speaker 01: All of these advisors are bound by injunctions that are binding on LPL. [00:35:48] Speaker 01: As registrants, as registered representatives under FINRA rules, they're all bound to cooperate with LPL in investigations, in litigation, and they had counsel in March of 2025, and they were privy to all of this. [00:36:06] Speaker 01: This notion that they didn't know what was going on, they're not really parties to this, I think is exploded by those two things, by Rule 65 and by that memo. [00:36:16] Speaker 02: Just so I understand how this would work, if I were an advisor and I had an old iPhone, an iPhone from 2020, [00:36:25] Speaker 02: And I gave it to my kid and wiped the phone and did whatever you're supposed to do, repurposed the phone to give it to my kid. [00:36:34] Speaker 02: And the kid has it now. [00:36:36] Speaker 02: But at one time, it was used as a phone under the order under the July 2025 order. [00:36:45] Speaker 02: They would have to turn over their kid's phone to the examiner. [00:36:49] Speaker 01: Well, there would be no physically turning over your honor because it all happens remotely, but I think theoretically yes not theoretically I think you know it should be it would be within the terms and then the forensic examiner would find there isn't any data on there it was wiped so There's there's there are no concerns there well I mean But you'd have to do that right so I mean there is a concern if I know that my daughter's phone is going to be turned over such as some third party [00:37:17] Speaker 02: I mean, the Supreme Court's recognized phones are different. [00:37:20] Speaker 02: So I guess my question is that if we look at paragraphs 9 and 10 in the revised order, which would then, if an advisor said, I'm not turning my daughter's phone over, or the kid says, I'm not turning my phone over, could the court then sanction the kid under the order, who's not a party in this case? [00:37:40] Speaker 01: No, because paragraph 10 at line 15 says that, [00:37:47] Speaker 01: Those sanctions would be limited to what Judge Oda describes as individual financial advisors. [00:37:53] Speaker 01: So the child would be excluded. [00:37:54] Speaker 02: But the mom could be because the kid refuses to turn over the phone or refuses to whatever you have to do to relinquish the phone, right? [00:38:06] Speaker 02: And they've never had a chance to be heard on any of this. [00:38:10] Speaker 01: They would have a chance to be heard on it, Your Honor, under paragraph nine, because paragraph nine [00:38:17] Speaker 01: reserves the right to make objections. [00:38:19] Speaker 02: But they're not a party to the litigation. [00:38:21] Speaker 02: That's why I'm just puzzled by this. [00:38:24] Speaker 01: You don't find them in the caption, but they have counsel, they received that memo that I identified earlier in the excerpts of record, and they knew what was going on. [00:38:34] Speaker 03: And they... Well, let me receive this memo, which I understand comes from [00:38:39] Speaker 03: from you and from council for LPL and it's addressed to council for individual respondents, which seems to recognize that they have a distinct interest, but A and B are busy talking for C. I'm not sure that's the same as saying C is committed to this. [00:39:00] Speaker 01: C is committed to this because they have chosen to work for LPL and they are registered representatives [00:39:06] Speaker 01: that are bound by the U.S. [00:39:08] Speaker 03: Court of Appeals for the Ninth Circuit, that it doesn't bind me to everything it wants to bind me to. [00:39:12] Speaker 01: I understand that, Your Honor. [00:39:13] Speaker 01: But when an advisor, when these advisors went to LPL, they knew about the broker protocol. [00:39:20] Speaker 01: The broker protocol required them to limit whatever categories of data they took with them to five. [00:39:28] Speaker 01: And if they exceeded the five, then they weren't even allowed to take those five categories of data with them. [00:39:34] Speaker 01: When they got to LPL, [00:39:36] Speaker 01: they signed or were bound by LPL's code of conduct, which is part of the record. [00:39:42] Speaker 01: And LPL's code of conduct obliged them to not use or have on their personal devices any data that was deemed confidential by another securities firm. [00:39:55] Speaker 01: And that other securities firm is Ameriprise. [00:39:58] Speaker 01: So yes, they weren't parties in the formal sense that both your honors are talking about. [00:40:02] Speaker 01: If you look at the caption, you won't find their names there at that time. [00:40:06] Speaker 01: But they were privies to these orders. [00:40:11] Speaker 01: They knew of these orders. [00:40:13] Speaker 01: They knew of the stipulated order on New Year's Eve of 2024. [00:40:17] Speaker 01: And they have not complied. [00:40:19] Speaker 01: And they stand here, you know, asking to continue to not comply with their duties. [00:40:29] Speaker 01: And what does that mean in the real world? [00:40:31] Speaker 01: That means there's data out there. [00:40:33] Speaker 01: We don't know what we don't know. [00:40:35] Speaker 01: Let's take a hypothetical involving a lawyer who switches firms. [00:40:39] Speaker 01: Lawyer goes to a new firm. [00:40:40] Speaker 01: I did that about six years ago. [00:40:42] Speaker 01: There's a spreadsheet. [00:40:43] Speaker 01: Tell us all your clients. [00:40:45] Speaker 01: We need to run conflicts checks, all of that. [00:40:48] Speaker 01: What's the financial information? [00:40:49] Speaker 01: How much money do they owe you? [00:40:51] Speaker 01: What are the hourly rates and so forth? [00:40:53] Speaker 01: I provided it. [00:40:54] Speaker 01: This happens every day. [00:40:56] Speaker 01: But where did I get all that data before I put it on that spreadsheet? [00:40:59] Speaker 01: I got it from my office. [00:41:03] Speaker 01: desktop, my home desktop, my Mac, my iPhone, that's where all that data lives. [00:41:09] Speaker 01: So if I just turned over the spreadsheet to a forensic examiner and said here you go, here's all the data, that wouldn't start to solve the problem because what I used to populate that spreadsheet is important. [00:41:22] Speaker 01: And if any of that data is unsecured out there in the world, we know what can happen. [00:41:28] Speaker 01: And we don't need to look very far to know what can happen in a worst case scenario. [00:41:33] Speaker 01: like the Panama Papers. [00:41:36] Speaker 01: A bunch of financial data gets leaked by someone, and it winds up out in the world. [00:41:42] Speaker 01: And the people who are harmed by it really don't have any recourse. [00:41:47] Speaker 01: And that's a problem that Judge Oda was trying to solve. [00:41:50] Speaker 01: And I heard counsel, Mr. Freeman, say earlier that Rule 13804 only allows prohibitory injunctions. [00:42:01] Speaker 01: Injunctions that would protect the status quo and that's not exactly right, but I'm going to play along with my colleague Mr.. Freeman for a moment If the court reads rule 13804 it won't find the word prohibitory, and it won't find the word status quo in there So you know there's nothing about Judge Oda's injunction that runs afoul of rule 13804 but is this you know when we look at an injunction and [00:42:31] Speaker 01: Judge Clifton, you said quacks like a duck. [00:42:33] Speaker 01: You know, the first question I often have is, is it a mandatory injunction or is it a prohibitory injunction? [00:42:39] Speaker 01: It's mandatory, I guess, on a superficial level in the sense that you can say it tells people to do concrete things lest they be sanctioned. [00:42:48] Speaker 01: However, a prohibitory injunction aims at preserving the status quo. [00:42:53] Speaker 01: And what is the status quo? [00:42:54] Speaker 01: It's a status quo ante. [00:42:57] Speaker 01: And this court's decision in the [00:43:03] Speaker 01: Marlin Nutraceuticals case says the status quo is a status quo ante. [00:43:09] Speaker 01: The state of things as it existed before the bad event happened. [00:43:15] Speaker 01: In this case, that moment was before these advisors departed Ameriprise and went to LPL and took 187 categories of data of 4,500 customers with them. [00:43:29] Speaker 01: Judge Ota was trying to keep that horse in the barn. [00:43:33] Speaker 01: or whatever term you want to use for that. [00:43:38] Speaker 01: This injunction, this consent decree in December, the sine qua non of the later order, the enforcement order of July, sought to solve that problem by containing, controlling and containing this data so that it wouldn't get out into the world at a significant cost to our client, Ameriprise. [00:44:01] Speaker 01: What [00:44:02] Speaker 01: Customer is going to want to entrust their private financial data to a securities firm That can't keep it secure or that has advisors that are going to go rogue and go off the reservation and take this data out Somewhere else let me ask you a little bit more about that I know in your briefing you referred it as a fiduciary duty to protect the customers information from a cyber security breach What's the basis nature and scope of that duty? [00:44:28] Speaker 01: your honor Title 15 [00:44:33] Speaker 01: Section 6801 of the U.S. [00:44:36] Speaker 01: Code announces the policy of the Congress that financial institutions, and that definition applies here to both of these firms, has an affirmative and continuing obligation to respect the privacy of its customers and to protect the security and confidentiality of those customers' nonpublic personal information. [00:44:56] Speaker 01: So it's a statutory duty that comes straight out of the U.S. [00:44:59] Speaker 01: Code. [00:45:04] Speaker 01: Your honor, I see my time is lapsing, and I'm sorry I've been too wordy, but let me close by saying this. [00:45:14] Speaker 01: This court is not a forum for undoing consent decrees. [00:45:21] Speaker 01: And Judge Oda cared about preserving the confidentiality of Ameriprize's [00:45:26] Speaker 01: information. [00:45:27] Speaker 01: The FINRA arbitration in this case is more than a year away. [00:45:31] Speaker 01: FINRA doesn't have the power to stop the dissemination of personal identifying information. [00:45:39] Speaker 01: It doesn't have the power to issue injunctions. [00:45:41] Speaker 01: Only the district courts have that. [00:45:44] Speaker 01: And Judge Oda exercised that power. [00:45:47] Speaker 01: And this court should do the same thing. [00:45:50] Speaker 01: So we ask that this court dismiss [00:45:53] Speaker 01: LPL's appeal affirm judge Oda's order denying the intervention is untimely and In the alternative if the court should not dismiss LPL's appeal we ask that the court affirm Judge Oda's July order. [00:46:08] Speaker 01: Thank you very much your honor. [00:46:09] Speaker 02: Thank you counsel [00:46:26] Speaker 05: Thank you, Your Honor. [00:46:26] Speaker 05: Just a few points in rebuttal. [00:46:27] Speaker 05: First, Judge Dayalban, I apologize. [00:46:30] Speaker 05: It was a bit of a flurry, but we did file a motion to seal along with our motion to stay, and that just escaped my mind. [00:46:36] Speaker 00: You signed the declaration, right? [00:46:37] Speaker 00: Yes, indeed. [00:46:38] Speaker 05: Your Honor, yes. [00:46:39] Speaker 05: It was truly a flurry. [00:46:41] Speaker 05: I don't have many like that. [00:46:43] Speaker 05: That's why I do appeals. [00:46:45] Speaker 05: But that was it concerns that the names of the advisors who have not intervened here they've been kept under seal in in the court below and We were trying to keep it under seal here because they have not Come to the court to request relief and the arbitration itself is generally treated as confidential Okay, and I just wanted to ask about that because you know generally we like to keep things public we like people to know what we're doing so that we're not Feeling like we're hiding the ball [00:47:14] Speaker 00: Why is there... I'm not sure that I agree with you that they have a... Reputational harm is enough for us to say, okay, we'll keep it under seal. [00:47:24] Speaker 05: So I think the harm is that the allegations in this case are that they are treating this information in a way that is inappropriate. [00:47:31] Speaker 05: That is, in violation of our security protocols, of regulation SP, and the obligations that are imposed on them, we don't think there's any basis in the record for those allegations. [00:47:41] Speaker 05: And we're seeking to protect their confidentiality, keep their name out from sort of track tracks to the mud, and upset the ongoing [00:47:51] Speaker 00: Isn't that true in pretty much any case you have especially like as an example of criminal case someone's being alleged to be a Sex offender sure, but you know their name gets dragged through the map, but that's not filed under seal. [00:48:05] Speaker 05: That's Understood your honor. [00:48:06] Speaker 05: They think that the way this is set up fin arbitrations are are treated as confidential. [00:48:10] Speaker 05: That's a novel Judgment that was made by by Congress and by Finra and In these circumstances, we didn't see any reason why that should be different [00:48:20] Speaker 05: In this court, I take your point, Your Honor. [00:48:22] Speaker 05: I just think it's the context here, the confidential arbitration, the point of that confidentiality that we think warrants keeping under seal here. [00:48:30] Speaker 00: Okay. [00:48:30] Speaker 00: Thank you. [00:48:32] Speaker 05: Second, Your Honor, I wanted to speak briefly about my friend's point on the injunction. [00:48:36] Speaker 05: I do think that the July 18th order is itself an injunction. [00:48:38] Speaker 05: You can think about it as an initial injunction. [00:48:41] Speaker 05: You can think about it as a modification of the stipulated order, which I understand he agrees is an injunction. [00:48:47] Speaker 05: At bottom, we think the real question is, as this court said in Montana Wildlife, does it prescribe conduct and compel compliance? [00:48:54] Speaker 05: It clearly does. [00:48:55] Speaker 05: And even if you think that you need to find a distinction, of course, we've talked about the substantive difference between those two orders. [00:49:01] Speaker 05: That's our principal concern here. [00:49:02] Speaker 05: But it also adds deadlines, adds dates. [00:49:05] Speaker 05: There's no question about that. [00:49:06] Speaker 05: It also adds additional individuals, the advisors who can be subject to compliance. [00:49:11] Speaker 05: I think I heard my friend agree that it is enforceable by contempt. [00:49:16] Speaker 05: I think that is an injunction by any terms. [00:49:20] Speaker 05: The second thing I want to talk about is this idea about a data breach and the concern that reportedly being addressed here. [00:49:28] Speaker 05: There is simply nothing in the record, as I just said, that suggests that there's any risk of a security breach, a data breach here. [00:49:35] Speaker 05: This information has been in the advisor's possession for at least as under the allegations for four to seven years. [00:49:41] Speaker 05: There's been no indication that there has been a data breach. [00:49:45] Speaker 05: Many of these are current clients of LPL's advisors. [00:49:48] Speaker 05: They are seeking their financial advice. [00:49:50] Speaker 05: They trust them to follow the security protocols that LPL has in place and imposes on its advisors to keep that information secure. [00:49:57] Speaker 05: And indeed, in April of 2024, there was a notice, a notice of data breach. [00:50:02] Speaker 05: We didn't agree with that notice, but it was sent to the advisors to let them know what was going on. [00:50:06] Speaker 05: We haven't heard a peep from any of those advisors. [00:50:08] Speaker 05: I think that's very relevant to the third party standing arguments. [00:50:11] Speaker 05: But it's also relevant to the fact that there's just no indication here that there's any risk of an actual data breach. [00:50:17] Speaker 05: These individuals, these clients want their financial advisors to have their information in their possession to be able to provide them with financial advice. [00:50:25] Speaker 05: And the last thing I'll say, Your Honors, I'm happy to address any questions, is that your question is Judge Clifton. [00:50:33] Speaker 05: We are not asking the Court to stay and to move the interpretation of the stipulated order to the arbitration panel. [00:50:41] Speaker 05: We have asked the Court, and it's part of our arguments, about the difference in scope. [00:50:44] Speaker 05: But I want to be clear, we would not object to that if that's where the Court lands. [00:50:48] Speaker 05: We are perfectly happy to be before the arbitration panel. [00:50:50] Speaker 05: We think that's where this case belongs. [00:50:52] Speaker 05: And contrary to my friend's view, rule 13804 expressly provides for arbitration panels, vendor arbitration panels to issue permanent injunctive relief. [00:51:00] Speaker 05: If that's what's warranted, the panel can do that. [00:51:04] Speaker 02: All right. [00:51:04] Speaker 02: All right. [00:51:05] Speaker 02: Thank you, counsel. [00:51:06] Speaker 02: Thank you. [00:51:08] Speaker 02: Mr. Brand? [00:51:21] Speaker 04: a few quick points your honor and happy to answer any questions you may have. [00:51:27] Speaker 04: LPL's counsel said he was going to be addressing the purported timeliness problem for us and the purported prejudice they suffered. [00:51:35] Speaker 04: Didn't get to it. [00:51:35] Speaker 04: There's nothing to suggest that our motion was untimely and he certainly hasn't added to anything in the record and there's nothing on it about prejudice to them. [00:51:46] Speaker 04: He mentioned the March 14 memo. [00:51:49] Speaker 04: That under [00:51:50] Speaker 04: Your typical analysis, like in the Calvars decision, I know two of you were on the Calvars panel. [00:51:56] Speaker 04: The crucial date for determining timeliness is the date when the intervenors, putative intervenors, have reason to believe that their interests might not be adequately protected by the other defendant in the case. [00:52:09] Speaker 04: At the earliest point in time, that was that March 14 memo, and that's when we got word that the stipulated order could go far beyond [00:52:17] Speaker 04: the bulk upload tool, and we file within five weeks after that. [00:52:22] Speaker 04: Where's the prejudice? [00:52:22] Speaker 04: There is none. [00:52:23] Speaker 04: So that would be the first point, Your Honors. [00:52:26] Speaker 04: Another point is, Mr. Ellis actually already made it, 13804 does provide for injunctive relief, contrary to what Mayor Paz's counsel said. [00:52:34] Speaker 04: Additionally, there is no evidence of us acting in concert in any way to undermine what the district court has done here. [00:52:43] Speaker 04: So if you have any questions about that, I'm glad to address them, but there's no evidence on that point and no basis for arguing that, actually. [00:52:52] Speaker 04: The critical thing here is if you conclude that we are entitled to intervene because our motion was timely and we had protectable interests at stake, then what happens after that? [00:53:05] Speaker 04: There are really only two things a district court could do. [00:53:08] Speaker 04: And that is, consider the question of, is a valid arbitration agreement in place and does it apply to Ameripaz's demand regarding the forensic review? [00:53:16] Speaker 04: If the answer to both of those is yes, and I submit to you, no reasonable person could reach any other conclusion. [00:53:23] Speaker 04: If the answer is yes, then the district court has no discretion. [00:53:27] Speaker 04: It must stay the proceedings pending arbitration. [00:53:31] Speaker 04: LPL agrees with us that that would be an appropriate result here. [00:53:34] Speaker 04: We contend it would be the only appropriate result here. [00:53:37] Speaker 04: That's the only way to protect our interests. [00:53:40] Speaker 04: Opposing counsel was suggesting that there's a related issue here, that we were [00:53:48] Speaker 04: what technically would be called the control person of Ameriprise. [00:53:51] Speaker 04: It's the controlling person. [00:53:52] Speaker 04: We're the control person. [00:53:53] Speaker 04: Employer, employee, that would be the analogy. [00:53:56] Speaker 04: That they could somehow bind us to the stipulated order. [00:54:00] Speaker 04: That is not the case. [00:54:01] Speaker 04: And I would, if you have any doubts about that, I would encourage you to look specifically at two things. [00:54:06] Speaker 04: One is Federal Rule 13200. [00:54:10] Speaker 04: 13,200, and FINRA regulatory notice 16-25. [00:54:15] Speaker 04: Taken together, these two make clear that no member firm, neither LPL nor Ameriprise, may compel an associated person, the financial advisors, no member firm may compel an associated person to waive [00:54:33] Speaker 04: his or her right to arbitration. [00:54:35] Speaker 04: And that's what would happen here if we were somehow bound by the stipulated order or bound by the July 18 order. [00:54:42] Speaker 04: We would effectively be waiving our right to arbitrate the propriety, nature, and scope of any forensic review. [00:54:50] Speaker 04: We don't waive that right. [00:54:51] Speaker 04: We've made it very clear we don't waive that right. [00:54:53] Speaker 04: And it's not just that that would be a violation of our right to arbitrate. [00:54:59] Speaker 04: But regulatory notice 16-25 makes it clear [00:55:03] Speaker 04: that if LPL attempted to do that to us, or if in this case Ameriprise is attempting to do us, that in fact is a violation of a separate federal rule, 2010. [00:55:14] Speaker 04: Regulatory Notice 16-25 makes it perfectly clear that Ameriprise may not directly or indirectly compel us to waive our right to arbitration, which it is seeking to do here by saying that we are bound by the stipulated order, that we're bound by the July 18th order. [00:55:28] Speaker 04: With that, I'll rest unless you have any questions for me. [00:55:33] Speaker 02: All right. [00:55:33] Speaker 02: Thank you very much. [00:55:34] Speaker 02: Thanks to all counsel for their briefing and argument in this case. [00:55:36] Speaker 02: Apologize for those from out of town. [00:55:38] Speaker 02: The weather in Southern California did not cooperate. [00:55:40] Speaker 02: Supposed to get bad again later today. [00:55:43] Speaker 02: And with that, this case is submitted and this particular panel is done. [00:55:47] Speaker 02: So good luck the rest of the week. [00:55:48] Speaker 02: Thank you.