[00:00:08] Speaker 01:
Thank you, Your Honors, and good morning.

[00:00:10] Speaker 01:
May it please the court, I'm Ross Intelsano for Appellant Paul Feinstein.

[00:00:15] Speaker 01:
I'd like to reserve three minutes for rebuttal.

[00:00:17] Speaker 01:
The case law is clear that removal jurisdiction is based solely on statute.

[00:00:22] Speaker 01:
The defendant bears the burden of proving removal jurisdiction.

[00:00:25] Speaker 01:
The district court in this case ruled that the FDIC's removal of this case under the FOREA removal provision and the general removal statute does not appear to be proper.

[00:00:37] Speaker 01:
Now, two and a half years after the FDIC improperly removed this matter from FINRA, it has advised this court that

[00:00:48] Speaker 01:
they are not challenging the district court.

[00:00:50] Speaker 03:
So would you agree that the FDIC had a right to have the decision made with regard to this dispute in a different forum?

[00:00:57] Speaker 03:
You just think they went about it the wrong way.

[00:00:59] Speaker 03:
They should have repudiated the arbitration provision and that would have ended the arbitration and then the claim if it all would have had to be pursued through the FIREA process or what?

[00:01:09] Speaker 01:
No, I believe once we put in our claim, we had the right, as long as there are arbitration clause, that the FDIC could be sued in arbitration.

[00:01:19] Speaker 01:
And courts have moved the FDIC into arbitration, including this court, in the Oregon Bureau of Labor case.

[00:01:28] Speaker 01:
So no, I do believe that irrespective of whether or not they did it improperly, they would still be in arbitration.

[00:01:36] Speaker 03:
But isn't the whole point of this statutory construct, it's almost like a bankruptcy for a bank.

[00:01:42] Speaker 03:
You want all the claims to be gathered in one spot and adjudicated and assets distributed.

[00:01:48] Speaker 01:
That's true unless the FDIC is assuming agreements with parties that have underlying arbitration agreements.

[00:01:57] Speaker 01:
So in this situation, the FDIC, excuse me, in this situation, the FDIC came in

[00:02:07] Speaker 01:
It became the receiver for First Republic Bank.

[00:02:11] Speaker 01:
And in that process of doing that, the FDIC assumed all the liabilities of Frim and Frisk.

[00:02:19] Speaker 03:
It assumed all the contracts and then it can disaffirm any contract it wants to, right?

[00:02:23] Speaker 01:
Correct.

[00:02:23] Speaker 01:
But there are underlying agreements that it did not disaffirm in this situation.

[00:02:27] Speaker 03:
But that's what I'm saying.

[00:02:28] Speaker 03:
So you think they could have done it.

[00:02:29] Speaker 03:
They just did it the wrong way.

[00:02:30] Speaker 03:
They should have disaffirmed more contracts.

[00:02:32] Speaker 01:
Right.

[00:02:32] Speaker 01:
Including the FRIM, the transition bonus agreement between First Republic Investment Management.

[00:02:38] Speaker 01:
But the one thing they couldn't repudiate is the FINRA rules.

[00:02:43] Speaker 01:
Because the reason why we're in FINRA is because First Republic Securities Corporation is a registered broker dealer.

[00:02:51] Speaker 01:
Any disputes between a registered broker dealer and a registered rep have to be heard at FINRA.

[00:02:56] Speaker 01:
When they took over,

[00:02:57] Speaker 01:
those liabilities, they sit in the shoes of First Republic Securities Corporation and therefore have mandatory arbitration.

[00:03:07] Speaker 01:
So even if they did it properly, the FDICR should still be in the final arbitration.

[00:03:13] Speaker 01:
And with respect to First Republic Investment Management and FRISC, it's even more clear and a completely different analysis.

[00:03:20] Speaker 01:
In that situation,

[00:03:22] Speaker 01:
In May 1st, 2023, the FDIC appointed its receiver, the First Republic.

[00:03:28] Speaker 01:
Then there was a purchase and an assumption agreement on the same day.

[00:03:31] Speaker 01:
And in that purchase and assumption agreement, the FDIC moved all the assets to JP Morgan.

[00:03:39] Speaker 01:
So now JP Morgan owns the claims against our client, Mr. Feinstein.

[00:03:44] Speaker 01:
In May 2023, two weeks after the receiver was appointed,

[00:03:50] Speaker 01:
The FDIC substituted in our arbitration for only First Republic Bank, not for Frim and Frisk, because Frim and Frisk are still owned by JP Morgan.

[00:04:01] Speaker 03:
So if your client wins, whatever the forum is, whose assets are going to satisfy that judgment?

[00:04:07] Speaker 01:
If he wins in his claims against the FDIC, it would be the FDIC.

[00:04:11] Speaker 01:
But that has nothing to do with Frim and Frisk's claims against him.

[00:04:17] Speaker 01:
$16 million worth of claims, if any, were related to that.

[00:04:19] Speaker 03:
Does he have any claims against them, though, or are all his claims claims that would now be satisfied by assets that are controlled by the FDIC?

[00:04:27] Speaker 01:
Yes, the answer to that is yes, Your Honor.

[00:04:28] Speaker 01:
So what's very important to us is what's happened now is, first of all, now we have the FDIC admitting that it's no proper removal.

[00:04:36] Speaker 01:
Frim and Frisk are now riding the coattails of the FDIC and saying they should be also in federal court.

[00:04:44] Speaker 01:
However, we have these underlying arbitration agreements that are still alive with Frim and Frisk.

[00:04:49] Speaker 01:
And after we filed the arbitration in February of 2020, FINRA specifically sent a note and letter to Frim and Frisk saying all disputes with them had to be arbitrated.

[00:05:00] Speaker 01:
And that was before the submission agreement was even signed by Frim, Frisk, or the FDIC.

[00:05:06] Speaker 01:
So there is jurisdiction that's still alive.

[00:05:09] Speaker 01:
Now irrespective of all the machinations by the FDIC to try to be in federal court, it has nothing to do with Frim and Frisk.

[00:05:17] Speaker 01:
There are still live arbitration agreements including this transition bonus agreement between Frim and Mr. Feinstein and also the FINRA rules because Farsher Public Securities Corp is a FINRA broker-dealer and they can't vitiate that.

[00:05:33] Speaker 01:
When the FDIC tried to repudiate the submission agreement, they sent that repudiation only on behalf of the FDIC and First Republic Bank.

[00:05:44] Speaker 01:
They did not send it on behalf of Frim and Frisk because they didn't own Frim and Frisk, JP Morgan did.

[00:05:51] Speaker 01:
So that specific repudiation says it's not a repudiation on behalf of other parties.

[00:05:57] Speaker 01:
Those other parties are frim and frisk with these underlying agreements.

[00:06:01] Speaker 01:
So even if the court here finds that the repudiation by the FDC was proper, which we don't think it was, it has absolutely no effect on frim and frisk.

[00:06:13] Speaker 01:
They are still bound by the active agreements.

[00:06:16] Speaker 01:
And the Supreme Court in the Bird case found that the FAA leaves no room for discretion and the district court shall direct the parties to proceed in arbitration if there are active arbitration agreements.

[00:06:27] Speaker 01:
And with Frim and Frisk, there are.

[00:06:29] Speaker 01:
Now, what Frim and Frisk are arguing, strike that.

[00:06:34] Speaker 01:
So Frim and Frisk know that that's the case?

[00:06:37] Speaker 01:
Because after Receiver was appointed, Frim and Frisk filed arbitrations against 16 other former employees and registered reps, similar to Mr. Feinstein, at FINRA, proving that they know that they still have mandatory arbitration clauses against these employees.

[00:06:56] Speaker 01:
Now what they're trying to argue is that there's an intertwining effect between their claims against us and our claims against the FDIC.

[00:07:06] Speaker 01:
But the Supreme Court in Byrd specifically rejected that argument.

[00:07:11] Speaker 01:
and requires that the district court.

[00:07:13] Speaker 03:
But this is all about whether Frim and Frisk should be in arbitration.

[00:07:16] Speaker 03:
Yes, yes.

[00:07:17] Speaker 03:
Can we go back to whether FDIC should be in arbitration?

[00:07:20] Speaker 03:
Sure, happy to do that.

[00:07:21] Speaker 03:
I mean I think under 12 USC 1821 D6A2 or whatever says you can continue the action if it's a pre-petition action.

[00:07:30] Speaker 03:
Correct.

[00:07:31] Speaker 03:
But only in two fora and missing from the list is an arbitration panel.

[00:07:37] Speaker 01:
It is certainly a novel concept and a novel argument and a novel issue here.

[00:07:42] Speaker 01:
So here's what happened there.

[00:07:44] Speaker 01:
The district court found that 1821 is not a mandatory venue provision for federal court.

[00:07:51] Speaker 01:
And he was following the Holmes decision in the Sixth Circuit.

[00:07:56] Speaker 01:
It sure seems like by its language it is, though.

[00:07:59] Speaker 01:
Yeah, but I don't think there hasn't been a lot of cases where there is already an arbitration pending.

[00:08:06] Speaker 03:
Yeah, but do you have a textual argument that it isn't a venue selection provision?

[00:08:10] Speaker 01:
Well, I think if it was intended to be a venue provision, it would specifically say that, and it doesn't.

[00:08:19] Speaker 01:
And the statute says to continue in action, it doesn't say to continue a court claim or continue a federal court case, it says continue in action.

[00:08:28] Speaker 01:
So it contemplates... Excuse me?

[00:08:33] Speaker 01:
in a different section it does but not in a section.

[00:08:35] Speaker 03:
No, no, in D6A2 it says can be continued in one of these designated four and it lists I think the principal place of, the district that includes the principal place of business and the district for the District of Columbia.

[00:08:47] Speaker 01:
Correct.

[00:08:48] Speaker 01:
That is true Your Honor, that's what it says.

[00:08:50] Speaker 01:
But in the only other case that has ever occurred where that either side has found where there was a pending arbitration before the removal, the Mapfray case in Puerto Rico,

[00:09:03] Speaker 01:
The judge decided that continuation was permissible in arbitration.

[00:09:09] Speaker 01:
And here in the lower court, that's what the judge decided to do.

[00:09:11] Speaker 03:
But what did they say about the language of the statute?

[00:09:14] Speaker 01:
They said it wasn't clear enough to enforce all

[00:09:20] Speaker 01:
petitioners to have to have all their disputes heard in federal court.

[00:09:23] Speaker 01:
And there have been lots of cases around the country in which the FDIC has been forced to litigate in an arbitration form and not in federal court.

[00:09:31] Speaker 01:
It just doesn't happen very often because the FDIC doesn't very often remove arbitrations.

[00:09:36] Speaker 01:
And here, they didn't even have the ability to do that.

[00:09:40] Speaker 01:
So here,

[00:09:41] Speaker 01:
And what happened in our case is we filed a continuation request at FINRA, which is very similar to what happened in the Maverick Court, and found that that was enough, and the judge found that that was enough as well.

[00:09:56] Speaker 01:
And we believe there's no independent basis for either of the defendants to be here in federal court, but specifically First Republic Investment Management and Frisk.

[00:10:06] Speaker 01:
And I focus on that because

[00:10:09] Speaker 01:
You know, there's been some argument about whether or not the arbitrators would have the ability to make decisions based on FOREA as a statute.

[00:10:17] Speaker 01:
And here, we already had 10 days of arbitration at FINRA.

[00:10:21] Speaker 01:
We have a very sophisticated arbitration panel.

[00:10:23] Speaker 01:
They have been asking every three months for an update.

[00:10:27] Speaker 01:
There is no doubt that this arbitration panel has the ability to see whether or not any of their defenses or our defenses

[00:10:34] Speaker 01:
Foraya plays a role in.

[00:10:36] Speaker 03:
Well, it can't be the rule, though, that in deciding whether to send it back to arbitration, you look at the composition of the panel and see whether you're going to have sufficient belief that they'll get it right.

[00:10:47] Speaker 01:
No, I think you're right.

[00:10:49] Speaker 01:
But I think what we've heard from Frim and Frisk is that they believe the only place where anyone can rule on Foraya or any defenses related to Foraya would be in federal court.

[00:10:59] Speaker 01:
And what I'm saying is that there are very sophisticated arbitrators who can

[00:11:04] Speaker 01:
of course, rule on statutes.

[00:11:06] Speaker 03:
But that rule suggests it turns on the sophistication of the arbitrators, and if we had unsophisticated arbitrators here, it may be a different argument, and I don't think you want to make that argument.

[00:11:14] Speaker 01:
I am not solely relying upon that.

[00:11:17] Speaker 01:
If, at the end of the day, the court decides to bifurcate this proceeding and forces us to go forward against the FDIC and federal court, and then we are in arbitration with Frim and Frisk, if Frim and Frisk believes

[00:11:33] Speaker 01:
and we knock out the case and they get a zero.

[00:11:36] Speaker 01:
They have the ability to move to vacate the award.

[00:11:40] Speaker 01:
in federal court and that's the proper standard, that's the proper procedure for them.

[00:11:45] Speaker 01:
The FDIC would have the same thing and what all we're asking you to do is because there's no jurisdiction to actually be here, send everyone back to FINRA.

[00:11:56] Speaker 01:
Then the FDIC and First Republic Investment Management and FRISC can make a decision.

[00:12:00] Speaker 01:
They can either decide they want to stay at FINRA, they could also ask FINRA to decide whether or not they have jurisdiction or not.

[00:12:08] Speaker 01:
Or they can move in court to stay the arbitration.

[00:12:12] Speaker 01:
With respect to Frim and Frist, I think there's no doubt that we're going to stay there.

[00:12:16] Speaker 01:
With respect to the FDIC, they might choose to stay there, too.

[00:12:19] Speaker 03:
Move in court.

[00:12:20] Speaker 03:
Which court?

[00:12:21] Speaker 03:
One of those two designated fora?

[00:12:22] Speaker 01:
Yes.

[00:12:23] Speaker 01:
Yeah.

[00:12:23] Speaker 01:
It would be in court.

[00:12:25] Speaker 03:
Northern District of California, I guess?

[00:12:27] Speaker 03:
Excuse me, yeah.

[00:12:28] Speaker 03:
Northern District?

[00:12:29] Speaker 01:
Or the Central District.

[00:12:30] Speaker 01:
I mean, Northern District would probably be, yes.

[00:12:32] Speaker 03:
I mean, if we want to go with the 1821D6A, it would have to be Northern District of California.

[00:12:36] Speaker 01:
Yes.

[00:12:36] Speaker 01:
Well, they moved here in the Central District because the arbitration was venue in Los Angeles.

[00:12:45] Speaker 01:
Now, one of the other issues involved in the case is the tideliness of,

[00:12:56] Speaker 01:
of our motion to remand, and this is a clear and erroneous standard for that.

[00:13:05] Speaker 01:
We believe, I'm sorry, excuse me, abuse of discretion.

[00:13:09] Speaker 01:
We believe that it's nowhere near close to an abuse of discretion.

[00:13:12] Speaker 01:
The judge has the ability under Rule 6 of the Federal Rules of Civil Procedure to control his docket, and that's exactly what he did in this case.

[00:13:22] Speaker 01:
There's been lots of argument about gaps between the stays.

[00:13:26] Speaker 01:
I think the judge in his order on November 27th was very clear that the stays continued until December 13th, 2023.

[00:13:33] Speaker 01:
And he found in this case that there was a minimum amount of good cause and excusable neglect for us to file our motion to remand.

[00:13:43] Speaker 01:
And it's our belief that that's nowhere near the Abusive Discretion Standard.

[00:13:47] Speaker 01:
If there's not any more questions, I'm happy to.

[00:13:50] Speaker 01:
Thank you so much.

[00:14:00] Speaker 05:
We use splitting time, so we've given you 10 minutes to stick to that, and then we'll hear five minutes from your co-counsel.

[00:14:12] Speaker 02:
Good morning, Your Honors.

[00:14:14] Speaker 02:
May it please the Court, John Gerisco, representing the FDIC as receiver for First Republic Bank.

[00:14:23] Speaker 02:
The world changes when a bank fails.

[00:14:27] Speaker 02:
That's what FIREA does.

[00:14:29] Speaker 02:
One of the main things FIREA does when a bank fails is that it establishes a comprehensive claims process by which any claimant who has a claim against the receivership puts the claim through the claims process.

[00:14:47] Speaker 02:
This court has made clear in Benson, in Rundgren, and in Shaw

[00:14:53] Speaker 02:
that this is a jurisdictional requirement to exhaust the claims process.

[00:14:59] Speaker 02:
Mr. Feinstein filed an administrative claim against the receivership, but he didn't follow through.

[00:15:07] Speaker 02:
What the statute requires, as this court has alluded to, it begins with filing a claim.

[00:15:13] Speaker 02:
If the claim is disallowed, then we go to 1821 D6 for what happens next.

[00:15:21] Speaker 02:
And what happens next is there are three choices.

[00:15:24] Speaker 02:
The first choice is not at issue here, which is the claimant may request an administrative review of the claim.

[00:15:30] Speaker 02:
The second choice is that the claimant may continue an action commenced before the appointment of the receiver.

[00:15:38] Speaker 02:
And the third option is to file a new lawsuit.

[00:15:42] Speaker 02:
As we argued in our brief,

[00:15:45] Speaker 02:
We believe that contrary to the map free court that council alluded to out of the district of Puerto Rico, that the text of 1821 D6 does not allow a finding that an arbitration commenced before the appointment of the receiver is.

[00:16:05] Speaker 02:
an action that can be continued.

[00:16:07] Speaker 03:
Independent of who should be making the decision, what's the statute that allows a removal from arbitration to federal court?

[00:16:18] Speaker 03:
What statute would you point to that says this arbitration can be removed to federal court?

[00:16:26] Speaker 03:
I get the argument that

[00:16:28] Speaker 03:
You could maybe disaffirm the contract and shut down the arbitration by saying we no longer agree the arbitration, figure it out, do what you want, file an administrative claim.

[00:16:36] Speaker 03:
I'm a little confused about the removal language.

[00:16:41] Speaker 02:
Certainly, Your Honor.

[00:16:43] Speaker 02:
The FDIC special removal statute is 12 USC 1819 B2B.

[00:16:49] Speaker 02:
We argued below that the removal of this arbitration to federal court was proper under 1819 B2B.

[00:16:58] Speaker 02:
We relied on, most importantly, the precedent from this court and other courts of appeals, recognizing that Congress, in creating the special removal power for the FDIC, intended the FDIC's part of the move to be much broader than the general removal statute 20 at USC 1441, and that the FDIC should have every opportunity to have a federal forum.

[00:17:27] Speaker 02:
And below, we argued that that language supported removal of this arbitration proceeding.

[00:17:34] Speaker 02:
As the court's aware, on appeal, we have elected not to challenge the district court's finding that Section 1819B2B did not authorize the removal of Mr. Feinstein's arbitration from FINRA.

[00:17:50] Speaker 02:
Again though, as the district court, that tracks what the district court found, which is that this removal was not authorized by statute.

[00:17:57] Speaker 02:
The district court ultimately held though that the FDIC had properly repudiated

[00:18:03] Speaker 02:
the one agreement in this case that required First Republic Bank to arbitrate at FINRA, which the parties call the submission agreement.

[00:18:11] Speaker 03:
And so it's only frim and frisk, to use the acronyms I guess we're throwing around, that are subject to FINRA.

[00:18:18] Speaker 03:
The FINRA obligation to arbitrate doesn't extend to First Republic?

[00:18:22] Speaker 02:
First Republic voluntarily submitted to FINRA jurisdiction by signing the submission agreement.

[00:18:30] Speaker 02:
The FDIC then authorized its statutory repudiation power under Section 1821E to say we are not... So the arbitral jurisdiction arose as a result of a contractual choice that First Republic made, not as a result of a FINRA regulation?

[00:18:46] Speaker 02:
Correct.

[00:18:48] Speaker 02:
First Republic Bank was

[00:18:50] Speaker 02:
was not a broker.

[00:18:52] Speaker 02:
It had no obligation to be in FINRA.

[00:18:57] Speaker 02:
Again, because the allegations here are essentially allegations against the failed bank, First Republic Bank entered into the arbitration.

[00:19:08] Speaker 02:
As Your Honor's are aware, the note that's one of the issues in the arbitration

[00:19:16] Speaker 02:
that is now in court, that note was given to First Republic Bank.

[00:19:21] Speaker 02:
So First Republic Bank came in as a counterclaimant or third party claimant, whatever nomenclature you want to use, to deal with the note issue.

[00:19:31] Speaker 02:
And so it voluntarily submitted.

[00:19:35] Speaker 02:
But that contractual voluntary submission is something the FDIC could repudiate under 1821 E and it did repudiate as we explained.

[00:19:44] Speaker 05:
So can I ask a question?

[00:19:46] Speaker 05:
So we're dealing with an appeal from the central district, right?

[00:19:50] Speaker 05:
Yes.

[00:19:52] Speaker 05:
But the case has been transferred to the northern district.

[00:19:55] Speaker 02:
That is what the district judge, his last order, transferred the case to the Northern District of California.

[00:20:02] Speaker 05:
Just help me understand why it was ever in the Central District.

[00:20:05] Speaker 05:
When you removed it, you could have designated where, right?

[00:20:09] Speaker 05:
And you designated Central District rather than Northern District.

[00:20:12] Speaker 05:
Why did you do that?

[00:20:14] Speaker 05:
And does it matter?

[00:20:16] Speaker 02:
It's not in the record.

[00:20:17] Speaker 02:
I don't know and I don't think it matters because

[00:20:20] Speaker 05:
The case would agree now that the case should end up in the northern district.

[00:20:27] Speaker 02:
We do because Mr. Feinstein was given the option of the two courts designated under 1821 D6, either the Northern District or the DC District Court, he chose the Northern District of California.

[00:20:40] Speaker 02:
So that is where this case, as the district court anticipated when I transferred the case, that's where this case should be decided.

[00:20:49] Speaker 05:
The counterclaims, you wouldn't be here to address the counterclaims.

[00:20:52] Speaker 05:
That's other counsel, is that right?

[00:20:55] Speaker 02:
Yes, your counsel for the 60 years.

[00:21:00] Speaker 03:
But you think it shouldn't proceed in the Northern District either because they didn't file timely within the 60 days or not?

[00:21:08] Speaker 02:
Well, no, that's correct.

[00:21:10] Speaker 02:
The case should be in the Northern District.

[00:21:12] Speaker 02:
And then it should be dismissed?

[00:21:14] Speaker 02:
Right.

[00:21:14] Speaker 02:
But that's not before us.

[00:21:16] Speaker 02:
Right.

[00:21:19] Speaker 02:
As we argued in our brief, we believe that 1821 D6 does not give, does not allow these, Mr. Feinstein's claims against the FDIC to continue.

[00:21:31] Speaker 02:
That leaves the counterclaims.

[00:21:33] Speaker 05:
Right, but you, when this, if this goes to the Northern District as opposed to back to the arbitration panel, then you're going to go in and file a motion to dismiss.

[00:21:45] Speaker 02:
Well,

[00:21:46] Speaker 02:
Yes, we will.

[00:21:47] Speaker 02:
We will file a motion to dismiss.

[00:21:48] Speaker 05:
Again, we- I mean, I don't think that's a secret.

[00:21:50] Speaker 05:
If you think that that's a litigation tactic, you don't need to tell me.

[00:21:53] Speaker 02:
No, no, no.

[00:21:54] Speaker 02:
Certainly, Your Honor, again, we raised it.

[00:21:56] Speaker 02:
We raised it in this here because it's a matter of subject matter jurisdiction.

[00:22:01] Speaker 02:
So we raised this issue that even though we understand why the district court did what it did to give Mr. Feinstein an opportunity to pursue his claims, we don't believe that the text of Section 1821D6 allows that.

[00:22:15] Speaker 02:
And that would mean that what would remain of the case would be the subsidiary's counterclaims against Mr. Feinstein, which would go to the Northern District of California, we believe.

[00:22:24] Speaker 04:
Why do they need to go to the Northern District?

[00:22:26] Speaker 04:
Why can't they stay in a central district?

[00:22:32] Speaker 02:
That's a good question, Your Honor.

[00:22:34] Speaker 05:
I suppose that to the extent that- Did the district court order, it ordered the entire case up there though,

[00:22:42] Speaker 02:
The district court did order the entire case up to the Northern District of California.

[00:22:49] Speaker 02:
And again, you know, counsel referred to this issue of intertwining because certain of the issues involved in the counterclaims may implicate firea.

[00:23:03] Speaker 02:
It may be a situation where ultimately it would be proper to have those decided in one of the courts designated under 1821D6.

[00:23:11] Speaker 02:
Right.

[00:23:12] Speaker 04:
So as I understand it, if they somehow, and I may not be saying this entirely properly, but if they somehow would affect the assets that are now under FDIC receivership, then they basically would

[00:23:28] Speaker 04:
that then come under coverage of the statute.

[00:23:30] Speaker 04:
And so that would make sense that those claims, if that was the case, if it belonged in the Northern District, then maybe you'd seek to dismiss them or something.

[00:23:36] Speaker 04:
But if they don't, if they don't and it just ends up that FDIC is not implicated at all for a counterclaim, which I don't know if that's true or not.

[00:23:47] Speaker 04:
I don't know if we know whether that's true or not.

[00:23:49] Speaker 04:
For those claims, I'm just curious as to why they needed to be in the Northern District, what the hook is for transferring those claims.

[00:23:55] Speaker 04:
I suppose other than you said,

[00:23:58] Speaker 04:
that they might be intertwined, but it seems like by definition they wouldn't be intertwined.

[00:24:01] Speaker 04:
If they were intertwined, they would be the type of thing that might affect the assets under FDIC receivership.

[00:24:11] Speaker 04:
So I'm talking about a world in which they're not.

[00:24:13] Speaker 02:
Certainly, Your Honor.

[00:24:15] Speaker 02:
And again, the case was transferred as a whole.

[00:24:19] Speaker 02:
And really, if the FDIC is by definition out and none of the issues

[00:24:26] Speaker 02:
relating to the counterclaim were to implicate the FDIC, then 1821D6 might no longer be a factor.

[00:24:34] Speaker 02:
But I think counsel for the subsidiaries might have a better idea of, or might be able to opine as to whether the central district would be sufficient if this case was limited only to their claims against Mr. Feinstein.

[00:24:47] Speaker 05:
Okay, maybe we'll hear from them then.

[00:24:50] Speaker 02:
We ask that the court affirm the district court.

[00:25:07] Speaker 00:
Good morning, Your Honors.

[00:25:08] Speaker 00:
May it please the Court?

[00:25:09] Speaker 00:
My name's Dippinita Amar.

[00:25:11] Speaker 00:
I represent the entities that we're colloquially calling Frim and Frisk.

[00:25:17] Speaker 00:
I'd like to start by actually answering a couple of the questions from Your Honors.

[00:25:23] Speaker 00:
To start with Judge Nelson's question regarding why was the case removed initially to the central district.

[00:25:30] Speaker 00:
I believe the answer is the FINRA arbitration was pending in Los Angeles, and at the time,

[00:25:36] Speaker 00:
Mr. Feinstein had not yet pursued his administrative remedies by filing with the FDIC his request for claims.

[00:25:45] Speaker 00:
So if you look at the statute 1821D, that's really what happens after an individual or an entity has pursued claims through the administrative process and thereafter been disallowed.

[00:25:59] Speaker 05:
Where the district hadn't really ripened, if you will.

[00:26:02] Speaker 00:
Exactly, Your Honor.

[00:26:03] Speaker 00:
That's exactly what happened at the time.

[00:26:05] Speaker 00:
After removal, Mr. Feinstein, on his own, voluntarily pursued the administrative process.

[00:26:13] Speaker 00:
When he did so, he did so not only with respect to his claims against Frim and Frisk, but also he submitted the entire kit and caboodle, so to speak.

[00:26:29] Speaker 00:
He submitted the entire case, including

[00:26:33] Speaker 00:
Frim, Frisk, and First Republic banks counterclaims against him.

[00:26:39] Speaker 00:
So the entire thing was submitted through the administrative process, which in my mind is a very clear concession that Mr. Feinstein has made that the whole thing is effectively a claim for assets and liabilities now that belong to the FDIC.

[00:26:57] Speaker 03:
And once the... Did the FDIC even have jurisdiction over the Frim and Frisk parts though?

[00:27:02] Speaker 00:
The FDIC, the FDIC, well.

[00:27:07] Speaker 03:
The administrative process, I mean.

[00:27:08] Speaker 00:
Yes, yes, absolutely, because what Mr. Feinstein was seeking was a declaration, among other things.

[00:27:17] Speaker 00:
that the promissory note that he owed First Republic Bank, he had signed a $7.1 million promissory note, and he was seeking a declaration that he'd be relieved of the obligation to pay that.

[00:27:30] Speaker 03:
Sure, it had jurisdiction over that.

[00:27:31] Speaker 03:
I'm talking about the parts that were just the frim and frisk parts.

[00:27:34] Speaker 00:
So the parts that were the frim and frisk parts are also parts where he is alleging acts and omissions of employees of the bank, of First Republic Bank,

[00:27:45] Speaker 00:
which has now been put under receivership and belong to the FDIC.

[00:27:50] Speaker 00:
So every .

[00:27:51] Speaker 00:
.

[00:27:51] Speaker 00:
.

[00:27:51] Speaker 04:
So you're arguing that we need to even address that.

[00:27:55] Speaker 04:
Can we get the lower court to address that and not have to do the hard work?

[00:27:59] Speaker 04:
Judge Cole has to do this all the time in his home circuit.

[00:28:02] Speaker 04:
Do we really need to address that or can the Northern District address whether or not the FDIC is implicated by some of these claims, which ones they might be implicated by?

[00:28:15] Speaker 04:
If they are implicated by that then it seems like the, those would be treated differently than if it just turns out that the FDIC is not implicated.

[00:28:27] Speaker 04:
I understand your point I think is, well by submitting to the, by bringing all these claims in the administrative proceeding and he was, he was impliedly at least acknowledging that that was the case but can't we let the district court decide whether that's true or not?

[00:28:43] Speaker 00:
Actually, Your Honor, I think he was explicitly acknowledging, if you look at the cover letter of his submission, he was explicitly acknowledging that the counterclaims and his claims were all part of the same dispute, and indeed they were.

[00:28:56] Speaker 00:
They were asking for relief from acts and omissions of the bank, which by

[00:29:03] Speaker 00:
It's very terms for ASS belong to FDIC.

[00:29:07] Speaker 00:
On your question.

[00:29:08] Speaker 04:
Because it doesn't even seem that was the reason why, unless I'm missing it, that was the reason why we have this sort of interlocutory appeal.

[00:29:15] Speaker 04:
The reason for the interlocutory appeal is these tough questions about whether FDIC can remove something from arbitration and what they do and what the transfers approach.

[00:29:25] Speaker 04:
Like, this thing you want, and I understand why you want it to be decided by us, but do we need to?

[00:29:31] Speaker 04:
That's the only question I'm asked, do we need to?

[00:29:33] Speaker 00:
I think the real answer is you don't necessarily need to, but I think it's almost implicit in the relief that we are seeking, because one of the pieces of the relief is that the entire action was removed.

[00:29:50] Speaker 00:
When you remove an action, you don't just remove some parties and not others.

[00:29:54] Speaker 00:
And so I think if the removal was appropriate, and we contend that it was,

[00:29:59] Speaker 00:
then the entire action is removed and it needs to stay together as an entire action.

[00:30:03] Speaker 04:
What if the removal was inappropriate and but they blew the deadline to ask for it to be returned so they, but they've also, haven't they also asked for arbitration of, they filed a removal request motion for removal but they also filed a request for arbitration.

[00:30:24] Speaker 04:
So isn't it possible that the lower court could

[00:30:27] Speaker 04:
take claims that it had determined do not implicate the FDIC.

[00:30:30] Speaker 04:
I don't even know if any of those claims exist, but if we don't decide that, but the lower court does, and then it decides those claims need to go back and be arbitrated before FINRA.

[00:30:38] Speaker 00:
I don't think that the district court could decide that the claims as currently pled could be decided by FINRA.

[00:30:46] Speaker 00:
And the reason for that is that the affirmative defenses in those very claims are the mirror image of our claims.

[00:30:57] Speaker 00:
what Mr. Feinstein is contending in the affirmative defenses.

[00:31:00] Speaker 04:
Right, right.

[00:31:01] Speaker 04:
So that's why you're probably right.

[00:31:04] Speaker 04:
You may be right.

[00:31:05] Speaker 04:
They all have some sort of nexus or relationship to the assets under FDIC.

[00:31:16] Speaker 04:
But I'm just saying, assume for a second with me, which sounds like you disagree with it, but just assume that there was some claims that did not

[00:31:26] Speaker 04:
that did not affect the assets under FDIC receivership and so therefore did not fall under this whole regime of removing these claims and why would those not be sent back for arbitration?

[00:31:45] Speaker 04:
I'm assuming they blew the removal deadline but they do have an independent request for arbitration of those claims.

[00:31:55] Speaker 00:
The answer is if theoretically there were claims that were completely divorced of any liabilities that have been taken over by the FDIC, you could send

[00:32:06] Speaker 00:
the case claims back to Finra?

[00:32:08] Speaker 04:
You could split it all up that way.

[00:32:09] Speaker 00:
Theoretically, I just don't think it works in this case because Mr. Feinstein has conceded that they are all lawyers.

[00:32:16] Speaker 04:
But back to my original question, we don't really need to decide any of that, right?

[00:32:19] Speaker 04:
We can let the district court do the hard work because we don't like to work hard.

[00:32:23] Speaker 04:
I'm saying that, yeah.

[00:32:25] Speaker 05:
Quick, get this on the hook.

[00:32:28] Speaker 04:
So we could send it back and have the district court because they are interrelated.

[00:32:31] Speaker 04:
I think as you've been getting at, they're interrelated whether or not

[00:32:33] Speaker 04:
The question of whether or not these are FDIC, any of these claims don't implicate the FDIC, and whether they should be arbitrary are kind of related.

[00:32:41] Speaker 04:
And also, it feels like we'd be speculating to decide some of these without deciding the whole package.

[00:32:48] Speaker 00:
Yeah, I think you could punt that your honor to the northern well, maybe just leave something for the district court to do We're done I mean, I think you could theoretically do that.

[00:32:59] Speaker 00:
I just think in this case that doesn't really work.

[00:33:02] Speaker 00:
They Congress made this no, you said we could do it

[00:33:08] Speaker 05:
That's all I heard.

[00:33:09] Speaker 00:
Well, Your Honor, I think Congress made this scheme for a reason.

[00:33:13] Speaker 00:
No, it's a fair point.

[00:33:15] Speaker 00:
And the reason is that the FDIC is in the driver's seat and all these claims need to be where they want it to be.

[00:33:23] Speaker 00:
And if they've repudiated the agreement with FINRA, I think they belong all together.

[00:33:27] Speaker 00:
I'm getting cued that my time is up.

[00:33:29] Speaker 00:
So thank you.

[00:33:30] Speaker 05:
Thank you.

[00:33:31] Speaker 05:
But we took you over.

[00:33:32] Speaker 05:
Thank you.

[00:33:35] Speaker 04:
And by we, he means me.

[00:33:43] Speaker 01:
Okay, I might have to have you work a little bit hard talking about the causes of action, because there are six causes of action that Frim and Frisk have against Mr. Feinstein.

[00:33:53] Speaker 01:
Five of those six have absolutely nothing to do with... So let's just take that as a given.

[00:33:58] Speaker 05:
Okay.

[00:34:00] Speaker 05:
Why wouldn't we let the district court figure that out?

[00:34:03] Speaker 05:
As opposed to... Because you don't want it to go there anyway.

[00:34:06] Speaker 05:
You want us to send everything back.

[00:34:07] Speaker 01:
Correct.

[00:34:08] Speaker 05:
But say we don't agree with that.

[00:34:10] Speaker 05:
Why couldn't we just say, you know what, this is complicated.

[00:34:13] Speaker 05:
Northern District of California, hey, I know you didn't want this case, but now it's yours.

[00:34:18] Speaker 05:
Figure out.

[00:34:19] Speaker 01:
I think that is an option for you to do.

[00:34:21] Speaker 01:
I just think it's so clear that there is a pending arbitration clause between us and Frim and Frisk that the arbitrators can do that.

[00:34:28] Speaker 01:
And it's already set up, and they've already heard 10 days.

[00:34:30] Speaker 05:
But if we send it back to the Northern District of California, I think it seems to me the question is how many of these claims, which ones,

[00:34:37] Speaker 05:
What are the implications?

[00:34:39] Speaker 05:
That seems pretty detailed work that it seems to be, it would be good to have the district court decide in the first instance.

[00:34:44] Speaker 01:
I agree with you that I think it is very detailed work.

[00:34:47] Speaker 01:
Although if you looked at the causes of action, they're literally ones about trade secrets, ones about a breach of fiduciary duty.

[00:34:54] Speaker 01:
They have absolutely nothing to do.

[00:34:55] Speaker 01:
But it's not the only one.

[00:34:56] Speaker 05:
Say we were to take it.

[00:34:58] Speaker 05:
Now Judge Van Dyke's gotten into me.

[00:35:01] Speaker 05:
What if we were to take this on?

[00:35:03] Speaker 05:
What would we do?

[00:35:04] Speaker 05:
We would remand, we would

[00:35:06] Speaker 05:
Like, yeah, I don't even understand what we do.

[00:35:10] Speaker 01:
I think you would, after you look at them, and it's in the record at page 397, which is their counterclaim, I think you'll find that there are not any that really bring the FDIC into it.

[00:35:24] Speaker 01:
There are $16 million worth of claims against my client that have nothing to do with the FDIC.

[00:35:29] Speaker 05:
But you're not in any worse position whether we have the district court do that work or whether we do that work.

[00:35:33] Speaker 05:
I agree with you.

[00:35:34] Speaker 05:
Okay.

[00:35:35] Speaker 04:
And can I ask one related, which is, so I think your position is you want us to send everything back to FICRA, right, to arbitration.

[00:35:44] Speaker 04:
But assume for a second, I'm asking you to make an assumption that you may not agree, but assume for a second that we were to say, no, the stuff against, whether because we think you waived the 60 days or whether because you can't arbitrate, but the stuff against FINRA stays in the Northern District.

[00:36:02] Speaker 04:
Do you agree that the claims that you are saying under the assumption that you do agree with, which is that these claims don't affect FDIC at all, for those claims, could the lower court decide, could the Northern District decide to send those ones to arbitration and could they split the baby, so to speak, here?

[00:36:23] Speaker 01:
I believe the answer to that is yes.

[00:36:25] Speaker 01:
And our claims right now are against the FDIC.

[00:36:28] Speaker 04:
And why wouldn't those claims just, it's not clear to me those claims.

[00:36:34] Speaker 04:
if they were just by themselves, should have been transferred to the Northern District, right?

[00:36:37] Speaker 01:
They would have jurisdiction in the central... Our claim against the FDIC, well, I think the biggest reason why is because the repudiation was not a proper repudiation of the submission agreement, and that's clearly around the state standard, but they must, the FDIC was supposed to, and they're required to, give us notification within a reasonable time period of any... We understand your arguments on that, but assuming

[00:37:04] Speaker 04:
We thought it was a sufficient repudiation.

[00:37:07] Speaker 04:
Why?

[00:37:08] Speaker 04:
If those claims were the only ones that existed under your view that those claims don't implicate the FDIC, then it would have been okay to remove those claims to the central district and not the northern industry?

[00:37:20] Speaker 01:
I don't think it matters whether it's the central district or the northern district, but even if you find that the repudiation by the FDIC is proper as to the FDIC, there's still arbitration clauses in other agreements that they are bound by.

[00:37:37] Speaker 04:
So they would have had to visit... So the removal aspect is not...

[00:37:40] Speaker 04:
You would be, you're moving to arbitrary, because you also moved to arbitrary.

[00:37:44] Speaker 04:
You didn't just move to remand, but you also moved to arbitrary.

[00:37:47] Speaker 02:
Yes.

[00:37:47] Speaker 04:
Yeah.

[00:37:48] Speaker 04:
And so, that I think, my thought of that was that takes out the six, that takes out the blowing the deadline aspect of the removal.

[00:37:57] Speaker 04:
I know you have different ideas.

[00:37:59] Speaker 01:
And the concept is, we think everyone should be back at Frimer because there are live arbitration agreements, but at the worst, the FDIC would be in federal court and Frim and Frisk

[00:38:09] Speaker 01:
are in arbitration because there's nothing in their claims against us that warrant a federal court to decide.

[00:38:16] Speaker 01:
And there are live arbitration clauses.

[00:38:18] Speaker 03:
So with, I think, what Judge Van Dyke may have been asking, maybe not, I may be wrong about this, but assuming that's right, could the Northern District of California be the court that decides to send those other claims, the Frim and Frisk claims, back to arbitration, or should that have been decided by the central district?

[00:38:37] Speaker 01:
I believe

[00:38:39] Speaker 01:
I don't know the answer to that question, Your Honor.

[00:38:40] Speaker 01:
It's a good question because it's never really been raised before.

[00:38:43] Speaker 01:
I don't know the answer to that question.

[00:38:44] Speaker 01:
I believe now that it's been transferred that I presume it would be the Northern District.

[00:38:50] Speaker 01:
We would prefer to have you do the work, to be honest, but... Everybody wants work on the Ninth Circuit.

[00:38:57] Speaker 05:
Look, thank you.

[00:38:59] Speaker 05:
You're over, but we took you over as well.

[00:39:01] Speaker 01:
Thank you.

[00:39:01] Speaker 05:
I appreciate that.

[00:39:02] Speaker 05:
Thank you to all council for

[00:39:04] Speaker 05:
Your argument's in this complicated case.

[00:39:06] Speaker 05:
It's very helpful.

[00:39:07] Speaker 05:
Thank you.

[00:39:07] Speaker 05:
And the case is now submitted.

[00:39:08] Speaker 05:
And that concludes our arguments for today.

[00:39:13] Speaker 06:
All rise.

[00:39:17] Speaker 06:
Hear ye, hear ye.

[00:39:18] Speaker 06:
Officers having had business with the Honorable the United States Court of Appeals for the Ninth Circuit shall now depart for this court for this session.

[00:39:26] Speaker 06:
Stands adjourned.