[00:00:00] Speaker 01: Good morning, Your Honors. [00:00:01] Speaker 01: David Hall on behalf of Plaintiff Appellants. [00:00:04] Speaker 01: I'd also like to reserve three minutes for rebuttal, if I may. [00:00:07] Speaker 03: All right. [00:00:11] Speaker 01: This case concerns claims under the Securities Act of 1933 that were properly commenced in state court. [00:00:17] Speaker 01: Under that statute, the Securities Act, there's a provision that's explicit and mandatory that gives plaintiffs an absolute choice of forum. [00:00:26] Speaker 01: It bars any removal of claims like this that were properly commenced in state court. [00:00:30] Speaker 01: mandatory, absolute, no discretion to the parties, no discretion to the court. [00:00:36] Speaker 01: Once commenced in state court, these cases stay there. [00:00:40] Speaker 01: Defendants removed anyway. [00:00:42] Speaker 01: As pretext, they point to the bankruptcy of a non-party and then point to a discretionary removal provision in the bankruptcy code that doesn't say anything about these types of cases, doesn't mention the Securities Act, doesn't say that it was intended to override the Securities Act, nothing about the Securities Act. [00:01:00] Speaker 01: That's not how it works. [00:01:01] Speaker 01: We know that from Supreme Court opinions going back decades. [00:01:05] Speaker 01: We know that from Radzenauer. [00:01:07] Speaker 01: We know that from recent decisions from the Supreme Court like Epic v. Lewis that we cite. [00:01:13] Speaker 01: We also know it from this court's decisions, controlling decisions. [00:01:16] Speaker 01: Luther is the case that we point to because it concerns the same removal bar under the Securities Act. [00:01:22] Speaker 01: But there's a wealth of opinions. [00:01:23] Speaker 01: Courts don't pick and choose between statutes. [00:01:26] Speaker 01: They don't infer an implied repeal. [00:01:29] Speaker 01: on nothing more than the say-so of counsel. [00:01:32] Speaker 01: Implied repeal, allowing one statute to override another without an expression of it in the statute, is extremely rare. [00:01:41] Speaker 01: It's disfavored. [00:01:43] Speaker 01: It doesn't come up very often. [00:01:46] Speaker 01: That's for good reason, as explained by all the authorities that we point to. [00:01:49] Speaker 01: And there are several requirements that the party proposing that extreme medicine must satisfy before we even get to the sort of secondary [00:01:59] Speaker 01: canons of construction that defendants have led the district court to accept. [00:02:04] Speaker 04: So there's one circuit decision, the WorldCom case from the Second Circuit, that disagrees with you. [00:02:11] Speaker 04: What are your main disagreements with WorldCom? [00:02:15] Speaker 01: Thank you, Your Honor. [00:02:16] Speaker 01: So WorldCom was a two-judge motions panel, didn't have full briefing, didn't have the benefit of this full appeal. [00:02:26] Speaker 01: But it's also plainly wrong. [00:02:27] Speaker 01: It misinterpreted the canons that it did apply, specificity and surplussage, and I will explain why. [00:02:34] Speaker 01: But it also skipped the threshold step. [00:02:36] Speaker 01: The parties there didn't have, you know, I wasn't in the case, but they didn't argue the irreconcilable conflict threshold issue under Radzenauer or Epic v. Lewis. [00:02:46] Speaker 01: It jumped ahead. [00:02:47] Speaker 01: The parties there assumed there was an irreconcilable conflict, and then engaged in those secondary canons of specificity and surplusage. [00:02:56] Speaker 01: Here, we haven't waived those arguments. [00:02:58] Speaker 01: It's front and center, and we can't skip that threshold step. [00:03:01] Speaker 04: Do you agree there is a direct conflict? [00:03:04] Speaker 04: You've got Section 22A saying you cannot remove to federal court, and then 1452A that says for bankruptcy proceedings, you can remove where there's bankruptcy jurisdiction. [00:03:14] Speaker 01: Well, the question isn't conflict at all. [00:03:17] Speaker 01: I mean, all these cases have conflict. [00:03:18] Speaker 01: It's irreconcilable conflict. [00:03:21] Speaker 01: And the Supreme Court and the Ninth Circuit have given courts the tools to reconcile statutes like this. [00:03:27] Speaker 01: One line of authority from the Ninth Circuit that we cite says where one statute is mandatory and the other is permissive, the permissive should give way to the mandatory. [00:03:36] Speaker 04: Well, WorldCom said found there's exceptions to both, right? [00:03:40] Speaker 04: So Section 22A has an exception for class actions. [00:03:45] Speaker 04: And then Section 1452A has its own carve-outs. [00:03:49] Speaker 04: So why is that incorrect? [00:03:51] Speaker 04: If you're teeing up exceptions on both sides, why should we favor one versus the other? [00:03:58] Speaker 01: So once you get to the specificity canon that I think WorldCom is speaking to there and is sort of avoiding the specificity canon, because [00:04:05] Speaker 01: It says one statute is not a complete subset of the other, so they're both equal. [00:04:11] Speaker 01: We'll move on to other canons. [00:04:14] Speaker 01: That's misapplication of the specificity canon. [00:04:18] Speaker 01: We know that from Radsenauer itself. [00:04:21] Speaker 01: There were exceptions to both of those statutes. [00:04:24] Speaker 01: There wasn't a complete overlap. [00:04:26] Speaker 01: The National Bank Act wasn't a complete subset of the Securities Exchange Act and vice versa. [00:04:30] Speaker 01: We also know that since WorldCom, the Supreme Court has rejected that [00:04:34] Speaker 01: misapplication of the specificity canon. [00:04:37] Speaker 01: We know it in Radlax, which we cite. [00:04:39] Speaker 01: We know it in MCorp, which also involved the bankruptcy removal or bankruptcy code. [00:04:44] Speaker 01: So that's not how specificity works. [00:04:46] Speaker 01: Even if you get to specificity, WorldCom got it wrong. [00:04:49] Speaker 01: WorldCom didn't cite anything for that. [00:04:51] Speaker 04: Tell me why Section 22A is more specific than the general removal statute in 1452A. [00:04:58] Speaker 01: Sure, Your Honor. [00:04:59] Speaker 01: It's really by any measure. [00:05:02] Speaker 01: The case law explains that the court should look to really all the circumstances in determining specific versus general. [00:05:09] Speaker 01: Qualitative, quantitative, proportional, absolute numbers. [00:05:13] Speaker 01: Any measure, pick your measure. [00:05:14] Speaker 01: It's clearly more specific. [00:05:16] Speaker 01: The removal bar. [00:05:17] Speaker 03: It's not clear. [00:05:18] Speaker 03: It's not clear. [00:05:19] Speaker 03: We wouldn't be here if it were clear. [00:05:21] Speaker 03: So tell us why. [00:05:23] Speaker 03: Sure. [00:05:23] Speaker 01: Thank you, Your Honor. [00:05:27] Speaker 01: Let's start with the qualitative reasons. [00:05:29] Speaker 01: There's the substantive scope. [00:05:32] Speaker 01: One deals with Securities Act claims brought in state court. [00:05:35] Speaker 01: That's it. [00:05:36] Speaker 01: The other, the removal bar under the bankruptcy code, could apply to any substantive claim. [00:05:40] Speaker 01: Could be disability claims, could be employment claims, could be personal injury claims, could be securities claims. [00:05:44] Speaker 01: Any claim that has any tangential connection to bankruptcy could potentially get sucked up into that removal provision. [00:05:49] Speaker 01: So on their face, the substantive scope is different. [00:05:53] Speaker 01: Also, another qualitative difference [00:05:56] Speaker 01: The removal bar under the Securities Act only benefits plaintiffs. [00:05:59] Speaker 01: It's only a protection for plaintiffs. [00:06:01] Speaker 01: The only party that can invoke it, rely on it, do anything with it are plaintiffs. [00:06:06] Speaker 01: The class of litigants under the removal provision of the bankruptcy code is unlimited. [00:06:11] Speaker 01: Plaintiffs can remove to federal court. [00:06:14] Speaker 01: Even intervening nonparties can remove to federal court. [00:06:19] Speaker 01: Related parties in consolidated litigation, it's not just defendants, it's any party. [00:06:24] Speaker 01: You also look at the nature of the provisions themselves. [00:06:28] Speaker 01: One is mandatory, the Securities Act removal bar, that reflects Congress's intent that it be an absolute bar that always apply the language is no case shall be removed. [00:06:38] Speaker 01: Then you look at the permissive discretionary nature of the bankruptcy removal provision. [00:06:43] Speaker 01: It doesn't require defendants to remove these cases. [00:06:46] Speaker 01: They may. [00:06:47] Speaker 01: They may not. [00:06:48] Speaker 01: Even after they've been removed, courts don't have to keep them there. [00:06:51] Speaker 01: They can remand for any reason [00:06:53] Speaker 01: it can be an equitable reason, it can be comedy, any reason that justice requires. [00:06:58] Speaker 01: We know that those caveats, those gaps, those permissive gaps in the bankruptcy statute are a feature and not a bug. [00:07:05] Speaker 01: We know that because the Supreme Court in Things Remembered, as we explained in our brief, looked at those and contrasted them [00:07:11] Speaker 01: with other mandatory provisions and said this is on purpose, that Congress passing the bankruptcy removal provisions understood that it's going to impact and come into conflict with other removal provisions and those permissive features are meant to give way, are meant to accommodate not displace the other removal provisions like the removal bar. [00:07:33] Speaker 03: Can the state court adjudicate bankruptcy matters? [00:07:38] Speaker 01: Well, I will point out there are no bankruptcy matters in this case. [00:07:41] Speaker 03: I'm asking you the question theoretically. [00:07:45] Speaker 03: May a state court adjudicate bankruptcy matters? [00:07:48] Speaker 01: Well, I think they can't adjudicate some non-core bankruptcy matters. [00:07:53] Speaker 01: They can't adjudicate core bankruptcy matters. [00:07:57] Speaker 01: Neither are at issue in this case. [00:07:58] Speaker 01: And I would point out, Your Honor, the sort of justification. [00:08:00] Speaker 03: But we're looking at the statute, so we're not looking [00:08:03] Speaker 03: just at the facts of this case, we're looking at the statutes because that's what you're comparing the statutes in terms of specificity and we have to look at what the statutes are intended to do. [00:08:13] Speaker 03: And so that's why I asked that question about whether or not a state court could adjudicate the bankruptcy issues. [00:08:20] Speaker 01: Well, it could adjudicate some non-core bankruptcy and it definitely could adjudicate claims like this that have at best a tangential connection to a bankruptcy of a non-party. [00:08:30] Speaker 01: And we also know that Congress in passing the bankruptcy removal provisions put in those permissive removal and remand options recognizing that even cases that might be related to a bankruptcy can stay there at the discretion of the parties and based on a case by case specific assessment by the court. [00:08:49] Speaker 03: So do you do you agree that there's related to jurisdiction over these claims or no? [00:08:54] Speaker 01: No, we don't agree. [00:08:56] Speaker 01: We contested that. [00:08:57] Speaker 01: The standard in the Ninth Circuit is the same as the third, the PACOR decisions. [00:09:01] Speaker 04: And it's, you know... Fairly permissive, isn't it? [00:09:05] Speaker 01: Well, the word conceivable is pretty permissive, but when you look at the decisions that actually interpret what that means, the limit is would it require another lawsuit, a judgment in another lawsuit, to substantiate the purported basis. [00:09:17] Speaker 01: And here, they point to indemnification and contribution [00:09:21] Speaker 01: rights that are really hypothetical and never come into play unless they go get a judgment. [00:09:26] Speaker 01: So even if, you know, those rights could suffice in some cases, they wouldn't here because there hasn't been that other judgment. [00:09:37] Speaker 02: So would your clients have to file a claim in the bankruptcy proceeding? [00:09:43] Speaker 01: For this type of case? [00:09:44] Speaker 01: Yes. [00:09:44] Speaker 01: No, Your Honor. [00:09:46] Speaker 01: The connection to bankruptcy and the efficiency gains are all illusory. [00:09:49] Speaker 01: The bankruptcy plan has already been confirmed. [00:09:53] Speaker 01: Defendants, after they improperly removed us, never tried to transfer us to New York. [00:09:57] Speaker 01: So the idea that this was all to accommodate the bankruptcy is really a fiction. [00:10:01] Speaker 01: It's forum shopping by defendants. [00:10:03] Speaker 01: They want to be in federal court. [00:10:04] Speaker 01: Plaintiffs want to be in state court. [00:10:05] Speaker 02: Because you were forum shopping. [00:10:06] Speaker 02: Right. [00:10:06] Speaker 02: Everybody's forum shopping. [00:10:07] Speaker 01: Yeah, and Congress gave plaintiffs the absolute choice of forum here. [00:10:11] Speaker 01: And we think it should be respected and not overridden by the bankruptcy code. [00:10:14] Speaker 02: On the other hand, the role of the bankruptcy court has been recognized over and over as uniquely important. [00:10:22] Speaker 02: It's the one forum where all the claims against a party that is declared bankruptcy or is in bankruptcy can be resolved. [00:10:32] Speaker 02: and allowing your clients to proceed in this competing forum, if you will. [00:10:39] Speaker 02: The argument is we'll undermine this whole carefully constructed system that recognizes that the bankruptcy removal statute is special and necessary to protect the bankruptcy court's unique competence in administering bankruptcy estates. [00:10:55] Speaker 02: I didn't make that up. [00:10:56] Speaker 02: It's right out of Royden Miller. [00:10:57] Speaker 02: But how do you respond? [00:10:59] Speaker 01: We recognize the importance of the Bankruptcy Code. [00:11:01] Speaker 01: There's a whole court system for those cases. [00:11:04] Speaker 01: There's hundreds and thousands of those cases every year. [00:11:08] Speaker 01: But we know from the statute itself, Congress, when they wrote the removal provisions into the Bankruptcy Code, specifically contemplated that some of these cases aren't going to get vacuumed up into federal court. [00:11:19] Speaker 01: Some of them are going to stay in state court. [00:11:21] Speaker 01: So that was intentional. [00:11:22] Speaker 01: That's a feature, not a bug, as the Supreme Court explained in Petrarca, things remembered. [00:11:27] Speaker 01: We're talking about the Securities Act passed in 1933 in response to the Great Depression. [00:11:33] Speaker 01: The capital markets of the United States are also very, very important. [00:11:38] Speaker 01: The reason investors all over the world come to the United States to invest is because of the protections from statutes like this. [00:11:44] Speaker 01: This is a seminal statute. [00:11:46] Speaker 01: Congress, when they passed it, was reacting to maybe the greatest financial crisis we've dealt with. [00:11:51] Speaker 01: They specifically put in this removal bar to protect plaintiffs, to give them the strength to enforce [00:11:56] Speaker 01: the choice of venues so they can enforce this very important statute. [00:12:00] Speaker 01: So I mean if we're really comparing just broad brush the overall importance of these systems, I think the securities laws and the capital markets are equally important. [00:12:09] Speaker 04: Let me ask this. [00:12:10] Speaker 04: When we think about irreconcilable conflict between two statutes, I read your briefing to read it in a more broad sense of if you enforce Section 22A, will that frustrate the basic purposes of the bankruptcy code? [00:12:25] Speaker 04: And you would say no, that you can create an error exception. [00:12:28] Speaker 04: Appellees narrow in a little bit more and say it's not that broad of a lens. [00:12:35] Speaker 04: Look more specifically at whether you can do two things at the same time, and you can't both remove and bar removal at the same time. [00:12:43] Speaker 04: So which one is right? [00:12:45] Speaker 01: We're right, Your Honor. [00:12:47] Speaker 01: As explained, you know, not just in our brief, but in Radsnour, if you look at Radsnour, which is the seminal case on this, [00:12:54] Speaker 01: And we think of a very persuasive and instructive case, a district court case, the Alcon case, that's probably the most thorough analysis of WorldCom and how it would interact with a removal bar since WorldCom. [00:13:06] Speaker 01: Both of those cases explain that the proper frame is not whether the overlapping portion of the Venn diagram reaches a different result. [00:13:15] Speaker 01: We know that's not the case. [00:13:16] Speaker 01: It's not that just in this case, applying these two narrow portions of the statutes as a whole, would you reach a different result. [00:13:23] Speaker 01: Of course, that just states the question. [00:13:25] Speaker 04: We wouldn't even be, you know, engaging any of these... Right, because in Radzenauer, you can't both have venue in only one district versus wherever you want. [00:13:33] Speaker 01: Yeah, it was the same. [00:13:34] Speaker 01: And it was the same in this court's controlling decision in Luther. [00:13:37] Speaker 01: You had the removal bar, and then you had the CAF removal provision. [00:13:41] Speaker 01: It was either getting removed or not. [00:13:43] Speaker 01: It's this, that wasn't instrumental. [00:13:46] Speaker 04: But Luther was relying more on the specificity versus general. [00:13:50] Speaker 04: It didn't get into irreconcilable differences. [00:13:55] Speaker 04: Or conflict, rather. [00:13:56] Speaker 01: And I think the proper rubric is to move through the irreconcilable differences, apply the Ninth Circuit case law on minor exceptions and mandatory versus permissive before we get to specificity. [00:14:06] Speaker 01: But in all candor, the same considerations come up in both, Your Honor. [00:14:11] Speaker 01: When you look at what's a minor exception, you look at a lot of the same factors that we point to as why the removal bar is more specific. [00:14:18] Speaker 01: The impact, the relative impact, the proportional impact. [00:14:21] Speaker 01: I mean, I think I was trying to think of good analogy. [00:14:24] Speaker 01: You know, the impact on the securities laws is there's, you know, these cases are maybe a drop in a puddle. [00:14:29] Speaker 01: But compared to the bankruptcy system as a whole, it's a drop in an ocean. [00:14:33] Speaker 01: I mean, the proportional impact that it will have [00:14:36] Speaker 01: uh... is minor as you know to the bankruptcy statute not as clear as i'd hope that would come out but if i may reserve some time but not all of the security cases will have a bankruptcy component though correct your honor but when you look proportionally there really aren't that many state court securities act cases to begin with so you're talking about a puddle to begin with i mean i think there have been uh... you know ten a year [00:15:01] Speaker 01: or something like that, that, you know, there's very, very low number of cases to begin with. [00:15:05] Speaker 01: But then when you look at the proportion that are impacted by a bankruptcy, you know, we do have a handful, and that handful is a substantial portion of that already small pool. [00:15:13] Speaker 01: When you look at the ocean of bankruptcy cases, bankruptcy removal cases, the number of securities cases that, you know, that would be barred by the removal bar is negligible. [00:15:23] Speaker 01: It's a fraction of a fraction of a fraction of a percent. [00:15:26] Speaker 01: We're talking about hundreds of thousands of cases and maybe, you know, I think this has come up five times in 40 years. [00:15:32] Speaker 01: So the proportional impact on the bankruptcy code is much lower than the proportional impact on the securities. [00:15:38] Speaker 02: But when it does come up, it comes up in terms of many millions of dollars. [00:15:42] Speaker 02: So in each case, certainly it is impactful. [00:15:47] Speaker 01: Yeah, these are important cases. [00:15:49] Speaker 01: And we think that Congress gave plaintiffs the right to enforce these laws because these are important interests. [00:15:55] Speaker 03: And they gave the right of removal. [00:15:57] Speaker 03: That's the problem. [00:16:00] Speaker 03: All right, Counselor, you've exceeded your time. [00:16:01] Speaker 03: We'll give you a couple of minutes. [00:16:03] Speaker 01: Thank you very much. [00:16:17] Speaker 00: May it please the court, Dan Lerman, for the defendants. [00:16:21] Speaker 00: WorldCom was correctly decided. [00:16:23] Speaker 00: The text, timing, and purpose of the statutes all show that Section 1452 authorizes removal of cases that arise under Title XI or relate to a bankruptcy case. [00:16:35] Speaker 00: First, the statutes are in irreconcilable conflict. [00:16:38] Speaker 03: They dictate op- Did WorldCom decide that point? [00:16:41] Speaker 00: Excuse me, Your Honor? [00:16:42] Speaker 03: Did WorldCom decide that point? [00:16:44] Speaker 00: Yes and. [00:16:45] Speaker 00: It did decide that and it's de novo in any event for this court. [00:16:48] Speaker 00: WorldCom, yes. [00:16:49] Speaker 03: One question at a time, counsel. [00:16:52] Speaker 03: Point me to the language in WorldCom where the irreconcilable conflict was addressed. [00:17:00] Speaker 00: It said that they were in direct conflict and it said that you cannot comply with one and the other at the same time. [00:17:06] Speaker 00: That is this court's definition of a reconcilable conflict. [00:17:09] Speaker 03: Where's the language? [00:17:26] Speaker 00: This is a close question as it involves a direct conflict between two unambiguous statutes. [00:17:31] Speaker 00: Section 22A, this is Judge Cabrera's decision at page 90 in the very first paragraph of WorldCom. [00:17:42] Speaker 04: But later on, WorldCom talks about how, when it's talking about undue burden, that something could happen where indemnification agreements with the estate could affect or do other things. [00:17:55] Speaker 04: I didn't read it to talk about a conflict. [00:18:00] Speaker 04: It did say direct conflict, but whether it was irreconcilable seems pretty absent from this opinion. [00:18:06] Speaker 00: It might not have used the word irreconcilable, but this court has defined a reconcilable conflict. [00:18:12] Speaker 00: to occur when two statutes dictate opposite results as to a particular matter, that's from Novak, or when one statute permits what the other prohibits, that's from Moyle. [00:18:22] Speaker 00: We have that here. [00:18:22] Speaker 00: You cannot comply with both statutes. [00:18:24] Speaker 04: But if you want to get your honor to... Well, I guess what I... So I'll just... I'll tell you how I think about this. [00:18:28] Speaker 04: It seems as if the problem with your case is it hasn't really meaningfully addressed this presumption against implied repeal. [00:18:38] Speaker 04: And it is a really strong presumption that comes up in many different Supreme Court cases and in our own cases. [00:18:47] Speaker 04: And I'm having a hard time seeing why the bankruptcy amendments would have impliedly repealed Section 22A. [00:18:56] Speaker 04: And is it our attempt, we have to try to harmonize those statutes together before we reach that point. [00:19:02] Speaker 04: So how would we, can you address that? [00:19:04] Speaker 00: Yes, three things. [00:19:05] Speaker 00: First of all, I think what the presumption against implied repeal says is that we don't presume an implied repeal unless there's an irreconcilable conflict. [00:19:14] Speaker 00: That's what Radzenauer said. [00:19:15] Speaker 00: Radzenauer first said the first statute is more specific. [00:19:18] Speaker 00: We now ask whether there's an implied repeal that happens when there's an irreconcilable conflict. [00:19:23] Speaker 00: So they're essentially synonymous. [00:19:24] Speaker 00: This court has found implied repeals in Kresge, in Novak, in Moyle, in Glacier Bay. [00:19:31] Speaker 00: In Kresge, the first statute said that [00:19:34] Speaker 00: officers of national banks could be fired at will. [00:19:36] Speaker 00: Another statute, the ADEA, said that discrimination on the basis of age should not be allowed. [00:19:43] Speaker 00: This court held that the second statute prevailed because application of the first one would interfere with the scheme. [00:19:49] Speaker 00: And we have that here. [00:19:50] Speaker 00: Just to address your point about harmonization, what harmonization means is that if you can comply with both statutes, we'll try and comply with both statutes so you won't impliedly repeal something when you can comply with both. [00:20:01] Speaker 00: That was the case, for example, in Stand Up for California, where there was nothing in the Indian Gaming Act that said anything about NEPA. [00:20:07] Speaker 00: That's the case in Epic Systems, when there was nothing in the NLRA that said anything about arbitration. [00:20:12] Speaker 00: You could comply with both acts. [00:20:14] Speaker 00: So we're not going to read something into the second act to impliedly repeal it. [00:20:18] Speaker 00: The second part of the harmonization point, and I think this court made this clear in both Glacier Bay and Moyle, is that when there is a conflict, we'll repeal it only to the extent necessary so that we will give effect to the second statute. [00:20:29] Speaker 00: So I think that's all this court is saying with respect to implied repeals. [00:20:34] Speaker 04: But why can't we infer an implied exception, a narrow exception, saying, look, you can remove for bankruptcy cases under 1452A, except in the narrow context of Section 22A claims? [00:20:50] Speaker 00: Well, first of all, those narrow exception cases, as we stated in the brief, are really just specificity cases. [00:20:54] Speaker 00: They're just cases where this court stated that the first statute [00:20:57] Speaker 00: is specific and a subset of the second. [00:21:00] Speaker 00: The second answer you're on. [00:21:00] Speaker 04: Which we'll get to in a second, but I guess that is a way to harmonize to statutory conflicts. [00:21:08] Speaker 00: It's a way to harmonize it if you're just saying the first one trumps. [00:21:11] Speaker 00: You could also harmonize it by saying the second statute is a narrow exception. [00:21:14] Speaker 00: That's what this court said in its on-bank decision in Novak. [00:21:17] Speaker 00: So I don't think that narrow exception question stands for some sort of independent doctrine other than the specificity doctrine, because that's just begging the question. [00:21:26] Speaker 00: They don't provide any reason why applying section 1452 here would interfere with the Securities Act. [00:21:32] Speaker 00: The only thing they say is that it denies them an absolute choice of forum. [00:21:36] Speaker 00: But that also just assumes the conclusion. [00:21:38] Speaker 00: We know that it gives you a right of forum in some cases. [00:21:41] Speaker 00: The question is, what happens when there's a direct conflict, as here, when another specific statute gives you a right of removal? [00:21:47] Speaker 00: We point to many cases, and your honor cited the Wright and Miller treatise, which talks about how this is designed to protect the unique competence of the federal courts in bankruptcy matters. [00:21:55] Speaker 00: We cite many cases for the proposition that bankruptcy is unique. [00:21:59] Speaker 00: The Constitution authorizes Congress to create a uniform bankruptcy scheme under federal control. [00:22:05] Speaker 00: Section 1452 was designed to centralize all bankruptcy and bankruptcy-related litigation in a federal forum. [00:22:13] Speaker 00: We know that 1452 was meant to expand that removal authority, according to Justice Ginsburg's decision in Things United. [00:22:20] Speaker 00: And so this could have real damage. [00:22:22] Speaker 00: This case and WorldCom are examples. [00:22:24] Speaker 00: WorldCom, there were dozens and dozens of state and federal actions. [00:22:27] Speaker 00: There was a single bankruptcy case, but there were dozens of other follow-on cases that could interfere with the core purpose, which is to protect the estate and the orderly administration and bankruptcy. [00:22:38] Speaker 00: So Congress recognized this problem and targeted this problem. [00:22:41] Speaker 00: There is no problem the other way. [00:22:42] Speaker 00: The federal courts can vindicate someone's rights under a federal statute, the Securities Act, and that's really the only thing they say is that they have a choice of forum. [00:22:52] Speaker 00: But both statutes give someone a certain extent of choice of forum. [00:22:54] Speaker 00: The question is, which would do more damage if we're getting to this repugnancy analysis? [00:22:59] Speaker 00: And every court to address the issue in this circuit, and WorldCom addressed it if it didn't use the word Eric and Silable, has shown that we're talking about the bankruptcy system as a whole. [00:23:08] Speaker 00: We're not talking about one particular case. [00:23:10] Speaker 00: We're talking about cases that arise under Title XI and that relate to Title XI. [00:23:14] Speaker 00: Or. [00:23:15] Speaker 00: Or. [00:23:15] Speaker 00: Or. [00:23:16] Speaker 00: Or. [00:23:16] Speaker 00: Correct, Your Honor. [00:23:17] Speaker 00: Yes. [00:23:18] Speaker 00: And this can have massive impact. [00:23:20] Speaker 00: It had massive impact in WorldCom. [00:23:22] Speaker 00: It's having massive impact in this case. [00:23:24] Speaker 00: And that's directly what Congress cared about. [00:23:27] Speaker 00: So I think the deleterious consequences can be significant. [00:23:32] Speaker 04: And so can you explain to me the massive impact? [00:23:33] Speaker 04: Because, well, either we're speaking in a case-specific way or in a general statutory sense. [00:23:39] Speaker 04: And we haven't, I mean, it's surprising that WorldCom is the only circuit decision that's actually addressed this, and it's 20 years old. [00:23:45] Speaker 04: So these things don't come up on a regular basis. [00:23:48] Speaker 04: And WorldCom was a big bankruptcy. [00:23:53] Speaker 04: SCP is a big case. [00:23:56] Speaker 04: So it's like these odd offshoots that happen and can have reverberations, I suppose. [00:24:00] Speaker 00: I will push back a little. [00:24:01] Speaker 00: There have been dozens of cases in this circuit. [00:24:03] Speaker 00: There have been dozens of cases in the Second Circuit. [00:24:05] Speaker 00: They're fewer now because they have a binding precedent. [00:24:08] Speaker 00: But this did happen before WorldCom. [00:24:10] Speaker 00: Since then, the courts there just applied WorldCom. [00:24:12] Speaker 00: It minimizes the conflict. [00:24:13] Speaker 04: one of the purposes of the so let me let me ask this you know it's we have a bankruptcy proceeding it's all the way over in new york and and and and here's any cal cases actual impact with their be here if at the end of the day the litigation [00:24:29] Speaker 04: here in California would relate to resolving the securities claims and whether there's liability. [00:24:35] Speaker 04: And then the bankruptcy court would have to decide, or some other court, whether indemnification or other contribution requirements apply and affect the estate. [00:24:46] Speaker 00: Well, first I'll just suggest that, as Judge Rawlinson said, this is about the statute. [00:24:50] Speaker 00: It's not about a particular case. [00:24:52] Speaker 00: And that's it, just full stop. [00:24:54] Speaker 00: And these apply to cases that arise under Title XI. [00:24:57] Speaker 00: That includes avoidance actions [00:24:59] Speaker 00: and cases that might not be court proceedings but are directly related to the bankruptcy action. [00:25:03] Speaker 00: So it would apply. [00:25:04] Speaker 00: There are certain claims against the property of the estate that cannot be brought in state court. [00:25:09] Speaker 00: There are certain claims that directly affect the estate, and this statute targets those. [00:25:13] Speaker 00: Now, the purpose of targeting related to is also to protect the estate because Congress recognized that you could have duplicative proceedings. [00:25:21] Speaker 00: You could have conflicting judgments. [00:25:23] Speaker 00: One of the purposes was to avoid jurisdictional disputes, which is what we have here. [00:25:27] Speaker 00: All of this could affect the estate. [00:25:29] Speaker 00: Just as a simple matter, even aside from conflicting judgments of law, we're depleting the estate. [00:25:36] Speaker 00: There are already being advanced fees under the DNO policies. [00:25:39] Speaker 00: That's before we talk about indemnification or contribution. [00:25:43] Speaker 00: We have conflicting discovery demands. [00:25:45] Speaker 00: That's all in this case. [00:25:46] Speaker 00: So it does affect the estate in this case. [00:25:48] Speaker 00: Also, I'll say, these cases, other than this one, have all been consolidated in the federal court. [00:25:53] Speaker 00: that yields certain efficiencies. [00:25:54] Speaker 00: It protects the unique competence of the federal courts in these matters. [00:25:58] Speaker 00: Even if it's not transferred to the bankruptcy court in New York, we still have 10 cases here that are all in federal court. [00:26:04] Speaker 00: What they want is to have certain state cases that assert claims under the same act and involve the same defendants be fractured from the federal case where you can't consolidate, you can't relate, you can't coordinate [00:26:16] Speaker 00: And that all further depletes the estate, Your Honor. [00:26:19] Speaker 04: Well, let me ask this. [00:26:19] Speaker 04: Earlier, I think you were essentially suggesting that this all boils down to specificity. [00:26:24] Speaker 04: So why do you think these statutes are equally specific and one is not more specific than the other? [00:26:31] Speaker 00: Yes. [00:26:32] Speaker 00: I will call to that. [00:26:33] Speaker 00: Specificity is an important element to this case, Your Honor. [00:26:35] Speaker 00: In Radsenow itself, the court first asked whether it was specific, and then it said even so. [00:26:40] Speaker 00: if one interferes with the other, we will give effect to that. [00:26:43] Speaker 00: So I agree, specificity is important. [00:26:45] Speaker 00: I don't think there's quite as rigorous or procrustian ordering. [00:26:48] Speaker 00: I think, you know, we're all getting to what Congress intended here, and that's one indication of congressionalism. [00:26:53] Speaker 03: So you don't want to address the issue? [00:26:54] Speaker 00: No, I am going to address it, Your Honor. [00:26:56] Speaker 00: No, no, no, I am clearly addressing the issue, and I will, and I'm sorry. [00:26:59] Speaker 03: Oh, OK. [00:26:59] Speaker 00: So I thought I didn't hear the answer to your question. [00:27:02] Speaker 00: OK. [00:27:02] Speaker 00: They are both specific. [00:27:04] Speaker 00: What Raz and Ivers says is you ask whether one statute is specific and one is general. [00:27:08] Speaker 00: Here, section 1452. [00:27:10] Speaker 00: is a targeted bankruptcy-specific removal statute. [00:27:14] Speaker 00: It is a specific supplement to the general removal statute, and it applies to claims that are related to a specific bankruptcy case that is in bankruptcy at that time. [00:27:23] Speaker 00: So the statutes here are both specific. [00:27:26] Speaker 04: But what about the point that, you know, bankruptcy removal covers a whole range of substantive law as opposed to Securities Act-only claims? [00:27:36] Speaker 00: I think what that shows, Your Honor, is Congress intended to grant robust removal authority over these cases. [00:27:42] Speaker 03: What does that do to the specificity analysis? [00:27:45] Speaker 00: Excuse me, Your Honor? [00:27:47] Speaker 03: What does that do to the specificity analysis? [00:27:51] Speaker 00: I don't think it does anything, Your Honor, because the question is whether one is specific and one is general. [00:27:57] Speaker 03: Which is more specific? [00:27:58] Speaker 03: That's the question. [00:27:59] Speaker 00: I'm sorry, Your Honor. [00:28:02] Speaker 00: I think it's difficult often to say which is more specific because sometimes it's apples and oranges. [00:28:06] Speaker 03: I think you're resisting this question. [00:28:07] Speaker 00: No, I'm not, Your Honor. [00:28:07] Speaker 00: I don't mean to resist it. [00:28:08] Speaker 00: They are equally specific here, Your Honor. [00:28:10] Speaker 00: This is tethered to a specific bankruptcy case. [00:28:13] Speaker 03: But you need to tell us why they're equally specific. [00:28:16] Speaker 03: You're saying that, but you're not explaining to us why in the statutory schemes they're equally specific. [00:28:22] Speaker 00: Because, Your Honor, Section 1334 either talks about claims arising under Title XI, which is a specific thing. [00:28:28] Speaker 00: That's like a fraudulent transfer or an avoidance claim. [00:28:31] Speaker 00: Those were created by the bankruptcy law, by the bankruptcy code, which was comprehensive federal jurisdiction over all of bankruptcy law in the United States of America, and those can only be brought under the bankruptcy law. [00:28:43] Speaker 00: That is just as specific as the Securities Act claim. [00:28:47] Speaker 00: Even as to related to claims, that is just as specific because it has to be related to a specific bankruptcy year case, Your Honor. [00:28:53] Speaker 00: A specific bankruptcy petition is very specific. [00:28:56] Speaker 04: But any number of different things can come up under bankruptcy, any legal matters, whereas Securities Act claims of 33. [00:29:03] Speaker 04: And then you deal with the parties. [00:29:05] Speaker 04: One of them only relates to plaintiffs being able to remove versus all parties. [00:29:12] Speaker 04: So that also seems more general than the Securities Act. [00:29:16] Speaker 00: I disagree, Your Honor. [00:29:17] Speaker 00: If you look at Radzenauer, the first statute in Radzenauer applied to a particular defendant, national banks. [00:29:23] Speaker 00: The second was a general venue provision that applied to anywhere the defendant was located, the defendant did business, or the act was violated. [00:29:31] Speaker 00: So you had one applied to a specific defendant, and one you applied to a national bank. [00:29:35] Speaker 00: If it said plaintiffs or defendants, that wouldn't have changed it. [00:29:37] Speaker 00: It would have still been a specific plaintiff or defendant. [00:29:40] Speaker 00: And again, the whole purpose here of the removal provision was to expand removal authority. [00:29:45] Speaker 00: The mere fact that it applies to plaintiffs or defendants [00:29:48] Speaker 00: does not make it less specific. [00:29:50] Speaker 00: It makes it more robust, and that is consistent with the congressional scheme here. [00:29:55] Speaker 00: So they were both specific statutes. [00:29:57] Speaker 04: I'm not sure I understand that, but the intent to remove, and I don't think anyone's doubting that there is an important premise behind the intent to remove for bankruptcy matters. [00:30:07] Speaker 04: There is also an important premise behind wanting to bar removal for securities at claims. [00:30:12] Speaker 04: How does that relate to questions of scope between the statutes? [00:30:16] Speaker 04: Congress wanted to do both. [00:30:18] Speaker 04: We're trying to find out if Congress intended to impliedly repeal or limit the earlier statute. [00:30:24] Speaker 00: I'm just saying it goes to congressional intent. [00:30:25] Speaker 00: If you look again at Kresge, Your Honor, you could say that claims by or against national bank officers affect a very small proportion of all cases or all employment discrimination claims. [00:30:37] Speaker 00: But precisely because it was such a targeted absolute statute [00:30:42] Speaker 00: That is why this court found a conflict, and that's why this court resolved the conflict in the later statute, because it conflicted with Congress's scheme over employment discrimination. [00:30:51] Speaker 00: I think that's analogous to the case here. [00:30:55] Speaker 00: So the mere fact that it is robust, that's consistent with the ADEA, which is also robust and applies to a broad variety of claims. [00:31:01] Speaker 04: Why doesn't Luther help guide us? [00:31:04] Speaker 04: Luther also addressed a broad scheme CAFA removal, which has a monetary threshold and some diversity requirements, but otherwise you can remove any number of different kinds of claims of class actions under CAFA versus Securities Act. [00:31:20] Speaker 00: May I answer your honor? [00:31:21] Speaker 04: Sure. [00:31:21] Speaker 00: Of course. [00:31:22] Speaker 00: Okay, thank you. [00:31:23] Speaker 00: Luther addressed a different statute. [00:31:25] Speaker 00: Every court in this [00:31:26] Speaker 00: circuit to address the issue has held that Luther does not control. [00:31:30] Speaker 00: The reason why, and that includes Luther itself on remand. [00:31:33] Speaker 00: Initially the district court found no jurisdiction under CAFA. [00:31:36] Speaker 00: This court agreed on remand and applied this court's decision in Luther and said Luther is different. [00:31:40] Speaker 00: The reason why is what CAFA did was relaxed the complete diversity requirements for diversity jurisdiction with respect to large class actions. [00:31:48] Speaker 00: That is a procedural mechanism. [00:31:50] Speaker 00: This is not a procedural mechanism. [00:31:52] Speaker 00: This is a targeted bankruptcy-specific statute that Congress enacted as part of... But Rasner was also a procedural mechanism. [00:31:59] Speaker 04: We're talking about scope. [00:32:01] Speaker 04: And whether it's a procedural mechanism or not, CAFA allowed for a broader scope of claimants to come before the court in removal. [00:32:10] Speaker 04: I don't understand why a procedural would make any difference as to a scope. [00:32:13] Speaker 00: Well, it's not targeted to any specific subject matter. [00:32:16] Speaker 00: This is. [00:32:16] Speaker 00: It's still targeted to bankruptcy in a particular bankruptcy petition in cases arising under Title 11, which is a whole chapter of the United States Code devoted to bankruptcy cases. [00:32:26] Speaker 00: That's not true for diversity jurisdiction, Your Honor. [00:32:29] Speaker 00: So I think it is different not just because class actions are a procedural mechanism, but because diversity jurisdiction is different than a specific [00:32:36] Speaker 00: grant a federal question jurisdiction in 1334 enacted as part of the bankruptcy code. [00:32:41] Speaker 00: I think that is distinguishable. [00:32:43] Speaker 00: Luther also didn't address whether Section 22 would interfere with the application of anything, but it certainly didn't address whether [00:32:51] Speaker 00: its removal bar would interfere with 1452 because it didn't address 1452. [00:32:55] Speaker 00: It also didn't address this place in the statutory scheme, including the absence of the accept as otherwise provided language, which we believe shows Congress's intent that section 1452 would control in all cases except for the two enumerated exceptions therein. [00:33:12] Speaker 00: So Luther is distinguishable. [00:33:13] Speaker 00: Every court to address the issue has held that Luther is distinguishable. [00:33:16] Speaker 00: That includes Luther itself on [00:33:18] Speaker 00: remand. [00:33:18] Speaker 00: And so we believe that WorldCom and Judge Cabrera's decision there was correctly decided and that this court should follow Rucham and affirm the decision below. [00:33:27] Speaker 03: Any other questions? [00:33:28] Speaker 03: Thank you, counsel. [00:33:29] Speaker 00: Thank you. [00:33:29] Speaker 03: We'll give you two minutes for rebuttal, counsel. [00:33:32] Speaker 01: Thank you, your honors. [00:33:37] Speaker 01: So Luther provides the roadmap if the court wants to engage the specificity analysis. [00:33:41] Speaker 01: It's a controlling decision. [00:33:42] Speaker 01: It addresses the same removal bar. [00:33:45] Speaker 01: The CAFA statute that was compared to the removal bar in that case is not materially different from 1452 here. [00:33:54] Speaker 01: So it also lacked the surplusage language from 1441. [00:33:59] Speaker 01: It also applied to a broad scope of substantive claims. [00:34:04] Speaker 01: And the Ninth Circuit had no problem applying the specificity analysis, comparing the removal bar, holding that the removal bar was specific and that CAFA was general and broad. [00:34:15] Speaker 01: Specific doesn't equal subset. [00:34:18] Speaker 01: That's what we got below. [00:34:19] Speaker 01: That's what WorldCom said. [00:34:21] Speaker 01: And that's what my opponents, you know, argued pretty much up until today. [00:34:27] Speaker 01: But we haven't heard much about the subset, that specificity is only applicable if it's a subset. [00:34:32] Speaker 01: They've seemed to abandon that argument. [00:34:34] Speaker 01: And that's, you know, that's accurate. [00:34:37] Speaker 01: WorldCom got that wrong. [00:34:38] Speaker 01: We know that because of Luther. [00:34:39] Speaker 01: We know that because of Radzenauer. [00:34:41] Speaker 01: We know that because of the intervening Supreme Court cases like Radlax and MCorp. [00:34:45] Speaker 01: Also, on whether WorldCom addressed irreconcilable conflict, it did not. [00:34:51] Speaker 01: Direct conflict is not the same as irreconcilable conflict. [00:34:55] Speaker 01: The definition that because the two statutes would lead to a different result in a specific case, that does not mean that the statutes can't be reconciled. [00:35:03] Speaker 01: We know that from Radzenauer, which explicitly says that, you know, that the statutes lead to two different results in a certain case is not enough. [00:35:11] Speaker 01: That just states the question. [00:35:12] Speaker 01: the court then has to try to reconcile the statutes. [00:35:15] Speaker 01: And we have those tools. [00:35:17] Speaker 01: We have the tools spelled out under the minor exception cases. [00:35:20] Speaker 01: And I would point the panel to Judge Rollinson's joiner in the dissent in US v. Novak. [00:35:27] Speaker 01: Now, the result in Novak turned on some language that isn't present here. [00:35:31] Speaker 01: There was notwithstanding any other law clause that overrode that was interpreted by the majority to support an implied repeal. [00:35:38] Speaker 01: But Judge Fletcher's dissent that Judge Rawlinson joined goes through the minor exception doctrine, cites the same case as we do. [00:35:46] Speaker 01: And that is all sound analysis. [00:35:48] Speaker 01: The result may have turned on a different. [00:35:51] Speaker 03: But it didn't carry the day. [00:35:53] Speaker 01: Yes, Your Honor. [00:35:54] Speaker 01: But the result turned on a language that isn't present here. [00:36:01] Speaker 01: We think that the balance of that analysis should carry the day here. [00:36:06] Speaker 01: I'd also like to point out that a misstatement, the idea that all the cases are in federal court now is just not true. [00:36:13] Speaker 01: There have been some related cases that have been remanded back to state court. [00:36:17] Speaker 01: The entire bankruptcy regime did not crumble under the weight of those cases in state court. [00:36:23] Speaker 01: We also have a split. [00:36:24] Speaker 01: So since WorldCom nationwide, there are cases on our side of the ledger that have held that the securities removal bar [00:36:32] Speaker 01: trumps the bankruptcy removal provision. [00:36:34] Speaker 01: Those cases were sent back down to state court. [00:36:37] Speaker 01: But we didn't have the sky-is-falling bankruptcy impact on the bankruptcy regime that has been alluded to in this case. [00:36:45] Speaker 01: We also have the impact here. [00:36:47] Speaker 01: The bankruptcy plan was approved. [00:36:50] Speaker 01: We have cases proceeding in state court, other cases that were remanded. [00:36:54] Speaker 01: We have our case that has not proceeded to discovery. [00:36:58] Speaker 01: It hasn't been consolidated with the other security cases. [00:37:01] Speaker 01: None of the security cases have been sent to the bankruptcy in New York. [00:37:04] Speaker 01: But the bankruptcy plan proceeded fine. [00:37:06] Speaker 01: It got approved. [00:37:07] Speaker 01: It didn't have an impact on the plan. [00:37:09] Speaker 01: So whether you look at the impact on the Statue of the Whole, or you look at the actual impact in cases like this, the sky is falling parade of horribles that we hear about the bankruptcy. [00:37:18] Speaker 01: It just doesn't materialize. [00:37:20] Speaker 03: All right. [00:37:21] Speaker 03: I don't think we're looking at it as a parade of horribles. [00:37:24] Speaker 03: We're just looking at the statutory scheme and which one Congress wanted to be more intact. [00:37:30] Speaker 03: That's the difficult question for us. [00:37:31] Speaker 03: It's a very challenging case. [00:37:33] Speaker 03: And we thank you both for your helpful arguments. [00:37:36] Speaker 03: The case just argued is submitted for a decision by the court. [00:37:39] Speaker 03: That completes our calendar for the day. [00:37:40] Speaker 03: We are in recess until 9.30 AM tomorrow morning. [00:37:44] Speaker 01: Thank you, Your Honor.