[00:00:02] Speaker 00: Case number 15-7049, United States, Israel, Anthony Oliver and Anthony Oliver Appellant versus Philip Morris, USA, Inc. [00:00:10] Speaker 00: of Virginia Corporation, formerly known as Philip Morris, Incorporated. [00:00:14] Speaker 00: Mr. Doloff for the appellant, Mr. Paz for the athlete. [00:00:56] Speaker 05: Good morning. [00:00:57] Speaker 02: Good morning. [00:00:57] Speaker 02: Why don't we let everybody get settled? [00:01:01] Speaker 02: All right. [00:01:01] Speaker 02: Thank you. [00:01:02] Speaker 02: Good morning. [00:01:03] Speaker 05: Good morning. [00:01:03] Speaker 05: I'm David Golub, and I represent the relator, Anthony Oliver, in this appeal. [00:01:08] Speaker 05: When this case was before the court the first time, this court specifically articulated the test to be applied for determining whether there was public disclosure of Mr. Oliver's allegations. [00:01:21] Speaker 05: using the traditional Springfield Terminal X plus Y equals Z test, the court said the X was public disclosure of price disparities between the prices charged the government and the prices charged the private consumer customers. [00:01:36] Speaker 05: And the Y, the court said, was there a public disclosure of false certifications of compliance with the MFCs. [00:01:47] Speaker 05: Court said, in order for there to be public disclosure, there had to be proof of both of those points. [00:01:55] Speaker 05: One, the price disparity. [00:01:57] Speaker 05: Two, false certifications of compliance with the MFCs. [00:02:02] Speaker 05: And the court went further and explained that the Y component was comprised of two prongs, [00:02:11] Speaker 05: The first prong was the existence of the MFCs themselves, which establishes the fact that there was a certification at issue. [00:02:20] Speaker 05: And the second prong of the Y component was that there were false certifications. [00:02:28] Speaker 05: And the court dealt with those two prongs on the first page of its decision, in the first paragraph of its decision, where the court said, [00:02:39] Speaker 05: And this is a quote, neither the contract term obligating Philip Morris to provide the government with most favored customer pricing, nor Philip Morris's fraudulent certifications that it complied was publicly disclosed. [00:02:57] Speaker 05: Accordingly, we vacate the district court's decision. [00:03:00] Speaker 02: So your position is that it was error, [00:03:06] Speaker 02: Legal error for the district court to conclude that given what had been publicly disclosed, an implied false certification, an inference of an implied false certification was appropriate? [00:03:21] Speaker 05: Yes, the district court could make a finding that there was a certification. [00:03:25] Speaker 05: because the MFCs require a certification. [00:03:28] Speaker 05: But what the district court did not have any evidence of, did not have any public disclosure of, was that there was a false certification. [00:03:37] Speaker 05: And that is what the definition of the why was in this court's first opinion. [00:03:42] Speaker 05: Evidence of a false certification of compliance. [00:03:45] Speaker 04: How do you define false certification? [00:03:47] Speaker 05: Just so we're all clear a false certification is under the under the false claims act a certification that that the government that the Philip Morris complied with the price warranties in the NFC's knowing that it was not complying with the with the with the [00:04:06] Speaker 05: the warranties and knowing is defined under the statute to be either intentional or with willful blindness or with reckless disregard. [00:04:17] Speaker 05: But there had to be something before the court to establish falsity [00:04:23] Speaker 05: And what this court said in its first decision, this was the argument in the first decision before the court. [00:04:31] Speaker 05: Does the Iceland memo have anything in it to support a finding of falsity? [00:04:35] Speaker 05: And the court addressed that in part 3b of its decision. [00:04:40] Speaker 02: All right. [00:04:40] Speaker 02: But then on remand, the district court says we have evidence of price disparity, c, the Iceland memo. [00:04:49] Speaker 02: We have evidence that the m, [00:04:53] Speaker 02: FCs exist and that they were publicly available. [00:05:00] Speaker 02: And the essence of your complaint, said the district court, is disclosed because of the inference that arises from the continuation of sales. [00:05:17] Speaker 05: Well, the inference that the district court drew was an inference of certification. [00:05:24] Speaker 05: You can make an inference of certification. [00:05:26] Speaker 02: No, she went further. [00:05:27] Speaker 05: The district court went further. [00:05:28] Speaker 05: And what she said was, you can draw an inference of wrongdoing from the Iceland memo. [00:05:34] Speaker 05: And she used the familiar, because the government investigator would be alerted to the likelihood of wrongdoing. [00:05:41] Speaker 02: And why not? [00:05:42] Speaker 03: This is coupled with knowledge of the MSC. [00:05:47] Speaker 05: Yes, but this court specifically rejected any finding that the Iceland memo would give rise to a knowledge of fraud in its first decision. [00:05:56] Speaker 02: Standing alone, yes. [00:05:57] Speaker 05: Not just standing alone. [00:05:59] Speaker 05: What it said in 3B was, and the argument that was made before was, well, the fact that there were complaints. [00:06:06] Speaker 05: The fact that there were complaints made would have alerted the investigator. [00:06:11] Speaker 05: The court rejected that in 3B. [00:06:14] Speaker 05: The mere fact that the exchanges inquired or even complained about pricing does not amount to a public disclosure of facts supporting the elements of a claim of fraud. [00:06:24] Speaker 05: Contrary to Philip Morris's assertions, the Iceland memo did not publicly disclose the allegedly fraudulent aspect of the prices Philip Morris charged the exchanges. [00:06:34] Speaker 05: I don't see the problem with the jury. [00:06:36] Speaker 05: The problem is not every price disparity is unlawful. [00:06:40] Speaker 05: Not every price disparity is fraudulent. [00:06:43] Speaker 05: Not every price disparity is a false certification. [00:06:47] Speaker 03: Your client's theory is that there's fraud lying in the combination of price disparity plus the NFC, right? [00:06:57] Speaker 05: The client's theory here, Mr. Oliver's theory is that there was deliberate overpricing by including the money to fund domestic surcharges. [00:07:08] Speaker 03: I have to say that argument which occurs throughout the briefing completely eludes me. [00:07:13] Speaker 03: How is there anything like fraud in charging what the market will bear, assuming there's nothing else? [00:07:23] Speaker 05: It's fraud because there are two prices charged to similarly situated customers. [00:07:29] Speaker 03: Going back to the MFC. [00:07:30] Speaker 03: Yes. [00:07:31] Speaker 05: The MFC says you have to charge the government the best price you give similarly situated customers for the same product. [00:07:38] Speaker 05: What Philip Morris is alleged to have done, and I don't think they deny that they did this, they just say it was legal. [00:07:43] Speaker 05: What Philip Morris is alleged to have done is to price cigarettes to private distributors without including amounts to cover domestic surcharges, price the same cigarettes, identical cigarettes in the same markets to the government, [00:07:59] Speaker 05: with including $6.60 to cover the MSA surcharge and a TTPP surcharge. [00:08:07] Speaker 03: You completely lost me because I thought the whole theory of your case was the combination of the price differential plus the NFC spelled fraud or at least enough to set an investigator on the trail of fraud. [00:08:25] Speaker 05: Well Judge Williams, the claim here is and what the complaint alleges is that there was a knowing and intentional false certification. [00:08:36] Speaker 05: That's paragraph 31 and 36 of the complaint. [00:08:39] Speaker 05: And the knowing and intentional false certification is the claim is that Philip Morris used its affiliates to do fraudulent transactions to violate the MSCs. [00:08:51] Speaker 05: They had an obligation to give the government the best price. [00:08:55] Speaker 05: What they did was they sold from Philip Morris, the parent company, directly to the government at one price. [00:09:02] Speaker 05: They then used their affiliates [00:09:05] Speaker 05: They sold at a low price to their affiliates. [00:09:07] Speaker 05: The affiliates then turned around and resold at a low price to a similarly situated private duty free customer. [00:09:16] Speaker 05: And the allegation here is that that was a knowing and intentional way of circumventing the NFCs. [00:09:25] Speaker 05: The difference between what's in the complaint and what's in the Iceland memo is, the Iceland memo says, this is perfectly legal. [00:09:33] Speaker 03: As we've explained... That's a legal conclusion, but the fact of differential prices is acknowledged, right? [00:09:43] Speaker 03: Yes, but this... [00:09:45] Speaker 03: issue of the memo. [00:09:47] Speaker 05: The fact that differential prices doesn't give rise to any wrongdoing. [00:09:52] Speaker 05: Differential pricing and what we're saying, what that memo says is there's nothing wrong here. [00:09:58] Speaker 05: What the complaint says is there is something wrong here because it was a scheme to avoid the MSC obligations by not giving the same prices to the government. [00:10:08] Speaker 05: What the memo says is, the Iceland memo says [00:10:12] Speaker 05: There's this reason for it, a business reason having to do with the Surgeon General requirements. [00:10:18] Speaker 05: We explain that. [00:10:20] Speaker 05: And it says at the bottom, issue resolved. [00:10:23] Speaker 05: What the complaint says is, that's not the reason. [00:10:26] Speaker 05: That's not the reason for the price disparity. [00:10:28] Speaker 05: This was a sham to charge the government $6.60, whatever the differential is. [00:10:34] Speaker 05: Turns out it's more than $6.60 in the one example we give for American Samoa. [00:10:39] Speaker 05: But it's a sham. [00:10:40] Speaker 05: to evade the MSC requirements. [00:10:44] Speaker 05: And in order for the Iceland memo, either alone or in combination, was facially neutral. [00:10:51] Speaker 05: The MSC provisions are facially neutral. [00:10:54] Speaker 05: There has to be something in the Iceland memo that gives rise to a likelihood of wrongdoing, or as was said in Springfield Terminal, clear and substantial evidence of wrongdoing. [00:11:06] Speaker 05: or evidence that would allow a government to begin a prosecution. [00:11:11] Speaker 02: An investigation. [00:11:14] Speaker 05: It has to be a likelihood. [00:11:17] Speaker 05: It's not a possible suspicion. [00:11:19] Speaker 05: Here, what you have in that agreement in the Iceland memo is, yes, there's a price disparity. [00:11:25] Speaker 05: It's perfectly legitimate. [00:11:26] Speaker 05: The issue is resolved. [00:11:28] Speaker 05: Where is there anything in the Iceland memo that supports a finding of any wrongdoing? [00:11:33] Speaker 05: that would allow you to say anything wrong doing. [00:11:36] Speaker 03: As I understand it, it's a legal principle outside the case, outside the factual disputes in this case. [00:11:47] Speaker 03: You're relying on a legal principle that essentially the MSA and the other charge equally do not apply to either of these. [00:12:00] Speaker 05: No, it's true that they don't apply. [00:12:04] Speaker 05: What we're claiming, Judge, is that they charge one price to the government, they charge one price to private duty free customers, and they justify the price to the government. [00:12:16] Speaker 05: by saying it was to cover the amounts of those surcharges. [00:12:19] Speaker 05: It doesn't make any difference why they justified it. [00:12:22] Speaker 05: They knew it was, they knew, this is what the complaint alleges, they knew that they were charging different prices, they knew it was a violation of the MFC and they knew that they were falsely certifying compliance. [00:12:36] Speaker 05: And all the Iceland memo says is, there's a price disparity. [00:12:39] Speaker 05: How does that give rise to any basis for a finding of wrongdoing? [00:12:45] Speaker 05: This is an internal memo from one Philip Morris executive to another saying, we got this phone call, we resolved it, we told them that it was because of the requirement of the surgeon general's requirements that there's different prices, issue resolved. [00:12:58] Speaker 02: There has to be no clues to what that means. [00:13:02] Speaker 05: Yes, we don't know that. [00:13:03] Speaker 05: But that's not on the that's not on the relator to establish the significance of it is the significance of it is that the Philip Morris is arguing that that internal memo would have alerted [00:13:16] Speaker 05: a government would have provided a basis for prosecution or would have alerted to a likelihood of wrongdoing. [00:13:23] Speaker 05: That's what they have to establish and that is exactly what this court said the first time around didn't happen. [00:13:29] Speaker 02: So the government, that's right, looking only at that memo. [00:13:33] Speaker 02: So you know that Philip Morris is charging two different prices and that the government's paying more for cigarettes [00:13:44] Speaker 02: than a duty-free cigarette. [00:13:49] Speaker 02: Yes. [00:13:50] Speaker 02: And you know that there's an obligation to give the government the most favored customer. [00:13:57] Speaker 05: Yes, if there's no reason to justify the price differential. [00:14:04] Speaker 03: The fact that there's a reason or not depends on something completely outside the colloquies within Billet Mars and also something outside the mind of Mr. Oliver. [00:14:18] Speaker 03: It depends on what the law is. [00:14:23] Speaker 03: I haven't seen anything, any of the cases that requires that there be some certification of some, of why a possible claim of distinction is invalid under the law. [00:14:41] Speaker 05: Because what the cases make, the cases every case says, exactly what this court said about the why in the first appeal, that there has to be some basis in an FCA claim for a finding of falsity. [00:14:54] Speaker 05: And where in the Iceland memo is there anything to support any wrongdoing, any falsity? [00:15:03] Speaker 05: Where, and even if you add the certification. [00:15:06] Speaker 03: How strange argument coming from you. [00:15:10] Speaker 03: case has been that it's obvious that there's no difference between these types of sales, that it's obvious that the MSA charge doesn't apply to sales to the government, essentially what used to be called post exchanges. [00:15:30] Speaker 03: It just seems terribly strange for you to say that that's completely buried and the leader of the Iceland memo would never think of the possibility. [00:15:40] Speaker 05: Well, but you have object of evidence of that. [00:15:42] Speaker 05: The object of evidence is what the Iceland memo says is we've gotten inquiries from government personnel. [00:15:48] Speaker 05: We've explained this to them. [00:15:50] Speaker 05: If this was so suspicious, if there was a hint of wrongdoing, those inquiries would have resulted in some investigation. [00:15:58] Speaker 05: Those inquiries would have resulted in somebody saying, this doesn't make any sense. [00:16:03] Speaker 05: And the issue here is not, of course we take the position [00:16:07] Speaker 05: that there is a fraudulent scheme here. [00:16:11] Speaker 05: The issue is, what did that memo, written eight years earlier than the filing of Mr. Oliver's complaint, convey to anybody reading it? [00:16:19] Speaker 05: And it didn't convey anything about any criminal activity or any fraud or any falsehood. [00:16:26] Speaker 03: Could I ask about something relating to Mr. Oliver as an original source? [00:16:32] Speaker 03: Yes. [00:16:34] Speaker 03: In the original, [00:16:39] Speaker 03: set of memos before the district court. [00:16:43] Speaker 03: On that, Mr. Oliver pointed to a November 16, 2007 email which he had sent and which says that the overpayments [00:16:57] Speaker 03: doesn't say or with respect to what or anything. [00:17:02] Speaker 03: And it says also that Mr. Oliver talked with all kinds of high brass and made the same point to them. [00:17:12] Speaker 03: Then in the 2015 declaration, that blossoms extraordinarily. [00:17:19] Speaker 03: And there, we have allusions to the Samoa-Guang problem. [00:17:27] Speaker 03: We have the reference to the NFC. [00:17:32] Speaker 03: Everything blossoms extraordinarily, so that the case [00:17:38] Speaker 03: Mr. Oliver is now, post-2015, saying he communicated to the government, is full-fledged as opposed to, I have to say, seems to be a meaningless assertion over payments in that November 2007 email. [00:18:00] Speaker 05: Well, we fleshed it out when we went back when they re-raised the issue last night. [00:18:04] Speaker 05: I mean, there's no dispute that Mr. Oliver met with the top officials of the NEXCOM, the top officials of APHIS. [00:18:11] Speaker 05: He met with Gerardo Bianchi, the CEO of NEXCOM. [00:18:15] Speaker 05: He met with the COO, Michael Howard, of APHIS. [00:18:19] Speaker 05: He met with the director and secretariat of APHIS, and he explained to them [00:18:25] Speaker 05: the claim he was making about the inclusion of amounts for purported covering surcharges. [00:18:33] Speaker 05: And there's no dispute that he did that. [00:18:36] Speaker 05: There's no dispute that he called the DOD hotline. [00:18:41] Speaker 05: Basically, when they re-raised their motion after the first decision, we went in to present a more full explanation of what Mr. Oliver did. [00:18:53] Speaker 05: And on that point, [00:18:55] Speaker 05: It's clear that he brought this to the attention of the government. [00:18:59] Speaker 05: The question is, what is this? [00:19:01] Speaker 05: He brought his claim that Philip Morris was falsely overcharging, was charging the government more based upon reported amounts needed to cover surcharges than it was charging private duty-free customers. [00:19:18] Speaker 03: Can I hear in the November 07 memo? [00:19:20] Speaker 05: Well, the November 07 email just makes an allegation of overcharging and fraud. [00:19:24] Speaker 05: What we did was we put in what his discussions were with Rear Admiral Bianchi, what his discussions were with the AFIS executives, and we put in how we went about verifying what he knew from the beginning [00:19:37] Speaker 05: And the significance of that is, even if there were public disclosure, as an original source, he's entitled and can proceed with his action if he has direct and independent evidence of even one vital ingredient, one element of the case. [00:19:54] Speaker 05: The district court denied him original source status because it said he got it all from third parties, making reference to the paragraph where he said he went and verified. [00:20:04] Speaker 05: But he knew from day one when he talked with Maloney in 2007, the next con buyer, he knew that when Maloney told him, Maloney said to him, Philip Morris is including charges to cover the amount of the MSA surcharge in its pricing, he said to Maloney on that day, [00:20:25] Speaker 05: Before he did any verification, he said to Maloney, that should not be included. [00:20:32] Speaker 05: That is not included in normal pricing. [00:20:34] Speaker 05: He was someone who was in the market. [00:20:36] Speaker 05: He was familiar with market pricing. [00:20:39] Speaker 05: He himself paid the MSA and TTP surcharges. [00:20:42] Speaker 05: He had pricing in domestic. [00:20:44] Speaker 05: He had pricing in international. [00:20:46] Speaker 05: And he told Maloney that. [00:20:48] Speaker 05: Maloney said, wow, they've been pulling the wool over my eyes. [00:20:52] Speaker 05: And then he went and verified it. [00:20:53] Speaker 05: The district court denied him original source status, not because it didn't believe what he was saying, but because he went and verified it. [00:21:01] Speaker 05: And she said, oh, well, everything he knew came from third parties. [00:21:04] Speaker 05: When he told Maloney, this is an overcharge, he hadn't talked to any third parties. [00:21:09] Speaker 05: He was a conversation with Maloney based upon his personal experience as someone in the market participant. [00:21:17] Speaker 05: And so the original source status is something that is an independent ground to allow him to go forward with the lawsuit. [00:21:30] Speaker 02: All right. [00:21:31] Speaker 02: I'll give you some time on rebuttal. [00:21:32] Speaker 05: Thank you very much. [00:21:42] Speaker 01: Good morning. [00:21:43] Speaker 01: Good morning, Your Honor, and may it please the Court. [00:21:45] Speaker 01: Elizabeth Pimpas for Defendant Eppley, Philip Morris, USA. [00:21:48] Speaker 01: I think the theory of fraud here is exactly as the Court described. [00:21:53] Speaker 01: It's that Philip Morris was telling the government one thing and, in fact, doing something else, which revealed that the statement to the government was false. [00:22:03] Speaker 01: Namely, the theory is that one can [00:22:06] Speaker 01: imply from the most favored customer provisions a certification that Philip Morris was giving the military the best price for the products. [00:22:15] Speaker 01: And then there was a price disparity that showed that or you could infer that might be false because two corporate affiliates were getting a better price. [00:22:22] Speaker 01: That's the theory. [00:22:24] Speaker 01: And we believe the district court correctly in this round applied the disclosure bar because this court's cases say that the bar applies where [00:22:36] Speaker 01: The fraud that we're later alleges the essential elements of the fraud he alleges were in the public domain prior to the suit. [00:22:45] Speaker 01: And so when you look at the Joint Appendix pages 21 and 22, those are the pages of his complaint where he describes this theory and he says, [00:22:54] Speaker 01: The fraud is there's a most favored customer certification to the government. [00:22:59] Speaker 01: And then there's some pricing activity, namely giving two particular corporate affiliates, duty-free and international, a better price than the government. [00:23:07] Speaker 02: So counsel relies heavily on this court's opinion in Oliver I in defining the why [00:23:16] Speaker 02: in this XYZ formula. [00:23:18] Speaker 02: Are you taking issue with that? [00:23:20] Speaker 01: No, Your Honor, not at all. [00:23:21] Speaker 01: I think the issue is, as the Court described here today, in that opinion, the Court was focused on whether the Iceland memo standing alone was enough to trigger the bar because the Court concluded that the other piece was not sufficiently disclosed on the record of evidence at that time. [00:23:38] Speaker 01: On remand, we supplemented that. [00:23:40] Speaker 01: So now we have the two pieces before the Court. [00:23:42] Speaker 02: So I agree that was the holding. [00:23:44] Speaker 02: But there's this discussion by the court describing what it thought was needed in order to reach the Z conclusion. [00:23:57] Speaker 02: And everybody agrees as to the X. It's this Y characterization that seems to be at issue. [00:24:04] Speaker 02: That the fact that there's a most favored customer provision doesn't tell you anything because that simply says, [00:24:12] Speaker 02: subject to all kinds of qualifications, your client's obligated to give the government the most favorite customer. [00:24:23] Speaker 02: So you don't know at that point, if I understand the argument, whether or not there's any problem or not. [00:24:29] Speaker 01: Well, two things, Your Honor. [00:24:31] Speaker 01: I think with the two pieces in front of you, meaning the price disparity and the most favorite customer, you can infer the fraud. [00:24:39] Speaker 01: Because what you have in front of you then [00:24:40] Speaker 01: is the most favored customer provision from which you can infer that Philip Morris was telling the government, impliedly certifying that it was getting the best price. [00:24:49] Speaker 02: All right, so let me just push you on that, though. [00:24:53] Speaker 02: The argument in part might be that the most favored customer provision does not obligate Philip Morris to give exactly the same price. [00:25:12] Speaker 02: to the government as it might give to someone else. [00:25:15] Speaker 02: That there are other factors that could work into what is legitimately a most favored customer price. [00:25:23] Speaker 02: But that price differs from what Philip Morris may be charging other customers. [00:25:32] Speaker 02: So then you're into this, well, are the customers similarly situated, et cetera. [00:25:38] Speaker 02: What's your response there? [00:25:39] Speaker 01: twofold, Your Honor. [00:25:40] Speaker 01: Number one is the question for the bar, let's assume that we're just looking at these disclosures, is could one investigator infer a fraud? [00:25:48] Speaker 01: I think the answer is you're certifying this most favorite customer, you've got a price over here that may or may not violate that, you could investigate it. [00:25:55] Speaker 01: That's a pair from these disclosures, but the more important and in fact critical point here is that under this court's cases, the bar measures [00:26:04] Speaker 01: what's in the relator's complaint against what's in the public domain. [00:26:08] Speaker 01: And his complaint, again, this is paragraphs 25 to 29, appendix 21 and 22, he alleges no more than the two pieces that we just described and that were in the public domain. [00:26:20] Speaker 01: And that is why the district court correctly on this round found [00:26:24] Speaker 01: that the fraud or later alleges to use this court's formulation staples was in the public domain now that we have the record establishing the two pieces. [00:26:36] Speaker 04: But one thing I'm not, I guess, understanding about your argument is that in any government contract there could be [00:26:47] Speaker 04: You know evidence that someone comes across that the contractor may not be in compliance with the contract That doesn't necessarily put you on notice of fraud And it seems that that's what you're arguing here [00:27:03] Speaker 01: Well, but again, Your Honor, it's not what we're arguing. [00:27:05] Speaker 01: The test for the bar is simply, what is the relator alleging is the fraud in his complaint? [00:27:09] Speaker 01: And are the essential elements of what he describes as a fraud publicly disclosed? [00:27:13] Speaker 01: And that test is met here because, as Your Honor notes, [00:27:18] Speaker 01: We don't believe that what he's pledged in his complaint actually amounts to or pleads a fraud, but that's beside the point for jurisdiction, which is the issue here today. [00:27:25] Speaker 01: All we look at is what is he saying the fraud is? [00:27:28] Speaker 01: What are the elements? [00:27:29] Speaker 01: And he's saying there's a most fated customer certification that the court can infer is false because he [00:27:35] Speaker 01: appears that we appear to be charging someone else a better price that's you know paragraphs 25 to 29 of his complaint and that's exactly what was in the public domain he's not adding anything to those publicly disclosed elements and if we take a step back for what this bar is supposed to do [00:27:52] Speaker 01: It's supposed to judge or test whether a key TAM action that the government has declined to join after an investigation should nonetheless go forward because the relator is adding something about a potential fraud that might otherwise have gone undetected or might reveal something new that's not in the public domain and that simply is not the case here. [00:28:11] Speaker 04: Is there any legal significance to the fact that the government didn't join [00:28:17] Speaker 04: we ever held that that has any significance in how we view this matter? [00:28:23] Speaker 01: I don't know if the court has held that. [00:28:25] Speaker 01: I think statistically, and we had a site on this in our briefs, statistically it's like ninety-some percent of non-intervened key TAN cases are not permitted to proceed, and that's in part because there were later reports to be standing in the government shoes and prosecuting a claim of potential fraud in the government's name. [00:28:44] Speaker 01: Now, [00:28:44] Speaker 01: Certainly, there are some cases where a QITAM action can proceed, where the government declines to intervene, and even when some of the elements of the fraud are in the public domain. [00:28:54] Speaker 01: And that's where you satisfy the original source requirement. [00:28:57] Speaker 01: But that has some very specific trappings and requirements that we would submit are not met here for the reasons in our papers. [00:29:04] Speaker 01: And I think the district court carefully considered below and she agreed, including after considering the new and far more robust declaration [00:29:13] Speaker 01: that Mr. Oliver submitted. [00:29:15] Speaker 03: Yeah, I mean, I have two questions about that. [00:29:18] Speaker 03: One is, it doesn't seem to me that your brief fully addresses the more robust claims in the 2015 declaration, which there it's [00:29:32] Speaker 03: It's blossomed into the whole thing, which is what I take to be now the whole thing. [00:29:39] Speaker 03: Namely, this is page 453 in particular, where we have not merely the price differential, but the assertion as to what the cause of the price differential is, and then in addition is thrown in the MFC. [00:30:03] Speaker 03: Assuming that's taken us correct, the flaw in terms of original source is what? [00:30:12] Speaker 01: There are three, Your Honor, and they're a matter of timing and quality, not just quantity on the declaration. [00:30:18] Speaker 01: The first is the operative complaint does not plead original source, which the Supreme Court said at Rockwell is a problem. [00:30:24] Speaker 01: But even if we go on to consider the declaration at appendix 453 and onward, there are two. [00:30:30] Speaker 02: I didn't quite read Rockwell to say quite as much as you're saying, but I get your point. [00:30:35] Speaker ?: Yeah. [00:30:35] Speaker 01: So it's conceded, it's not put, but let's go with the district court's view and say, let's take everything he's put in the record and let's consider it on the merits. [00:30:43] Speaker 01: Let's do that starting at appendix 453. [00:30:47] Speaker 01: He starts out with what this court's opinion in Findlay described as some conclusions. [00:30:50] Speaker 01: He says, I believe there was a fraud. [00:30:52] Speaker 01: I had a suspicion. [00:30:53] Speaker 01: We've seen many relators do that who've been jurisdictionally barred. [00:30:57] Speaker 01: And then when he goes on to say, and this is really important, [00:30:59] Speaker 01: It's paragraph 13 of his declaration at pages 454 to 55 of the appendix. [00:31:06] Speaker 01: He concedes that the only specific example of the disparate pricing that he says shows the certification to be false, this Samoa versus Guam disparity, [00:31:17] Speaker 01: is one he discovered after he filed this lawsuit in 2008. [00:31:20] Speaker 01: So the original source cases are clear that even if there is direct knowledge and a specific example, it has to be uncovered and brought to the government's attention before the lawsuit's filed. [00:31:32] Speaker 01: So that's not the case here. [00:31:34] Speaker 01: And then further and critically, this court's precedents say that the relator's knowledge of the substance of allegation of fraud. [00:31:44] Speaker 03: Your reading may well be correct, but we have paragraph 10 in which is a fairly elaborate presentation of what he claims to have said to Admiral Bianchi and others. [00:32:01] Speaker 03: And then we have paragraph 13. [00:32:04] Speaker 03: And I take it you're saying the only reasonable reading of that is that the aspects of paragraph [00:32:14] Speaker 03: 10 that depend on information in paragraph 13 must be, in fact, after discovered information. [00:32:25] Speaker 03: Is that right or what? [00:32:26] Speaker 01: I think that's the most reasonable reading, if not the only. [00:32:29] Speaker 01: But the other thing I'd say, and I appreciate your honor raising paragraph 10, it was going to go directly to the point I was about to make about the cases, which is that the [00:32:38] Speaker 01: information in this declaration, including paragraph 10, has to be direct and independent of third-party sources, meaning it has to be firsthand. [00:32:47] Speaker 01: And the district court correctly applied those cases to say what he's really describing here is his learning things from third-party sources that were not unique to him. [00:32:59] Speaker 01: It wasn't directed. [00:33:00] Speaker 03: My reflection is part of your brief. [00:33:02] Speaker 03: accepts the proposition that the relator can do at least some research. [00:33:10] Speaker 03: And I take it research other than plowing through documents. [00:33:15] Speaker 01: Indeed, Your Honor, we agree completely. [00:33:17] Speaker 01: And we don't quarrel with the fact that a relator who has what you need in the first place, which is some direct and independent knowledge, factual knowledge of your own, you are then free to go investigate and augment it. [00:33:28] Speaker 01: But you have to have the first step. [00:33:30] Speaker 01: which is the relator personally has to have direct and independent knowledge of the fraud that he's asserting here. [00:33:37] Speaker 01: And what we see in the declaration is, and this is in our brief, I think it's pages 54 onward, we walk through and engage that he says my starting knowledge was a belief or a suspicion. [00:33:50] Speaker 01: But this court's cases say, that's not enough. [00:33:51] Speaker 01: You have to have some facts. [00:33:53] Speaker 01: Now, if you have some facts that are directed at independent, you can, of course, go and investigate further. [00:33:57] Speaker 01: That's not what this declaration describes. [00:34:00] Speaker 04: So just so I'm clear, your position then would be that if he had somehow come into possession of a document that was able to be authenticated between Philip Morris executives that basically said, we're going to cheat the government, and here's how we're doing it, et cetera, [00:34:19] Speaker 04: And he came into position of that document. [00:34:22] Speaker 04: He couldn't be a key tamery later because he'd still only have secondhand knowledge. [00:34:29] Speaker 01: It depends what the basis of his knowledge was in the first instance. [00:34:31] Speaker 01: I mean, to give you a concrete example, right, there was like the relator in the Quinn case who was the client. [00:34:38] Speaker 01: And the defendant was an arbitrator who said he arbitrated his case on a given day and billed the government. [00:34:43] Speaker 01: And the client said, well, I have firsthand knowledge that my arbitration did not happen that day. [00:34:47] Speaker 01: So he's misstating something to the government. [00:34:49] Speaker 01: So he had the foundation. [00:34:50] Speaker 01: Now, if that relator had gone on and confirmed that the arbitrator was at a resort in Bermuda and investigated that through third-party sources, that would be fine. [00:35:01] Speaker 01: You know, the same thing in Davis, which was akin to the situation your honor described. [00:35:05] Speaker 04: So let's suppose we have what he says that he knew, and then upon his further investigation, he comes into possession of a document like that. [00:35:15] Speaker 04: your position would be that that document couldn't be considered because it's, in effect, secondhand knowledge. [00:35:23] Speaker 01: It might, Your Honor, if what he knew was a fact about the fraud he alleges, but there is nothing in his complaint or in the declaration that shows. [00:35:31] Speaker 01: And that's why perhaps he doesn't plead it under the Rule 11 standard. [00:35:34] Speaker 01: He doesn't say, I'm an original source. [00:35:36] Speaker 01: I have firsthand knowledge, like an insider might, that Philip Morris knew that these were comparable customers and that it was actually misrepresenting best price to the government. [00:35:46] Speaker 02: So is the failure to plead that's key here? [00:35:50] Speaker 04: I mean, he's offered to plead it on remand, right? [00:35:53] Speaker 01: And it's the failure to plead, Your Honor, and the futility of repleting, and I want to stress this. [00:35:59] Speaker 01: It's clear from our papers, and this is at Appendix 122-144, we walked through in several rounds. [00:36:06] Speaker 01: He's on his third complaint since 2008. [00:36:09] Speaker 01: He has not, he never worked for Philip Morris. [00:36:12] Speaker 01: He hasn't been able, he says it in paragraph 30 of his complaint, he needs discovery to do what you're supposed to do at the pleading stage, which is plead some actual facts that we knew that this wasn't comparable. [00:36:22] Speaker 01: And the reason we'd submit it futile, Your Honor, is that when you look on page 29 of our brief and the accompanying citations to the record, [00:36:29] Speaker 01: What he's admitting is that this is apples to oranges. [00:36:32] Speaker 01: The price disparity or the price comparison here is between Philip Morris USA charging the military one price, and then Philip Morris USA charging its corporate affiliates, duty-free and international, a different price. [00:36:48] Speaker 01: And those are not similarly situated customers. [00:36:51] Speaker 01: We put SEC filings in the record that are noticeable. [00:36:54] Speaker 01: This is at appendix 122 [00:36:56] Speaker 01: 44 that say those are contract manufacturing arrangements different than the government. [00:37:01] Speaker 01: They're not similarly situated. [00:37:03] Speaker 01: It explains a lot about really why there's no MFC violation here, never mind a fraud. [00:37:07] Speaker 01: So we respectfully submit that the court affirmed the judgment. [00:37:11] Speaker 03: I guess I'm still somewhat uncertain about the line you're drawing between the research that's permissible consistent with the original source and the research that's not consistent. [00:37:25] Speaker 03: So it seems clear that he knew by November 2007 [00:37:35] Speaker 03: that there were price differentials between sales to the government for purposes of the armed forces exchanges and, quote, civilian sales. [00:37:51] Speaker 03: Maybe it's not clear. [00:37:52] Speaker 03: Actually, all we get clearly from the 2007 email is that there are overpayments. [00:38:02] Speaker 03: The failing there is that it doesn't point to the specific things being compared, or what? [00:38:11] Speaker 01: There's that, Your Honor, because the only specific, the Samoa Guam, came after he filed. [00:38:15] Speaker 01: And also, Your Honor, he's not doing what we expect an original source to do, which is point to something that's not already public. [00:38:22] Speaker 01: To the extent he's just saying, I was aware somehow that [00:38:26] Speaker 01: Philip Morris was charging somebody an affiliate or a duty-free operator a different price in the government that was out there for decades So what is he adding? [00:38:35] Speaker 01: I mean the disclosure bar inquiry is do you get to go forward with a key tip? [00:38:40] Speaker 01: Despite the fact that the essential elements of your case were in the public domain and this court's cases say yes and [00:38:46] Speaker 01: If you have something substantial, material, new to add, Findlay says that taking your expertise in applying a legal conclusion or supplying additional detail about an already disclosed practice is not enough. [00:39:01] Speaker 01: So what he doesn't have is exactly what Your Honor described plus [00:39:06] Speaker 01: the building block of an original source claim, which is some personal factual knowledge that he disclosed to the government before he filed the lawsuit. [00:39:14] Speaker 01: Samoa Guam is the only thing he's come up with. [00:39:16] Speaker 01: It doesn't work for a myriad of reasons, and it was far too late. [00:39:19] Speaker 03: Let's just suppose that Samoa Guam were timely. [00:39:23] Speaker 03: Would it be enough, in your view? [00:39:25] Speaker 01: On the facts played here, no, because he doesn't say that he had any direct or personal knowledge of that. [00:39:31] Speaker 01: If he were the person buying under that arrangement, for example, or he were somehow revealing something new or material about this practice, but the practice itself, namely, [00:39:43] Speaker 01: His complaint and Samoa Guam rely on the same thing that has been in the public domain for decades, namely there's a worldwide most favorite customer policy. [00:39:53] Speaker 01: And then there's evidence in multiple places in the world that the military gets one price, Philip Morris corporate affiliates get another. [00:40:00] Speaker 01: The Iceland memo says, this is paragraph three of the memo, we frequently receive inquiries about why this is the case. [00:40:08] Speaker 01: It's observable on the shelf. [00:40:10] Speaker 01: So even with Samoa Guam, A, he had no personal direct knowledge of it, and B, it's not adding anything to what's in the public domain. [00:40:18] Speaker 01: It's just another example of an already disclosed practice. [00:40:22] Speaker 01: And that's exactly what this court's cases say is not enough to proceed as an original source after the government declines intervention. [00:40:30] Speaker 04: So a custodian works at Philip Morris and they just happen to be observant and they, you know, find some documents on the desk that show government fraud and they take those to the government and the government isn't interested and then they bring a suit. [00:40:51] Speaker 04: They're not an original source because all their information is secondhand. [00:40:56] Speaker 04: I mean, they're a custodian. [00:40:57] Speaker 04: They don't have anything to do with procurement, et cetera, et cetera. [00:41:01] Speaker 04: They can read. [00:41:02] Speaker 04: And they read that it appears that there's fraud. [00:41:06] Speaker 04: And they try to do something about it. [00:41:08] Speaker 04: But they bring this lawsuit. [00:41:13] Speaker 04: Your position is they're not an original source. [00:41:15] Speaker 01: No, Your Honor, I don't think that we have to embrace a position as broad as that to affirm the district court here. [00:41:22] Speaker 01: The relator in your example might be an original source. [00:41:25] Speaker 01: He's got something very different than the relator here, right? [00:41:29] Speaker 01: He's got direct firsthand knowledge of facts, documents, internal that might otherwise go undetected. [00:41:35] Speaker 04: How is his knowledge firsthand? [00:41:38] Speaker 04: He's not... [00:41:40] Speaker 04: If he were to be called as a witness in court to testify about, you know, how these transactions happened, you would object and say, hearsay. [00:41:53] Speaker 04: And that objection, if I were sitting on the district court still, would be sustained. [00:41:59] Speaker 01: Possibly, Your Honor. [00:42:00] Speaker 01: The reason I'm hesitating is because I'm thinking of the relator in Davis who was an accountant who prepared some documents for the defendant. [00:42:07] Speaker 01: That relator may not have been able to testify about how the actual transactions occurred. [00:42:12] Speaker 01: What he could do in the first instance personally that this relator cannot is say, I have [00:42:17] Speaker 01: Personal firsthand my eyes knowledge of internal documents that I've read I have the documents I can present to you. [00:42:24] Speaker 04: They show facts How's that different than Oliver talking to to some people who have firsthand knowledge about? [00:42:34] Speaker 04: What they were charged or weren't charged and why? [00:42:37] Speaker 01: Well, in the first instance, he didn't have anything but a suspicion or belief. [00:42:41] Speaker 01: Some of the conversations occurred too late in this case. [00:42:44] Speaker 01: And then, again, who's the best party to disclose it, right? [00:42:46] Speaker 01: When you think about what's the point of encouraging original sources or whistleblowers to come forward, in your example, those documents that the custodian obtained at the defendant might never have come to light, might never have come to the government's attention. [00:43:01] Speaker 01: Quite different here. [00:43:03] Speaker 01: Mr. Oliver, as a relator, is performing no such public service. [00:43:06] Speaker 01: What he's doing is talking to other people who are, frankly, in a better position to speak to or report what he says is the pricing differential that shows a fraud. [00:43:15] Speaker 01: And so he's bringing nothing new, and he's certainly bringing nothing new that wasn't already public, which is not clear that that was the case in your hypothetical. [00:43:22] Speaker 01: I don't know if the facts in the documents that the relator in the hypothetical obtained were in the public domain, as is clearly the case here. [00:43:32] Speaker 02: Anything further? [00:43:34] Speaker 01: We would disrespectfully submit the court of thumb. [00:43:36] Speaker 01: Thank you. [00:43:37] Speaker 02: Thank you. [00:43:40] Speaker 02: Council for appellate. [00:43:43] Speaker 05: Thank you. [00:43:45] Speaker 05: What you just heard argued was that everyone's known for decades and that it's perfectly lawful for Philip Morris to charge one price through its affiliates to private customers and one price to the government when it does it directly. [00:43:59] Speaker 05: That is what the Iceland memo says and what counsel just told you was that's been known for decades, there's nothing unlawful about it that doesn't raise any suspicion. [00:44:09] Speaker 05: And that is exactly why [00:44:11] Speaker 05: the Iceland memo doesn't give any evidence to an investigator because all it does is confirm what you just heard Philip Morris say, everyone knows it's perfectly legal. [00:44:26] Speaker 05: Here's what Oliver contributed, and this goes both to the public disclosure and to the original source. [00:44:33] Speaker 05: You have to look at what he says in his declaration, which has been a little mis-paraphrased by the defendant. [00:44:41] Speaker 05: What he says is, I, and this is again in paragraph, this is actually in paragraph five, [00:44:48] Speaker 03: I'm sorry, in which document? [00:44:50] Speaker 05: This is his declaration in paragraph 5. [00:44:53] Speaker 03: 2005. [00:44:54] Speaker 05: Yes, at 451, I think it is, of the appendix. [00:44:59] Speaker 05: But what he says is, I met with Maloney. [00:45:03] Speaker 05: I asked him if I could sell, my company could sell overseas. [00:45:07] Speaker 05: He said yes. [00:45:08] Speaker 05: I talked to him about pricing. [00:45:09] Speaker 05: Maloney told me do what everyone else does and just knock off the federal excise tax. [00:45:14] Speaker 05: He then says to Maloney, based upon his knowledge and experience as a market participant, no, I'm going to knock off the amounts to cover the other two surcharges. [00:45:25] Speaker 05: He says in his, it was, he says, this is in paragraph five on page two. [00:45:31] Speaker 05: I told Maloney I also intended to reduce the charge to reflect two other components that I believed were inapplicable to overseas sales. [00:45:41] Speaker 05: and then he explains what they were, these surcharges amount to approximately $5.60 and $1 per carton and in my experience in the industry were generally passed on by cigarette manufacturers in the prices charged to the purchaser. [00:45:56] Speaker 05: Now, then he says, it was my understanding [00:46:00] Speaker 05: at the time that I was speaking with Maloney, that these surcharges were not applicable to overseas sales and would not be included in overseas product pricing determinations. [00:46:12] Speaker 05: That's what he knows as a market participant, as someone who is involved in paying surcharges, in pricing products domestically, in pricing products overseas, and in dealing with competitive pricing. [00:46:29] Speaker 03: lines of page 450, that's critical. [00:46:34] Speaker 05: I'm sorry, I don't, I actually. [00:46:36] Speaker 03: The one below me was surprised because. [00:46:38] Speaker 05: No, it's the end of, it's the last few lines of page, of the fourth, of the previous page, where he's saying, these are the surcharges, they're passed on to the purchaser for domestic. [00:46:50] Speaker 05: It was my understanding, the last three lines on page two of the declaration, it was my understanding at the time. [00:46:56] Speaker 05: Thank you. [00:46:57] Speaker 05: and this is page 449 of the appendix. [00:47:01] Speaker 05: It was my understanding at the time that I was speaking with Mr. Maloney that these surcharges were not applicable to overseas sales and therefore would not be included in the overseas pricing determinations. [00:47:13] Speaker 03: So the discovery of Mr. Oliver [00:47:17] Speaker 03: Was Oliver's the original source of legal conclusion? [00:47:20] Speaker 05: No, it's not a legal conclusion. [00:47:22] Speaker 05: It's perfectly legal to include the search. [00:47:25] Speaker 05: It's perfectly legal to do it. [00:47:27] Speaker 05: It's just no one was doing it. [00:47:28] Speaker 05: Oliver knew no one was including those amounts in the pricing. [00:47:35] Speaker 05: They could do it, they could have charged the private duty consumers, duty free consumers, customers, they could have charged the government, but what they couldn't do, and what Oliver told Mr. Maloney was, they're doing it to you, they're not charging, they're not including that cost to the private sector. [00:47:53] Speaker 05: That is what Mr. Oliver knew based upon his market experience as someone pricing with knowledge of market pricing practices. [00:48:04] Speaker 05: And what he says is, it's my understanding that these amounts are not included [00:48:10] Speaker 05: to cover the surcharges because these surcharges only apply to domestic sales. [00:48:15] Speaker 04: You're saying that he knew what the industry practice was and that Philip Morris wasn't complying with the industry practice as far as pricing. [00:48:25] Speaker 05: Well, he knew what the industry practice was because he himself was a market participant. [00:48:30] Speaker 05: And what he was saying was, Philip Morris complied with the industry practice with the private duty-free customers and was not complying with the industry practice, which it didn't have to do, but it couldn't do them differently. [00:48:44] Speaker 05: What he was saying was, look, you're being charged an extra $660 that is not being included in the pricing to the duty-free market. [00:48:55] Speaker 05: That is it. [00:48:56] Speaker 03: Okay, I'll just go back. [00:48:57] Speaker 03: Okay. [00:49:01] Speaker 03: Except this in full, all its glory. [00:49:06] Speaker 03: Mr. Maloney, the buyer for Nexcom, didn't know about the price differential. [00:49:13] Speaker 03: Correct. [00:49:14] Speaker 03: He's been happily paying the higher price. [00:49:16] Speaker 03: Correct. [00:49:18] Speaker 03: And what? [00:49:20] Speaker 03: Oliver reveals to him is that civilian buyers are getting a much better deal. [00:49:29] Speaker 03: Correct. [00:49:30] Speaker 03: Is that it? [00:49:30] Speaker 05: Yes. [00:49:31] Speaker 03: And now that, as Patess said, that the Iceland memo reflects awareness of that as being very widespread. [00:49:43] Speaker 05: I agree with that, except that, except the Iceland memo says, this is a perfectly legitimate thing, and what Mr. Oliver Enads is, if they are doing this because they're telling the government that we need to include amounts to cover the surcharges, that is fraudulent. [00:50:09] Speaker 05: Because those surcharges don't apply and those surcharges are not charged to the private duty, the amounts to cover the surcharges are not charged to the private duty sector. [00:50:20] Speaker 05: 33 sector. [00:50:22] Speaker 05: That is what prompts Mr. Maloney to say, wow, they've been pulling the wool over my eyes. [00:50:28] Speaker 05: Maloney knows what the price is domestically. [00:50:31] Speaker 05: Next Count buys domestically and overseas. [00:50:34] Speaker 05: Maloney knows I'm paying, and I'm making this number up, $15 for a carton and the [00:50:41] Speaker 05: Philip Morris has told Nextcom that part of that is an amount to cover the surcharge for the MSA and the surcharge for the TTPP. [00:50:50] Speaker 05: And Maloney accepts that. [00:50:51] Speaker 05: Now Philip Morris comes and says, we're going to charge the same $15 overseas, including those same amounts to cover the surcharges. [00:51:01] Speaker 05: Oliver comes along and says, whoa. [00:51:04] Speaker 05: There's no amount to cover the surcharges because those are domestic and when Philip Morris prices the private sector overseas, it knocks those numbers out. [00:51:17] Speaker 05: So the private sector is paying $10 instead of $15 for the same cigarette. [00:51:23] Speaker 05: Maloney says, wow, they've been pulling them all over my eyes. [00:51:26] Speaker 05: The Iceland memo doesn't address that at all. [00:51:29] Speaker 05: All the Iceland memo says is, there's different prices. [00:51:32] Speaker 05: It could be completely legal. [00:51:34] Speaker 05: It could be somebody made a mistake. [00:51:36] Speaker 05: It could be fraud. [00:51:38] Speaker 05: But there's nothing in the Iceland memo that says this is a deliberate way to include $6.60 for surcharges to cover reported surcharges that we don't charge in the private sector. [00:51:54] Speaker 05: And that is why the difference between the complaint in this action and the Iceland memo. [00:52:02] Speaker 05: And with all due respect to the characterization of the complaint, here is what the complaint alleges. [00:52:08] Speaker 05: The complaint alleges in paragraph 31, not 25 through 29, but paragraph 31 that Philip Morris falsely warranted compliance with the MFC provisions when it knew it was not complying. [00:52:24] Speaker 05: The complaint alleges in paragraph 32 that Philip Morris made those false statements to get money it was not entitled to get. [00:52:32] Speaker 05: The complaint alleges in paragraph 39 [00:52:36] Speaker 05: that Philip Morris used these false presented and used false statements to make a fraudulent claim, to get a fraudulent claim paid. [00:52:45] Speaker 05: And the complaint alleges, in paragraphs 25 through 29, a scheme. [00:52:50] Speaker 05: The scheme was, we are going to sell directly to the military at one price. [00:52:57] Speaker 05: We're going to use our affiliates to sell to the private sector at a lower price. [00:53:05] Speaker 05: And the complaint alleges that they did that knowing. [00:53:10] Speaker 05: that there was no, just the complaint alleges it's identical cigarettes, the complaint alleges it's similar markets. [00:53:18] Speaker 05: The complaint alleges this was a scheme. [00:53:20] Speaker 05: This wasn't something perfectly legal for two decades or three decades. [00:53:25] Speaker 05: This is something, by the way, the MSA didn't come into effect until the late 90s. [00:53:30] Speaker 05: This is something that was done by Philip Morris, the complaint alleges, [00:53:35] Speaker 05: to circumvent its requirements under the MSCs. [00:53:48] Speaker 02: Judge Williams? [00:53:52] Speaker 02: Any further questions? [00:53:53] Speaker 05: I have one last point, if I might add it. [00:53:56] Speaker 05: Aye. [00:53:56] Speaker 05: That is simply the pleading issue. [00:53:59] Speaker 02: What if you were required to plead with the original source? [00:54:02] Speaker 02: This is not something... That's addressed in your brief. [00:54:05] Speaker 05: Okay, it is, and I rest on that. [00:54:07] Speaker 05: Thank you very much. [00:54:08] Speaker 02: Thank you. [00:54:08] Speaker 02: We'll take the case under advisement.