[00:00:02] Speaker 01:
Case number 17-7141, D.C.

[00:00:07] Speaker 01:
Healthcare Systems Inc.

[00:00:08] Speaker 01:
Appellate for District of Columbia and out, Mr. Morse for the appellate, Ms.

[00:00:14] Speaker 01:
Lipsak for the appellate.

[00:00:18] Speaker 00:
Mr. Marshall, let me just say for the record, Judge Griffith is not able to be here because the power was out in his house as a consequence of our lovely weather yesterday and today, but you can be assured he will be listening on the tapes and will participate in full.

[00:00:39] Speaker 04:
Thank you, Your Honor.

[00:00:42] Speaker 04:
May it please the court that I represent DCHSI.

[00:00:48] Speaker 04:
here told DCHSI to file a different lawsuit when DCHSI said that the district had intentionally underpaid chartered.

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that this lawsuit presents.

[00:01:18] Speaker 04:
The State Court proceeding resolved the question of what was done to protect state people and a lot of doctors when an attorney is struck to run out of money.

[00:01:32] Speaker 04:
That was before the State Court judge who resolved that question.

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This lawsuit presents a different question.

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This lawsuit presents a question about why DCHSI ultimately will install of its property.

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And this lawsuit presents the question

[00:02:08] Speaker 04:
without compensation and without sufficient process from the State.

[00:02:19] Speaker 04:
But the work that's intended to do a lot of specific things, which is to prevent a party that nozzles in the State Court from taking a de facto appeal to a United States district court.

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object the State Court decision, and this is why she says there are other opposed things here.

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And it's not only for review, because this is not the fact that the State Court decided before it was to sit down and proceeding in the State Court without hearing.

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Here, DHSL says,

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take that points back to the party.

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Section 3 provides a second federal remedy for that party.

[00:03:43] Speaker 03:
Um, this is the objective.

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I think you just let me talk.

[00:03:56] Speaker 00:
Um, this

[00:04:01] Speaker 00:
I guess I have a question for you, which wasn't really addressed very much in either brief, but I just wonder, why doesn't Verizon, the Supreme Court's opinion in Verizon, resolve this case?

[00:04:14] Speaker 00:
This is a challenge to the decision of the insurance commissioner, right?

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The rehabilitator is the insurance commissioner.

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Is that right?

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to a decision by the insurance commissioner.

[00:04:31] Speaker 00:
Just to turn my cards over, this is a helpful question to you, not one you need to resist.

[00:04:36] Speaker 00:
So this is a challenge to a decision by an executive agency and a rise in the Supreme Court says Rooker Feldman doesn't apply to challenges to decisions of executive agencies.

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Why is that not

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applicable here?

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Or isn't it?

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Maybe I should give you a leading question.

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Isn't it applicable here?

[00:05:01] Speaker 04:
Yes, I appreciate that.

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And I think the question could certainly resolve the question on that issue.

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The final issue is with the district, the district advocates' choice to update and then make up the difference so that DCHS happens to use to have a company instead of using this otherwise valid state court process.

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that are involved with that.

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Right.

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So that's it.

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It seems to us that Section 23 provides whether the rising case is helping us here, but that case is helpful, too.

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I'm happy to sit down.

[00:06:37] Speaker 02:
I'm just going to ask it.

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It seems difficult in all of these Rooker-Feldman cases to disentangle preclusion and Rooker-Feldman.

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I mean, it does seem like there are going to be many preclusion hurdles given various things that your client agreed to in terms of empowering the rehabilitator.

[00:07:02] Speaker 02:
But you would just, I guess, or just to separate those conceptually and even where, as in, I guess it's the Exxon case, there may be dueling decisions that that would be sorted out through full faith and credit and not through Roker Feldman as such.

[00:07:20] Speaker 04:
Yes, that's exactly right now.

[00:07:24] Speaker 04:
I guess what's difficult is so wrapped into the rehabilitation is this authority to make all those subsidiary decisions and it's

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efficacy and finality is only – is based on its nature as a kind of whole package.

[00:08:02] Speaker 02:
And when you say, oh, no, we're not challenging that, we're not appealing that, but we want to be able to appeal, you know, some subparts of it, I guess, given the distinctive nature of rehabilitation, doesn't that maybe make it more of a candidate for Rook or Feldman?

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is the analogy to the gray case from the circuit that we asked for two days ago.

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Some of them have fleshed out, but which the circuit sort of endorsed in gray.

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There are other, you know, cases like that also.

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That's just the case.

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If that's something that this, that they object to,

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In those cases, it's sort of loaded for the best interest of the child.

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Here, it's loaded essentially to protect, you know, the sick people and the doctors first and foremost, right?

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So, that's a statement.

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Okay.

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Does nobody ask you to change the outcome?

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Does it exist Trigger?

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It does.

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The business absolutely does not exist, but there's sort of a legal person that has chartered better means and rehabilitation while creditors try to get paid on.

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And what's the size of it?

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Had these claims against the contracting officer chartered?

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Did those claims been acted on?

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Yes.

[00:10:24] Speaker 04:
So here you raised 10s of millions of dollars.

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Right.

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So, those claims that come, that function is strong.

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The rehabilitator controls those claims.

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Right.

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And the rehabilitator sells those claims.

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Right.

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So, what does that mean?

[00:10:45] Speaker 03:
So, there's no rehabilitation law.

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Right.

[00:10:54] Speaker 03:
The state ought to pay the policy, and I think that the state should try to cross that.

[00:11:02] Speaker 04:
Where that part, where that part, the cross, you know, the abortion, where is it?

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What gives the state health care at a big discount such a

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social outcome, but it just can't be the case that the state can outpace them in tens of

[00:11:48] Speaker 02:
Why not?

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And I know this isn't bankruptcy, but when you think of bankruptcy, which is a little more familiar, it's taking a lot of valid claims and basically saying, we're going to do a work out here.

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We're going to have a clean slate.

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And if you said, fine, for purposes of bankruptcy and reorganization and the health of a business going forward, fine, we're not questioning that.

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We just want to be able to litigate the underlying claims that you have

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to resolve in the bankruptcy.

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I'm not sure that, I mean, usually when I have a conflict, I see a conflict, at least functionally.

[00:12:26] Speaker 04:
I'm not sure, to think about it, but there's a more important difference here.

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The premise of bankruptcy

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the creditors get paid, and maybe if there's money left over directly to others, they get paid.

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That's pretty unusual, but, you know, that's sort of what the bankruptcy is doing.

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The way about death doesn't really dig it from there.

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The way is not set to just maximize the death in the state.

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The state project sets the standard we've got our straddle with, which is just HHS, sort of, and said, look, well, the state is independent by $60 million.

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We're trying to interact.

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And we're not going to waste that.

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They actually earn the $60 million to approve what the de-habilitator has suggested, because the private sector

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permits so that people don't lose insurance.

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And in this case, going really people don't lose insurance.

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And so that that's what we're going to do from the Medicaid.

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We're going to change those and say, look, we're going to do it now.

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lawsuit if you think that the state has done something separate that's unfair and that's what this lawsuit is.

[00:14:16] Speaker 02:
So the record is puzzling and I realize this may be beyond the scope of what we need to really understand, but did DCHSI try to intervene in the rehabilitation proceeding before 2016?

[00:14:40] Speaker 04:
So there's this cut in August of 2013 when the rehabilitator has made a deal with the district to set up this cut.

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The rehabilitator comes to the judge.

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Anything that's there, it's pending.

[00:15:00] Speaker 04:
The rehabilitator just comes up one step.

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the music for abuse of discretion, you know, the order.

[00:15:08] Speaker 04:
If you read the order that follows this call, clearly the judge just says, no, the charlatan that suggests no gross abuse of discretion, you know, for our principle.

[00:15:15] Speaker 04:
So the DCHSR said, you know, I had to report this debate.

[00:15:28] Speaker 02:
Right.

[00:15:28] Speaker 02:
And he said, today I'm not going to read this.

[00:15:34] Speaker 02:
That's my step.

[00:15:35] Speaker 02:
Right.

[00:15:37] Speaker 02:
Just say it too late.

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He said, you're done.

[00:15:40] Speaker 02:
Right.

[00:15:41] Speaker 02:
So then it's just puzzling, even in the cold record, how many times your client thought, I'm going to appeal this, and I'm not.

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And so then there was an effort, there was an appeal filed in the DC Court of Appeals that was then withdrawn.

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Any light on that?

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Again, I'm not saying it's necessarily what we had.

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It's just puzzling.

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is, hey, the judge was wrong to say that we want a party.

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With judge, we've got sort of the why, the what.

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It doesn't make DCHS out more of a party, right?

[00:16:27] Speaker 04:
But why would try the appeal, right?

[00:16:32] Speaker 03:
The what is, does it

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We destroyed, I mean, it's, it's been doing this for a long time.

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We've got sick people, you know, sick and needy people in the district for, you know, a decade or more.

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It's about to be destroyed.

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They're trying to come back.

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They've got me in front of them at each point.

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One thing's a goodness, they say.

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One thing's a goodness, they say.

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One thing's a goodness, they say.

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For us appeal, where do we get up?

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The judge gives the funds down to the rehabilitators' proposals.

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That doesn't give us money that we just sort of go back to.

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We still can't solve for the fundamental right.

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The judge, you know, already said, you know, the rehabilitation is the rehabilitation, and the court, he isn't going to change that.

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That's not even what we're asking for.

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Somebody basically said, well, we've done this, and we've grossed costs money.

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And they said, well, we can personally do this stuff.

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And they filed, and DCHS filed this lawsuit, which I think is the right lawsuit to file.

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It is the right procedure, I would need to say, look, the state just can't do this until this comes to a good end.

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And we provide them some comfort.

[00:18:02] Speaker 04:
1983 provides, I think that the State Court judge very much did not address those questions that were to say nothing about, you know, due process or take the takings clause or anything like that.

[00:18:16] Speaker 04:
And so for that reason, also I think Riker-Feldman doesn't apply.

[00:18:19] Speaker 00:
All right.

[00:18:21] Speaker 00:
Thank you very much.

[00:18:22] Speaker 00:
Thank you.

[00:18:30] Speaker 05:
May it please the Court, Sonia Lipsak for the District Appellees.

[00:18:34] Speaker 05:
I'm also arguing today on behalf of Mercer LLC and in our healthcare toss.

[00:18:39] Speaker 05:
Chief Judge Garland, let me start with your question about Verizon.

[00:18:43] Speaker 05:
This is not state agency action.

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The rehabilitator is under the statute

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appointed to essentially stand in the shoes of Chartered under the aegis of the D.C.

[00:18:56] Speaker 05:
Superior Court.

[00:18:57] Speaker 00:
I thought it was under the aegis of the insurance commissioner and then reviewed by the Superior Court.

[00:19:01] Speaker 00:
Is that wrong?

[00:19:02] Speaker 00:
It's appointed by the commissioner, correct?

[00:19:05] Speaker 05:
The commissioner's – the rehabilitation statute provides – You have to talk a little louder.

[00:19:10] Speaker 00:
I don't know why I'm not hearing so loud.

[00:19:11] Speaker 00:
I'm sorry.

[00:19:12] Speaker 00:
It's my fault.

[00:19:13] Speaker 05:
The rehabilitation code establishes that the commissioner shall be appointed the rehabilitator of Chartered.

[00:19:24] Speaker 05:
And the Superior Court of the District of Columbia approves – for example, we have a rehabilitation order here, which was approved by the Superior Court.

[00:19:34] Speaker 05:
We then have the entire proceedings of the litigation in the Rehabilitation Court where, again, very consistent with the statute, the rehabilitator was required to present his rehabilitation plan for reorganization of charter.

[00:19:51] Speaker 05:
The Superior Court judge reviewed that plan.

[00:19:55] Speaker 05:
The plan had to be fair and equitable, et cetera.

[00:19:58] Speaker 05:
So the Court is very clear that every step of the way through this proceeding, the rehabilitator was being supervised by the D.C.

[00:20:06] Speaker 05:
Superior Court.

[00:20:08] Speaker 00:
And the litigation record here is actually... How is that different than the Maryland Commission?

[00:20:14] Speaker 00:
being supervised by the Maryland Court of Appeals, which had the same degree of authority over its decisions.

[00:20:21] Speaker 00:
If the Maryland Commission acted arbitrarily and capriciously, I'm talking about Verizon, the Maryland Court of Appeals would have had to vacate the decision of the Commission.

[00:20:34] Speaker 05:
Well, I think the litigation here demonstrates that essentially the way this unfolded in the DC Superior Court was garden-variety civil litigation.

[00:20:44] Speaker 05:
For example, the Rehabilitation Court would have considered, and Senate would have considered, DCHSI's motion to intervene if it had made one.

[00:20:54] Speaker 00:
And in fact... So would a commission have considered a motion to intervene?

[00:20:59] Speaker 00:
I don't see how that's different.

[00:21:00] Speaker 00:
There's motions to intervene in executive agencies and regulatory agencies and then in the courts of appeals.

[00:21:08] Speaker 00:
How is that different?

[00:21:13] Speaker 05:
I'm not sure other than to say that here this was simply basically a proceeding that unfolded in the Superior Court where the rehabilitator stood in the shoes of chartered

[00:21:25] Speaker 05:
and presented plans to the DC Superior Court Judge, the Rehabilitation Court, who then approved every step of the way what the rehabilitator was doing.

[00:21:35] Speaker 00:
Let's pass on that question and go to that second question, which is the nature of the approval.

[00:21:41] Speaker 00:
So the only ground that the Superior Court could reject the rehabilitator on is if the rehabilitator abused its discretion

[00:21:51] Speaker 00:
In fact, if a man has festly abused the authority and discretion that was vested in his statute, that's the only role of the Superior Court.

[00:21:58] Speaker 00:
Is that right?

[00:22:00] Speaker 05:
That's the role of the court under the statute.

[00:22:02] Speaker 00:
Yes.

[00:22:03] Speaker 00:
Yes.

[00:22:04] Speaker 00:
And that's the role that the court said that the court was applying.

[00:22:08] Speaker 00:
He said, my only role here is not to make a judgment I would myself to decide whether the decision was arbitrary and capricious or an abuse of discretion.

[00:22:17] Speaker 00:
Right?

[00:22:18] Speaker 05:
That's right.

[00:22:18] Speaker 00:
And that was the judgment of the spirit court, that it was not arbitrary and capricious or an abuse of discretion.

[00:22:24] Speaker 00:
Correct?

[00:22:25] Speaker 05:
In fact, the reorganization order in particular was fair and equitable.

[00:22:29] Speaker 00:
Right.

[00:22:30] Speaker 00:
And none of those are the claims that are brought before us today.

[00:22:33] Speaker 00:
The claim here is not simply whether it's arbitrary and capricious.

[00:22:37] Speaker 00:
The claim here is whether there's a series of constitutional violations under a preponderance of the evidence standard, not an abuse of discretion standard.

[00:22:47] Speaker 00:
And the Supreme Court's made clear in its later cases, Skinner and Lance, that

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If a federal plaintiff presents an independent claim, it is not, and that's what this is, independent of an arbitrary and capriciousness claim, it is not an impediment to the exercise of federal jurisdiction.

[00:23:08] Speaker 00:
The same or related question was earlier aired between the parties.

[00:23:14] Speaker 00:
That's what the court said in Skinner.

[00:23:17] Speaker 00:
It only applies when you're asking for rejection of the district court's judgment.

[00:23:21] Speaker 00:
And the only judgment here is that the rehabilitator did not act arbitrarily and capriciously.

[00:23:28] Speaker 00:
That's all the Superior Court decided.

[00:23:32] Speaker 05:
I don't think that's all that happened here.

[00:23:34] Speaker 05:
There's only one due process clause.

[00:23:38] Speaker 05:
So the rehabilitation court was tasked with reorganization and rehabilitation of chartered.

[00:23:47] Speaker 05:
And the court entered a series of orders that reorganized charter.

[00:23:52] Speaker 05:
It also approved the settlement of claims.

[00:23:57] Speaker 05:
And in that process, there's no claim here that the due process clause was at all violated.

[00:24:02] Speaker 00:
There's no claim where?

[00:24:04] Speaker 00:
When you say here, I'm sorry, here as here in this room or here in Superior Court?

[00:24:11] Speaker 05:
There's no question that the due process – there's not a claim here that the rehabilitation

[00:24:18] Speaker 05:
of the proceedings that sort of – there's no facial challenge to the rehabilitation corps statutes.

[00:24:24] Speaker 02:
But I thought that was precisely DCHSI's point that the rehabilitation is about getting and keeping this entity on an even keel in order to fulfill the functions and responsibilities to people – recipients of health care and doctors and employees.

[00:24:44] Speaker 02:
And that that function is sort of a forward-looking function.

[00:24:47] Speaker 02:
But that the claims that DCHSI has are more retrospective, you know, what has happened in terms of shortchanging them.

[00:25:00] Speaker 02:
And they're saying, okay, we accept when the Superior Court says, that's not the business.

[00:25:06] Speaker 02:
I'm not doubting all those I's and crossing all those T's.

[00:25:10] Speaker 02:
I'm just deciding this keep the boat sailing question, right?

[00:25:15] Speaker 02:
And if that's true, then for purposes of due process, all you're looking at in the rehabilitation is, did the rehabilitator do that function consistent with the procedural needs of that?

[00:25:28] Speaker 02:
of that task, not was that a procedurally adequate way to cut off DCHSI's claims.

[00:25:37] Speaker 05:
DCHSI hasn't cited any authority for the proposition that a different standard of review – I'm not focusing on the standard of review.

[00:25:45] Speaker 02:
I'm kind of focusing on the scope – I mean, there are two things I think that we're probing.

[00:25:49] Speaker 02:
One is the scope of the proceeding kind of as a definition matter, and then the other is what's coming out of it.

[00:25:56] Speaker 00:
Just to be fair, I am focusing on that, so you can continue along that line, but you'll come back to mine then.

[00:26:03] Speaker 02:
Why don't you continue on the, I didn't mean to interrupt, if you have further questions on the review and what came out of that, go ahead on that.

[00:26:13] Speaker 02:
And I have a pending question about what defines the scope and nature of what the rehabilitator was doing.

[00:26:21] Speaker 02:
Is it statutory?

[00:26:22] Speaker 02:
Is it what the judge says?

[00:26:24] Speaker 02:
But follow up on the, I didn't mean to interrupt, follow up on the questions about the standard of review.

[00:26:32] Speaker 05:
So at the threshold, Exxon makes clear that Vukov Foghren continues to bar claims, even if they were not the identical claims not raised in the state court proceeding.

[00:26:51] Speaker 05:
A disappointed litigant cannot come to federal court and bring constitutional claims, but in fact go to the injury

[00:26:59] Speaker 05:
that the State order, you know, affected the party.

[00:27:04] Speaker 00:
I don't understand why you say that.

[00:27:05] Speaker 00:
The Court is very clear that preclusion is a different question than Rooker-Feldman.

[00:27:12] Speaker 00:
And the fact that they didn't raise the claim, it might, but could have raised the claim, is a preclusion issue.

[00:27:21] Speaker 00:
But it's not a Rooker-Feldman issue.

[00:27:23] Speaker 00:
Is there any place where the Superior Court resolved the Fifth Amendment taking question?

[00:27:31] Speaker 05:
Throughout the Rehabilitation Court proceeding, DCHSI alleged both procedural and substantive unfairness in the way the proceeding – Yes.

[00:27:41] Speaker 00:
Yes.

[00:27:42] Speaker 00:
Can you point me to any statement in the Superior Court's decision where it said there's been no Fifth Amendment violation here, either of due process or of takings clause?

[00:27:54] Speaker 00:
In the hearing transcripts, which are included – I got them in front of me.

[00:27:59] Speaker 00:
Go ahead.

[00:28:21] Speaker 05:
I'm not saying it's not, I'm just looking for help.

[00:28:33] Speaker 05:
toward the bottom of the page.

[00:28:36] Speaker 05:
It says, the court has reviewed all the pleadings.

[00:28:38] Speaker 05:
It's going to deny the opposition of DCHSI.

[00:28:40] Speaker 05:
This goes to the reorganization order.

[00:28:43] Speaker 05:
He refuses to strike it to show that he's considered DCHSI's objections.

[00:28:49] Speaker 05:
And he says, however, I believe, despite the allegation of due process violations,

[00:28:54] Speaker 05:
I don't agree with them.

[00:28:55] Speaker 05:
This continues on to JA 197.

[00:28:58] Speaker 05:
I believe the fact you had a hearing on this and the fact there was an order and the court signed it, I think the revalidator has acted appropriately.

[00:29:05] Speaker 00:
So that goes to the procedural one.

[00:29:08] Speaker 00:
What about the taking without just compensation?

[00:29:11] Speaker 05:
Well, let me be clear that here the takings that are being alleged are the revalidation court's orders.

[00:29:19] Speaker 05:
That's why the

[00:29:21] Speaker 05:
is stemming from the Superior Court judgments, and why any review by a federal court of those orders would necessarily require the federal court to conclude that the state court was wrong.

[00:29:35] Speaker 00:
Well, we do review.

[00:29:36] Speaker 00:
We can review a decision by the state.

[00:29:40] Speaker 00:
They can bring an action that the state court took property without just compensation.

[00:29:47] Speaker 00:
It's a big issue in the Supreme Court right at this very moment.

[00:29:50] Speaker 00:
The question of whether a state court's taking comes within the compensation clause has not been resolved.

[00:29:59] Speaker 00:
So they can bring that action in here until the Supreme Court tells us one way or the other.

[00:30:04] Speaker 00:
It's a different claim.

[00:30:06] Speaker 05:
This is – excuse me if I meant to say they could not – the claim was not cognizable.

[00:30:10] Speaker 05:
The claim is barred by Rook or Feldman.

[00:30:13] Speaker 05:
If DCHSI thought, as they've alleged – I mean, just hypothetical.

[00:30:17] Speaker 00:
The Superior Court of the District of Columbia takes all of your money and gives you nothing back in exchange.

[00:30:24] Speaker 00:
And then they issue an order saying, we don't think that – you know, we're just going to take the money, and it's not manifestly unreasonable to do that.

[00:30:30] Speaker 00:
They're saying you couldn't go in the Federal Court and challenge that taking?

[00:30:34] Speaker 00:
because it would undermine the judgment, the unlawful judgment of the Superior Court?

[00:30:42] Speaker 00:
Which the Superior Court did not address the question of the Fifth Amendment.

[00:30:46] Speaker 00:
It just said, we're going to take your money.

[00:30:48] Speaker 05:
And the reason that is not the situation here is that the amount of compensation, for example, the – DCHSI has alleged that Chartered only got $5 million instead of the $40 or $50 million they think they were entitled to.

[00:31:03] Speaker 05:
And in the settlement, Chartered only got $48 million instead of the north of $100 million DCHI SSI thinks Chartered should have received.

[00:31:14] Speaker 05:
That is the very essence

[00:31:16] Speaker 05:
of what happened in the court.

[00:31:19] Speaker 05:
And so what they're saying now in federal court is, oh, that's unfair.

[00:31:26] Speaker 02:
That seems to me, I mean, again, it seems to me more like a preclusion issue, you know, to the extent that DCHSI signed off on giving a rehabilitator title to the property, and then there was a settlement that included settlement of those claims.

[00:31:45] Speaker 02:
I mean, that's a serious obstacle for DCHSI.

[00:31:49] Speaker 02:
And yet, the question is, is the obstacle in the nature of a Rucker-Feldman problem?

[00:31:54] Speaker 02:
And, you know, as we're not here litigating the whole case, we're here on appeal of one issue.

[00:32:00] Speaker 02:
And the difficulty is that, you know, let's say this, does it turn out what the Superior Court judge said about these claims that the judge took to be kind of ancillary and not the project?

[00:32:19] Speaker 02:
before that judge.

[00:32:21] Speaker 02:
But if the court then says, well, there's no due process violation, you know, you're going to make claims, or it's not a due process violation, you have claims taken elsewhere.

[00:32:30] Speaker 02:
And it seems like both of those things were said.

[00:32:33] Speaker 02:
But I'm focusing on this prospective welding of this ship.

[00:32:39] Speaker 02:
It's hard to say that that judgment is being appealed here.

[00:32:44] Speaker 02:
In fact, it might be the reason why they withdraw the appeal in the

[00:32:48] Speaker 02:
DC Court of Appeals, right?

[00:32:49] Speaker 02:
Because actually, we're not fighting with the rehabilitation.

[00:32:52] Speaker 02:
Our battle is both preceding that and survives that.

[00:32:58] Speaker 05:
The allegations in DCHSI's complaint make clear, I think in a way that their legal arguments here don't, that what they're seeking to do is appeal the Superior Court's orders.

[00:33:11] Speaker 05:
And what they're trying to do is say,

[00:33:15] Speaker 05:
We should have gotten more compensation – or, excuse me, chartered should have received more compensation than it did.

[00:33:23] Speaker 05:
And there's no way to get at those claims unless, for example, the settlement order is vacated or returned.

[00:33:32] Speaker 05:
Chartered has waived and released all of these claims.

[00:33:37] Speaker 00:
That's a different – that's a merits defense, and that's not a Rucker-Feldman defense.

[00:33:42] Speaker 05:
I agree.

[00:33:42] Speaker 05:
The issues overlap, but the reason it's relevant to Worker Feldman here is because in order to get at any of the claims DCHSI is raising would require review and rejection of the settlement order.

[00:33:55] Speaker 00:
No, it would just require the District of Columbia to pay them more money.

[00:33:58] Speaker 00:
They'd still have whatever was done with respect to the assets, whatever was done with respect.

[00:34:04] Speaker 00:
I'm not saying they're entitled to the money.

[00:34:05] Speaker 00:
I understand you can have all.

[00:34:08] Speaker 00:
probably another hundred years of litigation on the various additional defenses you have.

[00:34:11] Speaker 00:
But all they're asking for is money.

[00:34:14] Speaker 00:
They're not asking for undoing the settlement order.

[00:34:16] Speaker 00:
They're not asking to get the assets back.

[00:34:18] Speaker 00:
They're not asking any of those things.

[00:34:20] Speaker 00:
They want more money than they got.

[00:34:22] Speaker 00:
And the District of Columbia can or cannot pay that, depending on the order of a court of appeals.

[00:34:27] Speaker 00:
But it doesn't overturn the judgment.

[00:34:33] Speaker 00:
I'm still stuck on the

[00:34:35] Speaker 00:
relationship between the Superior Court and the realtor, which you describe as sort of symbiotic, but which, when I look at the DC code, doesn't sound that way.

[00:34:49] Speaker 00:
The only role of the Superior Court is to determine whether the settlement was fair and equitable.

[00:34:58] Speaker 00:
That's its role.

[00:35:01] Speaker 00:
That is exactly what the Superior Court judge says in approving the settlement.

[00:35:09] Speaker 00:
I find the exact spot not here.

[00:35:18] Speaker 00:
He says the rule of the court is to determine

[00:35:22] Speaker 00:
Under the circumstances of each case, whether the settlement is fair, the court's role in the rehabilitation process is to supervise the rehabilitator, review the actions for abusive indiscretion, and not to substitute the court's judgment.

[00:35:40] Speaker 00:
That's what we do every day when we review the decisions of the federal agencies.

[00:35:47] Speaker 00:
People appeal those decisions, and we review them for whether they are

[00:35:52] Speaker 00:
arbitrary and capricious.

[00:35:54] Speaker 00:
And that's all.

[00:35:55] Speaker 00:
That doesn't make us or our judgment a judgment that we agree or disagree with the agency.

[00:36:02] Speaker 00:
And that's exactly what the Superior Court Judge said here, that he's not necessarily agreeing, he's just settling the case.

[00:36:08] Speaker 00:
He's just approving the settlement.

[00:36:10] Speaker 05:
That would be true in any garden variety civil litigation.

[00:36:13] Speaker 05:
I think the settlement order here is actually... Well, not it.

[00:36:15] Speaker 00:
That's not true.

[00:36:16] Speaker 00:
It wouldn't be true in a garden variety civil litigation.

[00:36:19] Speaker 00:
The test would be preponderance of the evidence.

[00:36:21] Speaker 00:
The plaintiff would win if they succeeded on a more likely than not standard.

[00:36:28] Speaker 00:
Here, they can't win on a more likely than not standard.

[00:36:33] Speaker 00:
They can only win if

[00:36:34] Speaker 00:
The judgment against them, the decision of the agency against them was manifestly unfair or an abusive discretion.

[00:36:42] Speaker 00:
That's not garden variety.

[00:36:45] Speaker 05:
Let me try it again.

[00:36:48] Speaker 05:
The settlement order here and the way that the Superior Court judge approved the settlement looks exactly like it would if in an ordinary piece of civil litigation, a judge was looking to the party settlement.

[00:37:03] Speaker 05:
He applied the same factors that he would have applied under district law.

[00:37:08] Speaker 02:
Okay.

[00:37:08] Speaker 02:
Let me ask you a question on that.

[00:37:10] Speaker 02:
You said parties.

[00:37:12] Speaker 02:
And one big question mark here is,

[00:37:15] Speaker 02:
Was DCHSI a party for purposes of Rooker Feldman?

[00:37:21] Speaker 02:
And I know that the judge said various things in that regard.

[00:37:29] Speaker 02:
Clearly, it was not firmly a party.

[00:37:31] Speaker 02:
So I guess my specific question is, under what circumstances must we hold that an unnamed participant in a State Court proceeding becomes a party for Rooker Feldman purposes?

[00:37:46] Speaker 05:
As the Supreme Court has suggested, a party becomes a party for worker development purposes when it has been treated as a party and when it has an ability to appeal.

[00:37:57] Speaker 05:
That is exactly what happened here.

[00:38:01] Speaker 05:
And that relates, I should note, just to DCHSI, as if DCHSI was

[00:38:07] Speaker 05:
represent, you know, was itself.

[00:38:10] Speaker 05:
And DCHSI has focused on that here because Chartered, whom DCHSI in this Court attempts to stand in the shoes of, was obviously a party to the rehabilitation proceeding.

[00:38:26] Speaker 02:
And so DCHSI, for purposes of asserting one's rights, when Chartered is controlled wholly by someone else, it's hard to say that DCHSI, who's being told by the judge, get out of here, you're a gadfly, you're getting in our way, I want to resolve this, go to another court, we're not dealing with that, to say that, oh, but Chartered's there representing its interests, that is not exactly easy one to swallow.

[00:38:52] Speaker 05:
No matter whether one thinks about DCHSI as DCHSI, and the question, that's what the parties have focused on in the briefing, is whether DCHSI participated.

[00:39:04] Speaker 02:
Yes.

[00:39:05] Speaker 05:
Whether they had a right to appeal.

[00:39:07] Speaker 05:
The answer to both of those questions is yes.

[00:39:09] Speaker 02:
I'm not so sure on right to appeal because just the fact that the judge said go appeal and just the fact that they filed an appeal doesn't mean the court of appeals would not have said,

[00:39:20] Speaker 02:
Hello, you're not a party, you know, no jurisdiction.

[00:39:24] Speaker 02:
So we actually don't know the answer to that from the perspective of the D.C.

[00:39:29] Speaker 02:
courts.

[00:39:30] Speaker 05:
Whether someone is a party for local federal purposes is a federal question.

[00:39:35] Speaker 05:
Right.

[00:39:36] Speaker 05:
It's true that the D.C.

[00:39:37] Speaker 05:
Court of Appeals might have told D.C.

[00:39:40] Speaker 05:
HSI, you don't comply with local rules of civil procedure.

[00:39:45] Speaker 02:
You don't know any number of grounds.

[00:39:47] Speaker 02:
But my question to you is, what is the standard

[00:39:50] Speaker 02:
for when an entity is a party for purposes of fulfillment, which is, as I gather, narrower than it is for purposes even of preclusion.

[00:40:01] Speaker 05:
It is whether they were treated as a party and for here the rehabilitation court

[00:40:08] Speaker 05:
The litigation record here is crystal clear.

[00:40:10] Speaker 00:
The DCHSI did everything except... Don't they have to be able to appeal to the tightest court of the state?

[00:40:20] Speaker 00:
That's exactly what they did.

[00:40:22] Speaker 05:
They appealed to the D.C.

[00:40:23] Speaker 05:
court of appeals, and if they had lost there, they could have appealed to the United States Supreme Court.

[00:40:27] Speaker 00:
If they were allowed to appeal.

[00:40:28] Speaker 00:
And didn't the rehabilitators say, one of your clients today, say that they did not have standing to appeal?

[00:40:37] Speaker 05:
The rehabilitator in the DC Court of Appeals made two arguments.

[00:40:42] Speaker 05:
One, he said DCHSI failed to formally intervene.

[00:40:46] Speaker 05:
That's simply true.

[00:40:48] Speaker 05:
It's conceded.

[00:40:50] Speaker 05:
The new bulletin was also said in the D.C.

[00:40:53] Speaker 05:
Court of Appeals, but I don't really understand how D.C.

[00:40:56] Speaker 05:
HSI had standing.

[00:40:58] Speaker 05:
But standing, regardless of the merit of whether they had standing or not, it's not whether you have party status.

[00:41:05] Speaker 00:
And I think those two issues should be considered separate.

[00:41:10] Speaker 00:
an appellate brief of the Council for the Rehabilitator, quote, DCHSI lacks standing to appeal because it is not a party agreed under D.C.

[00:41:20] Speaker 00:
Code 11721B.

[00:41:21] Speaker 00:
Now, if that were correct, they could not appeal, and the Court of Appeals could not decide because it only has jurisdiction over parties agreed.

[00:41:32] Speaker 00:
Isn't that right?

[00:41:34] Speaker 05:
agree, and then let me explain why.

[00:41:37] Speaker 05:
At that point, DCHSI is in the D.C.

[00:41:42] Speaker 05:
Court of Appeals arguing about its standing.

[00:41:48] Speaker 05:
There are – like, there are sort of well within what Rook or Feldman requires, which is that they were treated as a party below and they had a right to appeal.

[00:41:57] Speaker 05:
And if they didn't – so the D.C.

[00:41:59] Speaker 05:
Court of Appeals could say, well, no, absolutely you were a party.

[00:42:03] Speaker 00:
Just to keep the hypothetical clean, what if the DC Court of Appeals said you do not have standing to appeal because you are not a party aggrieved under DC Code 11-721B and therefore we will not hear your appeal?

[00:42:19] Speaker 00:
Under those circumstances you would agree that Rooker Feldman doesn't apply, correct?

[00:42:25] Speaker 05:
No.

[00:42:26] Speaker 05:
For the reason specifically that it's

[00:42:29] Speaker 05:
black letter law that a litigant's position, whether it has merit or is miscellaneous, cannot manufacture this Court's federal subject matter.

[00:42:37] Speaker 00:
I'm asking you if there were, if the Court of Appeals, if the D.C.

[00:42:41] Speaker 00:
Court of Appeals decided that they didn't have standing, they could not appeal the decision of the Superior Court, then, not if some party told them that, if they decided that,

[00:42:56] Speaker 00:
Since the purpose of Rooker Feldman is to force appeals to go through the state court system.

[00:43:04] Speaker 00:
If the state court says you're not a party, you don't have standing to appeal.

[00:43:11] Speaker 00:
And the Supreme Court has said Rooker Feldman doesn't apply where you're not a party.

[00:43:15] Speaker 00:
And the reason it doesn't apply is because you can't go through the state court system.

[00:43:20] Speaker 00:
This seems like a very easy thing.

[00:43:21] Speaker 00:
I mean, maybe you think it hurts your case,

[00:43:25] Speaker 00:
I need an honest answer to the question.

[00:43:27] Speaker 00:
The D.C.

[00:43:31] Speaker 00:
Court of Appeals never had a chance to issue that ruling.

[00:43:34] Speaker 00:
So now we have to decide, right?

[00:43:36] Speaker 00:
So basically we would have to decide, in order to resolve this, we would have to decide whether they had standing for purposes of the D.C.

[00:43:45] Speaker 00:
Court of Appeals.

[00:43:49] Speaker 05:
What I'm not sure about in your question is the different parties can lack standing at any time.

[00:43:58] Speaker 05:
Many cases go on for years, and then the court says, wait a minute, you have no standing.

[00:44:03] Speaker 05:
That doesn't make them not a party.

[00:44:07] Speaker 00:
The question is whether it makes it not a party for Rooker Feldman purposes.

[00:44:11] Speaker 00:
If we agree, I think we just have, that the purpose of Rooker Feldman is to prevent a federal court

[00:44:19] Speaker 00:
other than the Supreme Court from reviewing a decision of a state court, because there is a federal statute which says those kinds of appeals are supposed to go through the Supreme Court.

[00:44:31] Speaker 00:
Now, if they can't go through the Supreme Court because you weren't a party, Booker Feldman says expressly, Exxon says expressly, and Lance, that you cannot

[00:44:45] Speaker 00:
use Rucker Feldman there, because the person wasn't able to appeal through the state court system.

[00:44:51] Speaker 00:
Is anything I've said wrong so far?

[00:44:54] Speaker 05:
That's all right.

[00:44:55] Speaker 00:
All right.

[00:44:55] Speaker 00:
So then, really, our job is to decide whether the rehabilitator was correct or incorrect when he told the Court of Appeals that DCHSI cannot appeal because they lack standing.

[00:45:10] Speaker 00:
I don't know what the right answer is necessarily, and I appreciate that we're not bound by what the rehabilitator had said.

[00:45:17] Speaker 00:
On the other hand, it's as persuasive as a brief, and we have to decide whether it's correct or not.

[00:45:34] Speaker 05:
as a party that they actually participated is angrily fulfilled in the circumstances here.

[00:45:41] Speaker 05:
DCHSI participated like a full litigant at all times throughout the rehabilitation proceeding.

[00:45:50] Speaker 05:
In fact, at the entry of the settlement order, counsel for DCHSI said as much.

[00:45:57] Speaker 05:
It expressed surprise that they might have had to file a piece of paper to formally intervene when they had simply been treated as a party throughout, including filing discovery requests, voluminous briefs, and et cetera.

[00:46:09] Speaker 05:
They were treated as a party in the rehabilitation court.

[00:46:14] Speaker 00:
Let me give you another hypothetical.

[00:46:18] Speaker 00:
Citizens for Protection of Health Care in the District of Columbia files an amicus brief in the Superior Court in this very case.

[00:46:28] Speaker 00:
Hypothetical.

[00:46:30] Speaker 00:
And the judge says, you know, you guys are really good lawyers.

[00:46:32] Speaker 00:
I want you to participate in every possible way.

[00:46:35] Speaker 00:
You don't have standing.

[00:46:36] Speaker 00:
You have no assets in this case.

[00:46:39] Speaker 00:
But you're good lawyers, and I'd like you to participate in every way as if you were a party.

[00:46:45] Speaker 00:
Does that decision against them, would they be bound?

[00:46:52] Speaker 00:
They may not have that standing in federal court either, but the fact is just because you're treated as a party doesn't make you a party unless you have a right to appeal.

[00:47:03] Speaker 05:
It was the judgment of the Rehabilitation Court that DCHSI did have a right to appeal, in fact, on multiple occasions.

[00:47:12] Speaker 02:
I think you're a little bit over reading that.

[00:47:14] Speaker 02:
If a court is on a task and a party is coming in and saying, well, an entity is coming in and saying,

[00:47:21] Speaker 02:
you know, look at this evidence, consider our claim, and the judge is saying, no, I'm not going to do that.

[00:47:28] Speaker 02:
I have an urgent task in front of me.

[00:47:30] Speaker 02:
And the parties counsel is saying, that's wrong, that's wrong.

[00:47:35] Speaker 02:
Look at the Constitution.

[00:47:36] Speaker 02:
And the judge says, you go appeal that.

[00:47:39] Speaker 02:
Like, you know, someone else can tell me I'm wrong, but I think I'm right.

[00:47:44] Speaker 02:
The fact that he says you go to appeal doesn't mean that he's thought about, you know, gotten briefing on and considered the jurisdictional question of whether that entity actually has appeal rights.

[00:47:54] Speaker 00:
And to support Judge Piller's point, he didn't say you have a right to appeal.

[00:47:58] Speaker 00:
He said you have a right to note an appeal, which of course anybody can note an appeal.

[00:48:03] Speaker 00:
That doesn't mean you get a right to appeal.

[00:48:05] Speaker 00:
And then another party says, frankly, you don't have standing.

[00:48:20] Speaker 05:
DCHSI pursued its appeal all the way until a week before oral argument.

[00:48:32] Speaker 05:
Again, I think the litigation record here demonstrates

[00:48:39] Speaker 05:
the particular level of participation and the seriousness with which the Superior Court, the Rehabilitation Court, treated all of DCHSI's followings as they were recognized in that proceeding as a party in interest.

[00:48:56] Speaker 05:
It seems like it would be quite an odd result if the formality

[00:49:04] Speaker 05:
of whether or not they actually filed a motion to intervene and it was granted, which the Rehabilitation Court said, if you had filed one, I probably would have granted it.

[00:49:16] Speaker 05:
I don't know how the federal question of a party under Work with Edmund can turn on that sort of procedural or formalistic distinction under district law.

[00:49:26] Speaker 05:
Looking at what actually transpired in the Rehabilitation Court and DCHSIs

[00:49:34] Speaker 05:
appeal to the D.C.

[00:49:36] Speaker 05:
Court of Appeals, which was the entirely proper way to get at whether they had any objections, procedural unfairness or substantive unfairness, of those orders.

[00:49:48] Speaker 05:
That is exactly what 1257 requires a party to do.

[00:49:53] Speaker 05:
I think that adequately, you know, and

[00:50:01] Speaker 05:
Ampley supports that they were a party for Rockefeller purposes.

[00:50:10] Speaker 05:
Thank you.

[00:50:11] Speaker 05:
The judgment should be affirmed.

[00:50:12] Speaker 00:
I figured that would be the last line.

[00:50:17] Speaker 00:
You're out of time, but we'll give you some more time as we usually do here.

[00:50:21] Speaker 00:
Two more minutes.

[00:50:22] Speaker 00:
Thank you, Your Honor.

[00:50:23] Speaker 00:
Just to one particular point made by opposing counsel, that's the statement at J.

[00:50:29] Speaker 00:
196 and 197 of the appendix by the Superior Court Judge.

[00:50:35] Speaker 00:
However, I believe that there has, despite the allegation of due process violations, are in process.

[00:50:41] Speaker 00:
I don't agree with that contention.

[00:50:44] Speaker 00:
I believe the fact they had a hearing on this and the fact there was an order which the court signed that gave the rehabilitator the right under the statute to marshal the assets and to seek rehabilitation, as you have argued, I think they've acted appropriately.

[00:51:02] Speaker 00:
Does that resolve your Fifth Amendment due process argument?

[00:51:07] Speaker 00:
It does not.

[00:51:09] Speaker 04:
The reason is what the judge is suggesting there is a due process claim that is about the sufficiency of the process in the rehabilitation.

[00:51:22] Speaker 04:
So DCHSI is saying essentially, look, you don't

[00:51:29] Speaker 04:
five briefs, Your Honor, you didn't consider what we've said under State law sufficiently.

[00:51:37] Speaker 04:
That's actually not the due process claim that the procedure of the due process claim that we assert here, right?

[00:51:46] Speaker 00:
So that's the due process.

[00:51:48] Speaker 00:
I understand that.

[00:51:49] Speaker 00:
What's the difference between what you claim and what the Court said there?

[00:51:54] Speaker 04:
is that it's the state that didn't give sufficient process.

[00:52:02] Speaker 04:
If you want to look at the paragraphs that sort of describe it, it's...

[00:52:20] Speaker 04:
The rehabilitation court was involved as DCH, sorry, as trust is wrapped because they're being intentionally underpaid.

[00:52:34] Speaker 04:
The insurance regulator has made the decision

[00:52:44] Speaker 04:
So, based on what Chartered says, they're being under paid tax as part of their assets for purposes of whether they go into rehabilitation or not.

[00:52:57] Speaker 04:
They're trying to decide whether they want to decide without the DCHSI or Chartered's input.

[00:53:07] Speaker 04:
They don't go to a neutral third party to decide whether that should happen.

[00:53:19] Speaker 04:
You know, you've got to move the rotation.

[00:53:22] Speaker 04:
And the one thing that the judge doesn't want to deal with that, he doesn't, that's not exactly to him.

[00:53:35] Speaker 04:
Nobody ever asks him, is that the right decision, was that, should the insurance regulator have asked you some questions, should they have gone to the, he's fine.

[00:53:43] Speaker 02:
But he does approve a settlement on the merits of all those claims.

[00:53:47] Speaker 02:
as part of the rehabilitation, right?

[00:53:50] Speaker 02:
It's one of the component pieces of the rehabilitation that, and it's actually one of the things that you complain about, is that there's an evaluation only of a slice of the underpayments, and then they compromise that as if it stands for all of the underpayments, but that's settled and released.

[00:54:08] Speaker 02:
Yes, but I'm not declaring process and taking steps.

[00:54:20] Speaker 04:
So, you know, the doctor was like, oh, we're not real actors here.

[00:54:23] Speaker 04:
Come on.

[00:54:24] Speaker 04:
These claims, because that's, you know, that, you know, social growth, that's... And then to do a veritation caused us to have...

[00:54:41] Speaker 00:
this is sort of a question I think Judge Piller was asking before the difference between earlier claims and pre-claims and is that what you're talking about?

[00:54:54] Speaker 00:
Earlier than what happened under the rehabilitator?

[00:55:00] Speaker 00:
Earlier than what happened under the rehabilitator?

[00:55:08] Speaker 00:
These process claims that you're raising, is that what you're saying?

[00:55:17] Speaker 04:
the day we have a functioning company and the value of the company that day, the day before the course of conduct began, right?

[00:55:31] Speaker 04:
And then,

[00:55:44] Speaker 04:
paid more attention to us and, you know, got to a fair party and given us more process, then we would have got a better settlement.

[00:55:51] Speaker 04:
We're saying, that piece of conduct that caused us to lose it, maybe if they had a fair party, maybe the district would have sort of woken up and said, oh, yeah, we don't.

[00:56:08] Speaker 04:
You know, everyone goes, you go,

[00:56:10] Speaker 02:
Mr. Metz, you have two things that give me pause.

[00:56:13] Speaker 02:
One is, you said you're not challenging that settlement.

[00:56:18] Speaker 02:
Now, that may not be Rockefeller-relevant, but that seems like that's an independent ground.

[00:56:23] Speaker 02:
So just affirm.

[00:56:24] Speaker 02:
I mean, isn't that settlement a settlement of the very claims that you're, the very amounts of money that you're asserting in your Section 1983 claim?

[00:56:37] Speaker 04:
But they actually amounted to money that we're asking for.

[00:56:39] Speaker 02:
Yeah, they didn't give the amount of money, but they required release of all those claims, I thought.

[00:56:45] Speaker 02:
They're really claims.

[00:56:46] Speaker 02:
They're middle claims, late claims.

[00:56:48] Speaker 02:
And I only evaluated the middle claims as part of your – temporarily as part of your assertion, but they got a release on the whole nine yards.

[00:56:56] Speaker 04:
Right.

[00:56:57] Speaker 04:
That's right.

[00:56:58] Speaker 04:
So, two things.

[00:57:04] Speaker 04:
not in DCHSI.

[00:57:06] Speaker 04:
They're traders.

[00:57:07] Speaker 04:
They're traders.

[00:57:08] Speaker 04:
What DCHSI had was a business.

[00:57:11] Speaker 04:
So DCHSI was about the fact that the state does it under the state statutory scheme, that's backed under that state statutory scheme, and

[00:57:47] Speaker 04:
district, you have to pay chartered.

[00:57:49] Speaker 04:
He just says, hey, I agree or disagree with what you suggested.

[00:58:06] Speaker 04:
is still last.

[00:58:08] Speaker 04:
DCHSI has still last its business, because it's only been sold.

[00:58:11] Speaker 02:
This was the other thing that you said that gave me pause in the referral terms.

[00:58:16] Speaker 02:
You said mine there should have been a rehabilitation in the first place.

[00:58:22] Speaker 02:
Is that not another way of saying we are appealing the very fact of the rehabilitation?

[00:58:30] Speaker 03:
No, it's not.

[00:58:42] Speaker 04:
insurance company, that's right.

[00:58:45] Speaker 04:
And the judge said, yes, should I approve this, you know, should I sign it?

[00:58:50] Speaker 04:
And when we put in the rehabilitation, that the judge did something wrong, we do not say that the judge did something wrong.

[00:58:55] Speaker 04:
What we say is the district, on our campus, spent tens of millions of dollars for all of this time, and that the campus now will

[00:59:22] Speaker 04:
and equity, and go from having a business to having nothing.

[00:59:26] Speaker 04:
The section actually provides a place in federal courts where you can come in and say, actually, no, the right story is the right story.

[00:59:40] Speaker 04:
But for local families, the purpose is frankly for conclusion purposes.

[00:59:47] Speaker 04:
This lets us, I think, get up to federal court to ask for a remedy.

[00:59:54] Speaker 04:
Unless that court reverse.

[00:59:58] Speaker 00:
Okay.

[00:59:59] Speaker 00:
Thank you.

[00:59:59] Speaker 00:
An obligated case.

[01:00:00] Speaker 00:
We'll take it under advisement.

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