[00:00:00] Speaker 02:
Thank you, Your Honors.

[00:00:01] Speaker 02:
Paul Clement for the appellants.

[00:00:02] Speaker 02:
I'm going to endeavor to save three minutes for rebuttal.

[00:00:05] Speaker 02:
Very well.

[00:00:06] Speaker 02:
Your Honors, the decision below awards over $134 million in legal restitution for a loan program that was a net money loser for the defendants.

[00:00:17] Speaker 02:
Because the defendants had zero net profits, after the Supreme Court's Lew decision, the availability of that relief depends entirely on classifying it as legal rather than equitable restitution.

[00:00:30] Speaker 02:
But according to the Bureau and the decision below, while classifying that relief as legal allows the plaintiff to disregard roughly $150 million in business expenses, it does not entitle the defendants to the essential guarantee and hallmark of legal relief, namely a jury trial.

[00:00:49] Speaker 02:
That cannot possibly be correct.

[00:00:52] Speaker 02:
While one can certainly imagine Lew's net profits limitation on restitution applying to all restitution, legal or equitable, it simply cannot be correct that classifying restitution as legal evades the net profits limitation of Lew, but does not guarantee the defendant the most basic protection against the kind of punitive remedies available only at law.

[00:01:16] Speaker 04:
Mr. Clement, I actually agree with a lot of the sentiment that you're making.

[00:01:22] Speaker 04:
I'm not sure how to get there, given our case law.

[00:01:26] Speaker 04:
Commerce Planet seems to clearly foreclose part of this.

[00:01:30] Speaker 04:
Now, maybe we should revisit Commerce Planet, but I don't see that as clearly irreconcilable with Lou.

[00:01:36] Speaker 04:
So how do we get to what you're saying?

[00:01:39] Speaker 02:
So the way you get to where I'm saying that you should be, and avoid teeing this up for the Supreme Court, because I think what I'm saying, I haven't really heard the other side say it actually doesn't make sense as a first principles matter, is to recognize that Commerce Planet is a decision about 13b of the FTC Act.

[00:01:58] Speaker 02:
It is not

[00:01:59] Speaker 02:
And even my friends on the other side seem to understand that this is not a matter of Commerce Planet foreclosing this panel from deciding differently under the CFPA.

[00:02:10] Speaker 02:
The phrase they use in their brief, which I think is well chosen, is that the logic of Commerce Planet might extend to this different statute.

[00:02:20] Speaker 02:
But I do not think you should extend it for several reasons.

[00:02:24] Speaker 02:
First is, and just to be as clear as I can, if you actually look at

[00:02:28] Speaker 02:
the language and commerce planet that is the holding, it is phrased in terms of an award under 13B.

[00:02:35] Speaker 02:
So the holding of the court is limited to that statute.

[00:02:39] Speaker 02:
And, you know, obviously there's broader reasoning that, you know, that I think is fairly described as dictum, but you should not extend that 13B holding to the CFPA for two basic reasons.

[00:02:51] Speaker 02:
One is Commerce Planet did not have the benefit of either Lew or AMG Capital.

[00:02:58] Speaker 02:
And I simply don't think that some of the language in Commerce Planet would be repeated after Lew and after AMG Capital.

[00:03:08] Speaker 02:
You just can't say with all due respect that, you know, legal restitution, equitable restitution, it doesn't make that big a difference and it certainly hasn't made a difference that sort of sounds in Seventh Amendment principles

[00:03:21] Speaker 02:
after the Supreme Court has said that the difference is absolutely critical and the defining feature of equitable restitution is you can't get net profits because it's a penalty.

[00:03:32] Speaker 02:
And, of course, that's because it's a penalty reasoning transforms perfectly to the Seventh Amendment jurisprudence and the Tull decision, which basically says that if it's a penalty, that's something you could only get at law.

[00:03:45] Speaker 02:
not at equity, and therefore the Seventh Amendment right goes with it.

[00:03:48] Speaker 02:
So that's the first reason.

[00:03:50] Speaker 02:
The second reason is that there's a fundamental difference I think between the two statutes.

[00:03:56] Speaker 02:
So if you remember 13b, all it authorized in the statutory language was injunctive relief.

[00:04:04] Speaker 02:
And then through a series of cases, this court said injunctive relief kind of opens the door to everything in equity.

[00:04:11] Speaker 02:
But since ultimately the statute only authorized equitable relief, it seems to me that if you found statutorily permissible relief, and the court had already held that you got restitution as part of the equitable relief,

[00:04:26] Speaker 02:
It's almost as a matter of the statute, there couldn't be a jury trial right there, because it would be nonsensical to say, well, you have a jury trial right to injunctive relief.

[00:04:35] Speaker 04:
But this- So can I parse out the- Sure.

[00:04:37] Speaker 04:
Because there's two issues here.

[00:04:38] Speaker 04:
There's the Seventh Amendment claim.

[00:04:40] Speaker 04:
Even if I were to agree with you on the substance of the Seventh Amendment claim, I don't understand how you get past waiver here.

[00:04:47] Speaker 02:
I understand the arguments, but- There is absolutely no waiver here, because here's what happens.

[00:04:52] Speaker 02:
And I think it's important to kind of understand the dynamic here.

[00:04:55] Speaker 02:
The trial judge is expecting there to be a jury trial, but before, or at least a trial, jury or bench trial.

[00:05:05] Speaker 02:
And then immediately before that, he grants summary judgment on liability.

[00:05:10] Speaker 02:
And so then the parties come in for a pretrial conference to discuss whether this scheduled trial is going to happen.

[00:05:18] Speaker 02:
And in the process of that, this is September 7, 2016.

[00:05:23] Speaker 02:
It's the critical sort of exchange.

[00:05:25] Speaker 02:
And at that point, the CFPB still has, because it's in its complaint, a damages claim, and it has a restitution claim.

[00:05:34] Speaker 02:
And then on the critical page of the transcript, which is 3ER 456, the lawyer for the Bureau first makes clear that they're taking damages off the table.

[00:05:47] Speaker 02:
And then in response to a question from the trial judge about whether there is a jury trial right, they say, as far as restitution, yes, we'd agree that it's an equitable remedy and that unless the court wanted to give it to an advisory jury, it would be the court's remedy to decide.

[00:06:04] Speaker 02:
So at that point, this was all prelude, right?

[00:06:10] Speaker 02:
This is all prelude, but I don't think that matters for purposes of whether there was a waiver.

[00:06:16] Speaker 01:
They may have been wrong about the law, and the parties may have had a mutual mistake as to the law of restitution.

[00:06:24] Speaker 01:
But the substance of what they were asking for was that they said they wanted restitution of interest and fees that the consumers had paid.

[00:06:33] Speaker 01:
And given that description of the substance of the relief they were seeking, you waived the right to a jury trial.

[00:06:41] Speaker 01:
So even if there was a legal mistake, why aren't you still bound by the waiver?

[00:06:45] Speaker 02:
I mean, the Connolly decision, it's an old one from this court, but it is directly on point.

[00:06:50] Speaker 02:
If we give up our jury trial right in response to the government's suggestion that they are not seeking relief that gives us a jury right, and that's clearly what they did by saying it was equitable, then at that point, if the government later

[00:07:05] Speaker 02:
makes clear that they are seeking something that entitles them to legal relief, that they are now seeking legal relief.

[00:07:14] Speaker 02:
At that point, any waiver that was based on a representation that they weren't seeking legal relief is not a clear and unequivocal waiver for Seventh Amendment purposes.

[00:07:24] Speaker 01:
But the relief they're seeking didn't change.

[00:07:26] Speaker 01:
It was the same relief all along.

[00:07:27] Speaker 01:
They were just wrong about the Seventh Amendment.

[00:07:31] Speaker 02:
So two things.

[00:07:32] Speaker 02:
Two things, Your Honor.

[00:07:33] Speaker 02:
First, I don't think that's correct because the substance of their relief in terms of their not being tracing or something like that might have been legal all along.

[00:07:43] Speaker 02:
But they were specifically at that point appealing to the judge's discretion

[00:07:48] Speaker 02:
to issue equitable relief.

[00:07:51] Speaker 02:
And that wasn't just an accident, they just won on summary judgment on liability.

[00:07:56] Speaker 02:
So of course they wanted the fact finder to be the same judge that had just ruled for them on liability.

[00:08:02] Speaker 02:
And of course we wouldn't have wanted the fact finder to be the judge who just ruled against us on liability, but we didn't have any choice.

[00:08:10] Speaker 02:
Once the government goes in,

[00:08:12] Speaker 02:
and says we're taking damages off the table, and as to restitution, it's equitable and it's for you, Judge, and the bench's decision, then at that point, two weeks later, there's a stipulation that says we waive our jury trial right, but there's no jury trial right left at that point.

[00:08:28] Speaker 02:
We don't have anything.

[00:08:31] Speaker 04:
So it comes up to us.

[00:08:32] Speaker 04:
Lew comes in in the meantime.

[00:08:34] Speaker 04:
We send it back down for restitution.

[00:08:36] Speaker 04:
Why wasn't a jury trial demanded at that point?

[00:08:39] Speaker 02:
So we did, and we have the record site, I think it's ER 83, but we did demand a jury trial, I will say, in sort of a backhanded way.

[00:08:50] Speaker 02:
I mean, but we basically said, you can't go forward with this without giving, you know, consistent with the Seventh Amendment.

[00:08:57] Speaker 02:
Of course, at that point, our principle, to be candid, our principle pitch is, look, this is still, they said equitable, they're stuck with their representation, this is still equitable.

[00:09:08] Speaker 02:
And so you can't give them anything, because there's no net profits.

[00:09:12] Speaker 02:
But if you did, it would be a Seventh Amendment violation.

[00:09:14] Speaker 02:
So I certainly think that's enough to revive.

[00:09:18] Speaker 02:
I don't even think we need to revive it.

[00:09:20] Speaker 04:
But your position, I mean, we could try and cabin Consumer Planet.

[00:09:27] Speaker 04:
You think it would just come out differently today in light of Lou?

[00:09:30] Speaker 02:
Like if we were just hearing that case, I think it would have to and therefore you should not extend.

[00:09:35] Speaker 04:
It seems fairly egregious that you could take.

[00:09:38] Speaker 04:
I mean, first of all, where's this 134 or more than that even coming from?

[00:09:42] Speaker 04:
Are we just talking about hypotheticals here or can this money actually be extracted?

[00:09:47] Speaker 02:
It may be possible that this money, I wouldn't sort of dismiss this as hypotheticals, because at least the corporate entity has other lines of businesses that are not affected by any of these kind of issues.

[00:09:59] Speaker 02:
And so I don't think this is a situation where this is just a fictional number.

[00:10:04] Speaker 02:
This is a real award.

[00:10:06] Speaker 02:
It is an award that absolutely could not be awarded by a court in equity.

[00:10:10] Speaker 02:
And yet that's where we are.

[00:10:13] Speaker 02:
And, you know, with all due respect, I mean, they pitched this.

[00:10:17] Speaker 02:
It wasn't just like happenstance or mistake that they said they wanted an equitable remedy.

[00:10:22] Speaker 02:
At that point, obviously, Lew wasn't decided, but it still made a difference whether it was equitable or legal at that point in terms of whether the discretion of the judge was going to be.

[00:10:32] Speaker 02:
It was all up to the discretion of the judge or some kind of mandatory

[00:10:37] Speaker 02:
imposition, and for their own reasons, the Bureau wanted it to be discretionary at that point.

[00:10:41] Speaker 02:
There was a whole bunch of back and forth about that.

[00:10:43] Speaker 02:
So I don't think you can just say, well, you know, the substance of it was legal all along.

[00:10:49] Speaker 02:
I don't actually think that's right.

[00:10:50] Speaker 02:
And indeed, remember, when they came back up here in their opening brief in the first appeal, they were clear.

[00:10:59] Speaker 02:
We did not ask for legal restitution below.

[00:11:02] Speaker 02:
They were absolutely candid about that, and they said, but there are good reasons to excuse the fact that we didn't make it here.

[00:11:06] Speaker 04:
But after Lew, there's no question that we're asking for legal restitution.

[00:11:10] Speaker 04:
I mean, you're just saying you can't switch midstream.

[00:11:14] Speaker 02:
I'm saying two things.

[00:11:15] Speaker 02:
One, you shouldn't be able to switch midstream.

[00:11:18] Speaker 02:
And second, if you can, at a bare minimum, if you're getting legal relief that that's how you're getting around Lew, you can't

[00:11:25] Speaker 02:
You have to take the bidder with the sweet.

[00:11:28] Speaker 04:
You mean the jury trial?

[00:11:29] Speaker 04:
Jury trial.

[00:11:30] Speaker 04:
And I agree with you, but I don't understand why that wasn't demanded, because I think if it was demanded... Well, I guess our precedent... It was demanded.

[00:11:39] Speaker 02:
It's conceded between the parties that we made a jury trial demand.

[00:11:44] Speaker 02:
And then we also withdrew it.

[00:11:46] Speaker 02:
after these representations at the September 7th.

[00:11:49] Speaker 04:
But you never renewed it.

[00:11:50] Speaker 04:
Oh, I got to go look at what you said.

[00:11:52] Speaker 02:
You can look at what we said.

[00:11:53] Speaker 02:
I mean, we did not, like, you know, say, we hereby renew our jury trial demand.

[00:11:57] Speaker 02:
We said, you know, we invoked the Seventh Amendment and said you can't proceed in this way without violating the Seventh Amendment.

[00:12:03] Speaker 02:
I would think that is good enough in a world where what you're looking for is a clear and unequivocal waiver of a constitutional right.

[00:12:10] Speaker 02:
I'd like to reserve my time.

[00:12:11] Speaker 03:
Thank you.

[00:12:11] Speaker 03:
Very well.

[00:12:12] Speaker 03:
We'll round to three minutes.

[00:12:22] Speaker 00:
May it please the court, Kevin Friedle for the Consumer Financial Protection Bureau.

[00:12:26] Speaker 00:
In the prior appeal, this court affirmed defendant's liability for deceptively collecting hundreds of millions of dollars from borrowers that those borrowers didn't owe.

[00:12:34] Speaker 00:
And it remanded this case for the district court to reconsider restitution for those violations.

[00:12:39] Speaker 00:
The district court did so using simple math and a spreadsheet of loan level data, data that defendants themselves provided, showing for each relevant borrower the amount they received in loan proceeds and what defendants collected towards principal interests and fees.

[00:12:54] Speaker 04:
Can I ask a question about this $134 million in restitution?

[00:12:58] Speaker 04:
Is this money that the CFPB is taking as a penalty, or is this going to be paid out to each of the individual

[00:13:07] Speaker 04:
borrowers.

[00:13:09] Speaker 00:
This is money that will go to those borrowers who paid defendants more than they received in loan proceeds.

[00:13:17] Speaker 00:
Any borrowers who didn't pay in excess, they paid back less than they received, take nothing from this award, but those who paid in excess will get back that access.

[00:13:29] Speaker 04:
And just to return to- The reason why that's important to me is, I mean,

[00:13:37] Speaker 04:
It does seem odd in a way.

[00:13:39] Speaker 04:
And as you heard the colloquy, I think we're kind of boxed in a little bit by our precedent.

[00:13:46] Speaker 04:
But it seems odd that Cash Call is ordered to pay all this money out when they lost a lot of other funds, $93 million.

[00:13:56] Speaker 04:
Do you dispute the $93 million?

[00:13:58] Speaker 04:
I don't understand what happened to that below, that they said should have been cut off of $134 million.

[00:14:06] Speaker 04:
I thought there was 93 million that they said they lost money because they never got any funds back from other borrowers and they were arguing that should go as an offset to the hundred and thirty four million.

[00:14:19] Speaker 00:
I think that they that is not that is their claimed offset for for serve recovery to all.

[00:14:26] Speaker 00:
We're talking here, though, about a subset of consumers who paid more than they received.

[00:14:31] Speaker 04:
I understand that, and that's why I asked where the money's going, but I want to know more specifically our case.

[00:14:37] Speaker 04:
Gordon does not say that the district court, in our prior opinion, I don't think, says the district court had to apply this approach.

[00:14:45] Speaker 04:
It just said it may apply this approach.

[00:14:50] Speaker 04:
I guess we're stuck with abuse of discretion if we go down that road.

[00:14:53] Speaker 04:
But it's not clear to me why the district court didn't look at a profit.

[00:15:00] Speaker 04:
I don't know if it's a profit base, but at least taking out of the 134 million some of the money that that cash call actually lost.

[00:15:08] Speaker 04:
Because it seems a little bit unfair to say, well, you have to compensate everybody who was harmed, but you don't get any

[00:15:17] Speaker 04:
any benefit from all the money that you lost to Cash Call?

[00:15:21] Speaker 04:
Do I have this wrong?

[00:15:22] Speaker 00:
So I think the $134 million, to be clear, that takes account of the proceeds, the loan proceeds that those consumers received.

[00:15:31] Speaker 00:
That is what they gave to those consumers.

[00:15:33] Speaker 04:
But it doesn't account for the money that Cash Call lost on bad loans.

[00:15:38] Speaker 00:
To other consumers who paid back less.

[00:15:40] Speaker 00:
That that's correct your honor, but that was a completely reasonable place for the district court to land here agree that the district court was not mandated by Gordon to go down this road route.

[00:15:51] Speaker 04:
It had discretion to do so, and it chose this discretion.

[00:15:55] Speaker 00:
I, I think that this court's prior opinion this case what it said was that net revenues.

[00:16:02] Speaker 00:
are an appropriate way to at step one to approximate, you know, the unjust gains.

[00:16:08] Speaker 04:
We also said that cash call has the burden to show why the why net revenues is not the right approach.

[00:16:19] Speaker 04:
And I don't know whether I've got to ferret out whether the district court

[00:16:24] Speaker 04:
analyze this correctly, that the simplest answer seems to be, we're not worried about what cash call lost, we're only worried about correcting harm to the consumers who were hurt.

[00:16:34] Speaker 04:
That seems to be what the district court said.

[00:16:36] Speaker 00:
I think that's basically right.

[00:16:38] Speaker 00:
What we want here is a remedy that will deprive defendants of their unjust gains.

[00:16:44] Speaker 00:
return that to the consumers from whom the money was wrongfully taken?

[00:16:47] Speaker 04:
It's a little anomalous because Unjust Gains almost has a—I mean, this is why I have trouble with our prior precedent because Unjust Gains has a profit—I mean, the whole name of it is profit-based.

[00:17:00] Speaker 04:
i think that that's one way it can be measured but it's certainly not the only way and this court has approved uh... i don't know what our and as has the supreme court but i don't think we've ever mandated and that's where i'm wondering how much interplay we have with an abuse of discredit admittedly it's tough because we'd have to say that the district court abused its discretion but it's troubling to me that the district court i gotta be honest when we decided this case two years ago

[00:17:30] Speaker 04:
I never in a million years would have thought that this would come back with $134 million restitution award.

[00:17:35] Speaker 04:
This is shocking to me.

[00:17:37] Speaker 03:
But you did ask for $215 million, $250 million initially, correct?

[00:17:43] Speaker 00:
That's right.

[00:17:44] Speaker 00:
And then on remand, our step one request was a lower amount, $197 million.

[00:17:51] Speaker 00:
And I think we're not asking for a ruling by the court that it's always in every case necessary.

[00:17:57] Speaker 00:
to start and end with net revenues, we just are asking for a ruling sort of affirming the two-step framework that this court has prescribed, and that was followed here.

[00:18:07] Speaker 00:
And sort of at step two, it was the defendant's burden to show that the money they took from those consumers who paid in excess of what they received shouldn't constitute unjust gains.

[00:18:19] Speaker 00:
And they say, well, you have to, you know, restitution is measured by the unjust gains received in a transaction, which is true.

[00:18:26] Speaker 00:
But the relevant transaction here isn't their entire lending program.

[00:18:31] Speaker 00:
You know, there were thousands and thousands and thousands of transactions every time the defendants demanded it.

[00:18:36] Speaker 04:
Was Gordon an issue where it was just one transaction?

[00:18:41] Speaker 04:
Because I think you're hitting at the heart of what's troubling me here is this is sort of a, at least the claim is that this is a collective fraud.

[00:18:50] Speaker 04:
And so I don't know if it's a collective fraud.

[00:18:52] Speaker 04:
Like say you had a Ponzi scheme.

[00:18:55] Speaker 04:
You wouldn't go, I mean, not everybody gets compensated out of a Ponzi scheme.

[00:19:01] Speaker 04:
You take whatever recovery you can get and then you allocate it out and you might get, those who are harmed might get 10 cents on a dollar or something like that.

[00:19:11] Speaker 04:
This seems like to take that to the extreme where we're gonna give all the money back to those who are harmed, but we're not gonna let cash call take any benefit for the losses that they took.

[00:19:25] Speaker 00:
So we don't think of it as sort of just one unified violation every time they demanded and collected money from borrowers that those borrowers didn't know.

[00:19:34] Speaker 04:
You view it as thousands of separate violations.

[00:19:37] Speaker 00:
Correct.

[00:19:37] Speaker 00:
And it was.

[00:19:38] Speaker 00:
And every time that they... But my question was, what was it in Gordon?

[00:19:42] Speaker 04:
Was Gordon one?

[00:19:43] Speaker 04:
Because Gordon is where this law came from.

[00:19:45] Speaker 04:
And I'm wondering if Gordon actually contemplated the situation we have here.

[00:19:52] Speaker 00:
You know, Your Honor, I couldn't speak to that.

[00:19:54] Speaker 00:
I'm sorry.

[00:19:54] Speaker 00:
But I would also say that, you know, Gordon was relying on similar two-step framework from FTC cases.

[00:20:02] Speaker 00:
This is sort of a common, long-standing measure restitution that the FTC has sought for, you know, that ultimately compensates consumers when money is wrongfully taken from them.

[00:20:14] Speaker 00:
And I would also just point, I don't think it's a product just of this court's case law.

[00:20:19] Speaker 00:
The Supreme Court's decision in Porter looked at an award, a restitution award, where landlords had wrongfully taken money in excess of the maximum rents set by law.

[00:20:31] Speaker 00:
And the award there was give back all of the excess, everything that was owed.

[00:20:36] Speaker 04:
And there was no offset for those who

[00:20:39] Speaker 00:
That's the Porter case?

[00:20:40] Speaker 03:
Porter, yes, Your Honor.

[00:20:42] Speaker 03:
I guess the more crude analogy would be if you punch me in the face and they punch you in the face, you still punch me in the face.

[00:20:50] Speaker 03:
So whether they punched you in the face, fair enough.

[00:20:53] Speaker 03:
But you punched me in the face, therefore I should get some restitution from you.

[00:20:56] Speaker 03:
Even though they punched you in the face, that has nothing to do with me.

[00:21:00] Speaker 00:
And I think it's worse than that, Your Honor.

[00:21:02] Speaker 00:
They punched the consumer in the face and they want an offset.

[00:21:05] Speaker 00:
for having been punched in the face by a different consumer.

[00:21:09] Speaker 00:
But I did want to be sure to address another aspect of the Seventh Amendment arguments that we think are important here and that we haven't focused on yet.

[00:21:19] Speaker 00:
We do think we win on waiver.

[00:21:20] Speaker 00:
We think we win on Commerce Planet.

[00:21:22] Speaker 00:
But I think it's also clear, and defendant's reply brief actually makes this clear, that there just were no disputes of fact to send to a jury in this case at all.

[00:21:35] Speaker 04:
uh... so what can you address the way i i don't want to cut you off but i'd like to hear about the way same here sure yes so we think you know under this court's present like the palmer decision uh... the defendant should be held to their waiver so long as it was made knowingly based on the facts of the case what about what they did on remand and i haven't taken a close look at that you don't think that them that when they went back at least as it was represented they said you can't go forward

[00:22:03] Speaker 04:
That was post-Lew.

[00:22:05] Speaker 04:
Things had been clarified.

[00:22:06] Speaker 04:
They said you can't go forward with effectively legal restitution without violating the Seventh Amendment.

[00:22:11] Speaker 04:
That wasn't enough?

[00:22:14] Speaker 00:
I don't think so, Your Honor.

[00:22:17] Speaker 00:
You know, you have to, Rule 38 requires that if you're going to demand a jury trial, you have to sort of do that in a certain way.

[00:22:24] Speaker 00:
You can't just allude to it.

[00:22:26] Speaker 00:
And they certainly could have asked clearly and forthrightly, look, if this is going to happen, we need a jury trial.

[00:22:33] Speaker 00:
and then those arguments could have been addressed, you know, we'd have to address Commerce Planet, whether they had a right to a jury trial, and also this point that there just were no disputes of fact at that.

[00:22:44] Speaker 04:
And let me ask you about that, because Commerce Planet, oh sorry, did I cut you off?

[00:22:47] Speaker 04:
No, no, go ahead.

[00:22:48] Speaker 04:
Commerce Planet, at least as I read it, suggests that they don't have a right to a jury trial, which doesn't make any sense to me, if it's legal restitution.

[00:22:59] Speaker 04:
And I'm just wondering,

[00:23:01] Speaker 04:
how far we go down the road of Commerce Planet.

[00:23:04] Speaker 04:
I mean, I guess we're bound by it.

[00:23:06] Speaker 04:
I think we're bound even if it's dicta with our rule in the Ninth Circuit.

[00:23:11] Speaker 00:
That's our understanding of the case, too.

[00:23:13] Speaker 00:
It was the district court's understanding of the case.

[00:23:15] Speaker 00:
I think that if the court is troubled by that outcome, you know, there are multiple other routes to resolve this case based on waiver or, again, the fact that this restitution award did not require the district court to itself resolve any factual questions.

[00:23:31] Speaker 00:
that had to go to a jury.

[00:23:32] Speaker 01:
And what about the fact that the waiver in September 2016 came only after you were pretty clear that what you were seeking was an equitable remedy, right?

[00:23:43] Speaker 01:
So don't we have to view the waiver in light of that representation?

[00:23:48] Speaker 00:
So I think we were very clear about the substance of the restitution award we sought.

[00:23:54] Speaker 00:
Under controlling law, that is a legal remedy.

[00:23:57] Speaker 00:
What we said at the hearing was that it was, in response to a question about the jury, we said it's an equitable remedy.

[00:24:05] Speaker 00:
And it would not entail that.

[00:24:08] Speaker 01:
And you said the judge would have discretion because it was equitable.

[00:24:11] Speaker 00:
Yes, that's right.

[00:24:14] Speaker 00:
I actually can't recall if we made that representation at this key hearing or later, but I think that the question of whether the restitution that we accurately described was best characterized under controlling law as legal or equitable is a legal question.

[00:24:32] Speaker 00:
We gave them the facts to make that determination for themselves.

[00:24:36] Speaker 00:
This is the relief we seek.

[00:24:38] Speaker 00:
This is the substance of our claims, and I think that if they mistakenly thought that

[00:24:45] Speaker 00:
they did not have a jury trial right to that, that that doesn't vitiate their waiver.

[00:24:53] Speaker 00:
But I did, I could just want to make one point about the fact that there were no disputes of fact here.

[00:25:00] Speaker 00:
I think they tried to answer this argument in the reply brief in a passage that starts on page 11 and goes on to page 12, where they identify four issues they say were in dispute and that the district court had to resolve

[00:25:13] Speaker 00:
to order the restitution that it did.

[00:25:17] Speaker 00:
But three of those issues are clearly legal disputes.

[00:25:21] Speaker 00:
And the only one that's even arguably factual wasn't relevant to the restitution award.

[00:25:26] Speaker 00:
So that potentially factual issue involved their disputes about the credibility of a bureau witness during the initial proceeding.

[00:25:34] Speaker 00:
But the district court didn't rely on that testimony or anything that that witness had said in issuing the restitution award.

[00:25:42] Speaker 00:
The other three

[00:25:43] Speaker 00:
points that they raise in this passage are purely legal issues of the kind that a district court could have resolved at summary judgment or on a motion for a directed verdict.

[00:25:54] Speaker 00:
And because the district court could have ordered the same restitution award on a motion for summary judgment, motion for a directed verdict, I think that makes clear there were no factual issues that needed to go to a jury.

[00:26:06] Speaker 00:
This is sort of another reason the court should conclude that the Seventh Amendment just wasn't implicated by this award.

[00:26:14] Speaker 00:
And once the seventh amendment issue drops out, I think it really clarifies their next set of arguments that, you know, we should have been stopped from

[00:26:23] Speaker 00:
describing the restitution that we sought accurately as legal restitution on remand to sort of prevail on their waiver or equitable estoppel arguments where they would have to show that the district court abused its discretion.

[00:26:38] Speaker 00:
I think at the very minimum they would have to show prejudice from this sort of labeling confusion and they just haven't done that.

[00:26:45] Speaker 00:
They haven't pointed to any argument that they wanted to make against the restitution award, anything they wanted to do on remand to sort of challenge this $134 million award that they were not able to do.

[00:26:58] Speaker 00:
And that really shows that they were not prejudiced and that the

[00:27:03] Speaker 00:
District Court correctly concluded that neither waiver nor equitable estoppel should have somehow prevented it from applying controlling precedent such as in Great West to conclude that this was legal restitution all along.

[00:27:17] Speaker 00:
The court has no further questions.

[00:27:20] Speaker 00:
We'd ask that the court affirm in full, bring this very long running consumer protection case to an end so we can begin distributing redress to consumers.

[00:27:34] Speaker 03:
All right, thank you, Counselor.

[00:27:36] Speaker 03:
We'll go to three minutes.

[00:27:41] Speaker 02:
Thank you, Your Honor.

[00:27:42] Speaker 02:
Just a few points in rebuttal.

[00:27:43] Speaker 02:
First, starting with waiver.

[00:27:45] Speaker 02:
I mean, keep in mind that a waiver of the Seventh Amendment right has to be knowing.

[00:27:49] Speaker 02:
And my friend, you know, essentially said that at best there might have been a mistake here about what was going on.

[00:27:54] Speaker 02:
A mistake is the opposite of a knowing waiver.

[00:27:57] Speaker 02:
And this Court has spoken to this issue before in the Connolly decision, and I'll read what I think is the relevant language.

[00:28:03] Speaker 02:
the appellants could not waive their right to a jury trial on a law point not in issue.

[00:28:08] Speaker 02:
The record should clearly show that the issue of law was raised and that the party clearly understood he was waiving a jury trial, particularly where the law in question is raised outside of the pleadings.

[00:28:19] Speaker 02:
That describes this case to a T. They said in open court in response to a question,

[00:28:24] Speaker 02:
about whether there should be a jury trial right that they were seeking only equitable restitution.

[00:28:30] Speaker 02:
That was 30 seconds after they took damages out of the case.

[00:28:33] Speaker 02:
So at that point, yes, later, after making a fully compliant demand for a jury trial, we waived our jury trial right.

[00:28:40] Speaker 02:
But we had nothing left.

[00:28:41] Speaker 02:
We didn't have a jury trial right left.

[00:28:43] Speaker 02:
They'd taken all of the legal relief off of the table.

[00:28:46] Speaker 02:
And it's worth noting that this issue was not only pressed below on remand, but it was passed on as well.

[00:28:51] Speaker 02:
I mean, he did invoke, Judge Walter did invoke Commerce Planet.

[00:28:55] Speaker 02:
To speak to Commerce Planet for a second.

[00:28:59] Speaker 02:
The holding of the case and all of the dictum that informs the holding is, for now at least, so long as a court limits an award under 13B to restitutionary relief, the remedy is an equitable one for Seventh Amendment purposes.

[00:29:13] Speaker 02:
So the holding is limited to 13B.

[00:29:16] Speaker 02:
And think about how anomalous it would be to have Commerce Planet be like the dead hand or the zombie precedent here.

[00:29:24] Speaker 02:
Because you couldn't even get this issue back to this court

[00:29:27] Speaker 02:
under 13B, because after AMG Capital, you can get zero monetary relief in a 13B case.

[00:29:35] Speaker 02:
So, like, you know, Commerce Planet, time has moved on.

[00:29:39] Speaker 02:
You can't, again, you couldn't get...

[00:29:41] Speaker 02:
after AMG Capital, you could not get any restitutionary relief under 13B.

[00:29:46] Speaker 02:
So if you wanted to get this court to reconsider its 13B holding in Commerce Planet, you couldn't even get there because of AMG Capital.

[00:29:54] Speaker 02:
So the idea that that's going to control in another statute that specifically provides for legal and equitable relief, it makes no sense.

[00:30:02] Speaker 02:
I mean, the CFPA statute, unlike 13B,

[00:30:06] Speaker 02:
provides for damages.

[00:30:08] Speaker 02:
Nobody would think that if they didn't drop their damages command that somehow Commerce Planet would mean that in a case for damages there wouldn't be a jury trial, right?

[00:30:17] Speaker 02:
Of course there would be.

[00:30:18] Speaker 02:
And when you have distinctly legal relief that only evades the net profits cap of lieu because it's legal under a statute that authorizes legal and equitable relief, unlike 13B, which only authorizes equitable relief,

[00:30:32] Speaker 02:
I don't see how there can't be a jury trial right.

[00:30:35] Speaker 02:
Just two other very minor points.

[00:30:37] Speaker 02:
My friends on the other side recognizing that if this is legal restitution, review should be de novo.

[00:30:44] Speaker 02:
And the second thing is he says there's no disputes of fact.

[00:30:46] Speaker 02:
I mean, please, in the first instance, there was a bench trial.

[00:30:50] Speaker 02:
It wasn't summary judgment against us on the amount of restitution.

[00:30:53] Speaker 02:
There was a bench trial.

[00:30:55] Speaker 02:
There should have been a jury trial.

[00:30:57] Speaker 02:
And the jury should have gotten the ultimate question of how much unjust gains are there in this case.

[00:31:01] Speaker 02:
Thank you, Your Honor.

[00:31:02] Speaker 04:
Can I just ask one question on the de novo?

[00:31:05] Speaker 04:
I wanted to make sure I understood your point on legal restitution.

[00:31:09] Speaker 04:
If it's legal restitution, it's de novo review.

[00:31:12] Speaker 04:
Is that what I just heard you say in the review?

[00:31:14] Speaker 02:
Yes, and that's what my friends say on page 47 of their brief.

[00:31:17] Speaker 02:
OK.

[00:31:18] Speaker 02:
And I do think part of the problem here is that people haven't fully appreciated the consequences of treating this as legal relief.

[00:31:29] Speaker 02:
And I'm not sure you really can just apply Gordon

[00:31:32] Speaker 02:
to legal relief the way you could when that standard was developed for a judicial discretionary decision about equitable relief.

[00:31:39] Speaker 02:
I mean, I think if it's legal, it's ultimately got to go to the jury, and the jury has to determine what are the defendant's unjust gains.

[00:31:47] Speaker 02:
And yes, there can be, like, you know, legal back and forth and say, well, the jury instructions should tell them they can consider this and they can't consider that.

[00:31:54] Speaker 02:
But if it's a legal remedy, it goes to the jury, and it doesn't go to the jury just like you must impose some penalty.

[00:32:00] Speaker 02:
It goes to the jury and says, just like it would if it were compensatory damages, what is the amount of the plaintiff's injury?

[00:32:06] Speaker 02:
Here the question is, what's the amount of the defendant's unjust gains?

[00:32:09] Speaker 02:
I appreciate the court's intelligence.

[00:32:10] Speaker 03:
No, no.

[00:32:11] Speaker 03:
I thank you very much to both counsel for your argument in this case.

[00:32:14] Speaker 03:
If we could draft you to argue more cases than both of you, we would do that.

[00:32:18] Speaker 03:
I'm not sure I'm allowed to do that.

[00:32:20] Speaker 03:
So anyway, this matter is submitted.

[00:32:22] Speaker 03:
And thank you very much.

[00:32:23] Speaker 03:
We are adjourned.