[00:00:00] Speaker 00:
The next case on our docket is Cheryl Sauer versus SolarEdge Technologies, Incorporated.

[00:00:10] Speaker 00:
And that case has been submitted on the briefs.

[00:00:13] Speaker 00:
So that brings us to the next argument case today, and that's John Arnold, Michael Johnson versus Michael Mittman.

[00:00:24] Speaker 00:
The lawyers can please come forward.

[00:00:39] Speaker 00:
Do you need her?

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

[00:01:01] Speaker 00:
So when you're ready, you make them forward.

[00:01:09] Speaker 03:
May it please the court.

[00:01:10] Speaker 03:
My name is Mark Wilson, and I represent the appellants, John Arnold and Michael Johnston, and I would like to reserve three minutes, please.

[00:01:20] Speaker 03:
The parties in this case were the three musketeers for many years until Mr. Mittman filed his own whistleblower application.

[00:01:31] Speaker 03:
Mr. Mittman breached the party's agreement that Mr. Johnston would file a single

[00:01:37] Speaker 03:
or application for the Johnston Group, and the Johnston Group included all three of those parties.

[00:01:44] Speaker 03:
The parties agreed that if the SEC awarded a bounty, then they would split that bounty and the associated expenses in accordance with a formula.

[00:01:56] Speaker 03:
Mr. Mittman's breach netted him $13.5 million when he was only entitled to $1.1 million under the parties agreement.

[00:02:07] Speaker 03:
And the district court's order leaves my clients without a remedy to recover over $12 million of damages.

[00:02:15] Speaker 03:
We are asking this court to reverse the district court's order, deny my client's leave to amend, with instructions to permit my clients to file a second amended complaint.

[00:02:28] Speaker 03:
Our preference is that the court reverse with instructions for the case to proceed on the first amended complaint as drafted.

[00:02:38] Speaker 03:
Now, my clients pled all the potential claims that the facts justified.

[00:02:44] Speaker 03:
And they expected that discovery would reveal the best causes of action that they would present to the jury.

[00:02:51] Speaker 03:
They didn't expect that the district court would grant a motion to dismiss with prejudice without leave to amend, especially because this was the first time that the court heard a motion to dismiss on its merits.

[00:03:08] Speaker 03:
The first time the court heard the motion to dismiss, it granted it on the basis of ripeness.

[00:03:14] Speaker 03:
So when the district court decided the motion at issue, it should have at least given my clients a chance to amend.

[00:03:22] Speaker 03:
Now, the district court decided the merits of the case under the guise of the plausibility standard.

[00:03:29] Speaker 03:
But my clients don't have to prove their case in the complaint.

[00:03:33] Speaker 03:
But that's the filter that the district court used when it evaluated the first amended complaint.

[00:03:40] Speaker 03:
The first amended complaint adequately put Mr. Mittman on notice of the claims.

[00:03:46] Speaker 03:
There is enough factual content in the first amended complaint for the court to draw a reasonable inference that Mr. Mittman is liable for the alleged claims.

[00:03:57] Speaker 03:
Now, the district court's error is

[00:03:59] Speaker 03:
best exemplified by looking at the claims for breach of oral contract, breach of implied and fact contract, and concealment.

[00:04:09] Speaker 03:
Now, with respect to the oral contract claim, the trial court granted the motion to dismiss because my clients did not allege an oral contract in the original complaint, and they failed to specify the date and the context of the agreement in the first amended complaint.

[00:04:28] Speaker 03:
Now, the original complaint did have a cause of action for breach of contract.

[00:04:34] Speaker 03:
And my client, when they filed an amended complaint, broke that original contract claim into two pieces, an oral contract claim and the implied and fat contract claim.

[00:04:47] Speaker 03:
This is a notice pleading requirement.

[00:04:49] Speaker 03:
There's no surprises here.

[00:04:51] Speaker 03:
And the conclusion that the district court made that if there was an oral contract that would have been included in the original contract is a merits argument, not a plausibility argument.

[00:05:04] Speaker 03:
There's no cases that say the failure to specify the exact legal theory in an original complaint bars an amended complaint.

[00:05:14] Speaker 01:
Can I ask you a question?

[00:05:15] Speaker 01:
I don't mean to interrupt.

[00:05:20] Speaker 01:
Your position that there could not have been a surprise might be a bit of a stretch given the earlier action in the D.C.

[00:05:30] Speaker 01:
Circuit.

[00:05:31] Speaker 01:
D.C.

[00:05:32] Speaker 01:
District Court and D.C.

[00:05:33] Speaker 01:
Circuit Court.

[00:05:34] Speaker 01:
There was a different argument there that may or may not have been given the basis for a collateral estoppel or even a judicial estoppel type claim, but we don't have those claims here, to be sure.

[00:05:46] Speaker 01:
But I think there, there was an argument by your client that there hadn't been a joint venture, right?

[00:05:51] Speaker 01:
The joint venture claim here could have been a surprise.

[00:05:56] Speaker 03:
The concept of joint venture or joint whistleblower was a very different concept at the DC Circuit Court of Appeals and the SEC than it was here.

[00:06:06] Speaker 01:
I appreciate that.

[00:06:07] Speaker 01:
I'm responding to your statement that they couldn't have been surprised.

[00:06:11] Speaker 03:
Yes.

[00:06:11] Speaker 03:
And I understand on the joint venture argument, I understand what you're saying.

[00:06:18] Speaker 03:
All I'm saying is that in the context of that,

[00:06:22] Speaker 03:
My clients in the SEC proceedings and in the DC Circuit Court of Appeals said that the parties had an agreement to split the whistleblower work.

[00:06:37] Speaker 03:
They were always consistent in that regard.

[00:06:40] Speaker 01:
So that's why the breach of contract, whether it's an express contract or an implied contract, I think could not have been a surprise.

[00:06:47] Speaker 03:
I appreciate what you're saying and what I'm trying to.

[00:06:50] Speaker 03:
The term joint whistleblower meant something different there than it does here.

[00:06:57] Speaker 03:
And for there, from the SEC's perspective and even Mr. Mittman's writings, it meant 50-50, which was not ever the concept.

[00:07:05] Speaker 00:
You've answered my question.

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

[00:07:08] Speaker 00:
Let me ask you, speaking of joint ventures, I'm trying to figure out why did Mr. Mittman owe a fiduciary a duty to your clients in 2015 despite leaving the Johnson Group the year before?

[00:07:27] Speaker 03:
Earlier, and as alleged in the complaint, the parties agreed that they would continue pursuing the SEC investigation and then ultimately the joint whistleblower application as a team, as a joint venture.

[00:07:42] Speaker 03:
And when they agreed to pursue it as a team, as a joint venture,

[00:07:48] Speaker 03:
That created the fiduciary duty.

[00:07:50] Speaker 00:
And so I guess you mean to the next question, what is your best authority to support that working together on a whistleblower application is a joint venture that creates this fiduciary obligation?

[00:08:07] Speaker 03:
Sure.

[00:08:08] Speaker 03:
The California law on joint ventures and partnerships isn't terribly different.

[00:08:12] Speaker 03:
So the cases that we cited for you about

[00:08:15] Speaker 03:
partnership, joint venture, they're very similar.

[00:08:18] Speaker 03:
The blend shows that there's almost no distinction.

[00:08:24] Speaker 03:
And so when parties agree that they are going to do something together, and most of the joint venture cases are real estate cases, but when the parties agree.

[00:08:33] Speaker 00:
So what case do you think is the most directly on point?

[00:08:36] Speaker 00:
Because I couldn't find any authority that I thought was directly on point.

[00:08:42] Speaker 00:
I know that the law

[00:08:46] Speaker 00:
states that a joint venture requires a community of interest that is a joint interest in a common business undertaking and understanding as to the sharing of profits and losses and a right of joint control.

[00:09:00] Speaker 00:
I think that was the Connor versus Great

[00:09:05] Speaker 00:
Western savings or great savings.

[00:09:10] Speaker 00:
But it seems like paragraph 40 of your first amended complaint might just undermine the idea that the whistleblower application was a business undertaking, and I just wanted to give you the opportunity to respond to that.

[00:09:34] Speaker 03:
All right, so I'm looking at paragraph 40, your honor, of the First Amendment complaint.

[00:09:39] Speaker 03:
And it talks about, it says, though not the reason Johnston blew the whistle on Citigroup, the new availability of a bounty became one way for the parties to recover some of the costs.

[00:09:50] Speaker 03:
And then it goes into paragraph 41, which really begins, I think, the discussion of working together to hold Citigroup accountable.

[00:09:59] Speaker 03:
And it alleges.

[00:10:00] Speaker 03:
that the parties agreed that Johnston would file a single whistleblower application.

[00:10:06] Speaker 03:
So they are, they are operating as the Johnston group and they are agreeing to pursue the whistleblower application and it's for profit.

[00:10:14] Speaker 03:
Okay.

[00:10:16] Speaker 01:
You're relying on what I would think of as vanilla.

[00:10:19] Speaker 01:
California law regarding joint ventures, but this hasn't been applied in this context, in a whistleblower context, surely.

[00:10:24] Speaker 03:
I agree with you, and that is correct.

[00:10:26] Speaker 03:
I think vanilla partnership law is exactly what we are relying on.

[00:10:30] Speaker 01:
I interrupted your response to Chief Judge McGee's question.

[00:10:34] Speaker 03:
When you asked me what is the law that says that there is a fiduciary duty in a joint venture, I don't think the parties briefed the issue because the issue below was whether or not there was control.

[00:10:47] Speaker 03:
So I don't think that that was the issue that the district court was struggling with.

[00:10:52] Speaker 03:
The issue was whether there was joint control and we were citing cases that talk about how it doesn't need to be equal.

[00:10:58] Speaker 03:
and how control can be delegated.

[00:11:00] Speaker 01:
So can you go to that point, which is what the district court relied upon?

[00:11:02] Speaker 01:
Because I'm not sure if you're going to be able to show a joint venture or not under vanilla, what I'm calling vanilla existing California law on joint ventures.

[00:11:13] Speaker 01:
But the district court was concerned that you'd pleaded yourself out of it.

[00:11:16] Speaker 01:
That's my paraphrase, I think, because there was indication in the email traffic that your client had requested,

[00:11:23] Speaker 01:
access, I think, to the application and hadn't been granted and later was granted.

[00:11:28] Speaker 01:
You know what I'm referring to.

[00:11:29] Speaker 03:
Yeah, the December 5, 2015 email thing.

[00:11:33] Speaker 01:
So can you tell me why you think that was not an adequate reason for the court to rule as a matter of law that there isn't a joint venture?

[00:11:39] Speaker 01:
Sure.

[00:11:39] Speaker 01:
Wasn't a joint venture?

[00:11:40] Speaker 03:
Sure.

[00:11:40] Speaker 03:
So I think it's a merits-based decision to look at a single email and determine that there's no adequate split of control.

[00:11:49] Speaker 01:
Can the joint control that you're referring to, which I think is an element to the vanilla cause of action, be evidenced by delegation of authority?

[00:12:03] Speaker 03:
Absolutely.

[00:12:04] Speaker 03:
And if you really look at the email, if you look at the very last paragraph, my client invites Mr. Mittman to contribute more to the application.

[00:12:13] Speaker 03:
And it's important to understand the timing of that email.

[00:12:16] Speaker 03:
That is at the finish line.

[00:12:18] Speaker 03:
This application must be filed in December.

[00:12:22] Speaker 03:
They have very little time to make any changes.

[00:12:25] Speaker 03:
And so the first three quarters of the email, Mr. Mittman is asking for information.

[00:12:30] Speaker 03:
He wants to see things.

[00:12:31] Speaker 03:
And at the tail end,

[00:12:33] Speaker 03:
My client pushes him back a little bit, but then he says, hey, if you have some edits, please let me know and we'll look at them.

[00:12:41] Speaker 03:
So it's not a complete, I'm ignoring you.

[00:12:44] Speaker 03:
He's inviting him at the end, but more importantly,

[00:12:48] Speaker 03:
I think it's unfair to look at a single email at a complaint stage and say, well, that's enough.

[00:12:54] Speaker 03:
I've determined that there's no adequate joint or delegation of control.

[00:12:59] Speaker 01:
Your client's assertion and version of events, again, we're just here at the

[00:13:03] Speaker 01:
Outset and we're not finders of fact But I think your clients version of events is that he was the leader of the your three musketeers analogy Yes, I don't remember which musketeer was the leader Name them, but that's your clients version of events that that was true during the SEC action the FINRA action And he had taken the lead this time as well.

[00:13:24] Speaker 03:
Yes all throughout that's correct and the concept is that

[00:13:29] Speaker 03:
As I understand the Dodd-Frank law, whistleblower applications must be filed by a single person.

[00:13:34] Speaker 03:
Right.

[00:13:35] Speaker 03:
And in the application, Mr. Johnston said he was filing it on behalf of the Johnston group.

[00:13:40] Speaker 01:
What's your client's strongest allegation that would support the notion that the court could find joint control?

[00:13:46] Speaker 01:
for purposes of a joint venture.

[00:13:48] Speaker 03:
That the parties agreed that they would work together to prepare the application.

[00:13:53] Speaker 01:
Okay, and so the district court was, forgive me for interrupting, the district court was concerned that that email that you're talking about, the December 15th email, does not evidence a joint cooperative.

[00:14:02] Speaker 01:
It evidences that you're guys taking the lead.

[00:14:05] Speaker 01:
Hence my question, can the, do we have California case law establishing the proposition that the joint and cooperative nature can be

[00:14:13] Speaker 01:
that element can be satisfied if one party to the joint venture delegates the lead role to another party?

[00:14:20] Speaker 03:
The answer is yes.

[00:14:23] Speaker 03:
And I will give you the case.

[00:14:31] Speaker 03:
It's the Orozco case.

[00:14:33] Speaker 03:
It says, joint control for purposes of a joint venture need not be equal and may be delegated.

[00:14:43] Speaker 03:
With respect to the breach of implied, well, actually, I want to finish on the breach of oral contract claim.

[00:14:51] Speaker 00:
Did you want to reserve any time, or did you want to?

[00:14:53] Speaker 03:
Oh, yes, I reserved three minutes.

[00:14:56] Speaker 00:
But you were well beyond that.

[00:14:57] Speaker 03:
I'm sorry.

[00:14:59] Speaker 03:
Then I will stop talking.

[00:15:00] Speaker 03:
OK.

[00:15:00] Speaker 03:
Thank you.

[00:15:16] Speaker 04:
Good morning.

[00:15:17] Speaker 04:
May it please the court, Justin Scherr on behalf of the defendant, appellee Michael Mittman.

[00:15:23] Speaker 04:
It's important to note in this case what is not in the amended complaint that's the subject of this appeal.

[00:15:29] Speaker 04:
There is no factual allegation that the three parties, Mittman, Johnston, and Arnold, got together and discussed how they were going to allocate this whistleblower award if they ever got one.

[00:15:41] Speaker 01:
Well, I thought there was an understanding, the allegation, is that there was an understanding that they used the same operating

[00:15:46] Speaker 01:
principle that they'd use while they were practicing together.

[00:15:50] Speaker 01:
So basically, eat what you kill kind of an agreement.

[00:15:54] Speaker 04:
So they do drift back into this allegation, which was more part of their first complaint.

[00:15:59] Speaker 04:
that there's get out what you put in agreement that lasted through the life of their of their working together.

[00:16:04] Speaker 01:
Doesn't it doesn't isn't it the fact that the complaint alleges on what we've got in front of us is that that is in fact how the parties proceeded and in their earlier course of dealings.

[00:16:16] Speaker 01:
Not just they talked about it but they did it.

[00:16:18] Speaker 04:
I think that's a fair characterization, but at the time, so there was a period when they were working together at the same company during which there was this perhaps general principle, again, assuming the allegations are true.

[00:16:30] Speaker 01:
Right, which we have to do.

[00:16:31] Speaker 04:
Correct, that there was a general principle of some kind of get out what you put in.

[00:16:36] Speaker 04:
But that agreement, implied in fact agreement, which is what they relied on in the first complaint,

[00:16:43] Speaker 04:
was formed at a time when the Dodd-Frank Act hadn't even passed.

[00:16:48] Speaker 04:
There was no statute.

[00:16:50] Speaker 04:
But even if you were to say, OK, that carried through.

[00:16:52] Speaker 01:
Can I interrupt you?

[00:16:53] Speaker 01:
Of course.

[00:16:54] Speaker 01:
Just since you're proceeding chronologically, forgive me for interrupting you.

[00:16:56] Speaker 01:
No.

[00:16:57] Speaker 01:
But there was the earlier action, right?

[00:16:59] Speaker 01:
There's the reporting to the SEC.

[00:17:01] Speaker 01:
There's a FINRA action.

[00:17:02] Speaker 01:
Correct.

[00:17:02] Speaker 01:
And Dodd-Frank was, I mean, I appreciate, I think the allegation is that this was launched, this effort was launched

[00:17:09] Speaker 01:
prior to passage of Dodd-Frank, and of course it was Dodd-Frank that allowed, ushered in the bounty.

[00:17:15] Speaker 01:
It was a blower, right?

[00:17:17] Speaker 01:
So why isn't there a pre-existing course of conduct between these three that predated Dodd-Frank?

[00:17:26] Speaker 04:
There is, yes, Your Honor.

[00:17:27] Speaker 01:
Okay, so what am I missing then?

[00:17:29] Speaker 04:
So I think to say that there's an agreement to get out what you put in there, there were, it doesn't, it is not an enforceable agreement.

[00:17:36] Speaker 04:
It doesn't work.

[00:17:36] Speaker 04:
And here's why there was a thinner arbitration where they use one formula, certain percentage.

[00:17:41] Speaker 04:
I think it was 4% Mr. Mimmon got, then there was costs of cooperating with the SEC and the SEC investigation.

[00:17:47] Speaker 04:
I think Mr. Mittman paid 10% of that process.

[00:17:50] Speaker 04:
That's what I have.

[00:17:50] Speaker 01:
Yep.

[00:17:51] Speaker 04:
Yeah.

[00:17:51] Speaker 04:
And then there's this separate process after they're no longer working together of submitting a whistleblower application.

[00:17:58] Speaker 04:
And the plaintiffs allege that there's a brand new formula that hadn't been previously applied of 4.12% that Mr. Mittman is supposed to get.

[00:18:06] Speaker 01:
Well, you're talking about what filtered out on the back end of the formula.

[00:18:09] Speaker 01:
His allegation, no idea if he can prove it.

[00:18:12] Speaker 01:
His allegation, it was the same formula.

[00:18:15] Speaker 01:
But because the formula is that you get out what you put in, and there are different inputs, then the back-in percentages are going to differ somewhat.

[00:18:26] Speaker 01:
So why is that inconsistent?

[00:18:27] Speaker 04:
I think if you interrogate that concept, I don't think it works.

[00:18:31] Speaker 04:
Because how do you determine how much everybody puts in?

[00:18:34] Speaker 01:
Well, there are entire partnerships that operate on eat what you kill.

[00:18:39] Speaker 01:
kind of very loose agreement so why not here again I don't think improve it but what what's it you're asking us to rule as a matter of law this could not have existed.

[00:18:50] Speaker 04:
So I think what you kill concept is what kind of revenue you're bringing into the company.

[00:18:55] Speaker 04:
That's not going to change by the time there's a motion.

[00:18:57] Speaker 01:
Well, why not, for example, just to play devil's advocate, why not that since you get out what you put in, that the parties would have, after the fact, assessed the number of hours they all put in and compensated, you know, divided the pie accordingly?

[00:19:15] Speaker 04:
Sure.

[00:19:16] Speaker 04:
I just think that's a much more complicated agreement that required some factual allegations.

[00:19:20] Speaker 04:
that we got together and discussed this is what we're going to do, saying that we always had this very general, very principle of getting out what you put in.

[00:19:28] Speaker 04:
That's not an enforceable agreement.

[00:19:29] Speaker 04:
And I'll make one more point, Your Honor.

[00:19:31] Speaker 01:
So sorry.

[00:19:32] Speaker 01:
Sure.

[00:19:32] Speaker 01:
Just to pick up on that point, so you think it would be unenforceably vague?

[00:19:37] Speaker 01:
Vague.

[00:19:37] Speaker 04:
Correct, Your Honor.

[00:19:38] Speaker 01:
To put this into contract terms as a matter of law?

[00:19:41] Speaker 04:
Correct.

[00:19:41] Speaker 04:
And I'll give you an example.

[00:19:43] Speaker 04:
With respect to Mr. Mittman's whistleblower application, he put 100% of his time and money into that application.

[00:19:50] Speaker 04:
How did he even reach this agreement?

[00:19:53] Speaker 04:
By getting 100% back from his own efforts to submit his whistleblower application.

[00:19:57] Speaker 01:
You didn't get anything I assume that's a rhetorical question because you know what their theory is That their agreement was that they wouldn't be doing that they'd be working jointly right, but that's a different agreement I think my point is your honor that if it's simply get out what you put in

[00:20:10] Speaker 04:
it's not clear how Mr. Mittman would have breached that agreement in the facts that are alleged.

[00:20:16] Speaker 04:
What you need, what they need to allege is that they got together and they reached an agreement that only Mr. Johnson's gonna file a whistleblower application, Mr. Mittman is not, and there's no factual allegation that they even discussed the question about Mr. Mittman's ability to file his own whistleblower application.

[00:20:35] Speaker 04:
So I think if you assume

[00:20:38] Speaker 04:
all the facts to be true, what you end up with is an allegation that Mr. Johnston and Mr. Arnold expected that Mr. Mittman would go along with Mr. Johnston's plan of filing his own whistleblower application and controlling how any potential whistleblower award got distributed.

[00:20:57] Speaker 04:
And by the way,

[00:20:59] Speaker 04:
a whistleblower application has to be filed on behalf of an individual.

[00:21:06] Speaker 04:
So essentially, what their narrative is, is that they expected Mr. Mittman to allow Mr. Johnston to continue to control this process, even though they were no longer working together.

[00:21:20] Speaker 04:
And so they were ultimately surprised when they learned that Mr. Mittman

[00:21:25] Speaker 01:
Filed his own whistleblower application and they were disappointed, of course that You think a fact-finder couldn't look at the December 15th email and and Decide that that does evidence and awareness between the three of them that they were going to continue to operate on the same basis

[00:21:48] Speaker 04:
I think it does not demonstrate an agreement.

[00:21:53] Speaker 04:
I think what they use that email to suggest is that there was some fraudulent representation.

[00:21:58] Speaker 04:
And I'm happy to go into the fraud claim, but I think that's how the email is relevant to their allegations.

[00:22:05] Speaker 00:
I wanted to give you an opportunity to explain how the alleged oral contract is materially inconsistent with prior pleadings, which was one of the—or the main basis that the district court ruled the way he did in this case, especially viewing the first amended complaint allegations and the light most favorable to the plaintiff.

[00:22:33] Speaker 04:
Yes, Your Honor.

[00:22:34] Speaker 04:
So, in the first complaint, the only claim that was asserted by the plaintiffs was that there was an implied agreement.

[00:22:41] Speaker 04:
An implied agreement is one that can be manifested through conduct.

[00:22:44] Speaker 04:
If you get into a taxi before the days of Uber, you tell the driver where you'd like to go, and there's an implied agreement that upon your arrival, you'll pay the driver.

[00:22:53] Speaker 00:
Well, they alleged in the original complaint that Johnson, Arnold, and Mittman agreed that they would jointly pursue a whistleblower bounty in order to compensate them jointly for their efforts in blowing the whistle on the city group fraud.

[00:23:11] Speaker 04:
Yes.

[00:23:12] Speaker 00:
I just, I'm having trouble seeing how the First Amendment complaint is inconsistent with the prior pleading.

[00:23:20] Speaker 04:
Yes, I think that's a purely conclusory allegation, and one they describe in the facts asserted in the first complaint.

[00:23:27] Speaker 04:
were based purely on this idea that for the period they were working together, they had this get out what you put in concept.

[00:23:36] Speaker 04:
There was no allegation and no facts suggesting that the parties got together, they shook hands, they agreed on how to distribute the whistleblower award, or they discussed the fact that Mr. Mittman couldn't file his own whistleblower application.

[00:23:50] Speaker 04:
There's nothing like that.

[00:23:51] Speaker 04:
All they are alleged in the first complaint, yes, they have the conclusory word agreed in the first complaint.

[00:23:57] Speaker 01:
But the court didn't dismiss it on that basis.

[00:23:59] Speaker 01:
The court dismissed it because he said if there had been such an agreement—again, I'm paraphrasing—if there had been such an agreement, they would have remembered that and it would have been in the first complaint.

[00:24:09] Speaker 01:
Hence, I think, the chief's question, which is, what's inconsistent in the first amendment complaint with the notion that there was an implied in fact agreement?

[00:24:16] Speaker 01:
In other words, it seems that they did allege that.

[00:24:18] Speaker 01:
Can't you read the first complaint that way?

[00:24:21] Speaker 04:
I don't think so because what they argue in the first complaint is that there was an agreement implied by conduct in the first amended complaint.

[00:24:28] Speaker 04:
Yes, that claim carries over, but the inconsistency is for the first time since approximately eight years since these events took place, the plaintiffs alleged that there was an express oral agreement because they were concerned that an agreement to

[00:24:44] Speaker 04:
file a single whistleblower application under Johnston's name and distribute any potential award according to these 100th percentage allocation is not an agreement that can be implied by conduct like getting in a taxi or going into a restaurant and ordering food and having an applied agreement that you're going to pay the check after your mail is over.

[00:25:03] Speaker 04:
This is not a plausible implied agreement that can be manifested through conduct.

[00:25:09] Speaker 04:
And even if it were, the plaintiffs haven't alleged what conduct Mr. Mittman engaged in to manifest an agreement of that kind.

[00:25:19] Speaker 01:
So I think... What about the prior... I just want to give you one more shot.

[00:25:22] Speaker 01:
Sure.

[00:25:22] Speaker 01:
What about the prior course of dealings between the parties?

[00:25:26] Speaker 01:
Why isn't that conduct that manifests, again, at this very early stage, why isn't that conduct that a fact finder could rely upon?

[00:25:35] Speaker 04:
Again, I think...

[00:25:37] Speaker 04:
There is nothing in a prior course of conduct where you split things in general sort of equitable fashion that provides you cannot file your whistleblower application yourself.

[00:25:48] Speaker 04:
That's not a term of such an agreement.

[00:25:50] Speaker 01:
Could I get you to address the question that Chief Judge McGee asked at the outset, which is your take on whether or not the

[00:25:58] Speaker 01:
facts as alleged would allow a finding or a conclusion, would be a legal conclusion that the parties had a joint venture.

[00:26:08] Speaker 04:
Sure.

[00:26:08] Speaker 04:
So a joint venture has to be a business enterprise for profit.

[00:26:14] Speaker 04:
Applying for a whistleblower award.

[00:26:17] Speaker 04:
I don't think can be characterized as a business.

[00:26:19] Speaker 01:
I don't know if it can or not.

[00:26:20] Speaker 01:
I think it hasn't been.

[00:26:21] Speaker 01:
Correct.

[00:26:22] Speaker 01:
Right.

[00:26:23] Speaker 01:
And so— Not that I'm aware of.

[00:26:25] Speaker 01:
I'm sorry?

[00:26:25] Speaker 04:
I'm sorry.

[00:26:25] Speaker 04:
Not that I'm aware of.

[00:26:26] Speaker 04:
Correct.

[00:26:26] Speaker 01:
Yeah.

[00:26:27] Speaker 01:
Right.

[00:26:27] Speaker 01:
So my question is, I think better asked, why couldn't it be that the existing—of course, there's California law—what it takes to form a joint venture

[00:26:37] Speaker 01:
Again, we're really early on.

[00:26:39] Speaker 01:
I don't know if they can prove this up, but why would it, why are the allegations here legally infirm?

[00:26:43] Speaker 04:
Sure.

[00:26:44] Speaker 04:
I just, I think, you know, the, the case law is clear.

[00:26:46] Speaker 04:
You have to do more than a cert, uh, concludes your allegations.

[00:26:49] Speaker 04:
So simply saying that was a joint venture and joint control.

[00:26:52] Speaker 04:
It's not enough.

[00:26:52] Speaker 04:
You have to, you have to allege facts that support this.

[00:26:55] Speaker 04:
And so.

[00:26:56] Speaker 04:
So they don't allege any facts about Mr. Mittman's joint control of this process.

[00:27:03] Speaker 04:
The email that they heavily rely on for their fraud claim provides exactly the opposite.

[00:27:09] Speaker 04:
It demonstrates that Mr. Mittman asked, can I please attend the meeting with the attorney that you're using?

[00:27:16] Speaker 04:
to advise on this whistleblower application that you're planning to file in your name.

[00:27:20] Speaker 04:
And the answer he got was no.

[00:27:22] Speaker 01:
Right.

[00:27:22] Speaker 01:
So hence my question.

[00:27:24] Speaker 01:
Right.

[00:27:24] Speaker 01:
You could affect and I could read it that way I think and find that after hearing what the parties have to say about this and considering their testimony.

[00:27:32] Speaker 01:
But why.

[00:27:34] Speaker 01:
Do you have an answer to the question that I asked earlier that differs, perhaps, that California doesn't allow joint control to be established by virtue of delegation by one member of the joint venture?

[00:27:47] Speaker 04:
I think Mr. Wilson is correct that you are allowed to delegate your control.

[00:27:52] Speaker 04:
I think those are the cases that he cites stands for.

[00:27:56] Speaker 04:
I'll tell you, the Orozco case, in that case, the court found that there wasn't a joint venture.

[00:28:02] Speaker 04:
Yep.

[00:28:03] Speaker 04:
But no, do I know of a case that expressly says you cannot demonstrate that lack of joint of control through a delegation?

[00:28:12] Speaker 04:
No, but to me, it doesn't make sense, right?

[00:28:14] Speaker 04:
I mean, the evidence that somebody else is taking the lead on something necessarily does not demonstrate that there is joint control.

[00:28:25] Speaker 04:
So I don't think that works, but no, I'm not aware of a case.

[00:28:28] Speaker 01:
I appreciate your candor.

[00:28:29] Speaker 01:
Thank you.

[00:28:30] Speaker 02:
We have three of us sitting here, and it takes two to tank to issue a decision, but we do have one fearless leader for our court.

[00:28:41] Speaker 02:
We have a situation right here where we have some semblance of joint control, but we have a leader, too.

[00:28:48] Speaker 02:
We have somebody presiding, and we also have the chief.

[00:28:50] Speaker 02:
I think you can.

[00:28:52] Speaker 02:
There are situations where I don't think it's necessarily completely inconsistent to have

[00:28:58] Speaker 02:
a form of joint control, but also have a leader of sorts.

[00:29:03] Speaker 04:
I agree, Your Honor.

[00:29:04] Speaker 04:
I don't know if you're suggesting the three of you are in a joint venture.

[00:29:07] Speaker 04:
Or musketeers.

[00:29:09] Speaker 04:
It took me a while to figure that out.

[00:29:12] Speaker 02:
We'll figure that out afterwards.

[00:29:14] Speaker 04:
For the particular vehicle of a joint venture, you do need to demonstrate, or at least allege, joint control.

[00:29:20] Speaker 04:
The plaintiffs have not alleged those facts here.

[00:29:23] Speaker 04:
And on top of that, before the DC Circuit, they affirmatively said there was no joint venture because Mr. Johnson had all the control.

[00:29:31] Speaker 04:
Now, that was actually not particularly relevant to the issue before the D.C.

[00:29:35] Speaker 04:
Circuit, but they were trying to analogize the question of whether Mr. Mittman satisfied the statutory criteria.

[00:29:43] Speaker 04:
of a joint whistleblower by comparing it to the standards for a joint venture under California law.

[00:29:50] Speaker 04:
And the affirmative only said, we didn't have one.

[00:29:52] Speaker 04:
So I don't think you can, you know, giving them all the benefit to the plaintiffs in this case, I don't think you can ignore these documents that they referenced in the complaint and submitted in other proceedings.

[00:30:04] Speaker 04:
Thank you, Your Honor.

[00:30:17] Speaker 03:
Council stated that the allegations about the party's agreement were too vague.

[00:30:23] Speaker 03:
Instead, they're very specific regarding the splits and each party's obligations.

[00:30:29] Speaker 03:
Paragraph 41 of the first amended complaint specifically says that the parties agreed that Mr. Johnston would file the single application.

[00:30:39] Speaker 03:
So that wasn't something that you have to infer from the first amended complaint.

[00:30:43] Speaker 03:
It's in the first amended complaint.

[00:30:47] Speaker 03:
With regard to the argument that the first admit that the original complaint did not put them on notice of a oral agreement, at least paragraph 36 of the original complaint says that the parties pursued their remedies against Citigroup as a team and subject to an implied agreement manifested by words, conduct, and a course of dealing.

[00:31:14] Speaker 03:
So again, I don't think that you have to be

[00:31:17] Speaker 03:
perfectly precise in a complaint to withstand a motion to dismiss.

[00:31:25] Speaker 03:
There is nothing inconsistent with the amended complaint and the original complaint with respect to the oral contract.

[00:31:33] Speaker 03:
And to the extent that there are things that are vague or this court finds are missing, we can amend.

[00:31:42] Speaker 03:
Thank you.

[00:31:43] Speaker 01:
Council, were you just reading from paragraph 36?

[00:31:45] Speaker 03:
the original complaint.

[00:31:46] Speaker 01:
No wonder.

[00:31:47] Speaker 01:
Okay.

[00:31:48] Speaker 01:
Thank you.

[00:31:49] Speaker 01:
I've got the other.

[00:31:50] Speaker 03:
Yes, I was trying to respond to the question about whether there was anything in the original complaint that used something that would indicate it was oral.

[00:31:58] Speaker 03:
Thank you.

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

[00:32:01] Speaker 00:
Mr. Wilson and Mr. Scherer, thank you very much for your oral argument presentations here today.

[00:32:08] Speaker 00:
The case of John Arnold, Michael Johnson versus Michael Mittman is now submitted.

[00:32:14] Speaker 00:
That concludes our oral argument calendar for today, and so we are adjourned.

[00:32:21] Speaker 00:
Thank you very much.

[00:32:22] Speaker 00:
All rise.