[00:00:09] Speaker 01: Okay and our final case for argument this morning is Turpin versus AT&T Mobility LLC. [00:00:48] Speaker 01: Counsel, you can approach when you're ready. [00:00:50] Speaker 01: Thank you. [00:01:03] Speaker 04: Good morning, Your Honors. [00:01:04] Speaker 04: I am Pierce O'Donnell. [00:01:05] Speaker 04: I may have pleased the court. [00:01:06] Speaker 04: I am counsel for the appellant plaintiff, Michael Turpin. [00:01:10] Speaker 04: I have reserved three minutes for my rebuttal. [00:01:14] Speaker 04: In 1770, John Adams famously and unpopularly defended the British soldiers in the Boston Massacre. [00:01:22] Speaker 04: And he said in his summation jury, facts are stubborn things. [00:01:28] Speaker 04: This case, this appeal, is about a lot of stubborn things, dozens in scores of factual issues presented by my client in opposition to AT&T's motion for summary judgment. [00:01:42] Speaker 04: The district court, we believe, committed clear error by ignoring those facts. [00:01:47] Speaker 04: and then wiping out of the Federal Communications Act section 222 a broad swath of unauthorized access to client information through SIM swaps. [00:01:59] Speaker 04: We believe the court's interpretation of the law misinterpretation led to excluding the fact that many of the issues we presented factually show that there was unlawful access, use, and disclosure of my client's confidential information under 222A and 222C. [00:02:20] Speaker 04: The court also erred in dismissing at the pleading stage two fraud claims and three negligence claims. [00:02:29] Speaker 04: The court did not apply the accepted principles of Rule 12b-6. [00:02:34] Speaker 04: The trial court failed to accept these many factual allegations as well-pled and pled straight into the elements of California law for fraud and for the three negligence claims. [00:02:49] Speaker 04: Indeed, I'm sorry to say, the court did not play referee. [00:02:53] Speaker 04: In fact, the court took sides. [00:02:55] Speaker 04: at the pleading stage and the summary judgment stage on what are purely disputed factual issues. [00:03:02] Speaker 01: Can you tell me how your negligence claims are distinct from your FCA claims? [00:03:07] Speaker 04: Yes, the FCA claims are rooted in the Federal Communications Act, amended in 1996 to broadly expand the protection of customers' data, information. [00:03:19] Speaker 04: They added 222A, Your Honor, which is a broad protection of confidential proprietary information, and they strengthened 222C in protecting my client's client-protected network information. [00:03:35] Speaker 04: The statute in the federal law creates a duty of care actionable through the private right of action in Section 206. [00:03:44] Speaker 00: view that proprietary information under 222A is something broader than the CP&I that is referenced in subsection C, why would you even need subsection C? [00:03:58] Speaker 00: First of all, C existed before A. And in the 1996 amendments, Congress added A. Would you agree that A would subsume subsection C if it was interpreted the way that your client wants us to interpret it? [00:04:13] Speaker 04: It does not subsume. [00:04:14] Speaker 04: And the Federal Communication Commission has explicitly ruled such in the broadband ruling and giving it the deference it's entitled under Chevron and brand action. [00:04:23] Speaker 03: As soon as you say Chevron, lights go up because [00:04:26] Speaker 03: The longevity of Chevron has been put into question by the argument for the Supreme Court. [00:04:32] Speaker 03: I want to ask a practical question. [00:04:34] Speaker 03: If it matters that we have the FCC, the agency's interpretation of what is arguably an ambiguous statute, what should we be doing in the meantime, because I'm not sure [00:04:49] Speaker 03: If three months from now, what does it mean? [00:04:51] Speaker 04: Four months from now, Chevron will be Chevron anymore. [00:04:55] Speaker 04: I have an over-under with my colleagues. [00:04:57] Speaker 04: How long it would take one of you to ask me that question. [00:04:59] Speaker 03: It's just kind of screaming out there. [00:05:00] Speaker 03: It screams out. [00:05:01] Speaker 03: It's above our pay grade, I'm afraid, so. [00:05:03] Speaker 04: OK. [00:05:05] Speaker 04: Let's put aside the agency. [00:05:07] Speaker 04: We think the statute is clear, the legislative intent, that Congress intended to broad protection. [00:05:13] Speaker 04: So the reset messages, the text messages, are contents of communications which are covered by A. C is CP&I, and that has to do with the technical configuration. [00:05:25] Speaker 04: I'll go into that in a moment. [00:05:26] Speaker 04: I don't think you have to. [00:05:27] Speaker 03: I get that. [00:05:27] Speaker 03: I'm going to ask you to walk through that. [00:05:29] Speaker 03: I can win this appeal without you deferring. [00:05:30] Speaker 03: Let me ask a broad question. [00:05:31] Speaker 03: Because the question, as Judge Josiah observed, says at least some question about how A and C [00:05:38] Speaker 03: coexist. [00:05:39] Speaker 03: There's an argument, at least, that says A is kind of a general introduction, C is the guts that we should apply. [00:05:47] Speaker 03: I'm not saying that's the correct argument, but it's been put into play. [00:05:50] Speaker 03: And so the agency's interpretation can be determinative. [00:05:55] Speaker 03: And so if the Chevron world persists, no heavy lifting to be done by me. [00:05:59] Speaker 03: The agency said that. [00:06:01] Speaker 03: But if the Chevron world doesn't exist, [00:06:04] Speaker 03: That question gets a lot harder for me. [00:06:07] Speaker 04: It is, and maybe that would counsel if I don't persuade you that on its face, the statute is different. [00:06:13] Speaker 04: Congress was clear in legislative history. [00:06:15] Speaker 04: It wanted broad protection, and it beefed up CP&I. [00:06:18] Speaker 04: Let's just focus on C, OK, customer, proprietary net. [00:06:21] Speaker 04: And help me understand. [00:06:22] Speaker 04: I'm going to. [00:06:23] Speaker 04: Because I'm out of my elevator. [00:06:25] Speaker ?: OK. [00:06:25] Speaker 04: I'm almost as old as you are. [00:06:28] Speaker 04: I'm just going to say, I'm BC before computers. [00:06:30] Speaker 04: That's how old I am, Your Honor. [00:06:32] Speaker 04: I'm going to take a one minute on mechanics, because that will answer the question of what's C all about. [00:06:38] Speaker 04: When the bribed employee for $500 at the AT&T store entered unauthorized into the account system, my client's information and data, he affected a SIM swap by necessarily, inevitably, per se, [00:06:55] Speaker 04: accessing proprietary network information. [00:06:59] Speaker 04: Why is that? [00:07:00] Speaker 04: Two things have to happen. [00:07:01] Speaker 04: One, there's that little SIM card. [00:07:03] Speaker 04: It has the numbers on it. [00:07:04] Speaker 04: That's my client's phone number. [00:07:06] Speaker 04: Mr. Pinsky, the bad guy, had given the clerk his new SIM. [00:07:12] Speaker 04: So he transfers it. [00:07:14] Speaker 01: I want to let you explain the mechanics. [00:07:15] Speaker 01: But didn't the hackers already have access to your client's phone number? [00:07:21] Speaker 04: Phone number's not it. [00:07:22] Speaker 04: Phone number doesn't do anything for you. [00:07:25] Speaker 04: The phone number is the phone number, but you have to get it inside the system, Your Honor, and change the SIM. [00:07:30] Speaker 04: The multi-digit number is changed by the bad guy to the number that Mr. Pinsky gave him for the new SIM. [00:07:37] Speaker 04: Secondly, you need something else for the system. [00:07:40] Speaker 04: You need the IMEI. [00:07:41] Speaker 04: That's the 15-digit code for your phone. [00:07:46] Speaker 04: Mr. Turpin was an ancient. [00:07:47] Speaker 04: He had a BlackBerry. [00:07:49] Speaker 04: And Mr. Smith changed the number of the IME BlackBerry to a new iPhone 15 possessed by Mr. Pinsky. [00:07:57] Speaker 04: Those are classically reconfigured, the technical configuration. [00:08:02] Speaker 04: We put in facts on that. [00:08:04] Speaker 04: The court didn't interpret it that way, but that's a disputed issue. [00:08:07] Speaker 04: So before I get to the broader version of A, C itself should get me to trial, Your Honor, because we have plenty of facts on what I just told you. [00:08:17] Speaker 04: You cannot pull off a sim swap. [00:08:20] Speaker 04: unless you reconfigure the technical configuration of my client's account. [00:08:25] Speaker 04: You can't do it. [00:08:26] Speaker 04: So having the phone number doesn't do anything for you, Your Honor. [00:08:29] Speaker 00: I actually think you should stay with this argument with respect to subsection C, because in my view, that's your better argument. [00:08:36] Speaker 00: I agree with you, Your Honor. [00:08:38] Speaker 00: You don't need to go to subsection A, and I think it creates all sorts of problems in terms of the interpretation, whether the statute's ambiguous. [00:08:44] Speaker 00: But on subsection C, what I'm struggling with is that [00:08:50] Speaker 00: While I understand that there's more than a phone number that was transferred, it's sort of access and control to that phone number. [00:08:57] Speaker 00: What I'm really troubled by is that there was no information that was actually transferred to Pinsky through the SIM swap. [00:09:05] Speaker 00: So I understand that the ability to have access over the phone number allowed Pinsky to request a new password. [00:09:18] Speaker 00: How does that message relate to Turpin's use of telecommunication services? [00:09:23] Speaker 04: It's not related to telecommunication services. [00:09:25] Speaker 04: It's use, disclose, or access to various components, including technical configuration. [00:09:31] Speaker 04: That's the definition under H1 of subsection C. All we had to have here was improper access. [00:09:39] Speaker 04: By definition, Smith wasn't authorized to enter my client's account system, and it's my client's account. [00:09:46] Speaker 04: Nor was, of course, Mr. Pinsky authorized to use the reset messages within there. [00:09:52] Speaker 04: But you cannot have – that's my evidence. [00:09:54] Speaker 04: I think I get a trial, hopefully, Your Honor, on my interpretation of CP&I technical configuration is the mechanical evidence of what happens. [00:10:04] Speaker 04: And the message is 22. [00:10:06] Speaker 04: reset messages between Pinsky using my phone, my client's phone, it's our phone. [00:10:12] Speaker 04: And Google and Microsoft led to getting the information into Microsoft and stealing it. [00:10:18] Speaker 04: So that's what has to happen. [00:10:19] Speaker 04: Congress wanted to be sure that we protected access to it. [00:10:23] Speaker 04: And Mr. Smith and Mr. Pinsky cannot do what they did, Your Honor, I submitted my evidence, which I think gets me a trial, without having illegal access to the technical configuration. [00:10:35] Speaker 04: They also had, and by the way, this is all demonstrated in ER 1896, Exhibit 21, Your Honor, in opposition to summary judgment. [00:10:45] Speaker 04: It says right here, IME changed, SIM swap trains, and Your Honor, they actually put the numbers [00:10:51] Speaker 04: of the SIM that was going from my clients to the SIM of Mr. Pinsky, and the same with the IMEI, that's the phone identifier, International Mobile Equipment Inventory Identifier. [00:11:04] Speaker 04: That's it, right here on this exhibit, ER 1896. [00:11:06] Speaker 04: So we don't need to speculate what happened. [00:11:09] Speaker 04: Now, AT&T could say, oh no, we have a different version, Mr. O'Donnell, of what happens to the technical configuration. [00:11:16] Speaker 04: Your Honor, that's why we have trials. [00:11:19] Speaker 04: And I believe on this issue, which is one of first impression, I believe that we have that. [00:11:24] Speaker 04: Now, if I could just for a moment talk about the FCC. [00:11:27] Speaker 04: The FCC has said what I think is obvious and a reasonable interpretation of the statute. [00:11:31] Speaker 04: You can't get inside my house. [00:11:34] Speaker 04: while unlocking my door. [00:11:36] Speaker 04: And they unlock the door here, and that's CP&I. [00:11:39] Speaker 04: You can't have a SIM swap as a matter of mechanics or technology, whatever, without having unauthorized access and manipulation and changing of the configuration of my account. [00:11:52] Speaker 04: That's what Congress meant, I believe, [00:11:54] Speaker 04: for technical reconfiguration. [00:11:56] Speaker 04: It's the arrangement and then the rearrangement of the relationships between the two SIM numbers and the two IMEs, and those were all done inside. [00:12:06] Speaker 01: Can you point me, and maybe you already did, but can you point me again to where in the record your client indicates that Smith actually saw or disclosed his IME? [00:12:18] Speaker 04: Where in the record is that? [00:12:21] Speaker 04: Okay, the notes of [00:12:24] Speaker 04: These are account notes, and they're in the record. [00:12:26] Speaker 04: And it's ER 1896. [00:12:29] Speaker 04: And it shows there that Smith gives you the actual minute and second, Your Honor. [00:12:34] Speaker 04: When he changes the SIMs, it says, change from SIM, my client's number, to a new number, which is possessed by Mr. Pinsky, because he gave him that number as part of the deal. [00:12:46] Speaker 04: Secondly, we have to change the phone so the cell tower finds the phone. [00:12:51] Speaker 04: And we have to change the IMEI of a BlackBerry. [00:12:54] Speaker 04: to the IMEI of the Pinsky's iPhone 15. [00:12:59] Speaker 04: That's in this document. [00:13:01] Speaker 04: So that's the technical thing that happened. [00:13:03] Speaker 04: And Mr. Smith is doing this. [00:13:05] Speaker 04: He's unauthorized. [00:13:07] Speaker 04: Remember, he did two of these a couple weeks earlier, and he wasn't fired. [00:13:11] Speaker 04: So he's good at what he does for $500. [00:13:13] Speaker 04: So 1896. [00:13:13] Speaker 04: Huh? [00:13:13] Speaker 01: 1896, so the record is where I should look. [00:13:18] Speaker 00: I think you might want to reserve the balance of your time, but I have a question before you take a seat, which is, can you point to any authority suggesting that the FCA creates a duty of care that gives a private right of action that would sort of [00:13:34] Speaker 00: You know, I think that your negligence claims are barred by the economic loss doctrine and I can't understand why and what authority you have to suggest that the FCA gives you a cause of action. [00:13:45] Speaker 04: Sheen, the case that's at issue here, expressly carves out any independent legal duty outside of the contract. [00:13:52] Speaker 04: The Federal Communications Act creates a clause of action under 206 for lack of care. [00:13:58] Speaker 00: Is Sheen the best case that you have? [00:14:01] Speaker 04: Well, it's the case I have to deal with. [00:14:02] Speaker 04: It's the California Supreme Court. [00:14:04] Speaker 04: Your Honor, it cars out fraud, which is ex contractus, and it also says if there's an independent legal duty, which there was an in Sheen of the loan modification at issue, the negligence there. [00:14:14] Speaker 04: Our negligence overrides everything here because it's a federal duty. [00:14:19] Speaker 04: It's a duty of due care. [00:14:21] Speaker 04: And the commission, I don't know if Your Honor, if I should mention the Federal Plaintations Commission, but they have interpreted, and it's not disputed by AT&T, the CP&I rules and the broadband ruling and others have said you have a, quote, duty to take every reasonable measure of care in protecting [00:14:40] Speaker 04: CPNI and CPI under Section 222. [00:14:44] Speaker 04: So there is an independent federal duty, Your Honor, which is not grounded in state law. [00:14:48] Speaker 04: And that's more than sufficient to create the independent duty under Sheen that takes us out from underneath the onus of the economic loss doctrine. [00:15:00] Speaker 01: Thank you. [00:15:00] Speaker 01: I'll give you three minutes on rebuttal. [00:15:02] Speaker 01: We took up a lot of your time. [00:15:03] Speaker 01: Thank you. [00:15:11] Speaker 02: May it please the court, Marcellus McBrady, Gibson Dunn, and Crutcher appearing on behalf of AT&T Mobility. [00:15:19] Speaker 02: Your Honors, the fundamental principles of statutory construction and common law require affirmance for at least three reasons. [00:15:27] Speaker 02: First, there is no Federal Communication Act claim because AT&T didn't disclose any protected information under the statute. [00:15:36] Speaker 02: regardless of which interpretation that you use. [00:15:38] Speaker 02: What the court specifically found below was that the only thing that was transferred was control over the phone number. [00:15:47] Speaker 02: That is not information. [00:15:49] Speaker 00: So how do we understand? [00:15:51] Speaker 00: You'd agree that it would be a violation of the FCA to turn over a list of text messages that a user had. [00:16:01] Speaker 00: So if I went into the store and I said I wanted [00:16:03] Speaker 00: a list of text messages and phone numbers from which they were coming from for a particular AT&T client. [00:16:08] Speaker 00: You couldn't do that. [00:16:09] Speaker 00: That would be a violation of the law. [00:16:11] Speaker 00: So how is it not a violation and a disclosure of CP&I to give access and control over a phone number that basically allows the recipient then to intercept every single text message or [00:16:26] Speaker 00: or call that comes in. [00:16:28] Speaker 02: Well, Your Honor, to complete the hypothetical, the issue with respect to the text messages here are that in that context, the statute doesn't cover non-customer activity. [00:16:39] Speaker 02: It only covers customer activity. [00:16:42] Speaker 02: So in that context, once the SIM swap occurs, you have an imposter, the thief who has control over the phone number. [00:16:50] Speaker 03: And in this particular case— And so its activity in his account [00:16:53] Speaker 03: He may not initiate it, but it's his account. [00:16:56] Speaker 03: He's presumably going to get billed for that account or has already paid for that account. [00:17:00] Speaker 03: Why isn't that his information? [00:17:03] Speaker 02: For a couple of reasons, Your Honor, because the FCA is only concerned about customer usage and customer information, as indicated in the name [00:17:12] Speaker 02: customer proprietary network information or customer proprietary network information. [00:17:16] Speaker 00: It's like a significant loophole for AT&T to argue that if we have an employee that accepts a bribe and therefore allows somebody to come in and intercept those all of a sudden because that person, we've allowed them to have access and control. [00:17:33] Speaker 00: to this phone number and the text messages come in, somehow now we can put our hands up and say, we're no longer bound by the provisions of the FCA because a third party came in and is controlling the text messages coming in. [00:17:47] Speaker 02: Your Honor, I think that's a much broader point to say not bound by the FCA. [00:17:51] Speaker 02: I think the specific question is whether or not it would be a violation in terms of a disclosure of CP&I. [00:17:56] Speaker 02: First of all, neither the FCC nor any case law says that text messages are CP&I. [00:18:01] Speaker 02: So let's start with that. [00:18:03] Speaker 02: going beyond that, there's nothing that requires a finding that that be customer information. [00:18:10] Speaker 02: Again, in this context, the text messages were not generated by Mr. Turpin, were not intended by Mr. Turpin, or received by Mr. Turpin. [00:18:17] Speaker 02: They were generated by Mr. Pinsky. [00:18:19] Speaker 02: The other thing we have to consider is that we're- Perporting to be Mr. Turpin. [00:18:22] Speaker 03: Excuse me? [00:18:23] Speaker 03: Perporting to be Mr. Turpin. [00:18:24] Speaker 03: Correct. [00:18:25] Speaker 03: Correct. [00:18:25] Speaker 03: The other thing that we have to consider- So why would [00:18:29] Speaker 03: Why would Congress in enacting the statute, why would the agency in interpreting it, if we still pay attention to their interpretation, why would they not be concerned about the conduct at issue here? [00:18:40] Speaker 03: Why should we read the statute as narrowly as you're trying to argue that we should? [00:18:46] Speaker 02: respectfully, your honor, I don't think that in looking at section C that it is a narrow reading because I think it specifically talks over and over again, whether you're talking about location, you know, usage and so forth. [00:18:59] Speaker 02: It clearly is with respect to the customer. [00:19:01] Speaker 02: I don't think it's a narrow rating. [00:19:03] Speaker 02: I think it's an accurate reading because if you don't have the customer involved, no one's saying the thief has a confidentiality interest or proprietary interest in those messages. [00:19:13] Speaker 02: And also the text messages were not sent. [00:19:16] Speaker 03: It's the customer who's most vitally affected by it. [00:19:19] Speaker 03: Why is it the statute wouldn't extend to protect the customer in that fashion? [00:19:23] Speaker 02: Because even if it remains the customer's account, which I'm not disputing that it would be, [00:19:29] Speaker 02: the information that's being exchanged in that context is not the customer. [00:19:34] Speaker 02: Your Honor made a reference to a bill. [00:19:37] Speaker 02: Perhaps the person's billed for it. [00:19:38] Speaker 02: But again, the distinction that's being parsed is that it's not the information generated or received by the customer. [00:19:44] Speaker 02: And AT&T didn't send the text message. [00:19:47] Speaker 03: My question is somewhat different. [00:19:50] Speaker 03: It is that why would Congress or the agency [00:19:54] Speaker 03: want to carve out the kind of activity, would not want to cover the kind of activity at issue here by something that is plumbly intended for customer protection. [00:20:04] Speaker 02: I think for a few reasons, Your Honor, because number one, even the FCC has recognized in the order that's the subject of the supplemental authority that we have [00:20:13] Speaker 02: that the FCA is not intending to try to generate and deal with all the potential implications of a SIM swap. [00:20:20] Speaker 02: And I think to try to force this issue, which is whether or not post-swap, someone who's not the customer is sending and receiving a text message, which does not reveal any information about Mr. Turpin's usage, about Mr. Turpin's location, about Mr. Turpin's account. [00:20:38] Speaker 02: It just doesn't. [00:20:39] Speaker 02: Because it's not Mr. Turpin that's engaged in the activity. [00:20:42] Speaker 02: It's not the customer, it's the thief. [00:20:45] Speaker 02: And perhaps with respect to other regulations or other statutes, in looking at the entire ecosystem, there may be an effort to address that issue. [00:20:53] Speaker 03: I would also submit that given that we're... I get what you're saying. [00:20:58] Speaker 03: I'm not sure that I, even after many hours, have a firm enough handle on understanding what CP&I is and how it should apply here. [00:21:07] Speaker 03: But I'm asking a somewhat different question. [00:21:11] Speaker 03: And I understand the importance of the language of the statute. [00:21:14] Speaker 03: I understand the importance of the logic of the agency. [00:21:17] Speaker 03: But is there any reason to think that what's being discussed here shouldn't be protected? [00:21:23] Speaker 03: Because when you interpret a statute, you try to do it with good sense. [00:21:28] Speaker 03: And in this case, I have a hard time understanding why it is that what you're saying isn't covered [00:21:36] Speaker 03: wouldn't have been covered, not just shouldn't. [00:21:38] Speaker 03: I'm not answering the policy question, but wouldn't have been covered. [00:21:42] Speaker 03: I think a few reasons. [00:21:43] Speaker 02: Number one, the statute was promulgated in 1996, your honor. [00:21:47] Speaker 02: That was way before the advent of sim swaps, let alone cryptocurrency. [00:21:52] Speaker 02: And so I don't believe that this context that we're talking about is what was contemplated. [00:21:57] Speaker 02: The idea is that when there was a liberalization of competition with respect to telecommunication carriers, what [00:22:03] Speaker 02: was the catalyst for this, was an effort to try to ensure protections, again, of customer information. [00:22:10] Speaker 02: I don't think it was contemplating a situation where non-customer information was at stake. [00:22:16] Speaker 02: And I would submit this. [00:22:17] Speaker 02: This discussion, I think, betrays another point, which is, at a minimum, to try to interpret the statute in that way, I think would create [00:22:25] Speaker 02: a potential due process issue because obviously you have to have clear notice of the potential liabilities here. [00:22:31] Speaker 02: We certainly don't read the language to encompass this. [00:22:35] Speaker 02: The FCC has not said that it encompasses this. [00:22:37] Speaker 02: There's no decision of law that says that it encompasses this, which is not to say that [00:22:42] Speaker 02: Telecommunication carriers aren't concerned about SIM swaps and potential implications, which is why 99.9 percent of SIM swaps are authorized. [00:22:52] Speaker 02: We're talking about one-tenth of one percent of an even smaller fraction that are unauthorized. [00:22:57] Speaker 02: And so when you say, well, why wouldn't this be protected? [00:23:01] Speaker 02: I think the reason is that I think it's not within the congruence of what was originally contemplated back then. [00:23:06] Speaker 02: You're clearly saying the law hasn't caught up [00:23:08] Speaker 02: to this problem. [00:23:10] Speaker 02: I think that's fair, Your Honor. [00:23:11] Speaker 02: When you say not caught up to it, I think that's a fair distillation of it. [00:23:15] Speaker 02: I don't think that the law, as presently stated, reaches this. [00:23:21] Speaker 02: Because for the simple reason, and I'm not taking issue with what Your Honor is saying about the broader concept and potential concern here, but I don't think you can force that into this context because the statute plainly talks about protecting a customer's information. [00:23:38] Speaker 02: It's talking about the customer's usage. [00:23:40] Speaker 02: It's talking about how many services they use, what type of lines they use. [00:23:43] Speaker 02: It's not talking about an imposter coming in having nothing to do. [00:23:48] Speaker 02: There's no revelation or disclosure to Mr. Pinsky in those text messages. [00:23:52] Speaker 03: Let me change context. [00:23:53] Speaker 03: Please. [00:23:54] Speaker 03: So I've got a home security system. [00:23:58] Speaker 03: And it can be configured, which I haven't done, but it can be configured in such a way as to not need a key. [00:24:04] Speaker 03: but I could use a keypad to deactivate the alarms and the lock and so forth. [00:24:13] Speaker 03: Isn't something that gives access to an outsider to whatever it takes to change the key code, isn't that my information? [00:24:25] Speaker 03: I mean, I'm the one that's at risk if it gets changed. [00:24:27] Speaker 03: And that sounds like the distinction you're drawing here. [00:24:30] Speaker 03: And I get on one level, well, if it's whatever the security company, ADT, if they have these things in the background that lets the thief change the code, OK, it's maybe ADT's information. [00:24:46] Speaker 03: But on some level, it seems like it has to be mine, too, because I'm the one that's exposed. [00:24:52] Speaker 02: Your Honor, respectfully, I think that in that context as well as this context, we can't conflate control with information or access with information. [00:25:01] Speaker 02: The reason that it's customer proprietary information or customer proprietary network information, the emphasis being on customer in the beginning and information at the end. [00:25:12] Speaker 02: I'm the one at risk. [00:25:13] Speaker 02: I mean, knowledge is power, and the power is going to be used against me. [00:25:17] Speaker 02: But the point is that giving control over a phone number or giving control over an instrument that allows one to unlock a house, that's not the same as giving access to an electronic account. [00:25:28] Speaker 02: It's just not, which raises the other point about why all of these claims that Mr. Turpin has can also be disposed of on proximate causation grounds, because just to extend the hypothetical that you're talking about, [00:25:39] Speaker 02: As we say, and as the district court found, actually, the district court didn't rule on approximate causation. [00:25:44] Speaker 03: The district court tried not to go there. [00:25:46] Speaker 03: I understand your argument, but I've got to tell you, it's hard for us to take that kind of argument on without asking the district court to dig into it more deeply. [00:25:54] Speaker 03: So you can use your time that way, but I'm not prepared to sign on to the approximate causation claim. [00:26:00] Speaker 02: I can take a hint, and I will move away from that and go on to other questions. [00:26:03] Speaker 03: We have other questions we need help on. [00:26:05] Speaker 02: Please, that's quite all right. [00:26:06] Speaker 02: And I just want to say that for those reasons, the district court correctly found, after studying this and seeing this, that the text messages and the [00:26:16] Speaker 02: technical configuration arguments. [00:26:18] Speaker 02: If you take all of what my friend said and you distill it, the court found that it did not reveal the details of Mr. Turpin's phone bill, user agreement, technical service specifications, call history, data usage, or any other confidential proprietary information. [00:26:37] Speaker 03: Those facts reveal his next phone bill. [00:26:41] Speaker 03: It'll have whatever communications happens subsequently, presumably [00:26:46] Speaker 03: I confess I don't look very carefully at the phone bill. [00:26:49] Speaker 03: There's a long list of calls and messages and whatnot. [00:26:53] Speaker 03: Wouldn't it reveal those communications that Mr. Pinsky was responsible for but wind up on Mr. Turpin's phone bill? [00:27:00] Speaker 02: But they wouldn't be customer information. [00:27:04] Speaker 02: They would be information about, first of all, it would be information that Mr. Pinsky generated. [00:27:12] Speaker 02: It wouldn't disclose, as the district court found, anything with respect to Mr. Turpin. [00:27:17] Speaker 01: Even though they were happening on Mr. Turpin's account because the account has now been [00:27:23] Speaker 01: been compromised, that's it. [00:27:25] Speaker 02: Well, that's it with respect to whether or not customer information is at issue. [00:27:32] Speaker 02: I mean, it's simply not the case that once the swap occurs, that the information generated until the customer regains control over that number, that's not customer generated information. [00:27:44] Speaker 02: And I think, as the court said, perhaps [00:27:47] Speaker 02: The law has not caught up to that point, but that's where we find ourselves because the statute under any definition, whether it be CPI, which is in section A, or section C and H, it simply doesn't reach this scenario. [00:28:03] Speaker 02: And with respect to the other claims, again, I think there was some colloquy on this, the fraud and the negligence claims [00:28:10] Speaker 02: are not availing because of the economic loss doctrine. [00:28:14] Speaker 03: I think in the process we'll probably take you over time, but this is a complicated case and I think we're prepared to do that. [00:28:20] Speaker 03: I did want to get to the economic loss doctrine, in particular, which I understand and on its face appears to apply here, but I look at Sheen and Sheen makes a point of saying, yeah, this is a better [00:28:34] Speaker 03: task for the legislature to take on. [00:28:37] Speaker 03: And so the legislature hasn't spoken to this, so we're not going to do it. [00:28:46] Speaker 03: And we hear from your colleague that analogous here is the argument that Congress [00:28:55] Speaker 03: in the FCA has set out a duty and whether A is an overview, 222A is an overview or [00:29:07] Speaker 03: a specific separate obligation, it does use the word duty. [00:29:12] Speaker 03: And so why shouldn't we take that as a basis for saying, well, Congress has told us this is a duty that can be acted upon, and so the economic law doctrine does not bar this kind of claim? [00:29:24] Speaker 02: Well, for a few reasons, Your Honor. [00:29:25] Speaker 02: First of all, there is no authority for the proposition that you can import from a federal statute a state law negligence claim. [00:29:36] Speaker 02: And in fact, we cite the Asplen case, which is a California case that says that that proposition is highly dubious. [00:29:43] Speaker 02: And indeed, it should be, because just imagine if you were to take that to its logical conclusion, it would mean that for potentially any violation of a federal statute, you have a negligence claim. [00:29:54] Speaker 02: it would essentially eviscerate the distinction between tort and contract. [00:29:58] Speaker 02: Further, if there were a congressional motivation or intent to provide that, one would think that it would be clearly articulated in the statute, which it is not. [00:30:09] Speaker 02: And so the federal statute uses the word duty. [00:30:12] Speaker 02: But it doesn't state that it's providing a negligence duty in any context. [00:30:20] Speaker 03: The concept of negligence per se is hardly a novel one. [00:30:22] Speaker 03: It's been known for a long, long time. [00:30:26] Speaker 03: I understand the argument that says the state of California doesn't inherently incorporate as an established duty under state law this statement in a federal statute. [00:30:37] Speaker 03: But it's not hard to understand the connection. [00:30:39] Speaker 02: Well, again, Your Honor, I think it's simply for the fact that there's no, in answering your question, why wouldn't that be the case if there's a reference to a duty, there's no indication that that allows importation [00:30:54] Speaker 02: and the creation of a negligence claim where it doesn't exist in state law. [00:30:58] Speaker 02: And I think there are eerie implications here, too. [00:31:00] Speaker 02: Where a federal court is sitting and looking at a state statute, obviously there's constraint to be able to interpret that statute in a manner that would be consistent with the state. [00:31:10] Speaker 02: Here we have no less than the California Supreme Court [00:31:14] Speaker 02: in the Sheen case, making the point that obviously these claims are foreclosed. [00:31:18] Speaker 02: And there is simply no decisional law, nothing, that indicates that you could morph this FCA claim, which has to stand, and we submit, fail on its own, and allow that to somehow resuscitate a negligence claim. [00:31:32] Speaker 03: Well, I've read Sheen multiple times. [00:31:39] Speaker 03: It did seem to go to some effort [00:31:42] Speaker 03: albeit on a subject that was plainly within the common treatment of state law and something the legislature would speak to in terms of a mortgage lender's duty for renegotiation or modification of long terms and so forth. [00:32:03] Speaker 03: And I do understand that California may have a reason to say, look, we're not going to import wholesale. [00:32:10] Speaker 03: whatever's provided in federal statutes. [00:32:13] Speaker 03: But it seems to me the logic of Sheen does have to deal in some fashion when applied to this context with the fact that this subject is one that's customarily federally regulated, not a subject of, I mean, state legislature could enact something, but supremacy clause would mean if the FCC or Congress acted, they'd have the last word. [00:32:40] Speaker 03: I did look at the case that you cited. [00:32:43] Speaker 03: It does give me pause. [00:32:45] Speaker 03: I'm not, I don't have a conclusion for myself yet, but it seems to me Shane went a long way, but may not go quite as far as it needs to here. [00:32:55] Speaker 03: And that's why I want to open the door to see what, if anything more you might have to say to me about that. [00:33:00] Speaker 02: Your honor, I think that we have briefed that point. [00:33:03] Speaker 02: And I think that in talking about the supremacy clause in that, in that hypothetical, [00:33:08] Speaker 02: I think that answers the question, quite frankly, is that there is a federal regime on this. [00:33:14] Speaker 02: There is a federal statute on that. [00:33:17] Speaker 03: Do you think 206 and 222, whatever they're there, that covers the field? [00:33:21] Speaker 03: Not a preemption type argument, but the state doesn't look to incorporate federal law because federal law has already covered the subject? [00:33:30] Speaker 03: 100%, Your Honor. [00:33:31] Speaker 02: That's exactly what I'm saying. [00:33:33] Speaker 03: And the concern I have, although I'm not, like I say, persuaded, to the extent that the federal law [00:33:38] Speaker 03: hasn't caught up to modern life with regard to smartphones. [00:33:45] Speaker 03: And the state just lives with it, doesn't try to fill the gap in any fashion. [00:33:53] Speaker 02: And Your Honor, I understand that point with respect to the broader consequence. [00:33:57] Speaker 02: But I also think that this is a very case-specific point. [00:34:00] Speaker 02: Because I think that with respect to these particular facts, [00:34:04] Speaker 02: The challenge that Mr. Turpin has is that, and I say this with full respect to the colloquy that I'm having, his record is simply bereft of any evidence whatsoever that there was a transferal of information. [00:34:19] Speaker 02: It's undisputed that the claims that he's asserting arise out of a contractual relationship. [00:34:24] Speaker 02: There's no authority for this importation. [00:34:28] Speaker 02: given the division between the federal and state spheres as the court has articulated. [00:34:33] Speaker 02: In other words, this is simply not the case to have that sort of unwarranted expansion or debate about application because it's just not on this record a compelling case or one where it's even warranted. [00:34:48] Speaker 02: It's simply not the case to do that. [00:34:52] Speaker 02: And I shifted in terms of talking about the economic loss doctrine. [00:34:57] Speaker 02: But I want to make sure, because I'm looking at you there. [00:35:00] Speaker 02: And I want to make sure with respect to any questions the court further has about the FCA or about the economic loss doctrine or about anything, I want to make sure that I'm fully addressing the court in any way that I possibly can. [00:35:13] Speaker 01: Why don't you just take a minute and make whatever final points you'd like to make. [00:35:16] Speaker 01: Thank you. [00:35:17] Speaker 01: A minute or two. [00:35:17] Speaker 02: Go ahead. [00:35:22] Speaker 02: Just need to get back to my points here. [00:35:24] Speaker 03: A case with as many issues as this one. [00:35:29] Speaker 02: It was all scattered. [00:35:30] Speaker 02: Just a few pages. [00:35:32] Speaker 02: A few pages of notes. [00:35:34] Speaker 01: I got mine. [00:35:35] Speaker 02: Well, again, I think I just want to make the point that, as we noted, they're on this record. [00:35:44] Speaker 02: When you cut to it, there is simply no evidence of the disclosure of any protected information under any definition. [00:35:53] Speaker 02: And as we said, the common law negligence claims and the fraud claims, all are disposed of by the economic loss doctrine. [00:36:00] Speaker 02: And with respect to this further point about the pleading claims that were mentioned, we would just submit that the district court was right on that. [00:36:11] Speaker 02: with respect to the various reasons why these fraud claims fail. [00:36:14] Speaker 02: They're set forth at pages 52 through 61 of our brief. [00:36:19] Speaker 02: We also feel that there are a number of arguments, by the way, not the least of which is this discussion about technical configuration and so forth, that were not exactly fully developed. [00:36:29] Speaker 02: And so in terms of trying to bring it here, we think that that should also be taken into consideration. [00:36:33] Speaker 02: But ultimately, again, no evidence whatsoever of any disclosure of information. [00:36:39] Speaker 02: And then finally, [00:36:41] Speaker 02: I know there's been a lot of talk about concern about the potential ramifications of swaps and so forth. [00:36:48] Speaker 02: And I want to underscore that carriers are very concerned about that, recognize the issue [00:36:56] Speaker 02: I want to reiterate the point that's undisputed at page three of our brief that 99% of these swaps are authorized, more than 99.9% of them. [00:37:06] Speaker 02: We're only talking about a tiny fraction of unauthorized swim swaps, a tiny fraction of those result in financial loss, and an even more rarefied, tiny sliver result in any cryptocurrency losses. [00:37:19] Speaker 02: And so we would urge that particularly on this record, given the panoply of reasons, [00:37:25] Speaker 02: for affirmance that that is warranted here and that is entirely appropriate and that again a forced discipline looking at the record in this case Indicates no basis whatsoever for anything other than affirmance. [00:37:40] Speaker 02: Thank you. [00:37:41] Speaker 01: Thank you very much Let's put five minutes on the clock and thank you I was looking yours. [00:37:51] Speaker 04: Okay. [00:37:51] Speaker 01: I'm gonna make you work. [00:37:52] Speaker 01: Yeah, exactly [00:37:54] Speaker 04: I love being here, Your Honor, so thank you very much. [00:37:57] Speaker 04: Although I'd much rather be downtown in front of a jury, because I think that's where this case belongs. [00:38:03] Speaker 04: I think there's tribal issues of fact about. [00:38:05] Speaker 04: Let me go through rapid fire. [00:38:06] Speaker 04: First of all, there's another key document in this case. [00:38:10] Speaker 04: It's ER 1936 to 1938. [00:38:14] Speaker 04: This is an AT&T printout, Your Honor. [00:38:18] Speaker 04: of what happened on January 7th, 2018 when Mr. Pinsky got the handoff from Mr. Smith. [00:38:26] Speaker 04: This shows you in great detail the back and forth between my client's phone, it's my information, it's being used by somebody else, they're in my house, between Mr. Pinsky [00:38:41] Speaker 04: using the transferred IMEI and the SIM, and Google and Microsoft, back and forth, back and forth, back and forth, page after page of these transactions, OK? [00:38:54] Speaker 04: This is what he was seeing. [00:38:56] Speaker 04: This is what he was doing. [00:38:58] Speaker 04: He could get from this the date of a call, the time of a call. [00:39:02] Speaker 00: Who was sent to? [00:39:05] Speaker 00: I think the argument from your friend on the other side that really we should just accept that maybe the statute hasn't caught up with the day and age, and we're trying to fit a square peg in a round hole, and that's not what CP&I was intended to, and solely because it may not feel very good, but it wasn't the customer's information if the information was solicited by and accepted to somebody who's not the customer. [00:39:34] Speaker 04: First of all, I think that may be a triumphal issue of fact, whose information it is, number one. [00:39:39] Speaker 04: Number two, a necessity has to be our information. [00:39:42] Speaker 04: And in the final rulemaking on sim swaps, which we had a little motion practice about, the FCC says, quote, [00:39:51] Speaker 04: And I'm not giving up on Chevron, Your Honor, okay? [00:39:54] Speaker 03: But it says, quote, We don't want to give up on Chevron either, but it's not our choice. [00:39:59] Speaker 04: I like metrophones. [00:40:00] Speaker 04: I like, anyway. [00:40:01] Speaker 04: Well, hopefully we won't get there. [00:40:03] Speaker 04: But I want to make it clear. [00:40:04] Speaker 04: The FCC supports my position on this. [00:40:07] Speaker 01: What's the argument that it is your client's information? [00:40:10] Speaker 01: I mean, he wasn't the one making these calls and sending these messages after this. [00:40:14] Speaker 04: These were messages using his purloined number, Your Honor. [00:40:19] Speaker 04: It is his information. [00:40:21] Speaker 04: It belongs to him. [00:40:22] Speaker 04: It's being used by somebody else. [00:40:25] Speaker 04: I believe that's the law. [00:40:27] Speaker 04: I think it's the appropriate interpretation. [00:40:29] Speaker 04: It's certainly a factual dispute, number one. [00:40:31] Speaker 04: But I want to read you paragraph 87 of the final rule on SIM swaps, which we've submitted to you. [00:40:39] Speaker 04: The FCC has determined [00:40:41] Speaker 04: This fraudulent SIM swaps, like here, result in unauthorized disclosure of access to customers' accounts and, Your Honor, including individually identifiable CP&I. [00:40:56] Speaker 04: That's the ruling of the FCC. [00:40:59] Speaker 04: That's their interpretation of the statute. [00:41:01] Speaker 04: Once you have unauthorized access, as we did here with this SIM swap, you have a violation of CP&I. [00:41:08] Speaker 04: Paragraph 87, that's what the FCC says. [00:41:11] Speaker 03: The FCC also said... The severon may impact subsection C, not just A. [00:41:16] Speaker 04: It could. [00:41:17] Speaker 04: It could. [00:41:18] Speaker 04: But Your Honor, I think the other thing that we need to know, there's another FCC ruling. [00:41:22] Speaker 04: Are text messages protected? [00:41:24] Speaker 04: CP&I, absolutely. [00:41:26] Speaker 04: In the geolocation order, which we cite in our brief at 19 and 20, the FCC said just that. [00:41:34] Speaker 04: We cannot take a narrow gauge in interpreting what is protected customer proprietary information. [00:41:41] Speaker 04: And there they make it clear that text would be. [00:41:45] Speaker 04: Next, the FCC has also said that once there's an unauthorized SIM swap and you get in to my account, whatever happens there afterwards is the responsibility of the carrier. [00:41:57] Speaker 04: We don't have to parse out, Your Honor, who owns the communication. [00:42:01] Speaker 04: Once you're inside, okay, you're in the world of CP&I and you have violated the statute. [00:42:07] Speaker 04: The district court hung on the words, disclose. [00:42:12] Speaker 04: Well, we don't know what Smith saw. [00:42:13] Speaker 04: Well, we do know of necessity he saw protected CP&I when he got in unauthorized. [00:42:19] Speaker 04: But remember, the statute also says what? [00:42:22] Speaker 04: Use and disclose and access. [00:42:26] Speaker 04: There's no question here under our version of the facts. [00:42:30] Speaker 04: And I think the clear interpretation of the statute on its face and by the FCC [00:42:35] Speaker 04: that you had a violation of CP&I. [00:42:38] Speaker 04: That in and of itself is grounds for reversal to get a trial in this case. [00:42:43] Speaker 04: On Sheen, a duty is a duty is a duty. [00:42:48] Speaker 04: whether it comes from the state legislature or the California Supreme Court, the Ninth Circuit. [00:42:53] Speaker 04: But here we got the best duty in the world you could have. [00:42:55] Speaker 04: We have it from Congress. [00:42:56] Speaker 04: Clearly, they created a duty of due care. [00:42:59] Speaker 04: In fact, it may be strict liability based on reading the statute and what the FCC says. [00:43:04] Speaker 04: Once you have unauthorized access, you have a violation of CP&I. [00:43:09] Speaker 04: Unless the court has, I'm like the FedEx guy. [00:43:12] Speaker 04: I'm sorry I talk so fast, Your Honor. [00:43:15] Speaker 03: Well, we don't want Mr. Pinsky to be a judge. [00:43:18] Speaker 03: We might need a 15-year-old to explain some of this to us. [00:43:20] Speaker 04: Your Honor, he's 15, and I have another case where the kid is 17. [00:43:24] Speaker 03: It raises another question, so I'll make it work a little bit over time. [00:43:30] Speaker 03: It was noted by your colleagues that a substantial amount of civil judgments have been obtained. [00:43:38] Speaker 03: I assume Pinsky's one of them. [00:43:40] Speaker 04: I'm going to starve. [00:43:43] Speaker 04: Those are on my wall framed, as we used to say in the day. [00:43:46] Speaker 04: Ace hasn't gone away. [00:43:48] Speaker 04: No, sir. [00:43:48] Speaker 04: We have only $2 million collected from Mr. Pinsky. [00:43:51] Speaker 04: I have a judgment for 20 against him, uncollectible. [00:43:54] Speaker 04: And there's a guy sitting in federal prison in New York City named Truglia. [00:43:58] Speaker 04: We have a $75,000 treble RICO judgment against him. [00:44:02] Speaker 04: I assure you, if I ever collect that, AT&T will get full credit. [00:44:06] Speaker 04: But right now, I'd like a shot at getting some money from AT&T. [00:44:10] Speaker 03: Except for from the case, curiosity impels me to ask, what did Pinsky do with the money? [00:44:16] Speaker 03: Did they get off someplace? [00:44:18] Speaker 04: Here's what he did. [00:44:18] Speaker 04: We got $2 million of it. [00:44:20] Speaker 04: He bought expensive watches. [00:44:22] Speaker 04: He bought a car that will knock your socks off. [00:44:24] Speaker 04: Oh, watches. [00:44:25] Speaker 04: Sir, these kids, when they do the crypto, they like sneakers, like $399 sneakers, and they also like watches. [00:44:34] Speaker 04: And they trade in watches. [00:44:35] Speaker 04: And this is in the record. [00:44:36] Speaker 04: By the way, we took Pinsky's deposition. [00:44:39] Speaker 04: So at trial, I don't have to speculate in front of a jury what actually happened and how he did it. [00:44:43] Speaker 04: And you know, with a little Venmo payment of $500, you can open the keys to people's CP&I. [00:44:50] Speaker 04: And that's what happened here, I think. [00:44:51] Speaker 01: Well, thank you very much for your arguments. [00:44:53] Speaker 01: We really do thank both counsel for their arguments. [00:44:55] Speaker 01: And we thank the court for putting all their time. [00:44:57] Speaker 01: We want to work on commissions. [00:45:02] Speaker 01: Thank you all very much. [00:45:03] Speaker 01: Have a nice day. [00:45:03] Speaker 01: Thank you so much. [00:45:04] Speaker 01: And we are adjourned. [00:45:05] Speaker 01: Thank you.