[00:00:00] Speaker 01: Good morning, Your Honors. [00:00:02] Speaker 01: My name is Bill Peterson. [00:00:04] Speaker 01: I'm from the law firm of Snow and Wilmer, and I represent the appellant in this case, SCAP-9. [00:00:12] Speaker 01: In preparing my arguments today, I read all the briefs and wish I had rewritten them, because if there's one thing... That isn't always the case. [00:00:23] Speaker 01: We should make it a lot shorter. [00:00:25] Speaker 01: There were a lot of issues raised in the briefs. [00:00:29] Speaker 01: I'm not 100% sure what interests the court the most, but I assume it has to be state action. [00:00:38] Speaker 01: I think that's maybe the main issue. [00:00:39] Speaker 01: There's an interesting Bivens issue that was also raised in the briefs, in the answering brief, and in the reply. [00:00:49] Speaker 01: As I said is also a very interesting case too, but it had nothing to do with the district court order if there's a [00:00:58] Speaker 01: When I say that I wish I had opportunity to rewrite these briefs, there's one thing that I wasn't going to start with, but I'm going to, because it's the single, in my view, now most important takeaway from the case with respect to state action. [00:01:16] Speaker 01: Because I've read a lot of state action cases now and a lot of law review articles, and it seems to be more law review articles than there are cases. [00:01:25] Speaker 01: And I think one of the reasons for that, according to the law review articles, is the law on state action is kind of a mess. [00:01:31] Speaker 01: It's very chaotic. [00:01:34] Speaker 01: The most interesting article came out, I think, just a couple months ago from the Notre Dame Law Review, and I thought it put together pretty well. [00:01:41] Speaker 01: But if I were sitting on a bench, the question I would ask would be why no court has ever held [00:01:49] Speaker 01: to be a state actor. [00:01:52] Speaker 01: So why should you? [00:01:53] Speaker 01: And to me the most important case on this in the [00:01:59] Speaker 01: In the many cases that have discussed state action would be the Blount case, which was cited by the DC Circuit Court of Appeals. [00:02:10] Speaker 01: And in the Blount case, which I thought was the most important, because it was the most similar to what's happening here, there was a rule that was enacted by the regulatory agency, which was also regulating securities. [00:02:27] Speaker 01: But in that case, it was municipal bonds [00:02:31] Speaker 01: And what the agency did, it was similar to FINRADS, MTSB regulates municipal lines. [00:02:38] Speaker 01: But what they did there was they, not the agency, excuse me, the group, the industry group, NTSB enacted a rule that said if you're going to solicit and sell bonds to the government, then you can't contribute to their campaign funds. [00:02:59] Speaker 01: You can't do that. [00:03:00] Speaker 01: That's a conflict. [00:03:02] Speaker 01: And so the issue was raised as to whether or not that was a First Amendment violation. [00:03:06] Speaker 01: of the broker who wanted to contribute to the fund that happened to be a fund that he was soliciting for work. [00:03:13] Speaker 01: And he said that was a First Amendment violation. [00:03:16] Speaker 01: And of course, the agency, excuse me, the entity said, no, we're not subject to a First Amendment prohibitions and restrictions because we're not the government. [00:03:29] Speaker 01: What the court held in that case, without analysis at all, just a conclusion. [00:03:37] Speaker 01: But the conclusion that they reached was, no, because your rules are enacted, although for the industry carry the force and effect of law, [00:03:48] Speaker 01: under the SEC, then you are essentially an operative and agent to the government. [00:03:55] Speaker 01: And therefore, we're going to go on and address the merits of the case. [00:04:00] Speaker 01: And the merits of the case had to do with whether or not the restriction was a violation of the First Amendment. [00:04:05] Speaker 01: So without analysis, they just passed by it. [00:04:09] Speaker 01: And they just concluded that it's a state agency. [00:04:14] Speaker 04: My question maybe goes a step backward from that, and I'm wondering why we would even need to reach that question because under the case law, SPARTA says there's no private right of action against an SRO. [00:04:32] Speaker 04: And so if that were the case and if that were the governing law, then I don't think we'd need to get to the [00:04:41] Speaker 04: interesting question that you're raising. [00:04:43] Speaker 01: Well, that's where my client is asking you to go to the next, also to the next step. [00:04:49] Speaker 01: You want to go backwards. [00:04:50] Speaker 04: No, I don't want to go backwards. [00:04:51] Speaker 04: I never get, I mean, if there's no private right of action, then I don't need to get to the question of whether there's a state actor. [00:05:01] Speaker 04: If there were ostensibly a private right of action in the broad sense, then I'd need to know [00:05:07] Speaker 04: do we have a state actor here, and do we have a Bivens claim, et cetera. [00:05:11] Speaker 04: But if you don't have a claim in the first place, I don't think we even would get to the second question. [00:05:18] Speaker 01: Well, in Sparta, that had to do with the situation where FINRA [00:05:26] Speaker 01: precluded trading and then changed their mind and said, now you can trade, but the damage was done. [00:05:30] Speaker 01: And this court said there's no pride of action for that kind of conduct because you're engaging in your regulatory authority that's been delegated to you by the SEC. [00:05:41] Speaker 01: Therefore, there's no private right of action for that kind of action. [00:05:46] Speaker 01: But my claim here is basically what this court said in Sparta was, you're immune. [00:05:55] Speaker 01: You're immune because you've been delegated this governmental authority in order to make those kinds of decisions. [00:06:02] Speaker 01: And just like the government, then, you're immune. [00:06:05] Speaker 01: What we're asking the court to do now is, OK, you're immune from private right of actions. [00:06:11] Speaker 01: But if you take that delegation from the government, you can't take more than what the government has to give you. [00:06:19] Speaker 01: It's, you know, that's horn book law. [00:06:21] Speaker 01: You cannot be delegated more authority than the delegator has. [00:06:25] Speaker 01: And the delegator in this case being the SEC itself is not immune from takings claims. [00:06:34] Speaker 01: And that is where this case is different. [00:06:39] Speaker 01: And we're saying, if you're claiming immunity, you take the good with the bad. [00:06:44] Speaker 01: If you're immune because you're acting as an operative of the government, basically exercising delegate authority from the government, then why shouldn't you be held responsible to the same extent that the government would exercise if, as delegator, they were performing the same duty? [00:07:03] Speaker 01: You know, Sparta is definitely a problem. [00:07:06] Speaker 01: I mean, that's what this Court has said. [00:07:09] Speaker 04: I appreciate your acknowledgement. [00:07:12] Speaker 01: But it didn't reach that particular question, because it was not a takings analysis there. [00:07:17] Speaker 01: It was basically a tort claim. [00:07:20] Speaker 01: It was not a constitutional claim. [00:07:23] Speaker 01: And when this Court has said multiple times, [00:07:26] Speaker 01: that the state, excuse me, that FINRA is immune, and they have many times, not this court, all courts have said that, they have not gone so far as to say that [00:07:36] Speaker 01: say that you are not also responsible for whatever wrongs that the government as delegator might itself have, because they can't give you the immunity at the same time without taking the responsibility for the constitutional infirmities in delegating that very authority. [00:08:00] Speaker 04: If I take your argument that the Sparta's private right of action doesn't apply here to these constitutional claims, we'd still be in the soup of the Supreme Court's Bivens jurisprudence, in which is they've basically said, we're kind of closing the door on Bivens, and we're only going to have this very limited extension. [00:08:26] Speaker 04: We go out on a limb here in light of what the Supreme Court has said. [00:08:31] Speaker 01: Well, you are correct. [00:08:34] Speaker 01: I think this court, the last time it visited Bivens, remarked that the Supreme Court has said, we don't like Bivens cases. [00:08:48] Speaker 01: We do not want to extend the Bivens analysis, which would be a damage claim for constitutional violations, really more than what they've already articulated in Bivens, I guess. [00:09:05] Speaker 01: However, what the jurisprudence since that time [00:09:11] Speaker 01: had said, look, one of the key things that the court looks at to determine whether or not they recognize a Bivens case is whether or not there's an alternative [00:09:23] Speaker 01: whether the plaintiff in the case, the one who is damaged, has some other alternative. [00:09:28] Speaker 01: And that's the case, basically, that my adversary cited in his brief, EFLEX, I believe. [00:09:36] Speaker 01: And that was a distinguishing factor, because what the Seventh Circuit said in that case was the same thing that you're saying now. [00:09:43] Speaker 01: We don't want to extend Bevin's. [00:09:45] Speaker 01: And in this particular case, and this is EFLEX, in this particular case, we're not going to extend it because. [00:09:51] Speaker 01: because the plaintiff in that case, which was, I forget, I think it was a marketer, basically had a remedy. [00:10:00] Speaker 01: Now, I think it was an illusory remedy. [00:10:03] Speaker 01: I don't think the Seventh Circuit was being intellectually honest, because I don't think they had a remedy. [00:10:08] Speaker 01: But the remedy the Seventh Circuit said the guy had was, well, you're in a grief party. [00:10:14] Speaker 01: Same argument being raised here. [00:10:15] Speaker 01: You're in a grief party. [00:10:17] Speaker 01: And although it hasn't been recognized that a non-party to the proceeding can be in a grief party, we think maybe you can. [00:10:24] Speaker 01: But that's not the case here. [00:10:28] Speaker 01: That's why I think that notwithstanding the admonition from the Supreme Court and other courts, don't extend Bivens too far. [00:10:38] Speaker 01: Don't extend it beyond its limited parameters as they exist today. [00:10:42] Speaker 01: We're not asking you to extend Bivens. [00:10:45] Speaker 01: This Court, in one of the cases we cited, recognized that Bivens' case [00:10:51] Speaker 01: I think that the case was McGivern. [00:10:52] Speaker 01: It is cited in a case that I cited in the brief, which was basically an employee of one of the utilities, I think it was PG&E, was not permitted to do something because he had tested positive for drugs. [00:11:10] Speaker 01: And the policy under which he was not permitted to operate was a policy that came from the Nuclear Regulatory Agency. [00:11:20] Speaker 01: And so what this court said in that case was, well, if you can show in trial, because this was like a pleading dismissal like my case is, if you can show at trial that that policy that was enforced by the utility [00:11:35] Speaker 01: was compelled or forced down by NERC, then you got a Bivens claim. [00:11:41] Speaker 01: And I don't know how the case ultimately turned out, but this court made that very distinction. [00:11:48] Speaker 01: And so basically there's two things going on here. [00:11:53] Speaker 01: One is I'm saying we don't have an alternative remedy here. [00:11:56] Speaker 01: And what we're also trying to demonstrate to the court is this is a violation of our constitutional rights, the deprivation of our property that came down [00:12:05] Speaker 01: basically from FINRA that was delegated that authority by the SEC. [00:12:11] Speaker 01: So that's my bid-in's answer. [00:12:15] Speaker 03: Did you want to reserve some time? [00:12:18] Speaker 01: I have two minutes? [00:12:19] Speaker 01: Yes. [00:12:20] Speaker 01: Sure, thank you. [00:12:20] Speaker 03: You bet. [00:12:42] Speaker 00: Good morning, Your Honors, and may it please the Court, David Norris for FINRA. [00:12:47] Speaker 00: There's only one live claim in this appeal under the Fifth Amendment of the U.S. [00:12:52] Speaker 00: Constitution for either a taking or a due process violation. [00:12:56] Speaker 00: And I want to sort of start where Judge McEwen's questions began, which is there are a number of points that SCAP has to establish in order to demonstrate a basis to reverse the district court. [00:13:09] Speaker 00: First, it has to show that FINRA lacks immunity. [00:13:12] Speaker 00: Second, it has to show that SCAP has a private right of action. [00:13:15] Speaker 00: Third, it has to show that contrary to 50 years of unanimous precedent, FINRA is a state actor. [00:13:22] Speaker 00: Fourth, it has to show that it raised those state action arguments below. [00:13:25] Speaker 00: And fifth, it has to show that it has a cognizable Fifth Amendment claim. [00:13:30] Speaker 00: Again, SCAP has to do all five of those things, and it can't do a single one. [00:13:34] Speaker 00: So I'll start this morning by addressing the grounds the district court actually reached, private right of action and immunity, because those are the simplest bases for this court to affirm. [00:13:46] Speaker 00: Turning to private right of action, I think Judge McEwen's question hit the nail on the head, is that the lack of the private right of action here is an independent basis to affirm, regardless of state action. [00:14:00] Speaker 00: And with respect to the Bivens arguments that Mr. Peterson raised, the problem is they're all foreclosed by U.S. [00:14:07] Speaker 00: Supreme Court precedent. [00:14:08] Speaker 00: Correctional Services v. Molesko, the U.S. [00:14:11] Speaker 00: Supreme Court held that it would not imply [00:14:14] Speaker 00: a constitutional cause of action against a private entity. [00:14:18] Speaker 00: That's because the purpose of Bivens was to create a cause of action to deter constitutional violations by individual officers and what the Supreme Court held in Molesko was, quote, if a corporate defendant is available for suit, [00:14:31] Speaker 00: Claimants will focus their collection efforts on it, and not the individual directly responsible for the alleged injury. [00:14:38] Speaker 00: In other words, a Bivens action against a private entity undermines the very purpose of Bivens, and so the Supreme Court held it would not use that against the private entity implied Bivens claim. [00:14:49] Speaker 00: We raised Molesko in our answering brief. [00:14:52] Speaker 00: SCAP did not address it in its reply brief because it's controlling its dispositive of the issue. [00:14:57] Speaker 00: The argument that's been raised in the brief that was addressed here, I want to just address briefly, which is that they should have a private right of action because otherwise they don't have an ability to appeal this as an aggrieved party. [00:15:08] Speaker 00: But there's two problems with that. [00:15:09] Speaker 00: The first is that that's irrelevant to a private right of action analysis. [00:15:13] Speaker 00: It's axiomatic. [00:15:14] Speaker 00: We cite DigiMark in the briefs, although there's a number of other decisions. [00:15:18] Speaker 00: That happens all the time, where there's an alleged law broken, there's an alleged injury, and there's no private right of action to redress that. [00:15:25] Speaker 00: And so it doesn't matter, even if that was true. [00:15:28] Speaker 00: The other point is in ethics. [00:15:32] Speaker 00: That's exactly what happened. [00:15:33] Speaker 00: And so SCAP has suggested that ethics is different and distinguishable because there, the non-member of the SRO who was attempting to assert a Bivens claim was an aggrieved party that could appeal. [00:15:43] Speaker 00: But that's not actually what the Seventh Circuit held in ethics. [00:15:47] Speaker 00: What the Seventh Circuit held was, quote, we do not believe it appropriate for us to delineate in any definitive way the administrative paths that may be open to ethics. [00:15:57] Speaker 00: And despite that, it said it would not imply a Bivens claim because of the comprehensive remedial structure of, in that case, the Commodities and Exchange Act. [00:16:05] Speaker 00: And the court, the Seventh Circuit specifically looked to Sparta, because in Sparta this court held that it wouldn't imply a private right of action, in that case for common law tort claims, but because of the comprehensive remedial structure of the Securities and Exchange Act. [00:16:19] Speaker 04: Could I ask a clarifying question? [00:16:23] Speaker 04: If you start with the immunity which you referenced, under the partnership case and also the Sparta case, that would appear to apply only to money damages, is that right? [00:16:39] Speaker 00: I believe that Partnership Exchange and Sparter were both claims involving money damages. [00:16:45] Speaker 00: I don't agree that immunity is limited to claims for money damages. [00:16:50] Speaker 00: This court has a firm dismissal of declaratory and injunctive relief claims previously based on immunity. [00:16:57] Speaker 00: The first time SCAP sued FINRA for supposed constitutional violations, there was a request for declaratory judgment and injunctive relief, and that case was affirmed on immunity grounds. [00:17:09] Speaker 04: What case do you think most precisely addresses immunity and equitable relief? [00:17:22] Speaker 00: Well, I guess I'd point this court to its decision in Sachs v. Dietrich. [00:17:29] Speaker 00: And in that case, the court held that FINRA arbitrators were [00:17:36] Speaker 00: in offender arbitration were immune from claims. [00:17:38] Speaker 00: And the reason was that it was necessary to quote, protect the decision maker from undue influence and protect the decision making process from reprisals by dissatisfied litigants. [00:17:53] Speaker 00: And this court doesn't need to look any further than this case to see that sort of effect in action. [00:17:59] Speaker 00: This is the seventh lawsuit filed. [00:18:01] Speaker 00: And that purpose is no more undermined or lessened by virtue of the action being a request for [00:18:08] Speaker 00: declaratory relief or injunctive relief. [00:18:11] Speaker 00: The immunity that SROs enjoy at bottom derives from the exact same immunity that federal judges and prosecutors and other discretionary functionaries enjoy. [00:18:21] Speaker 00: And I don't think that you can sue a federal judge for if you're unhappy with the outcome of your trial or with your sentence. [00:18:30] Speaker 00: You can't sue him for declaratory judgment or injunctive relief, just as you can't sue the federal judge for immunity. [00:18:36] Speaker 03: We've never said this, have we? [00:18:39] Speaker 03: I had the same question Judge McEwen is raising. [00:18:42] Speaker 03: SPARTA doesn't quite get there. [00:18:43] Speaker 03: It didn't have to, and it's relying on cases that didn't involve or only involved money damages. [00:18:49] Speaker 04: Let's walk through. [00:18:50] Speaker 04: Let's just take a thought experiment here. [00:18:54] Speaker 04: Let's say SPARTA only applied to money damages. [00:18:59] Speaker 04: then that would leave potentially equitable relief, right? [00:19:06] Speaker 04: But Bivens doesn't help because that's a money damages case. [00:19:14] Speaker 04: So having, going down the route that your colleague argues here, you would never get to Bivens because if you already have immunity [00:19:29] Speaker 04: for money damages, then Bivens is kind of irrelevant. [00:19:33] Speaker 04: Do you agree with that? [00:19:35] Speaker 00: Yeah, I agree that this court has held Bivens does not imply a prior right of action for equitable relief. [00:19:42] Speaker 00: That's correct. [00:19:42] Speaker 04: Right. [00:19:43] Speaker 04: So then we have, we're back to Sparta again kind of, [00:19:54] Speaker 04: on the question of, is there a private right of action? [00:19:56] Speaker 04: Could there be a private right of action for equitable relief? [00:19:59] Speaker 04: Because we've now, in our hypothetical, X'd out money damages. [00:20:05] Speaker 04: So could there be a claim for injunctive relief? [00:20:12] Speaker 00: Again, I don't believe so, your honor. [00:20:15] Speaker 00: Now, I agree that I have not located a decision from this court directly on point. [00:20:22] Speaker 00: Part of the reason for that, I think, is it's not raised in any of the briefing. [00:20:26] Speaker 00: SCAP has never argued that it has its claim for declaratory or injunctive relief should be treated separately than its claim for money damages. [00:20:34] Speaker 04: I agree with that. [00:20:35] Speaker 04: It's just something, of course, to me, because when we're in these, you know, Bivens land and you're only talking about money, [00:20:42] Speaker 04: then you want to ask yourself that question. [00:20:45] Speaker 04: Are there other circuits that have dealt with the equitable side of this or not? [00:20:52] Speaker 00: There's a number of district courts that have reached this exact conclusion. [00:20:56] Speaker 00: I don't believe any of them are in the briefing. [00:20:58] Speaker 00: I can give you a few citations now if that's helpful. [00:21:00] Speaker 04: Well, I think probably the best way to do that would be to file a 28-J letter now if you have additional citations, because [00:21:09] Speaker 04: We might write him down wrong, and we're not going to look them up right now anyway, so. [00:21:14] Speaker 00: Absolutely. [00:21:14] Speaker 00: The other point I should have raised earlier when I was first asked this question is, I also think Sparta is instructive on this. [00:21:21] Speaker 00: And the reason Sparta did clearly involve a claim for money damages, but the reason Sparta is instructive is, [00:21:27] Speaker 00: part of the reasoning in Sparta was that the comprehensive regulatory scheme set forth in the Securities and Exchange Act necessarily precluded collateral attacks on those proceedings. [00:21:40] Speaker 00: I think what the court said is the system of cooperative regulation set forth in the Securities and Exchange Act could not, meant so that states could not, quote, define by common law the regulatory duties of an SRO, a result which cannot coexist [00:21:55] Speaker 00: with the congressional scheme of delegated regulatory authority under the Exchange Act. [00:22:01] Speaker 00: And so I think that reasoning from Sparta applies equally to claims for declaratory and injunctive relief. [00:22:06] Speaker 00: You could see how problematic it would be if you were allowed to sue an SRO, a prosecutor, a judge, anyone else who enjoys absolute immunity, to try and define the duties of that federal officer, or in this case, the duties of this private entity, FINRA, outside the context of the SRO exchange. [00:22:24] Speaker 00: you take a case like this, if the claim for injunctive relief is, you know, void the decision of the Office of Hearing Office panel that determined that this was a violation of the FINRA capitalization rule, that would be pretty disruptive to that ongoing proceeding. [00:22:39] Speaker 00: And if that could be brought particularly at state court, you could see why that would be a problem. [00:22:43] Speaker 00: And so I do think SPARTA and the reasoning for immunity and no private right of action from SPARTA applies directly to claims for declaratory and injunctive relief, but we will, [00:22:53] Speaker 00: will submit a letter on the additional claim. [00:22:54] Speaker 04: And I'm not sure it was argued here, actually. [00:22:56] Speaker 00: It definitely was not. [00:22:58] Speaker 00: I mean, SCAP has never raised the argument that its declaratory relief claim should be treated separately. [00:23:03] Speaker 02: Do you agree with the district court that they have a remedy with the SEC as an agreed party? [00:23:11] Speaker 00: I'm not sure, Your Honor. [00:23:13] Speaker 00: They might not. [00:23:14] Speaker 00: But that goes back to, I sort of addressed this earlier, but that goes back to this court's decision in Digimark, which is that is a result often when there's no private right of action. [00:23:24] Speaker 00: And it also goes back to the Seventh Circuit's decision [00:23:27] Speaker 00: in ethics, the Seventh Circuit's decision in ethics did not hold that the non-member could appeal by virtue of the Commodities and Exchange Act it held. [00:23:34] Speaker 00: We're not going to decide that issue. [00:23:35] Speaker 00: It doesn't matter. [00:23:36] Speaker 00: They still lack a private right of action. [00:23:40] Speaker 00: Unless there's any questions on immunity or private right of action, I will turn briefly to address the state action argument. [00:23:50] Speaker 00: The last thing I'll say just briefly on private right of action is [00:23:54] Speaker 00: that I think this is clear from the panel's questions, but the state action arguments do not help SCAP with its lack of a private right of action. [00:24:03] Speaker 00: And we know that because of Molesco. [00:24:04] Speaker 00: In Molesco, it was assumed that the defendant was a state actor engaged in state action. [00:24:09] Speaker 00: The public function test was implicated in that case. [00:24:11] Speaker 00: And so that doesn't help. [00:24:12] Speaker 00: You have to have a private right of action. [00:24:14] Speaker 00: You have to get around immunity, and you have to have state action. [00:24:19] Speaker 00: On state action, private self-regulation of the securities industry has existed for over 225 years since the first stock exchanges were formed in the 1790s. [00:24:33] Speaker 00: And despite this long history, no court has ever held that FINRA is a state actor or engaged in state action when performing its private self-regulatory duties. [00:24:43] Speaker 00: Instead, every court has held the opposite, that FINRA is a private actor, and that includes [00:24:48] Speaker 00: the Second Circuit, the Third Circuit, the Fourth Circuit, the Sixth Circuit, and this circuit. [00:24:54] Speaker 00: And the reason for that uniformity is that private self-regulation preceded the Exchange Act by over 100 years, and so the private self-regulatory functions that FINRA performs are not traditional and exclusive governmental functions. [00:25:07] Speaker 00: They are private functions. [00:25:09] Speaker 00: And when the Exchange Act was formed, Congress did not [00:25:14] Speaker 00: displace that traditional process of private self-regulation, instead it charged the SEC with overseeing or regulating FINRA, and there is a long history of precedent from the Supreme Court, you know, beginning in Jackson, most recently in Halleck, that holds that regulation of a private entity, even extensive regulation of a private entity, does not transform that entity. [00:25:36] Speaker 00: into a state actor. [00:25:38] Speaker 00: And so that's what's fatal to all of the state action arguments. [00:25:41] Speaker 00: I'll just note that my colleague Mr. Peterson mentioned today at oral argument that the key case for state action in his view is the Blount [00:25:51] Speaker 00: And so I appreciate the idea that sometimes we'd all have to do over with our opening briefs, but oral argument certainly is the wrong time to identify the key authority for why state action applies. [00:26:13] Speaker 00: Unless there's any particular state action tests or exceptions that this court's interested, the last state action point I'll make briefly is that all of these state action tests are particular. [00:26:27] Speaker 00: They depend on particular facts and particular allegations, and whether the challenged action in the particular case can be said are fairly attributable to the government, that the government can be said to be responsible for those actions. [00:26:40] Speaker 00: And so all of those tests depend on some factual predicate, and clearly that factual predicate is missing in this case. [00:26:47] Speaker 00: There's no allegations in the complaint or the record that would, if true, demonstrate that Finner is a state actor or exercising government, is performing as a state actor or engaged in state action. [00:27:00] Speaker 00: Instead, as we pointed out in our answering brief, [00:27:03] Speaker 00: the complaints replete with the opposite allegations, that Finner is, quote, a private actor and not a state actor. [00:27:09] Speaker 00: And so those allegations are insufficient. [00:27:11] Speaker 00: So I don't see how you could, I don't see how an appeal, given the record that there is, make a determination that Finner is a state actor. [00:27:18] Speaker 00: So unless there's any further questions, Finner respectfully requests that the decision be affirmed. [00:27:25] Speaker 00: Thank you, Your Honors. [00:27:25] Speaker 03: Thank you for your argument. [00:27:32] Speaker 01: Thank you very much. [00:27:33] Speaker 01: I'd like to just to do two things. [00:27:34] Speaker 01: One is to address a blunt and the other is to address the [00:27:38] Speaker 01: Sparta. [00:27:40] Speaker 01: First of all, counsel reminded me that actually Blount is cited in the reply brief. [00:27:48] Speaker 01: The last couple of pages deal with Duffield. [00:27:50] Speaker 01: I forgot to mention Duffield to this court. [00:27:52] Speaker 01: Duffield's a very important case because Duffield cited Blount. [00:27:57] Speaker 01: In fact, it directly quoted from Blount, and that's in my reply brief. [00:28:01] Speaker 01: But in that particular case, what this court said in Duffield, Duffield was saying, look, [00:28:06] Speaker 01: Uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, [00:28:21] Speaker 01: Well, you could state such a claim. [00:28:26] Speaker 01: You could state such a claim in that regard, except for the fact that when you, Mr. Duffield, gave away your right to arbitration, you did it before the SEC made enrollment and membership in FINRA mandatory. [00:28:43] Speaker 01: That was the distinguishing factor. [00:28:46] Speaker 01: Since that case, the SEC has made membership in FINRA [00:28:50] Speaker 01: mandatory. [00:28:51] Speaker 01: You must be a member of FINRA. [00:28:53] Speaker 01: And so the distinguishing factor in Duffield, which from this court, was whether or not state action was held to exist as a result of the state compelling membership [00:29:08] Speaker 01: would be the answer to that problem today would be yes. [00:29:12] Speaker 01: In other words, Duffield supports me because it distinguished the claim that state action is involved because you're required to be a member of FINRA because you voluntarily gave up your arbitration rights before that rule was enacted. [00:29:34] Speaker 01: The Duffield Court directly quoted from Blount, and that quote is in my reply brief. [00:29:45] Speaker 01: The last thing I wanted to mention was SPARTA, and I think I can do this maybe in 37 seconds, and that is SPARTA, what this court said in SPARTA was the SEC was faced with a dilemma. [00:30:00] Speaker 01: It can't regulate the OOTC market unless it really expands. [00:30:04] Speaker 01: Instead of doing that, we're going to let them do it in cooperation with a private entity. [00:30:08] Speaker 01: And they're going to work in cooperation basically to regulate these markets. [00:30:12] Speaker 01: And so what this court said, and two things in spinner, if I could just have 20 seconds instead of 10 seconds, is the court said the legislative history of the 75 amendments [00:30:24] Speaker 01: underscored that self-regulatory organizations are intended to be subject to SEC's control and have no governmentally-derived authority to act independently of SEC oversight. [00:30:36] Speaker 01: The last point, Your Honor, having to do with money damages. [00:30:39] Speaker 01: In Sparta, this court directly borrowed from and quoted from the Second Circuit, and what they said in the Second Circuit was, [00:30:48] Speaker 01: Consistent with their role in the regulation of securities markets, SROs are granted immunity from suit when acting as a quasi-governmental capacity, as the Second Circuit observed in Barbara. [00:31:02] Speaker 01: Absolute immunity is particularly appropriate in the unique context of the self-regulation of the national securities exchange [00:31:09] Speaker 01: under the act, the exchange act, performs a variety of functions that would, in other circumstances, be performed by a government agency. [00:31:17] Speaker 01: Yet government agencies, including the SEC, would be entitled to sovereign immunity for all suits for money damages. [00:31:28] Speaker 01: Sparta was basically talking about money damages. [00:31:32] Speaker 04: We know. [00:31:33] Speaker 04: But I don't see anywhere in your brief that you made any distinction between money damages and equitable relief. [00:31:41] Speaker 01: Our claim is basically for constitutional damages as a result of taking. [00:31:49] Speaker 01: It's money. [00:31:50] Speaker 04: I just want to make clear, you want money, and you may or may not get it, but that's what you want is money, right? [00:31:55] Speaker 01: That's right. [00:31:56] Speaker 01: I think you're correct. [00:31:57] Speaker 01: I think this Court has decided that evidence doesn't apply to equitable relief. [00:32:02] Speaker 01: I can't cite the case, but I thought there was one. [00:32:04] Speaker 03: You're right about that. [00:32:06] Speaker 03: We're going to take that under advisement, and thank you both for your argument. [00:32:08] Speaker 03: We'll stand in recess for the day.