[00:00:10] Speaker 01:
Good morning and may it please the court. Christopher Passage with McGuire Woods on behalf of Plaintiff Appellant Cachet Financial Services. And I would like to reserve two minutes for rebuttal.

[00:00:20] Speaker 01:
The issue posed to this court essentially boils down to one core question. Have the insurers in this case established that their interpretation of the two exclusions at issue is reasonable in the context of the language of the policies we have before us here today? They have not. Cachet has presented reasonable interpretations of both of the two undefined phrases in the exclusions at issue today. With respect to the fraudulent instructions exclusion, it is reasonable to interpret instructions which prove to be fraudulent to simply mean fraudulent instructions.

[00:00:51] Speaker 01:
With respect to the authorized access exclusion, it is reasonable to limit authorized access to Cachet's computer system to mean access to Cachet's internal systems, not the mere ability to upload data to Cachet's systems. And not only are Cachet's interpretations reasonable in a vacuum, but when read in context of the policy, the insurers cannot meet their burden at this stage on the pleadings to establish that they have the only reasonable interpretation of those two policies.

[00:01:16] Speaker 01:
With respect to the fraudulent instructions exclusion, we want to look in terms of California law. California coverage interpretation law requires us, as I mentioned, to look first to the language of the contract and to review that policy language in the context of the contract. And that is said in Civil Code 1641. That goes back to cases like Jay Lamb. That goes back to the California Supreme Court's case in Bank of the West, which says the court must interpret the language in context with regards to its intended function in the policy. And here, there are a few different signposts we can look at to see what is the meaning of instructions which prove to be fraudulent in the language of the policy itself.

[00:01:54] Speaker 01:
The first is a simple, plain, logical layperson view. Instructions which prove to be fraudulent should mean fraudulent instructions. It's not a hard switch to get there. The second thing to note is that this phrase is not defined in the policy. Instructions to treat fraudulent is not defined. Instructions as a word standing alone is not defined. Third, you look to the title of this exclusion itself, which is, again, a fraudulent instructions exclusion. A layperson looking at this title would necessarily reasonably expect that this exclusion would be directed to cover fraudulent instructions.

[00:02:28] Speaker 01:
But It goes a little bit beyond that as well.

[00:02:29] Speaker 03:
What do we do about the use of quotation marks elsewhere, though? So there are no quotation marks in that heading. But elsewhere, financial instruction is or fraudulent instruction is in quotes.

[00:02:41] Speaker 01:
Well, I think there are a couple of different things that I like to say in response to that. First, Your Honor, we can have questions as to what is what are other reasonable interpretations. Right. So the insurers have argued and repeatedly argued that this should be meaning a broader thing. So it should be something broader than the defined term here. The problem is it's not unreasonable for a layperson who's looking at this language to say, well, it's an instruction which proves to be fraudulent. That's a fraudulent instruction. When you look at that, and that's why the context is important here. When you look at that language, it would be reasonable to look at that and understand that to mean the same type of thing as what we have in the defined term of fraudulent instruction.

[00:03:18] Speaker 00:
Which defined term? Let's just assume for a moment that we accept your argument that the defined term, the fraudulent instruction definition, applies to exclusion. Correct. There are two definitions, one under A6A2 and one under A6B. Correct.

[00:03:34] Speaker 00:
Which one applies? And let me just ask a second part to this question, which is because there are two definitions and you're suggesting that it applies, but the fact that we wouldn't know even as between those two which one to apply, doesn't that sort of run counter to your argument that the defined term should apply when it's not clear to me which one?

[00:03:53] Speaker 01:
Not quite, Your Honor. And here's what I'd say. First of all, in response to your question, It's both. And here there's a reason for that. If you look at the way that the exclusion actually works, the exclusion says that there is no coverage for instructions which prove fraudulent except as provided under insurance agreements A6A2 and A6B. So effectively, and this is something the insurers actually raised throughout their briefing below, they call this sort of a funneling exclusion, right? So exclusion, so coverage for fraudulent instructions is sort of funneled into A6A2 and A6B.

[00:04:25] Speaker 01:
Well, this interpretation actually gives light to that sort of funneling effect that we have here. Because when you limit coverage under A6A1 to exclude things that are specifically fraudulent instructions, that ensures that the only way that you can get coverage for something that's a fraudulent instruction, assuming you meet the other confines of the insuring agreement, is under A6A2 and A6B. That's why this definition is important here. It's because it renders that consistency there in place. You can actually look at other places in the policy where this type of cause and effect is placed.

[00:04:58] Speaker 01:
I believe if you're looking at insuring agreement A61 in the policy, that's an insuring agreement for employee theft. So it talks about theft committed by, among other things, employees.

[00:05:11] Speaker 01:
Give me a moment. I can give you a pin site if that would be necessary for the record.

[00:05:15] Speaker 01:
But you have insuring agreement A6 or A1.

[00:05:19] Speaker 00:
I have it in front of me. I think it's at ER400.

[00:05:49] Speaker 01:
that is an exclusion for loss resulting from theft committed by any of your employees, among other things there. So, again, there's an exception here. It says except when covered under insuring agreement A1. Now, what's the effect of this? If you have theft, it's covered under A1. But the policy wants to make sure that you don't have that coverage for theft under other insuring agreements. That's the same thing that they're trying to do here with respect to exclusion. At least that's a way you can reasonably interpret that exclusion. You want to have coverage for fraudulent instructions only under A6A2 and A6B.

[00:06:21] Speaker 01:
It's separate and distinct from the computer fraud insurance agreement. A6 is the computer and funds transfer fraud insurance agreement, and the parties understand that to mean the computer fraud agreement, which is A6-1, and then you have the funds transfer fraud insurance agreement, which are the other ones. The whole goal, make sure you have fraudulent instructions coverage only under those two insurance agreements. And it's a reasonable interpretation for an insurer to have in that situation.

[00:06:43] Speaker 00:
So this is basically your illusory coverage, right?

[00:06:46] Speaker 01:
argument? It is not an illusory coverage argument. We have an illusory coverage argument. But at this point, it also, the illusory coverage argument kind of lends credence to the arguments with respect to ambiguity.

[00:06:59] Speaker 01:
The insurer's position is that there should be a broad exclusion read to read out any coverage for the batch files that we have at issue here. The problem is, when you look to John's grill, you have to look to an insurer's reasonable expectations as well. And Cachet's reasonable expectations here are not particularly far-fetched. You have a computer fraud insurance agreement. Cachet's business is handling ACH transactions for payroll services companies.

[00:07:26] Speaker 01:
Presumably, it would be reasonable to expect the fraud occurring in those transactions by using a computer would be covered. There's a reasonable expectation of coverage for that. And that's where John's Grill comes into play. When you have a When you have an argument with respect to ambiguity, you have a reasonable interpretation, as we've presented here. When you have a reasonable expectation of coverage, which the insurers don't truly fight against, they say that reasonable expectations don't come into play unless there is a reasonable interpretation, but they don't make an argument.

[00:07:58] Speaker 01:
Then when there is a particular interpretation that would effectively vitiate coverage here, then that interpretation can't be the one that's adopted here.

[00:08:08] Speaker 01:
So that's the fraudulent, I'm sorry, Your Honor.

[00:08:12] Speaker 03:
I think I'm confused by an answer you gave to Judge Desai earlier. Can you just go back and say, can you explain again where you what do you think is giving you the coverage here? Because I think maybe you said something that I don't understand.

[00:08:22] Speaker 01:
Oh, I'm sorry. It's the computer. The computer fraud and showing beaming gives cash coverage. And that was what was decided by this court previously in the party's prior appeal.

[00:08:30] Speaker 03:
But did you tell her that it's coming from 6A2 and 6B? Because I thought your argument was that it's from 6A1.

[00:08:38] Speaker 01:
So I apologize if I misstated anything. So like. Cashier's coverage from this is solely under A6A1. The court has already found there's no coverage under – That's what I thought.

[00:08:48] Speaker 00:
Let me just clarify. My question to you, and I think what you were trying to answer because I asked a compound question, was if we were to apply the definition of fraudulent instruction, there are two of them. Correct. One under A6A2 and one under A6B. And I asked which one of those two definitions would apply, and I think your answer is both.

[00:09:06] Speaker 01:
Both. Yes, that's correct. Yes. And I'm sorry for the confusion. There are a couple of different moving parts that obviously we're dealing with here.

[00:09:12] Speaker 00:
And that assumes, of course, that we agree with you that the fraudulent instruction definition or definitions could or would apply at all to the exclusion, you know, separate and apart from the question Judge Friedland asked, which is, you know, why do we assume that the definition even applies? when there's quotations.

[00:09:32] Speaker 01:
Yeah, I think those are two separate questions. Yes, I apologize. I just want to make sure that that was clear for the record.

[00:09:37] Speaker 04:
I want to be clear. Are you saying that the, quote, fraudulent instructions has different meanings, or is there one meaning when it's in quotes?

[00:09:46] Speaker 01:
There is one meaning here. And I want to make sure that we have the language kind of clear, because it's something that is a little bit, it kind of lends credence to our argument in our view, obviously.

[00:09:56] Speaker 01:
Fraudulent instructions is the definition that is provided for in the policy, right? So you have the fraudulent instructions definition that is defined within the scope of ensuring agreements A6A2 and A6B. Our understanding, our interpretation, what we think is a reasonable interpretation, is that instructions proven to be fraudulent should be interpreted to mean the same thing as fraudulent instructions in this context.

[00:10:19] Speaker 04:
This gets back to Judge Freeland's very initial question, I think, which is where a policy is set up to clearly advise the policyholder – that there are definitions for this policy, and when we use them, we have quotes around them.

[00:10:35] Speaker 04:
When it has that, and it uses that throughout the policy as a structural mechanism, why would we take language that is not in quotes and treat it as though it was?

[00:10:45] Speaker 01:
I think there are a few different reasons for that, Your Honor. First of all, again, it goes back to context of the policy, and I recognize I'm somewhat repeating myself here with this argument. But when you look at how this policy is used, the goal is going to be to ensure that there is coverage for fraudulent instructions here within the scope of the fraudulent instructions or within the scope of the funds transfer fraud insurance agreements only. That's one. Second of all, we're not looking for the only singular interpretation of this provision here, right?

[00:11:10] Speaker 04:
All that Cachet needs to do is establish- I think that that is a function of what a policy writer is doing when they decide to use defined terms and advise the policy holder that we are doing this. And when we use our defined terms, we'll put quotes around them to bring it to your attention. I mean, there's a provision right at the outset that says, this is what we're doing in this policy.

[00:11:29] Speaker 01:
Sure, but we would submit, Your Honor, that this is one of those cases where a layperson reads this policy. And, you know, we're not talking about sophisticated parties here. We're talking about laypeople doing an objectively reasonable interpretation.

[00:11:39] Speaker 04:
A layperson can understand this structure of we use language, and, you know, if it's not specified as a definition here, then we give it its reasonable understanding. But we have chosen to define some terms, and we'll alert you.

[00:11:55] Speaker 04:
will signal to you when we're using them and then do that throughout. Why should we assume that a reasonable person can't understand that?

[00:12:03] Speaker 01:
Some of the reasons that I've said, I won't repeat the same reasons I've said before, Your Honor, with respect to the context that we discussed previously. But I think one thing you can also look to is the fact that even the insurers in this case, when they're talking about instructions that prove to be fraudulent, reference fraudulent instructions in their prior briefing. The district court, when it was talking about instructions that prove to be fraudulent, actually referenced fraudulent instructions instead. It's a very simple thing to have an understanding that those two terms should mean the same thing. It gives effect to other areas in the policy, like the theft insurance agreement in combination with that authorized representative exclusion we discussed.

[00:12:40] Speaker 01:
If you look at, for example, different types of interpretations, it may be that their argument is reasonable. It may be that their interpretation is reasonable. We're not conceding that. All we are saying is even if it is, they haven't proven their interpretation is the only reasonable one.

[00:12:56] Speaker 01:
If I may briefly get to the authorized access exclusion, I know I'm running a little bit low on time.

[00:12:59] Speaker 03:
It's up to you. You can save your time or you can use it.

[00:13:03] Speaker 01:
I'll just briefly, with respect to the authorized access exclusion, I think the one thing I would like to say in my limited time is there is a distinction in the policy between entry and access. Use of the system here, the only use of the system that was referenced here, the only thing that was allegedly complained, was the uploading of batch files into the portal, into the server. That's it. There's no accessing of the internal files there. There's no accessing of the internal mechanisms of the system.

[00:13:34] Speaker 01:
What happened here is not access. It is entry. And the authority that the insurers cite all relates to authorized representatives, not authorized access. Authorized representatives who are effectively acting in the shoes of the insured. There's one example where somebody was literally retained to be a vice president or be an officer of the company, that is an authorized representative. We do not have that here. It's also buffered by the fact that when you have an authorized representative exclusion, if they had wanted to assert it, they could have. There is an authorized representative exclusion in the policy.

[00:14:06] Speaker 01:
It was almost identical, if not entirely identical, to the authorized representative exclusion that was, in fact, an issue in Southern California counseling in a great American policy there. That was not raised by the insurers here. The authorized exclusion does not bar coverage. And I'll reserve the rest of my limited time for rebuttal. Thank you.

[00:14:40] Speaker 02:
Good morning. May it please the court. My name is Stefan Dan Dallas with Kaufman Dallowich. I'll be arguing on behalf of the insurer defendants in this, uh, in this case, including Berkeley Insurance Company, who I directly represent, who's the primary insurer on a tower of insurance, where Great American, represented by Mr. Birch, are they're going to follow the arguments, all the same issues apply. The only thing I'll point out for the benefit of Great American is as an excess insurer, they only would have any obligations whatsoever once the primary is exhausted.

[00:15:13] Speaker 02:
But all the issues that we're going to talk about here today apply equally to both.

[00:15:19] Speaker 01:
That's correct, Your Honor.

[00:15:21] Speaker 02:
Thank you.

[00:15:23] Speaker 02:
So there's a lot to unpack from that.

[00:15:30] Speaker 02:
I kind of felt like counsel was making the arguments for us as it relates to reading in context, 1641, reading the policy as a whole.

[00:15:41] Speaker 02:
There's two exclusions that are at issue here. One that was determined by Judge Garnett to preclude coverage in full, the fraudulent instruction exclusion.

[00:15:52] Speaker 02:
You start from the premise, however, of what coverage is granted. What's the affirmative grant of coverage? The court found, did not find that there was coverage. The court found, the Ninth Circuit, sorry, the prior panel who addressed this, found that Cachet plausibly made an argument that A6A1 could be triggered. That's a fraudulent entry of electronic data into a computer system where that entry causes money to be transferred. That's just the front door.

[00:16:22] Speaker 02:
That's not the end of the analysis. Under California law, you have to look at all the exclusions. You have to read the policy as a whole.

[00:16:28] Speaker 03:
Can you explain a hypothetical, any kind of situation that would have coverage under 6A1 without triggering the fraudulent instructions exclusion?

[00:16:38] Speaker 02:
Sure.

[00:16:41] Speaker 02:
Let's say there's a hacker who breaks into the system, breaks into Cashier's system, fraudulently inputs an approved vendor, fraudulently submits a vendor invoice, and fraudulently causes that invoice to be paid through their workday system or a similar account payable system. That fraudster, himself or herself, pushes the buttons, keystrokes in, through the fraudulent entry or change of data, and through those keystrokes causes money to fly out the door.

[00:17:19] Speaker 03:
So wouldn't that be causing a financial institution to send money in a way that would trigger the exclusion?

[00:17:25] Speaker 02:
Well, it's not an instruction, number one. And it's not – the financial institution doesn't act on it. Those are self-executing transactions. I can go into my account and do an ACH. Chase doesn't have to do anything. I'm not interacting with anyone at Chase. They're not acting on an instruction. I haven't instructed someone to do something. I've done it myself. So in the hypothetical – The fraudster, him or herself, has done it without giving any instruction to anyone else. No one has acted on anything that the fraudster did.

[00:17:57] Speaker 02:
The fraudster did it, him or herself. I can offer another example that even takes it outside. Let's say there was an instruction. Under D4D, the exclusion, it has to be an employer or financial institution that acts on the instruction.

[00:18:13] Speaker 02:
What if it's a payroll situation? And Judge Garnett touched on a few of these scenarios that say It's not illusory because there's all kinds of other things that affect your business that may be outside of the upload of batch files. So in a payroll situation, and ironically, we're dealing with a payroll company who defrauded Cachet. Most companies have a payroll company. Let's assume Cachet had a payroll company. The fraudster who hacks into the system, sets up three ghost employees and salaries and bonuses, communicates directly with the payroll company.

[00:18:48] Speaker 02:
to cause payments to be made to those ghost employees, and those payments are made from the payroll company who acts on that instruction. That payroll company is neither an employee nor a financial institution, so it's outside the context of the exclusion and arguably would fall within A6A1, subject to all other terms, conditions, facts, et cetera. Of course, but they're umpteen examples of how you can have an A6A1 company covered loss, a fraudulent entry of electronic data into a system.

[00:19:22] Speaker 02:
What that's for, as distinct from A6A2, which is the funds transfer portion of that insuring agreement, A6A1 is computer system fraud, a fraud upon the computer system. That's why there's a distinction, and this goes to the arguments that counsel is making. It's abundantly clear, excuse me, that when there's a fraudulent instruction, it's in quotes. If you look at the beginning of the policy, Under the page 1 of 14 of the foreign policy, it says, words and phrases that appear in quotation marks have special meaning.

[00:20:02] Speaker 02:
It's intentional. In fact, this is a very well-written policy to make it abundantly clear that if there's an instruction to transfer money that proves to be fraudulent, you cannot find coverage under A6A1.

[00:20:15] Speaker 00:
Let me ask you this. You advanced two arguments with respect to the fraudulent instruction exclusion and also the authorized access exclusion. And the district court didn't reach the second exclusion.

[00:20:26] Speaker 00:
And I would assume you agree with me when I say that we could affirm the district court on either ground and we could affirm on the authorized access exclusion instead of the first one. Absolutely. Okay. Which exclusion do you think is the better argument that you have?

[00:20:43] Speaker 02:
Frankly, Judge Tsai, I think they're both equally strong. And in this context, they work together. Again, back to reading everything as a whole.

[00:20:53] Speaker 02:
Cache can't have it both ways. They can't say at the front door under A6A1 that there's been a fraudulent entry of electronic data into a computer system, dot, dot, dot, dot, dot, by one of their customers who they gave the keys to the kingdom, but then say that it was not through authorized access. I agree. There is a difference between entry and access. Fraudulent entry. It's interesting when you look at that exclusion, the prefatory language is exactly the same.

[00:21:22] Speaker 02:
Under A6A1, the affirmative grant, fraudulent entry of electronic data into a computer system.

[00:21:27] Speaker 02:
Look at the exclusion.

[00:21:30] Speaker 02:
D4A, loss resulting from what? Fraudulent entry of electronic data into a computer system. So it's a binary situation.

[00:21:39] Speaker 02:
If you have a fraudulent entry of electronic data into a computer system such that it would trigger, plausibly trigger coverage under the insuring agreement, it was either by someone who had authorized access to that system or someone who did not have authorized access to that system. What you heard counsel argue, and you'll see it through their briefs, they're contemplating that someone actually got into the server room and was keystroking in the hardware, in this internal, I think was the term he used, internal, Let's look at the definition of computer system, also a defined term with quotes around it.

[00:22:15] Speaker 02:
It's not just the computers themselves. It says nothing about internal. In fact, what it says, computer system means systems and applications software and related communications networks by which electronic data is transmitted.

[00:22:30] Speaker 00:
That's why I'm asking this question, and I know you're saying that both arguments are equally as strong, but Here, there is a defined term where we can go to understand what system means, which sounds contrary to the definition I think that your friend on the other side is advancing. And so in my view, the authorized access exclusion seems like the easier exclusion for you to be able to apply here. And I know that the district court went through the effort of dealing with the fraudulent instruction exclusion. But is it really your view that either apply equally and both are as strong and there's less workforce?

[00:23:05] Speaker 00:
to be done in terms of writing a decision that if you win on either one, which do you prefer to win on?

[00:23:15] Speaker 02:
I could ask my client which they prefer to win on. I don't think they care which one they win on. They think either one applies, and they truly do. And frankly, we wish the district court would have addressed both.

[00:23:26] Speaker 00:
I think the illusory coverage issue is a closer call. And Judge Friedland asked you a question about when there would be coverage in an instance other than this one. And we only have to deal with the illusory coverage issue if we are deciding this case under the fraudulent instruction.

[00:23:46] Speaker 02:
I understand that. I understand that. They have not argued anything is illusory about authorized access or unauthorized access. They're simply trying to raise an ambiguity as to what is access and trying distinction between entry and access. Entry is used in the context of the electronic data itself. As you point out, the The computer system definition is clear that it's not just internal. It's the communications. That's exactly what they did. They gave my payroll, HR and I green access to the system to be able to enter things through a portal.

[00:24:18] Speaker 02:
So there's no illusory argument, but on that point, just to not, you know, lose sight of the fraudulent instruction, the mere possibility of some coverage. And I've already given two or three examples there that, There's nothing illusory about this. There's absolutely nothing illusory about it. It makes it abundantly clear through the use of funneling exclusions, which are normal, and there's no confusion about it. If you look at fraudulent instruction, it's a defined term. There's nothing, let me, if I can, on the fraudulent instruction, let me just give a quick example.

[00:24:50] Speaker 02:
Two insuring agreements, just like here, you have A6A1 and A6A2.

[00:24:55] Speaker 02:
One covers the fraudulent entry, the other contemplates fraudulent with an exclusion that says any instruction that proves to be fraudulent.

[00:25:04] Speaker 02:
If the first insuring agreement is we will cover, we will indemnify loss arising from rotten food products.

[00:25:14] Speaker 02:
You have insuring agreement two, we will insure loss resulting from rotten fruit.

[00:25:23] Speaker 02:
The exclusion says we will not cover loss arising resulting from any fruit that proves to be fraudulent. But rotten fruit, as used in the second insuring agreement, is a defined term, and it's defined to only be apples and oranges. But the claim is a claim for rotten bananas. It's pretty simple. No one would say that that's ambiguous or illusory. You get coverage for rotten apples and bananas. You don't get coverage for rotten bananas.

[00:25:53] Speaker 02:
That's how the A6A1 A682 read together with the fraudulent instruction ensuring agreement works. It's not illusory at all. Authorized access, I agree. I wish Judge Garnett could have. But this is de novo review, as you know, and you can affirm on any ground, and that's why we've briefed and laid out clearly why they can't have it both ways. It can't both be a fraudulent entry of data into their computer system by someone that was authorized to make that entry but not have access to this system to be able to make that entry.

[00:26:31] Speaker 02:
They can't have it both ways. So we think certainly the authorized access exclusion, D41, makes it abundantly clear that this is not a covered loss. And there is, I'll point out, also a funneling aspect to D41, except when covered under A6B, which is where an employee who would have authorized access receives a fraudulent instruction as defined from a computer software contractor. So it's contemplating, and if you look on pages, I believe it's 32 and 41 of our brief, our response brief, it boils down to pretty clear flow charts.

[00:27:09] Speaker 02:
It's a decision tree type analysis. If this, then this. If this, then this.

[00:27:17] Speaker 02:
It's not, first of all, Cachet is a sophisticated party and was represented by one of the world's largest brokers. They're not a lay person. But any lay person who can read, they would be charged with having the obligation to read the policy. There's no dispute.

[00:27:36] Speaker 04:
I want to ask you a couple of questions about this illusory coverage principle. Yes.

[00:27:43] Speaker 04:
My understanding from reading the California case law is that the California Supreme Court has never actually adopted that doctrine, even though it's had the opportunity to do so.

[00:27:51] Speaker 02:
I'm sorry. Could you repeat that?

[00:27:53] Speaker 04:
So my question is, reading California's case law, I don't think that the California Supreme Court has adopted the illusory coverage doctrine. It seems like it has had the opportunity to do so and it has not. So in terms of our job of trying to faithfully apply whatever California law is without really commenting one way or another, what do we make of that? What do we do with that?

[00:28:15] Speaker 02:
Well, there are appellate court cases and district court cases that give parameters around what they expect the California Supreme Court would do with the concept of illusory.

[00:28:26] Speaker 04:
Isn't the most recent pronouncement from the California Supreme Court basically saying we're not adopting this, but even if we did, here's some thoughts we'd have about it?

[00:28:36] Speaker 04:
What are we supposed to make of that?

[00:28:39] Speaker 02:
I think that would not be – To the extent the California Supreme Court has not made a pronouncement on it and they've just given an indication, the case law that is of record that gives the best indication of what the California Supreme Court would do because it's already been decided and it's not dicta in any case is that the mere possibility of any coverage. It doesn't have to cover what they want it to cover. It just has to cover something. There's plenty that can be covered. The policy, again, to the flow chart, it's clear what it does cover.

[00:29:11] Speaker 02:
Because it points you direct, it makes it so easy. If there's a fraudulent instruction involved, look here.

[00:29:19] Speaker 02:
If it's an instruction that proves to be fraudulent, you may not look here. If it's employee dishonesty, employee theft, you have to look here.

[00:29:29] Speaker 02:
It gives a step-by-step guide that any layperson who can read the words on paper would be able to follow. There's nothing confusing or illusory about it.

[00:29:43] Speaker 02:
Yes.

[00:29:45] Speaker 02:
So John's Grill came up both in Judge Garnett's opinion, which wasn't briefed before that. It came up, it was briefed before you on appeal. John's Grill, what Judge Garnett did was anticipated an argument that they didn't even make. They never even made the argument that there was an ambiguity.

[00:30:02] Speaker 02:
She went through that analysis and said, there's nothing ambiguous about it. It's abundantly clear what it is. And even if it wasn't, there's nothing illusory about it because you can have all different types of coverage. It doesn't have to cover this claim. It doesn't have to cover what you want it to cover. In terms of expectations... You're over your time.

[00:30:20] Speaker 03:
I don't know if Judge Forrest had a different question.

[00:30:21] Speaker 02:
Oh, I'm sorry.

[00:30:22] Speaker 03:
Okay, I need to cut you off because you're over your time. That's okay.

[00:30:24] Speaker 02:
Thank you.

[00:30:25] Speaker 03:
I think we had about a minute left for rebuttal.

[00:30:27] Speaker 01:
I think that minute was about right.

[00:30:34] Speaker 01:
Briefly for the court, we hear a lot about from opposing counsel reference, you know, ways in which a cashier's interpretation may not have been reasonable in ways in which it should have been done. But what I have not seen in the briefing is what exactly their interpretation is of instruction. What exactly their interpretation is of instruction that proved to be fraudulent. And this is somewhat a problem because they discuss all of their different ways in which there are examples, uh, in which, you know, there could be coverage on the computer fraud insurance. The payroll payroll payments that involves a financial transaction involves a financial institution.

[00:31:08] Speaker 01:
Um, anything that they have provided in terms of their examples all involve processing through a financial institution. So it's hard to see where they could have a reasonable interpretation other than the one that Cassie presented. With respect to the authorized access exclusion, two brief points. First, the exclusion says that if there is fraudulent entry, it references both fraudulent entry and authorized access. Entry and access cannot mean the same thing here. And I may have been a little bit flip when I mentioned what the access to a computer system would be, I'm not talking about actually going around, digging around the servers, going into a server room, unclipping wires, that kind of thing.

[00:31:44] Speaker 01:
What I'm talking about is the ability to actually go manipulate code, manipulate internal items in the system. There's a destruction of electronic programs endorsement, I believe, in the policy that actually contemplates going inside, potential hacking internally in the system.

[00:31:59] Speaker 01:
That is more of a line of what access would be in this instance.

[00:32:04] Speaker 03:
Thank you both sides for the helpful arguments. This case is submitted.