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Velvel on Net Eauity Oral Argurments Part 1

Velvel on Net Eauity Oral Argurments Part 1

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Discursive Comments On The Oral Argument In The Court of Appeals In The Madoff Case On March 3, 2011.
Discursive Comments On The Oral Argument In The Court of Appeals In The Madoff Case On March 3, 2011.

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Published by: Investor Protection on Mar 24, 2011
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Discursive Comments On The Oral Argument In The Court of Appeals In TheMadoff Case On March 3, 2011. Part 1
March 24, 2011Discursive Comments On The Oral Argument In The Court of AppealsIn The Madoff Case On March 3, 2011.PART 1I was in Florida on March 3rd, when the oral argument was held in the Second Circuit, in the Madoff case, on thequestion of how to determine net equity. So I did not see the argument. I read the transcript on an IPod twice, butreading a complicated document on an IPod is, to me at least, next door to not reading it at all. After getting thehard copy of the transcript, I have now read it three times. So I didn’t write anything about the argument untilafter getting the transcript, reading it in hard copy, and marking it up.The oral argument was, I think, the most complex one it has ever been my misfortune to have to read, but I feel Inow have a reasonable, if imperfect, grasp of most of it. So I shall now set forth some views.I should say preliminarily that, based on the transcript, it is hard to agree with those in attendance who felt thejudges did not know the case. On the other hand, it does seem that the argument, for whatever reasons, generally focused on a relatively small number of points in comparison to the total picture, and that several points thatshould have been prominent received little or no attention (as I shall discuss below).I also wish to say preliminarily that I hope this essay on what transpired is as inoffensive as possible. Unless youhave done it yourself, or at least have worked closely on an oral argument with the advocate, it is hard tounderstand just how stressful an appellate oral argument is. Even a trial court oral argument is no picnic, and oralarguments in federal courts of appeal or the Supreme Court are very difficult. For they often, even usually, consist,as did the one on March 3rd, of a continuous barrage of questions designed to trip you up, questions oftendelivered in the hostile tone for which the legal profession is infamous. The courts, and professors, call this testingthe limits of your argument to see how far it can be carried and what results it may lead to in a variety of differingcircumstances. The advocate is confronted with question after question, some with ramifications that he or shemay not have considered, and with the need to find ways to bring out the points he/she wishes to make in answerto an unending stream of questions, often hostile ones. So it is not easy, and there is a reason why great appellateadvocates tend to be unusually smart men and women. And, of course, extensive preparation, including mootcourts -- at which persons unconnected with the case should play a role and at which advocates should practicegetting out their points in answer to questions, often hostile sounding questions, which do not obviously seem tocall for the points the advocate wishes to make -- are essential preparation if there is to be excellent performance.(In case anyone is wondering, I emphatically do not think I am nor ever was a great or even a good oral advocate-- I have the wrong personality for it in a number of ways -- and in my old age I also reject the inhuman idea of facing a battery of hostile siege guns firing at me in rapid succession from the bench. That is for younger people (Iam 71) who want to make a mark. But I do know a lot about appellate oral arguments because I spent a part of my life helping to prepare people for oral arguments in the Supreme Court and setting up moot courts for thispurpose. (For reasons I will not get into here, I recently breached my “never again engage in oral argument”principle by appearing before Lifland -- this was my first oral argument in I don’t know how many years, though itwas a lower court argument, not an appellate one, and after appearing before Lifland, I once again recognized thewisdom of the principle of “never again engage in oral argument,” lest one be savaged from the bench without any fair opportunity to reply.)So, as said, appellate oral arguments are hard to do, and the oral argument here was, I think, particularly difficultto do. And I do wish to say that I think Helen Chaitman did an excellent job, a very good job.Let me also say that this essay has been divided into two parts. There are several reasons. One is that it has takena very long time to write, and will take me considerable additional time to finish, has proven to be godawful longin terms of numbers of words, and I have not been intelligent or perceptive enough to figure out in advance how to reduce it to a shorter string of essences, so to speak, without using organizational techniques that wouldthemselves require extensive time to employ. Also, I now have to largely turn my attention to some other
important, non Madoff matters for four or five days. So, in order to begin putting the essay’s views into the publicforum for Madoff victims who might wish to know those views, I have divided the essay into two parts, am postingthe first part now, and will finish and post the second part, I hope, in about ten days or two weeks from now. Thefirst part deals with some general matters plus the oral arguments of our first two advocates. The second part willdeal with the arguments of the three advocates who opposed us, plus the rebuttal argument of Helen Chaitman.* * * * *Let me cover some of the pre-oral argument maneuvering, insofar as I know it, before turning to the argumentitself. (This essay, as you can see, is discursive rather than the tightly written, all-excrescences-removed work thata good brief should be. Once, about a year ago, a lawyer on our side called me on the phone to lambaste me foropposing a direct appeal to the Second Circuit. This person told me I was a lousy lawyer, incompetent, and merely an academic because I favor a discursive style when writing essays. The person was so rude that I have not spokento him or her since, and don’t intend to in the future. And let us hope that we win in the Second Circuit, thusproving wrong the views I held about a direct appeal.) My knowledge of the pre-argument maneuvering isnecessarily limited because I am not part of the relatively small group of New York City lawyers who seem to be incharge. Indeed, not being a part of that group -- two of whom, including the one who later called to tell me I am anincompetent, made clear on an early phone call that my presence was not desired -- I know little in advance aboutanything. Right now, for example, some among the NYC group are dealing with the Trustee in regard to whichissues should be briefed as part of the so-called “omnibus briefing” of important issues this Spring, and I for one,and I know that some others too, are completely in the dark as to what is going on.With regard to the pre-argument maneuvering about which my knowledge is limited, I have heard that the NYClawyers exchanged memos, had conference calls, and had one or two moot courts, though I don’t really know how the moot courts were handled except that I’ve heard that in the last one all the non-arguing lawyers werecollectively the judges (which, if true, is, in my experience, not the way to hold a moot court). During the periodFebruary 25-March 1, I did, however, send the lawyers’ group, in part at the invitation of one of its members,three memoranda of possible questions from the bench and possible answers, and one memo stressing the needfor a short, persuasive opening argument of two or three minutes that would quickly tell the Court what our mainpoints are before the Court got into the barrage of questions which many of you saw in person or read on thetranscript. I included an example of such an opening argument. Though there is of course no guarantee, if you tella Court at the beginning of your argument that you will begin with a brief listing of your points, the judges willsometimes let you do this because they know you will be brief (they will hold you to brevity), and in this way yourmajor ideas will be set before the Court before the guns start firing at you. Such a short introductory openingargument briefly stating our major points was not attempted here.Nonetheless, to my surprise, one of the group of NYC lawyers who are in charge told Dave Bernfeld that material Isent had been helpful. That was nice of him. But I do not really think my memos did much good or proved terribly helpful. The transcript shows that a large number of the points I stressed -- very important points, I think, whichcould be made in answer to questions if the argument proved a barrage, as it did -- received little or no mention.The points included that there were extensive statements of legislative intent in our favor, and the specific itemsof legislative intent that the statements established; that some of the leading legislators of the day -- not back benchers -- delivered these statements; that CICO has almost never been used before in nearly 320 SIPC cases;that the use of CICO utterly destroys Congress’ vigorously and repeatedly stated intent that victims receive money or securities promptly from SIPC because CICO necessitates years-long forensic accounting to establish whether acustomer can receive anything from SIPC; that there are well established financial techniques which limit theextent to which a Bernie Madoff can just make things up; that there should be discovery into why Picard and SIPCchose to use CICO; and that while SIPC and the Trustee claim they are being fair, the truth, as SIPC’s letters toCongress reveal, is that almost all the money Picard is clawing back is going to the fabulously wealthy (at least inthe short run) while the now newly impoverished will get little or nothing.I should also say that the very first answer given to the Court by our advocates surprised me greatly. At the very beginning of the argument Judge Jacobs asked whether our three successive advocates were “going to divvy upissues in any way?” (Tr. 3.) The answer was “We’re not really, Your Honor.” (Tr. 3.) I have worked with advocateson lots of appellate cases in which more than one lawyer argued for my side: But I never have seen an instancewhere there was more than one lawyer arguing on a side and the lawyers did not divide up the argument by issues. The reasons for such division are obvious. With such division a lawyer can focus deeply on the issues he/she is responsible for, there will be less duplication of argument and therefore a larger number of importantpoints can be covered, etc. Yet our side did not divide up the issues. (Perhaps I should add that an experiencedappellate lawyer on our faculty was thunderstruck when told that the argument was not divided by issues.)
How did this occur? Well, I really don’t know but believe I can likely make a good guess. With regard to rebuttal,you can’t divide up the issues in advance because you cannot know in advance what points will be crying out forrebuttal when your rebutter rises to rebut. To select Helen Chaitman for rebuttal was in my view a good ideabecause, I would bet, she probably knows more about the case than anyone else. She would likely be best able of anyone to think of the best rebuttal points on many topics. And, proving the point, she did a good job on rebuttal.But aside from rebuttal, where you can’t divide up the issues in advance because you don’t know what the rebuttalwill have to focus on, why was there no division of issues to ensure deeper focus on crucial points andpresentation of a larger number of points? My guess, which unhappily may sound harsh but for which I have abasis that I will partly keep to myself, is this: each of several lawyers thought they should do the oral argument,and would be best at it. This had an effect on cooperation -- I know, for example, that who would be the oraladvocates was in contention, apparently bitter contention, until nearly the very end -- and at least possibly was areason why the lawyers were perhaps unable to, and in any event did not, split up the argument by issues.Ron Stein of NIAP, Dave Bernfeld and I discussed this question of who would argue for a couple of weeks,although Ron and I were wholly out of the loop and David was only somewhat knowledgeable about what wasoccurring. The reasons for our discussions were that we could sense what might occur and had qualms about theappellate experience and appellate expertise of the lawyers. Given my own prior experience with numerous expertSupreme Court advocates and given what is sometimes written on this subject in the Times or the National Law Journal, we knew that there are major league Supreme Court specialists who in the last ten to twenty years or sohave headed, or who are part of, special appellate sections of major law firms, sections of law firms that specializein both Supreme Court work and federal court of appeals work. The idea of trying to hire such a lawyer for theappeal (and then for later Supreme Court work that will arise) seemed a good one. But there wasn’t enough timeleft to do it and we believed the NYC group of lawyers were likely to object strongly to the very idea of beingdisplaced on appeal by an appellate specialist, even one of (deserved) national reputation.The idea we were discussing, however, should be resurrected. There are at least three reasons. First, if we lose inthe Second Circuit, we might wish to seek a rehearing en banc, i.e., a rehearing from the entire Court, not just thethree judges who heard the case on March 3rd. (The other side might do the same if it loses.) In seeking oropposing such a rehearing, and in orally arguing if rehearing is granted, it would be wise to have an appellatespecialist of the type I’m discussing.Second, regardless of which side wins in the Second Circuit, the loser will ask the Supreme Court to hear the caseand the other side will oppose this. No one can doubt the wisdom of having our side represented in suchproceedings by a high Court specialist who is expert in gaining and opposing Supreme Court review and, if aSupreme Court hearing is granted, in arguing cases before the high Court. This is only the more true when oneconsiders that in Supreme Court proceedings the SEC may well be represented by, and likely will at minimumreceive the advice of, the Solicitor General’s office, the U.S. Government’s highly expert office of Supreme Courtlawyers. (Most, and maybe even close to all, of the Supreme Court experts in private practice spent time in theSG’s office.)Finally, the entire problem is going to repeat itself -- beyond question. As said, there is soon going to be omnibusbriefing before Lifland on vital issues. While I am not privy to the details of what the Trustee and the group incharge are determining those issues to be and what the schedule of briefing will be, on January 10 I did receive apreliminary memo about this and do believe the issues will include such crucial ones as whether the CICOcalculation of net equity should incorporate the time value of money. My personal opinion is that the omnibusbriefing should include certain other issues that I doubt will be included, such as whether victims should receivecredit, in their net equity calculations under CICO, for the approximately half billion dollars (I believe it is) thatMadoff admittedly earned on monies from the 703 Account that were invested every single night of the scam inshort term instruments, Treasuries, money market funds, etc., and whether the Trustee can lawfully demand thatvictims repay him tax refunds they receive from the U.S. Treasury (an expert tells me that there is precedentagainst this, and I shall read the cases he cites as soon as possible). In any event, the omnibus issues will beimportant ones, and the losing side will appeal them -- perhaps to the district court (the trial court) and then tothe Second Circuit, or perhaps directly to the Circuit -- and the losing side in the Circuit will seek Supreme Courtreview. The situation which existed with regard to the appeal on net equity will almost certainly affect us againwith regard to the omnibus argument on appeal unless our side hires appellate experts of the kind discussed here.Tomorrow would not be too soon, so that whoever is hired will have ample time to acquaint him/her/their selveswith the omnibus questions. Not to mention the need to acquaint him/her/their selves with the net equity part of the case for purposes of a possible en banc rehearing in the Second Circuit and requested Supreme Court review.Writing discursively, before moving on let me briefly discuss the relationship to David Becker of a point adverted

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