pac twelve and its constituent schools operate a multi billion dollar corporate conglomerate the purpose of which is to promote and market athletic events the defendants let me ask the u including the pac twelve and are imposed on all the schools who participate in f b s football bowl series college football that yes the n c a a and pac twelve have the authority to dictate the rules of play the rules of work how many hours can be worked a day by the students how many days a week i have of course you know about that it looked to me as though that was not quite the way it worked and i want you to educate me if i misunderstood it looked to me like what the end sub and see does is impose limits you can't make the kids practice more than a certain number of hours a day you can't give them more than a certain level of benefits at school it didn't look like it made rules saying you shall have practices for so many hours a day and you shall accord such and such benefits it looked as though those were school decisions possibly coached decisions that the school the coach to make but as far as what the students do it at their place of work if it is work it looked as though all the rules were made by the school and the coach and not the defendants in this case what am i missing there no you're not at all your honor and you are correct the n c a a rules are prescribed generally in the negative and that is you may not do this you may not do that you may not do the other things so it wasn't like there could still be a vast difference though a school that didn't care about athletics like my college wesley and or that didn't even have intermural athletics like university of the school for which the point of point his college football that's what i understood it look like they're the school could let the coach say you have to show up for practice six days a week and it's three hours a day and  school could say you have to take the same courses as everybody else and we require english literature and u s history and various calculus and another school could say we have a special academic program that's attuned to your practice needs and you can take recreational athletics and professional athletics and athletic planning and that could be your curriculum and it looks as though the school is perfectly free to do these things the schools are all free to do whatever they wish and they're free not even to participate in sports regime i'm just you know your whole argument for employer employee status which is a precondition to minimum wage and overtime looks to me like it depends on telling people when they have to show up for work when how they work how long they work where they work and it looks as though and c w a doesn't have anything to do with any of that well two two responses to that first your honor with respect to the f b i s football players who are the only focus of this mitigation we we have we in those incredibly competitive football programs are defacto the default standard so it's just because everyone has a point this is the school chooses to be a serious football school corrupt so it pushes it right to the allowed limit but that doesn't mean that end sub will and see double a makes that it just means that the school pushes it to the limit except that as a practical matter with respect to the conditions of employment the limit is is the rule number one but number two and more importantly no it isn't u s c could get a new president who decided this football thing is just a starting education at u s c and even though we're allowed to make kids for three hours a day we're only going to make them practice two hours a day at least three days a week corrupt and if that were the case then it might be a different it might be a different case altogether but at least what's alleged in the complaint and what the current regime is it is in fact a fact of the rule but more importantly the prescription that really matters is the n c a a s prescription on pay and it is the single most important prescription the n c a a makes and it says you may not pay the students in excess of and then that rule has changed over time and judge thomas is familiar with this because the court had then that the in that the same thing the school could say everything is being distorted about our scholarships because of these expensive football players scholarships we're not going to give football players scholarships anymore but it is their free to do that right that is entirely correct they probably would not get the top football players out of high school but they could certainly want but they are free to not be a football school and in fact for example in the chronology of the so called amateurism of college athletics that this court catalog in the o'bannon case a couple of years ago  court said that until nine hundred twenty nine most schools eighty percent of all schools were fielded professional sports teams that kids who played sports for eighty percent of the schools in the n c a a were paid athletes academics or church schools so that and again your honor your your questions highlight the difference between this case for example and the berger case from the seventh circuit which was so highly relied upon both by the defendants and ultimately by the district court  dismissing the complaint in which the seventh circuit said that participants in ivy league women's track and field are not employees because the nature of the activity that they engage in is not primarily a commercial activity i primarily an educational activity let me ask you if we assume the facts of your complaint exactly the same everything is the same except that the income to the n c double a and also to the pac twelve is one hundred thousand a year instead of hundreds of millions of dollars  the concurring opinion judge hamilton in his concurring opinion pointed out number one the kids who participate in ivy league track and field are not scholarship athletes they don't participate with the expectation of the internationals a good scholarship that you know for for tract and field as well not for athletics not to me and i'm sure that's true i happen to know that the ivy league schools well i know harvard anyway does give athletic scholarships particularly for girls teams  the athletic scholarships that are offered to athletes scholarships that are offered to athletes are no different than the scholarships that are offered to any other students including those who bring a particular skill to our universe for example that are awarded to students but all of those scholarships are awarded based solely on a need based application which at least as far as i know even to this day because i do some work on the alumni schools committee are virtually identical in all cases in the  part of the ib group agreement and it is as your honor knows it is an entirely voluntary agreement any one of those schools can decide today or tomorrow we're going to get out of this business of ivy league sports which by the way was originally a sports and the ivy league was formed as a sports league and joined the f b s football series if it chooses to do so and the rules would change but but the simple fact of the matter is that in berger judge hamilton said one of the factors that he found persuasive was that the women's track and field team they are a non revenue sport and the students who participate in track and field are not doing so with the expectation of a scholarship that is fundamentally different than what this court s a division one men's basketball team where the court said that that exchange of labor for in kind compensation and i'm using this court's exact language that exchange of labor for income and compensation a quintessentially commercial transaction v the exchange of labor for incoming consideration it was it issue in oban it which the court called a commercial transaction is a virtually identical in all material respects to the exchange of labor for in kind consideration that the f b i s football players are engaged but it is let's say it is i think i think there's much  strength to your argument but it looks like the exchange is entirely with the school not and see double a what i'm thinking is a student with one of these very ample football scholarships might arguably be an employee of c but i said even if he were i don't understand why he'd be an employee of the in simple and c double a it doesn't pick up it doesn't bring him into the school it doesn't make the decision to award a scholarship it doesn't tell employee employer cases require more control of the day to day activities and also in most of them the picking of the employee no i don't believe that it's necessary that all the joint employers pick the employees i think what's necessary is that the joint employers participate in the decisions that affect both the conditions of employment and most importantly here the pay and there is no question it is beyond dispute that the n sets the pay rules it does so in the negative you cannot pay but that is in fact setting the pay rules and when we know that in a commercial in a commercial transaction involving the exchange of labor for in consideration the power of the purse strings is the ultimate power over the work environment so the yanks joining me lawyer is is that the limits are in effect requirements as well because everyone goes to the limit i think so long as we have an ultra competitive f b s conference and so long as all the teams that voluntarily participate in that understand the enormous amounts of money that are involved they will all run right to the very top so for example when in two thousand and fourteen the n c a a finally allowed scholarships for the full cost of attendance not simply granted aid within a month within one month every school in the five largest conferences gave full scholarships to their to their f b i students that that was the one of the findings of the district court in the o'bannon case which this court cited approvingly in affirming large i'm still we're thinking it's kind of like the going rate for young lawyers it may have just risen to one ninety and that may mean that the firms the big firms in the big cities that want to compete with the other big firms in the big cities may pay that but it's not a rule and most of the law firms in america don't pay the going rate well again we're in is just like that the one rule that is an absolute rule is is the n c a a payroll there's no question that that's an absolute rule but even all the other rules it's a limit it's you don't have to give the kid scholarships at that level it's just if you want to be as competitive in football as  other top football schools do well you're there on a nominee matter you're asking a fundamentally fact specific question which i can answer for you now on the basis of the findings of the district court in the o'bannon case which this court recognized and accepted in and that's that as soon as as soon as the n c a a and not in december of two thousand and fourteen as soon as the n c a a said you can now give scholarships for the full cost of attendance within a month every single one of the schools in the five largest conferences did exactly that so we know who setting the pay rules we know that because we've seen it and so yes i agree that the rules that the n c a a promulgated are promulgated in the negative but it is also fundamentally clear that in the competitive realm of f b s football the limit is is in fact the standard my time is up and i haven't really addressed any of the issues that i wanted to i hope i have answered you questions i'll give you all the time for has any other questions i'm happy to try to answer them if i if i may borrow some time that doesn't belong to me thank you thank you you thank  pac twelve is an employer of those players and i do want to start with the latter point it was discussed in the topside argument but plaintiff's never really addresses it in his brief not even in the reply brief after we made it its own subsection in our brief and i submit in addition to the reasons that were articulated supporting that there's not really much that plaintiff could have said i mean the notion that the n c a a because it regulates the venture of intercollegiate athletics is suddenly the employer of tens of thousands of student athletes at sure the conferences are are within the larger umbrella of the n c a a but even mr dawson does not attempt to distinguish your honor between the n c a a and the pac twelve for these purposes now as i said he doesn't really get into it at all but as we explained the notion that a regulator is an employer has very dangerous implications and he says the n c a a sets minimum eligibility requirements well the state bar of california sets eligibility requirements order practiced law in this state but that does not mean every lawyer in the state of california is an employee of the state bar and similarly he says the n c a a sets limits on hours that athletes can be required to participate in athletic activity each week well the government sets an hours maximum for truckers for commercial airline pilots that does not mean that trucker every trucker and every commercial airline pilot is an employee of the federal government and in fact the callahan case from the seven circuit that we cited rejected a claim much like this so even though we think it's clear as i'll discuss in just a moment that f p s players are not employees court doesn't even need to reach that question if it wants to affirm instead on the ground that no matter what the student athletes are not rather the n c a a and the pac twelve do not employ student athletes as they don't have the same level of interaction the n c a a does not choose which player goes and plays for which team does not say show up and play show up practices at this location on these hours on these days and so on and so forth now on the employee question the district court's ruling was consistent with the seven circuits decision and berger as well as with this court's precedent this court like the supreme court has analyzed employee status under the f l s say by looking to quote unquote economic reality but in particular by looking to whether or not there is an express or implied agreement for compensation if we agree with your position on the state issue in other words and so far as california law is concerned it's clear that they're not employees how does that affect the  a i think they are distinct although related your honor i suppose in theory one could find that congress use certain words that brought them with broad student athletes or f b s players within this scope but the california legislature is worker's compensation amendment or so took them out or somehow vice versa ultimately of course we think you come to the same i think the court properly comes to the same conclusion on both that is the precedent that i'm about to discuss one of the f l s a takes f b s players outside the scope of  decision the van horn case held that student athletes could be employees for purposes of workers compensation the california legislature amended the law to make clear that that was not the case in california intermediate pellet courts have since held that that evinced an intent on the part of the legislature to exclude student athletes from the definition of employee for any purpose that is not limited to the workers compensation purpose we indeed judge kleinfeld thinks that puts us in the clear obviously the plaintiffs takes a different position miss seldon and in her argument then perhaps  can speak to that in more detail but on the issue of express or implied compensation agreement that is a promise or expectation of compensation applying that test here requires a firm it's because no f p s player receives a promise of compensation to the contrary as a plaintive says repeatedly n c a a rules have consistently provided for decades that student athletes will not be paid to play in light of those rules f b s players could not have had a objective expectation of compensation you heard two principal responses this morning plaintiff's case i submit largely stands on two pillars scholarships and revenue and i want to take them in turn your are even your honors even if you were to be but isn't the real issue and grants the federal  aspect of it this notion of amateurism which isn't incorporated into state decisions but certainly incorporate in the federal decision well that's what i was just speaking to judge with what i learned to n c a a rules consistently providing for decades a student athletes are not to be played indeed as burger concluded and we submit here that is the crux of the economic reality of student athletes situation they come in knowing that as student athletes in all sports for decades have known that they will not be paid to play they can get aid to to  cover their educational expenses the expenses they incur in order to undertake the educational endeavor including participation in your collegiate athletics but they know they will not be paid to play so in light of that it's impossible to find the required compensation agreement now on the scholarship point even if the court were to conclude that scholarships could be compensation for f l s a purposes and i'm going to try to persuade you that they can't be that affirmative still required here there is no allegation complaint that the scholarships are compensation for f l s a purpose i don't know that i don't understand this broader argument that would say they're not employees of any type of any employer i'm thinking suppose a lawyer except a client and the client says i have no cash but i have forty acres i'll give you the forty acres at an exchange for your legal services it seems pretty clear that that's compensation for legal services and that the employer is being employed as an agent of the client in the usual way and i'm thinking it's the same way if the employee if the employer of the lawyer is a physicians group and they say we'll give you free medical care for life which is just like a scholarship that says we won't charge you to wishing to go to war school will provide the services in kind services for no monetary charge in exchange for legal services i don't really see the difference so judge kleinfeld there is a difference and i want to explain it if i can just finish the point i was making which is that even if the court agrees with what i think the notion you were just articulating that scholarships are f l s a compensation there is no allegation in this complaint that they are this in fact we know that that is not the plaintiff's theory because his class is defined as also all f b s football players and every s p f b s team has a number of students who aren't do not receive any scholarship and see rules limit scholarships to eighty five but roster slots to one hundred five so there are two dozen or so players on every f b s football team who are not playing for scholarship and they're within plaintiffs class so even if you think they are compensation that is scholarship under the f l s a this  dismissal must be affirmed because plaintive doesn't a legit and he does not challenge in this court at all the district courts denial of leave to a man he didn't ask for leave to amend below and he's not challenging here but why aren't scholarships f l as a compensation i want to make clear ju argument is not the notion of what cash payments versus in kind payments either we know from from the supreme court's precedent this court's precedent can be compensation under the f l s a so it is not the form of the payment that is being made but we also know from this court's decision williams versus strickland kleinfeld i know you're particularly familiar with it not every exchange of labor for in kind benefits creates an employment relationship this is why i continue to be so amazed that they put so much weight on this one sentence in a band and it talks about an exchange of labor for in kind compensation that sentence could have been applied equally to williams where this court found no employment relationship recall the plaintiff in williams restored furniture as part of his rehabilitate if there be the furniture was then sold in commerce and he received food clothing shelter and other benefits and this court said that was not an employment relationship it was a rehabilitative relationship and the benefits were given to him in order to pursue that relationship similarly here this is an educational relationship and the benefits are given so that the student athletes can participate in the overall educational endeavor which yes includes participation in intercollegiate athletics another reason we know that scholarships are not f a compensation is that if they work then every every student who received any kind of scholarship be it for music which was mentioned this morning math physics even need based from their school would suddenly be an employee of the school and we know from walling versus portland terminal that that is not a correct reading of the act finally the implications of holding that scholarships are f l s a compensation are i submit quite troubling if you get to that would presumably mean you have some people on one team doing exactly the same activity that is the scholarship athletes other people on the same team doing exactly the same activity the non scholarship athletes some are employees and some are not and then at that point you have the non scholarship athletes coming along making a benjamin type claim that is an intern type claim saying hey i'm doing the same work as the actual employees but i'm not getting paid in which case they then they also become employees and suddenly the courts are dictating to schools around the country that everyone on every team has to be dealt with exactly the same now i want to get to number two the main point you heard it's in the briefs it's revenues this case is about revenue revenue revenue there is no case your honor that makes revenue a relevant factor under the f l s a analysis if it were i would assume little leaguers would then be employees of their teams because n pays eight figures multimillion dollars to e s p n to air the little league world series of course if they are employees and someone is out there violating the child labor laws here the little league world series over ten million dollars you're out of the broadcast television contract to i just want to finish up on the points that you want to how we raise the end occasions in our brief of holding that revenue is suddenly relevant to the to the employee question none of them were answered in the reply brief how does a team know if its revenue goes down one year it has bad news for example revenue goes down is it suddenly no longer an employer take it outside the team context suppose a company has a private company has a bad year goes bankrupt or its employees suddenly no longer employees how do you assess any of this and of course this all puts aside to say that if the court were to say that revenue that was a relevant factor here we would be saying that male student athletes can't be employees female student athletes cannot i don't know why the court would want to go down that road at all but i will stop here and ask the court to affirm good morning karen seldon on behalf of the pac twelve judge kleinfeld you're absolutely right that the law in california is very clear that the california legislature and state appellate courts have been uniform in finding the student athletes are not employees as a matter of law for purposes of workers compensation employment discrimination or the and tort liability and these statutes and cases collectively represent a long standing public policy in the state of california to treat issues related to student athletes completely outside of the system of employment last time and again the legislature has chosen an alternative way to address student athlete issues now mr dawsons arguments in his briefing all depend on this court ignoring those statutes ignoring those cases and somehow analyzing wage hour issues in a vacuum but as the towns and case recognized the statutory exclusion in the labor code represents a legislative intent and i quote to prevent student athletes from being considered an employee of an educational institution for any purpose which could result point as a reason for that legislation he said to protect the institutions not to protect the student athletes in the case of the tort claims act that's correct and also the case of the worker's comp as well the court in van horn had analyzed again a football player  his relationship to the school and had said that the football player is rendering services to the school and the legislature very quickly responded in one thousand nine hundred sixty five expressly carving out student athletes on making the determination that they are not rendering services to the school they're not working the reason for that ultimately was to protect the schools financially that was the reason wasn't i think that was part of the reason your honor but i think the other part is and i think the graphic case pointed out is that  legislative history suggests that they did not think this fits in with within the realm of the employment relationship and i would direct the court to the graphics and case for that legislative history but sometimes the sixty five again and again the shepherd case used the you legislative intent that is in the labor code to say that the same applies under the feet as well and their reasoning is that what the legislature said and worker's comp is important and significant in other contexts in california and it would be absurd in the words of shepard to say that a student athlete can't get workers comp benefits but can sue for employment discrimination so by and analogy here it would similarly be entirely inconsistent to say that a student athlete can't get workers c benefits can't sue for employment discrimination and is not employed for tort liability but somehow is entitled to a ten minute rest break it would be creating an inconsistency in the law we're presently none exists so i see i have my time is out i'm will give you for minister bottle thank you very much ron i appreciate that and let me first respond on the on the question on revenue and and this relates i think to judge lewis question earlier which i unfortunately didn't get a chance to answer if we look at the the factors that this court identified invention for determining the primary beneficiary test five of those factors point to the employment relationship in the first one is that the players  for teams with an expense and an expectation of compensation that's what this court said and o'bannon as to the division one men's basketball and it applies equally here and i should note as well it's what the supreme court said in one thousand nine hundred five in the alamo foundation case scholarships are in kind consideration they are not cash in the sense that it's not a check or money or anything like that but there is no question that the scholarships that these athletes come to school with the expectation expectation of receiving are kind compensation and in one thousand nine hundred five in alamo the supreme court said in kind consideration is the exact same thing as wages it simply answers that question second again without respect to anything having to do with revenue second the players do not participate in football activities for academic credit or in furtherance of their degree programs third football does not correspond to the players academic commitments in fact i can tell you that more often than not the time that the athletes have to spend practicing and playing is more likely to conflict with academic commitments than it is to help the academic commitments for participating in practice in games is not necessary for any kind of academic licensing such as in the case involving the the beauty company that does that to defend its response identified in their argument and from and finally fifth the teams do not employ other paid employees who would otherwise perform the functions that the players perform when they play on saturdays all of those factors are completely unrelated to revenue and they have everything to do with the primary beneficiary being the and ca in the pac twel of the state issues what i would like to say is this we submitted recently i apologize for it we submitted the dynamix operations versus superior court of california case in a california supreme court case decided earlier this year i apologize for the late submission it is not directly relevant to our case because it concerns whether an employee is an employee or an independent contractor or whether a worker is an employee or an independent contractor but when we read through that case again in preparation for the argument we were struck by the fact that the court says and we highlighted in our submission that under california law a statute that is enacted for different purposes may point to someone being an employee under that statute whereas a statute that is an active for different purposes may point to him a worker not being an employee the judge who you made the point that the vicarious liability issue and the worker's compensation issue are primarily statutes that are concerned with protecting him for years primarily concerned with protecting employers whereas here the labor statute the labor code the california labor code is primarily concerned with protecting employees when they should this is a provision the california labor code that provides that cheerleaders prefer professional teams are considered to be employees and so therefore you have the concern about employees and yet there is no comparable provision for student athlete there's there's not only because it hasn't ever been addressed it simply hasn't been addressed what we have is a we have a california labor code that is extremely broad and is interpreted extremely broadly and then we have separate issues we have the workers compensation statute which by the way if if a if if an athlete is determined not to be an employee for purposes of the worker's compensation statute the result of that is not that the that the the athlete has no claim it's simply that the athlete has a claim in either negligence or strict liability or whatever it may be he loses in loses the ability to make a worker's compensation claim but if he's able to prove negligence or gross negligence or intentional misconduct or whatever it may be the the athlete may wind up with a much marja recovery than the caps under the worker's compensation regime most employers want to see workers classified as employees under the worker's compensation statute because most employers recognize that it's primarily for their benefit because it's a huge cap on liability here if the court determines under california law that these these athletes are not employees there is no alternative regime for them to to seek fair m the stands in the way of these workers being classified as appoints thank you counsel thank you very much thank you both for the arguments today and for your briefings very helpful to the court case just are going to be submitted for decision