wayman tom and please let me know if i'm speaking too loudly i will be reserving six minutes for rebuttal your honor this quiz exactly yesterday was about celebrating workers rights in this country and this case is about protecting some s say to uphold such a scheme and accepting a pelleas artificial justification would undercut one of the fundamental purposes of the f l a c ensuring that workers are adequately paid as as a service charge and there's discussion in the briefs and discussion in the order about the seven exemption and my st question is whether in your we or they are they used interchangeably or are they different that is an excellent question your honor and the for purposes of this matter they are different here the auto steely case vs jackson entertainment this court provided some initial guidance identifying at least two prerequisites that indicate a payment may be a service charge the company must include the service charges in it receipts and that such service charges must be distributed to its employees now in that field because the employer failed the st prerequisite no further assessment of whether the service charge w still to know include a statement of undisputed facts regarding the service charge or proof that service charges were included in the gross receipts even if those ot of the two of these at issue in this case were included in the  that's part of what we'll discuss today my question to you is are these two prerequisites met here your honor the the court the answer to that question respectfully is is is no because the appellant's did not include a statement of undisputed fact relating to whether or not the service charges were actually included in the gross receipts so while the  would like to just follow up a little bit all my earlier question so it does not look like the service charge regulation has the requirement that  this i get your if we assume that this sir is a service charge in it meets the tune the feelie requirements do we even need to be talking about seven  well for purposes of this matter your honor the it's how we contend that because the service charges basically constitute a commission that seven i does apply but because of material fact i've read that not appreciate the cases you've cited and i and i recognize that the that the employer has focused a lot on seventy nine as did the district court i'm simply asking was why are we doing the service charge seems as i read it to be yes that a requirement that number that has does not have some of the limitations and if you are saying and i know you don't agree this that there's no i'm sorry to be kana stuck on the asvab just actually trying to understand it i mean is there along yet prior to a lawsuit or prior to a complaint is there something where the employer designated the way they meet the f l s a as the in either a tip credit or a service charge is that something that you must do as you go along and are you saying they changed it after the fact or or is it something that if your challenge you can meet it under any of the available ways your honor that is an axle in question and and to answer your question i would direct the court to section two or three m of the f l were going to be paid two hundred and thirteen dollars an hour plus tips not plus commissions the onboarding paperwork explicitly excluded commissions as a form of income thereby demonstrating that their wages would information is obviously dispositive it's in the record in fact the other interesting point your honor is that that during the course of the posing  corporate designee who testified under oath that he was responsible for implementing the a tully's play will practices and policies he testified that he had never even heard of seven i until one week before his deposition in preparation for the deposition which i think is dispositive that the appellee actually just try to recreate a narrative to circumvent the requirements of two or three and by that require the employer to pick their allaying so to speak for f l s a compliance and stick with that no matter what or does the employer have the ability to meet the minimum wage and overtime requirements whichever way the facts take martin excellent question your honor and i must say that unfortunately as i as i mentioned at the outset i get it it's going in a different direction from tipped from including tell us but the law i thought was designed to make sure that they get the minimum wage not on the number one and number two get time and a half if they work over forty hours and if they're getting that by virtue of including service charges how are they evading the law it seems to me they are giving the employees what the statute is designed to give them well again your honor because at the outset they were not advised that they were b that they would be paid you know commissions or that somehow commissions would be a form of mean i think that that would be a huge disservice to millions of employees and in the restaurant industry because now you would have employers that on on the surface with pete would appear to adapt a tip  credit paying these people less than minimum wage paying them time and a half to thirteen an hour and then when confronted with a lawsuit completely switch gears and you know one day and then adopt a completely different  two things let me follow up on that then i mean seven appears by text if i'm not reading that incorrectly to apply to the overtime requirements it doesn't say anything about the non overtime minimum wage and so that's that that's well it also has the requirement of the fifty percent of compensation you know element and i know you think  when you're talking about the fifty percent it's talking about compensation not regular rate so our use in a regulation that's talking about what the rate hourly rate is and see now on appeal and presented in the district court with the use of service charges the auto gratuities is not what was originally placed on the  respond the argument is made that there is a material issue of fact because the service charges were not compulsory or controlled by the employer but that they were discretionary and that there is evidence in the record that on various occasions when there were complaints the service charge would be removed so what what's your response satisfies those obligations and i'm not sure if this is in the record or not and i'll ask your colleague as well but is the reason that the in the we is the reason that the service char commission did not satisfy the obligations for several weeks is that due to the hourly rate the too low or is that due to that it doesn't sound like you agree with me on this and you may be right but if the service charge is a separate category from seventy nine and doesn't have the fifty percent of compensation this court has found that with respect to employers that try to create or follow other sections of the f l a say such that's sort of a position just can't be taken and i'm referring to with respect to the seven i and these service charges which pelleas would like to insist are commission for purposes of seven i be a political will and regulation that is at issue any unstrap services you must pull the entire compensation during the employment of the individual all compensation in whatever form or method and the only compensation that would be excluded is any compensation that has nothing to do with employment so on this basis alone those regular gratuities the direct wages of to thirteen the overtime when comparing against the auto gratuity rates obviously a pallies are contending our service charges exceed fifty percent of the employee's total cost of compensation in other words the auto gratuities always are less than fifty percent of the total compensation so that's my nd point my silly council yes do you have a case that supports the arguments that you just made unfortunately with respect to the calculation of seven hundred and seventy nine dollars there is not that much authority your honor but certainly the regulation itself was obviously intended as an interpret and here the customer could easily ask to have it removed if they were not happy with the service in fact if you look at the court's ruling or opinion you can see that the district court actually analyzed a sampling of the a pelleas customer bills which showed twenty percent gratuity and then it had a separate line below it saying quote additional tip with a line there so that the customer could add more to the gratuity and then a total by just the plain language you can see that for the customer that would demonstrate that it was a gratuity that was discretionary and not a compulsory service and i can understand why the separate line for additional gratuity would be considered that but i don't understand the reasoning that says the prior line showing the service charge or auto gratuity whatever you want to call it how it would affect that well because if on the one of the factors in how was how what would the customers understanding of the pa we you take it off and management agrees to take it off does that do the service charge to failure and that that one example your honor that is an excellent question and the answer is unequivocally yes and you can see from the plethora of authority around the country that that was the reason why the district court would absolutely deny a motion for s because even in those cases where it just appeared to be a service charge not some type of gratuity in this case an auto gratuity the court has found that it was merely the minimum but if they were able to pay more or waiters were drunk they spilled food on the customers and management takes the service charge off and that circumstance you say that want to vent in and of itself  on what what creates a material fact d and disputes on the treatment of the service charges slash auto gratuities and that took the argument from your brief to be that th regulations state that it must be compulsory it must be inflexible and it must be non negotiable so not even when situation where the servers are junk and the service is terrible can manager remove the auto gratuity and still be able to assert that the service charge is compulsory and in this case the facts demonstrates that it was only apply fifty percent of the time and the  servers it was perceived as a service property because they could ask to have it immediately removed and the customers could pay more could pay less or pay nothing at all additionally the regular tip and the auto gratuities were commingled all of the time because if there were parties of six or more and it had the auto grid to eddie and if they added another one hundred dollars because the service was impeccable then it would be co mingled and then it would be added and all of the servers would would essentially split the gratuities through their payroll tax and then it would be taxed as wages all right mr manners you want to try to wrap up in the next minute or so material fact relating to the kitchen supervisor who also functioned as an expert dire and the the sushi chef helpers the fact demonstrate that they simply did not engage in more than being then in the interaction with the customer to qualify as to be employees and if they did not qualify assist employees then it automatically blows up the test credit and therefore the employers are on the hook for the difference between two  in looking at this issue about whether there's a genuine issue material fact that i appreciate your concern and it with the district courts language in the st part of the paragraphs making the decision i mean there there does in all candor seem to be some level of you know creating certain types of testimony over others but the nd d or i think is the issue of  whether whether we have an actual just view is based on whether it's more than demand a mess or not and just from work look at this looks to me like your argument is much stronger on pappas than it is with this system so she said yes and my question is whether or not you agree with that or not and your colleague may disagree with both of it but if if one employee if  there's a genuine issue of material fact over pappas and there's not ever the sushi chef helpers does that a material issue of material fact for the pool as a whole  absolutely even if there is one individual who not only qualified employee prime it would blow up the credit absolutely or it would invalidate the tippling arrangement and subject the employer are allowed to return so with that we will take a short recess while i move on to our next case thank you very much