briefing on this case this is a employment class certification case where we've sought a petition to review a decision by judge chan of the northern district to grant certification on a class case involving expense reimbursement at o'reilly auto parts retail stores and as we've outlined in our brief whenever you're analyzing the issues of rule twenty three in employment context you do have to analyze a little bit of the underlying case that you can determine whether or not common issues predominate well let me ask you and accepts that seems to be the central issue in this case this is a rule twenty three f appeal and so the only thing we can do on this is peel is either say that a class was that the judge either abused its discretion in certifying the class or did not abuse his discretion correct well i believe that's true with one minor exception and that is i think the case was pretty clear that if the judge based his decision on a roni is legal assumptions then the court can review those legal assumptions don't they don't don't take cases suggest that those are erroneous legal assumptions as to the nature of the class in other words erroneous legal assumptions on the rule twenty three issues as opposed to what the underlying theories of liability i would suggest that it's both that if the judge in doing the rule twenty three analysis misapplies california law and of the  face putting put aside the failsafe and self serving cation issues which i understand are separate arguments seems pretty on exceptionable california law requires that people be reimbursed for their expenses in the class definition is simply those folks in a certain time period who weren't reimbursed for their expenses the quest definition doesn't seem to embody in any theory of liability in my in my review my wrong and well i believe so your honor and here's why when judge chen made his decision on how to define this class and entered into this cell certification process he based his analysis of the common issues solely on his interpretation of labor code section zero two the reimbursement section and when you look at the way in which he's defined the class it is involving the liability issue you raise your hand through an affidavit and say i incurred an expense and i didn't get reimbursed that's your classic fail safe class and i do believe that that class as defined is ripe with all kinds of due process concerns well but those are separate issues from the theory of liability aren't they now the words let's assume the theory of liability had instead been only those people that the employer new had encouraged expenses and had done nonetheless fail to reimburse the class definition  the in the identification process would nonetheless be the same when well i think that you would have been interesting enough if you look at other cases in this district that have analyzed this issue where an employer has expressed policies and there's no evidence no common evidence that they're not providing expense reimbursement and the case law makes it clear that there's some burden on the employer to do something where we believe judge chen's definition of the class ran afoul is when it created this you accept judge chen's interpretation of twenty eight o two and impose on the employer this obligation once the knowledge is put on them to exercise due diligence then the way he's defined it would not be a failsafe class and that's why him running afoul of the law created the failsafe problem and it isn't that the burden as judge chand seems to have there's no don't there's no summary judgment motion here there's no partial summary judgment he's made all these statements  in correct in the question of a vacation process but even under your interpretation of the question isn't the burden on the class members to demonstrate that the that the employer knew or should have known i believe that burden is there but under jeff judge chen's analysis the burden will then flip to the employer right once they demonstrate that the employer knew or should have known the employer might have an affirmative defense of saying no i really couldn't have known that that's true i thought it was like reckon burden is on the class to demonstrate that the employer knew or shouldn't have known of any particular reimbursement right correct and the problem that i have with that and let's talk about that issue from from a rule twenty three standpoint judge chen and his order made some assumptions let's just assume that he's right in the california supreme court's wrong on twenty eight o two well wretched to be fair there's no there's no california supreme court case that specifically deals with this issue you make certain reasonable assumptions or perhaps unreasonable so some ships from other things they've said but there's no california supreme court case on point that says you may one of the prerequisites for recovering these reimbursements is making a request pursuant to employer's policy well if you look at the get two so i asked which we cited yes i saw that the supreme court the they end up in front of us you may have a terrific argument on them i'm just saying i'm less convinced that you are the judge chen road willy nilly over california law he may have misinterpreted it but if there certainly isn't a california supreme court case that gives exact guidance for this case i understand i believe the good to so case does that but that the express holding there was whether or not you could provide reimbursement in a lump sum but in the process of analyzing it they outlined other methods of course putting burdens on the employee to do something and i think this is the question i'm still stuck with is why is that front of us now these guys may have a terrible liability theory but  entire class at once rather than winning them one by one what's what's wrong with the classes seems to me well defined to match up their terrible liability theory if you will move for summary judgment well ok let me address that issue let's not let's look at what judge chen found the common issue was and let's focus on this knowledge issue putting aside my view that that's not the law but judge chin's view of the law is that the employer if the plaintiffs prove the employer knew or should have known this expense was being incurred then they have to prove that they use due diligence to reimburse and what are the common issues as framed by the court what the trial court said is we can adjudicate that knowledge on class wide proof but think about that for a minute you have five hundred twelve stores with an express policy for reimbursement they can be done at the store level for less than twenty dollars or at the corporate level for more than you and i this seems to me to be the argument you should be making in other words this is the class management argument or class typicality or commonality argument as opposed to even if judge chain has the wrong theory of liability the question ought to be is the class manageable properly defined under that theory so i think this is that's what i want to ok and i'm glad you said because that's what i was going to address next so it's perfect here's the problem with judge chen's analysis in his order he makes a lot of assumptions but the store manager always going to know who goes to the bank that's not necessarily true and that may vary from store to store he makes an assumption that store manager is going to know whether or not somebody submitted a request for reimbursement at the store level but that may or may not be true if he's not involved in it an assistant manager could process it he makes the assumption that the store manager is going to know whether or not somebody submitted an expense reimbursement request to the corporate office that isn't even handled by the store manager that's handled through the district manager let's go to the next level in the hierarchy for o'reilly's knowledge you've got district managers that supervise ten to twelve stores there's going to be verity among the stores five hundred twelve among the districts over fifty as to the knowledge of the individuals and then the question becomes who do you impute that knowledge to if it's the store manager one of the putative class members although judge ten created the subclass for them or the assistant store manager where there was no subclass created they're the ones that are part of this class and get reimbursed and it's what you which of the rule twenty three factors you think your chain abused his discretion i believe on the common commonality superiority and manageability i think all of them one of the things that i would you know we do we do review that for abuse of discretion you do you do and i think where he abused his discretion is if you look at the order he made these assumptions that you could just put on mr mill gars case and what knowledge his store manager had or his district manager have and impute that across the entire state when you have five hundred twelve different stores in gauging in five hundred twelve different acts with different store managers working different schedules that may or may not be there when somebody goes to the bank they may be the sales call because this auto parts they have to show the  there is going to be variability from store to store as to who went and who has knowledge of who went there's at least two people at every store that are supposed to do the bank on one of the two but the evidence is that the what's called the r s s as you saw  the briefs which is like a second assistant will do it on occasion as well obviously the store manager is only working five days a week if he works a sunday there's two other days that bank deposits are being made he's not even there this is the manager maybe off a  commercial customer doing a sales call and an r s s runs to the bank and then again when they come back do they do immediate reimbursement of petty cash to the accumulative and cent of the corporate office so there's knowledge of whether the expense was incurred whether they walked whether they took the delivery truck some days the delivery truck might be available some days it might some district managers allow use of delivery trucks some don't there's so much variability in this that it really will wreak havoc and one of the other problems i have is there was no trial plan submitted with this class certification motion and so we're speculating about how this common proof on this knowledge element is going to be proven  of california one of which ironically is our largest competitor in the auto zone case they have the exact same facts we have they had an express policy allowing reimbursement they had proof that the reimbursement program was utilized they had evidence that there was no denial and in that case judge brower found the absence of common questions because there were no uniform policy that denied reimbursement and it's ironically judged even looked at this stewart versus radio shack case and presume the knowledge to be that the employee had submitted a request and he found excuse me judge conti in the lum liquidators case found that one of the issues that will be individualized is whether the employee submitted the request they presumed an employee obligation to do something and i guess the practical problem with a case like this from a commonality standpoint is are so many individualized issues including who went when and did they submit a request and i think the employee has some burden here thank you opponent talked about you know i'm speaking only for myself enough for the court i'm less interested in the theory whether or not judge chad had a correct theory of liability than whether or not this question is manageable under his theory honor i hope i can do that even though the manageability issues were not among the three issues presented in the twenty three of the titian we're talking about something different here we had the three issues your opponent has been treating which is that isn't this going to just devolve into how many employees are there approximately four thousand class members over time business going to devolve into four thousand individual requirement to demonstrate administrative feasibility a feasible way of identifying class members so that a creature amidst the issue about the self certification that is no i myself should have an issue i think judge freedoms opinion probably is controlled yes one of my questions are really different one and maybe maybe you think it's not in front of us well even if everybody self certifies how is the eventual liability determination to be made except on a case by case basis here's some that was appropriate tell me how you think that would work so what would happen is the judge would say as to all members of the class i certify that i find that if if you  he'll but he'll have to did you get rulings not in front of us as well more mr peterson says that is what is it that's my question so is it because of the way he's identified subclasses or is it not in front of us because it's not compas by the twenty three f certification well the best i can do to say that it is in front of you is it seems to me to be a merits predicate issue on which commonality would depend judge us and we'll pay you if he's wrong then the class certification is wrong if you i think that judge view of commonality does depend upon that view i don't think you should say that for the following reasons as you said there is no california supreme court decision exactly in point get to so doesn't decide mr peterson's contention is good too so somehow says there are only two elements the  expense was incurred and not reimbursed but looking into good tussaud's discussion of the commission system the supreme court of california said and get to so that the employer if it wants to use it could use a commission system will have to have an accounting that allocates the compensation commissions as opposed to the reimbursement they will have to be two so within the four corners of the two so if you look carefully enough it undermines my problem with q two so any other california cases and is that they don't really deal with the issue i think that your opponent is making maybe i'm wrong about this he says look we have we will reimburse anybody who gets it has it has those expenses or you have to do is ask yes and the class want to be limited to those who asked well known and mr peterson brought to our attention your decision in demon vs anthem that says that a federal court is obligated to look to the decision of an intermediary not we're only we only well not unpublished ones in that case if you look back at it two of the three decisions that they relied upon more on published if you have there was a published decision and that decisions just came out the same way as the published one that is that is right but time i mean we have to we have to make any real guess about what the california supreme court would say and i take it you agree that the california supreme court really has not addressed this precise issue i do agree only in so far but i'd qualify that in so far as i just said that good to so embody this implied additional requirement to justify to show that the amount allocated to so they've got to do something and i would argue that that's quite good too so was it cases i read it with the employer wanted to pay reimbursement but in a lump sum rather than rather than in various in a single yes well not really burst but by reimbursement if they said it's a lump sum it's an enhanced lump sum based on the employees that committed to do so didn't do you at all with the notion of an employer being required to pay reimbursement absent a request from the employer correct that is right nor did the that we're in uncharted territory here in the we're going to all cases anyway yes well i have all i can find on what the california supreme court would do is the one thing about to get to so addressed in connection with the begins begins with the statutory objective of preventing an employer from shifting expenses of doing business to its employees that claims adjusters and the this court said well there's a policy that would show a liability and then it's up to individuals in the has been content for nearly eight years to continue to apply a policy of requests only for reimburse reimbursements when they they could easily  complied just by requiring each depositor deposit or when he makes a deposit or sheet just right on the deposit to the initial who made the deposit and whether expenses judge chan's interpretation of turning on cue i there were go where i think just what is common to the class that will be decided as a class that arise from his incurred which they don't really dispute and that they knew that some expenses were going reimbursed well that remains for us to prove and that will be very important and whether or not they substantive burden to exercise reasonable efforts toward reimbursement with the burden of proof nowhere did judge show either in this case of the stewart case say that the defendant or any burden of proof normally the plaintiff has the burden of proof and we don't challenge that but those of the common issues that he delineated that we would argue was surely justified the satisfaction of commonality he did not abused his discretion in  deferring further questions about manageability and predominance to a later stage if you recall these said at some point in the opinion that the sworn certifications that he foresaw being put in at the claim stage they might win all at t class they might to show that the individual lies determinations in the claims process would be less then c s a c s k was claiming or they might show that the individual lives questions would be just too much even at the claims stage in which case he could modify the class he could decertify the class he could do all sorts of things so here we are reviewing this talking about the issues of when a twenty three f petition comes to us can don't we just review the issue of whether the certification was an abuse of discretion as opposed to the individual issues in the petition i'm not sure i'm not sure i know the case law on that perfectly but i thought that the issue in front of us was to review whether or not the judge abused his discretion in certifying the class and that we were necessarily limited to the issues he certified to us managing a class action of the no further questions thank you very much thank you mr peterson i think you've got a minute time and i'll try and cut to the chase here having heard that discussion but there's just a couple more points i wanted to make were we take issue with the abuse of discretion to the point you just raised is what i raised earlier there are so many individual issues that will predominate this knowledge issue as i outline previously i need not restate them again knowledge as to who went to the bank how they got there whether they got reimbursed that it clearly was an abuse of discretion i also want to read a couple of just two quick quotes one from the chavez case judge briars decision when he found an absence of commonality identical facts the court would need to make individualized factual determinations concerning whether the claimed expense were necessary whether the employee actually sought reimbursement so he's presuming the employee doing something and whether or not they were reimbursed when judge bryer denied certification in the autozone case he said because defendant had a uniform policy to provide reimbursement failed to offer significant proof that the fenton had a uniform policy or practice of denying reimbursement and because defendants offered numerous punitive class member declarations demonstrating that the employees were routinely in statutory interpretation on this twenty eight o two issue and he says that when you interpret a statute you shouldn't do so in a way that creates observer absurd results he then says that the plaintiff argued the employer can't sit back and wait for a claim of reimbursement and then judge chen says however mr stewart's not cited any authority to pursue port this proposition and practically speaking such a approach would produce mischief or absurdity which good to big difference in this case in that case as we outlined in our twenty eight day letter is that that was an aggregate liability case this isn't one and can we really create a class can we certify a class where somebody is just going to check a box and raise their hand and say yes i went to the bank and yes i didn't get reimbursed without any due process due process right to cross examine that affirmation when we know from the record that several people that responded to mr mock survey under the in the underlying case were wrong you we've given we've let you go well and over time we should appreciate the arguments from both sides in this case we will take the case under submission and the court will be in recess until tomorrow