good morning honors theater butros for wells fargo i'd like to reserve three minutes for a bottle thank you the stipulated facts in this case the plane went language of section two hundred and twenty six dollars and at least four california supreme court decisions the kirby decision brinker decision the augustus decision and the ralph's grocery decision all compel reversal in this case the st issue i wanted to focus on was the fact that section two  six seven only provides a remedy for the failure to provide arrest break the kirby decision from the california supreme court could not be clearer it says over and over again that the statute is triggered by the non provision of meal and rest periods not the nonpayment of wages and here it's until we would have to disagree with a carrot to agree with you right no your honor invacare as far as we can tell and we've scrubbed the opinion the briefing that that issue was raised in that case it came up on the procedural posture that the defendant had one below so the defendant did not make the argument as far as we can tell on appeal regarding this question whether it's the statutes trigger it's undisputed if you the my my my greatest hits stipulated fact is number forty two which is that you are to a one which the parties agree there's no allegation in this lawsuit that the home mortgage consultants were not stand for the proposition in this court in california if a court doesn't address an issue the case is not precedent for us i don't know it was a carrot doing if it wasn't having a remedy it was assuming that there was a remedy for failure to the court of appeal i think would have been hard pressed to ignore kirby but since it was a litigator the court just assumed what the parties brought to the court and jumped right to the damages on their cases where we have a court of appeals  point where the th circuit has not followed it as a matter of state law i mean it's interesting here to the california supreme court tonight sir i'd also be interested in your view on what bearing that merits and i do know your i don't have one at my fingertips but here where the guy post is what would the california supreme court do there's a california court of appeal case that doesn't address the issue we're raising and there's a california supreme court case kirby that says emphatically that this provision section two hundred and twenty six point seven is only triggered where the th the employer fails to provide rest breaks fails to give the opportunity makes the employee keep working so it's absolutely clear in the kero does not say anything about that and the fact that it doesn't that it the parties didn't litigate that issue does not bind this court to care is that does that create a question of whether we should certify this narrow question you're now talking about to say listen the keros here but we didn't see this argument made you know the supreme court said in kirby that it's it doesn't provide  the obligation the employer is to make sure that there's an opportunity to take a rest break it down have to require them the employees to take a rest break they don't have to force them they must provide an authorized and permit a respirator so i think it's clear but if the court doesn't agree with us on this i think certainly that would be an option and again the course of dividing what the california supreme court would do the carroll's one benchmark and i'm going to talk about it in the context of jumping to the next  california supreme court's decisions are clear the kero as we've discussed i think it's wrongly decided but the court doesn't have to deal with that because it didn't address this issue and i think it's easily distinguishable on the next issue regarding whether or whatever the company was called the ledge i am understand much deducted from sales associates paychecks any previously that anything previously paid drawn on commissions the company states that such repayment was never taken it would result in payment of last then the hourly wage which seems like they're saying that that's essentially vesting there too isn't it no your honor he said that in the kero that the hourly the true up it was a pure commission system the if someone didn't make enough commissions to me twelve dollars an hour they would true it up but it's a kero said that was not compensation at all it was like an interest free loan and then it could be taken back in the future commissions well it could be that they said that they would never  it was never taken if it would result in payment of less than the twelve dollars in one separate hour for our time worked in any week so i thought that meant that if you never earned enough commissions they were never going to have you earn less than twelve dollars a month  it's hard to know how it played out in practice all the time but the california court of appeal the premise of its decision was that there was no minimum hourly wage paid and one quote your honor they say their separate compensation test this is the court says that employers are required to separately compensate employees for rest periods if an employer's compensation plan does not already include a minimum hourly wage for such time our compensation system does its undisputed its  the hourly wage was paid no matter what it was vested the wage statements if you look at the excerpts of record three hundred and two thousand three hundred and nine every time no matter what there's regular pay it's hourly pay the comp plan says this exactly would find exactly what it was a protection for you it was in for the employees it was in protection for the employees and then they could make more money more compensation commissions an incentive compensation so i just don't understand so invacare i was never taken if it would result in a payment of less than twelve dollars per hour for all time work out how is that not exactly the same maybe with different words labeling it well because there was according to vic arrow the fact that the who was a claw back of the true up which was not an hourly wage meant there was no way you could tell for sure whether people were compensated for their rest breaks here we know for a fact that and the judge said  that because there was an hourly wage paid that was vested in that was kept in the employees were not required were not did not clock out they were paid for their rest break time we know that for a fact and they were paid minimum wage that's what the law requires  and so the fact that then they could make more compensation we shouldn't punish a company for giving more compensation that was then used to calculate as part of this comp and that was tracked if they made more commissions is that right if it wasn't subtracted your honor in fact that brings me to the ralph's grocery case it was not deducted or subtracted it was used as a part of the formula to see if the employee had through it's his or her productivity made commissions and it's not a semant issue and that's going to come up and say it was subtracted the employee got twelve dollars an hour they were paid for the rest they can into account it was taken into account i think it's much better so than i did but that that's key because they have this magical thinking approach here that an employee who got paid for a spray twelve dollars an hour who got their rest break the fact that it was taken into account what they made per hour to see if they could get more compensation eliminates the reality that they got the rest break and they were paid for and that's that's rough grocery says that's incorrect that is perfectly appropriate to look at compensation already received to give a bonus or incentive pay so if you take ralph's grocery kirby and i think you're honored that judge ruling that is sort of a weird decision but it is different to say pure commissions and we're going to do this formula the kero thought that meant you couldn't tell if the people were paid for their rest breaks here we know for a fact that they were so i think that you know again the care is a very confusing decision i think it's wrong but you don't have to reach that maybe i'll address the shipmate test of the damages issues the fair a decision i think does provide clear guidance it's the only court of appeal decision on the question of whether you look at the hourly rate in determining the one hour of pay for the pay premium what's the status on that is that still pending i believe there's a day or two dollars before it becomes final the rehearing they have not sought this correct yes so that could happen in the coming days but the  think that decision is clearly correct it relies on the five sites the five district court decisions we relied on but it's very sensible it's the the argument in the that was accepted below and that mr rubin will make is that because the twenty six dollars uses one hour of pay at the regular rate of compensation that should be interpreted like that phrase regular rate of pay in the overtime law that there's just no basis for that those are two different phrases compensation in pay and in the difference well here is the key difference your honor is rate of pay as they argue for pages and pages this is his get quite a term of it as a term of art under the the overtime of compensation is not in here rate of compensation is tied directly to one additional hour of pay which seems to to clearly indicate that the premium which is a very very generous payment for ten minutes an hour for ten minutes already but the legislature in the wage order was referring to the hourly rate of compensation and that that failure to apply that rule inflated the damage slick seventy three million dollars sort of bare minimum we respectfully of the court did reduce the least some tension between fact kara's reasoning and farrah's reasoning that because the kero talks about this idea that people who earn commissions are not going to actually earn the commissions during the rest breaks and that that is part of the problem and then farrah says that's not a problem so is this a further reason that we need to certify this in the conference room where it's not clear to me how both of these could be right i don't think that we care again didn't address this question so i don't think it stands for a proposition that relates to this damages issue but what i can say is i want to challenge this notion that there's no support for it in the record here that commissions and a commission system is going to deter someone from taking a rest break it's not like some alone officers there and there's an unlimited supply conveyor belt of customers and if they take ten minutes off they're not going to get a customer so it has no support for that and our thank you michael rubin for plaintiffs mr bush st made three arguments all the dress them in turn but st judge nelson the fair decision the deadline is actually november th for either a petition for review or quest for publication and i think after i get through my arguments i'll talk about certification or whether to defer submission in light of the issues and the potential conflicts the three arguments st where whether this is an appropriate claim at all obviously did treat this case as a valid claim the claim is whether there's a violation of state law to twenty six dollars if an employer fails to provide a paid rest break that it sounds like he did in my misunderstanding the argument or maybe you can address his argument that they didn't pay them for the respirator they did not pay in accordance with law with two twenty six dollars says is that a rest beric break has to be paid in accordance with law that includes specifically the wage order law the wage order law requires the pay for the rest break to be at the regular rate of compensation the argument is that well so far we did not pay the rest breaks at the regular rate of compensation that is the violation because it was  dollars an hour wells fargo would not because their commission structure would only kicking him if it was going to be effectively a bonus to them if not then they go back to the regular hour of no has charged her to point it out the twelve dollars is a minimum just as it was in the kero case an employer has to pay at least that amount in order not to violate the state minimum wage law the requirement of being paid is a requirement that you be performs at a basic competent level and sells in the minimum as the record shows is one thousand two hundred dollars commission per sale of a single mortgage anyone who performs at a basically competent level is paid only in the commission and receives the same amount of pay for that commission and whether they take their rest breaks or not therefore have no incentive to take rest breaks it is the fact that they are in the exact same amount whether they take the rest break or not that shows us either way there and when they're getting the compensation if they're working twelve hours a day they're receiving the amount of money so you're working ten hours a day they're receiving at a minimum the same amount of money i mean it just feels like you're trying to boot strap and let me buy it for me to jump into with california me wants to let me make the point more clearly than california law requires that a rest big break be paid at the legally required level  whether you agree that wells fargo paid with legally required level or not the claim under twenty six dollars was that wells fargo did not pay its legally required level that is a valid claim kero says it's a valid claim in fact we have two stipulations in this case that state the issue one at three hundred and twenty dollars to one dollar it to a one where the parties and the court accepted the stipulation state that the issue to be decided is ask you a question that i'm trying to understand about how this compensation should be calculated in your view compared to over time because if i'm understanding the record correctly and how overtime is calculated it's like an average of the commissions which you get by dividing the commissions by the number of hours but then there's this multiple plying by point five so it seems like the overtime amount of for commissions is really like half of the average hourly commissions and i order my misunderstanding that  the the calculation of the regular rate is identical and but overtime premium requires time and a half so once you factor in the commissions divide the total remuneration by the number of hours that gives you your regular rate we say the rate of pay is the same things were great of compensation but it gets you the regular rate for overtime you get that amount and i analysis and just as that and just it was a devastating critique of the majority the the analysis and you saw it page seventeen dollars to nineteen dollars over opinion says you start with the term of art that everyone recognizes regular rate and there was additional language in the awful a say that is not copied by the i w c regular rate everyone agrees is the total pay and compensation if you look in the dictionary if you look at the fact throughout the labor code throughout the i w c wage orders throughout the deal a c enforcement manual they're used interchangeably we gave many examples she gave m examples and the question is simply whether a canon of construction which says that in some instances where legislatures different language it may mean two different things requires a different result the majority never explained why the particular result it reached is compelled by the difference in language the california supreme court repeatedly in murphy said that pay and compensation are used interchangeably in the more recent case went back to murphy and said yes that's what murphy said and you can't assume a difference just because different words are used we know historically why different words were used in february they used the f l s a regular rate of pay language in august they just tracked the i w c regular rate of compensation language so for all of the reasons that just it's just as edmund recognized they are the same they should be treated the same and the purposes  for the rd which are to provide an incentive to employers to give rest breaks and for employees to take rest breaks and that only happens if you provide the same type of compensation not with the other circumstance so you do not agree with the argument that i thought was made today that that all the carol says is that you have to give them a rest break it that you don't pay him no no murphy for example actually says that the requirement california law is that you to not paying rest breaks that same company invacare of which is actually furniture which was the exact same case involving the exact same sales associates they also didn't get paid for time waiting for sales meetings and the issue on kirby was how to apply the two way fee shifting provision of labor could two hundred and eighteen dollars most statutes give fees only to the prevailing plaintiff that's one dollar way fee shifting absent special circumstances to fifteen dollars says in a case for nonpayment of wages then whichever party prevails is entitle the fees so the question was whether on the facts of kirby and the facts of curb your critical there is  claim for the prelim party for a nonpayment of wages fees in the way justice lou dealt with that in the california supreme court is you look to the facts what happened in kirby was not what's happening  here in kirby there wasn't a question about whether rest breaks were paid or not there was no question of whether there was a nonpayment of rest break the issue was whether the employer had failed to provide a rest break at all and the question was whether a claim for the remedy for failure to provide a wrist rake the extra hour of damages that wages or penalty but murphy said it was wages is something that could trigger a two hundred and eighteen dollars way fee shifting provision and so when the supreme court justice lou said no this isn't an action for nonpayment of wages that is not that means that a claim for argument i guess we need a way to sounds i can see whether petitions filed whether the california supreme court takes it but if they don't let's say they don't take it or have no petitions filed it sounds like your argument is we shouldn't follow farah because you think it's wrongly decided absolutely and let me explain what could happen in farah the st of all the petition for you will be filed and there will be requests for the publication of the kalar you are involved in that case   in the california court system the court could either grant review or could grant the publication and have the case no longer have any presidential value so we won't know for several  months what the california supreme court is going to do but there will be a request to review and to d publish and so you know i mean i guess we could ask for additional briefing at that point but but i'm interested in your view of why this is interesting to me when we have a bill can reject a state court of appeal decision because seen this in other cases where we have split decisions and those seem to be the most likely candidates you know generally but i'm not clear on what the standard is i mean we have to just say me seems odd to say we're going to defer to the state courts except when we think they're wrong and then we w to and that's why can we do the same thing with the care of that there's different you could if there were a legitimate basis for doing so if there weren't a stipulation if there weren't murphy saying the ten dollars to twenty six dollars says you have to provide paid rest breaks the california supreme court would likely deny a request for sort of occasion because the recall you can only ask the supreme court to accept certification you can't compel it to certify the standard is articulated in different ways in different cases persuasive evidence to the contrary that that's what the california supreme court would do we pointed out in our briefs why the justice edmund far more eloquently and eloquently than we pointed out why the california supreme court is not likely to adopt the fair analysis you are not bound by fair are neither are the other five courts of appeal in california well i understand that but that just because it makes it very problematic for us because we have case law that says you know we should follow a court of appeals unless there is and that's the question right now what is that standard unless there is persuasive evidence to believe that the california which california courts have said difference in language does not mean difference in content we cited two or three others the amicus brief in support of a c love cited additional cases  murphy itself does so there are there are lots of reasons to believe your position and i know i'm taking your time but what you might want to reserve but is if this california supreme court denies review that that has no bearing we should give that no weight i mean you sort of agree with them we would stick to your position would be we would still walk and say well edmund should be his dissent makes more sense yes and the question then would be whether our position would certainly be the majority never did nothing really analyze the issue it has no response to justice dead and that's not what the california supreme court would do when it actually takes the case you can push it along a little bit by requesting certification but you're obviously should request certification if they deny you i mean are we as if they deny review it seems a little odd to go back and say well hey we think you got it wrong you surely should keep this case no because there are lots of reasons the court can deny review and the supreme court could decide to reject certification like the colver sara steve case the supreme court of california within the last three weeks rejected a request for certification from this court and the court then has to decide it in the in the kirby vs sorry the kilby versus c v s case there were three cases before this in this case there was no way in farah there was an hourly rate and aid non discretionary bonus on top of that but there was there was plainly an hourly rate in this case as judge anderson pointed out there wasn't an hourly rate at all th so no this is this is factually distinguishable from fair in any respect which may be another reason why the court reaches a different decision and as we pointed out in our briefs is one reason there's no need to certify or the st submission because the judgment below should be affirmed even if error on the facts presented in fairer were correct so i still have a question i'm going to give you more time for but i'm just to make clear that i have a question about these these who received only hourly pay because they didn't get enough commission so in their view there are nine hundred and sixty one of them it seems like at one point you said the may be four hundred and four of them as to those those h m c these are you relying solely on a waiver type argument at this point or are you contending that they actually weren't properly compensated somehow they weren't actually compensated and there was waiver ok so you explain the the not properly compensated part to me because i'm having a little trouble understanding that argument i think ok two parts st you look at the compensation plan and as part of that you look at the reasonable expectations of the employer and the employees if we are correct in our analysis the compensation plan be but is it i mean the basis they would have gotten the twelve dollars an hour including the time on respirators though is that right and then the problem is you're saying that that but that wasn't anticipated to be really an hourly rate it was ant to be an advance on commission if that's the st argument the nd argument is that the data doesn't actually show that these people didn't receive commissions the the data that st of all the data that was submitted as  judge anderson pointed out at page thirteen of the excerpts defendant and this is the waiver fails to establish how many if any such h m c as there were so why did you say if any the reason is because we don't know that any of the supposedly nine hundred and sixty one or four or four got no commissions and had no offset those best we can tell is that it multiplied out to a factor times twelve but that could have been because there were low commissions at all and in fact they didn't get the hourly wage and there's just no way for judge andersen to tell so if we agree with you that you waited to there being this category and there being nine hundred and sixty one of them does that just leave us with the fact dispute on how many there are that i'm i'm not sure i see a stipulation from them the other way either so it feels a little bit like you both have an argument that you didn't agree on this and that might mean we should remain for a fact development on this question of that category of these people no because what judge henderson concluded in that that sentence  defender failed was selfish for many if any such h m c as there were means that they didn't even establish the threshold fact necessary to create a dispute a fact and that's why the case was able to proceed and be resolved on stipulation so they didn't meet their threshold burden as to whatever number there if any there may have been but the main argument is the st one which is the compensation plan itself just like a compensation plan that says everyone gets a minimum wage and obviously we know from the language in the in the letter that everyone receives and the policy that the expectation of this company clearly stated is you don't sell you don't stay and therefore the fact that they have this start up option the st three months where there was no carry over doesn't affect the nature of the compensation plan itself it is a commission plan where you just do not get paid separately for your rest breaks which under california law is unlawful i thank you i will give you five minutes or about one thank you very much from what mr  rubin said is simply false it's not supported by the record he referenced the offer letter he's there's no indication that the company said if you don't sell you you leave and that's irrelevant what the offer letter says it's an excerpt of record pa dollars it notes that advances are fully earned based on hours worked and any other paid time they're referred to as advances because they're taken into account in calculating the incentives the notion that there's no hourly wages here is fantasy your honour's it's stipulated to take a look at e r one hundred and ninety six the plaintiffs agreed that the fact that the hourly pay is taken into account in calculating net commissions incentives shall not give the employer the right to recover any hourly pay hourly pay is fully vested when received and is not subject to recapture under any circumstances that is just to say this was not there was no hourly pay the wage statements three hundred in the excerpts a record three hundred and nine regular pay was always paid just claiming it was not paid is not enough i think you're right the problem is we're dealing with california law and we have this great federalism principle where we defer to stay law and that doesn't seem to benefit your client in this i think it does your honor because book difference in because which seems to become like the brown versus board of education for a sphere the kero the difference was there was no paid hourly wages and i know you said that you don't think it's a difference they said it was not compensation at all the wage statements invacare oh did not every time say regular pay it was taken away the fact that you  that it wasn't i mean they said it wouldn't you never make less than twelve dollars an hour so i don't understand it seems like it wasn't defects different your honor that there's employee never knew if they got to keep the money and at the end if you look at the chart to invacare oh it shows oh the chart shows how much they're making and then they would only employer money that didn't happen here if the employee here left with the balance where they were getting a commission they didn't have to open he said it doesn't mean  call it oh ng while they're still there and we don't know when the charge into kara whether that was ever actually owed if they left because there's also the statement that they would never make less than twelve dollars an hour but what ever the situation invacare zero here are we know as a matter of stipulated fact in the trial judge said this there was an hourly told our dollar wage paid that covered rest breaks the rest breaks were paid under kirby that's the end of the story under twenty six dollars roofie was before kirby we were not saying that the brak break not the nonpayment of wages and you have a response to the last plant that we were discussing with mr rubin about whether there's a fact dispute on the number of employees you didn't get commissions or can you i have a response i think it's indicative of this  preposterous situation where and where they're saying what is in stipulated facts doesn't matter the stipulation said the only evidence in the record is the stipulation that our experts said there were nine hundred and sixty one employees but  response to what else you did if we are is that the only thing you did well the fact they're there they're the plaintiffs they have the burden of proving that each individual in the class is entitled to damages so wasn't our burden and the fact that the judge you know couldn't find anything the had said yes but your honor it's a stipulation of what the evidence was so the evidence in the record our experts testimony unrefuted by the plaintiffs that nine hundred and sixty one dollars people didn't get a commission and therefore their hourly pay covered so when so there's the statement about the expert is there any do we have any pay records or anything in the record that shows us how you would count how many of these people there are because it seems like there's a dispute about the number or whether these people even exist is there anything else other than that one statement is dependent that's it your honor i believe we sued in something after the the judgment came in that provide some additional information but frankly that's the tail wagging the dog it would be a grave injustice it would violate the class action rules it violates clear california law the court doesn't need to search could be decides this question ralph's grocery decides this question and people receive payment for their breaks you can't award one hundred million dollars to a class of those circumstances thank you very much thank you both sides for the very helpful arguments in this difficult case that is submitted