five five or six two and one eight dash five five nine one zero and one eight dash five six three four six seven eleven correctly seven eleven got that right ok that now i don't have to change that in my mind so we've consolidated these for argument and basically what we do have a number of matters here but we have all the same people so it's twenty minutes each side and that includes any rebuttal or whatever but if we have additional questions we you know we'll we'll take whatever time that we need and perhaps maybe i can ask before we start running the clock i notice at the seven eleven table which i'm saying that correctly right i see three people so are you proposing any division of labor ok all right that's perfect that's all i need to know so go ahead to state your name for the record and your appearance and we'll be ready to go thank you yes thank you your honor i'm shannon let's hear it in for the plaintiffs please the court i would like to reserve at least three minutes of my time for a battle to make your honors there can really be no question here that the district court acted improperly in dismissing this case on a motion for judgment on the pleadings the court acted as though it was reviewing frankly an entire trial record let alone a summary judgment record it was reviewing a complaint and the court made a decision a legal decision th couldn't state a claim that they were employees under federal or state law so you have the federal and you have the state claims and you're in diversity anyway so whether the federal claim success or not you're still in federal court right correct so the fs l a claims f l issue right it's just not affect those claims correct right so we have to deal with federal law on that so how have you stated a claim based on the plaiting well based on the detailed pleadings there would be enough you could you could state quite well the fact that there was a great deal of control by the defendant over the plaintiff's work and many of the other factors under the they worked for a long periods of time these were not this isn't a plumber coming into your house on a one time basis to fix your sink there's the fact that it was this is not a job that required a great deal of prior experience or education pretty much you just you put down your money and you could become you could work at one of the seven eleven stores as a franchisee which they alleged they were really effectively working as managers and store clerks they were running the stores the other factors they used the stores were provided by seven eleven seven eleven had an extremely detailed operations manager manual regarding every last detail about how the operations were supposed to run i mean the courts to look to these variety of factors under f l se cases but the most primary one that they've looked at has been the amount of control and there was no question there  conceivably let's just assume that just for hypothetically for the moment that that we agree with you and that you still could get knocked out at summary judgment right sure and it could be a different the dynamics dynamic is not going to affect those claims as of now as far as we know correct the federal clans have a different standard from the state law claims correct so looking at the state law claims i mean right now we've got  this jan pro that case argued two months ago before another panel to score presents the issue of whether dynamics applies to franchisees yes so we're going to hear something on that and i believe that counsel on both sides here are the same counsel on that case right i'm playing his counsel defense counsel is not it's never ok so although he said made an amicus brief in that case all right so do you anticipate that the other panel's decision this case will affect this case and if so how yes that decision could very well affects this case it's a similar situation there are different nuances to that case that aren't present here however because in that case there's an additional level of argument that's not presented here in that case the defendant used what's called a multi tier scheme where there's a company at the top and then there are so called master franchisees in the middle and then there are the workers so in addition to the arguments you have here in that case there are also these arguments about whether the company on the top can be liable for mis classifying workers for whom there is no direct relationship here there is a direct relationship so i don't know  that it seemed like the allegations of control in the wage and hour complaint appeared to be based on the that terms of the parties agreements as opposed to some unwritten policy that contradicts the terms of the agreement so if we were to conclude that the relationship created by the franchise agreement is not an employment relationship under the f l a say since that's how it's sort of stated can we affirm the dismissal no i mean in addition to the cost of verses janet king hears from the tenth circuit there are other cases we've cited including scanlon vs knight enterprises where the eleventh circuit reversed a grant of summary judgment for the defendant on the question of employee status under the f l i'd say if you look at the allegations in the complaint yes there is a lot of reference to the agreements in control that's built into the agreement itself but there are also a number of allegations that just simply state that seven eleven had a great deal of control over the work of the plaintiffs and  franchisees and the and of course labels don't matter i mean this court made clear for example on alexander versus versus fed ex the fact that there is a contract that says that the workers can do the work however they please and they're to be classified as independent contractors is not the end of the story a court has to actually look at the relationship itself and so the complaint here is not waived so i want to i know that there is some indication that there are some april dates coming up as far as this would go so is it let's say judge fisher was in a different situation at the time when she had judge walter's decision which seemed to have affected her analysis under the plum unary and junction and if that were to go back and be analyzed under dynamics it conceivable that judge fisher could maybe not have abused her discretion but there's still an irreparable harm issue because of if all this gets delayed to consider all these other cases how does that affect your client yes so your honor the reason why we filed that as a preliminary injunction was because of the procedural posture of the case where we weren't in a district court if we had we been  a case was pending at a district court i would have filed a motion to rule twenty three d as courts have often issued orders denying the right of defendants to go around collecting release is when there's a fugitive class action but you're not r of three d as opposed to twenty three d but really what we're asking for is akin to a twenty three what would have otherwise been a twenty three d requests and here is the problem so typically often courts have stepped in and controlled such communications and not allowed the collection of these releases while the case was pending they often do that recognizing that it gets very complicated to try to unwind these releases after the fact now i did notice that in a similar situation that we have in a massachusetts case raising pretty much the same claims patel versus seven eleven the court there issued a more nuanced decision when we did move for a rule twenty three d protective order and essentially the court said look if you eventually win and these plaintiffs are in fact employees he all but said i'm not going to enforce these releases i'm sure seven eleven is going to challenge that later helper to have started challenging that because of the difficulty in knowing whether these will be able to be unwound later that's why i urge there's irreparable harm because right now they don't know whether they need to sign these releases in order to carry on their work with seven eleven past april and the it's why we asked to have this heard on an expedited fashion well ok let's say they sign their releases and then you wind down the way and it's to term and that their employees are right would that not then be and forcible release well i'm not i'm not a hundred percent sure about that i'm certain that seven eleven will argue they signed the release there is this case they knew that it was there and so they would argue waiver yes yes which is why we're asking for a ruling before they're put in the position of having to make that choice about the plaintiffs as well q tip class members in this so what is ok so the irreparable harm to your clients is that they have to make a decision before the case is over and if they want to continue to do business they have to sign the release and then they run a risk of if they sign this release that it might not be found and enforceable and they could get some eleven would argue that the case is now moved because there are no plaintiffs who can bring a claim if they don't sign the release because they don't want to take their chances and they want to press on with this claim then seven of them is going to say you can't work for us anymore which we've also said is overtly retaliatory because they're saying that only franchisees who agree not to sue a city more on this can continue working for us that's just the definition of retaliation and i actually think judge fisher no orders there she seemed to recognize there's some difference between the state law claims in the federal claims on that score is sure your repertoire harm argument any different now that the will prevail in its argument that well too bad they signed the release you know full run away and that this case without there but they signed the release if there is some indication from this court as the federal district court judge in massachusetts seemed to give some indication that look if you end up winning down the road these are unlikely to be enforced that would at least give them some comfort in moving ahead there right now it's they're just really in an untenable position worry well i don't i don't know the answer to that i think seven eleven has been extremely aggressive in this litigation and i have no doubt that they will come after them in any way they think they can i think they are the they're in a very tough bind here which is why which is why we sought this injunctive relief and now this expedited hearing on this question well we're reviewing the injunction for abuse of discretion so i don't know that we can let's say even we have prayed with you that that appears that maybe the irreparable harm component is different that what the district court did i think we can't really enter a new in chunks and here well i mean a couple of things one we did point out that the court below did not really apply the right standard in holding the plaintiffs to having to prove likelihood of success on the merits when that's not the standard in the circuit there's also the concern that the court i would say the district court abused her discretion in just simply ignoring or not really grappling at all with arguments of these are weighed claims and she cited only two cases involving franchisees who claims against an employer in order to keep their job but the judge below just did not properly without i would say that that's an abuse of discretion ok so what just tell me exactly what your clients are going to face if we were to say there is no abuse of discretion what when's it going to come at you know what are they going to have to make these decisions on and what so if we find no use of discretion then how when is it going to come out there's different timing well if april is generally the date and i apologize i looked at the record i really don't know the exact date in april i know that their contract six their current contracts expire in april i don't know if it's beginning of april or the end of april might be the middle of april so it's very soon  practical matter if this court were simply to remain to the district court there would be a lot of work to try to get this sorted out before such a date again if there was some indication from this court that it would be problematic for them to be put in this position that at least would help again that's just been problematic in other cases but if the court were to say something of that sort of like the court in massachusetts did that might put us in a better position if you want to reserve times unless you have more questions now thank you honest good morning runs may please the court normally on for seven eleven if you want as i'd like to start out by addressing the plenary injunction issue and your honor i asked what position the plaintiffs would be if they refused to comply with their existing contractual obligations and the short answer to that is they're going to be in the exact same position they agreed to be and when they entered into these franchise agreements back in two thousand and four the franchise agreements that they were given were never p before this court and that they put before the district court in all of those cases the defendants have created a release after the fact he's there after a lawsuit was filed or a motion for class certification had been filed to try to either diminish or release liability th presented by that case that's not what this is about this case is about enforcing an existing contractual requirement which has been enforced by every single court in the country that has taken a look at the issue that if you want a new contract when your existing loan expires you sign a term release plan just have never questioned the legitimacy of that required requirement as a matter of law the only issue that they've raised is that this case should be treated differently than every other how what what do you want and they signed us are you going to then are you going to say that they waived at it makes no difference at all your honor california what is crystal clear that wage claims can be released just as any other released so there was no reason for the court to deal with that issue on a preliminary injunction and that's the exact same issue here there's no need to deal with this on a preliminary injunction as judge fisher succinctly noted that the claims can't be released they're not released the reason that to try to enforce it are you going to say that they waive that if they sign it they're waving it right that's it they're out of the law to go on if they sign a i'm just trying to figure out how this is not a sophie's choice here if a court at american determination decides that the releases are for some reason and enforceable then of course the releases would be stricken on the claims would not be released that's the whole purpose of the unconscionable of the statute and that's the that's the best what happens in the but of course the district court can decide that is simply going to hold the matter in abeyance until there's a determination as to whether or not the releases are enforceable i don't think that's something that the court would resolve the motion to dismiss is not going to be before the court on the twelfth the six motion would be something that the parties would raise at the summary judgment level so there's no immediate harm here at all and i just want to circle back to you to the unconscionable the new standard because it's important to realize how that works it doesn't require that somebody come into court before they sign a contract and seek a declaration of the conference on the force of the statute by its terms california code section six hundred seventy point five looks at the contract at the time it was made so they can come back into court say this was procedurally unconscionable and substantively unconscionable at the time that we entered into it and therefore it should not be in sourced unless the court has any questions i may have to come back to that but right now we have why shouldn't we vacate mery man and the wage in our case in light of  something that the parties agree on and we think that the plaintiff's expense reimbursement claim even if they now mix applies retroactively is not impacted by the nomics because those types of claims are not reached by the dynamics test well do you think vas it may affect this case you want our hands and but we don't know what the court's going to do with that if it's going to reach that issue on the merits or if it's going to remain on the matter to the district court in the  retaliation claim still exists but the determination that there was a what about for the only to mention to the court that the plaintiffs objection to the release ability of the wage claims really isn't something that want to the court's attention because they were no life weaklings but if you take a look at the court's ruling that or not that warranted different treatment in this case that's the plaintiff's position and judge fisher rejected that she said the plaintiff's arguments were not persuasive and i think that's an important point to make here because i believe the plaintiffs appeal misconstrues the nature of this court's review this is not to know this is an abuse of discretion review and aside from their single footnote it argument that judge fisher did not correctly by the serious questions test which we think is incorrect there is no assignment of error in either their opening brief or their reply brief all they do is repeat the exact same arguments they made the judge fisher and asked this court to come to a different conclusion and that's not what is done on injunction motions what has to be a step discretion and i agree with you on that i'm that judge fisher concluded the pain of would suffer no irreparable harm because quote if the claims are not way the ball then the claims aren't waived unquote do you agree that if the plaintiffs were to sign franchise renewal agreements the district court could not dismiss the weights in our case based on the waivers and the agreements without first determining whether the waivers are and of course the ball the court would first need to sign the renewable agreements renewal agreements as is and the district court were to conclude the waiver isn't for simple could the franchise be found liable for breach of contract for challenging the imports ability of the  waivers that i'm aware of you know if that was the standard then anybody that challenge the enforceability of the riemann as being unconscionable would be free to contract i'm not aware of any case that has ever taken that that it's so it appears the plaintiff filed the second case only because the first case was on appeal at the same time and so it ended up and so assuming if we were to vacate your email on both cases would you agree that pla in corrective notice in the first case thereby eliminating the need in the second case or what if so or not we had no objection to that your honor in fact they filed the second case as a related case judge walter determined that on either of your parts it just seems like the timing and one going on appeal and then when you file some pain i mean i don't know if they're on a wheel and how they do it your honor that's not something the user of the parties did here again that was a determination by judge walter and frankly i think that notwithstanding judge walters determination that the case was not related to the issue does end up in front of them in some way shape or form because if this case goes back to the district court the releases are going to be an issue that's going to be raised in the case so obviously he's going to have to deal with that issue and i question why the second case in judge fisher's courtroom wouldn't still go on at that point will point out that as to at least two of the other four elements that are required to obtain a preliminary injunction the balance of harms and the public interest judge fisher ruled that both of those factors also went in seven lessons favor and again on those factors as well plaintiffs are present no assignment of ever whatsoever there is nothing in their brief the challenge is just for issues rulings on those requirements so the corrective action that they're talking about here under the only time and i went back into the briefing to search to make sure i wasn't missing anything the only time the phrase corrective notice appears is in the discussion of the procedural history of the case where the plaintiffs note that the just a court denied their motion for corrective notice and properly so  even if it was before the court and honestly how much for that the court would have jurisdiction over that even if they had raised the issue because it's completely ancillary to the underlying ruling on the preliminary injunction but that aside judge fisher made the factual finding the nothing that seven eleven did in connection with the presentation of the renewal franchise agreement was in any way misleading or coercive and nowhere in plaintiffs reve to the challenge that is a clearly erroneous factual finding can you help me on your perspective seemed to they seemed to tie it to the franchise agreement can you tell me your perspective on this on whether well i mean obviously you want that affirmed and you want that is out i understand that but can you respond to what there it needs to go to summary judgment or how that would be any different than what we have here or how your perspective on that thank you your honor and i don't believe that your honor really got an answer expressly premised on the terms of the franchise agreement they repeatedly quote the franchise remit they don't make any allegations that are outside its scope i know they take judge walther to task and say that he somehow contrasted their allegations with the provisions of the franchise agreement i'd like to make two points on that if i could first given the fact that their complaint purported to recite the terms of the franchise agreement there would have been no error if judge walker in fact did that the law is clear that when the allegations of a complaint conflict with the terms of a document attached to the complaint the terms of the document control plaintiffs never question that issue or they cite anything to the contrary secondly and more importantly when we made this point in our opposition it is our main argument you've now been given about ninety pages worth of briefs from the plaintiffs and received close to eighteen minutes worth of arguments they have yet to identify a single instance where judge walter disregarded their allegations in favor of anything there's nothing there and it's important to remember that in dismissing this claim and concluding that there was no issue with respect to the control element judge walther was not writing on a clean slate he had before him the opinion of the california department of corporations which discusses the extensive controls the franchise was made exercise he had the system of opinion which are just the exact same franchise system seven eleven and concluded taking a look at the exact same allegations that the plaintiffs make in this case that those allegations of control did not constitute control over the means and manner and that's the only element of the economic reality test by the way the plaintiffs challenge on the subpoena and of course you had the patterson opinion which we haven't had a chance to discuss the patterson took a look at system and characterized the seven eleven franchise relationship as one which in his words the franchisee in the courts words in which the franchisees possess virtually all operational control that's the california supreme court and that's the legal predicate on which he made the ruling that the f l s say correctly the f l s a claim could not survive i would like to address with your honor's the issue of the interplay between patterson and dynamics because it touches upon both of the plaintiff's claims in this appeal the appeal of judge walker's ruling that the allegations of control were not sufficient to state an employment relationship and the impact if any the dynamics as on this appeal and we do understand that the you play ability of dynamics including whether or not it applies retroactively is something that doesn't include remanded because there is no record developed on that dynamics at all your honor the issue did not come by dynamics self applied retroactively to the parties in that case right correct you on about the california supreme court has made clear in the estate of propst which we cited and the  opinion in bearding that before a judicial opinion can be applied retroactively there needs to be an individual ised analysis in terms of whether or not somebody relied on the parties to the law obviously that never took place here because the dynamics of opinion did not come out until after judge walther entered his order granting seven eleventh's a motion for judgment on the pleadings so that is something that we need to address in the trial court in addition we would need to address the implications of plaintiff's view on dynamics his application and what probably be means because plaintiffs take the position that simply because a franchise or operates a company on locations in the state it's an employer if that's the case if that's the standard in california then virtually every franchise or is going to wake up tomorrow and be the employer of its franchisees because virtually every franchise system operates company located california can be surprising i don't think that it would be appropriate to conclude that california's work found that you needed to take the contemporary realities of franchising into account when considering whether one of the claimant relationship existed and in paterson and that you need to ignore those exact same realities me first address quickly on the this injunction question you had a lot of questions regarding the irregular ability and so what i'm hearing seven eleven say is that even if we win on the argument that the franchisees are employees they're still going to argue that this release was valid which is why there is irreparable harm here because there is a risk that we could lose on that and that the plaintiffs and the putative class here really are facing wondering if it's possible it looks like well i don't know what we have in conference time there so we don't know we'll have to we'll talk after we get out of court so i can't i'm not at that but if hypothetically we wait for jam pro and decide that  well i mean they are docket a separate cases the injunction issue as i have explained is a pressing issue if it had to go back down in order to be decided before april there's obviously a lot of work that would need to be done quickly there could be another emergency appeal so i would urge the court to take that into consideration in determining how to how to proceed here i do want to mention that with g m pro that case was briefed before dynamite the parties were permitted to submit if dynamics were held apply to franchises i mean i think the fact the california supreme court twice cited two cases about franchise orders who had been held to be employees i think it's telling that decided to cover all decisions for massachusetts one of which counsel i california supreme court has done that's an issue they could take to the legislature and actually try to take that to the legislature in massachusetts and were not successful they didn't get a carve out so franchise out or take your time as fact unless my colleagues have any additional questions that will conclude they do not appear to i want to thank you both for your arguments in this case you're clearly familiar with the law and the procedures and the facts of these cases and that that is helpful for us and it's it's always a pleasure to have lawyers that come so well prepared to court so thank you both thank you because the matter will be submitted both matters or all of them