good morning runners in may it may please the court and counsel when we look at this case we look we have to ask several questions about the people that are involved here these are property tax consultants are they are they  y did they manage customers could they find both o'connor and the clients and were customers substantially affected and financially on how they did their job the answer to all those questions is yes and we when we look at the issues that we were raised here the lower court clearly read out several portions of the regulations and read in things in the regulations that did not apply the court found below that a pelleas when we look at the three tiers we look at whether these people were paid on a salary basis whether they were whether they engaged in and were tax and financial consultants and whether they exercise discretion in matters of significance below the question about whether to one see apply was our primary issue so when we when we look at this case we have to look at that regulation that regulation was not cited by the court below in its decision so what we're asking today is that the court properly interpret these regulations and that it apply the facts that are already in the trial record the regulation because that's at this juncture i offer advice is yes advise be an advisor or a consult so they were property tax consultants and when you look at texas law property tax consultant is defined as someone advise the clients but they have but they represent them and they consult well their product they consult because a consultant can act on behalf of someone else in their capacity just like a lawyer  but they are actually gauged in consulting well there that they have to analyze each file that they get and they have to choose the right evidence to present to the taxing authority and then they have to negotiate the already prepared files and the training manual which says exactly what to do step well run or that's that's not exactly right there's no script there's a there's a stack of paper about two feet high that they're all given to make their job a little bit easier because historically if you go back before two thousand and nine they had to get together all this information themselves but o'connor to make the job easier started creating these files that had all the and most of the information in it that would be relevant and organized it in a particular fashion and train them on it but that didn't eliminate the discretion they had to actually choose the evidence that was appropriate to argue either from a market standpoint or from an equity standpoint or from other factors discretion the only thing they couldn't do was agree to a value that the that the that the harris county appraisal district offered i could agree to any other number but that was low because if they agreed to a higher number or the number that the harris county appraisal district offered they would forego appeal i had discretion to take any number of firms yes absolutely your honor in the the primary evidence that we have but what about this  about this issue what were the were the the documents the hearing files and the where that showed that they had to analyze and negotiate and they often signed these files and then formal hearings they could sign a file as long as it was lower to say and was to result in tax savings to the client and they often did that the vast majority of them re t at the informal hearing stage when they went if they they couldn't reach an agreement and they couldn't agree to a lower value at that stage they would go to the formal hearing stage and then they would advocate on behalf for a lower value at that stage also they couldn't agree to the h d i value unless they got permission to do it that was because it would waive their appeal their client's appeal and so when we look at the hearing guidelines eight it's just a page but the types of things on there are important because they were codes that coextensive with the fiduciary duties that each of these property tax consultants heads they have that they have to timely report hearing of the results that they can't make agreements and formal hearings or their way their appeal they can't they can't do an authorized hearings they can't not show up and they can't do an informal sign off without written court's decision the court used to say that they had no discretion they didn't have to stick with the st page of that stack of paper the hearing guidelines or they caring a hearing on the hearing of evidence that was produced and that was that mr mr kelly assisted in compiling demonstrated that these people often and repeatedly started with that that value and then  negotiated to a reasonable guy that they could agree on that was less than the appraisal district value now when we're looking at what the court did below and why this is important we have to and forty one point two zero one c is the regulation and i'm going to read for a moment the regulation is has a lot of things in it but i want to read for the court how the court read it below the court did the site to it but to get to where the court decided this is how the court would have had to read this regulation an employee may qualify and this is at page forty nine of of our appellate brief an employee may qualify for the administrative exemption if the employee's primary duty is the performance of work directly related to the management to the general business operations of the employer's customers those for example employees acting as advisors to the to the employer's clients the findings of fact and law we see all these elements that are in there we see that they have to attend they didn't attend property tax hearings on behalf of businesses we see that the employers were work must be directly related to the systems with running the company as opposed to doing the work related to the production of the businesses services we see that a citation to administrative interpretation two thousand and ten dash one which it calls pretty persuasive authority and we see the reliance on the only two witnesses that the court relied on primarily which was mr kelly and mr webb which says that the contents of the administration for patient wants all the plaintiffs due to the production and nature now why is that wrong that is wrong because it ignores the rest of the regulation it ignores all of the rest as this court this court has never addressed this question so it is an issue of st impression but it did address it in dicta in santa c employees primary duty is the proof is is direct really related to the management of the employer's customers those for example employees acting as consultants t employer's clients or customers as task tax experts or financial consultants for example may be exempt the court sided none of that addressed none of that and read out all of that and those types of cases what those cases say with respect to one b your honor is that when in the fine it in the tax and financial consultant stand context that that is a core about in the regulations where think yes yes your honor our primary case in our primary thing is to unsee or be employees lawyers customers that's the part to realize right management of the employer's employer and management of the employer customers that is what was read out by the court and not addressed also the court read in to that several things it read in with respect to the primary duty the management of business customers using ai to ten dash one it also read in the words purely personal to describe it now and it also read and or accepted the idea that you could only be fit in with  within this context if you were an advisor and not a consultant so texas law defines what a consultant is and we know that these people are consultants under the law so they could have chosen a different word or they could have said justifies or at the court but the but the regulatory but deal well did not that are part of labor said or and used the disjunctive with respect to all of these it did not add purely personal and in fact in the preamble to the two thousand  regulations when it had an opportunity to do so it rejected adding those words to the regulation now  when we look at discretion and independent judgment your honor i think this was the area where the court basically said that o'connor was acting in good faith and denied liquidated damages in paragraph twenty eight of the decision that is interest only close to the new standard which is which was applied and in saying no in flutie by this court which is the fair reading standard i don't think they're the same standards because i can imagine circumstances where good faith would exist but a fair reading would not like say for example if o'connor were lying or or an employer was relying on and on advice of counsel or advised by their h r director and that was reasonable or in good faith it might not be a fair reading either but in this case it's both when we look at the regulation we see that mr a mr webb and mr kelly both interpreted these regulations the same way and the and what they were doing the same way  exempt mr webb h r director for o'connor thought that they were exempt as felix the general counsel of o'connor thought that they were exempt and in looking at it they squarely fit into these things when we look at discretion and then the pendant judgment the p t we have to look at what what their actual duties were the print the p t c is have the authority to bind both o c a o'connor and the residential customer property owners before the various appraisal district as a property tax consultant during this timeframe and then became a manager and is now a senior senior manager at o'connor emphasized that private property tax consultants worked on behalf of o'connor and customers in a complex legal and financial honor because it follows on the heels of mr kelly statement it says the use of manuals guidelines or other established procedures containing a relating to highly technical scientific legal financial or other similarly complex matters that can be understood or interpreted only by those with advanced or specialized knowledge or skills does not preclude the exemption that's not true about these manuals i could pick up this manual and i would know what i have to go argue because i would know i can't do that amount but i could do below and they would have exactly the square foot they would have all in with the last appraisal for the past several years the manual has all the information and i'm not using it independent tax or kill any expertise in going to the hearing and and mr kelley testified in his testimony that you had to be trained in a certain way to do this kind of work it's not just wrote and it's not simple it is something that they have to apply they have to use their own judgment they have to they have to work within it but they have to they have to use their own judgment even this late numbers or are they say well yes they are because they're looking at it to see whether the market valuation is proper they're looking at it to see what might honor you look at whether the house was was renovated recently whether it had some kind of as well as my singletary testified whether it had a stock or recently that all the neighborhood knew about whether it had whether you know or something there dear to considered eight years worth of evidence twenty depositions in what is now fifty thousand dollars page record considered all of it and found that the defendant failed to prove there from a defense in the truth is the evidence not only supports that finding p weighs heavily in favor of the trial court's finding as to all three elements we we opened in the trial were told the court that the case was unusual and it was and it was unusual in part because such an overwhelming amount of usually clear evidence came straight from the mouths of their corporate representatives and so we knew as far back as two thousand and twelve those depositions were taken there by virtue of their testimony that they had already given it wouldn't be able to meet the elements of the exemption going alone what was the reason for your honor between the time we sought the conditional certification in judge harmon the original judge ruled is about thirteen months and so we lost some of them because of limitations and then we had a few motions that were pending one was because of limitations that the court ruled ultimately that we we didn't get their willfulness so we had to your limitations period then after that gap there was a period where there were two motions pending  by that time not only have we lost some because of limitations but we also lost some because we flat couldn't find out their address it changed or the couple died and so that left us and then and then we had i believe your honor six that settled out so by the time we got to trial the two thousand and eighteen we had eleven left so that is your question a really thank you sure i think it's important just let's understand what a day in the life of these folks is they get h they're seasonal workers the average lifespan of the job is three or four months they get there sometimes they get two weeks of training or a week and sometimes they get a day or two for example of their lawyer or real estate agent as their corporate a trial said mr kelly they might just get a day or two and why is that is because the whole entire process is automated that's patrick o'connor's work in systematized here's what happens each night they get a stack of counsel described a trial o'connor you have three to five minutes profile if you want to sleep and it's a very quick dive to get rid of extraneous stuff for example i live in houston you can't be comparing a house in unbolt to a house in galveston that sometimes happened why did that happen because the people preparing the files are in india they don't have necessarily the frame of reference that these individuals that i represent might have had if they were preparing the files but this enables my clients to th grab the file and use what mr o'connor describes as automated automated evidence packages that do the calculations for them during these hearings we talked a lot about discretion gesture we don't get there for reasons i'm going to explain a minute but i'd like to also circle back to why the job has nothing to do with the st element of the duties test which is management or general business operations that has always been a hallmark of this exemption dating back seventy years and it still is today the primary duty has to relate to running or servicing the business and the distinction has been drawn for decades by our courts including cases we cite seminal cases that says there's a dichotomy that isn't always dispositive and sometimes just a tool th analyzes are these folks helping run or service a business to be their employer's business or can be a customer's business are they doing that or are they making widgets are they producing the product or in this case the service the employer exists to market their primary service offering if that's what the employees are producing is particularly far afield from what the exemption requires so here where you've got our customers that don't have business operations their home they're not running businesses and then you've got these property tax consoles that are hired by o'connor given up to two weeks of training for these files that they must use  asked him to clarify they want to be clear our clients only represented homeowners at these tax hearings right they didn't hill business i said absolutely it's not and because commercial property tax consultants represent the business owners which business out of one of these homes you go on the business side of the business you do not want to be home person i can't tell you if they're seizing or not but i can tell you there is a very there's a very distinct separation within the company o'connor says that you've got the commercial folks in the residential folks and residential folks because you would go to the commercial side because those properties are called income properties ok so if they're generally right correct it's we're only dealing with the residential side only homeowners really only homeowners petrik o'connor said the commercial folks handle income properties none of our folks were commercial agents and it wasn't a meaningful part of what they do and he went on and on about how that kind of work is far more complicated than this where they can be fed a file given an automated evidence package and go handle hearing he said they don't even have time to deeply analyze the file and if they didn't use that st number during the hearing they had to ask for it to use their phraseology they could be fired and so what happens is and i think this is very important to understand the mechanics of what they did there's two kinds of these hearings they're not in court you go there prison review board show you all of them this and you  you wait for them to call your number and then there's two phases there's an informal hearing which happens in a cubicle you go and you sit down and say i'm protesting the house on moral street and they say what sure opinion of value they being the appraiser what's your opinion  see we put a cover sheet in our brief you'll see the property values of forty thousand dollars and you'll see that the property tax consultant had given opinion of twenty and they know it's crazy and they didn't want to do it but they're not allowed to ever grew the devalued shouldn't be reduced they have some fruit but it's within narrow parameters for example joe joe wrote if i say well this house that my opinion of value comes from this she is twenty thousand dollars and you say well that's way too low maybe thirty there is some room to haggle but it's a thing within very narrow constraints that little it does you know that's in the cubicle and then if that doesn't work and by the way it's important that they can't agree not to reduce you might think will ach if i have somebody i they don't work for the cat and they're going to decide my fate ok that's a different form and it's more of an argument format so the property tax consultant argues and then the appraisal district representative argue and then the three folks on a rb panel decide value sometimes sometimes their prison district will want to agree on a number they want about why don't we agree on fifty thousand dollars guess what then the property tax consultant has to read specific verbiage saying i do not have the authority to agree on the value of qana requires you know they'll tell you well that has to do with this to do cherie duty we've got to protect our client's rights that's fine it mi and yet that has nothing to do with the f l say or the overtime claim they are again operating with very narrow parameters and so you heard some of our clients testify at trial the fact that i couldn't reach an agreement it would infuriate these a r v s because i was in f things off the table but still leave a lot of discretion on other things like the be all in dollars they could make certain agreements so long as they're providing some other services that fit within the regulation would you agree with then or do you think that required on the customary regular basis and so what the courts do with the case law it often does is it distinguishes what is something the use of skill and when is the exercise of discretion in this instance if you're given a phone call with the values you told you start with this and then you use everything in here you can come up with your own file and then try to get to the lowest the repast will the case law says that when you're operating within those narrow confines and you're using skill that use of skill is distinct from the use of discretion judgment and that's why a trial and it's in our brief repeatedly we talk over and over with their corporate prisoners about they had to use this skill they had to use this skill they were taught standardized techniques and training established techniques that that a proprietary in nature there that's why this works that's why you can get people off the street who have never done it employ them for three or four months with very little training and have them be able to go do sixty five of these a day because you're telling of correct me if i'm wrong but there's no real interaction between the customers involved the homeowners and these employees who are your clients  concept of advice and consultancy it's not a colloquial term it has to do with advising a business on how the business should be worried or run more efficiently that's that's what the losses that goes way way back in other words if i'm advised in consulting as contemplated by this regulation which has to do with running or serving the business i'm helping somebody know how to run or service a business i'm either advisory or consulting and to that point the senate coast case they cite really illustrates why their position is not a sound because they relied so heavily on it in the court case they accuse the court of ignore easy of course but the court didn't the court just rejected their arguments exist because you had employees of one company going out and helping manage the business of another one providing supervisory oversight to people running a business that is a very different context than we have here which is why i'm now going to circle back to that st part of the duties test running or sometimes people will be doing work for an individual customer a customer has a person when it is that work deemed to be the kind envisioned by this exemption and the answer is it's ok that they're an individual so long as they're running a business but people whose business in quotes and this is what the deal says and this is in our brief is purely personal this is in the guidance it's not made up it came straight from the department they don't have business operations such as this exemption would cover ok so that's two thousand and four with the regulations fast forward six years when the department of labor is assessing whether mortgage loan officers are exempt and they say well  we're getting loans for homeowners historically they had been exempted so this is a reversal of course by the deal but they're seeking homos for their homes is that management or general business operations or do they have businesses courts that the brother said no that's what purely personal means and they refer back to the two thousand and four regulations and say look there's a distinction here they give examples for example if someone's out trying to buy a warehouse right and you're getting a loan for that that might be a business or if they're seeking help to run a business that's not purely personal but if they're seeking a loan for their home it is that's what we've got here we've got homeowners admittedly it's important to them they want their property taxes down just like you do just like i do to somebody says that's not running your mr your business so i don't think we even get to the next the next part of the test which is discretion and independent judgment five hundred dollars still i think the case law and combined with the deal cards provides us answers now now that you know parents would have you ignore all of the guidance all of it they've accused the department of labor of of making up a new law that same argument got rejected by the supreme court in a case called prez where someone was challenging this administrator center protg sion as something that should not be given the effect of law because there was no notice and comment period and that was that argument intimately with all the way up 's if your duty is squarely on the production side you're producing the product or service your employer markets you're not exempt it says this dichotomy it's usually just part of the puzzle but when your duty fall several of them come up in the fine is affecting conclusions of law del hein is probably the seminal case on this whole issue of the dichotomy and yet it's never cited it's never discussed by the opponents just as doing twenty seven years later is never discussed  that and we knew from their proper representatives testimony at trial that he might go so far as to admit that our client's duties were squarely on the production side and that's exactly what happened i asked him if he got the battling twenty a regulations it does seem to me that we need to apply the law that exists as we understand it to exist i'm not sure a stupid lation of what the law is if we don't think that is the law is binding when so many discussions among ourselves say we may not get into this at all but if we do it does seem to me that whether this is a fair reading this administrative interpretation of what the  if it's a fair reading be hard for us to ignore and a termination of we're going to use it of whether it's a fair reading of what they had to to examine both the regulations that i'm not saying you have to agree with that but you think the stipulation overrides all of that that i do based on recent case law that addresses a vital area i think that's really that fairness to the judge but also fish and see if the parties proposes that a proposition of law is uncontested and then they go to trial don't raise anything different and then they file a post from your response brief an appellate court and never raise the issue and then try to raise it in a simple no authority or apply as has occurred here i don't think that's enough but let's just say the fair reading standard judge lake in more versus spangler actually noticed or or talked about how the tax and financial consultants were carved out in that if well you're all right i mean i worked in d c a long time and i met a lot of consultants that never met the clients and they were piling up on you know they would study things and they would work in the context of government contracts like miter you know booz allen hamilton all those guys i know those guys met met their clients or met the people are talking about well if you're going to advise somebody i would agree but that's why the disjunctive is used in the regulation advisers or consults because it it denotes that there are two different types one that might deal directly with the clients and advise them and another that might deal advocate for the clients without you know i mean and it's a misnomer to say that they know don't oh i'm sorry well in this instance that means analyze negotiate and add or advocate i don't i don't think that's ever been addressed or you know i mean i would say this there are several cases in several dio opinions that talk about representing people on a purely personal level those those are hogan two thousand and six dash for t three high and in re morgan stanley cider are brief are all examples where the consult was doing the same thing as the company and they were advising people on their portfolios are purely personal things rather than business things and so in those kind the context i mean i don't think any of us would dispute that of a financial consultant or financial advisor or morgan stanley's exams but that's exactly where we're headed because what what the point what the natural result of what the plaintiffs or  what the appellant's pelleas are arguing here is that you have to meet another exemption to meet this one you have to be a professional professionally examplar you have to be a highly compensated employee and that's what they are get below that this regulation can't operate on its own but zanuck oh says exactly the opposite of and so when we look at and when we look at the idea that anyone off the street can do this st off when they're when they're being hired when o'connor is hiring these people they require that they have two years experience a real estate they they have to have a license of some kind or get a property tax license they have to have forty hours of training under the law and they also have to have to have to analyze complex files they have to pick the evidence that they're going to use negotiate property tax values based on that and then they have if they failing that at the informal board they have to advocate on behalf of client now the best evidence of that is in our brief page thirty nine dollars when we're looking at and this is the same evidence that the court below ignored when you look at the informal and formal hearing files and the supporting documentation along with the summaries of same absolutely refutes unequivocally that the that the can value was the only value they were allowed to say when you look at that the value or the value on the cover page which didn't always exist when you looked through those files you'll see that it didn't exist initially it existed for a couple of years and then it went away completely because they weren't calling it anyway they were analyzing the file and pick it out the there's voluminous documentation on this and there's arguments that you can hear those pages are all listed at page thirty nine of the brief but the summaries that summarize those also talk about this and they say that they show that these people did not rest on those a report value they went in there and they vigorously advocated on behalf of their clients and they  where i live you don't have zoning right read you know restrictions so everybody can have i mean i have a home office a mile on and it's has a whole different deal with those income clients right well with the income producing clients at this i trust that you will you know you'll give a fair reading to the regulation in your old rule in our favor years thank you very much for your time thank you very much figuring the final p