[00:00:00] Speaker 04:
We'll proceed now to hear argument in the next case on calendar argument this morning, which is 24-6575 and 24-6914, Kelly Salazar versus Dryer, Ryder, Phoenix, LLC.

[00:01:06] Speaker 04:
All right, we're ready to proceed.

[00:01:10] Speaker 04:
We'll hear first from Mr. Licata.

[00:01:13] Speaker 04:
You may proceed.

[00:01:17] Speaker 02:
Good morning, Your Honors, and may it please the Court, Michael Licata, on behalf of the plaintiff's appellants.

[00:01:22] Speaker 02:
I'd like to reserve four minutes of time for rebuttal, if I may.

[00:01:26] Speaker 02:
Plaintiff's Appeal asks the Court to clarify several important issues that will have wide-ranging impacts for employees, employers, and litigants across the circuit.

[00:01:35] Speaker 02:
I'm prepared to address each of the issues, which include the preemption issue, the rule 16 issue, the class certification order, and the civil penalties question.

[00:01:46] Speaker 02:
But if the court prefers I start with a particular issue or has a particular question, I'd be happy to start there.

[00:01:51] Speaker 02:
Otherwise, I'll proceed on the preemption question.

[00:01:53] Speaker 03:
Well, since you're inviting us, Senate Counsel, you argue that the FLSA does not preempt Arizona wage loss because the AWA borrows the FLSA standard.

[00:02:05] Speaker 03:
But doesn't that effectively give plaintiffs sort of two bites at the apple here?

[00:02:09] Speaker 02:
No, Your Honor.

[00:02:10] Speaker 02:
We think that the AWA overtime claim fits squarely within the savings clause under section 218 of the FLSA.

[00:02:21] Speaker 02:
And we think there's really two cases that control the question here.

[00:02:26] Speaker 02:
Those are Wang v. Chinese Daily News and Busk v. Integrity Stopping Solutions.

[00:02:31] Speaker 04:
But Wang was vacated by the Supreme Court, wasn't it?

[00:02:34] Speaker 02:
It was vacated on other grounds.

[00:02:36] Speaker 04:
It was not binding.

[00:02:36] Speaker 04:
I mean, we could find it persuasive, but it's not binding.

[00:02:39] Speaker 02:
That's correct, Your Honor, and as we've put in our briefs, there have been several district courts.

[00:02:43] Speaker 02:
I think we've cited five or six that have all lined up behind Wayne, not because it's presidential, but because its reasoning is very persuasive.

[00:02:51] Speaker 03:
So we could rely on the reasoning that was not vacated.

[00:02:54] Speaker 02:
That's correct, Your Honor.

[00:02:56] Speaker 02:
And also, Wayne clarifies Williamson.

[00:03:00] Speaker 02:
This court's ruling on Williamson, which remains binding precedent.

[00:03:04] Speaker 02:
In weighing the court made clear that the FLSA does not provide exclusive remedies for state law claims that are, quote, duplicated by or equivalent of rights covered by the FLSA.

[00:03:15] Speaker 02:
There the court held that a violation.

[00:03:16] Speaker 00:
My problem with Williamson is that it's got this confusing language in it that says, quote, claims that are directly covered by the FLSA, such as overtime and retaliation disputes, must be brought under FLSA.

[00:03:31] Speaker 00:
What do we do with that?

[00:03:33] Speaker 02:
It's a great question, Your Honor.

[00:03:34] Speaker 02:
In Wang, the court addressed that very issue and described that statement as dicta in Williamson, and described the fact that in Williamson, the court actually rejected the district court's assumption that the FLSA provided exclusive remedies.

[00:03:51] Speaker 02:
And the court explained that that finding would amount to, in effect, field preemption, which does not exist under the FLSA, given the savings clause.

[00:04:02] Speaker 04:
But there's also language in Williamson suggests that if you're trying to use state law to expand on the FSLA's remedies or get more than the FSLA would, that that might be an issue.

[00:04:20] Speaker 04:
And that doesn't seem to be dictated.

[00:04:22] Speaker 04:
It seems part of the analysis that frames the holding of the case.

[00:04:25] Speaker 04:
Doesn't that

[00:04:26] Speaker 04:
Isn't that a problem for you here?

[00:04:28] Speaker 02:
I don't think that's a problem, Your Honor, because in this case, our claims are brought under state law.

[00:04:32] Speaker 02:
We are seeking state law remedies for a violation of state law.

[00:04:36] Speaker 04:
But you're using the state law.

[00:04:37] Speaker 04:
I mean, the state law is a law about the timing of payments.

[00:04:40] Speaker 04:
And you're using the fact that it has rule about the timing of overtime payments to now use it as a vehicle to test the substantive scope of the FSLA on overtime.

[00:04:52] Speaker 04:
Is the Arizona cause of action really meant to do that?

[00:04:59] Speaker 02:
Again, Your Honor, our argument, our position, is that the claims fit squarely within the state law claim.

[00:05:04] Speaker 02:
The state of Arizona has an interest in ensuring that employers timely pay their employees for all work.

[00:05:10] Speaker 02:
So if there were an argument, again, the defendants tried to raise an argument.

[00:05:15] Speaker 04:
But does Arizona law create the entitlement to overtime pay, or does that originate in the FSLA?

[00:05:22] Speaker 02:
The entitlement here originates under the FOSA.

[00:05:25] Speaker 02:
The obligation to pay overtime under the FOSA,

[00:05:28] Speaker 02:
The Arizona state statute requires employers to pay all wages due without limitation on where that obligation originates.

[00:05:38] Speaker 02:
And it actually expressly mentions over time in section 351 of the Arizona Wage Act.

[00:05:45] Speaker 00:
Council, would we even have to reach this issue if we determined that this defense was waived?

[00:05:52] Speaker 02:
You would not have to reach this issue.

[00:05:54] Speaker 02:
This issue can be resolved on a little 16 grounds, but given the split in the district and the preemption issue have been raised in a 12 B 6 prior to the filing of an answer.

[00:06:04] Speaker 02:
Could it have?

[00:06:05] Speaker 02:
Yes.

[00:06:05] Speaker 02:
Yes, I believe it could have.

[00:06:07] Speaker 04:
Well, then why couldn't it be raised in a in a 12 C motion for judgment on the pleadings, even though the issue wasn't in the answer?

[00:06:17] Speaker 02:
Our position is that after the deadline to amend the pleadings, the defendant has to meet the Rule 15 and Rule 16 requirements.

[00:06:25] Speaker 00:
And so you agree that the footnote and the motion for judgment on the pleadings could have been construed as a motion to amend under Rule 16?

[00:06:38] Speaker 00:
Because I give you that it was after the deadline had passed to amend the pleadings.

[00:06:42] Speaker 00:
So the scheduling order, there was no motion to modify the scheduling order.

[00:06:47] Speaker 00:
So what analysis do you believe the district court should have used, if any analysis, given what was presented?

[00:06:56] Speaker 02:
If the footnote was sufficient to raise this request.

[00:07:01] Speaker 00:
Are you conceding?

[00:07:02] Speaker 02:
No, we're not conceding that that's sufficient.

[00:07:04] Speaker 02:
And I believe we cited case law making that very clear, that a footnote that does not address the merits of the diligence requirement cannot be a basis of raising that

[00:07:14] Speaker 02:
you know, a motion is required.

[00:07:16] Speaker 00:
Okay, so you're saying that if we were to construe, if we were to reject the argument that it's insufficient, this is just a straightforward waiver issue, and we said, okay, that footnote can be construed as a motion to amend, then I think you were about to argue what standard.

[00:07:31] Speaker 02:
Yes, the standard would be under 16 before the district court was required to look to the diligence of the defendants before addressing the merits of their preemption argument.

[00:07:40] Speaker 03:
Was there any discussion of good cause?

[00:07:43] Speaker 02:
I don't believe so.

[00:07:44] Speaker 04:
To this day, I don't believe we've gotten an explanation for why the defendants waited 17 months past the... But if this is a defect that's present on the face of the pleadings and that could have been raised in a 12b6 motion, why can't it be raised?

[00:08:03] Speaker 04:
And Owen suggests it can be raised in a motion for judgment on the pleadings, even if it is not contained in the answer.

[00:08:10] Speaker 02:
Your Honor, I would disagree on a couple points.

[00:08:13] Speaker 02:
Owens did not address Rule 16.

[00:08:16] Speaker 02:
And in Owens, both the District Court and the Court of Appeals undertook a Rule 15 analysis.

[00:08:22] Speaker 02:
Rule 15 looks to prejudice, among other issues.

[00:08:26] Speaker 00:
Why didn't Owens look at the Rule 16 issue?

[00:08:29] Speaker 02:
Owens did not look at Rule 16 because they filed a motion to amend, and they did so prior to the deadline to amend.

[00:08:36] Speaker 00:
So factually, in Owens, there had not been a lapse of the deadline in the scheduling order to amend?

[00:08:42] Speaker 02:
That's correct, Your Honor.

[00:08:43] Speaker 02:
And the statements in the cases that talk about the ability to raise a defense in a motion for judgment on pleadings do not eliminate the requirement to plead that defense.

[00:08:53] Speaker 02:
We've cited a substantial authority from the Ninth Circuit that states that federal preemption is an affirmative defense that must be pleaded and is subject to waiver.

[00:09:03] Speaker 02:
In this case, it was not pleaded.

[00:09:06] Speaker 02:
The district court's only real conflict finding in this case was that Rule 23

[00:09:12] Speaker 02:
that permitting permitting the plaintiffs to proceed under Rule 23 would undermine the FLSA's opt-in mechanism.

[00:09:20] Speaker 02:
But that argument is directly addressed by the Ninth Circuit and Busk v Integrity Staffing.

[00:09:26] Speaker 02:
We briefed that case at the district court.

[00:09:29] Speaker 02:
It was not addressed.

[00:09:30] Speaker 02:
We briefed it again here.

[00:09:31] Speaker 02:
The defendants have not addressed it again.

[00:09:33] Speaker 03:
Can I turn your attention a little bit to the commonality issue?

[00:09:37] Speaker 03:
Sure.

[00:09:38] Speaker 03:
And the district court there found that the class members had different reasonable expectations, I think was the language used, of pay for pre- and post-trip duties.

[00:09:49] Speaker 03:
Why should those understandings not defeat the Rule 13 commonality requirement?

[00:09:54] Speaker 02:
It's a good question, Your Honor.

[00:09:56] Speaker 02:
Our position is that the court erred in applying a subjective test.

[00:10:01] Speaker 02:
The Arizona Supreme Court has made clear that an object of standard applies to reasonable expectations in the context of contracts.

[00:10:11] Speaker 02:
And the same court in Aronson v. Walmart applied the object of standard citing the Arizona Supreme Court decision in Walker v. Auto Owners Insurance Company.

[00:10:22] Speaker 02:
So given that an objective standard applies, in this case, all the drivers worked under the same compensation structure, performed the same work duties pursuant to the exact same directives.

[00:10:34] Speaker 02:
And the defendants, in this case, agree that the employee should be paid for this work.

[00:10:39] Speaker 02:
So the dispositive question is whether the so-called commission payments already paid the drivers for that work time or whether they did not.

[00:10:47] Speaker 02:
And the background fact here that I think is important for the court.

[00:10:50] Speaker 04:
Well, if they don't, then what would

[00:10:52] Speaker 04:
How would the pay be determined?

[00:10:55] Speaker 02:
That's really a damages question, Your Honor.

[00:10:58] Speaker 04:
No, but it goes something.

[00:11:00] Speaker 04:
As I understand it, their claim is that all of the compensation is governed by this commission plan.

[00:11:07] Speaker 04:
And everyone agrees that the commission plan doesn't specifically cover this by terms.

[00:11:14] Speaker 04:
And so is there something else that creates the expectation to be paid for that that's outside the plan?

[00:11:20] Speaker 02:
Yes, Your Honor.

[00:11:21] Speaker 02:
Our position is that when the defendants, their employer, directed them to perform the work, that constitutes an implied contract that they will be paid for that work.

[00:11:30] Speaker 04:
Well, if the implied contract with one driver could be different from the implied contract with another, depending on the circumstances under which they were retained, I think that was part of

[00:11:41] Speaker 04:
what the district court was concerned about.

[00:11:44] Speaker 02:
Right.

[00:11:44] Speaker 02:
And in this instance, all of the drivers are subject to the same directives.

[00:11:48] Speaker 02:
The defendants agree they're all subject to the same compensation plan.

[00:11:52] Speaker 02:
They're performing the exact same work.

[00:11:54] Speaker 02:
So the material parameters, work conditions are the same across the board.

[00:12:05] Speaker 02:
Instead of applying that objective standard, which the court did in Aronson, the district court here looked to Ayala v. US Express Enterprises, but Ayala involved a contract that expressly stated the piece rate covered all hours worked and referenced the pre and post-trip work duties.

[00:12:24] Speaker 02:
And I would direct the court's attention to footnote seven of the district court decision in that case.

[00:12:29] Speaker 02:
There the court addressed the period of time in which the employment contract did not address the work duties and it found a tribal issue of fact, class-wide issue of fact on whether or not the piece rate covered the additional duties and that is exactly the case here.

[00:12:46] Speaker 02:
I'd like to reserve the remainder of my time unless the court has another question.

[00:12:50] Speaker 04:
Thank you, counsel.

[00:12:51] Speaker 04:
Thank you.

[00:12:54] Speaker 04:
We will hear next from Ms.

[00:12:56] Speaker 04:
Miller.

[00:13:02] Speaker 01:
Good morning, Your Honors.

[00:13:03] Speaker 01:
May it please the court, Tracy Miller on behalf of the defendants and the appellees.

[00:13:08] Speaker 01:
With me here today is James Alexandra DeTillo, my colleague.

[00:13:14] Speaker 01:
Under plaintiff's theory, if an employee establishes an FLSA violation, that employee would automatically have a state law claim.

[00:13:25] Speaker 03:
Counsel, why don't you waive this?

[00:13:27] Speaker 03:
Why isn't it waived?

[00:13:27] Speaker 01:
Let's get to the point.

[00:13:31] Speaker 01:
Absolutely.

[00:13:31] Speaker 01:
Owens clearly states that a party can bring up an affirmative defense for the first time on a motion for judgment on the pleadings.

[00:13:43] Speaker 01:
There is no qualification in Owens.

[00:13:45] Speaker 00:
Wouldn't that broad reading of Owens essentially be an exception that swallows the rule?

[00:13:51] Speaker 00:
I mean, as your friend on the other side noted, Owens

[00:13:54] Speaker 00:
arose in a context quite different than this one where the deadline hadn't passed.

[00:13:59] Speaker 00:
So the absence of analysis with respect to the rule 16 factors obviously wouldn't exist in Owens because it wasn't similar to the facts here.

[00:14:09] Speaker 00:
But now your reading of Owens so broadly would erase the requirements and the rule 16 analysis that would typically be done.

[00:14:19] Speaker 00:
How do you square that?

[00:14:21] Speaker 01:
Rule 16, the purpose of Rule 16, for the most part, is to allow a district court to control its docket.

[00:14:29] Speaker 00:
And the district court can determine whether the just- Let me ask you this question more directly so I can get an answer from you.

[00:14:38] Speaker 00:
Do you believe that your reading of Owens would be an exception so broad as to swallow the rule?

[00:14:46] Speaker 01:
I do not.

[00:14:47] Speaker 01:
And I'll give you an example as to where I think that line is.

[00:14:51] Speaker 01:
Because Owen says that it's when it's a motion for judgment on the pleadings.

[00:14:55] Speaker 01:
And even in the case law, they cite, says when an affirmative defense is accepted in a motion for judgment on the pleadings, it serves to, in practical sense, amend the answer.

[00:15:08] Speaker 00:
I don't mean you, but your client filed

[00:15:14] Speaker 00:
a motion to amend the pleadings to add the motor carrier exemption defense, correct, through a request to modify the scheduling order and to and for leave to amend the answer.

[00:15:27] Speaker 00:
Am I right?

[00:15:28] Speaker 00:
Correct.

[00:15:28] Speaker 00:
Okay.

[00:15:29] Speaker 00:
And the district court denied that request and in fact went through an analysis that said this request wasn't made diligently.

[00:15:37] Speaker 00:
There's no reason for the delay and it rejected your request to do that.

[00:15:43] Speaker 00:
And then

[00:15:43] Speaker 00:
The next thing you did is you filed a motion for judgment on the pleadings adding this other preemption defense through a footnote.

[00:15:52] Speaker 00:
So this is a perfect example of how when you do it the way that you're supposed to do it and ask the court for leave and you were denied that request in one instance, then

[00:16:03] Speaker 00:
you went and did it this other way, what's the meaningful distinction there?

[00:16:07] Speaker 00:
Why wouldn't you have brought your other request through a motion for judgment on the pleadings?

[00:16:12] Speaker 01:
Because the other one was not appropriate for a motion for judgment on the pleadings.

[00:16:16] Speaker 01:
I think that's where the distinction is, and I think it shows in connection with the Eighth Circuit case.

[00:16:20] Speaker 04:
In other words, according to your position, the ON's exception would only apply to defects in the pleadings, and any issue that

[00:16:30] Speaker 04:
calls on any facts or discovery of any kind outside the pleadings, the Owens rule won't save you, and you're going to have to go through the rule 16 standard to amend.

[00:16:39] Speaker 04:
Am I getting, is that your position?

[00:16:42] Speaker 01:
I actually think, I think it applies, Owens says it applies to motion for judgment on the pleadings and motions for summer judgment.

[00:16:49] Speaker 04:
You can't go outside the pleadings.

[00:16:51] Speaker 04:
Correct.

[00:16:51] Speaker 04:
You can't look at other evidence.

[00:16:53] Speaker 04:
And so it,

[00:16:55] Speaker 04:
anything, any affirmative defense that was omitted from the answer that in any way needs facts to establish it is off the table in the Owens exception.

[00:17:04] Speaker 04:
It's just pleading defects.

[00:17:06] Speaker 04:
Is that correct?

[00:17:07] Speaker 04:
Correct.

[00:17:08] Speaker 04:
Correct.

[00:17:08] Speaker 04:
So only things that could have been raised on a 12b6 or that just within the four corners of the pleadings.

[00:17:14] Speaker 04:
And so it isn't driving a truck through rule 16 then.

[00:17:19] Speaker 01:
It is not.

[00:17:21] Speaker 01:
And I think the distinction shows with the idea that there can't be any prejudice if it's simply a pleading error and it's just a matter of law.

[00:17:33] Speaker 04:
I'm sorry, go ahead.

[00:17:35] Speaker 04:
I was going to shift to the merits.

[00:17:37] Speaker 03:
If we can stay here for just one second.

[00:17:40] Speaker 03:
And what part of the court's analysis was there a good cause analysis there?

[00:17:47] Speaker 03:
Or was it not required?

[00:17:49] Speaker 01:
So it was not required.

[00:17:51] Speaker 01:
So the court did not require, we did not believe, we believed we could raise, we do believe that we can raise the affirmative defense in a motion for judgment and pleadings.

[00:17:59] Speaker 01:
So we didn't argue to amend, I mean the footnote I know, but we really didn't argue to amend it and then we,

[00:18:06] Speaker 01:
Didn't show good cause and the court didn't ask to show good cause and wasn't required to show to set that standard Because the court in has the control under rule 16 to determine whether or not that's something it wants to require and point me to a case that Provides the analysis that I think you agreed to just now that is that Owens

[00:18:36] Speaker 00:
is limited in this way when there are defenses that are brought to the defects in the pleading versus something outside of the pleading.

[00:18:46] Speaker 00:
Where can I look for authority on that?

[00:18:49] Speaker 01:
I don't think it's been addressed one way or the other.

[00:18:53] Speaker 01:
I do know that the times that the cases relied on by plaintiffs were different in that regard.

[00:19:02] Speaker 01:
Well, Idaho decided, as a district court can, that they were going to require the Rule 16 good faith standard.

[00:19:09] Speaker 01:
They did that.

[00:19:10] Speaker 01:
The Sherman Court, the Eighth Circuit, that was a different case because they were at trial.

[00:19:15] Speaker 01:
So it wasn't a matter of a defect in the pleadings.

[00:19:18] Speaker 01:
It was actually they had moved to amend the answer during trial on a motion for a directed verdict.

[00:19:25] Speaker 01:
So that shows the distinction.

[00:19:27] Speaker 01:
But if you're asking me for a case that says it, I don't.

[00:19:30] Speaker 01:
It hasn't been looked at to my knowledge.

[00:19:32] Speaker 04:
So turning to the merits, the Arizona statute on its face

[00:19:37] Speaker 04:
mentions overtime pay and includes it within the scope of the timing rules that it establishes.

[00:19:44] Speaker 04:
Why doesn't that then just tack a state law cause of action on top of a federal law cause of action or a federal element and thereby allow state law to have state remedies?

[00:19:59] Speaker 01:
So looking first at that, we have two arguments for that, but looking at the preemption argument, the savings clause is much narrower than it's been described.

[00:20:09] Speaker 01:
The savings clause says you can have a minimum wage that's higher, you can have a work week that's lower, or you could have additional child labor laws.

[00:20:18] Speaker 01:
So the savings clause does not like minimum wage.

[00:20:21] Speaker 01:
specifically authorize a state to do this.

[00:20:24] Speaker 01:
So therefore, we should look at the conflict.

[00:20:27] Speaker 04:
Even if the savings clause doesn't apply, that doesn't mean it's preempted.

[00:20:30] Speaker 04:
You still have to affirmatively accept that savings would take it out of preemption.

[00:20:34] Speaker 04:
Correct.

[00:20:36] Speaker 04:
But I understood you to argue that the statute didn't apply as a matter of Arizona law and that it was preempted.

[00:20:42] Speaker 04:
And my point is I don't see how

[00:20:46] Speaker 04:
It doesn't apply as a matter of Arizona law because it says over time and will incorporate the obligations and then.

[00:20:54] Speaker 04:
You know, I don't understand why they can't have that remedy.

[00:21:01] Speaker 04:
It's not inconsistent with the is it.

[00:21:04] Speaker 01:
Okay, so with regards, there's two issues.

[00:21:07] Speaker 01:
So looking then, which I think you're getting at, is whether the state even created a law for overtime to recover federal law overtime under a state law remedy.

[00:21:20] Speaker 01:
And there's no, if you look at Roberts, which is when the Arizona Supreme Court looked at the issue of the state overtime law for public employers, in that case, they specifically have an, they incorporate federal law and say you look at essentially the FLSA's exemptions and incorporate that in.

[00:21:41] Speaker 01:
And when Roberts looked at that, so the defendant said, well then incorporate all of the FLSA and give us the Portal to Portal Act

[00:21:50] Speaker 01:
the Roberts court looked at it and said, no, that that small phrase trying to incorporate a little bit of federal law does not bring in all of the FLSA.

[00:22:05] Speaker 01:
So it just, that that was, that they can't, that it wasn't enough to do that.

[00:22:13] Speaker 04:
And it rejects that as an interpretation of- The proposal was undisputed then.

[00:22:19] Speaker 04:
you know, the FSLA required an overtime payment, and then it wasn't made.

[00:22:24] Speaker 04:
Couldn't the Arizona statute be invoked to get it because the money was due and it wasn't paid by the date and timing specified?

[00:22:33] Speaker 04:
Couldn't it be used then?

[00:22:34] Speaker 01:
So if it's a matter of contract law, if it was contractually owed, then the answer is yes, because the Arizona wage statute is meant to help enforce contractual rights.

[00:22:44] Speaker 01:
It's not meant to provide an additional remedy for a purely federal right.

[00:22:49] Speaker 01:
Plaintiffs agree there is no substantive right over time under state law.

[00:22:54] Speaker 01:
And so, yes.

[00:22:56] Speaker 04:
And yet, state law mentions over time and says it has to be paid not later than 16 days, etc.

[00:23:01] Speaker 01:
There's one word over time and that doesn't incorporate all of the FLSA and what it meant was either that it's contractually owed, which would be the case most of the time, or it is owed under the

[00:23:17] Speaker 01:
for public employers, because this statute is also to enforce overtime for public employers.

[00:23:23] Speaker 01:
Under state law, they are entitled to overtime.

[00:23:25] Speaker 04:
So you're saying even if it's absolutely crystal clear and everyone agrees that the FSLA applies and requires overtime, if that wasn't specifically said in the contract, then even though the overtime is due and isn't paid within the time specified in the Arizona statute, the Arizona statute still provides no cause of action to recover that money?

[00:23:46] Speaker 01:
If it's contractually owed, if they agree it's contractually owed, if it's not a misclassification case, because here it was a misclassification case.

[00:23:54] Speaker 01:
So of course it was paid late because the defendant's position wasn't owed at all.

[00:24:00] Speaker 01:
But if it's contractually owed, then yes, you would have an Arizona claim.

[00:24:03] Speaker 01:
Because the Arizona wage statute is to enforce contractual rights.

[00:24:08] Speaker 01:
It's not to enforce the FLSA.

[00:24:10] Speaker 01:
There's no intent.

[00:24:11] Speaker 01:
If the Arizona legislature wanted to enforce it, have an FLFA state overtime statute, it knew how to do that.

[00:24:19] Speaker 01:
It has a minimum wage.

[00:24:21] Speaker 03:
Can I turn your attention a little bit to the commonality issue?

[00:24:27] Speaker 03:
If all the chauffeurs were subject to the same commission plan, the defendants admit that the pre and post-trips duties are compensable work.

[00:24:38] Speaker 03:
Why isn't the common question simply whether the commission plan covers the work?

[00:24:43] Speaker 03:
Why isn't that, why do we need to get into this subjective expectation?

[00:24:47] Speaker 01:
Because the statute is that it's a wage claim.

[00:24:53] Speaker 01:
This one actually falls under the AWA and it's reasonable expectation.

[00:24:58] Speaker 01:
So expectation is the subjective element.

[00:25:01] Speaker 01:
It's essentially a contract.

[00:25:02] Speaker 01:
Did the parties expect it?

[00:25:04] Speaker 01:
And the evidence here was that the plaintiffs

[00:25:07] Speaker 01:
had different expectations.

[00:25:08] Speaker 01:
Some of them said, yes, I expected to be paid on an hourly basis for this work.

[00:25:14] Speaker 01:
Others said, no, I knew I was being paid a commission.

[00:25:17] Speaker 03:
But it's a big question whether it's compensable.

[00:25:19] Speaker 03:
Isn't that would be the commonality issue?

[00:25:22] Speaker 01:
No, because we agreed it was compensable time for the most part.

[00:25:28] Speaker 01:
But just because something's compensable time doesn't mean that it needs to be paid on an hourly basis.

[00:25:34] Speaker 01:
You can pay it as a commission.

[00:25:36] Speaker 01:
So if the commission was meant to include that time, they don't get an extra amount on an hourly basis.

[00:25:42] Speaker 00:
Why doesn't that go to damages, as I think your friend on the other side argued?

[00:25:46] Speaker 00:
So if you agree that pre- and post-trip work is compensable, which I think you do for the most part,

[00:25:52] Speaker 00:
And you agree that all the employees were paid under a commission plan.

[00:25:56] Speaker 00:
You agree with that?

[00:25:57] Speaker 00:
So why doesn't the specific payment differences go to just a damages calculation?

[00:26:05] Speaker 01:
Because it's whether a claim exists at all.

[00:26:08] Speaker 01:
So if the reasonable expectation of the employee was,

[00:26:14] Speaker 01:
commissions cover this work, then they don't even have a claim.

[00:26:18] Speaker 01:
So that would be the factual determination that would have to be determined on a person by person basis, which would make it inappropriate for a class certification, which is what the court found.

[00:26:28] Speaker 00:
I have another question for you about your cross appeal.

[00:26:32] Speaker 00:
I'm trying to figure out how a ruling from this panel wouldn't be an advisory opinion, given that the claims that are the subject of your cross appeal were settled.

[00:26:44] Speaker 01:
So our cross-appeal is in the alternative.

[00:26:48] Speaker 01:
If you rule in defendant's favor, then the cross-appeal gets thrown out.

[00:26:53] Speaker 01:
But if you're going to rule and say, yes, there is a state law claim for FLSA violations, then we want to be able to argue those FLSA defenses.

[00:27:03] Speaker 00:
How could you do that?

[00:27:05] Speaker 00:
We lack jurisdiction to decide claims that are

[00:27:09] Speaker 00:
that are no longer in the case, they've been settled.

[00:27:11] Speaker 00:
And even if you're arguing it as an alternative, I'm not understanding how that's properly before us.

[00:27:18] Speaker 01:
So those arguments would come back into the case, because if you allow state law to bring in the federal law, then presumably, maybe, you're bringing in all of those exemptions to the federal law.

[00:27:29] Speaker 03:
How do we do that?

[00:27:30] Speaker 03:
Osmosis?

[00:27:31] Speaker 03:
I mean, how is that happening?

[00:27:33] Speaker 01:
So players actually agree that we would have the opportunity if we have to defend a state law cause of action that's based on the FLSA, then they have to show the underlying FLSA violation in front of a jury and we'd have those defenses.

[00:27:49] Speaker 04:
Are there arguments that you're trying to raise on the cross appeal?

[00:27:51] Speaker 04:
Are they in any sense alternative arguments to sustain the judgment you currently have?

[00:27:59] Speaker 01:
No, they are not.

[00:28:01] Speaker 01:
They are not.

[00:28:01] Speaker 04:
Why not?

[00:28:03] Speaker 01:
because we have settled those FLSA cases, those claims.

[00:28:11] Speaker 04:
The judgment on the Arizona law claim.

[00:28:16] Speaker 04:
If the theory is that the Arizona law claim, which has an overtime rule in it, carries within it the overtime rules of the FSLA so that they are now embedded federal elements in a larger Arizona cause of action,

[00:28:30] Speaker 04:
Are the arguments you're making about the scope of federal law, are those embedded within the Arizona cause of action such that they would be alternative grounds for sustaining the dismissal of the Arizona action?

[00:28:47] Speaker 01:
Possibly.

[00:28:49] Speaker 04:
Honestly, I hadn't thought of that, but possibly.

[00:28:52] Speaker 04:
My point is, if you're right on the issues in the cross-appeal, would that eliminate the overtime payment obligation completely?

[00:29:01] Speaker 01:
Yes.

[00:29:02] Speaker 04:
The Arizona calls for action completely.

[00:29:06] Speaker 01:
Yes, Your Honor.

[00:29:07] Speaker 01:
Which you did not argue.

[00:29:08] Speaker 04:
Which I did not argue.

[00:29:09] Speaker 04:
I mean, he raised the issues.

[00:29:12] Speaker 04:
And in that sense, it's technically not a proper cross appeal, because a cross appeal is when you're changing something in the judgment.

[00:29:20] Speaker 04:
And in fact, it really is just an alternative way of sustaining the same judgment.

[00:29:25] Speaker 02:
exactly and this the court can affirm on any grounds right for any reason so that could be a reason even though i didn't argue it so thank you all right thank you cancer all right we'll hear from Thank you your honors i just had a couple of brief points on the rule 16 question rule 16 carries the force of law this court the district court was required to apply rule 16b for

[00:29:53] Speaker 02:
As stated by the a circuit in the Sherman case Failure to apply rule 16 before after a deadline to amend the pleadings would render scheduling orders meaningless and effectively read rule 16 be and it's good cause requirement out of the federal rules of civil procedure But isn't the rule that you can raise failure to state a claim at any time?

[00:30:14] Speaker 02:
I'm not sure about that.

[00:30:16] Speaker 02:
Sorry, I can't answer that question.

[00:30:17] Speaker 04:
And you've already conceded that this is a 12b6 issue.

[00:30:21] Speaker 04:
So it still is subsumed within failure to state a claim.

[00:30:25] Speaker 04:
And so it would seem that it can be raised at any time.

[00:30:29] Speaker 02:
Well, in this case, as I mentioned before, there's substantial nine circuit precedent stating that federal preemption must be pleaded and is a waivable defense.

[00:30:39] Speaker 00:
Council, I think I understood your response earlier to say that this could have been raised in a 12b6, but not that you're conceding this is a 12b6 issue.

[00:30:49] Speaker 00:
I mean, this could have been brought up in a 12b6.

[00:30:52] Speaker 00:
come at a time before the scheduling order had expired and the time to amend the pleadings had expired.

[00:30:57] Speaker 02:
That's correct.

[00:30:58] Speaker 02:
That's correct.

[00:30:59] Speaker 02:
And litigants are entitled to rely on the deadline set by the court.

[00:31:03] Speaker 02:
Under defendant's theory, their suggestion is that they can wait years into a case and not just file a motion for judgment on the pleadings, but file a summary judgment motion.

[00:31:11] Speaker 02:
And the rules should apply to defendants.

[00:31:13] Speaker 04:
Well, that would be very different, because then you have to go to facts outside the pleading.

[00:31:18] Speaker 04:
And Owens wouldn't apply, because it only talks about motions for judgment on the pleadings.

[00:31:22] Speaker 04:
But a defect on the pleadings, your position is that even though it's a defect on the face of the complaint, it could have been raised in a 12b6.

[00:31:32] Speaker 04:
If you didn't put the affirmative defense in the

[00:31:38] Speaker 04:
answer, you can't do it, even though no facts outside the complaint are needed.

[00:31:44] Speaker 02:
Our position is that the Court was required to apply Rule 16B4.

[00:31:47] Speaker 02:
I would just like to mention the merits question as to whether or not the overtime is covered under Arizona law was not argued below.

[00:31:57] Speaker 02:
It was struck by the District Court in the reply brief on the motion for judgment on the

[00:32:02] Speaker 02:
pleadings, this court does not need to reach that.

[00:32:05] Speaker 02:
But as your honor suggested, it's plainly within the Arizona state statute.

[00:32:10] Speaker 02:
And the question is, if preemption does not apply, the district court was required to apply a proper conflict preemption analysis.

[00:32:20] Speaker 02:
And I did not hear an argument as to those issues on how the state statute conflicts with the purpose of the FLSA.

[00:32:29] Speaker 02:
And this court has said that that.

[00:32:31] Speaker 04:
The issue is the one that I raised before in Williamson, that Williamson suggests that trying to expand on the carefully reticulated remedial regime of the FSLA and using state law to do that presents an issue.

[00:32:47] Speaker 04:
That's why Williamson has the comment that wage claims have to be brought under the FSLA.

[00:32:54] Speaker 02:
There were several conflicting statements in Williamson that this court then clarified in Wang.

[00:32:58] Speaker 02:
In both Williamson and Wang, they were very clear about the purpose.

[00:33:01] Speaker 02:
The purpose is to protect employees, not to protect employers.

[00:33:05] Speaker 02:
And the statute here is entirely consistent with and furthers the purpose of the FOCA.

[00:33:12] Speaker 02:
So with that, looks like my time's up.

[00:33:14] Speaker 04:
All right.

[00:33:15] Speaker 04:
Thank you, counsel.

[00:33:15] Speaker 04:
Thank you.

[00:33:16] Speaker 04:
We thank counsel on both sides for their arguments in this case.

[00:33:21] Speaker 04:
And the case just argued will be submitted.