-: SJC-13382, Matthew Sutton
and another v. Jordan's Furniture Inc.
-: May it please the court.
Julie Brennan on behalf of Jordan's Furniture.
I'm sorry? -: Sorry about that.
(Julie chuckles)
-: In the oral argument in this court,
in the Sleepy's case in,
Justice Kafker presented a hypothetical question
to the attorney representing the plaintiff in that case.
The attorney is with the same law firm
that represents Mr. Sutton in this case,
and the question was,
"Sleepy's could have easily created a draw
that met your requirements, right?
They could have said, 'We will give you a draw
that is the minimum wage times 40 and overtime at 1.5,'
and we wouldn't be here, right?"
That is the Jordan's pay plan. -: Well, is it really?
Because the subtraction issue is,
there's three parts to the Jordan's pay plan
I think are interesting.
One is the difference you just pointed out,
that the draw there, unlike the draw in Sleepy's,
which is 125 a day without a breakout,
this one had a breakout,
but there were two other parts to this.
One's that you have to pay everything back,
and if you don't get a commission,
either the beds aren't selling
or you're not a good salesperson, you owe the money back.
That wasn't the case in Sleepy's.
There was no money owed back, and secondly, in Footnote 8,
in that you do have something you don't have to pay out,
if you work on particular holidays,
you get that time and a half, and it's not a subtraction.
So you know exactly how to do it in Jordan's.
The more you work, the more you owe in a certain way here,
which seems troublesome.
So why don't you address the three different facts,
the one that helps you and the two that don't look so good.
-: Understood.
So the Sleepy's pay plan, $125 per day,
it did not track or pay out separate
and additional overtime pay or Sunday pay.
So what Sleepy's had to do-
-: You didn't lose. You were given that money.
You got that money.
By the way, that wasn't enough, obviously.
That money was yours.
-: It was the exact same system as Jordan's.
It was a draw against future-
-: They had no subtraction, did they?
-: They did, Your Honor. In the Sleepy's case, what Sleepy's-
-: Would fall behind in and owe money,
meaning you went and got your payroll in that week,
you would still owe them money that you had
to pay back out of future commissions?
-: The $125 per day in Sleepy's,
the way that the plan operated
was that Sleepy's admittedly didn't pay the statutory pay
that was due, the overtime pay of the Sunday pay.
Sleepy's argued, "We're gonna pay commissions later,
and we're gonna retroactively count some
of those commissions that we failed to meet.
We failed to pay the Sunday pay and the overtime."
So there was that retroactive application only.
-: But if, in that time period, you earned commissions,
they would subtract,
like have it be a constantly ever accumulating debt, right?
Maybe I'm wrong, but I-
-: My understanding of the Sleepy's pay plan
was that it operated identically.
The $125 per shift was a draw against future commissions.
That concept is the same at Jordan's but slightly different.
It pays out a base hourly rate to employees.
We pay the minimum wage times 40 hours.
We pay a separate and additional payment
that shows up as a line item on the pay stub,
time and a- -: It's a draw.
You're giving- -: The draw is-
-: No matter what, -: Draw is-
Justice Kafker: you have to pay it back, right?
-: Draw is specifically defined in the Jordan's pay plan,
and the definition of draw is an hourly base pay designed
to provide sales employees despite fluctuations
in commissions earned.
So at Jordan's- -: That's how it's described.
That's not how it actually works.
When it works is if you work that overtime
and get that draw,
you gotta pay that money back outta your commissions.
You don't get to keep that money.
You have to pay it outta commissions back, right?
-: And that was the same system in Sleepy's,
and so in this case,
the draw was specifically defined in the pay plan,
and we received an opinion letter from the DOS in 2003
that specifically said that that was permitted.
Question number six was,
"Can the employer count the premiums paid to the employee
as a recoverable draw against future commissions?"
And the answer was yes.
The attorney general continues to take the position
that that is permitted.
In topical outlines that the Attorney General's Office
publishes every few years,
the most recent of which was published-
-: Counsel, can I ask you to address
how the Jordan's Furniture plan meets the goals
of the overtime statute,
the three goals that are set forth in Mullally?
-: Yes.
Of the $9 million judgment in this case, 97% is Sunday pay.
Only 3% is overtime.
Mr. Sutton, the plaintiff in this case,
worked fewer than five minutes of overtime
during the three-year window at issue in this case.
A full one third of the class members,
the average overtime of the class members
over that three-year window was only four hours.
There's a reason for that Jordan's testimony,
which is in the record,
was that they did not schedule employees to work.
In fact, they dissuaded employees from doing so,
and that's why it was such a rare occasion.
And so this is not a case where this employer
is seeking to avoid paying extra pay
for employees working longer periods
of time behind the overtime statute.
So the overtime statute in this case applies
to only 3% of the damages.
The relevant statute is the blue laws,
Chapter 136, Section 6 paragraphs,
the payment obligation with respect to Sunday pay.
That statute is four sentences long.
The first two sentences create the obligation
to pay the Sunday pay.
The third sentence says, "The attorney," this paragraph.
The fourth sentence says that the fines
that are available under Chapter 149, the Wage Act,
Section 180A, are available to enforce the blue laws.
So for 97% of this case, it is Sunday pay,
which is governed by Chapter 136, Section 6, Paragraph 50,
and there is no private right of action under that statute.
-: So can you address the argument, I don't know who made it,
that the Wage Act gives that private right of action
to collect wages and so including Sunday pay?
-: Yes, Your Honor.
Chapter 149, Section 150 of the Wage Act
creates the private right of action,
and the first sentence reads that an employee
who is aggrieved by a violation of 12 specific statutes
that are listed out in Section 150-
-: And I take it the 12 do not include the Sunday.
-: It does not include the Sunday pay law,
and, obviously, that was intentional.
This court in the decision that it issued
in Donis in 2020 said that that language is controlling
where Section 150 has a specific list of 12 statutes,
violations for which can create a cause of action
under Section 150.
We have to follow that language.
This court in the decision said,
"We will not override the will of the legislature
by reading into these statutes additional protections
for employees that their authors did not choose to provide."
The Sunday pay law for decades has been enforced
by the Attorney General's Office.
Today an employee can go online, fill out a complaint form,
claim they weren't paid their Sunday pay,
and the attorney general pursues that claim on their behalf.
That's the reason why we have cases
like Driverama versus Attorney General.
In that case, the employee went to the attorney general,
filed their complaint for Sunday pay,
the attorney general ordered the employer to pay the pay,
and then the employer then filed a lawsuit,
and that's why the two parties there
are Driverama versus Attorney General.
-: Ms. Brennan, I'm not sure how much the 97,
3% really resonates with me and for a couple of reasons.
One is there's a lot of money in this case, and number two,
depending on what the retroactive analysis is,
it might be a really a lot of money
and 3% of a really a lot of money.
So the public policy concerns
about people not working too many hours
and also other people having opportunity for jobs
is present in this case because 3% of a lot is a lot
and 3% of retroactive a lot.
-: The relevant public policy in this case
is the public policy behind the blue laws,
and that's why it's important for this court to understand
that the 97% pertains to Sunday pay under the blue laws.
So- -: Can I read you
the AG's brief, like give you a chance to respond to it?
That ignores the fact that Section 150 explicitly
includes violations of 148 and the list of statutes
for which it grants employees a private right of action.
The next sentence, key.
"The fact that GLC 136,
Section 6 of the blue law is not a
'cause it explained above that statute
only determines the rate at which employees
who work on Sunday must be paid.
The failure to pay that rate
is actionable under the Wage Act."
-: I disagree with those statements obviously,
and let me explain why. -: Why don't you tell me why?
-: Section 148 is a statute
that requires the timely payment of wages.
Wages is not defined.
This court has held repeatedly that,
just because an employee claims that wages are due
or some amount of money is due to them from their employer,
it's within chapter 149, Section 148.
This court has repeatedly narrowly interpreted that
to exclude things like money that is supposedly due
under the Prevailing Wage statute
or discretionary bonuses or contingent commissions.
There are many compensation, and particularly most recently,
in this court's decision, in the Zucchini Gold case,
an employee sought to pursue a Wage Act claim
where the origin of the obligation to pay the time
and a half was the FLSA, a different statute.
In that decision, this court said,
"Wages is not all encompassing
of the obligation to pay that overtime comes from the FLSA.
The employee can't shoehorn that into a Wage Act claim."
That same analysis applies here.
It is only under 136, Section 6 that an employer has
to pay Sunday pay with no obligation
to pay premium pay. -: To whom?
To whom does the employer have to pay the Sunday pay?
-: The employee. -: Okay.
And it is for what? -: It is for pay on Sunday.
-: For working on Sunday? -: For working on Sunday, yes.
-: Wage an employer must pay an employee for work done.
In what world is that not wages?
-: In the world where this court has determined
that wages has a very specific definition.
-: Have we ever or not or did not include the payment,
(laughs) the compensation owed
to an employee for the work done?
-: Yes, so, for example, in the Zucchini Gold case,
the FLSA creates the obligation
to pay time and a half in that case.
The employee sought to bring a claim under the Wage Act.
This court said,
"The word wages in that section is not all encompassing,"
and because the origin of the obligation to pay that time
and a half is in the FLSA, not under Massachusetts law-
-: Well, wasn't that case really about whether
or not you trouble the damages or you get
to double them under the FLSA since the cause
of action arose under that one?
-: No, and that- -: It wasn't about wages
not being compensation for work done.
-: In the Zucchini Gold case, because it was a restaurant,
restaurants are exempted from the overtime requirement
under state law,
the employee had no basis under any Massachusetts law
to pursue a claim, right?
-: And so the question was only whether the federal law
provided the remedy or if the state law could be used
as a vehicle to override the state law,
presenting a supremacy clause problem, right?
You don't have that same issue here.
-: Well, the same analysis has been used
with respect to various types of compensation
that an employee can claim an entitlement to.
So for example, where an employee claims an entitlement
to wages under the Prevailing Wage Act,
the Prevailing Wage Act creates the obligation
to pay that pay, which is the Donis case.
Even though the central thrust of this case,
and that's the language that's used repeatedly,
the central thrust of the claim
is under the Prevailing Wage Act.
In that case, this court said,
because the Prevailing Wage Act
creates the obligation to pay,
you have to look to the Prevailing Wage Act
for your remedies.
You can't label it something other than what it is.
It's a claim under the Prevailing Wage Act, and, therefore,
you can't use the Wage Act to call it something different.
In this case, in count two,
that's exactly what the plaintiffs did.
The Sunday pay is only due under Chapter 136.
That is the only place in Mass general laws
that creates the obligation, and it also creates the remedy.
That third sentence says,
"The attorney general shall enforce this section,"
and the attorney general does, in fact,
regularly enforce that section.
If I could- -: Can I get you two issues?
'Cause they're not so simple either. Let me do this.
A shorter one, the Lodestar,
which I think you have a better argument on,
that there's very little analysis of why this is done time.
-: That is correct, Your Honor.
-: He's gonna stand up and argue the opposite.
Why don't you address why that's wrong
what the judge did on the Lodestar?
-: Yes.
Court's unit star method should be applied
with respect to a fee shifting claim like this is,
and the Lodestar method is for the judge
to determine an appropriate number of hours
for which attorney's fees will be paid by it,
and every case that you look at
under any of these employment statutes,
the judgment or the order is for that amount of money.
There's never a multiplier applied.
So to the extent that we're challenging the fee award-
-: So here, the judge multiplies the rate
or the hours times four or-
-: He performed the calculation to come up with $160,000.
So he analyzed how many hours and then analyzed the rate,
said it comes out to approximately 160,000.
Without any explanation or support or authority, he said,
"I'm going to multiply that by four,
and that's gonna be the fee award."
-: So these people were billing out at how much per hour?
-: I think the approved amounts were 400 and 500,
and we're not challenging the amount
-: So again, -: of the rate.
-: so they're billing out at 400 and 500 an hour,
and how many hours did it take to bring this case?
-: 400 from beginning all the way to judgment.
-: And the judge gives a multiplier.
What is his explanation or her explanation
for why it's times four?
'Cause I can't remember what it is.
-: The judge somehow looked to a bunch of factors
that are applicable in a common fund settlement case,
which don't apply in a fee shifting arrangement.
-: Why do they do it in a common fund case?
Why do they multiply it by four in a common fund case?
-: So when we settle a class action wage in our case,
usually counsel agrees to an amount
that's gonna go into the common fund,
and then we negotiate what percentage is going to go
to plaintiff's counsel.
In order to get that class action settlement,
we bring the settlement before the court,
and the trial judge analyzes because the trial judge has
to act in the interest of the members
of the class who are not present
to make sure that the contingency fee that's being taken
from that common fund is appropriate.
That's an entirely different analysis
than the Lodestar methodology that applies
in a fee shifting arrangement.
-: Okay, can I- -: And so we're not-
-: You're over.
So can I ask you about the retroactive?
One question, chief, with your permission.
So the regulation is not the problem.
This policy guidance thing is ambiguous enough
that it can support your position somewhat,
but we normally apply statutes, you know,
as if we don't requesting and we need an exceptional reason.
Is that alone the exceptional reason?
Because, you know, somebody in the department
issued guidance that may very well be inconsistent
with the regulations but supports your position?
-: I think there are quite a few reasons
nobody shouldn't apply in this case.
In this case, Jordan's was the good faith employer in 2003
that said to me, "We wanna set up our commission plan
in a manner that complies with the law."
I went and started communications with Lisa Price
to figure out how to properly structure this.
As a result of that, she suggests-
Justice Kafker: DOS is?
-: Division of Occupational Safety,
which, at the time, was the government agency.
-: So it's not the AG's Office or the Department of Labor.
It's this division of without this policy guidance.
-: I also received a letter
from the Attorney General's Office a month later,
which was not in the record in the Sleepy's case.
-: Is that in our record? -: It is in the record,
and the Attorney General's Office agreed
with the advice that was given by those two letters.
-: And when we read those letters,
do you reference the subtraction process in that letter
that you can recoup all of this
by subtracting it from commissions?
Is that in those letters that we get?
-: Section 6, I specifically asked the DOS to weigh in
on whether a draw could be applied towards commissions
because we were trying to structure this in a way
that was appropriate and compliant with the law.
We followed that advice, right? We incorporated-
-: And that the subtractions go forward, that-
-: Yes, yes. -: Okay. Okay.
We'll read the letters. -: Yes, and to this day,
the Attorney General's Office continues
to say that a draw system like that
is perfectly lawful and appropriate.
We cite to many cases-
-: Maybe that is. We don't have the AG argument.
But the AG's brief says the opposite.
So how am I gonna know that that's the case?
They're saying what you do is fine,
even though they're arguing against you in the case.
-: In 2023, just two months ago in August,
the attorney general published,
it's a summary of employment laws
that the AG's Office periodically publishes
to give guidance to employers.
Just two months ago in the topical guidance
that they published, these are the two statements that they-
-: It's in our appendix.
-: After we filed the appendix in the briefs,
but it is attached or excerpts of it are attached
to the Retailer Association of Mass briefs.
But these are the two statements that, as of August of 2023,
the AG is still making paid as a recoverable draw,
"may reduce future commissions provided the employees
always receive at least minimum wage
for all hours worked and overtime compensation
when their hours exceed 40 in a given work week."
They also make a statement.
"100% commissioned employees must be paid
at least the equivalent of minimum wage
for the first 40 hours and time in one half minimum hours
worked over 40 in a given work week."
-: Can I ask you?
Do we have cases that say that our analysis
or the application is prospective as a matter
of fundamental fairness of the statutory cases?
-: Yeah, so it's a three-part task follows,
and it looks to whether there was reasonable reliance.
That's the first factor, and Jordan's easily meets that,
given the opinion letters that it relied upon,
the Attorney General's advice
as of two months ago that it relied upon.
The second factor is whether
would further the purpose of the new interpretation.
Keep in mind, Sunday pay in the state is now gone.
It was phased out as part of the Grand Bargain legislation
that was adopted in 2018, and, as of January 1, 2023,
make that point because employees are not going
to lose any rights under the,
if this court were to determine that Sleepy's
should be applied only prospectively.
The statute of limitations is three years.
So right now, if an employee claimed that they failed
to be paid Sunday pay,
they'd be limited to going back only three years.
So the relevant window would be October 4th, 2020
to today, October 4th, 2023.
So if this court were to rule that the Sleepy's decision
back in 2019 can only apply prospectively,
that would be potentially impacted
is if there's a current claim pending like Jordan's.
And so Jordan's certainly satisfies this third criteria
which says that if an injustice would result
from the retro statute
or a new interpretation of the statute,
then this court will, on occasion,
say that it will apply only prospectively.
So let me give an example.
-: I just wanna make sure I understand that.
So Sleepy's is issued in what year?
-: 2019. -: So Sleepy's,
Jordan's continues to do this, right?
-: Only for a very short window of time.
So the lawsuit that was filed by this law firm
that represented Sleepy's in that case
was filed in June of 2019.
Immediately, Jordan's changed its pay plan.
-: Looking at the period three years before that lawsuit.
-: Yes. -: Okay.
So that 2016 to 2019 period. -: Yes.
-: Post Sleepy's. Okay. -: Correct.
And as a result of Sleepy's,
I'm sure many employers revisited their commission plans
and changed them as a result
of what was an foreshadowed new rule,
and within months of the Sleepy's case coming down
and hundreds of Sleepy's cases filed
against retailers in Massachusetts,
almost every car dealership,
every furniture retailer was sued.
-: And every one of them has won apparently, except for,
and Jordan's is the last fighting this, is that right?
-: There are a handful of cases that have been dismissed
for a variety of reasons.
-: Are there any cases going the way you want,
any superior court cases or anything
out there going your way?
-: I have found that most retailers
didn't do what Jordan's did.
Most retailers follow tracking or paying separate
and additional overtime and Sunday pay.
Jordan's did it differently, and Jordan's decided,
"We're gonna pay a base rate of pay
that's equal to the minimum wage,
a separate and additional payment for overtime,
and as for Sunday pay."
That makes all the difference because,
as soon as we made those hourly payments,
our entire obligation to pay statutory wage was done.
We had completed and fulfilled that obligation.
-: And subtracted, but that's a whole separate story.
Okay. -: Okay. Are we all set?
-: Thank you. -: Thank you.
Okay, now, Attorney Cassavant.
-: Chief justice and associate justices,
may it please the court.
Good morning. My name is Brant Cassavant.
It's been my privilege to represent the plaintiff,
Matthew Sutton,
and the 250-plus Jordan's Furniture sales employees
who are class members in this action.
Address three topics,
all of which have been touched upon here today.
The first is why Jordan's pay plan absolutely
does not comply with the overtime statute or the wage laws
as this court has interpreted them in cases like Sleepy's.
Second, the firm that Sleepy's does apply retroactively
to conduct a rising prior to the date of that decision,
as most of this court's decisions do, and third,
I would like to explain why plaintiffs have a private right
of action under the Wage Act
to recover unpaid Sunday premium pay.
So fundamentally,
did Jordan's pay plan comply with the wage laws
as those laws were interpreted in Sleepy's?
The Superior Court held it did not,
and the Superior Court was 100% correct.
In Sleepy's, this court,
we looked at the plain language of the statutes,
the regulations, the case law, and concluded the following.
Draws and commissions cannot be retroactively allocated
as hourly wages for overtime in Sunday,
even if those draws and commissions equal
or exceed what the employees would-
-: But- -: Here,
the draws were not retroactively allocated.
It sounded like, if I understand the program,
Jordan's paid employees for their first 40 hours
at the minimum wage, which Sleepy's prescribes,
and then any overtime at time and a half.
-: Incorrect, Your Honor. What it would actually do is this.
Jordan's informed its sales employees
that they would earn their commissions,
they explicitly use the phrase "earn your commission,"
when an item was sold
and the customer left the store with it or.
Jordan's would purportedly pay the commission earned
on that sale in week one in week two.
Now what Sleepy's would require
is that Jordan's pay the full value of that commission
plus any additional sums, not on a draw basis,
for any Sunday hours or overtime hours that employee worked,
but that's not paid.
-: Where does Sleepy's say that?
-: Sleepy's in Dickson. -: Sleepy's is harder.
Sleepy's is different from you in one respect.
They just paid $125 a day.
They didn't do this division, right?
They just paid $125 a day.
Jordan's, right? They do divide it up, right?
They do have an hour regular pay,
Sunday pay, and overtime pay.
Now they don't really give you a check for that, right?
They put something different,
but it is different than Sleepy's.
-: It is different from Sleepy's, but I have to emphasize.
The difference between this case
and Sleepy's is completely immaterial.
The fact that Sleepy's paid $125 draw
plus any commissions earned in excess of that draw,
which was actually how Sleepy's paid people,
is almost exactly how Jordan's did it
except Jordan's calculated the draw by the hour.
So- So why doesn't that
comply with Sleepy's?
-: It doesn't comply with Sleepy's because the hourly draw
is still coming out of the employee's commissions,
their earned commissions.
So they earn a commission- -: Did Sleepy have
a 100% commission employee? -: No.
Under Sleepy's, you can have a 100% commissioned employees
for- -: You also have to pay them
the minimum wage for the first 40 hours?
No. Okay. -: No.
Under Sleepy's, you can pay a commission,
a percent commission basis and use those commissions
to satisfy your minimum wage obligations.
What you cannot do is take those earned commissions earned
in one week and, in the next week, withdraw a portion,
hold back a portion of those commissions,
and we're paying you for the overtime
and Sundays that you work.
So the way that it would work is if an employee
in one week was owed $1,000 in commissions
and was owed $200 in Sunday pay, let's say,
so in total compensation, what Sleepy's would require
in that instance is a $1,200 paycheck,
which could include a draw from minimum wage
plus separate additional 200 pay for Sundays.
-: 'Cause I'm behind you a second.
So I'm a Sleepy's employee. I go to work.
I sell beds or whatever I do there,
and I don't sell a thing that week.
Do I get a check for that week
or are they paid on a bi basis?
-: Jordan's? -: Yeah.
-: They were paid on a weekly basis.
-: So at that week, I haven't sold a thing,
but I worked overtime.
Do I get a check that says that I worked this many hours
and this much over to that, and I, okay.
And then the next week, I still haven't sold anything.
So I get a check for my salary,
my regular hours in overtime.
Now owes Jordan's all that money, right?
-: Yes. -: And that's the difference.
When I worked at Sleepy's,
I got a check for $125 a day times five,
no matter what, but I didn't owe anything, right?
Or did I owe Sleepy's? -: You did owe Sleepy.
I think the essence of this confusion comes down to this
is where the money is coming from and whether the employees
are actually getting more money
for having worked more hours,
meaning overtime hours or Sundays.
Under any- -: Okay,
but let's pin that down.
Sleepy's, they clearly didn't, right?
There was no doubt they didn't,
but an employee at Jordan's who, that week,
got a check that had more money than an employee
who didn't work overtime, right?
-: Correct, yes, but then that money would be recovered
from future commissions.
-: I think that's where it gets harder because then,
you're getting into another part of Sleepy's which says
that that money needs to be secure and separate,
and it's like there is,
Jordan's does do that for this special holiday.
In Footnote 8,
there's a group that gets exactly what you're talking,
there's a type of pay that's paid for that, exactly.
-: Yeah, there are certain holidays
that Jordan's paid separate in addition
from any draws or commissions.
-: And they didn't subtract from commissions.
-: And there was no subtraction from the commissions.
This really- -: So they didn't subtract,
if you got that check every month from Jordan's
and they didn't subtract later,
would that have satisfied Sleepy's?
-: Arguably yes because it would be separate from
and in addition to any of the draws
or commissions that the employees owe.
-: Can I ask you, and you used the phrase essence
of the confusion
and had a great exchange with Justice Kafker.
Doesn't this really illustrate why this should
because the three-part test looks to unfairness
and foreseeability, whether something's foreshadowed,
and we have DOS in the AG's Office giving opinions.
We have this confusion that you were just illustrating.
Why shouldn't it be prospective?
-: To get to some of the essence of the confusion
that I referenced, it was not the essence of confusion
of whether Jordan should get a pass
for having flagrantly violated the law
for the past several years
on what is basically a good faith affirmative defense,
which I would like to get to.
The essence of the confusion
is that we're using complex industry terminology
like commissions and draws.
In Sleepy's, this kit held in a single sentence unanimously.
Employees are entitled to separate and additional payments
of one and one half times the minimum wage
for every hour the employee worked over 40 on Sundays.
All of Jordan's sales employees' compensation came
in the form of a commission, which is sales earnings,
from which Jordan's would deduct sums
that it was paying them that it was advancing them
for the overtime and Sunday hours they were working.
If you have an employee at Jordan's
who works a particular week and works a Sunday
and makes $1,000 in sales, the next week,
that employee is going to get $1,000.
Jordan's would allocate that $1,000 between a draw,
which was an advance against the commissions they earned,
plus whatever commissions were left over
after the deduction of that draw.
Let's say you had another employee work the same week
but not work Sunday and also in pay.
-: That employee- -: But he wouldn't earn $1,000.
His draw would be lower, right?
His draw would be lower than the employee
who worked overtime. -: Yes,
but he would still earn $1,000.
He would earn the exact same amount as the employee
who did work Sunday because they both generated $1,000
in commissions.
Jordan's would carry those commissions forward
and then would deduct the draw from that.
It's just that the employee who worked the Sunday
would have more of a draw taken
out of the 1,000 of the excess.
-: So the employee who worked overtime
and the employee who didn't work overtime
would get paid the exact same amount.
-: Exactly because the- -: That's the problem.
-: That's the key. That is the key to Sleepy's.
The key to Sleepy's is that the legislature, in its wisdom,
and as this court noted, the legislature chose the carrot,
not the stick approach to assuring compliance
with the wage laws, and with respect to the overtime
and Sunday pay law, what the legislature wanted
was for employees to receive more pay for the burden
of a longer week or for working on believed people's times
would be better spent with family or resting or so forth.
A system that ensures that employees
don't actually receive more pay for working more hours
or on Sundays does not comply with,
Jordan's has cleverly, cleverly implemented this system
where the employees' earnings
were capped at their sales earnings.
They would only make as much money as their sales earnings,
but Jordan's would cannibalize more
of those sales earnings in the form of a draw
to cover its premium statutory obligations, and that's-
-: Well, they could keep working and working and working.
They'd build up a debt
-: Yeah. Exactly, yes. -: that's higher, right?
So they could get a higher draw.
They could keep raising their draw,
but they would also raise their debt.
-: Exactly, yes.
It was basically Jordan's system required the employees
to pay for their own hourly labor, and then,
once they had earned sufficient draw to cover that time,
which Jordan's would take out of their earned commissions,
Jordan's would pay them whatever commissions
were left over after that recovery.
-: And so back to Justice Gaziano's question.
I understand the regulations said that's a no no,
but they're issuing this department
that your opposing counsel is communicating with
is issuing statements that say,
"If you do this, you can pay it outta your commissions.
If you pay this amount for hourly
and you keep track of overtime,
you can use commissions to pay for it."
Now they may not be fully informed
of sort of all the cleverness of this,
but does that give them,
I mean, you call it a good faith defense,
but it's not clear, right, that this is a no no.
-: There's a lot of things in the law that aren't clear,
and this court consistently
applies its statutes retroactively,
notwithstanding that fact.
A couple points on these letters-
-: But the Pioneer brief brings up a couple of cases
where we, even in the statutory context, right?
-: Certainly, yes, but this
is not one of those cases. -: Not one of those cases.
-: To address these letters, one,
I would encourage the court to look
in the record and read the letters again,
including Jordan's requests for these letters.
One of those requests is not even a request
for an endorsement of its current pay plan.
The question in that case was whether an employee
who worked in two different roles,
how would you compensate them
for working those two different roles?
So that is completely off in left field.
The other two letters,
as this court looked at and read in Sleepy's,
caused some confusion but no direct conflict
with the statute and include numerous statements
that a reasonable party or reasonable lawyer
might read and say, "Hmm, this is still a little ambiguous."
-: But it was easier in Sleepy's
because there wasn't any carve out.
Sleepy's just is $125 a day.
They didn't have this breakdown that starts looking more
like what that guidance letter talks about, right?
-: That's a form over substance position, Your Honor.
So in Sleepy's, the employer did do what Jordan's did,
which was advance them $125
and then pay them any commissions earned in excess
of the $125 so that their compensation
was always capped at their sales earnings.
Their paychecks didn't separately itemize it,
but the mere fact that Jordan's separately itemized
what it indisputably employee's paychecks
so that the paychecks reflected commissions earned
in excess of the draw plus the draw payment,
the harm is still the same.
The employee is not getting additional pay
for the burden of additional work.
-: It looks more like what that guidance letter said, right?
It's paying commissions that total these two components,
and they're broken out.
So it looks a lot more like the guidance letter
than Sleepy's did. -: Certainly it does,
but Jordan's reliance on those letters
is of absolutely no moment.
So I have called it a good faith.
These executive agencies,
it is not their job to advise employers
on how to shape their pay plans.
Indeed, in the attorney general letter
that Jordan's obtained,
the attorney general says in the very second paragraph,
"We don't have constitutional authority
to tell you how to do this.
This letter is purely informational."
This court decides what the law requires,
not executive agencies, and, in that regard,
Jordan's going out and soliciting these opinion letters.
It's arguably no different than any employer hiring experts
in a particular field and asking them
what their opinion is of something.
And then- -: Well, it's a little
different to say actually, "Go to the,"
when talk about the deference that's owed and we don't,
again, those guidance letters look inconsistent with the.
So in Sleepy's, we're not quite as deferential
to that kind of stuff as we ordinarily are.
-: I would argue that these letters are not
in conflict with the statute at all.
In the 2003 letter, the DLS noted specifically
that inside salespeople are subject to state overtime law,
even though the commission they receive
is not included in the regular hourly rate
for overtime purposes.
Jordan's elides that statement entirely.
Jordan's has always taken these letters
and engaged in hiring where the letters themselves are,
as this court observed,
somewhat ambiguous and are not models of clarity.
Jordan's somehow managed to divine perfect clarity
out of them and, from that ambiguity, said,
"Oh, our pay plan is entirely compliant.
We have done nothing wrong,
and we have not withstanding the fact that the regulations
were subsequently amended and revised,"
and decisions like Dickson and Mullally came out,
which foreshadowed this court's decisions.
Sleepy's, where the court held employers
can't retroactively reallocate wages
for one purpose to another purpose.
Setting all that aside, it decided to enforce our plan.
That's a good faith defense,
and there is no good faith defense on the Wage Act.
This is a strict liability statute.
But even if you engage in the retroactivity analysis,
they can't prove any of the three prongs. (laughs)
This outcome clearly was foreseeable in the sense
that this could any precedent,
reverse any of its prior decisions,
hold that the letters or the regulations
are in conflict with the statute.
-: And again, the cases in one of the amicus brief
where we don't apply a statute retroactive,
were they all cases where, basically,
we reversed ourselves
or some more clarifying a very confusing area of the law?
-: Yes, the case law, the cases where the court has done this
have involved situations where it
has been revisiting prior precedent or maybe is dealing
with a regulation that is directly at odds with the statute,
which is not the case here.
This court held that the regulation looked at the regulation
as a way of arriving as conclusion in Sleepy's,
but then just to the other two quick points,
'cause I see that my time is done,
with regards to the retroactivity,
the other two elements in this analysis
are whether applying the case retroactively
will advance the purpose of the overtime statute
and the Sunday pay law is to ensure
that employees receive compensation
for the burden of the work that they've done.
These 258 Jordan's sales employees
have worked $8.8 million worth
of Sunday hours and overtime hours.
Paying them that money will obviously making sure
that they are ultimately compensated
for the work that they do.
Jordan's response to that is, "Well, we can't fix the past.
I mean, we can't unhave them work these hours,
and, by the way, you know,
the Sunday law has been legislatively abolished,"
but that's a nonsensical position as every other court
to address this precise issue.
The past may be unfixable, but this court can award damages,
and that is in furtherance of the statute's purpose,
and then lastly, Jordan's has really stridently argued
that it was a good faith employer,
and it was trying its very best and that it's untrue.
Jordan's furniture has never, in this case,
provided a single iota of evidence
that requiring it to pay its its employees for hours
that they worked is an undue hardship for Jordan's,
a multimillion dollar company owned
by a multi-billion dollar conglomerate
that has fought this case quite methodically
from the beginning. -: Okay, the Lodestar.
I don't get how you get four times your rate and your hours.
Your rate seems fair, your hours seem fair, but
Brant: So in-
-: have you been very successful?
But why do you get four times?
There's just almost no explanation for that.
-: Well, there was plenty of explanation in the briefing,
and the judge simply said that he agreed partly
with each side.
We wanted a five times multiplier,
and he did not apply a five times multiplier
because it's an abuse of discretion standard.
This court- -: Hold up.
You do a good job, you get five times the lodestar?
-: Yes, there are.
-: That aren't this common fund oddity?
-: I would dispute that common fund settlement analysis
of oddity, and I'm happy to address this
if the court will indulge me.
Held in LaChance versus Commissioner of Commission,
a case we set on our brief from 2016 that the way, that,
in a judgment case where a party prevails on judgment,
the basic measure of a fee award is the fair amount
was reasonably spent on the case.
Then, quoting this court,
"The judge may then adjust the Lodestar calculation
upward or downward in light of the results achieved."
In the court, in that case and in several other cases
that we set in our brief, looks at a variety of factors,
including the contingent nature of the agreement,
of the fee agreement, the risk involved,
the results obtained,
whether the impact of the case affected more
than just one or two parties, but had broader.
We cited all those factors, we argued all those factors,
Jordan's argued against all those factors,
and this judge, in the exercise of his discretion
and who was the same judge who decided summary judgment
and so was very familiar with the case,
was very familiar about how much work
and dedication went into the case,
looked at these factors and said,
"I'm gonna give you a four times multiplier,"
which was consistent with several other cases
that we cited here,
both in and out of the class settlement context.
We cite a case in our briefing where it was a judgment,
and the court,
in very similar circumstances to this multiplier,
evaluating these factors,
and then very briefly in the settlement content-
-: In that case where you got four times,
what did the judge say
merited the four times multiplier?
-: That it was a large institutional defendant
against an individual,
that it had a impact to a broader group of people.
It was a consumer style class action,
and other outcome he reached,
but the court in that case did apply the factors
that I was looking at.
And then very briefly on this common fund issue, yes,
courts apply these similar factors in evaluating
whether a fee award in a common fund class action settlement
is fair and reasonable, but the par basically the same.
The courts want to check against the amount
of money the plaintiff's attorneys are asking for,
whether it's fair and reasonable,
taking into consideration the court's interest,
in short, you know,
encouraging settlement that attorneys who take fee skilled
and intelligent and enable attorneys who take fees
on a contingency basis and who wait year
ultimately receive the fair market price for their services.
There's a district court decision we cite in our briefing
where the courts specifically said that it
would be irrational in our market-based fee shifting system
for a prevailing attorney- -: Can I ask one last question?
A fee in Sleepy's as well?
-: So that was on this court in a certified question,
but then it settled when it went back to the district court.
-: So we don't have a decision. -: There was no judgment there.
So with that, I see my time is concluded
unless Your Honors have any other.