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13-

IN THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

NORDSTROM, INC., Petitioner, v. UNITED STATES DISTRICT COURT for the SOUTHERN DISTRICT of CALIFORNIA, Respondent, GINO MARAVENTANO; and NEESHA KURJI Real Parties in Interest. United States District Court for the Southern District of California USDC No. 10-CV-2671-JM (WMC) Julie A. Dunne, Bar No. 160544 Lara K. Strauss, Bar No. 222866 Joshua D. Levine, Bar No. 239563 LITTLER MENDELSON 501 W. Broadway, Suite 900 San Diego, CA 92101 Tel. 619.232.0441 Fax. 619.232.4302 Attorneys for Defendant-Petitioner NORDSTROM, INC. IN RE NORDSTROM, INC. PETITION FOR WRIT OF MANDAMUS

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CORPORATE DISCLOSURE STATEMENT Pursuant to Federal Rule of Appellate Procedure 26.1(a), corporate Petitioner Nordstrom, Inc. provides the following corporate disclosure information: Nordstrom, Inc. does not have a parent corporation and no publicly held corporation owns 10% or more of Nordstrom, Inc.s stock. Dated: April 2, 2013 By: /s Julie A. Dunne JULIE A. DUNNE LARA K. STRAUSS JOSHUA D. LEVINE LITTLER MENDELSON, P.C. Attorneys for Petitioner NORDSTROM, INC.

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TABLE OF CONTENTS PAGE I. II. III. IV. OVERVIEW AND RELIEF SOUGHT .......................................................... 1 ISSUES TO BE DECIDED ............................................................................ 5 PROCEDURAL HISTORY............................................................................ 6 STATEMENT OF RELEVANT FACTS ....................................................... 7 A. B. C. D. V. VI. Nordstroms Pay Policy ........................................................................ 7 The Maraventano Plaintiffs .................................................................. 8 The Maraventano Plaintiffs Admittedly Could And Did Engage In Sales During Pre-Opening And Post-Closing Selling Time ............ 8 The District Courts December 20, 2012 MSJ Order ........................... 9

LEGAL STANDARD FOR A WRIT OF MANDAMUS ............................ 10 ISSUANCE OF A WRIT OF MANDUMUS IS WARRANTED................ 11 A. B. The District Courts Order Raises Important Issues Of Law As A Matter Of First Impression ............................................................. 11 The MSJ Order Is Clearly Erroneous As A Matter Of Law ............... 15 1. 2. The MSJ Order Involves Questions Of Law Ripe For Review ...................................................................................... 16 The District Court Erred In Concluding That Armenta And Related Piece Rate Cases Apply To Draw Commission Plans With A Guarantee At Or Above Minimum Wage ........................................................................ 16 The District Court Clearly Erred In Concluding Employers May Pay Commissions Only For Work Periods During Which Employees Record (An Unspecified) Number of Sales ................................................. 21

3.

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TABLE OF CONTENTS (CONTINUED) PAGE a. Neither the minimum wage provisions of the Labor Code nor the Wage Order limit commission compensation to time spent on sales work..................... 21 The tasks performed by the Maraventano Plaintiffs during pre-opening and post-closing selling time constitute sales work as a matter of law......................... 25 Nothing in California law states an employee must complete a minimum number of sales per hour for the time to be compensable with commissions .............. 26

b.

c.

C. D.

Nordstrom Has No Other Means To Obtain The Relief Sought ........ 28 The Harm Nordstrom And Employers Across California Will Suffer Is Not Correctable On Appeal ................................................. 28

VII. THE CASE SHOULD BE STAYED ........................................................... 29 VIII. CONCLUSION ............................................................................................. 30

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TABLE OF AUTHORITIES

Cases

Page(s)

Agnew v. Cameron, 247 Cal. App. 2d 619 (1967) ........................................................................ 18, 19 Armenta v. Osmose, Inc., 135 Cal. App. 4th 314 (2005)...................................................................... passim Assn of Irritated Residents v. Fred Schakel Dairy, 634 F. Supp. 2d 1081 (E.D. Cal. 2008) .............................................................. 30 Bauman v. U.S. Dist. Court, 557 F.2d 650 (9th Cir. 1977) ............................................................ 11, 15, 27, 30 Brinker Rest. Corp. v. Super. Ct., 53 Cal. 4th 1004 (2012)................................................................................ 22, 23 Ahrenholz v. Bd. of Tr., 219 F.3d 674 (7th Cir. 2000) .............................................................................. 29 Perry v. Schwarzenegger, 591 F.3d 1147 (9th Cir. 2010) ............................................................................ 15 Sec. and Exch. Commn v. Buntrock, 2003 U.S. Dist. LEXIS 1636 (N.D. Ill. Feb. 3, 2003) ....................................... 14 Cole v. CRST, Inc., 2012 U.S. Dist. LEXIS 144944 (C.D. Cal. Sept. 27, 2012)......................... 17, 23 Cole v. U.S. Dist. Ct. for Dist. of Idaho, 366 F.3d 813 (9th Cir. 2004) ........................................................................ 11, 28 Credit Suisse v. U.S. Dist. Court, 130 F.3d 1342 (9th Cir. 1997) ............................................................................ 11

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TABLE OF AUTHORITIES (continued)

Cuvillier v. Alta Coll., Inc., 2003 U.S. Dist. LEXIS 26648 (C.D. Cal. Nov. 7, 2003) ............................. 26, 27 Ellis v. McKinnon Broad. Co., 18 Cal. App. 4th 1796 (1993)............................................................................. 18 Exec. Software N. Amer., Inc. v. U.S. Dist. Ct., 24 F.3d 1545 (9th Cir. 1994) .............................................................................. 15 Fitz-Gerald v. SkyWest, Inc., 155 Cal. App. 4th 411 (2007)............................................................................. 19 Gonzalez v. Downtown LA Motors, 2013 Cal. App. Unpub. LEXIS 1728 (March 6, 2013). ..................................... 12 Green v. Occidental Petroleum Corp., 541 F.2d 1335 (9th Cir. 1976) ..................................................................... passim Green v. St. of Cal., 42 Cal. 4th 254 (2007)........................................................................................ 22 In re Cement Antitrust Litigation, 673 F.2d 1020 (9th Cir. 1982) ................................................................ 10, 15, 28 Kirby v. Immoos Fire Prot., Inc., 53 Cal. 4th 1244 (2012)...................................................................................... 23 Klinedinst v. Swift Inv., Inc., 260 F.3d 1251 (11th Cir. 2001) .......................................................................... 24 Las Vegas v. Foley, 747 F.2d 1294 (9th Cir. 1984) ................................................................ 15, 16, 28 Marlo v. UPS, Inc., 2009 U.S. Dist. LEXIS 41948 (C.D. Cal. May 5, 2009) ................................... 19 Monzon v. Schaefer Ambulance Serv., Inc., 224 Cal. App. 3d 16 (1990) ................................................................................ 24

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TABLE OF AUTHORITIES (continued)

Muldrow v. Surrex Solutions Corp., 208 Cal. App. 4th 1381 (2012)..................................................................... 18, 25 Murphy v. Kenneth Cole Prods., Inc., 40 Cal. 4th 1094 (2007)...................................................................................... 15 Peabody v. Time Warner Cable, Inc., 689 F.3d 1134 (9th Cir. 2012) ..................................................................... passim Pfizer Inc. v. Giles, 46 F.3d 1284 (3d Cir. 1994) ............................................................................... 15 Quezada v. Con-Way Freight, Inc., 2012 U.S. Dist. LEXIS 98639 (N.D. Cal. 2012)................................................ 12 Ramirez v. Yosemite Water Co., 20 Cal. 4th 785 (1999)........................................................................................ 25 Schwind v. EW & Associates, Inc., 371 F. Supp. 2d 560 (S.D.N.Y. 2005) ................................................................ 24 U.S. v. U.S. Dist. Ct., 694 F.3d 1051 (9th Cir. 2012) ............................................................................ 15 United States v. U.S. Dist. Court, 717 F.2d 478 (9th Cir. 1983) .............................................................................. 28 STATUTES 28 U.S.C. 1651(a) .................................................................................................. 10 29 U.S.C. 207(i).................................................................................................... 24 Cal. Code Regs., tit. 8, 11070(4)(A) .................................................................... 21 Cal. Lab. Code 200 ............................................................................................... 22 California Labor Code section 1197 ............................................................. 6, 10, 21

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TABLE OF AUTHORITIES (continued)

Fair Labor Standards Act. ....................................................................................... 24 OTHER AUTHORITIES 29 C.F.R. 778.118-120 ......................................................................................... 24

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I.

OVERVIEW AND RELIEF SOUGHT This petition presents questions of law that one would only think could be

answered in the affirmative: Has an employer who guaranteed and paid plaintiffs at least $10.85 or $9.80 for every hour worked satisfied its obligation to pay Californias $8.00 per hour minimum wage for all hours worked? May an employer pay commissions for periods of time when plaintiffs were admittedly engaged in sales? Against its own better judgment, the district court in this case felt it was constrained by California law to answer both questions in the negative. Petitioner Nordstrom, Inc. (Nordstrom) seeks a writ of mandamus directing the Respondent District Court (District Court) to vacate its December 20, 2012 order denying Nordstroms motion for summary judgment (MSJ Order) and to issue a revised order consistent with the legal principle that an employer may satisfy California minimum wage requirements pursuant to a draw commission plan that guarantees hourly compensation at or above the state minimum wage for all hours worked. In the alternative, Nordstrom requests a writ directing the District Court to issue a revised order consistent with the principle that an employer may pay commissions for periods of time when employees are able to engage in sales. Nordstrom further requests that the Ninth Circuit direct the District Court to issue a stay of all proceedings pending the resolution of Nordstroms Petition for Writ of

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Mandamus (Petition).1 Nordstrom divides the workday for its draw commission employees, like plaintiffs Gino Maraventano and Neesha Kurji (Maraventano Plaintiffs), into two categories of time. The first category is known as non-sell time, for which

Nordstrom pays an hourly rate that is above the minimum wage. The second category is known as selling time, for which Nordstrom pays commissions subject to a guaranteed draw which is also above minimum wage. In any calendar workday selling time presumptively runs from 40 minutes before the posted store opening time until 40 minutes after the posted store closing time. The Maraventano Plaintiffs claim that it was unlawful for Nordstrom to pay commissions for the 40 minutes before the posted store opening time (pre-opening selling time) and the 40 minutes after the posted store closing time (post-closing selling time) because they supposedly had no access to, and therefore could not sell to, customers. Nordstrom moved for summary judgment proving that (1) under its draw commission plan, it guaranteed and paid the Maraventano Plaintiffs in excess of minimum wage ($10.85 for Maraventano and $9.80 for Kurji) for every selling hour worked, including pre-opening and post-closing selling time, and (2) Nordstrom properly paid commissions for pre-opening and post-closing selling time because Plaintiffs admittedly could and did sell during those periods. On December 20, 2012, the District Court denied Nordstroms motion for If the Court invites additional briefing from Plaintiffs, Nordstrom requests that it also be given the opportunity to submit briefing on any and all relevant legal issues. 2
1

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summary judgment regarding Plaintiffs California minimum wage and derivative claims. (AP 2 4-11.) In doing so, the District Court ignored the California

authorities stating that employers may satisfy their minimum wage obligations with commission plans that include a guaranteed draw equal to or in excess of minimum wage. Instead, the District Court relied on Armenta v. Osmose, Inc., 135 Cal. App. 4th 314 (2005) and piece-rate cases decided under Armenta to conclude for the first time ever that Nordstrom could pay commissions only for work time during which the Maraventano Plaintiffs completed (an unspecified) threshold number of sales. Notably, the District Court expressed discomfort with its own ruling. First, the District Court expressed its disagreement with the rationale of the Armenta decision itself. (See AP 1 9:20-24, n.7; AP 25:14-16 (The court readily conceded in its order denying summary judgment that it had (and for that matter continues to have) misgivings about the Armenta decision . . . .).) Second, the District Court recognized that no California statute suggests that commissioned employees must be paid separately for all work during which they cannot directly earn a commission. (AP 9:21-24, n. 7.) Finally, the District Court specifically

acknowledged the peculiar result of applying Armenta in a commission context, which forces employers to craft hybrid compensation systems for commissioned . . . employees where they are also paying employees per hour for any activity that is not directly related to earning a commission, even when that activity might assist

AP is used for all citations to the Appendix in Support of Nordstroms Petition. 3

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in generating future profits. (Id. (emphasis added).) The District Courts findings are unprecedented and clearly erroneous. California minimum wage law is intended to ensure a minimum income of $8.00 per hour for all employees. Under its draw commission plan, Nordstrom

guaranteed and paid minimum hourly compensation in excess of California minimum wage, while at the same time empowering its sales employees to earn commissions per hour far in excess of both statutory minimum wage and its own minimum draw. Indeed Maraventano earned up to $35 per hour and Kurji earned up to $17 per hour. (AP 2:18-3:2, 96:2-13, 214-18.) Moreover, the logic of the California authorities the District Court applied that an employer may not pay commissions for work time during which it precluded its employees from making sales could not apply to pre-opening and post-closing selling time because undisputed evidence confirmed Plaintiffs could and did sell during that time. Without immediate relief from the Ninth Circuit, the MSJ Order will cause significant, irreparable harm to Nordstrom and employers and employees across California. Nordstrom is now forced to oppose the Maraventano Plaintiffs motion for class certification on a claim that has no merit, and unless immediate relief is granted, Nordstrom will also be forced to incur the expense of trying that same claim. Even more compelling, however, is the impact the MSJ Order may have on commission pay plans across the state. As the Ninth Circuit recently recognized in Peabody v. Time Warner Cable, Inc., 689 F.3d 1134, 1137 (9th Cir. 2012), the 4

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treatment of commission policies has significant policy implications that will affect many employers and employees throughout California[.] Based on the erroneous legal conclusion in the MSJ Order, employers statewide may feel compelled to abandon commission pay plans, which permit employees to earn incomes far in excess of minimum wage, in exchange for safer, less controversial, hourly pay plans. Everyone loses in that scenario: employees lose the opportunity to maximize their income through commission compensation; employers lose the additional sales drive created by commission pay plans; and the public loses the additional attention and customer service that commission plans motivate. The Court need not and should not permit such an absurd and unfounded result. As all relevant factors governing petitions for writ of mandamus weigh heavily in favor of immediate review, the Ninth Circuit should grant this Petition. II. 1. ISSUES TO BE DECIDED May a California employer satisfy its minimum wage obligation with a draw commission plan that guarantees its sales employees hourly compensation in excess of minimum wage for every hour worked? 2. Does the California Labor Code or Industrial Welfare Commission (IWC) Wage Order 7 prohibit employers from allocating commissions to all work hours (or, in Nordstroms case, all selling hours)? 3. Does the California Labor Code or Wage Order 7 prohibit employers from paying commissions for sales work? 5

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4.

Must commission sales employees, who admittedly can and do make sales during certain work hours, complete a minimum number of sales per hour for that work time to be compensable through commissions?

III.

PROCEDURAL HISTORY Maraventano filed this action on October 20, 2010 and filed an Amended

Complaint on January 25, 2011, adding Kurji as a named Plaintiff. (AP 27-40.) The Amended Complaint alleges only an unpaid minimum wage claim under California Labor Code section 1197 and derivative claims. (AP 35:11-38:2.) On March 8, 2012, the District Court granted Nordstroms motion to consolidate this action with a later filed action Balasanyan v. Nordstrom, Inc., Southern District Case No. 10cv2609 JM (WMc) which alleges nearly identical claims under substantially the same legal theory. (AP 48:5-20.) The District Court specified that both actions should retain their separate character. (Id.) On October 8, 2012, Nordstrom filed a motion for summary judgment regarding the Maraventano Plaintiffs claims. On December 20, 2012, the District Court denied that motion. (AP 4-11.) On January 17, 2013, Nordstrom filed motions for reconsideration and interlocutory appeal. District Court denied both of those motions. 3 (AP 16-26.) The Maraventano Plaintiffs filed a motion for class certification on March 6, On March 6, 2013, the

Denial of a motion for interlocutory appeal does not prevent the Ninth Circuit from issuing a writ of mandamus. Green v. Occidental Petroleum Corp., 541 F.2d 1335, 1338, n.3 (9th Cir. 1976). 6

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2013, which is currently set for hearing on June 10, 2013. IV. STATEMENT OF RELEVANT FACTS A. Nordstroms Pay Policy

Nordstrom is a fashion retailer that operates department stores in California and employs salespeople to sell clothing and other merchandise to customers. (AP 83:11-17.) Nordstrom paid the Maraventano Plaintiffs an hourly rate for all nonsell hours worked.4 (AP 85:21-86:2.) Nordstrom paid the Maravetano Plaintiffs commissions pursuant to a draw commission plan for all selling time worked. Selling time presumptively includes all work time from 40 minutes before the posted store opening time until 40 minutes after the posted store closing time. (AP 84:23-85:2.) Pursuant to its draw commission plan, Nordstrom guaranteed that Maraventano would earn $10.85, and that Kurji would earn $9.80, for every selling hour worked. Nordstroms draw commission plan further allowed the Maraventano Plaintiffs to earn much higher wages through commissions. (AP 2:18-3:2, 85:1786:2, 96:2-13, 214-18.) The District Court summarized the draw commission plan as follows: Nordstroms salespeople work on commission rather than per hour. Nordstrom calculates each salespersons commissions at the end of each period and compares their commissions with the guaranteed minimum that they would have received had they been working at an
4

Non-sell time runs (1) from midnight until forty minutes before the posted store opening time, and (2) from forty minutes after the posted store closing time until midnight. Maraventanos and Kurjis hourly non-sell rates were $10.85 and $9.80 per hour, respectively. (AP 85:21-86:2.) The Maraventano Plaintiffs have no claim relating to their non-sell hours or compensation. 7

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hourly rate. If a given employees commissions per selling hour equaled or exceeded their guaranteed minimum, Nordstrom paid commissions. If their commissions did not equal or exceed the guaranteed minimum, Nordstrom paid the employees commission plus the amount necessary to bring them to the guaranteed minimum draw rate [of $10.85 per hour] for all selling time...According to Nordstrom, the average hourly salary received ranged from...$10.85 to $35.38 for Maraventano, and $11.31 to $17.02 for Kurji. (AP 2:5-3:2 (internal citations omitted); see also AP 84-87, 6-15.) B. The Maraventano Plaintiffs

Maraventano and Kurji are two former Nordstrom draw commission sales employees who worked in Nordstroms Escondido and Irvine, California stores, respectively. During their depositions, they explained they are seeking an

additional payment of minimum wages limited to the 40 minutes immediately before the store opened (again, pre-opening selling time), and 40 minutes immediately after the store closed (again, post-closing selling time). (AP 34:1-7, 35:15-19, 220:8-13, 225:10-226:1, 306:1-307:6.) Nordstrom paid for this time with commissions, subject to the guaranteed minimum draw discussed above. (AP 84:885:16, 93:26-94:23, 96:2-13, 199-209, 214-18, 225:10-14:1, 275:5-18, 276:4-278:8, 342:8-15, 344:5-17, 375:5-9.) C. The Maraventano Plaintiffs Admittedly Could And Did Engage In Sales During Pre-Opening And Post-Closing Selling Time.

At deposition, the Maraventano Plaintiffs admitted they could and did make sales during pre-opening and post-closing selling time. 5 These admissions were

See, e.g., AP 22:19-23:3 (noting admissions by [Plaintiffs] that they were occasionally able to make a sale during [pre- and post-store] hours selling time); 8

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further bolstered by their own expert report, which confirmed Maraventano and Kurji regularly recorded sales during pre-opening and post-closing selling time. (AP 560-63, 568-71, 12-24 (Boedeker Report), 778:9-16; AP 797, 810, 823, 836 (Marangi Report); AP 891:1-8 (Maraventano recorded sales during pre-opening selling time 9% of the times he worked an opening shift, and he recorded sales during post-closing time 35% of the time he worked a closing shift; Kurji recorded sales during pre-opening selling time 17% of the times she worked an opening shift, and she recorded sales during post-closing selling time 25% of the time she worked a closing shift).) D. The District Courts December 20, 2012 MSJ Order

In the MSJ Order, the District Court stated that it felt constrained to find that Nordstrom could not pay commissions for pre-opening and post-closing selling time because the stores were not open to the public: the deference this court owes to California state court interpretations of state laws outweighs Nordstroms argument that Armenta and DLSE 47.7 incorrectly interpreted the 2002.01.29 DLSE Opinion Letter.6 (AP 8:16-24, 9:11-18, 10:20-11:9.) Based on its reading

AP 9:24-25, n. 8 (noting that Nordstroms employees are occasionally able to ring up a sale during stocking, pre-opening, or post-closing time); AP 530:1-9 (citing AP 945:6-8, Kurji Decl., 6 (I do recall one occasion, wherein I assisted a shopper after the store posted closing time); AP 345:23-346:7, 357:25-358:10, 371:9-372:14 (Maraventano testifying that he could process orders over the phone using a customers credit card).) 6 Section 47.7 relies exclusively on DLSE Opinion Letter 2002.01.29, where the employer required employees to perform uncompensated work. (DLSE Manual 47.7 (citing the January 29, 2002 Opinion Letter as the legal rationale underlying 9

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of Armenta, related piece-rate cases, and Section 47.7 of the DLSE Manual, the District Court found that it was not enough that employees could engage in sales during pre-opening and post-closing selling time. The District Court concluded that Nordstrom could pay commissions only for periods of work when a certain minimum (but undefined) threshold of sales are made. 7 (See AP 9-11.) The District Court specifically acknowledged the peculiar result of applying Armenta in a commission context, where the activities the Maraventano Plaintiffs performed during pre- and post-store hour selling time helped to facilitate sales. (See id.; AP 9:20-24, n.7; AP 75:13-77:26 (chart).) V. LEGAL STANDARD FOR A WRIT OF MANDAMUS A party may seek relief by writ of mandamus when it has exhausted all relief in the district court and it has no other means to avoid irreparable harm. See 28 U.S.C. 1651(a) (codifying right to issue writ of mandamus); In re Cement the enforcement policy [articulated in Section 47.7]), 47.7.1; AP 923-34, January 29, 2002 DLSE Opin. Ltr.) The letter concluded that an employer cannot use wage payments . . . for activities that are compensated in an amount that equals or exceeds the minimum wage, as a credit for satisfying minimum wage obligations for those activities that are compensated at less than the minimum wage[.] (AP 933 (emphasis added.)) Section 47.7 has no relevance here where Nordstrom guaranteed and paid a draw in excess of minimum wage for every selling hour worked. 7 See AP 9:15-18, n.8, 23:3-5 (noting that Nordstroms employees are occasionally able to ring up a sale during [pre-opening and post-closing time] but concluding, based on Plaintiffs inadmissible summary judgment declarations, that Nordstrom could not compensate the time with commissions because the recording of sales appears to be the exception, not the rule.) Through its motion for reconsideration, Nordstrom proved the Plaintiffs declarations regarding the frequency with which they sold during pre-opening and post-closing selling time were false, and that Plaintiffs regularly sold during these periods of time. (See AP 889:1-894:5.) 10

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Antitrust Litigation, 673 F.2d 1020 (9th Cir. 1982); Green, 541 F.2d at 1338, n.3-4. Whether to issue a writ of mandamus is within the discretion of the Ninth Circuit. In exercising its discretion, the Ninth Circuit considers whether: (1) the district courts order raises new and important issues of law of first impression; (2) the district courts order is clearly erroneous as a matter of law; (3) the petitioner has no other adequate means to attain the relief it desires; (4) the petitioner will be damaged in a way that is not correctable on appeal; and (5) the error is oft-repeated, or manifests a persistent disregard of the federal rules. Bauman v. U.S. Dist. Court, 557 F.2d 650, 654-55 (9th Cir. 1977)). None of these guidelines is determinative and all five guidelines need not be satisfied at once for a writ to issue. Credit Suisse v. U.S. Dist. Court, 130 F.3d 1342, 1345 (9th Cir. 1997) (emphasis added).8 VI. ISSUANCE OF A WRIT OF MANDUMUS IS WARRANTED A. The District Courts Order Raises Important Issues Of Law As A Matter Of First Impression

The first of the Bauman factors is whether the District Courts order raises new and important issues of law as a matter of first impression. This factor weighs heavily in favor of granting Nordstroms Petition. As this Court recently held, commission plans are a key part of Californias compensation structure. See Peabody v. Time Warner Cable, Inc., 689 F.3d 1134, In fact, rarely will a case arise where all these guidelines point in the same direction or where each guideline is even relevant or applicable. Id.; see also Cole v. U.S. Dist. Ct. for Dist. of Idaho, 366 F.3d 813, 817 (9th Cir. 2004) (a showing of less than all [Bauman factors], indeed of only one, [does not] necessarily mandate denial; instead, the decision . . . is within the discretion of the court.) 11
8

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1135, 1137-38 (9th Cir. 2012) (noting the significant policy implications of the commission dispute at issue in the case that that will affect many employers and employees throughout California). Indeed, in Peabody, this Court certified a related commission compensation question to the California Supreme Court. Id. at 1135 (certifying the question: To satisfy Californias compensation

requirements, whether an employer can average an employees commission payments over certain pay periods when it is equitable and reasonable for the employer to do so.) (emphasis added); see also AP 751:3-754:19; AP 894-96.9 Commission plans are a key part of Californias compensation structure in part because they provide employees with the opportunity to earn significantly more than minimum wage. (AP 2:18-3:2 (noting the Maraventano and Balasanyan Plaintiffs high-end commissions per hour ranged from $17 to $73), 96:2-13, 21418.) The MSJ Order puts draw commission pay plans at risk. Until the District Court issued the MSJ Order, California law had consistently provided that draw commission plans with guaranteed compensation equal to or in excess of minimum wage were lawful. See AP 403-58 (Exs. A, B, C, D, E); see also AP 658:7-18 (Peabody Trial Court Order).10

Related issues are also being heavily litigated in Quezada v. Con-Way Freight, Inc., 2012 U.S. Dist. LEXIS 98639 (N.D. Cal. 2012) and Gonzalez v. Downtown LA Motors, 2013 Cal. App. Unpub. LEXIS 1728 (Mar. 6, 2013). Nordstrom is informed Con-Way Freight is also filing a petition for writ of mandamus to the Ninth Circuit in the Quezada action. 10 As this Court knows, the Peabody trial courts judgment was appealed and is currently pending before the California Supreme Court. Nordstrom cites the 12

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Yet the District Court concluded it could not follow any of these authorities. Instead, and against its own better judgment, it felt constrained to conclude that California employers may never pay employees through a pure commission system but must always pay employees through a combination of hourly wages and commissions. (AP 9:23-24 (Indeed, the Armenta line of cases forces employers to craft hybrid compensation systems for commissioned or piece meal employees where they are also paying employees per hour for any activity that is not directly related to earning a commission, even when that activity might assist in generating future profits.) (emphasis added).) The MSJ Order represents the first time a court has ever applied Armentas holding to a draw commission pay plan. It also represents the first time that a court has ever called into question the validity of draw commission pay plans, particularly one that has a guaranteed minimum draw in excess of minimum wage. The fact that the MSJ Order, like Peabody, implicates the permissibility of relying on commission compensation to satisfy state minimum wage obligations further confirms that the District Courts ruling implicates novel issues of law. Peabody, 689 F.3d at 1135.11 See

decision here only to demonstrate how other courts have analyzed minimum wage obligations in the context of commission compensation, not as precedent. 11 The overlap is apparent from the fact that both Plaintiffs and the Peabody petitioner rely heavily on the exact same cases following Armenta. (See AP 696737; 724-25 n.20, 845-75.) The Peabody petitioner discusses Armenta at length and cites to it 7 times, almost twice as many times as any other case in her brief. (Id.) 13

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If, as the MSJ Order suggests, employers may not use draw commission plans and instead must have hybrid hourly-plus-commission plans, writ relief is essential because employers and employees need to know that now not months or years from now after the underlying litigation is completed and the issue is then appealed. C.f., Sec. and Exch. Commn v. Buntrock, 2003 U.S. Dist. LEXIS 1636 (N.D. Ill. Feb. 3, 2003) (recognizing [i]nstruction by the Seventh Circuit on [issues related to duty office obligations] would be invaluable). Without clarity about whether and when employers may rely on commissions to satisfy minimum wage obligations, employers who pay for some or all hours with commissions are faced with a Hobsons choice: (1) keep their current plans and risk a ruling at some date far into the future that the pay plan is unlawful; or (2) eliminate draw commission plans altogether. If employers adopt the second, less-risky option, everyone involved in Californias retail industry will feel the consequences. Admittedly, commission plans are designed to benefit everyone to make sure all boats rise with the tide. They allow employers to provide employees with

generous, yet predictable, compensation because commissions represent a percentage of the employers overall sales. Commission plans benefit employees by allowing them to earn greater wages. And commission plans benefit the

consuming public by motivating employees to provide better, more-attentive customer service so that employees can make more sales and generate greater commission compensation. Immediate review of the MSJ Order is necessary to 14

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protect the benefits that commission plans provide. Immediate review is also in line with courts duty to construe the Labor Code statutes regulating the conditions of employment liberally, with an eye to protecting employees. See Murphy v. Kenneth Cole Prods., Inc., 40 Cal. 4th 1094, 1111 (2007). Prompt clarity will serve the important public purpose of providing certainty to employers and employees, and promoting maximum service for retail consumers. See Las Vegas v. Foley, 747 F.2d 1294, 1296-1297 (9th Cir. 1984) (granting writ of mandamus to provide guidance on controlling novel issue of law where case presents an important issue of first impression and resolution of the legal issue in question would substantially aid the administration of justice); Cement Antitrust Litig., 673 F.2d at 1025 (granting petition involving important public policy implications); c.f., Perry v. Schwarzenegger, 591 F.3d 1147, 1158 (9th Cir. 2010). B. The MSJ Order Is Clearly Erroneous As A Matter Of Law

Although all five Bauman factors are not needed for mandamus relief, the existence of clear error alone justifies writ relief. See Exec. Software N. Amer., Inc. v. U.S. Dist. Ct., 24 F.3d 1545, 1551 (9th Cir. 1994). In the context of a petition for a writ of mandamus, a district courts ruling is clearly erroneous . . . when [the Court has] a definite and firm conviction that a mistake has been committed. See U.S. v. U.S. Dist. Ct., 694 F.3d 1051, 1057 (9th Cir. 2012); Pfizer Inc. v. Giles, 46 F.3d 1284 (3d Cir. 1994) (granting writ of mandamus and vacating order denying motion for partial summary judgment where district courts holding was clear error). This factor also weighs heavily in favor of granting Nordstroms Petition. 15

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1.

The MSJ Order Involves Questions of Law Ripe For Review

Questions of law are ripe for immediate consideration by the Ninth Circuit when they are dispositive, purely legal in nature and do not require any additional findings of fact. See, e.g., Foley, 747 F.2d at 1296-1297 (granting writ of

mandamus to provide guidance on controlling, novel issue of law); Green, 541 F.2d at 1338-40 (concluding that district courts order certifying class under Rule 23(b)(1) was improper based on legal error and correcting error through grant of writ of mandamus). The District Court confirmed that this petition presents a question of controlling law: Here, the summary judgment is a question of controlling law: does Armentas prohibition on wage averaging apply to commissioned employees who are not being separately compensated for time during which they are unable (or at least highly unlikely) to earn a commission. (AP 26:8-11 (emphasis added).) 2. The District Court Erred In Concluding That Armenta And Related Piece Rate Cases Apply To Draw Commission Plans With A Guarantee At Or Above Minimum Wage

Prior to the MSJ Order, it was well-established that draw commission plans that guaranteed hourly compensation equal to or in excess of minimum wage were lawful in California. Section 34 of the Enforcement Policies and Interpretations Manual issued by the California Division of Labor Standards Enforcement (DLSE) specifically addresses commission compensation. Section 34.2 of the Manual expressly states, [i]f an employee receives a draw against commissions to be earned at a future date, the draw must be equal at least to the minimum wage 16

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and that the draw is considered the basic wage. See AP 456-57, DLSE Manual, 34.2, citing Agnew, 247 Cal. App. 2d 619 (noting advances to an employee will be presumed to . . . fix the employees minimum compensation). The DLSE has repeatedly concluded that California employers may satisfy their minimum wage obligations with draw commission plans where the guaranteed draw is equal to or greater than minimum wages. See, e.g., AP 481, 1987.03.03 DLSE Opin. Ltr. ([R]egarding the payment of minimum wage and commissions. . . . The minimum wage may be used as a draw against commission provided that the commission equals or exceeds the minimum wage for each pay period.); AP 483-86, 1994.02.07 DLSE Opin. Ltr. (endorsing plan that would pay pure commissions with a guaranteed monthly draw of $2,500 as adequate to meet commission sales exemption); AP 488-89, 2002.12.09, DLSE Opin. Ltr., n.2 (the draw paid must provide for at least minimum wage for all hours worked); AP 494, 1991.05.07 DLSE Opinion Letter, n.1 ([t]he minimum (whether it be statutory or contractual) must be paid under all circumstances). California courts have also concluded that employers may satisfy their minimum wage obligations with piece rate and commission compensation that equals or exceeds minimum wage for every hour worked. See, e.g., Cole v. CRST, Inc., 2012 U.S. Dist. LEXIS 144944 at *21-22 (C.D. Cal. Sept. 27, 2012) (finding that under a piece rate compensation plan, there would be no minimum wage liability under California law if the total amount paid each hour exceeded the $8.00 17

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per hour minimum wage even if 30 minutes of the hour was allegedly unpaid); AP 658:7-18 (finding that the plaintiff could not establish a minimum wage violation by claim[ing] that she received no compensation for certain hours worked and ignoring her significant commission compensation).12 See also Muldrow v. Surrex Solutions Corp., 208 Cal. App. 4th 1381, 1396-99 (2012); Ellis v. McKinnon Broad. Co., 18 Cal. App. 4th 1796 (1993); Agnew v. Cameron, 247 Cal. App. 2d 619 (1967). Neither the MSJ Order nor the order denying Nordstroms motions for reconsideration and for interlocutory appeal address any of the authorities confirming that employers may satisfy their minimum wage obligations with a draw commission plan that guarantees employees will earn in excess of minimum wage for every hour worked. (See id.; AP 4:21-11:25.) Indeed, neither the

Maraventano Plaintiffs nor the MSJ Order cite any authority holding that an employer may be held liable for minimum wage violations under a commission pay plan with a guaranteed minimum draw above the minimum wage. (Id.) The District Court instead denied summary judgment based entirely on Armenta and piece-rate cases following Armenta that did not involve a guaranteed minimum draw (or even commission pay plans). (AP 7:3-11:9 (citing Armenta, Quezada, Cardenas v. McLane Foodservices, Inc., 796 F. Supp. 2d 1246 (C.D. Cal. Indeed, in her opening brief to the California Supreme Court, Peabody herself acknowledged California employers may satisfy their minimum wage obligations with a guaranteed, non-refundable draw against anticipated future commissions in excess of minimum wage. (See AP 723, 728.) 18
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2011), and Ontiveros v. Zamora, 2009 U.S. Dist. LEXIS 13073 (E.D. Cal. 2009)).) No California court has applied those cases to a commission plan, much less a draw commission plan that guarantees hourly compensation in excess of minimum wage. Again, the District Court expressed its discomfort with the ruling, readily conced[ing] . . . that it had (and for that matter continues to have) misgivings about the Armenta decision but nevertheless concluded that it still owed deference to Armentas analysis.13 (Id., 25:14-16.) The District Courts ruling is clearly erroneous because it fails to acknowledge that Nordstroms guaranteed minimum draw places this case in a different category from Armenta and piece rate cases where employees allegedly receive no compensation for particular time periods. Armenta involved a situation where an employer paid an hourly rate ranging from $9.80 to $20 per hour for time it designated as productive time and $0 per hour for time it designated as nonproductive time. Armenta, 135 Cal. App. 4th at 317-20. Thus, if an

employee in Armenta reported for work, performed only non-productive work, went home sick and then was out for the rest of the pay period, he would be paid $0 for that pay period. In contrast, if a Nordstrom salesperson began working in their
13

The District Courts disagreement with Armenta is well-founded. The same district and division of the California Court of Appeal (i.e., Second Appellate District, Division Six) that issued Armenta warned that its holding should be limited to its facts. See Fitz-Gerald v. SkyWest, Inc., 155 Cal. App. 4th 411, 417 (2007) (concluding that Armentas holding applies only where agreed-upon wages are not paid); see also Marlo v. UPS, Inc., 2009 U.S. Dist. LEXIS 41948, at *8 (C.D. Cal. May 5, 2009). The District Court should not have extended Armentas holding beyond the scope of what California courts and California law intended. 19

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store 40 minutes prior to the posted store opening time, went home sick, and did no additional work during the pay period, that employee would still earn 40 minutes of compensation at the guaranteed hourly rate of $10.85 per hour. The rationale of the piece rate cases on which the District Court relied is likewise distinguishable. Assuming for arguments sake only that a piece rate compensation plan is an agreement to pay only for tasks directly involved in making the piece (and an implied agreement to pay $0 for tasks not directly related to making the piece), then the factual basis of the piece rate cases on which the District Court relied are distinguishable. 14 If a piece rate driver who is allegedly paid only for driving miles spends 30 minutes performing a pre-trip inspection, goes home sick, and never drives a mile that pay period, that driver will be paid $0 for the time spent on the pre-trip inspection because he never drove a mile. The same is not true under a draw commission plan that guarantees minimum hourly compensation for every hour worked. Again, Nordstrom guarantees and pays a minimum draw in excess of California statutory minimum wage for every hour worked regardless of whether the employees actually sell anything. Because

Nordstroms draw commission plan guarantees its sales employees pay for every hour worked, Armenta and its progeny cannot apply. Nordstrom agrees with the District Court that Armenta generally, and its application in the piece rate context, is wrong. Under piece rate compensation plans, the amount paid per piece is simply the measure of the compensation to be paid for all hours worked, which must equal or exceed minimum wage for every hour worked. Piece rate plans are not agreements to pay a specific wage only for tasks relating to making a piece and to pay $0 for tasks unrelated to making a piece. 20
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The District Court clearly erred when it failed to follow extensive California authority stating employers may satisfy minimum wage obligations with draw commission plans that guarantee pay above minimum wage for each hour worked. 3. The District Court Clearly Erred In Concluding Employers May Pay Commissions Only For Work Periods During Which Employees Record (An Unspecified) Number of Sales.

The District Courts finding that Nordstrom may not pay commissions for pre-opening and post-closing selling time is also clear error on at least three levels. (See AP 9:20-24, n.7.) First, neither Californias minimum wage statute nor the applicable Wage Order state that commission compensation may be paid only for time spent on sales work. Second, the tasks the Maraventano Plaintiffs performed during pre-opening and post-closing selling time constitute sales work as a matter of law. Third, nothing in California law indicates an employee must complete a threshold number of sales per hour in order for that time to compensable with commissions. a. Neither the minimum wage provisions of the Labor Code nor the Wage Order limit commission compensation to time spent on sales work

Both the California Labor Code and the applicable Wage Order permit employers to satisfy minimum wage obligations through wages. See Cal. Lab. Code 1197; Wage Order 7, codified at Cal. Code Regs., tit. 8, 11070(4)(A). 15

Before being defunded, the California Industrial Welfare Commission was vested with authority to promulgate wage orders fixing minimum wages among other requirements and did so through 18 wage orders applying to different industries. 21

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The Labor Code defines wages as all amounts for labor performed . . . whether the amount is fixed or ascertained by the standard of time, task, piece, commission basis, or other method of calculation. Cal. Lab. Code 200 (emphasis added). Likewise, the Wage Order defines wages as all amounts for labor performed by employees of every description, whether the amount is fixed or ascertained by . . . commission basis, or other method[.] Wage Order 7, 2(O) (emphasis added). Thus, both the California Labor Code and the applicable Wage Order unequivocally state employers may pay commissions for any labor performed. Nothing in the Labor Code or the Wage Order limits commission compensation to time spent on sales work. The District Court acknowledged as much in the MSJ Order. (AP 9:20-24, n.7 (The court is concerned that no California statute

suggests that commissioned employees must be paid separately for all work during which they cannot directly earn a commission.) (emphasis added).) It was clear error for the District Court to limit commission compensation to time spent on sales work when no such limitation exists in either the Labor Code or the Wage Order. Under rules of statutory construction, courts may not insert words into a statute that the legislature did not use. See Green v. St. of Cal., 42 Cal. 4th 254, 260 (2007) (If the plain language of a statute is unambiguous, no court need, or should, go beyond that pure expression of legislative intent). The absence of any language limiting what types of activities may be paid through commission can Brinker Rest. Corp. v. Super. Ct., 53 Cal. 4th 1004, 1026 (2012). Wage Order 7 applies to Nordstrom because it is in the mercantile industry. 22

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only mean employers may satisfy minimum wage obligations for any and all hours worked with commissions. See Kirby v. Immoos Fire Prot., Inc., 53 Cal. 4th 1244, 1250 (2012) ([w]e presume the Legislature meant what it said); Brinker, 53 Cal. 4th at 1026-27 (the usual rules of statutory interpretation [apply] to the Labor Code [and Wage Orders], beginning with and focusing on the text as the best indicator of legislative purpose). Indeed, the district court in Peabody (currently under review by the California Supreme Court) found that the employees minimum wage claim was barred because her salary (attributable to only 40 hours a week) plus commissions (allocated across all hours worked in the applicable pay periods) satisfied minimum wage obligations. (AP 658:7-18 (It is wrong for Plaintiff to make a claim for minimum wage violations . . . Plaintiff cannot ignore her commission payments once in excess of $10,000 in a single month and ignore the fact that she was a salaried employee, not an hourly employee, and then claim that she received no compensation for certain hours worked.).)16 The lawfulness of Nordstroms draw
16

Comments made at the Ninth Circuit oral argument in Peabody suggest that the Ninth Circuit was inclined to confirm the district court ruling. (See AP 677:18-21, July 11, 2012 Transcript, (Judge Smith, My gut still tells me that, no, this is not a minimum wage case. Were not talking about somebody working at Burger King, whos barely getting by.).) The Central District also recently recognized the permissibility of applying wages over all hours worked in Cole, 2012 U.S. Dist. LEXIS 144944 at *17-22 ([A]ssuming a driver was paid $.30 per mile, and drives for 30 minutes at 60 m.p.h. and then waits to load or unload for a total of 30 minutes, that driver earns $9.00 for that hour of work (0.5 hour driven at 60 m.p.h. multiplied by $0.30 per mile equals $9.00). This amount exceeds the California minimum wage. Id. (emphasis added, internal citation omitted) (decertifying 23

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commission plan is all-the-more evident here because Nordstroms draw commission plan guaranteed compensation above minimum wage for every selling hour worked. Moreover, every application of commissions in wage and hour law confirms that commission wages apply to all hours worked, irrespective of what duties salespeople perform during those hours: California law establishing the regular rate for calculating overtime owed to employees paid in whole or in part on commissions applies commissions to all hours worked, not just sales hours. (AP 458, DLSE Manual, 49.2.1.2; AP 460-61, 1988.06.15 DLSE Opin. Ltr., ; AP 463-66, 2002.06.14 DLSE Opin. Ltr., pp. 3-4.) Federal law establishing the regular rate calculation for paying overtime to employees paid in whole or in part on commissions applies commissions to all hours worked, not just sales hours. See 29 C.F.R. 778.118-120; Klinedinst v. Swift Inv., Inc., 260 F.3d 1251, 1256 (11th Cir. 2001).17 The overtime exemption applicable to certain commission employees in California applies commissions to all hours worked, not just sales hours. (See AP 413, Wage Order 7, 3(D); The federal commission sales overtime exemption applies commissions to all work hours, not just sales hours, by defining the exemption based on the regular rate, which is the same rate used to calculate overtime. See 29 U.S.C. 207(i); 29 C.F.R. 778.118-120; Schwind v. EW & Associates, Inc., 371 F. Supp. 2d 560, 567-68 (S.D.N.Y. 2005). minimum wage subclass). 17 California courts look to authority under the Fair Labor Standards Act. See Monzon v. Schaefer Ambulance Serv., Inc., 224 Cal. App. 3d 16, 31 (1990). 24

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It was clear error for the District Court to conclude Nordstrom could allocate commissions only to periods when employees were directly engaged in sales work. b. The tasks performed by the Maraventano Plaintiffs during pre-opening and post-closing selling time constitute sales work as a matter of law

After imposing a limitation on the type of work compensable with commissions, the District Court further compounded its error by concluding that employers may not pay commissions for time spent on activities that, as a matter of law, constitute sales work. The MSJ Order confirms the types of tasks the

Maraventano Plaintiffs performed during pre-opening and post-closing selling time: Pre-opening and post-closing activities include writing thank you notes to customers, addressing invitations to customers regarding upcoming sales events, calling customers to thank them for their business, attending store rallies and certain meetings, walking sales floor to familiarize him or herself with merchandise, putting away shoes that customers did not purchase, putting shoes on display, matching mismatched shoes, taking tissue paper out of shoes, and cleaning and dusting tables on the sale floor. (AP 2:22-25, n. 3.) Numerous California courts have, as a matter of law, held that these tasks constitute sales work. As the Muldrow court explained: [P]laintiffs point to the number of activities the employees are engaged in prior to the actual point in time that the sale is made. This argument perceives the word sales in a vacuum contrary to the job description of any salesman. The whole point of these activities, including online search for candidates, resume reviews, unsolicited (cold) calls, etc., [is that they] are the essential prerequisites necessary to accomplishing the sale. Muldrow, 208 Cal. App. 4th at 1392 (quoting trial court with approval, emphasis added); Ramirez v. Yosemite Water Co., 20 Cal. 4th 785, 801 (1999) (time delivery 25

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salesperson spent driving was exempt sales work because driving was part of sales process); Cuvillier v. Alta Coll., Inc., 2003 U.S. Dist. LEXIS 26648, at *4-5 (C.D. Cal. Nov. 7, 2003) (Selling includes sales-related activities); additional authority cited in (AP 75:14-77:26.) Nonetheless, the District Court concluded Nordstrom could not pay for this sales work with commissions. Again, the District Court admitted its finding in this regard seemed wrong: Paying commissioned employees additional wages for activities that are related to sales when the employees benefit from such activities by increasing overall sales is a peculiar result. Indeed, the Armenta line of cases forces employers to craft hybrid compensation systems for commissioned . . . employees where they are also paying employees per hour for any activity that is not directly related to earning a commission, even when that activity might assist in generating future profits. (AP 9:20-24, n.7(emphasis added).) The District Court committed clear error when it concluded Nordstrom could not pay commissions for the sales work the Maraventano Plaintiffs performed during pre-opening and post-closing selling time. c. Nothing in California law states an employee must complete a minimum number of sales per hour for the time to be compensable with commissions

The Maraventano Plaintiffs admittedly could, and did, make sales for which they earned commissions during pre-opening and post-closing selling time. (See Section IV.C. above.) Nonetheless, the District Court still found Nordstrom could not pay commissions for pre-opening and post-closing selling time because making sales appear[ed] to be the rare exception, not the rule. (AP 23:3-5; see also 9:1526

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18, n.8.) The MSJ Order cites no authority for the proposition that sales employees must complete a minimum number of sales during a work period in order for the work period to be compensable with commissions. There is none. The only authority suggesting that time paid with commission wages must be limited in any way is DLSE Manual Section 47.7. (AP 8:16-9:18.) It states only that employers may not pay commissions for time periods during which the employer precludes its employees from making sales. Id. The plain meaning of the term preclude is: to prevent the presence, existence, or occurrence of; make impossible[.] (See AP 741-42, (emphasis added).) Undisputed evidence confirms not only that it was possible for the Maraventano Plaintiffs to make sales during pre-opening and post-closing selling time, but also that the Maraventano Plaintiffs regularly did so. (AP 560-63, 568-71, 12-24 (Boedeker Report), 778:9-16

(Plaintiffs chart); AP 797, 810, 823, 836 (Marangi Report); AP 891:1-8.) There is absolutely no California law indicating that an employer may pay commission compensation only for work periods during which an employee makes (some undefined) threshold number of sales. It was clear error for the District Court to conclude Nordstrom could not allocate commission compensation to preopening and post-closing selling time when undisputed evidence proved Plaintiffs could and regularly did record sales. For each of these reasons, the clear error Bauman factor is easily satisfied.

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C.

Nordstrom Has No Other Means To Obtain The Relief Sought

Nordstrom has no other adequate means to attain the relief it desires. Cole, 366 F.3d at 817. Nordstrom exhausted every possible avenue of immediate redress it has available, including filing a motion for reconsideration of the MSJ Order with the District Court, as well as asking that the MSJ Order be certified for interlocutory appeal. (See AP 16-26); see also United States v. U.S. Dist. Court, 717 F.2d 478, 481 (9th Cir. 1983); c.f., Cole, 366 F.3d at 822-23 (denying petition for writ of mandamus because the petitioner failed to move for reconsideration with the district court prior to bringing the petition). The District Court denied both motions. Hence, Nordstroms only recourse is through a writ of mandamus. See Foley, 747 F.2d at 1296-97; Cement Antitrust Litig., 673 F.2d at 1025; Green, 541 F.2d at 1338-40. D. The Harm Nordstrom And Employers Across California Will Suffer Is Not Correctable On Appeal

The District Court itself recognized in the MSJ Order that its ruling creates a peculiar result that forces employers to craft hybrid compensation systems for thousands of draw commissioned employees. (AP 9:21-24, n. 7.) The MSJ Order therefore forces Nordstrom and other employers throughout California to evaluate whether to continue to employ commission pay plans, which indisputably permit employees to earn compensation well in excess of minimum wage, for fear their pay plans may ultimately be deemed unlawful. It is imperative that employers receive guidance regarding whether and how they may satisfy their minimum wage 28

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obligations with commissions before such plans are eliminated. Moreover, unless immediate relief is granted, Nordstrom will be forced to incur the unnecessary expense of litigating class certification and potentially a trial of a claim that has no merit. C.f., Ahrenholz v. Bd. of Tr., 219 F.3d 674, 676-77 (7th Cir. 2000) (if a case turned on a pure question of law, something the court of appeal could decide quickly and cleanly . . . the court should be enabled to do so without having to wait until the end of the case); see also AP 554-57, 877-79. Finally, Plaintiffs are seeking to certify a class of thousands of employees. If the District Court grants the motion for class certification, notice will be sent to thousands of current and former employees, erroneously informing them that Nordstrom may have violated the law. Once sent, the effects of that erroneous notice cannot be remedied on appeal. A complete reversal on appeal cannot relieve Nordstrom of the burden of defending lawsuits filed in response to such notice. See Green, 541 F.2d at 1338-40 (issuing writ of mandamus because [j]udicial efficiency requires that we order the district court to vacate the (b)(1) certification so that erroneous notice and opt-out procedures are not employed.) Even if the District Court denies class certification (as expected), employers will remain wary of using commission pay plans for fear they will be deemed unlawful. Only immediate review by the Ninth Circuit will provide an adequate remedy. VII. THE CASE SHOULD BE STAYED Directing the District Court to stay this action while the Ninth Circuit 29

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considers Nordstroms Petition will ensure that the District Court does not have to resolve issues in these cases multiple times and devote countless hours to hearing and re-hearing the same issues (e.g., not needing to decide class certification a second or third time if the Ninth Circuit disagrees about the legal standards and not needing to correct previously-issued class notices to thousands of sales employees). C.f., Lakeland Vill., 727 F. Supp. 2d at 897 (granting stay where three of four claims depended on the duty to defend at issue in the request for a right to appeal); see also Assn of Irritated Residents v. Fred Schakel Dairy, 634 F. Supp. 2d 1081, 1092-94 (E.D. Cal. 2008) (granting stay and noting [i]t would be a waste of judicial and party resources to proceed with [these] claims while the appeal is pending). Judicial efficiency and fairness therefore support an immediate stay. VIII. CONCLUSION The MSJ Order is clearly erroneous and likely to cause immediate and irreparable harm not only to Nordstrom, but also to other employers and salespeople across California. Because all relevant Bauman factors weigh heavily in favor of immediate intervention, the Ninth Circuit should grant Nordstroms Petition and direct the District Court to issue an immediate stay. Dated: April 2, 2013 By: /s Julie A. Dunne JULIE A. DUNNE LITTLER MENDELSON, P.C. Attorneys for Petitioner NORDSTROM, INC.

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STATEMENT OF RELATED CASES Pursuant to Local Circuit Rule 28-2.6, Petitioner Nordstrom, Inc. states it is aware of the following related case: Balasanyan v. Nordstrom, Inc., Southern District of California Case No. 11cv2609-JM-WMC. Dated: April 2, 2013 By: s/ Julie A. Dunne JULIE A. DUNNE LARA K. STRAUSS JOSHUA D. LEVINE LITTLER MENDELSON, P.C. Attorneys for Petitioner NORDSTROM, INC.
Firmwide:119412691.4 058713.1031