[00:00:16] Speaker 04:
Good morning, counsel.

[00:00:17] Speaker 01:
Good morning, your honors.

[00:00:19] Speaker 01:
Are we all ready?

[00:00:20] Speaker 04:
I think we are.

[00:00:21] Speaker 01:
Great.

[00:00:22] Speaker 01:
May it please the court.

[00:00:23] Speaker 01:
I'm John Schaeffer.

[00:00:23] Speaker 01:
I'm representing Viya Medical in this case.

[00:00:27] Speaker 01:
I think this case, what's interesting about this case, looking first at the unconscionability issue, is can the timing of disclosure constitute substantive unconscionability?

[00:00:37] Speaker 01:
And really, what makes this case somewhat unique is we're really needing to demarcate what is procedural unconscionability

[00:00:44] Speaker 01:
versus what is substantive unconscionability.

[00:00:47] Speaker 01:
This court recently addressed that issue in the Belsky versus Coinbase case.

[00:00:53] Speaker 01:
It's not cited in our briefs because it just came out in December of this year.

[00:00:57] Speaker 01:
But in that case, what the court says is that procedural unconscionability looks to the formations of the contract, the negotiations of the contract, issues outside the four corners of the agreement.

[00:01:11] Speaker 01:
substantive unconscionability looks at the specific term of the contract.

[00:01:16] Speaker 03:
Before we get into all this, there's a threshold question of was there a contract?

[00:01:21] Speaker 03:
Was there a unilateral contract?

[00:01:23] Speaker 03:
Are there any genuine disputes of fact on that?

[00:01:26] Speaker 03:
What's your position on that?

[00:01:28] Speaker 01:
Well, on that issue, that was not before the court to be decided.

[00:01:32] Speaker 03:
But it did decided.

[00:01:33] Speaker 03:
I mean, it was about to hold a jury trial and it was entitled to, I think, grant judgment if it felt that there was not evidence to go forward with a trial, right?

[00:01:41] Speaker 01:
And we were entitled to Rule 56F notice that that decision was going to be made.

[00:01:45] Speaker 01:
We weren't given any opportunity.

[00:01:47] Speaker 01:
to make that decision.

[00:01:49] Speaker 01:
And I think that's the important element here because I think what the lower court found is the lower court found a forfeiture here because the court ruled that the provision of continued employment was not part of the contract.

[00:02:03] Speaker 01:
Well, if something's not part of the contract, then you don't apply unconscionability.

[00:02:08] Speaker 01:
You're going to apply a completely different standard.

[00:02:11] Speaker 01:
And that is a true issue for the question of the fact that it should be decided.

[00:02:18] Speaker 01:
But we were entitled to a jury on that issue.

[00:02:20] Speaker 04:
Did the court say that was not part of the contract?

[00:02:23] Speaker 01:
The court specifically says, yes, the court says, I am ruling that these are new contracts.

[00:02:29] Speaker 04:
Well, it didn't say it wasn't part of the contract.

[00:02:31] Speaker 04:
It said it was a different contract.

[00:02:34] Speaker 01:
It said it was a different contract.

[00:02:37] Speaker 01:
And the court found a forfeiture.

[00:02:40] Speaker 01:
And the only way the court could find a forfeiture is if that was not a provision of the contract.

[00:02:46] Speaker 01:
Because under the Lucerne versus Allstate trucking case, the mere fact that a contract is unilateral means I can't change the terms and revoke it for the party who's performing.

[00:02:57] Speaker 04:
Did you make this argument in your brief?

[00:02:59] Speaker 01:
Yes.

[00:03:01] Speaker 01:
So the argument there is.

[00:03:03] Speaker 04:
You brought me to your brief where you said that

[00:03:06] Speaker 04:
that the district court erred by saying that this term was not a part of the contract.

[00:03:13] Speaker 01:
Our first argument is.

[00:03:18] Speaker 04:
I just want to be sure that I didn't miss that in your brief.

[00:03:23] Speaker 01:
I think it was in our reply because they argued.

[00:03:26] Speaker 01:
That's a different argument.

[00:03:27] Speaker 01:
No, no, because they argued it as a question presented.

[00:03:30] Speaker 01:
We argued the questions presented was a question of unconscionability.

[00:03:34] Speaker 04:
Well, generally, the reply brief doesn't raise new arguments.

[00:03:39] Speaker 04:
So that's why I was asking you if you raised this argument in your opening brief.

[00:03:44] Speaker 01:
Oh, yeah.

[00:03:45] Speaker 01:
So first question presented.

[00:03:46] Speaker 01:
Whether the court erred in finding the incentive plan did not contain a continued employment provision.

[00:03:52] Speaker 01:
Number four, that was our first question presented.

[00:03:54] Speaker 04:
I thought the first issue presented.

[00:03:56] Speaker 04:
Oh, I'm looking.

[00:03:57] Speaker 04:
Yeah.

[00:03:58] Speaker 04:
Your brief is the opening brief, right?

[00:04:01] Speaker 01:
Oh, yes, I apologize.

[00:04:02] Speaker 01:
I was reading this.

[00:04:03] Speaker 01:
I was looking at this brief.

[00:04:04] Speaker 01:
I apologize.

[00:04:05] Speaker 04:
I apologize.

[00:04:06] Speaker 04:
Yeah, your first issue is whether the district court erred in concluding as a matter of law that the continuing employment requirement in appellate violence incentive plans was procedurally and substantively unconscionable.

[00:04:19] Speaker 04:
You didn't make this argument that you're making here now in the issue presented.

[00:04:24] Speaker 01:
That's because we weren't given Rule 56 notice on that issue.

[00:04:31] Speaker 04:
The fact remains that you're making a different argument here than you made in your opening brief.

[00:04:37] Speaker 04:
You didn't make the argument in your opening brief that the district court erred by saying that this term was not in the contract.

[00:04:46] Speaker 04:
That's a different argument than saying that the district court erred in saying that the requirement was procedurally and subsequently unconscionable.

[00:04:54] Speaker 01:
Page 13 of our brief, to the extent Abbott contends the district court found

[00:04:58] Speaker 01:
that the continued employment provision was never part of the incentive plan, it's right there on page 13 of our brief.

[00:05:05] Speaker 01:
We specifically say that, and that wouldn't apply.

[00:05:08] Speaker 01:
You're not dealing with an unconscionability analysis then.

[00:05:11] Speaker 03:
Let me just ask, on the first question of was there a unilateral contract?

[00:05:17] Speaker 03:
Before we get to the issue of if there is one, what it might include, was there one?

[00:05:24] Speaker 03:
So there were plans that were issued to employees in June, and the argument that is made is that those were an offer and that the employees accepted that offer by then selling ventilators.

[00:05:36] Speaker 03:
Are there any disputes of fact on this point?

[00:05:38] Speaker 01:
On that, it's a unilateral contract.

[00:05:42] Speaker 01:
The issue then comes down to whether or not there was a condition to that contract.

[00:05:47] Speaker 03:
OK, I'm with you on that point.

[00:05:48] Speaker 03:
But just on the threshold point, are you disputing that there was, in fact, a unilateral contract, a standalone contract that we need to analyze through that?

[00:05:57] Speaker 03:
Whatever it encompasses, we'll figure that out.

[00:05:59] Speaker 03:
But there was some kind of agreement that if you work for a certain amount of time,

[00:06:05] Speaker 03:
You'll get certain benefits.

[00:06:06] Speaker 03:
Again, your position is subject to some conditions, but that was a standalone contract.

[00:06:11] Speaker 03:
Is that your view?

[00:06:12] Speaker 01:
For purposes of this appeal, that's the case.

[00:06:13] Speaker 03:
Well, how about just for purposes of this case?

[00:06:15] Speaker 03:
Because there seems to have been some attempt to segment what the district court was going to decide at various points.

[00:06:23] Speaker 03:
But I'm looking at this and I'm asking, was there a contract here?

[00:06:26] Speaker 03:
And do you have any arguments that there isn't?

[00:06:29] Speaker 01:
It's a bonus provision.

[00:06:31] Speaker 01:
It's a discretionary bonus provision that's provided there.

[00:06:36] Speaker 01:
The court below found a unilateral contract, so for purposes of appeal here, now we're... But do you dispute that?

[00:06:44] Speaker 03:
Is that correct?

[00:06:46] Speaker 01:
Is that a correct decision?

[00:06:47] Speaker 01:
Yeah.

[00:06:52] Speaker 01:
I think you can go either way.

[00:06:53] Speaker 04:
But you didn't challenge that.

[00:06:54] Speaker 01:
I'm not challenging that here.

[00:06:56] Speaker 01:
I'm not challenging the unilateral contract because the court deserves to do it.

[00:07:02] Speaker 03:
OK, I understand your position.

[00:07:03] Speaker 03:
So then once the plans are offered to employees in June, in the PowerPoints and in the FAQs, there's no mention of a continuing employment obligation.

[00:07:15] Speaker 03:
So where does that obligation come from?

[00:07:18] Speaker 01:
That obligation comes from the fact that this is a standard term that the company had had forever.

[00:07:22] Speaker 01:
What was being disclosed at that point in time were the new terms of these programs to be disclosed.

[00:07:28] Speaker 01:
We have a dispute as to whether or not these are truly new programs versus existing programs.

[00:07:33] Speaker 01:
There was a policy beforehand that he had signed that had that continuing employment provision in there.

[00:07:40] Speaker 01:
And I would draw, again, the distinction to you.

[00:07:41] Speaker 03:
What is the evidence that that continuing employment provision

[00:07:45] Speaker 03:
essentially ran through to these new programs that were offered in June.

[00:07:49] Speaker 01:
Because the new VIP plan was just a change of the name from the prior plan, which was called MIPS, which was a percent you share in a percentage of profits of the company.

[00:07:59] Speaker 01:
That's all it was.

[00:08:00] Speaker 03:
There was a lot of information provided to employees in PowerPoints and FAQs.

[00:08:04] Speaker 03:
Why weren't employees also told, by the way, you need to stay here through a certain period?

[00:08:10] Speaker 01:
This was provided to managers to help disclose below.

[00:08:13] Speaker 01:
And what they were doing is they were explaining how you would be compensated under the new plan because it was changing the way of doing that compensation.

[00:08:22] Speaker 04:
That's part of how you would be compensated, though.

[00:08:25] Speaker 01:
So they're disclosing the changes in how the bonuses are coming forward.

[00:08:32] Speaker 01:
But again, Your Honors, we're coming to the issue of unconscionability.

[00:08:36] Speaker 00:
Yes.

[00:08:37] Speaker 00:
Going back, so your position is it's a matter of dispute of fact, not that it's a matter of law, whether these continued employment provisions were imported into the new VIP plan and the bold plan.

[00:08:50] Speaker 00:
So your position, it's a factual issue that needs to be resolved by a jury, whether those provisions were continued on to the new plans?

[00:08:56] Speaker 01:
That is a disputed question of fact, and it is not a basis to find unconscionability.

[00:09:01] Speaker 04:
Well, it has to be a material issue of fact.

[00:09:06] Speaker 04:
was presented by the company that would raise a genuine issue of fact regarding the carrying through, other than the fact that it was in the initial employment agreement.

[00:09:18] Speaker 01:
That he had signed an agreement.

[00:09:19] Speaker 01:
He knew from a prior employer leaving that this was a provision of the agreement.

[00:09:24] Speaker 01:
That was later, right?

[00:09:26] Speaker 03:
That was after he had...

[00:09:27] Speaker 03:
he had sold the ventilators or participated in this?

[00:09:29] Speaker 01:
That was after he sold the ventilators prior to profits being calculated.

[00:09:33] Speaker 01:
But you go back to the Lucerne case, if it is part of the contract, it is not a forfeiture.

[00:09:38] Speaker 01:
It is a provision of the agreement.

[00:09:41] Speaker 04:
Well, that begs the question as to whether or not it is part of the contract.

[00:09:46] Speaker 01:
It's a disputed question of fact as to whether it is part of the contract or not part of the contract.

[00:09:52] Speaker 01:
But if it's not part of the contract, there is no unconscionability analysis because you can't have something that's not in the contract be considered unconscionable.

[00:10:01] Speaker 04:
It's an omission from a contract.

[00:10:05] Speaker 04:
We have cases where the provisions are omitted or put in a separate place.

[00:10:15] Speaker 04:
put in really fine print, and those are considered in the unconscionability analysis.

[00:10:20] Speaker 01:
Absolutely.

[00:10:21] Speaker 01:
And that's what your Coinbase case talks about.

[00:10:23] Speaker 01:
That's the issue of surprise, whether it's put somewhere else and put somewhere else that's hidden.

[00:10:29] Speaker 01:
But that is still part of the contract.

[00:10:30] Speaker 01:
And that is still procedural unconscionability.

[00:10:34] Speaker 01:
There's no evidence of substantive unconscionability.

[00:10:38] Speaker 01:
I see my time's running out here.

[00:10:40] Speaker 01:
But I think the fundamental point here is,

[00:10:42] Speaker 01:
is that the court found this unfair.

[00:10:45] Speaker 01:
And I understand this panel is finding this unfair.

[00:10:48] Speaker 04:
You don't know what we are finding.

[00:10:49] Speaker 01:
But I can see how someone would see what happened here as unfair.

[00:10:54] Speaker 01:
But applying unconscionability here, you're using a square peg to fit into a round hole.

[00:11:01] Speaker 03:
Can I ask you, there were later terms that were disclosed to employees on the company intranet.

[00:11:07] Speaker 03:
Contending that the continuing employment obligation comes out of that, or are you contending that it really actually began at the get-go with the offer letter?

[00:11:16] Speaker 01:
It was at the offer letter.

[00:11:18] Speaker 01:
There was a delay in getting... There never was a... Well, the original offer letter has it in there.

[00:11:23] Speaker 01:
So this was standard operating procedure for this company, as it is for most companies throughout the United States.

[00:11:28] Speaker 01:
As the Schachter case says, these are standard and they're there for important reasons.

[00:11:35] Speaker 01:
So to find this unconscionable is going to cause problems throughout the United States, or throughout California, because you're going to declare a provision that is standard to be considered unconscionable.

[00:11:47] Speaker 04:
No, it won't cause problems if the companies are clear in their communication about what's required.

[00:11:55] Speaker 04:
If the company had in those rollouts and in the PowerPoints and in the oral presentation said,

[00:12:04] Speaker 04:
there is a continuing employment, then this case would have never been here.

[00:12:10] Speaker 04:
And in all fairness, the employee could have determined whether or not to terminate from the company at a particular time.

[00:12:18] Speaker 04:
And I think that's part of the reason the district court was persuaded that it's unconscionable, because the employee left apparently thinking

[00:12:27] Speaker 04:
he had earned the bonus.

[00:12:29] Speaker 01:
Well, he knew before he left that he had, because he was told before him.

[00:12:32] Speaker 01:
But your point is exactly right, Judge Robinson.

[00:12:35] Speaker 01:
But that is procedural unconscionability, and you are required to have some moniker of substantive unconscionability.

[00:12:44] Speaker 03:
Do we even get to unconscionability if this is just not a part of the contract at all?

[00:12:49] Speaker 01:
Well, then our due process rights were violated under Rule 56F, because we were at a hearing on unconscionability, and some re-judgment was granted in our case.

[00:12:57] Speaker 03:
Right, but that was why I was kind of asking what are the disputes of fact as to the four corners of the agreement because we can send this back down and this litigation seems to have already gone on quite a long time.

[00:13:10] Speaker 03:
Let me ask you a related question to this.

[00:13:11] Speaker 03:
What's at stake in the case?

[00:13:13] Speaker 03:
What is the dollar value?

[00:13:15] Speaker 01:
It's not a significant dollar value case, but it's an issue of principle for the company.

[00:13:20] Speaker 03:
But what is the amount, roughly?

[00:13:21] Speaker 01:
I think the amount of the judgment is $300,000.

[00:13:22] Speaker 03:
Okay, of that .

[00:13:23] Speaker 03:
.

[00:13:24] Speaker 03:
.

[00:13:24] Speaker 04:
It's significant to some people.

[00:13:25] Speaker 01:
Oh, I agree.

[00:13:26] Speaker 01:
I agree.

[00:13:27] Speaker 01:
It's significant to me.

[00:13:28] Speaker 01:
That's all it .

[00:13:28] Speaker 01:
.

[00:13:29] Speaker 01:
.

[00:13:29] Speaker 01:
It'd be significant to me as well.

[00:13:31] Speaker 03:
I can't reserve the rest of my time.

[00:13:33] Speaker 03:
Well, if Judge Wellenson will permit me some additional questioning.

[00:13:36] Speaker 03:
Of course.

[00:13:37] Speaker 03:
If the .

[00:13:38] Speaker 03:
.

[00:13:38] Speaker 03:
.

[00:13:39] Speaker 03:
so $300,000, is that all in with the interest?

[00:13:41] Speaker 01:
I think that's all in with attorney's fees and everything.

[00:13:44] Speaker 01:
The bonus was about $100,000.

[00:13:47] Speaker 03:
The bonus was 100 and the rest, the other 200 is interest attorney's fees and is there a willfulness?

[00:13:53] Speaker 01:
There was a willfulness finding here.

[00:13:55] Speaker 01:
That's the other issue that we have.

[00:13:57] Speaker 01:
The judge made a willfulness finding through Esponte without giving us the opportunity to really argue the issue and that he misstates willfulness because did we have a good faith belief in believing that a continued employment provision?

[00:14:12] Speaker 03:
What is the dollar amount on the willfulness component?

[00:14:14] Speaker 01:
I don't have it on top of my head, but I'll have it on roll call.

[00:14:18] Speaker 03:
Okay.

[00:14:19] Speaker 03:
Are there any other, this is a single plaintiff case, are there other claims like this that are out there in the state court system or other claims pending against your client that this case?

[00:14:29] Speaker 01:
Against our client, no, but it is absolutely clear in California that continued employment provisions are permissible.

[00:14:34] Speaker 03:
No, I'm just trying to get an understanding of the exposure that your client faces because when I look at a case like this that has a dollar amount like this, one question that comes to mind is have you tried to mediate this?

[00:14:45] Speaker 01:
Yes, we've tried to mediate this.

[00:14:46] Speaker 01:
We've done all of those types of things, Your Honor.

[00:14:49] Speaker 01:
And what causes me concern here, Your Honors, is the idea that if this case is affirmed, there will be questions about the viability

[00:15:00] Speaker 01:
of continued employment provisions because substantive unconscionability requires you to look at the term and the only evidence of substantive unconscionability here is that term.

[00:15:11] Speaker 03:
I don't think anyone's taking question with continuing employment requirements generally.

[00:15:17] Speaker 03:
I think the issue here is the disclosure of them, which is not necessarily only an unconscionability issue.

[00:15:24] Speaker 03:
It's just is it part of the contract in the first place question.

[00:15:27] Speaker 01:
Well, if you're looking at the unconscionability issue, you have to, that first element on surprise, non-disclosure, is pure procedural.

[00:15:35] Speaker 01:
And under Coinbase, you have to have some substance.

[00:15:38] Speaker 01:
On your issue was, was this part of the contract, we were denied the opportunity to dispute that issue, knowing that, or know that issue was going to be decided at that point, and there's factual disputes.

[00:15:49] Speaker 04:
Counsel, what did the parties ask the court?

[00:15:51] Speaker 04:
You were getting ready to go to jury trial.

[00:15:54] Speaker 04:
What did the parties ask the court to decide?

[00:15:56] Speaker 01:
So what happened was, Your Honor, is in the pretrial conference order, the plaintiff for the first time raised unconscionability.

[00:16:03] Speaker 01:
At that point, the judge agreed to two briefs.

[00:16:07] Speaker 01:
The discussion from plaintiff's side in the pretrial conference order was to do unconscionability after the jury trial.

[00:16:13] Speaker 01:
As Your Honors know, you want to do the equitable issues first, because if you can resolve a case.

[00:16:18] Speaker 04:
Just answer my question.

[00:16:19] Speaker 04:
What did the parties ask the court to decide?

[00:16:22] Speaker 01:
Unconscionability.

[00:16:23] Speaker 04:
OK, so you asked the court to decide that.

[00:16:25] Speaker 04:
Exactly.

[00:16:26] Speaker 04:
Even though you didn't think it was an issue?

[00:16:28] Speaker 04:
They raised it as an issue.

[00:16:30] Speaker 04:
But you could have said, this is not an issue.

[00:16:33] Speaker 04:
This is not an issue because we don't have a contract.

[00:16:36] Speaker 04:
So you didn't raise this issue to the district court that you're raising to us, that unconscionability is not an issue.

[00:16:45] Speaker 04:
under the facts of this case?

[00:16:46] Speaker 01:
We absolutely believe unconscionability is at issue at the facts of this case.

[00:16:50] Speaker 01:
We were concerned it wasn't raised as a defense earlier, but we have a contract.

[00:16:56] Speaker 01:
Unconscionability is an issue because we believe the continued employment provision is part of the contract.

[00:17:02] Speaker 04:
So I don't follow your logic if you ask the district court to address that issue.

[00:17:10] Speaker 04:
Why now you're saying that the district court shouldn't have addressed unconscionability?

[00:17:15] Speaker 01:
Absolutely, the court should have addressed unconscionability.

[00:17:17] Speaker 01:
OK, so what's your problem then?

[00:17:19] Speaker 01:
The court should not have, as Judge Breezes said.

[00:17:22] Speaker 01:
Breasts.

[00:17:23] Speaker 01:
Breasts.

[00:17:24] Speaker 01:
I apologize.

[00:17:24] Speaker 01:
I apologize.

[00:17:25] Speaker 01:
Address should not have decided that provision was not part of the contract, because that is not part of an unconscionability analysis.

[00:17:34] Speaker 01:
But it's a ruling that the court could make.

[00:17:37] Speaker 01:
You would agree with that.

[00:17:38] Speaker 01:
It's a factual issue we're entitled to a jury on.

[00:17:41] Speaker 03:
What was going to be the jury?

[00:17:43] Speaker 03:
What was going to be the trial theory on this point on that point?

[00:17:47] Speaker 01:
Yeah, the fact that he had signed an agreement beforehand that had that provision in it that that's all we did was change the name of the one plan and that the presentations were overview presentations given to managers to explain how your bonuses would be calculated.

[00:18:05] Speaker 01:
It was just simply how your bonuses would be calculated.

[00:18:08] Speaker 01:
It's not these are all the terms of the agreement.

[00:18:10] Speaker 01:
A lot of the terms were included.

[00:18:12] Speaker 01:
A lot of the terms were not included.

[00:18:14] Speaker 01:
If you look at the PowerPoint presentation, it is all numbers.

[00:18:18] Speaker 01:
It's numbers that say we're going to do it based on ventilators.

[00:18:20] Speaker 01:
Exactly.

[00:18:21] Speaker 04:
And that's the terms.

[00:18:22] Speaker 04:
If you sell this number, that's part of the contract.

[00:18:25] Speaker 04:
If you sell this number of ventilators, here's what you get.

[00:18:27] Speaker 01:
Because people can start.

[00:18:28] Speaker 01:
But it didn't say when you would get it.

[00:18:31] Speaker 01:
Well, obviously, you couldn't do profits.

[00:18:33] Speaker 01:
One of the bonuses was on profits.

[00:18:36] Speaker 01:
If it ended in September, you wouldn't know the profits until the company closed its books at the year end.

[00:18:41] Speaker 04:
But that doesn't preclude giving the bonus when the profits are calculated, even if the employee has left the company.

[00:18:48] Speaker 04:
So that doesn't not help you in terms of raising the issue back.

[00:18:52] Speaker 01:
But as this court said in Coinbase, is this an unusual provision, or is this a good-faith provision that companies have here?

[00:18:59] Speaker 01:
As applied.

[00:18:59] Speaker 01:
As applied.

[00:19:00] Speaker 01:
As applied.

[00:19:01] Speaker 01:
As applied.

[00:19:02] Speaker 04:
To the abstract, it is not an unusual provision.

[00:19:05] Speaker 04:
Exactly.

[00:19:06] Speaker 04:
As applied.

[00:19:07] Speaker 04:
Very unusual.

[00:19:08] Speaker 01:
As applied here, it's simply limited.

[00:19:11] Speaker 01:
Your focus is on the procedural unconscionability.

[00:19:15] Speaker 01:
Where is the substantive unconscionability?

[00:19:17] Speaker 01:
Timing cannot be a basis of substantive unconscionability.

[00:19:20] Speaker 03:
The PowerPoints and the FAQs, was that what was provided to employees in addition to essentially an oral video conference?

[00:19:27] Speaker 01:
This was provided to managers to discuss with the employees.

[00:19:30] Speaker 03:
Were there any other materials that were provided to employees at this point?

[00:19:33] Speaker 01:
They had access to the

[00:19:35] Speaker 01:
plans on the Internet system later later later when the unfortunately because Council the in-house Council took a long time to draft okay but just just on on the information that was given to employees were they told

[00:19:51] Speaker 03:
in around June that there was a continuing employment obligation?

[00:19:56] Speaker 03:
Did any of the PowerPoints or FAQs say that?

[00:19:58] Speaker 01:
Those wouldn't have, but at the time they were first employed, they would know that that was a provision of the funds.

[00:20:03] Speaker 01:
That's a separate question.

[00:20:04] Speaker 03:
I'm just asking about the materials.

[00:20:05] Speaker 03:
They didn't have a reference to that?

[00:20:09] Speaker 01:
That was not referenced in there, and that goes precisely to the issue of procedural unconscionability, surprise, hidden terms, all of those things.

[00:20:19] Speaker 01:
The exact situation.

[00:20:20] Speaker 01:
There's a decent argument or a good argument that there's a high degree of procedural unconscionability here.

[00:20:28] Speaker 01:
But you would need at least a feather of substantive unconscionability, and there is no evidence of substantive unconscionability.

[00:20:35] Speaker 01:
The only substantive unconscionability cited by this judge is forfeiture.

[00:20:39] Speaker 01:
And forfeiture assumes that is not a provision of the agreement.

[00:20:44] Speaker 01:
So it can't be substantive unconscionability.

[00:20:46] Speaker 01:
And I've been looking forever.

[00:20:48] Speaker 01:
What is the evidence of substantive unconscionability?

[00:20:51] Speaker 01:
What I've heard from your honors is the timing issue, the surprise issue, the hiding issue.

[00:20:57] Speaker 01:
That is all procedural unconscionability.

[00:21:03] Speaker 03:
The timing issue just kind of loops into the question of, was it part of the contract in the first place?

[00:21:09] Speaker 03:
I understand your position on that, which is that was the issue you did not think was before the district court at that hearing, and you thought that was what was going to be tried.

[00:21:17] Speaker 01:
But then what you're saying is the unconscionability decision is wrong.

[00:21:23] Speaker 03:
Well, I'm not necessarily saying that.

[00:21:25] Speaker 03:
I am just wondering whether the unconscionability decision is of any moment here.

[00:21:30] Speaker 03:
Because if it's not part of the contract at all, one doesn't need to ask whether it's unconscionable at all.

[00:21:35] Speaker 03:
It's just something that's outside the agreement.

[00:21:37] Speaker 01:
Exactly.

[00:21:37] Speaker 01:
But we're entitled to have a jury decide which part of the agreement.

[00:21:40] Speaker 03:
I understand your position on that.

[00:21:41] Speaker 04:
Council, I just have one final question.

[00:21:43] Speaker 04:
We've taken you way over your time.

[00:21:44] Speaker 04:
And I'll give you a couple of minutes for rebuttal.

[00:21:46] Speaker 04:
But were these plans tapped as new plans?

[00:21:49] Speaker 04:
I'm sorry.

[00:21:50] Speaker 01:
One of them was touted as a new plan.

[00:21:52] Speaker 01:
One of them just changed the name from MIPS to VIP.

[00:21:57] Speaker 01:
So MIP to VIP.

[00:21:58] Speaker 04:
Well, to the extent the one was touted as a new plan, was that?

[00:22:02] Speaker 01:
Was the ventilator plan, where they didn't give them that.

[00:22:06] Speaker 01:
But the issue would be, why would an employee believe that the standard provision that was in all bonuses of continued employment would not be in the new one?

[00:22:15] Speaker 04:
Because it's new.

[00:22:17] Speaker 04:
If something is new, then there is an inference that the old is out and the new is in.

[00:22:23] Speaker 01:
But continuing employment provisions are standard in almost every bonus plan.

[00:22:29] Speaker 01:
And these types of cases have come to courts repeatedly, and courts repeatedly have said they are.

[00:22:35] Speaker 01:
There's never been an instance where they haven't been.

[00:22:37] Speaker 04:
And the concern here- I understand your argument, but it was not in the new plan.

[00:22:42] Speaker 04:
It just decidedly was not in the new plan.

[00:22:44] Speaker 01:
That's what the court below decided, and we were entitled to a jury on that.

[00:22:48] Speaker 01:
Got it.

[00:22:48] Speaker 01:
Thank you.

[00:22:49] Speaker 04:
Well, maybe.

[00:22:50] Speaker 04:
Maybe not.

[00:22:51] Speaker 01:
Thank you.

[00:22:51] Speaker 04:
Thank you, Your Honor.

[00:23:03] Speaker 02:
Good morning, Your Honor.

[00:23:04] Speaker 03:
Good morning.

[00:23:04] Speaker 02:
May it please the court?

[00:23:05] Speaker 02:
The appellant's position fails to take into account

[00:23:09] Speaker 02:
that context matters when conducting a substantive.

[00:23:13] Speaker 03:
What was before the district court at the hearing?

[00:23:16] Speaker 03:
Because your friend on the other side is saying, that was really just unconscionability.

[00:23:20] Speaker 03:
We got surprised there.

[00:23:21] Speaker 03:
We should have had an opportunity.

[00:23:23] Speaker 03:
We had a Rule 56F situation.

[00:23:26] Speaker 03:
How do you respond to that?

[00:23:27] Speaker 02:
In order to make an unconscionability analysis, to conduct that analysis, the court has to determine and make findings of fact as to what the terms of the contract are.

[00:23:37] Speaker 02:
what terms are in the contract, what terms are not part of the contract.

[00:23:40] Speaker 02:
So to look at all of the facts and conduct the factual review and see that it's not part of the contract at all, that's relevant, highly relevant to the procedural aspect of it, but of course it's an independent basis for this court to affirm the judgment as well, because since it's not part of the contract, at the time the unilateral contracts were entered into, it's not enforceable.

[00:24:00] Speaker 02:
It cannot be enforced.

[00:24:01] Speaker 03:
Mr. Schaefer then says, okay, but there's

[00:24:05] Speaker 03:
There's a fact question given the initial offer letter as to whether the requirement of continuing employment extended to these new plans.

[00:24:12] Speaker 03:
How do you respond?

[00:24:15] Speaker 02:
That offer letter was an MIP plan, and it said it was subject to change from time to time.

[00:24:20] Speaker 02:
And the appellant, when they're rolling out these new plans, represented them as new plans and said, we're changing the company philosophy, excuse me, the compensation philosophy to quote,

[00:24:31] Speaker 02:
pay-for-performance approach.

[00:24:32] Speaker 02:
That is a very different philosophy.

[00:24:34] Speaker 00:
Why isn't that still a factual issue?

[00:24:36] Speaker 00:
You may have the better case here, but why isn't that a factual issue that they would say, look, they were told before in their prior plan there was a continuing employment provision, and maybe they provide an expert saying this is custom and policy of this industry, and therefore a reasonable employee would assume that a new plan would still incorporate that.

[00:24:55] Speaker 00:
Again, you may have the better argument in the end, but why isn't that a factual issue?

[00:25:00] Speaker 02:
It is a factual issue and the appellant asked the court to have the unconscionability issue determined at the outset in a pretrial motion.

[00:25:08] Speaker 02:
And the court had to make factual determinations.

[00:25:11] Speaker 02:
We agreed to that.

[00:25:12] Speaker 02:
Had to make factual determinations.

[00:25:15] Speaker 00:
Why would a judge, how could a judge make a factual determination of whether this continued employment provision was imported into the VIP plan and whatever the other plan was?

[00:25:28] Speaker 02:
Oh, because all of the facts are undisputed.

[00:25:30] Speaker 02:
So they represented them as new plans.

[00:25:32] Speaker 02:
They never mentioned anything about the MIP plan or an incorporation of the MIP plan.

[00:25:37] Speaker 00:
If I can give you a different hypothetical.

[00:25:40] Speaker 00:
Say a company has a very generous 20-week maternity leave policy and someone hears about it and joins the company.

[00:25:49] Speaker 00:
And then later the company says, we're changing.

[00:25:51] Speaker 00:
We have a new plan now.

[00:25:52] Speaker 00:
It's not just maternity.

[00:25:53] Speaker 00:
It's paternity to reflect the new reality.

[00:25:55] Speaker 00:
We're changing.

[00:25:55] Speaker 00:
We're providing new benefits.

[00:25:57] Speaker 00:
Doesn't mention the duration.

[00:25:59] Speaker 00:
And then later said, it's not 20 weeks anymore.

[00:26:01] Speaker 00:
It's only eight weeks.

[00:26:02] Speaker 00:
I guess an employee would argue, I assume, and say, you know what?

[00:26:05] Speaker 00:
20 weeks is what I was told.

[00:26:09] Speaker 00:
I just assumed it would be important to this new one.

[00:26:13] Speaker 00:
I mean, isn't that a potential factual issue?

[00:26:15] Speaker 02:
Well, in that hypothetical, they're not saying they're adding or changing some of the terms, but they're not saying that's a complete replacement of the old plan.

[00:26:25] Speaker 00:
I think it's new.

[00:26:26] Speaker 00:
It's revolutionary, and now we're providing new benefits.

[00:26:29] Speaker 00:
That was the old framework, you know, this new reality about families.

[00:26:32] Speaker 00:
It's paternity leave, maternity leave.

[00:26:34] Speaker 00:
We're offering new things.

[00:26:35] Speaker 00:
But it's silent on this issue, much like the

[00:26:38] Speaker 00:
The new plan, the VIP plan, the ventilator program, I mean, they were silent on it.

[00:26:44] Speaker 00:
And can't you make an argument that a reasonable employer to assume this continued provision would continue on?

[00:26:50] Speaker 00:
Or maybe it's a custom and policy.

[00:26:52] Speaker 00:
Maybe they'll bring an expert saying this is just kind of the standard in this industry.

[00:26:55] Speaker 00:
Again, you may have the better argument because they didn't say anything.

[00:27:00] Speaker 00:
But isn't that still a factual issue?

[00:27:04] Speaker 04:
Not.

[00:27:05] Speaker 02:
I think.

[00:27:05] Speaker 04:
Is it a material factual issue?

[00:27:07] Speaker 02:
It's not a material factual issue, because when you look at the replacement plan, if they're representing it as a replacement plan, then that's the new controlling plan.

[00:27:17] Speaker 02:
And so there's really no dispute as to when the first plan in that hypothetical had the 20 weeks, and the second plan, the subsequent plan, did not have that provision and had different terms.

[00:27:29] Speaker 02:
And here, that's exactly what happened.

[00:27:32] Speaker 02:
So you had the MIT plan, but then the company moved to two new incentive plans

[00:27:37] Speaker 02:
or they're representing that they're changing the company compensation philosophy to a pay for performance plan.

[00:27:44] Speaker 00:
I guess bold plan is a little bit separate because that was kind of a limited plan for during COVID ventilators.

[00:27:50] Speaker 00:
What are the differences between the MIP plan and the VIP plan?

[00:27:55] Speaker 02:
The MIP plan, there are different metrics of sale.

[00:28:01] Speaker 02:
And so the VIP plan was a little bit more, was actually based on the sale of ventilators through, from April 1st, 2020 through September 30th of 2020.

[00:28:11] Speaker 02:
And it had different formulas to use.

[00:28:13] Speaker 02:
The bold plan also relied on different formulas.

[00:28:16] Speaker 00:
Not the bold plan, but they claim that the VIP plan is basically the same thing as the MIP plan, just with a new name.

[00:28:24] Speaker 00:
You know, can you address that?

[00:28:27] Speaker 02:
They cite nothing in the record or did not introduce any evidence that suggests that the MIP plan was, the VIP plan was, you know, changed or the MIP plan changed to the VIP plan.

[00:28:40] Speaker 04:
Was the VIP plan touted as a new plan as well?

[00:28:43] Speaker 02:
That's correct.

[00:28:44] Speaker 02:
And when they were rolled out together, they were introduced as new plans to address the crisis that we're suffering through at COVID-19.

[00:28:53] Speaker 02:
And needing both of these plans were being offered in order to incentivize the workforce to move forward with selling ventilators by September 30, 2020.

[00:29:05] Speaker 02:
To address your point, your honor, Mr. Abed actually gave up a 3% merit raise.

[00:29:12] Speaker 02:
So under the MIP plan, he had a 3% merit raise, and he's giving that up in order to go move forward with these two new incentive plans.

[00:29:21] Speaker 02:
So that goes to substantive.

[00:29:23] Speaker 00:
But that's also a factual dispute, right?

[00:29:25] Speaker 00:
Because the company says they gave up the 3% plan because of poor fiscal performance for the year, and it wasn't related to this.

[00:29:31] Speaker 00:
So that's also a factual dispute.

[00:29:34] Speaker 02:
The factual, I don't think it's a factual dispute.

[00:29:37] Speaker 00:
I think it's a... Is there evidence that was clearly the two were linked?

[00:29:41] Speaker 00:
I mean, at least according to the briefs, they say that they dropped the 3% plan because of poor fiscal performance.

[00:29:48] Speaker 04:
Is that in the record anywhere?

[00:29:52] Speaker 04:
Why the 3% merit increase was not given?

[00:29:56] Speaker 04:
Is that anywhere in the record?

[00:29:59] Speaker 02:
It might be in his deposition testimony.

[00:30:02] Speaker 02:
I'm not sure if it's quite into the record.

[00:30:04] Speaker 02:
But that's essentially the fact.

[00:30:07] Speaker 02:
And the record reflects that the 3% raise was no longer a part of the contract, which was part of the MIP plan.

[00:30:16] Speaker 02:
So that supports the fact that there is no factual dispute, that these are new plans that

[00:30:24] Speaker 02:
that essentially they're representing them as new plans to change the compensation philosophy.

[00:30:29] Speaker 02:
This is critical to the substantive unconscionability analysis because what the company is bargaining for and promising to the employee is based off of your performance, if you meet these specific metrics by September 30th, 2020, we will pay you for your performance.

[00:30:46] Speaker 02:
And in this case, they got everything that they bargained for.

[00:30:49] Speaker 02:
They got what they asked for.

[00:30:52] Speaker 02:
They got the performance.

[00:30:53] Speaker 02:
But Jonathan Abed got nothing that he bargained for.

[00:30:57] Speaker 04:
Council, if the MIP plan has still been in effect, would Mr. Abed have been entitled to a 3% merit increase?

[00:31:06] Speaker 03:
I believe so.

[00:31:07] Speaker 03:
One curiosity in the case is that the district court denied summary judgment and then turned around and prior to trial granted judgment in your favor.

[00:31:17] Speaker 03:
Is there any inconsistency between the district court's summary judgment ruling and then the ruling that it eventually made that's before us?

[00:31:25] Speaker 03:
And if so, is there a reason for ... Did something change along the way that caused the district court to reevaluate something?

[00:31:33] Speaker 02:
But no, there's no inconsistency.

[00:31:36] Speaker 02:
Essentially, when the defendant brings in MSJ, the court is basically denying that they've shown no material facts.

[00:31:45] Speaker 02:
They're applying a different standard.

[00:31:47] Speaker 02:
And at this situation, at the hearing before the trial, the court learned that Jonathan Abed had commenced performance before those additional documents were uploaded to Airways.

[00:32:00] Speaker 02:
So Jonathan Abed commenced performance.

[00:32:02] Speaker 02:
So the court actually had more information to make the ruling that at the time the contract was

[00:32:11] Speaker 02:
entered into, and performance commenced.

[00:32:13] Speaker 02:
That was before these additional terms of continued employment that had even been created and uploaded to Airway.

[00:32:19] Speaker 03:
One thing that does concern me is the willfulness finding, because it's one thing to say somebody didn't pay somebody on time.

[00:32:27] Speaker 03:
It's another to say that was willful.

[00:32:29] Speaker 03:
Was it proper here to essentially grant judgment in your favor on that issue?

[00:32:35] Speaker 02:
It was, because Jonathan Abed finished

[00:32:39] Speaker 02:
performance September 30th, 2020.

[00:32:41] Speaker 02:
He resigns October 29th, 2020.

[00:32:44] Speaker 02:
And then it's October 30th, 2020 that they upload this brand new document on the bold plan that the appellant concedes is a brand new plan.

[00:32:55] Speaker 02:
and that they represented as a brand new plan.

[00:32:57] Speaker 02:
There's no factual dispute as to that.

[00:33:00] Speaker 03:
So by making... Right, but I mean, if it's just a kind of left-hand, right-hand issue, that, you know, it sounds like the defense on why the terms were not put up earlier was that it was not intentional.

[00:33:11] Speaker 03:
It was something the general counsel had meant to do earlier.

[00:33:14] Speaker 03:
I don't know what's true and what's not true, but if that is true, that doesn't sound willful.

[00:33:18] Speaker 02:
But there's no jury, really, and no reasonable jury could find that it wasn't intentional.

[00:33:24] Speaker 02:
In order to defend yourself against the willfulness finding, you have to have a good faith reason based in fact or law.

[00:33:30] Speaker 02:
There's no disputus of the facts, and there's no legal basis.

[00:33:33] Speaker 03:
Why wouldn't it be in good faith to say we thought that his offer letter covered this?

[00:33:38] Speaker 03:
It turns out maybe we were wrong about that, but that doesn't sound like something that's not done in good faith, just as you say it.

[00:33:44] Speaker 02:
Because the offer letter, as the appellant concedes, does not cover

[00:33:48] Speaker 02:
Uh, the bold plan and the district court only found it with respect to the bold plan.

[00:33:53] Speaker 03:
What percentage of the recovery?

[00:33:54] Speaker 03:
So do you agree by the way that it's about $300,000 here?

[00:33:59] Speaker 02:
I think the attorney, the judgment is actually like 480,000.

[00:34:02] Speaker 03:
Can you break it down?

[00:34:03] Speaker 03:
Do you have this handy?

[00:34:04] Speaker 03:
Can you tell me what is this is composed of or is this somewhere else in the record how this all breaks down?

[00:34:09] Speaker 02:
I believe it is the first part of appellants record.

[00:34:14] Speaker 02:
It's like right at the beginning.

[00:34:15] Speaker 03:
Because the judgment looks like it was for 158,000.

[00:34:18] Speaker 03:
Correct.

[00:34:18] Speaker 02:
That's the initial judgment and then the attorney's fees are added on top of it.

[00:34:22] Speaker 02:
So thank you.

[00:34:23] Speaker 02:
That is the correct figure.

[00:34:24] Speaker 03:
OK, so 158, does that include willfulness?

[00:34:27] Speaker 02:
Yes.

[00:34:28] Speaker 02:
And the willfulness is around 20-some thousand.

[00:34:30] Speaker 03:
OK.

[00:34:31] Speaker 03:
And then the attorney's fees is on top of that and the interest?

[00:34:34] Speaker 02:
Correct.

[00:34:35] Speaker 03:
And that's somewhere else in the district court record we can find that?

[00:34:37] Speaker 02:
There's an amended judgment, yes.

[00:34:39] Speaker 03:
OK.

[00:34:40] Speaker 03:
Do you have other clients who are Viere employees, or do you know of others who are waiting on this case?

[00:34:47] Speaker 02:
I know others were affected by it, but I don't represent any.

[00:34:53] Speaker 03:
I'm just trying to understand the risk to both sides, if you will, in the case.

[00:34:58] Speaker 03:
What is the nature of the mediation efforts?

[00:35:01] Speaker 02:
We've made every effort that we can to... Did you go to a mediator in the district court?

[00:35:05] Speaker 02:
Yes.

[00:35:06] Speaker 02:
It was unsuccessful.

[00:35:11] Speaker 00:
What is your understanding of what the district court's ruling is with respect to the continued employment provisions?

[00:35:18] Speaker 00:
Were they incorporated into the new plans or not?

[00:35:23] Speaker 00:
It wasn't clear to me what exactly the district court ruled.

[00:35:26] Speaker 02:
Two findings of fact.

[00:35:28] Speaker 02:
First, that it was not part of the brand new plans, the VIP plan or the bull plan.

[00:35:33] Speaker 00:
If that's it, then that's the end of story, right?

[00:35:35] Speaker 00:
I mean, we don't need to go into inconscionability at all, because if it's not in it, it's not in it, right?

[00:35:40] Speaker 02:
That's correct, and findings of fact are given, reviewed under a clear error standard, which is significantly... On summary judgment, if there's a material dispute of fact, then the district court can't make the finding, correct?

[00:35:56] Speaker 02:
But there is no genuine dispute as to the facts, and this is not a...

[00:36:01] Speaker 02:
This is something that the parties actually asked for.

[00:36:03] Speaker 02:
We asked the court to try the consumability issue.

[00:36:07] Speaker 04:
Okay, so your view is that the parties agreed that the district court could make that factual finding?

[00:36:12] Speaker 02:
That's correct.

[00:36:18] Speaker 02:
And so I would conclude with the fact, because the appellant argues that timing cannot be used for both elements, but we're not arguing that the timing necessarily affects the substantive unconscionability.

[00:36:31] Speaker 02:
The substantive unconscionability is based off of the one-sided and absence of a justification for it.

[00:36:39] Speaker 02:
Those are the two factors that the Armandiras v. found health care

[00:36:44] Speaker 02:
the psych care services case talks about the California Supreme Court case.

[00:36:47] Speaker 02:
And in this case, there's no justification for the complete and total forfeiture of all incentives earned through September 30th, 2020, when the appellant promised to pay for a performance through that date, but then refused to do so.

[00:37:01] Speaker 00:
Do we even really need to address unconsciously one way or the other?

[00:37:04] Speaker 00:
I mean, one way, if someone finds that the continuing employment provision wasn't incorporated, that's it.

[00:37:11] Speaker 00:
End of story.

[00:37:11] Speaker 00:
You win.

[00:37:13] Speaker 00:
If that provision is incorporated, I mean, is there really any surprise in that way, and therefore, unconscionability wouldn't even apply?

[00:37:22] Speaker 00:
I mean, it seems like the threshold question really determines the outcome of this case, not really the unconscionability.

[00:37:26] Speaker 00:
It's just, was it incorporated or not?

[00:37:28] Speaker 02:
Well, I think that's a good point.

[00:37:30] Speaker 02:
So, to address the first part of the question.

[00:37:35] Speaker 02:
You do not need to address the unconscionability issue because they were unilateral contracts.

[00:37:40] Speaker 02:
The undisputed facts show that they were unilateral contracts, and it's not enforceable because it's not part of the contract.

[00:37:45] Speaker 03:
I think what Judge Lee is saying, if I'm correct, is that if someone were to find that the offer letter was, in fact, a part of the later June plans, and that's clear, then the continuing employment obligation is part of the offer letter, and there is no procedural unconscionability, and there's no substantive unconscionability either.

[00:38:04] Speaker 02:
Well, it wouldn't be towards the bold plan because the MIP plan doesn't cover the bull plan, but both plans were represented when you look at the slides as brand new plans and those representations are not disputed.

[00:38:18] Speaker 02:
It's not disputed.

[00:38:19] Speaker 02:
that they said we're changing the compensation philosophy.

[00:38:22] Speaker 02:
So that's where the surprise comes from.

[00:38:24] Speaker 02:
When you're representing, hey, we're changing from our old plans to a new compensation philosophy of pay performance, and we're going to pay you through September 30, 2020 because of the crisis that this country is going through, that's where the surprise comes from.

[00:38:39] Speaker 02:
And so that's an egregious level of procedural unconscionability, as well as the substantive unconscionability.

[00:38:45] Speaker 02:
And we respectfully ask this court to please affirm the district court's findings.

[00:38:49] Speaker 02:
Thank you.

[00:38:51] Speaker 04:
Thank you.

[00:38:53] Speaker 04:
Roberto, let's start with two minutes.

[00:38:55] Speaker 01:
I can be very quick, Your Honors.

[00:38:56] Speaker 01:
First, I would refer Your Honors to SCR 93.

[00:39:00] Speaker 01:
That's a page which says the current variable plan.

[00:39:05] Speaker 01:
So there was no representation that the VIP plan was a new plan.

[00:39:09] Speaker 01:
It was the current plan.

[00:39:11] Speaker 01:
I'd refer your honors to SCR 111.

[00:39:14] Speaker 01:
There was no trade-off of 3% bonuses for the new plans.

[00:39:19] Speaker 01:
The company did not make sufficient, in the frequently asked questions on SCR 111, frequently asked questions say, you're not getting your 3% raise because our profits didn't support it.

[00:39:30] Speaker 01:
One of your honors raised a good point about the summary judgment ruling.

[00:39:36] Speaker 01:
I'd refer your honors to page seven of our opening brief.

[00:39:41] Speaker 01:
On January 6, 2023, the district court denied summary judgment, finding that there was a genuine, quote, genuine disputed material fact concerning the creation in terms of the unilateral contract.

[00:39:54] Speaker 01:
How can you have that finding one day and then upon a purported unconscionability say there are no longer any disputed facts without providing any reason or justification for that change?

[00:40:07] Speaker 03:
I take your point.

[00:40:09] Speaker 03:
I mean, the district court also, though, said in the summary judgment ruling, assuming a unilateral contract was created, its terms did not include the employment at the time of payout via does not dispute this.

[00:40:21] Speaker 03:
So it seems that the district court then said later there was a unilateral contract that was created.

[00:40:28] Speaker 01:
But the issue is back to the Lursser case, where it was the exact same situation.

[00:40:37] Speaker 01:
So you have a unilateral contract, which means I can't change the terms.

[00:40:41] Speaker 01:
But that doesn't mean you get the bonus if there's a continuing employment provision in there.

[00:40:49] Speaker 01:
The case they cite, Ellis, they found a forfeiture in that instance.

[00:40:53] Speaker 01:
There can be no forfeiture if there is a condition that hasn't been met.

[00:40:57] Speaker 01:
And that's precisely what Lurser found.

[00:41:00] Speaker 01:
And my counsel, esteemed counsel, talked about the reasonableness standard.

[00:41:05] Speaker 01:
Is it reasonable for this provision in there?

[00:41:07] Speaker 01:
That's the standard of lesser.

[00:41:09] Speaker 01:
That standard has been rejected by California and the California Supreme Court.

[00:41:13] Speaker 01:
It doesn't apply.

[00:41:14] Speaker 01:
The standard isn't an overly harsh provision.

[00:41:18] Speaker 01:
When my counsel was asked about what the substantive unconscionability here, he says the contract was one-sided.

[00:41:24] Speaker 01:
That is procedural.

[00:41:25] Speaker 01:
That is not substantive.

[00:41:26] Speaker 01:
And then the last thing I'll leave, because I know I've been going way over my time, is the good faith belief.

[00:41:31] Speaker 01:
The good faith belief, a good example would be if I conditioned you getting a bonus on you wearing blue shoes on a particular day, that's not a good faith belief.

[00:41:42] Speaker 01:
But if I condition your employment, if I condition your bonus on you still being employed, that's known to be a good faith belief.

[00:41:50] Speaker 01:
We may have been wrong in believing that, we may have been wrong in not timely disclosing it, but it was reasonable for our people to believe we have a continuing

[00:41:59] Speaker 01:
employment provision in here.

[00:42:01] Speaker 01:
So how can that possibly be willful?

[00:42:03] Speaker 01:
This court's willfulness finding was simply that you didn't pay the bonus.

[00:42:08] Speaker 01:
Well, if you don't pay this court, the district district when I punch it, the district court's decision was you didn't pay the bonus.

[00:42:13] Speaker 01:
Well, that means every single case is willful.

[00:42:16] Speaker 01:
And if there's no other questions, I will leave it at that.

[00:42:18] Speaker 01:
Thank you.

[00:42:19] Speaker 04:
Thank you.

[00:42:19] Speaker 04:
Thank you to both counsel for your helpful arguments in this case.

[00:42:22] Speaker 04:
The case just argued is submitted for decision by the court.

[00:42:26] Speaker 04:
That completes our calendar for the morning.

[00:42:28] Speaker 04:
We are in recess until 930 a.m.

[00:42:30] Speaker 04:
tomorrow morning.

[00:42:32] Speaker 01:
All rise.

[00:42:40] Speaker 01:
This court stands in recess until 930 tomorrow morning.