65 B.R. 365 (1986)
In re Thomas H. TERRELL, Debtor.
Thomas H. TERRELL, Plaintiff,
v.
UNITED STATES of America, Defendant.
Bankruptcy No. BK85-00240, Adv. No. AP85-0757.
United States Bankruptcy Court, N.D. Alabama, S.D.
June 23, 1986.
Robert B. Rubin, Atty., Donald M. Wright, Birmingham, Ala., for debtor.
*366 Richard O'Neal, Asst. U.S. Atty., Birmingham, Ala., Helen Lokey, U.S. Dept. of Justice, Washington, D.C., for U.S.
Thomas E. Reynolds, Trustee.
Jack Rivers, U.S. Trustee.
Daniel W. Wainscott, Birmingham, Ala., for Andre Toffel (trustee for Burgess Mining).

MEMORANDUM OF DECISION
GEORGE S. WRIGHT, Chief Judge.
This cause came before the Court on the debtor's MOTION TO DETERMINE DISCHARGEABILITY OF IRS TAX LIEN. The Internal Revenue Service (hereinafter called "I.R.S.") has filed a proof of claim in Mr. Terrell's Chapter 7 case for $223,018.96 (Claim # 5).[1] The debtor does not dispute that he owes the $840.00 plus $73.67 in pre-petition interest for personal income taxes; the debtor also does not dispute that the personal taxes are non-dischargeable pursuant to 11 U.S.C. Section 523(a)(1) (1984). The debtor does contend, however, that he should not be held personally liable for the failure of Cahaba Resources, Inc. (hereinafter called "Cahaba") and Southern Air Filters, Inc. (hereinafter called "S.A.F.") to pay their respective withholding tax liabilities of $209,820.01 and $12,247.48. Mr. Terrell asserts: 1) that he was not a "responsible person" for the purposes of 26 U.S.C. Section 6672[2] and 2) that if he was a "responsible person", any alleged omissions on his part were not willful. After a TRIAL on the merits, the Court makes the following findings of fact and conclusions of law.

BURDEN OF PROOF
At the outset the Court notes that there are conflicting policy considerations on the issue of which party should bear the burden of proof in this proceeding. Courts have generally followed the rule that the person seeking to avoid the penalty provisions of 26 U.S.C. Section 6672 bears the burden of proving by a preponderance of the evidence that he was not a "responsible person", or that his failure to pay taxes was not "willful." See United States v. Pomponio, 635 F.2d 293 (4th Cir.1980); Brown v. United States, 591 F.2d 1136 (5th Cir.1979)[3]; Anderson v. United States, 561 F.2d 162 (8th Cir.1977); Lesser v. United States, 368 F.2d 306 (2nd Cir.1966). As the Lesser court explained:

*367 The result of the rule proposed by Judge Smith, that the burden of proof is on the government when the government is asserting the claim, would be to encourage taxpayers to wait for the government to sue. If such a rule were adopted the tax bar would quickly move to make the task of the government more difficult by advising clients not to pay taxes under protest but, by forcing the government to collect by levy and suit, secure the advantage of shifting the burden of proof.
Lesser, 368 F.2d at 310 (En banc opinion of court on issue of burden of proof).
The rule in bankruptcy, however, is that exceptions to discharge should be narrowly construed against the creditor and in favor of the bankrupt in order to carry out the "fresh start" policy of the bankruptcy law. See Gleason v. Thaw, 236 U.S. 558, 35 S.Ct. 287, 59 L.Ed. 717 (1915); In re Hunter, 780 F.2d 1577 (11th Cir.1986); Matter of Cross, 666 F.2d 873, 879-80 (5th Cir.1982) (Unit B). Courts, therefore, place the burden of proving that a particular debt falls within one of the statutory exceptions on the creditor asserting the exception. See Gleason v. Thaw, 236 U.S. 558, 35 S.Ct. 287, 59 L.Ed. 717 (1915); Hunter, 780 F.2d at 1579; Cross F.2d at 880.
While the issues of liability and dischargeability may be separate and distinct in some instances, see Matter of Merrill, 594 F.2d 1064 (5th Cir.1979), in this case both liability and dischargeability hinge upon whether Mr. Terrell was a "responsible person" under 26 U.S.C. Section 6672 and if so, whether his alleged omission was "willful". Because bankruptcy courts are courts of equity, Bank of Marin v. England, 385 U.S. 99, 87 S.Ct. 274, 17 L.Ed.2d 197 (1966); In re Ranch House of Orange-Brevard, Inc., 773 F.2d 1166 (11th Cir. 1985), the Court resolves this conflict in favor of the debtor and determines that the "fresh start" policy of bankruptcy overrides the policy in favor of putting the burden on the debtor/taxpayer. Cf. N.L.R.B. v. Bildisco, 465 U.S. 513, 104 S.Ct. 1188, 79 L.Ed.2d 482 (bankruptcy policy overrides that of labor law).[4] The government must, therefore, prove by a preponderance of the evidence that Mr. Terrell was a "responsible person" for the withholding taxes of Cahaba and S.A.F. and that his alleged omissions were "willful" for the alleged tax indebtedness to be nondischargeable pursuant to 11 U.S.C. Section 523(a)(1)(A) (1984).

FINDINGS OF FACT
Mr. Terrell was the son-in-law of Mr. A.E. Burgess who was the Chairman of the Board of Burgess Mining and Construction Corporation (hereinafter called "Burgess Mining").[5] Mr. Burgess set up Cahaba and S.A.F. in the latter part of 1981.[6] Mr. Burgess was the sole investor in Cahaba and S.A.F. contributing $90,000 and $110,000 respectively to the corporations. From their inception, Mr. Burgess dominated both corporations in every respect. He named the shareholders and officers of both corporations; established all salaries; retained exclusive power to hire and fire employees; made the ultimate financial decisions of both companies including the decisions as to which creditors were paid and when. In short, Mr. Burgess not only ran the show; he was the show.
Mr. Terrell was a shareholder and the secretary treasurer of both corporations. Mr. Terrell was basically the office manager for the corporations. He supervised the *368 corporations' insurance matters and did general coal accounting (i.e., calculating royalties and rents due owners). Mr. Terrell was authorized to sign corporate checks; and he did so to pay suppliers, coal truckers, the payroll and other creditors. Mr. Terrell signed the corporations' withholding tax returns and various notes on behalf of the corporations. Further, after the corporations had become delinquent in their withholding tax obligations, Mr. Terrell negotiated with the I.R.S. to setup a repayment plan.
The evidence shows; and the Court finds, however, that Mr. Terrell performed all of these duties at the behest and under the control and supervision of Mr. Burgess. Mr. Terrell understood the pervasive nature of Mr. Burgess' authority. Mr. Terrell never contravened any of Mr. Burgess' directives and never possessed any significant independent authority within the corporations. Mr. Burgess made all the financial decisions of the corporations; he alone directed which creditors would be paid.
The Fifth Circuit Court of Appeals succinctly outlined the basis for the alleged tax liability at issue herein as follows:
Under the withholding system set up in the Internal Revenue Code, 26 U.S.C.A. Section 3401 et seq., employers have a duty to collect both income and FICA ("social security") taxes from their employees. These sums are commonly referred to as "trust funds" because the Code provides that they are deemed to be "a special fund [held] in trust for the United States." 26 U.S.C. Section 7501. When net wages are paid to the employee, the taxes that were, or should have been, withheld are credited to the employee even if they are never remitted to the government; so the IRS has recourse only against the employer for their payment.
However, Section 6672 of the Internal Revenue Code imposes a penalty on any "person required to collect, truthfully account for, and pay over any tax" withheld who willfully fails to do so. The penalty is equal to the total amount of the tax not paid over, and is itself referred to as a "tax" in Section 6671. The term "person," as defined in Section 6671, includes "an officer or employee of a corporation . . . who as such officer [or] employee . . . is under a duty" to collect, account for, and pay over the withheld tax. This is known as a "responsible person." Thus, liability for a penalty is imposed only on (1) a responsible person (as defined in Section 6671), who has (2) willfully failed to perform a duty to collect, account, "and" pay over the tax.
Mazo v. United States, 591 F.2d 1151, (5th Cir.1979). The issues of responsible person status and willfulness are factual issues, see Roth v. United States, 779 F.2d 1567 (11th Cir.1986) (Godbold, C.J., dissenting); McCullough v. United States, 442 F.2d 1011 (5th Cir.1971); Pearson v. United States, CV-84-P-2885-W (N.D.Ala., May 21, 1986) (Pointer, J.) [Available on WESTLAW, DCTU database]; which must be resolved on a case-by-case basis. Neckles v. United States, 579 F.2d 938 (5th Cir. 1978).
Whether one is a responsible person "is a matter of status, duty and authority, not knowledge." Mazo, 591 F.2d at 1156 (emphasis added). The Fifth Circuit Court of Appeals has stated:
Liability attaches to those with power and responsibility within the corporate structure for seeing that the taxes withheld from various sources are remitted to the Government. This duty is generally found in high corporate officials charged with general control over corporate business affairs who participate in decisions concerning payment of creditors and disbursal of funds.
Liddon v. United States, 448 F.2d 509, 512 (5th Cir.1971) (quoting Monday v. United States, 421 F.2d 1210, 1214-15 (7th Cir. 1970) (emphasis added and citations omitted); see Brown v. United States, 464 F.2d 590 (5th Cir.1972) ("power and responsibilities"). The Liddon court further stated:
"In reaching a determination with respect to the person or persons upon whom to impose responsibility and liability for the *369 failure to pay taxes, the courts have tended to disregard the mechanical functions of the various corporate officer, and instead, have searched for the person or persons who could have seen to it that the taxes were paid, a person with ultimate authority over expenditures of corporate funds who can fairly be said to be responsible for the corporation's failure to pay over its taxes."

Id. at 512-13 (quoting 22 A.L.R.3d 8, 50 (1968)) (emphasis added and citations omitted). A "responsible person" is one who has or shares the "final word" as to what bills or creditors should or should not be paid, the word "final" meaning significant rather than exclusive control. Henderson v. Croom, 403 F.Supp. 665 (N.D.Ala.1975).
Based upon these authorities, the Court determines that the I.R.S. has failed to sustain its burden of proving that Mr. Terrell was a "responsible person" for the purposes of the Section 6672 withholding tax penalty. Mr. Terrell had no power or authority to direct which creditors were paid; he did not have the requisite "significant" input into the financial decisions of the employer corporations and in no way participated in the decisions concerning payment of creditors.[7]
The I.R.S. has placed much emphasis on Mr. Terrell's apparent status within the corporations and on the ministerial activities performed by him. In making the "responsible person" determination, the Court must be "concerned with actual control and economic reality, not paper facades." First Nat'l Bank v. United States, 591 F.2d 1143 (5th Cir.1979). The Court will, therefore, "disregard the mechanical functions of the various corporate officers and [will] instead emphasize where the ultimate authority for the decision not to pay the tax lies." White v. United States, 372 F.2d 513, 178 Ct.Cl. 765 (1967); see Godfrey v. United States, 748 F.2d 1568 (Fed.Cir.1984). Thus, neither Mr. Terrell's corporate office, see Liddon, 448 F.2d at 512 (quoting Monday v. United States, 421 F.2d 1210, 1214-15 (7th Cir.1970)), nor Mr. Terrell's duties of signing checks and tax returns, see Godfrey, 748 F.2d at 1575, per se require a finding that Mr. Terrell is a "responsible person." The evidence presented established Mr. Burgess at all times retained "actual control" over the corporations; and in "economic realty" he, not Mr. Terrell, was "the person who can fairly be said to be responsible for the corporation's failure to pay over its taxes." Id.[8]
*370 The following passage from the recent case of Pearson v. United States, CV-84-P-2885-W (N.D.Ala., May 21, 1986) [Available on WESTLAW, DCTU database] (Pointer, J.) (unpublished) which is controlling on this Court amply answers the contentions of the I.R.S. in this case:
Contrary to the Government's argument, it takes something more than "authority to direct or control the payment of corporate funds" before a person is labeled a "responsible person" under Section 6672. (Defendant's memo. p. 17) As the name implies, it takes "responsibility." If Section 6672 were read to mean that every person with mere authority to direct payments of corporate assets was liable, then everyone over the rank of bookkeeper might be subject to a penalty. This, of course, is not the intent of the statute. From a reading of the many cases cited, the court draws two broad conclusions. Persons who assume "managerial control," Sladov, supra at 241, may be personally liable for a penalty if they are the "persons responsible for collection of third-party taxes" during the taxing period. Id. at 250. One becomes responsible either by being directly responsible (through a job assignment) for collection and payment, or by being in a managerial position of overall responsibility and having knowledge that the subordinates with direct responsibility are not satisfying the statutory obligation. In other words, there must be some showing of fault on the person's behalf.
Pearson, CV-84-P-2885-W, p. 4 (N.D.Ala. May 21, 1986). Because Mr. Terrell lacked any independent authority and had no input into the financial decisions of the corporations which were dominated by Mr. Burgess, the Court cannot find that he was "responsible" or that he was at "fault". In this light, the Court is persuaded by the case of Campbell v. Nixon, 207 F.Supp. 826 (E.D.Mich.S.D.1962) wherein the court determined that the corporate vice president was not responsible for the withholding tax delinquency where the president alone directed the payments to creditors. See also Cellura v. United States, 245 F.Supp. 379 (N.D.Ohio E.D.1965) (manager not liable where employer directed priority of payment).
The Court makes the further finding that the I.R.S. has failed to sustain its burden of proof on the "willfulness" element of Mr. Terrell's alleged liability. 26 U.S.C. Section 6672 (1980); see Cellura v. United States, 245 F.Supp. 379 (N.D.Ohio E.D.1965); Campbell v. Nixon, 207 F.Supp. 826 (E.D. Mich.S.D.1962).

CONCLUSIONS OF LAW
Income taxes due within three years of the date of the filing of the petitions are nondischargeable. 11 U.S.C. Section 523(a)(1)(A), 507(a)(7)(A) (1984). Taxes "required to be collected and withheld and for which the debtor is liable in whatever capacity" are also nondischargeable. 11 U.S.C. Section 523(a)(1)(A), 507(a)(7)(C) (1984).

APPLICATION OF LAW TO FACTS
Mr. Terrell has not disputed his liability and the nondischargeability of the portion of the I.R.S.'s claim which relates to his personal income taxes, and the Court will enter a judgment in favor of the I.R.S. for $913.67. Because the Court has found that Mr. Terrell was not a "responsible person" chargeable with the penalty for the withholding tax liabilities of Cahaba and S.A.F., no debt for such withholding tax liability exists which may be excepted from discharge pursuant to 11 U.S.C. Section 523(a)(1)(A), 507(a)(7)(C) (1984).
A separate order will be entered consistent with this opinion.
NOTES
[1]  The pertinent portion of the proof of claim filed by the I.R.S. describes the alleged tax liability of Mr. Terrell as follows:

             B. UNSECURED PRIORITY CLAIMS under Section 507(a)(6)
                           of the Bankruptcy Code
                                                                     Interest To
 Kind of Tax    Tax Period    Date Tax Assessed       Tax Due       Petition Date
Income         12-31-83      Assessent prohibited    $209,820.01        -0-
                             by B/C Sec. 362(a)(6)
 Withholding (Section 6672 of the IRC of 1954).
Income         3-31-84       Assessment prohibited     12,247.48        -0-
                             by B/C Sec. 362(a)(6)
 Withholding (Section 6672 of the IRC of 1954).
Income       12-31-83           11-26-84                 840.00        73.67

The Court notes that the proof of claim incorrectly designates the first and third items. The first item is for withholding taxes pursuant to 26 U.S.C. Section 6672 in connection with the payroll of Cahaba Resources Inc. The second item claimed is for withholding taxes in connection with Southern Air Filters, Inc. The third item asserted is for Mr. Terrell's personal income taxes.
[2]  The cases which have been decided under Section 6672 generally refer to the "person required to collect, truthfully account for, and pay over any tax imposed by this title" by the shorthand phrase "responsible person." Slodov v. United States, 436 U.S. 238, 246, n. 7, 98 S.Ct. 1778, 1784, n. 7, 56 L.Ed.2d 251, 261, n. 7 (1978).
[3]  In re Bonner v. City of Prichard, 661 F.2d 1206, 1207 (11th Cir.1983) (en banc) the Eleventh Circuit Court of Appeals adopted as precedent the decisions of the former Fifth Circuit Court of Appeals rendered prior to October 1, 1981.
[4]  The Court declines to follow the case of In re Summers, 32 B.R. 861, 866 (Bkrtcy.N.D.Ohio, E.D.1983) wherein the court did not address this conflict of policies and put the burden of proof on the debtor.
[5]  Mr. Terrell and his ex-wife, the former Patricia Ann Burgess, (who is the daughter of A.E. Burgess) were divorced sometime prior to the filing of his Chapter 7 petition.
[6]  The United Mine Workers of America obtained a $540,540.78 judgment against Burgess Mining. Cahaba was established in an attempt to defeat this judgment and to operate a non-union shop. Burgess Mining is now a debtor under Chapter 7 of the Bankruptcy Code.
[7]  In the Burgess Mining Chapter 7 case, Judge Coleman DISALLOWED the claim of the I.R.S. asserting that Burgess Mining was liable for the withholding tax liability of Cahaba which is the subject of the instant dispute. In re Burgess Mining and Const. Corp., (BK82-04105) Order of November 26, 1985 (Bkrtcy.N.D.Ala.S.D. Nov. 26, 1985) (Coleman, J.). While that Order has been appealed to the United States District Court for the Northern District of Alabama, the FINDINGS OF FACT AND OPINION supporting Judge Coleman's Order contained the following passage which is echoed by the evidence in this case: [But is not res judicata (claim preclusion) or collateral estoppel (issue preclusion)]

This court finds no evidence that Burgess Mining by corporate act ever assumed or acquired any responsibility for the payment of the tax. Rather, the evidence in this case points to A.E. Burgess as a responsible person as defined in the case of Anderson v. United States, 561 F.2d 162, 165 (8th Cir.1977). It was the willfulness of A.E. Burgess (and not Thomas Terrell or A.E. Burgess, Jr.), which was responsible for the failure of Cahaba Resources to pay the withholding taxes when it had the funds available. Burgess dominated his children and directed their actions. It is apparent that in some cases he may have taken out of the corporation funds for his own benefit, which was wrongfully done. He so dominated and imposed his will upon the other officers as to remove from them the will power, freedom of action and ability to pay the taxes. It was the act of the individual, A.E. Burgess, acting for his own personal gain rather than the corporate act of Burgess Mining, through its directors, officers and stockholders that resulted in Cahaba Resources' failure to pay.
In re Burgess Mining and Constr. Corp. (BK82-04105) FINDINGS OF FACT AND OPINION (Bkrtcy.N.D.Ala.S.D. Nov. 26, 1985) (Coleman, J.).
[8]  Mr. Burgess does not dispute his "responsible person" status and has, in fact, consented to the assessment by the I.R.S. for the tax liability at issue herein. While the Court is well aware that there may often be more than one "responsible person", see Neckles v. United States, 579 F.2d 938, 940 (5th Cir.1978), the instant case is not such a situation.


                  NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                             File Name: 15a0003n.06

                                        Case No. 14-5497
                                                                                FILED
                            UNITED STATES COURT OF APPEALS                     Jan 05, 2015
                                 FOR THE SIXTH CIRCUIT                     DEBORAH S. HUNT, Clerk

JANA CHRISTINE JONES-TURNER; PENNEY                   )
SHERRARD; and WESLEY VARDEMAN, on                     )
their own behalf and all others similarly situated,   )
known or unknown, and all Opt-In Plaintiffs,          )       ON APPEAL FROM THE
                                                      )       UNITED STATES DISTRICT
          Plaintiffs-Appellants,                      )       COURT FOR THE WESTERN
                                                      )       DISTRICT OF KENTUCKY
v.                                                    )
                                                      )
YELLOW ENTEPRISE SYSTEMS, LLC, dba                    )
YELLOW AMBULANCE SERVICE; and                         )                           OPINION
LOUISVILLE TRANSPORTATION CO.,

          Defendants-Appellees.

BEFORE:          COLE, Chief Judge; GRIFFIN, Circuit Judge; CARR, District Judge. 

          COLE, Chief Judge. Three former employees of Yellow Enterprise Systems, LLC, and

Louisville Transportation Company (collectively “Yellow”) allege that they were not paid

overtime, as required under the federal Fair Labor Standards Act (“FLSA”) and Kentucky law,

for work they performed during meal and rest breaks. The plaintiffs sought certification of a

collective action under the FLSA and also moved for class certification on their Kentucky law

claims.     The district court, after conditionally certifying the FLSA collective action, later


 The Honorable James G. Carr, Senior United States District Judge for the Northern District of
Ohio, sitting by designation.
Case No. 14-5497
Jones-Turner, et al. v. Yellow Enterprise Systems, LLC, et al

decertified the collective action and denied the plaintiffs’ motion for class certification. Upon

the defendants’ motion, the district court also granted summary judgment to Yellow on all of the

plaintiffs’ claims, finding that the plaintiffs’ meal and rest breaks were not compensable under

the FLSA or Kentucky law.             The plaintiffs appeal the grant of summary judgment, the

decertification of the FLSA collective action, and the denial of their motion for class certification

under Federal Rule of Civil Procedure 23. For the following reasons, we affirm the judgment of

the district court in its entirety.

                                          I. BACKGROUND

        A. Facts

        Plaintiffs Jana Jones-Turner, Penney Sherrard, and Wesley Vardeman were employed as

emergency medical technicians (“EMTs”) and dispatch operators by Yellow Enterprise Systems,

LLC, a private ambulance company. During the plaintiffs’ employment, Yellow automatically

designated a 30-minute slot during each 8.5-hour shift as an unpaid lunch break. EMTs in the

field were not allotted a specific time period for lunch but were instructed to take advantage of

down time between ambulance runs to eat a meal. This 30-minute meal break could occur at any

point during an employee’s 8.5-hour shift.

        Yellow’s policy regarding compensation in the event of a missed lunch break was set

forth in its standard operating procedures and time-card policy. If an employee was unable to

take a lunch break due to call volume, Yellow required the employee to submit a missed lunch

slip to Administrative Director Jan Baker. Employees could submit the slips by giving them to a

dispatch officer or a supervisor, or by sliding them under Baker’s door or in her mailbox. Baker

would review the slip and determine whether there was a 30-minute period between calls at any

point during the employee’s shift. If there was such a period, it would be considered the

                                                 -2-
Case No. 14-5497
Jones-Turner, et al. v. Yellow Enterprise Systems, LLC, et al

employee’s unpaid lunch break. If there was no such period, the employee would be paid for the

missed lunch. After Baker left the company, Yellow automatically reimbursed employees for all

missed lunches when they submitted the slips.

        The missed-lunch policy was posted by the time clock at Yellow. The plaintiffs testified

that they had received and understood the time-card policy and the standard operating

procedures. Jones-Turner, Sherrard, and Vardeman all acknowledged that they had submitted

missed-lunch slips and received compensation on some occasions.

        Yellow’s policy required employees to radio the dispatch to request permission to take a

lunch break. Occasional requests for lunch breaks would be denied if call volume was too high.

Yellow’s time-card policy stated that crews would not be paid for lunch if they had the

opportunity to obtain a lunch but chose not to do so. Dispatchers were required to note on the

crew logs whether employees received a lunch break.             However, Yellow’s Director of

Operations, Belinda Jolly, testified that Yellow could not determine if employees missed a lunch

break if they did not turn in the slips because the dispatchers did not always fill out the crew

logs.

        The plaintiffs testified that they often missed lunch breaks but did not always fill out

missed-lunch slips because they felt it would be futile since they were not always paid after

submitting the slips. They also testified that they sometimes missed lunches and filled out slips

but were not paid for the time claimed, and that other employees had also complained to them

about filling out missed-lunch slips for which they were not paid. The plaintiffs have not

introduced any evidence documenting instances in which they submitted slips but were not paid

for the missed meal break. Nor is there evidence that the plaintiffs or other employees were

disciplined or threatened with discipline for submitting a missed-lunch slip.

                                                -3-
Case No. 14-5497
Jones-Turner, et al. v. Yellow Enterprise Systems, LLC, et al

       Yellow did not require employees to request permission from dispatch to take a rest

break. Both Sherrard and Vardeman testified that they took smoking breaks during the day, and

the plaintiffs did not present any records indicating that they did not receive breaks.

       B. Procedural History

       On March 29, 2007, the plaintiffs filed suit in Jefferson County Circuit Court alleging

that (1) Yellow’s failure to compensate them for lunch breaks violated Kentucky law and the

FLSA; (2) Yellow’s failure to guarantee that they received lunch breaks violated Kentucky

Revised Statutes § 337.355; and (3) Yellow’s failure to guarantee that they received rest breaks

violated Kentucky Revised Statutes § 337.365. The plaintiffs sought certification of an FLSA

collective action and class certification with respect to their state claims. Yellow removed the

action to the United States District Court for the Western District of Kentucky. On October 24,

2007, the district court granted the plaintiffs’ motion to certify a collective action under the

FLSA and approved the proposed class notice. Notice was sent to over 900 current and former

EMTs, and 77 chose to opt in to the action. On October 11, 2011, after Yellow moved to

decertify the FLSA conditional class and the plaintiffs moved for class certification with respect

to their state claims, the district court decertified the FLSA conditional class and denied the

motion for certification of a state wage-and-hour class. Reasoning that the alleged wrong to

employees stemmed not from the automatic deduction of 30 minutes of pay—a condition

common to all EMTs—but from the failure to pay the EMTs for compensable meal time if and

when it occurs, the court found that many factors determined whether individual opt-in plaintiffs

were properly paid. Therefore, the court concluded that the plaintiffs were not similarly situated

because analysis of the alleged violations would be highly individualized.

                                                -4-
Case No. 14-5497
Jones-Turner, et al. v. Yellow Enterprise Systems, LLC, et al

         On July 22, 2013, Yellow moved for summary judgment on all claims, arguing that

(1) the plaintiffs’ lunch breaks were not compensable under the FLSA; (2) even if the lunch

breaks were compensable, the plaintiffs’ failure to submit missed-lunch slips in accordance with

Yellow’s policy precluded them from obtaining compensation for the missed lunches; (3) the

plaintiffs were not guaranteed meal breaks under Kentucky law; and (4) the plaintiffs were not

entitled to recover damages due to Yellow’s failure to provide rest breaks. The district court

granted summary judgment to Yellow on all claims. The plaintiffs now appeal, contending that

the district court erred by (1) granting summary judgment on the ground that the plaintiffs’ meal

and rest breaks were not compensable under the FLSA or Kentucky law; (2) failing to certify

their Rule 23(b)(3) class on the ground that the class definition was “fail-safe” because it

included only those entitled to relief; (3) failing to certify their Rule 23(b)(2) class on the ground

that the plaintiffs sought compensatory and liquidated damages for unpaid wages; (4) failing to

rule on plaintiffs’ request for certification under Rule 23(b)(1); and (5) decertifying the FLSA

collective action on the ground that the opt-in plaintiffs were not “similarly situated” to the

named plaintiffs.

                                          II. ANALYSIS

   A. Standard of Review

         We review a district court’s grant of summary judgment de novo, viewing the facts and

drawing reasonable inferences in favor of the non-moving party. Hanover Ins. v. Am. Eng’g Co.,

33 F.3d 727, 730 (6th Cir. 1994). Summary judgment is appropriate if there is no genuine

dispute of material fact and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P.

56(a).

                                                -5-
Case No. 14-5497
Jones-Turner, et al. v. Yellow Enterprise Systems, LLC, et al

       We review both the denial of class certification and the decertification of a collective

action for abuse of discretion. Pipefitters Local 636 Ins. Fund v. Blue Cross Blue Shield of

Mich., 654 F.3d 618, 629 (6th Cir. 2011); O’Brien v. Ed Donnelly Enters., Inc., 575 F.3d 567,

584 (6th Cir. 2009). “A district court abuses its discretion when it relies on erroneous findings of

fact, applies the wrong legal standard, misapplies the correct legal standard when reaching a

conclusion, or makes a clear error of judgment.” Randleman v. Fidelity Nat’l Title Ins. Co.,

646 F.3d 347, 351 (6th Cir. 2011) (brackets omitted).

   B. Compensability of meal breaks

       Our court applies the “predominant benefit” test from Hill v. United States, 751 F.2d 810

(6th Cir. 1984), to determine whether a meal period is compensable under the FLSA. In Hill, we

concluded that a meal period was not compensable where a United States Postal Service worker

remained responsible for the undelivered mail and other items in his truck during his break, but

was not subject to interruptions from customers during his meal period nor required to eat in or

within sight of his truck. Id. at 812, 815. We explained that a meal period is not compensable

“[a]s long as the employee can pursue his or her mealtime adequately and comfortably, is not

engaged in the performance of any substantial duties, and does not spend time predominantly for

the employer’s benefit.” Id. at 814. The employee bears the burden of establishing that she

performs substantial duties and spends her meal time predominantly for the employer’s benefit.

See id. at 813–15.

       In Myracle v. General Electric Co., 33 F.3d 55, at *5 (6th Cir. 1994) (per curiam)

(unpublished), we addressed whether a lunch break was compensable when maintenance

mechanics were required to maintain responsibility for their machines and to remain on call

during their lunch break in case the machine malfunctioned. We held that, given that the

                                               -6-
Case No. 14-5497
Jones-Turner, et al. v. Yellow Enterprise Systems, LLC, et al

mechanics were free to leave the plant if they wished to do so and were only rarely interrupted

for emergencies or power outages, these occasional interruptions were de minimis and did not

render a meal period compensable. Id.

       Yellow required its employees to radio the dispatcher to request a lunch break. EMTs

had to eat within one mile of an assigned stand-by location. If the crews were “out of unit,” they

had to maintain radio contact and were subject to any available run. They were expected to

answer the radio after the first call. However, there was no policy that employees remain in the

truck for lunch, and plaintiffs introduced no evidence that they were ever told they had to eat in

the truck. Nor do the plaintiffs cite any evidence that while on a lunch break they were required

to perform duties beyond responding to a call, or that once approved for a lunch break they were

frequently interrupted by radio contact. As in Hill and Myracle, Yellow’s policies do not

indicate that the plaintiffs were engaged in substantial duties during their lunch break.

       Other circuits have found that meal breaks were not compensable under the FLSA when

employees were subject to emergency calls but could otherwise use their time for their own

purposes. See Henson v. Pulaski Cnty. Sheriff Dep’t, 6 F.3d 531, 536 (8th Cir. 1993). The

outcome here might be different if the plaintiffs had introduced evidence that they were required

to stay in their trucks or to drive or perform other duties while eating. See Reich v. S. New

England Telecomms. Corp., 121 F.3d 58, 65 (2d Cir. 1997) (holding that meal breaks were

compensable because the employees were required to remain on-site and perform duties such as

providing security or ensuring safety at the sites, even if those activities were “passive” and the

employees were permitted to eat their lunch). Because there is no such evidence here, we affirm

the district court’s judgment that the meal breaks were not compensable under the FLSA.

                                                -7-
Case No. 14-5497
Jones-Turner, et al. v. Yellow Enterprise Systems, LLC, et al

   C. Missed-lunch slip policy

       Having found that the plaintiffs’ meal breaks were not compensable under the FLSA, we

next consider whether the plaintiffs may recover for missed lunch breaks for which they did not

submit a missed-lunch slip. The district court concluded that our precedent in White v. Baptist

Memorial Health Care Corporation, 699 F.3d 869, 876 (6th Cir. 2012), dictates that the

plaintiffs are precluded from recovery because there we held that “if an employer establishes a

reasonable process for an employee to report uncompensated work time the employer is not

liable for non-payment if the employee fails to follow the established process.” In White, we

held that an employer was not liable for payment of missed lunches to an employee who had an

unpaid meal break automatically deducted from her paycheck and was required to fill out an

exception log if she missed her lunch break. Id. at 872. The employee, a nurse, stated that on at

least one occasion she used the exception log to report missing a meal break and was

compensated. Id. But she also testified that she stopped using the exception log or reporting the

missed lunches. Id. Although she occasionally told her supervisors that she was not getting her

meal breaks, she never told them that she was not being compensated for missing the breaks. Id.

at 876. Reasoning that the employer could not have had constructive knowledge that she was not

being compensated for the missed lunches because she had not told her supervisors that she had

not received compensation, we affirmed summary judgment for the employer. Id. We also

found that the employer had no actual knowledge that the employee was not paid for her missed

lunches and that there was no evidence that the employer in any way discouraged employees

from reporting time worked during meal breaks. Id. at 872, 877.

       Here, the plaintiffs have not produced evidence that Yellow had either constructive or

actual knowledge that they were not receiving compensation for missed meal breaks. White thus

                                              -8-
Case No. 14-5497
Jones-Turner, et al. v. Yellow Enterprise Systems, LLC, et al

dictates that their claim fails. Although the plaintiffs argue that their managers had actual

knowledge that the plaintiffs were regularly missing meal breaks and were not submitting

missed-lunch slips, the plaintiffs’ counsel conceded at oral argument that there was no evidence

in the record that the managers were regularly reviewing the crew logs at any time other than

when a missed-lunch slip was submitted. Therefore, there is no evidence that Yellow had any

actual knowledge that its employees were not receiving their meal breaks and not being

compensated for that time. Moreover, given that the plaintiffs have testified that on several

occasions they did use the missed-lunch slip procedure and were reimbursed for their missed

lunches, we cannot say that it was unreasonable for Yellow not to cross-check the crew logs with

the missed-lunch slips to ensure that the plaintiffs were paid for all missed lunches. As in White,

the plaintiffs’ claims fail because the employer had established a reasonable process to report

missed meal periods, and there is no evidence that the employer had actual knowledge that

employees were not being compensated for time worked.

    D. Collective action decertification and denial of Rule 23 class certification

        Similarly situated employees may recover compensation from an employer through an

FLSA collective action. 29 U.S.C. § 216(b). However, without a viable claim, lead plaintiffs

cannot represent others whom they allege to be similarly situated. White, 699 F.3d at 878.

Because the district court properly granted summary judgment on the plaintiffs’ FLSA claim for

missed meal breaks, the plaintiffs cannot meet their burden of showing that they are similarly

situated to the opt-in plaintiffs.

        Based on the record before us, we also find that the district court did not err in granting

summary judgment to Yellow on the plaintiffs’ state-law claims that they were not guaranteed

meal and rest breaks. Accordingly, the plaintiffs may not be certified as a class under Rule 23

                                               -9-
Case No. 14-5497
Jones-Turner, et al. v. Yellow Enterprise Systems, LLC, et al

for their state-law claims because the district court properly granted summary judgment on those

claims. We therefore affirm the district court’s decertification of the collective action and denial

of Rule 23 class certification.

                                       III. CONCLUSION

       We affirm the judgment of the district court.

                                               - 10 -


Order                                                                                Michigan Supreme Court
                                                                                Lansing, Michigan

  September 4, 2012                                                                                Robert P. Young, Jr.,
                                                                                Chief Justice

                                                                                Michael F. Cavanagh
                                                                                Marilyn Kelly
  145031                                                                                Stephen J. Markman
                                                                                Diane M. Hathaway
                                                                                Mary Beth Kelly
                                                                                Brian K. Zahra,
                                                                                Justices
  PEOPLE OF THE STATE OF MICHIGAN,
            Plaintiff-Appellee,
  v                                                                  SC: 145031
                                                                     COA: 300852
                                                                     Oakland CC: 2010-231164-FC
  JUSTIN MAURICE SANFORD,
           Defendant-Appellant.

  _________________________________________/

        On order of the Court, the application for leave to appeal the March 22, 2012
  judgment of the Court of Appeals is considered, and it is DENIED, because we are not
  persuaded that the questions presented should be reviewed by this Court.

                            I, Corbin R. Davis, Clerk of the Michigan Supreme Court, certify that the
                      foregoing is a true and complete copy of the order entered at the direction of the Court.
                            September 4, 2012                   _________________________________________
           p0827                                                                Clerk


Dismissed and Memorandum Opinion filed December 4, 2008

Dismissed
and Memorandum Opinion filed December 4, 2008.

In The

Fourteenth Court of
Appeals
____________

NO. 14-07-00918-CV
____________

GLENNA P. SMITH AND STEPHEN F.
SMITH AS THE PROPERTY OWNERS AND
THE PROPERTY OWNERS, Appellants

V.

HARRIS COUNTY APPRAISAL DISTRICT AND THE APPRAISAL
REVIEW BOARD OF HARRIS COUNTY APPRAISAL DISTRICT, Appellees

On Appeal from the
165th District Court
Harris County,
Texas
Trial Court Cause
No. 2006-54201

M E M O R A N D U M   O P I N I O N
This is
an appeal from a judgment signed September 24, 2007.  On November 24, 2008,
appellants filed a motion to dismiss the appeal.  See Tex. R. App. P. 42.1.  The motion is
granted.
Accordingly,
the appeal is ordered dismissed.
PER
CURIAM
Judgment rendered and Memorandum Opinion filed
December 4, 2008.
Panel consists of Justices Frost, Brown, and Boyce.


                             UNPUBLISHED

                    UNITED STATES COURT OF APPEALS
                        FOR THE FOURTH CIRCUIT

                             No. 14-7223

ALEX M. DINKINS,

                        Petitioner – Appellant,

          v.

HAROLD W. CLARKE,

                        Respondent - Appellee.

Appeal from the United States District Court for the Eastern
District of Virginia, at Norfolk.      Arenda L. Wright Allen,
District Judge. (2:13-cv-00517-AWA-LRL)

Submitted:   February 12, 2015             Decided:   February 18, 2015

Before MOTZ, WYNN, and FLOYD, Circuit Judges.

Affirmed by unpublished per curiam opinion.

Alex M. Dinkins, Appellant Pro Se. Rosemary Virginia Bourne,
OFFICE OF THE ATTORNEY GENERAL OF VIRGINIA, Richmond, Virginia,
for Appellee.

Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:

            Alex     Dinkins        appeals      the     district        court’s     order

dismissing his 28 U.S.C. § 2254 (2012) petition.                           The district

court referred this case to a magistrate judge pursuant to 28

U.S.C. § 636(b)(1)(B) (2012).               The magistrate judge recommended

that relief be denied and advised Dinkins that failure to file

timely objections to this recommendation could waive appellate

review of a district court order based upon the recommendation.

            The     timely       filing     of     specific         objections      to   a

magistrate      judge’s     recommendation          is      necessary      to     preserve

appellate review of the substance of that recommendation when

the     parties     have     been        warned     of       the     consequences        of

noncompliance.        Wright v. Collins, 766 F.2d 841, 845-46 (4th

Cir. 1985); see Thomas v. Arn, 474 U.S. 140 (1985).                            Dinkins has

waived    appellate       review    by    failing      to    file    objections      after

receiving proper notice.            Accordingly, we grant leave to proceed

in forma pauperis and affirm the judgment of the district court.

            We dispense with oral argument because the facts and

legal    contentions       are     adequately      presented        in   the     materials

before   this     Court    and     argument      would      not    aid   the    decisional

process.

                                                                                AFFIRMED

                                            2


203 Cal.App.3d 322 (1988)
249 Cal. Rptr. 798
In re the Marriage of DELOIS G. and MAURICE N. HIGINBOTHAM.
DELOIS G. HIGINBOTHAM, Appellant,
v.
MAURICE N. HIGINBOTHAM, Appellant.
Docket No. A038255.
Court of Appeals of California, First District, Division Four.
July 29, 1988.
*327 COUNSEL
Leo M. Cook for Appellant Wife.
Lawrence C. Buchanan for Appellant Husband.
OPINION
POCHE, J.

I. INTRODUCTION
Maurice Higinbotham (Maurice) and Delois Higinbotham (Delois) appeal and cross-appeal, respectively, from a judgment disposing of their property upon dissolution of their marriage. Maurice contends that the court erred in (1) treating partly as community property a house he bought before marriage; (2) failing to treat as his separate property the increased value of his disability retirement benefits resulting from their tax exempt status; and (3) requiring him to pay a portion of Delois's attorneys fees. Delois contests these points and asserts in her cross-appeal that (1) she was entitled to a greater share of her attorneys fees; and (2) the judgment should include an order directing Maurice's retirement plan to pay her an appropriate share of any death or survivor's benefits payable under the plan.
We reverse as to the treatment of the retirement benefits, and otherwise affirm the judgment.

II. THE CHURCH STREET HOUSE

A. Factual Background

In 1965 Maurice bought a house on West Church Street in Ukiah (the Church Street house) by trading a mobilehome and assuming an outstanding loan. He lived in the house until 1967, when the parties were married. After the marriage the parties lived elsewhere, and the Church Street house was rented out.
There was no evidence of a separate property source from which payments on the Church Street property might be made, other than rent from the property itself. Rent was paid in different forms at different times  as checks payable to Maurice, checks payable to Delois, or cash. Each spouse maintained a separate checking account, and the rent might be deposited in either account, or might be applied to current expenses; Delois testified *328 there was "no rhyme or reason to it." Likewise their earnings were heavily intermingled between the two accounts, and bills were paid out of both accounts, or either of them, with no apparent regard to the separate or community character of the obligation.
Delois was generally in charge of managing the money because, as she testified, Maurice "didn't want records kept; he didn't want to be bothered with it." One night Delois came home from a real estate class and told Maurice that because of the commingling of community funds, she had a "vested interest" in the Church Street house. Thereafter she referred to the Church Street property as "our house." Maurice apparently did nothing to dissuade her from this idea or to stop the commingling of funds.
About three months before the parties separated, Maurice threw away boxes of cancelled checks and other records. Just before the separation, he deeded the Church Street house to his daughter, Alice Higinbotham. She was subsequently joined in this action and participated in the trial. She has not appealed from the judgment.
The trial court concluded that the community was entitled to a pro tanto interest in the Church Street house based on all payments during marriage reducing the principal on the loan. Maurice asserts that this was error.

B. Traceability

(1a) The community acquired an interest in the Church Street house to the extent community funds were used to make payments on the property. (In re Marriage of Moore (1980) 28 Cal.3d 366, 371-372 [168 Cal. Rptr. 662, 618 P.2d 208].) The trial court found in effect that all payments during the marriage were made with funds which were presumptively community because of the commingling of community and separate income and the impossibility of tracing house payments to a separate property source.
(2) "Where funds are paid from a commingled account, the presumption is that the funds are community funds. (In re Marriage of Mix (1975) 14 Cal.3d 604, 610-611 [122 Cal. Rptr. 79, 536 P.2d 479]; In re Marriage of Marsden [(1982) 130 Cal. App.3d 426, 441 (181 Cal. Rptr. 910)].) In order to overcome this presumption, a party must trace the funds expended to a separate property source. (Ibid.) This issue presents a question of fact for the trial court and its finding will be upheld if supported by substantial evidence." (In re Marriage of Frick (1986) 181 Cal. App.3d 997, 1010 [226 Cal. Rptr. 766].) When the trial court has found the funds to be community, the question on appeal is whether substantial evidence supports that finding. Maurice fails to address the issue in these terms, perhaps because of the daunting burden placed on one who challenges the sufficiency of the *329 evidence to support a trial court finding. (See Trailer Train Co. v. State Bd. of Equalization (1986) 180 Cal. App.3d 565, 587-588 [225 Cal. Rptr. 717].)
(1b) The evidence does not compel the conclusion that, as a matter of law, the payments on the Church Street house were traceable to Maurice's separate property (i.e., the rent from the house). (3) "There are essentially two methods for tracing expended funds to a separate property source. The first ... is direct tracing. When separate funds deposited with community funds continue to be on deposit when the withdrawal is made and it is the intention of the drawer to withdraw separate funds specifically, the separate property status of the withdrawn funds is established." (In re Marriage of Frick, supra, 181 Cal. App.3d 997, 1010-1011.) In the context of periodic house payments claimed to be made with separate property, the evident effect of this language is that each payment must have been made when separate property funds were present in the account on which the payment was drawn, and must have been accompanied by an intent on the part of the drawer to utilize those funds rather than any community funds.
(1c) No such showing was made or attempted here, and Maurice tacitly concedes that he cannot directly trace individual payments to a separate property source. He therefore relies on the "recapitulation" method described in See v. See (1966) 64 Cal.2d 778, 783 [51 Cal. Rptr. 888, 415 P.2d 776], under which payments may be traced to a separate property source based upon a showing that the community income throughout the marriage was exhausted by family expenses, such that any sums devoted to separate property were necessarily separate in origin. (Ibid.) However, the records available at trial were apparently inadequate to establish the actual amounts of community income and expenses over the course of the marriage. Certainly the record contains no attempt at an actual recapitulation of expenses or income. Maurice attempts to overcome this hurdle by citing testimony in which Delois said that she paid bills from the two accounts and then "whatever was left" would be "used for groceries, family expenses, whatever, for the rest of the month." This testimony was at most ambiguous, and the trial court was not obliged to conclude that all of the income of both parties was used for living expenses. Testimony of similar weight tended to rebut any inference of traceability by establishing that some of the rental income from the Church Street property was directly applied to family expenses, and that there were some months when there was no rental income, so that the house payments in those months necessarily came out of community funds.
Maurice argues that a sufficient basis for recapitulation is afforded by tax returns showing that the annual income for the Church Street property exceeded annual expenses, excluding depreciation. This evidence indicates only that separate income was available to meet the payments; it does not *330 show the income was actually so applied. (4) "Evidence which merely establishes the availability of separate funds on particular dates without also showing any disposition of the funds is not sufficient proof of tracing to overcome the presumption in favor of community property." (Estate of Murphy (1976) 15 Cal.3d 907, 918 [126 Cal. Rptr. 820, 544 P.2d 956], quoted in In re Marriage of Marsden (1982) 130 Cal. App.3d 426, 442 [181 Cal. Rptr. 910].)
(5) Furthermore, the recapitulation method may be employed only when, through no fault of the spouse asserting a separate property interest, it is impossible to ascertain the balance of income and expenditures at the time the property was acquired. (See v. See, supra, 64 Cal.2d 778, 783.) (1d) The evidence here warranted a finding that Maurice was not free of fault. He eschewed any involvement in recordkeeping because, as Delois put it, "he didn't want to be bothered with it." His own testimony indicates that this neglect persisted even after Delois told him that expenditures of commingled funds on the Church Street property gave the community an interest in the house. Thereafter, according to Maurice, Delois referred to the Church Street property as "our place." Although he said at trial that he disagreed with this characterization, there is no evidence that he ever expressed his disagreement. His attempt to transfer the property to his daughter on the eve of separation supports an inference that he was fully aware of the community's claims and had simply neglected to take any action to protect against them.
(6) A party who commingles his or her separate property with property of the community assumes the burden of keeping adequate records. (In re Marriage of Frick, supra, 181 Cal. App.3d 997, 1011.) (1e) Even though Maurice may not have actively commingled property, he suffered Delois to do so with full knowledge of the facts. He not only failed to keep records, but disdained any effort to keep them and discarded many of them a few months before separation. The trial court did not abuse its discretion in finding that Maurice had not carried his burden of tracing the payments to his separate property.

C. Estoppel

(7a) Maurice contends that Delois is estopped to assert a community interest in the Church Street house because she "voluntarily assumed the management and payment of joint living expenses and the collection of rent and payment of the Church Street obligation." According to Maurice, this undertaking of management responsibilities placed Delois under a fiduciary duty with respect to the Church Street property.[1]
*331 We see no basis for holding that the elements of an estoppel were shown as a matter of law. (8) "For there to be estoppel by conduct all of the following elements must be present: (1) a representation or concealment of material facts; (2) made with knowledge, actual or virtual, of the facts; (3) to a party ignorant, actually and permissibly, of the truth; (4) with the intention, actual or virtual, that the latter act upon it; and (5) the party must have been induced to act upon it." (In re Marriage of Halpern (1982) 133 Cal. App.3d 297, 314 [184 Cal. Rptr. 740].) (7b) None of these elements is present here except Delois's knowledge of the facts  which, according to Maurice's own testimony, she explicitly shared with him. His inaction in the face of that knowledge was insufficient under general equitable principles to estop Delois from asserting her rights.
Nor do the cases cited by Maurice indicate that a managing spouse is estopped to assert rights based on the payment of commingled funds toward the nonmanager's separate property. Fields v. Michael (1949) 91 Cal. App.2d 443 [205 P.2d 402], is concerned with remedies for unauthorized gifts of community property to third persons. Title Insurance etc. Co. v. Ingersoll (1908) 153 Cal. 1, 5 [94 P. 94], merely observes that the wife's acquiescence in the husband's management of her separate property does not show any intent by her to make a gift of it. (See also In re Marriage of Jafeman (1972) 29 Cal. App.3d 244, 255 [105 Cal. Rptr. 483] [same, where wife manages husband's property].) In re Marriage of Modnick (1983) 33 Cal.3d 897, 905-906 [191 Cal. Rptr. 629, 663 P.2d 187], deals with the managing spouse's duty to disclose the existence of a community asset.
In Weinberg v. Weinberg (1967) 67 Cal.2d 557, 563 [63 Cal. Rptr. 13, 432 P.2d 709], the court said that the right of control over community property, then conferred by statute on the husband alone, made the husband analogous to a partner and barred him from taking unfair advantage of that position. Citing this case, Maurice contends somewhat obliquely that Delois was under a fiduciary duty with respect to property management, and should be estopped by her supposed violation of that duty. However, the partnership analogy drawn in Weinberg was based on the husband's statutory management powers over community property  powers which are now vested in both spouses jointly. (See Civ. Code, § 5125.) More significantly, Weinberg was concerned with the misuse of community funds in a way which injured the nonmanaging spouse. Here it does not appear that Maurice was injured by the mismanagement of any community funds. Rather his supposed injury flows from the presumptive failure to apply his separate income to his separate expenses. That injury occurred largely because Maurice *332 refused to be involved in his own financial affairs. There is no evidence of a deliberate fraud by Delois. Moreover, Maurice might still have a remedy had he not destroyed records which might have permitted tracing. No estoppel against Delois arises, at least not as a matter of law.

III. RETIREMENT BENEFITS
Shortly after the parties separated, Maurice was awarded a disability pension based on his employment as a California Highway Patrol officer. At the time of the award he was also qualified for a pension based solely on longevity. Had he elected to receive the longevity pension the benefit level would have been the same, but the payments would have been subject to income tax whereas the disability payments were not.
(9a) The trial court awarded Delois a share of Maurice's retirement benefits based on a ratio of years of service accrued during the marriage to total years of service. Maurice contends that the court should have set aside as his separate property the tax savings which resulted from the benefits' status as a disability pension. Specifically, he argues that he was eligible for either a longevity or a disability pension; that both paid a gross monthly benefit of $1,921.79; that had he taken the longevity pension, $402.10 would have been deducted for federal and state taxes; that the disability pension was tax exempt; and that the value of the exemption  the amount of tax which would otherwise have been paid  is his separate property.
(10) If a spouse elects to receive a disability pension when he or she is qualified for a retirement benefit based on longevity of service, the pension is a community asset except for (1) that portion which is attributable to service before marriage, and (2) that portion which, by virtue of its disability status, exceeds the amount of the longevity benefit. (In re Marriage of Stenquist (1978) 21 Cal.3d 779, 788 [148 Cal. Rptr. 9, 582 P.2d 96].) (9b) Maurice contends that the tax savings resulting from the tax-exempt nature of his disability pension fits the second category. We agree.
In Stenquist, supra, the court approved formulas defining as separate property "the net amount ... received over and above what would have been received as retirement benefits" (quoting In re Marriage of Mueller (1977) 70 Cal. App.3d 66, 71 [137 Cal. Rptr. 129]), and "the excess of the husband's pension over the `retirement' pension that he would have received if not disabled." (21 Cal.3d at p. 788, italics added.) Here it is undisputed that because of the tax exemption for disability pensions, Maurice will receive a larger benefit than he would have received under a longevity pension. Under the language of Stenquist, this amount appears to constitute a true disability benefit and thus Maurice's separate property.
*333 Delois contends that since the gross benefit levels for the two retirement options were identical, there was no "excess" of the disability benefit over the longevity benefit. As noted, however, the emphasis is on the net amount received, not the gross amount paid by the plan provider. Indeed the facts in Mueller, supra, 70 Cal. App.3d 66, appear fully apposite. There the husband had a choice between a longevity package paying him 65 percent of his final salary, and a hybrid package paying 35 percent of salary as a (taxable) longevity benefit, and 30 percent as a (tax-exempt) disability benefit. In other words, the packages had identical gross benefit levels, but under the disability package some 46 percent of each payment was nontaxable. Not surprisingly, the husband chose this package. The trial court held that the entire disability benefit, or 46 percent of the total, was the husband's separate property. The wife contended that the entire payment was community property. The Court of Appeal rejected both of these positions and remanded the case with directions to "determine the net amount after taxes by which the disability payments exceed the net amount after taxes that would have been received by virtue of retirement [i.e., longevity] payments." (70 Cal. App.3d at p. 72.) The effect of this direction was to treat as separate property the value of the tax exemption.
Delois contends that this portion of Mueller is inconsistent with Stenquist. In Stenquist the husband's disability pension paid 75 percent of his basic pay while a longevity pension would have paid only 65 percent. The husband contended that the entire pension was his separate property because it was attributable to disability. The Supreme Court approved the trial court's assignment as separate property of "the excess of the husband's pension over the `retirement' pension that he would have received if not disabled." (Stenquist, supra, 21 Cal.3d at p. 788.) The opinion does not disclose whether or how the tax ramifications were factored into this calculation. The case supports no particular treatment of tax benefits, because no such issue was considered by the court. (11) "[A]n opinion is not authority for a proposition not therein considered." (Ginns v. Savage (1964) 61 Cal.2d 520, 524, fn. 2 [39 Cal. Rptr. 377, 393 P.2d 689], quoted in 9 Witkin, Cal. Procedure (3d ed. 1985) Appeal, § 783, pp. 753, 755.) If anything, the court's unreserved approval of Mueller strengthens that case as precedent. (21 Cal.3d at pp. 788-789.)
(9c) Delois also cites In re Marriage of Justice (1984) 157 Cal. App.3d 82 [204 Cal. Rptr. 6], in which it is apparent that the court did not reduce the community's share by any tax benefit attributable to disability. Again, however, it does not appear that the question was ever placed before the trial or appellate court. In contrast, the Mueller decision must be understood to hold that tax benefits attributable to disability are the separate property of the disabled spouse. Otherwise the direction to the trial court in that case is uncomprehensible.
*334 We discern no coherent policy basis for refusing to follow Mueller. It is not suggested, for example, that recognition of the tax benefit as a separate asset will generate serious administrative problems for the trial court or the pension plan administrators. We cannot accept Delois's assertion that such recognition effects the kind of unilateral "transmutation" of community property which was condemned in Stenquist, supra, 21 Cal.3d at page 786. The community's interest is exactly what it would have been had Maurice elected a longevity pension. His election did not "transmute" anything which would otherwise have gone to the community; rather it recaptured income which would otherwise go to the taxing authorities.
The judgment must be reversed insofar as it fails to treat as separate property the amount by which Maurice's net after-tax retirement payments exceed the net payments he would have received had he chosen a pension based on longevity alone.

IV. SURVIVOR BENEFIT
(12a) Delois asserts in her cross-appeal that she was entitled to an order directing Maurice's retirement plan to pay her a suitable share of any survivor or death benefits which become payable during her lifetime. Such an order is authorized by Civil Code section 4800.8, but Maurice contends that Delois has not preserved the point for appeal. He points out that she never requested such an order from the trial court and never objected to its failure in its proposed judgment to provide for such an order.
(13) It is of course generally true that an appellate court will not entertain a point which could have been but was not raised in the trial court. (9 Witkin, Cal. Procedure (3d ed. 1985) Appeal, § 311, p. 321.) This rule loses most or all of its force, however, where the new point is one which could not have been raised in the court below. For example, a point which arises from a change in the law pending appeal may be entertained. (See id., § 254, p. 260.) However it is said that this exception is unavailable if the change in law occurred before rendition of the trial court's judgment. (Ibid., citing Oldenkott v. American Electric, Inc. (1971) 14 Cal. App.3d 198, 207-208 [92 Cal. Rptr. 127].)[2]
(12b) Here it appears that Civil Code section 4800.8 was enacted in 1986 and became effective on January 1, 1987. (Stats. 1986, ch. 686, § 1, pp. 505, 506; Gov. Code, § 9600.) Although judgment was not actually entered in this case until January 26, 1987, it is evident that most of the issues had been decided long before January 1. The case was initially *335 submitted on June 13, 1986. The court vacated the submission in September, directing the parties to undertake further briefing and argument on the status of the Church Street house. On November 10 the court rendered its intended decision. Delois requested a statement of decision, and a proposed statement was apparently promulgated in late November or early December. Both parties then filed papers on Maurice's objections to the proposed statement of decision and on the issue of attorney fees. Judgment was entered, filed, and mailed on January 26, 1987.
We do not believe the delay in formal entry of judgment justifies depriving Delois of her rights under section 4800.8. Her entitlement to an order under that statute "involves only a question of law determinable from a factual situation already present in the record." (Fields v. Blue Shield of California (1985) 163 Cal. App.3d 570, 585 [209 Cal. Rptr. 781].) The point is not one which "contemplates a factual situation the consequences of which are open to controversy and were not put in issue or presented at the trial...." (Panopulos v. Maderis (1956) 47 Cal.2d 337, 341 [303 P.2d 738].) Rather it flows almost automatically from the fact that Maurice's pension is, in part, a community asset. Section 4800.8 directs that the trial court in such instances "shall make whatever orders are necessary or appropriate to assure that each party receives his or her full community property share in any retirement plan, whether public or private, including all survivor and death benefits...." Maurice offers no substantive objection to such an order. The case is being remanded in any event in connection with the erroneous treatment of Maurice's tax exemption; therefore consideration of the point introduces no significant judicial inefficiency. Accordingly we will direct the trial court on remand to fashion an appropriate order pursuant to section 4800.8.

V. ATTORNEY FEES
Maurice contends that the trial court abused its discretion by directing him to pay a portion of Delois's attorney fees. He asserts that the trial court misunderstood the parties' relative ability to pay, miscalculating their respective incomes and failing to consider Delois's separate property. In her cross-appeal Delois asserts that the court abused its discretion by not awarding a larger amount.
We reject both positions. (14) In dealing with attorney fees the trial court exercises a broad discretion, and its ruling cannot be disturbed without a clear showing that its discretion has been abused. (In re Marriage of Frick, supra, 181 Cal. App.3d 997, 1022.) No such showing is made here. The court did not misunderstand the effect of the judgment on the parties' income; the statements challenged by Maurice were in the past tense, and apparently referred to the parties' respective incomes before any adjustment *336 which would result from the judgment. The court said that it "gave consideration to Husband's financial ability to pay both before and after entry of judgment." Nor does the record show that the court refused to take either party's separate property into account. There is no indication that the issue was ever specified as one on which either party was seeking an explanation of the court's reasoning; therefore we presume on appeal that the trial court handled it properly. (See Code Civ. Proc., §§ 632, 634.)

VI. CLERICAL ERROR
Both parties assert that the judgment contains a clerical error in that the court attached the wrong exhibit. Both parties are willing to stipulate to its correction. (15) The trial court has the inherent power to correct such an error at any time. (7 Witkin, op. cit. supra, Judgment, § 68, pp. 502-503.) Whether to exercise that power is a question for the trial court in the first instance.

VII. DISPOSITION
The judgment is reversed with respect to the treatment of Maurice's disability pension and the court is directed to (1) award to Maurice that portion of the monthly payments which exceeds the amount payable under a longevity pension, and (2) fashion an appropriate order under Civil Code section 4800.8. The court may also make any dispositional adjustments found to be warranted by these changes. In all other respects the judgment is affirmed, subject to the trial court's power to correct any clerical error.
Each party will bear his or her own costs on appeal.
Anderson, P.J., and Channell, J., concurred.
NOTES
[1]  Counsel for Delois clouds the issue, instead of meeting it, by discussing the question whether Delois was responsible for managing the property itself  finding tenants, undertaking maintenance and repairs, and so on. That question is at most only indirectly related to the point urged by Maurice. There is no question that Delois generally managed the family's income and expenses, including those connected with the Church Street property.
[2]  Oldencott does not hold that the change in law must precede formal rendition of judgment in order to be invoked on appeal. The opinion appears to rest on the fact that the defense belatedly offered there was without record support. (See 14 Cal. App.3d at p. 208.)


924 F.2d 550
Fed. Sec. L. Rep.  P 95,778, Fed. Sec. L. Rep.  P 95,796Donald E. CLARK, Plaintiff-Appellee,v.MERRILL LYNCH, PIERCE, FENNER & SMITH, INCORPORATED, a NewJersey corporation;  Wendell C. Hoover,Defendants-Appellants.
No. 90-2039.
United States Court of Appeals,Fourth Circuit.
Argued Oct. 31, 1990.Decided Jan. 31, 1991.As Amended Feb. 26, 1991.

Richard H. Sinkfield, argued, Rogers & Hardin, Atlanta, Ga.  (Paul W. Stivers, James W. Beverage, Rogers & Hardin, Atlanta, Ga., on the brief), for defendants-appellants.
E. Glenn Robinson, argued, Robinson & McElwee, Charleston, W.Va.  (David K. Higgins, Robinson & McElwee, Charleston, W.Va., on the brief), for plaintiff-appellee.
Before MURNAGHAN and NIEMEYER, Circuit Judges, and YOUNG, Senior United States District Judge for the District of Maryland, sitting by designation.
MURNAGHAN, Circuit Judge:

1
Appellee Donald Clark is a successful businessman who, since 1981, had traded in securities markets through appellant Merrill Lynch, Pierce, Fenner & Smith and its employee-broker, appellant Wendell Hoover.  In January of 1985, Clark decided he needed a new investment strategy to meet cash flow requirements and told Hoover that he was thinking of investing in municipal bonds.  Hoover and Merrill Lynch options specialist Richard Gordon convinced Clark instead to produce income through a combination of premiums from covered options, dividends, interest, and gains from sales of stock, assuring Clark that such a strategy would meet Clark's monthly cash flow requirements.

2
The strategy did not perform as expected.  By December of 1985, despite repeated assurances by Hoover and Gordon that his monthly income requirements were being met, Clark liquidated his positions and invested in municipal and corporate bonds.

3
Clark then brought suit in the United States District Court for the Southern District of West Virginia, Charleston Division, alleging state and federal securities fraud claims.  The district court (Staker, J.) referred all of the claims to arbitration except the claim brought under Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. Sec. 78j(b), and Rule 10b-5, 17 C.F.R. Sec. 240.10b-5, thereunder.  Merrill Lynch filed a motion to compel arbitration of that claim, and the motion was denied.

4
After a trial on the Section 10(b) claim, the jury returned a verdict in favor of Clark, awarding $1,683,170 in lost income, the increased cost of purchasing the bond portfolio, and prejudgment interest.  Merrill Lynch and Hoover appeal, claiming that (1) the district court erred in refusing to compel arbitration of Clark's Section 10(b) claim;  (2) Clark failed to prove actionable fraud or fraud in connection with the purchase or sale of a security under Section 10(b);  (3) Clark failed to prove damages;  (4) the damages awarded constituted a double recovery and were speculative;  (5) the district court submitted erroneous jury instructions on scienter, damages, reliance, and defenses to fraud;  and (6) the district court abused its discretion in denying Merrill Lynch's and Hoover's motion for a new trial.  The paramount question confronting us is whether the motion to compel arbitration of the Section 10(b) claim was improperly denied.

I.

5
Donald Clark lived in Buckhannon, West Virginia, from 1963 until 1983;  he started his own company there in 1963.  The company provided services to the oil and gas industry, and Clark sold it to NL Industries, Inc.  ("NL") in April 1979.  Clark received over $9 million on the sale, including 300,000 shares of NL stock valued at $20 per share.

6
In 1981, Clark opened a brokerage account with Smith Barney, Harris, Upham & Company.  Hoover was his broker there, and when Hoover moved to Merrill Lynch shortly thereafter, Clark transferred his account.  The account became known as the "02" account.

7
Hoover also introduced Clark to Richard Gordon, manager of Merrill Lynch's Managed Options Service in New York.  Gordon specialized in options, specifically covered call writing.  Clark opened a second account with Merrill Lynch in New York in February 1982 which Gordon managed and which became known as the "01" account.

8
The covered call writing continued through 1981, 1982, and 1983.  During that time and into 1984, Clark's income fell by roughly $500,000, and he became pressed for income to pay his expenses.  After examining his accounts' performance and concluding that the 02 account was not providing him with a sufficient return, Clark told Hoover in September 1984 to stop trading in options.

9
On January 16, 1985, Clark, Hoover, and Clark's accountant, Don Nestor, met in Buckhannon.  Clark was considering investing in tax-free municipal bonds to produce the income that he felt he needed and told Hoover so.  Hoover told Clark that he should consider another course, and recommended income production through a combination of premiums from covered options, dividends, interest, and gains from sales of stock.  Hoover emphasized that he believed such a program could exceed the return on municipal bonds.  After discussions with Hoover, and after a subsequent telephone conference call with Hoover and Gordon in which Gordon said that he believed that Clark's needs could be met through the recommended strategy, Clark decided not to invest in municipal bonds and to follow Hoover's recommendation to restructure the portfolio.

10
Clark kept the 01 account in New York with Gordon and the 02 account in Huntington with Hoover and opened a new "03" account in Huntington with proceeds from the sale of his NL stock.  Clark's income goals or objectives were $5,500 per month from the 01 account, $15,000 per month from the 02 account, and $25,000 per month from the 03 account, representing an annual return of approximately 12.7%.

11
As early as February or March 1985, the accounts were failing to meet their objectives.  In April or May 1985, Clark spoke with Hoover several times about Clark's inability to conclude from his account statements that his investment objectives were being met.  According to Hoover, Clark's objectives were being met and he so informed Clark although that fact was not reflected in the monthly account statements.  To address Clark's concerns, Hoover recommended transferring the 02 and 03 accounts from Huntington to New York.  The accounts were transferred in June 1985.  Hoover continued to be in contact with Clark about his accounts, although investment decisions thereafter were made through Gordon in New York.

12
Clark, Nestor, Hoover and Gordon met on August 15, 1985, to review the accounts.  At the meeting, Hoover again assured Clark that his accounts were performing as they should.  By late October, however, Clark was again pointing out to Hoover and Gordon that he was unable to see where his accounts had earned more in income than he could see in his monthly statements, and arranged a meeting in New York with Gordon and with Nestor, accountant for Clark.  Clark and Gordon compared summaries of the accounts at the October 31, 1985, meeting, and Clark, not satisfied with the amounts he had been receiving, stopped any new trading in the accounts.  On November 21, 1985, he directed Gordon to close the accounts and liquidate the investments.  By December 3, 1985, the liquidation was complete.

13
Clark brought the present action in August 1986, alleging that Merrill Lynch and Hoover had violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.  He also alleged that Merrill Lynch and Hoover had violated the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. Secs. 1962 & 1964, and were liable under a number of state law claims.  The district court referred all of the state law claims to arbitration1 but did not act to refer with respect to the Section 10(b) and RICO claims.

14
Merrill Lynch and Hoover moved to compel arbitration of the federal claims;  the motion was granted as to the RICO claim and denied as to the Section 10(b) claim.  After trial, the jury returned a verdict in favor of Clark, awarding $1,683,170 in lost income, the increased cost of purchasing the bond portfolio, and prejudgment interest.  Merrill Lynch and Hoover filed a timely notice of appeal.

II.

15
At the threshold we are confronted with two issues arising from a dispute between the parties as to whether they contractually agreed to submit any claim, including a Section 10(b) claim, to arbitration.

16
By memorandum opinion and order dated February 9, 1988, the district court ruled that Clark's federal securities law claim could be litigated and denied Merrill Lynch's motion to compel arbitration and to stay further court proceedings relating to that claim.  A subsequent motion by Merrill Lynch for reconsideration was denied on May 27, 1988.  Merrill Lynch now appeals the denial of the motion for reconsideration.

17
A. Effect of Waiving Interlocutory Appeal on Availability of Appeal from Final Judgment

18
While conceding that the denial of Merrill Lynch's motion was subject to interlocutory appeal under 28 U.S.C. Sec. 1292(a)(1), Clark contends that this court now lacks jurisdiction to review the district court's ruling on the issue, simply because the time within which to bring the interlocutory appeal has long since expired and that, in failing to bring an interlocutory appeal, Merrill Lynch somehow waived its right to raise the issue on appeal after final judgment.  To rule otherwise, continues Clark, would afford Merrill Lynch "a second bite at the apple."    In support of his novel argument, Clark cites Browder v. Director, Dept. of Corrections, 434 U.S. 257, 98 S.Ct. 556, 54 L.Ed.2d 521 (1978);  Washington v. Bumgarner, 882 F.2d 899 (4th Cir.1989);  and Shah v. Hutto, 722 F.2d 1167 (4th Cir.1983) (en banc ).

19
The argument is utterly without merit.  Shah and the other cases Clark cites have nothing to do with the instant case;  they involve tardy appeals from final orders and final judgments.  Rather, 16 Wright, Miller, Cooper & Gressman, Federal Practice and Procedure Sec. 3921 (1977) at 11, provides the proper authority:

20
[A]lthough appeals are available under Sec. 1292(a)(1) as a matter of right, failure to take an available appeal does not of itself waive the right to secure review, on appeal from final judgment, of matters that could have been appealed but were not.

21
See, e.g., Drayer v. Krasner, 572 F.2d 348, 353 (2d Cir.), cert. denied, 436 U.S. 948, 98 S.Ct. 2855, 56 L.Ed.2d 791 (1978) ("failure to take an authorized appeal from an interlocutory order [staying the action pending arbitration] does not preclude raising the question on appeal from the final judgment").  Hence, we clearly have jurisdiction to consider an appeal from the final judgment of the district court's denial of Merrill Lynch's motion to compel arbitration.

22
B. Agreement to Litigate Federal Securities Law Claims

23
Turning to the question of an agreement to litigate federal securities claims, Merrill Lynch asserts that the language of the arbitration clauses in all of the brokerage agreements entered into with Clark require arbitration of all of Clark's claims.  Thus, it continues, the district court erred in concluding that the contradictory language of one particular agreement was controlling and thus gave Clark the option of litigating his Section 10(b) claim.

24
Between 1981 and 1985, Clark signed numerous brokerage agreements containing three types of arbitration clauses.  The first of those three clauses appears in all of the agreements executed prior to 1985--eight agreements in all--and provides that "any controversy" between Clark and Merrill Lynch arising out of Clark's transactions with Merrill Lynch or out of the particular agreement itself shall be settled by arbitration.

25
The second arbitration clause, which appears in three other agreements signed in the first half of 1985, provides:

26
Except to the extent that controversies involving claims arising under the Federal securities laws may be litigated ... any controversy between us ... shall be settled by arbitration.

27
The third type of arbitration clause, and the one to which the district court ultimately looked in finding a contractual agreement to litigate federal securities claims, appeared in a single Managed Options Agreement signed by the parties on June 24, 1985, and read as follows:

28
Although you have signed a customer agreement form with MERRILL LYNCH that states that you are required to arbitrate any future dispute or controversy that may arise between us, you are not required to arbitrate any dispute or controversy that arises under the federal securities laws but instead can resolve any such dispute or controversy through litigation in the courts.

29
At the same time the Managed Options Agreement was executed, the parties executed two Standard Options Agreements containing the second type of arbitration clause discussed above.2   The two Standard Options Agreements also contained a clause which purported to resolve conflicting language in other brokerage agreements.  The clause reads:

30
Any agreement by me with you, whether previously or hereafter made applicable to any account of mine with you, shall also apply to such option transactions except to the extent which it conflicts with this agreement.  In the event of a conflict, this agreement shall control, and where there is no conflict, each provision of each agreement shall apply.

31
Merrill Lynch offers two arguments as to why the district court erred in concluding that the language of the Managed Options Agreement clause clearly and unambiguously shows that the parties intended and agreed that Clark did not have to submit to arbitration--but rather could litigate--any claim arising out of alleged violations of federal securities laws.

32
First, Merrill Lynch contends that, because of the conflict resolution clauses in the Standard Options Agreements signed the same day as the Managed Options Agreement, the arbitration clauses in the Standard Options Agreements--the second type of clause discussed above--control and must be read in connection with the arbitration clause in the Managed Options Agreement.  Thus, the argument continues, because the district court concluded that the language of the second type of clause requires arbitration of all claims, it erred in finding otherwise under the Managed Options Agreement clause.

33
Second, Merrill Lynch urges that the language of the arbitration clause contained in the Managed Options Agreement is simply a notice provision mandated by a now-rescinded SEC rule, Rule 15c2-2, 17 C.F.R. Sec. 240.15c2-2 (1987),3 and that as such does not create any substantive right to litigate rather than arbitrate a federal securities law claim.  Therefore, claims Merrill Lynch, the inclusion of the Rule's language by Merrill Lynch in any agreement with Clark should not be held to have superseded and rendered void previous agreements to arbitrate all disputes.

34
As a preliminary proposition, we note that, in construing the arbitration clauses of contracts, there exists a presumption in favor of arbitrability.  Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983);  see also Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985) (as with any other contract, parties' intentions control, but those intentions are generously construed as to issues of arbitrability).  The question, so reframed, is whether the language of the agreements between Clark and Merrill Lynch is sufficient to overcome the presumption of arbitrability in favor of litigating the Section 10(b) claim.

35
We quickly dispose of Merrill Lynch's first contention by noting that the language of the arbitration clauses in the Standard Options Agreements was also added in response to the notice provisions mandated by SEC Rule 15c2-2, an observation with which both the district court and Merrill Lynch agree.  See Clark v. Merrill Lynch, Pierce, Fenner & Smith, CA-86-879-3 (S.D.W.Va. Feb. 9, 1988) (order granting in part and denying in part the defendant's motion to compel arbitration and stay proceedings) at 6;  Brief of Appellants at 24, n. 9.  Thus, the arbitration clauses in the Standard Options Agreements and the Managed Options Agreement, all executed together on June 24, 1985, are not in conflict at all, rendering immaterial the question of which arbitration clause controls.

36
As noted earlier, however, the district court interpreted the language of the arbitration clauses in the Managed Options Agreement (the result of voluntary action) and the Standard Options Agreement (included only because of Securities and Exchange Commission mandate) differently.  The court found that the language of the arbitration clauses in the Standard Options Agreements "to be advice or notice to the customer that the courts have held that claims involving the securities laws are not subject to binding arbitration agreements (not an expression by Merrill Lynch of willingness to litigate)," an obvious reference to Rule 15c2-2.  But in construing the arbitration clause contained in the Managed Options Agreement, the court found that, because Rule 15c2-2 required the specific notice provision contained in the Rule be included in brokerage agreements only until December 31, 1984, the language of the clause in the Managed Options Agreement, entered into by Clark and Merrill Lynch on June 24, 1985 (i.e., well after December 31, 1984), had to be construed to have become, chameleon-like, a voluntary agreement not to require arbitration.  In so construing the clause language, the court concluded that the parties had agreed to litigate the Section 10(b) claim and denied Merrill Lynch's motion to compel arbitration.  The only remaining question, then, is which of the district court's interpretations of two similar clauses contained in three documents executed on the same day--June 24, 1985--is correct.

37
To answer that question, we need look no further than Judge Murray's well-reasoned opinion in Tauber v. Prudential-Bache Securities, Inc.  [Current Transfer Binder] Fed.Sec.L.Rep.  (CCH) p 95,226, 1990 WL 78530 (D.Md.1990).  In Tauber, the district court was confronted with facts virtually indistinguishable from the instant case in ruling on the defendant broker's motion to compel arbitration.  There the plaintiff had entered into a series of brokerage agreements from 1984 through 1986.  The agreements entered into in 1984, like all of the agreements for Clark's 01 account and most of the agreements for his 02 account, contained arbitration clauses whereby the parties agreed to submit all claims to arbitration.  The agreements entered into in 1985 and 1986 contained arbitration clauses containing language very similar to that contained in Clark's Standard Options Agreements signed on June 24, 1985.  The Tauber court also noted that it had been the defendant's practice during 1984 to provide clients with the same notice contained in Clark's Managed Options Agreement.

38
Like Clark, the plaintiff in Tauber argued that the litigation language in the 1985 and 1986 agreements should be construed not as mere notice but as creating a substantive right to litigate federal securities law claims.  The Tauber court began its analysis by carefully examining (a) the Supreme Court case law shaping Rule 15c2-2 from cradle to grave;  see Wilko v. Swan, 346 U.S. 427, 74 S.Ct. 182, 98 L.Ed. 168 (1953);  Shearson/American Express Inc. v. McMahon, 482 U.S. 220, 107 S.Ct. 2332, 96 L.Ed.2d 185 (1987);  Rodriguez de Quijas v. Shearson/American Express, Inc., 490 U.S. 477, 109 S.Ct. 1917, 104 L.Ed.2d 526 (1989);  (b) other circuits' construction of the Rule's language as a substantive term of the contract or as mere notice;  see, e.g., Ballay v. Legg Mason Wood Walker, Inc., 878 F.2d 729 (3d Cir.1989);  Gooding v. Shearson Lehman Bros. Inc., 878 F.2d 281 (9th Cir.1989);  and (c) various courts' attempts to draw distinctions between substantive and notice provisions by examining the precise language involved;  see, e.g., Stander v. Financial Clearing & Services Corp., 718 F.Supp. 1204 (S.D.N.Y.1989).  The court then turned to a line of cases from this circuit which have consistently held that the Rule does not create any substantive rights nor does "a party's preference for litigation over arbitration '... rise to the level of a substantive right.' "    Jeske v. Brooks, 875 F.2d 71, 75 (4th Cir.1989);  see also Ottenritter v. Shearson Lehman Hutton, Inc., 727 F.Supp. 980 (D.Md.1989);  Fisher v. Prudential-Bache Securities Inc., 635 F.Supp. 234 (D.Md.1986);  Shotto v. Laub, 632 F.Supp. 516 (D.Md.1986).  We are disinclined to depart from that line of reasoning now.

39
Admittedly, Judge Murray's opinion in Tauber did not address the fact, present in Tauber, that the precise language set forth in Rule 15c2-2(b), see n. 3, supra, was only required to appear in brokerage agreements until December 31, 1984.  But we think that here the district court below construed subsection (b) too broadly in concluding that Rule 15c2-2 must not have required any type of notice after that date and so must be deemed to have served a contractual purpose thereafter.  Subsection (b) merely provided a grace period within which brokers were permitted to use preexisting brokerage forms.  The obvious implication of such a provision is that after December 31, 1984, brokers should print new forms conforming to the requirements of the Rule if they meant to stay up to date, not that notice language was no longer required, and so the language had to become contractual in nature.

40
Had the parties entered into brokerage agreements containing the Rule's notice provisions after the Rule had been rescinded in 1987, see Sec. Exch. Act Rel. No. 25034, [1987 Transfer Binder], Fed.Sec.L.Rep.  (CCH) p 84,163, 52 Fed.Reg. 39, 271 (Oct. 15, 1987), the district court's reasoning would have far more force.  Here, however, the agreements were entered into while the Rule was still in effect, rendering Jeske, Ottenritter, and Fisher fully applicable.  Obviously, the Tauber court reached the same conclusion.

41
We thus hold that the litigation language contained in the arbitration clauses of the Standard Options Agreements and the Managed Options Agreement entered into by Clark and Merrill Lynch on June 24, 1985, were notice provisions only and did not create a substantive right to litigate federal securities law claims.  Like the court in Tauber, we find additional support for that conclusion by noting the parties' prior course of conduct in agreeing, in at least eight brokerage agreements entered into between 1981 and 1985, to submit all claims to arbitration, including federal securities law claims.4   There is nothing in the record to indicate that Clark at any time bargained for an agreement to the contrary.5

42
The district court erred, therefore, in construing the arbitration clause of the Managed Options Agreement as an agreement between the parties to litigate federal securities law claims and in denying Merrill Lynch's motion to compel arbitration of Clark's Section 10(b) claim.  Accordingly, we vacate the judgment of the district court and remand the case to the district court with instructions to compel arbitration of the Section 10(b) claim.

43
VACATED AND REMANDED.

1
 The arbitration proceedings have been suspended pending the outcome of this appeal

2
 Thus constituting two of the three agreements signed in the first half of 1985 which contained the second type of clause at issue

3
 Rule 15c2-2, entitled "Disclosure regarding recourse to the courts notwithstanding arbitration clauses in broker-dealer customer agreements," provided, in pertinent part:
(a) It shall be a fraudulent, manipulative or deceptive act or practice for a broker or dealer to enter into an agreement with any public customer which purports to bind the customer to the arbitration of future disputes between them arising under the Federal securities laws, or to have in effect such an agreement, pursuant to which it effects transactions with or for a customer.
(b) Notwithstanding paragraph (a) of this section, until December 31, 1984 a broker or dealer may use existing supplies of customer agreement forms if all such agreements entered into with public customers after December 28, 1983 are accompanied by the separate written disclosure:
Although you have signed a customer agreement form with FIRM NAME that states that you are required to arbitrate any future dispute or controversy that may arise between us, you are not required to arbitrate any dispute or controversy that arises under the Federal securities laws but instead can resolve any such dispute or controversy through litigation in the courts.

4
 Of course, those agreements entered into while Rule 15c2-2 was in effect were nonetheless enforceable.  Fisher, 635 F.Supp. at 236

5
 Indeed, Clark testified at trial that he did not read his brokerage agreements with Merrill Lynch