Case 2:17-cv-04271-MMB Document 24-1 Filed 12/28/17 Page 1 of 33 John E. MacDonald (Pa Bar No. 82828) jmacdonald@constangy.com CONSTANGY, BROOKS, SMITH & PROPHETE, LLP 989 Lenox Drive Suite 206 (2nd Floor) Lawrenceville, New Jersey 08648 Telephone: (609) 454-0096 Facsimile: (609) 844-1102 Steven B. Katz (admitted pro hac vice) skatz@constangy.com Sarah Kroll-Rosenbaum (admitted pro hac vice) skroll-rosenbaum@constangy.com CONSTANGY, BROOKS, SMITH & PROPHETE, LLP 2029 Century Park East, Suite 1100 Los Angeles, California 90067 Telephone: (310) 909-7775 Facsimile: (424) 465-6630 L. Julius Turman (admitted pro hac vice) jturman@constangy.com Philip J. Smith (admitted pro hac vice) psmith@constangy.com CONSTANGY, BROOKS, SMITH & PROPHETE, LLP 351 California, Suite 200 San Francisco, California 94104 Telephone: (415) 918-3002 Facsimile: (415) 918-3003 Counsel for National Collegiate Athletic Association; Duquesne University; Fairleigh Dickinson University; La Salle University; Monmouth University; The Pennsylvania State University; Rider University; Robert Morris University; Rutgers, The State University of New Jersey; Saint Francis University; Saint Joseph’s University; St. Peter’s University; Seton Hall University; Temple University; University of Delaware; University of Pittsburgh; and Villanova University UNITED STATES DISTRICT COURT EASTERN DISTRICT OF PENNSYLVANIA LAWRENCE “POPPY” LIVERS, Plaintiff, Civil Action No. 2:17-cv-04271-MMB v. NATIONAL COLLEGIATE ATHLETIC ASSOCIATION, a/k/a the NCAA, et al. Defendants. MEMORANDUM IN SUPPORT OF MOTION TO DISMISS Case 2:17-cv-04271-MMB Document 24-1 Filed 12/28/17 Page 2 of 33 TABLE OF CONTENTS Page I. SUMMARY OF MOTION TO DISMISS .................................................................................. 1 II. THIS COURT—LIKE THE BERGER AND DAWSON COURTS BEFORE IT— SHOULD DECLINE PLAINTIFF’S INVITATION TO CREATE AN EMPLOYMENT RELATIONSHIP THAT NEITHER CONGRESS, THE COURTS, THE DEPARTMENT OF LABOR, NOR ANY STATE LEGISLATURE, COURT OR ADMINISTRATIVE AGENCY, HAS EVER RECOGNIZED ................................................................................... 3 A. BERGER AND DAWSON REJECTED PLAINTIFF’S THEORY OF RELIEF ............. 4 B. THE DEPARTMENT OF LABOR’S LONGSTANDING VIEW THAT STUDENTATHLETES ARE NOT “EMPLOYEES” UNDER THE FLSA FURTHER SUPPORTS THE HOLDINGS OF BERGER AND DAWSON .................................... 12 III. PLAINTIFF CANNOT STATE A CLAIM AGAINST THE NON-ATTENDED SCHOOLS UNDER THE FLSA ........................................................................................................... 18 IV. CONCLUSION .................................................................................................................... 23 i Case 2:17-cv-04271-MMB Document 24-1 Filed 12/28/17 Page 3 of 33 TABLE OF AUTHORITIES Cases Page Agnew v. National Collegiate Athletic Ass'n, 683 F.3d 328, 343 (7th Cir. 2012) ............................................................................................. 8 Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) ...................................................... 2, 23 AT & T Corp. v. Core Communications, Inc., 806 F.3d 715 (3d Cir. 2015)............................................................................................... 16, 26 Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ...................................................... 2, 23 Berger v. National Collegiate Athletic Ass’n, 843 F.3d 285 (7th Cir. 2016)............................................................................................. passim Bonnette v. California Health & Welfare Agency, 704 F.2d 1465, 1465 (9th Cir.1983)........................................................................................... 6 Bowen v. Georgetown University Hospital, 488 U.S. 204, 109 S. Ct. 468, 102 L. Ed. 2d 493 (1988) ......................................................... 18 Brock v. Richland Shoe Co., 799 F.2d 80 (3d Cir. 1986), aff'd sub nom. McLaughlin v. Richland Shoe Co., 486 U.S. 128, 108 S. Ct. 1677, 100 L. Ed. 2d 115 (1988) ..................................................... 15 Carey v. National Event Svcs., Civ. No. 14-cv-05006, 2015 WL 667519 (E.D. Pa. Feb. 13, 2015)........................................... 2 Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984) ...................................................... 16, 17 Christensen v. Harris County, 529 U.S. 576, 120 S. Ct. 1655, 146 L. Ed. 2d 621 (2000) ....................................................... 16 Christopher v. SmithKline Beecham Corp., 567 U.S. 142, 132 S. Ct. 2156, 183 L. Ed. 2d 153 (2012) ...................................................... 13 Coleman v. Western Michigan University, 125 Mich. App. 35, 336 N.W.2d 224 (1983) ............................................................................. 9 Covington v. International Association of Approved Basketball Officials, 710 F.3d 114 (3d Cir. 2013)....................................................................................................... 2 Davis v. Abington Mem’l Hosp., Civil Action, No. 09–5520, 2012 WL 3206030 (E.D. Pa. Aug. 7, 2012) aff'd on other grounds, 765 F.3d 236 (3d Cir. 2014) .......................................................... 19, 22 ii Case 2:17-cv-04271-MMB Document 24-1 Filed 12/28/17 Page 4 of 33 TABLE OF AUTHORITIES Cases Page Dawson v. National Collegiate Athletic Ass’n, 250 F. Supp.3d 401 (N.D. Cal. 2017) ............................................................................... passim DelRio-Mocci v. Connolly Property Inc., 672 F.3d 241 (3d Cir. 2012)....................................................................................................... 2 Dong Yi v. Sterling Collision Centers, Inc., 480 F.3d 505, 510–511 (7th Cir. 2007) ................................................................................... 13 Donovan v. DialAmerica Mktg., Inc., 757 F.2d 1376 (3d Cir. 1985]) ................................................................................................... 6 Enterprise Rent-A-Car Wage & Hour Employment Practices Litigation, 683 F.3d 462, 469 (3rd Cir. 2012).................................................................................... passim Ethypharm S.A. France v. Abbott Laboratories, 707 F.3d 223 (3d Cir. 2013)..................................................................................................... 23 Fast v. Applebee’s Intern., Inc., 638 F.3d 872 (8th Cir. 2011).............................................................................................. 16, 17 Friedrich, et al. v. U.S. Computer Services a/k/a U.S. Computer Systems d/b/a Cable Data, 974 F.2d 409 (3rd Cir. 1992) ......................................................................................... 16 Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., (TOC), Inc., 528 U.S. 167, 120 S. Ct. 693, 145 L. Ed. 2d 610 (2000) .................................. 18 Gagnon v. United Technisource, Inc., 607 F.3d 1036 (5th Cir. 2010).................................................................................................. 16 Garcia v. San Antonio Transit Authority, 469 U.S. 528, 105 S. Ct. 1005, 83 L. Ed. 2d 1016 (1985) ..................................................... 6, 7 Goldberg v. Whitaker House Cooperative, Inc., 366 U.S. 28, 81 S. Ct. 933, 6 L. Ed. 2d 100 (1961) ............................................................... 3, 5 Hall v. Guardsmark, LLC, Case No. 11–213, 2013 WL 4855328 (W.D. Pa. 2013)..................................................... 16, 24 Helen Mining Company v. Elliott, 859 F.3d 226 (3d Cir. 2017)..................................................................................................... 16 Hill v. Delaware North Companies Sportservice, Inc., 838 F.3d 281 (2d Cir. 2016)..................................................................................................... 16 In re Schering Plough Corp. Intron/Temodar Consumer Class Action, 678 F.3d 235 (3d Cir. 2012)..................................................................................................... 19 iii Case 2:17-cv-04271-MMB Document 24-1 Filed 12/28/17 Page 5 of 33 TABLE OF AUTHORITIES Cases Page Jochim v. Jean Madeline Educ. Ctr. Of Cosmetology, 98 F.Supp.3d 750 (E.D. Pa. 2015) ........................................................................................... 11 Kavanagh v. Trustees of Boston Univ., 440 Mass. 195, 795 N.E.2d 1170 (2003) ................................................................................... 8 Klinedinst v. Swift Investments, Inc., 260 F.3d 1251 (11th Cir. 2001)................................................................................................ 17 Korellas v. Ohio State Univ., 121 Ohio Misc. 2d 16, 779 N.E.2d 1112 (Ohio Ct. Cl. 2002) ................................................... 8 Lugo v. Farmer’s Pride Inc., 802 F. Supp. 2d 598 (E.D. Pa. 2011) ....................................................................................... 10 Lujan v. Defenders of Wildlife, 504 U.S. 555, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) ........................................................... 19 Mackereth v. Kooma, Inc., No. 14-4824, 2015 WL 2337273 (E.D. Pa. 2015) ................................................................... 22 Marsh v. J. Alexander’s LLC, 869 F.3d 1108 (9th Cir. 2017).................................................................................................. 16 Marshall v. Baptist Hospital, Inc., 473 F. Supp. 465, 479 (M.D. Tenn. 1979) ............................................................................... 13 McMaster v. Eastern Armored Services, Inc., 780 F.3d 167 (3rd Cir. 2015) ................................................................................................... 16 Martin v. Selker Bros., Inc., 949 F.2d 1286 (3d Cir. 1991)............................................................................................... 7, 10 McLaughlin v. Richland Shoe Co., 486 U.S. 128, 108 S. Ct. 1677, 100 L. Ed. 2d 115 (1988) ....................................................... 15 Mineo v. Port Authority of New York and New Jersey, 779 F.2d 939 (3d Cir. 1985)..................................................................................................... 13 Moldenhauer v. Tazewell-Pekin Consol. Communications Ctr., 536 F.3d 640 (7th Cir. 2008) ................................................................................................... 13 Moore v. DirectSat USA, LLC, Case No. 2:08-CV-03552, 2009 WL 10687488 (E.D. Pa., Apr. 30, 2009) ............................. 19 Morgan v. MacDonald, 41 F.3d 1291 (9th Cir. 1994)...................................................................................................... 7 iv Case 2:17-cv-04271-MMB Document 24-1 Filed 12/28/17 Page 6 of 33 TABLE OF AUTHORITIES Cases Page National Collegiate Athletic Ass'n v. Board of Regents, 468 U.S. 85, 104 S. Ct. 2948, 82 L. Ed. 2d 70 (1984) ....................................................... 3, 4, 8 Newman v. Advanced Technology Innovation Corp., 749 F.3d 33 (1st Cir. 2014) ...................................................................................................... 16 N.L.R.B. v. Browning-Ferris Indus. Of PA, 691 F.2d 1117 (3rd Cir. 1982) ................................................................................................. 20 North Am. Soccer League v. NLRB, 613 F.2d 1379 (5th Cir.), cert. denied, 449 U.S. 899, 101 S.Ct. 267 (1980) ..................................................................... 23 O’Bannon v. National Collegiate Athletic Association, 802 F.3d 1049 (9th Cir. 2015), cert. denied, — U.S. —, 137 S.Ct. 277, 196 L.Ed.2d 33 (2016) .................................. 1, 2, 8, 24 Olson v. Superior Pontiac-GMC, Inc., 765 F.2d 1570, modified, 776 F.2d 265 (11th Cir. 1985)................................................................................. 13 Razak v. Uber Technologies, Inc., Civil, No. 15-cv-573, 2016 WL 5874822 (E.D. Pa. Oct. 7, 2016)................................................ 1, 2, 6 Reed v. Friendly’s Ice Cream, LLC, Case No. 15-CV-0298, 2016 WL 2736049 (M.D. Pa., May 11, 2016) ................................... 19 Rensing v. Indiana State Univ. Bd. of Trustees, 444 N.E.2d 1170 (Ind. 1983)...................................................................................................... 8 Richardson v. Bezar, Civ. Action No. 15-0772, 2015 WL 5783685 (E.D. Pa. Oct. 5, 2015) .............................. 21, 22 Roman v. Guapos III, Inc., 970 F. Supp. 2d 407 (D. Md. 2013)......................................................................................... 18 Rutherford Food Corp. v. McComb, 331 U.S. 722, 730, 67 S. Ct. 1473, 91 L. Ed. 1772 (1947) ...................................................... 7 Shephard v. Loyola Marymount Univ., 102 Cal.App.4th 837, 125 Cal.Rptr.2d 829 (2002) .................................................................... 8 Skidmore v. Swift & Co., 323 U.S. 134, 65 S. Ct. 161, 89 L. Ed. 124 (1944)................................................................. 16 State Comp. Ins. Fund v. Industrial Commission, 135 Colo. 570, 314 P.2d 288 (1957) .......................................................................................... 9 v Case 2:17-cv-04271-MMB Document 24-1 Filed 12/28/17 Page 7 of 33 TABLE OF AUTHORITIES Cases Page Tennessee Coal, Iron & R. Co. v. Muscoda Local, 321 U.S. 590, 64 S. Ct. 698, 88 L. Ed. 949 (1944) .................................................................. 10 Tony and Susan Alamo Foundation v. Secretary of Labor, 471 U.S. 290, 105 S. Ct. 1953, 85 L. Ed. 2d 278 (1985) ........................................................... 5 Tourscher v. McCullough, 184 F.3d 236 (3d Cir. 1999)....................................................................................................... 6 Townsend v. State of California, 191 Cal.App.3d 1530, 237 Cal.Rptr. 146 (1987) ....................................................................... 8 Vanskike v. Peters, 974 F.2d 806 (7th Cir. 1992), cert. denied, 507 U.S. 928, 113 S. Ct. 1303, 122 L. Ed. 2d 692 (1993) ..................................... 5 Waldrep v. Texas Employers Ins. Ass’n, 21 S.W.3d 692 (Tex. App. 2000) ............................................................................................... 8 Walling v. Portland Terminal Co., 330 U.S. 148, 67 S. Ct. 639, 91 L. Ed. 809 (1947), superseded by statute, 29 C.F.R. § 553.106(a). ........................................................................ 11 Wilkerson v. Samuels, 524 Fed. Appx. 776 (3rd Cir. 2013)........................................................................................... 6 Statutory Authorities 29 U.S.C. § 201 ......................................................................................................................... 1, 10 29 U.S.C. § 203 ............................................................................................................................... 5 29 U.S.C. § 216 ............................................................................................................................. 19 29 U.S.C. § 251 ............................................................................................................................. 10 29 U.S.C. § 255 ............................................................................................................................. 15 29 U.S.C. § 259 ....................................................................................................................... 13, 14 Mich. Comp. Laws Ann. § 423.201 .............................................................................................. 9 Ohio Rev. Code §3345.56............................................................................................................... 9 vi Case 2:17-cv-04271-MMB Document 24-1 Filed 12/28/17 Page 8 of 33 TABLE OF AUTHORITIES Rules and Regulations Page 29 C.F.R. § 790.13 ........................................................................................................................ 14 29 C.F.R. § 790.17 ........................................................................................................................ 14 29 C.F.R. § 790.18 ........................................................................................................................ 14 29 C.F.R. § 791.2 .......................................................................................................................... 21 Fed. R. Civ. Proc. 12(b)(6) ........................................................................................................... 24 Fed. R. Evid.201(b)(2).................................................................................................................. 16 Additional Authorities Adam Epstein & Paul M. Anderson, The Relationship Between a Collegiate StudentAthlete and the University: An Historical and Legal Perspective, 26 Marq. Sports L. Rev. 287 (2016)........................................................................................................................... 4 Northwestern University & College Athletes Players Association, 198 L.R.R.M. (BNA) ¶ 1837 (NLRB Mar. 26, 2014) jurisdiction declined, 362 NLRB No. 167 (Aug. 17, 2015) .................................................... 17 NLRB Gen’l Counsel Memo No. 18-02 (Dec. 1, 2017) ................................................................ 17 NLRB Gen’l Counsel Memo No. 17-01 (Jan. 31, 2017)................................................................ 17 U.S. Dep’t of Labor, Field Operations Handbook § 10b24(a)..................................................... 17 vii Case 2:17-cv-04271-MMB Document 24-1 Filed 12/28/17 Page 9 of 33 I. SUMMARY OF MOTION TO DISMISS. Plaintiff Lawrence Livers played football for Defendant Villanova University during the 2014-15 season. (See Complaint at ¶¶ 20, 176 [Dkt. 1].) In this lawsuit, he sues Villanova, the National Collegiate Athletic Association (“NCAA”), and 19 other universities located in this Circuit (“Non-Attended Schools”1) for minimum wages under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201 et seq., for the time he devoted to football. “To state a prima facie claim under the FLSA, a plaintiff must allege . . . [that he or she] was an ‘employee’ as defined by the FLSA . . . .” Razak v. Uber Technologies, Inc., Civil No. 15-cv-573, 2016 WL 5874822, *3 (E.D. Pa. Oct. 7, 2016). Plaintiff’s theory is that he—along with every scholarship athlete in any sport at any NCAA Division I school across the country— is entitled to be paid for the time he spent playing his sport because he became an “employee” of his school when he accepted an athletic scholarship and stepped onto the practice or playing field. (See, e.g., Complaint at ¶¶ 1-2.) He seeks certification of a collective action on behalf of all scholarship athletes (but not ‘walk-on’ athletes) (Complaint at ¶¶ 27-32) and a Rule 23 defendant class of NCAA Division I2 schools that grant athletic 1 The Non-Attended Schools are: Bucknell University; Drexel University; Duquesne University; Fairleigh Dickinson University; Lafayette College; La Salle University; Lehigh University; Monmouth University; The Pennsylvania State University; Rider University; Robert Morris University; Rutgers, The State University of New Jersey; Saint Francis University; Saint Joseph’s University; St. Peter’s University; Seton Hall University; Temple University; University of Delaware; and University of Pittsburgh. 2 See, e.g., O'Bannon v. National Collegiate Athletic Ass'n, 802 F.3d 1049, 1053 (9th Cir. 2015) (“The NCAA has grown to include some 1,100 member schools, organized into three divisions: Division I, Division II, and Division III. Division I schools are those with the largest athletic programs—schools must sponsor at least fourteen varsity sports teams to qualify for Division I—and they provide the most financial aid to student-athletes. Division I has about 350 members.”), cert. denied, — U.S. —, 137 S.Ct. 277, 196 L.Ed.2d 33 (2016). -1- Case 2:17-cv-04271-MMB Document 24-1 Filed 12/28/17 Page 10 of 33 scholarships in any sport. (Complaint at ¶¶ 33-43.) Plaintiff cannot make a plausible3 legal case for this theory, which has been twice rejected by federal courts in as many years. This Court should likewise dismiss the Complaint without leave to amend. First, Plaintiff’s theory has already been rejected as a matter of law at the pleading stage by the Seventh Circuit (affirming the Southern District of Indiana), and the Northern District of California. See Berger v. National Collegiate Athletic Ass’n, 843 F.3d 285 (7th Cir. 2016); Dawson v. National Collegiate Athletic Ass’n, 250 F. Supp.3d 401 (N.D. Cal. 2017). The “test of employment” under the FLSA is one of “‘economic reality’ rather than ‘technical concepts.’” Goldberg v. Whitaker House Cooperative, Inc., 366 U.S. 28, 33, 81 S. 3 A complaint must be dismissed under Federal Rule of Civil Procedure 12(b)(6), if it does not allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). The plaintiff must aver “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). “Though a complaint 'does not need detailed factual allegations, . . . a formulaic recitation of the elements of a cause of action will not do.” DelRio-Mocci v. Connolly Prop. Inc., 672 F.3d 241, 245 (3d Cir. 2012) (citing Twombly, 550 U.S. at 555). In other words, “factual allegations must be enough to raise a right to relief above the speculative level.” Covington v. Int'l Ass'n of Approved Basketball Officials, 710 F.3d 114, 118 (3d Cir. 2013) (internal citations and quotation marks omitted). A fortiori, the legal basis for the claim must be more than speculative. As this Court recently held in Razak: “The United States Supreme Court has established a two-part test to determine whether to grant a motion to dismiss. . . . First, the court must ascertain whether the complaint is supported by wellpleaded factual allegations. . . . “Taking the well-pleaded facts as true, the court must then determine whether the plaintiff is ‘plausibly’ entitled to relief. . . . In short, a complaint must not only allege entitlement to relief, but must also demonstrate such entitlement with sufficient facts to push the claim ‘across the line from conceivable to plausible.’” Razak, 2016 WL 5874822, at *2-3 (citations omitted). Accord Carey v. Nat’l Event Svcs., Civ. No. 14-cv-05006, 2015 WL 667519, *2 (E.D. Pa. Feb. 13, 2015). -2- Case 2:17-cv-04271-MMB Document 24-1 Filed 12/28/17 Page 11 of 33 Ct. 933, 6 L. Ed. 2d 100 (1961). College athletics in the United States is defined by its century-old “tradition of amateurism.” National Collegiate Athletic Ass'n v. Board of Regents of the University of Oklahoma, 468 U.S. 85, 120, 104 S. Ct. 2948, 82 L. Ed. 2d 70 (1984). “That long-standing tradition defines the economic reality of the relationship between student athletes and their schools.” Berger, 843 F.3d at 291. (See pages 4-12, infra.) The Department of Labor has long concurred in this view in its written interpretation of the FLSA. (See pages 12-17, infra.) This Court should join the Berger and Dawson courts to hold that student-athletes are not ipso facto employees of the schools for whom they play, or the NCAA. Second, Plaintiff cannot state a claim against any of Non-Attended Schools. He does not allege facts establishing even one of the indicia of joint employment established by the Third Circuit, and accordingly lacks Article III standing. Unless Plaintiff is prepared to amend his complaint to allege that he received athletic scholarships from Villanova and 19 other schools at the same time, and played for all of them, the Non-Attended Schools must be dismissed from this lawsuit regardless of the merits (or meritlessness) of Plaintiff’s theory of recovery vis-à-vis Villanova and the NCAA. (See pages 18-23, infra.) For these reasons, this Court should dismiss Plaintiff’s complaint in its entirety without leave to amend. II. THIS COURT—LIKE THE BERGER AND DAWSON COURTS BEFORE IT—SHOULD DECLINE PLAINTIFF’S INVITATION TO CREATE AN EMPLOYMENT RELATIONSHIP THAT NEITHER CONGRESS, THE COURTS, THE DEPARTMENT OF LABOR, NOR ANY STATE LEGISLATURE, COURT OR ADMINISTRATIVE AGENCY, HAS EVER RECOGNIZED. As noted above, college athletics in the United States is defined by its century-old “tradition of amateurism.” Board of Regents, 468 U.S. at 120. “[N]ot paying student-athletes -3- Case 2:17-cv-04271-MMB Document 24-1 Filed 12/28/17 Page 12 of 33 is precisely what makes them amateurs.” O’Bannon, 802 F.3d at 1076. In a recent survey of the case law, commentators concluded that “the courts have been consistent finding that student-athletes are not recognized as employees under any legal standard,” including “under … the FLSA.” Adam Epstein & Paul M. Anderson, The Relationship Between a Collegiate Student-Athlete and the University: An Historical and Legal Perspective, 26 MARQ. SPORTS L. REV. 287, 297 (2016). In December 2016, the Seventh Circuit reached the same conclusion, holding that Division I athletes are not “employees” under the FLSA as a matter of law. Berger, 843 F.3d 285. In April 2017, the Northern District of California followed Berger to hold that Division I football players are not “employees” under the FLSA, or under California state law. Dawson, 250 F. Supp.3d 401. Berger and Dawson are well-reasoned, are in accord with governing principles in the Third Circuit, and agree with the long-standing views of the Department of Labor. This Court should follow them and also hold that student-athletes are not employees of their schools by virtue of the fact that they received athletic scholarships. A. BERGER AND DAWSON REJECTED PLAINTIFF’S THEORY OF RELIEF. In Berger, two former University of Pennsylvania track-and-field athletes sued their alma mater, over 120 NCAA Division I schools, and the NCAA itself, alleging, like Livers (and Dawson before him), “that student-athletes are employees who are entitled to a minimum wage under the [FLSA].” Berger, 843 F.3d at 288. The Southern District of Indiana dismissed their complaint with prejudice under Rule 12, “holding that (1) [plaintiffs] lacked standing to sue any of the [defendants] other than Penn, and (2) [plaintiffs] failed to state a -4- Case 2:17-cv-04271-MMB Document 24-1 Filed 12/28/17 Page 13 of 33 claim against Penn because student-athletes are not employees under the FLSA.” Id. at 289. The Seventh Circuit affirmed both holdings. Regarding the athletes’ relationship to Penn itself, the Seventh Circuit broadly held that “student athletes are not employees” of the schools they attend “and are not covered by the FLSA” as a matter of law. Id. at 288. Berger started with the observation that the text of the FLSA defines the employment relationship in a “circular fashion.” Id. at 290. An “employee” is “any individual employed by an employer.” 29 U.S.C. § 203(e)(1). An “employer” is “any person acting directly or indirectly in the interest of an employer in relation to an employee.” 29 U.S.C. § 203(d). “Employ” is defined as “to suffer or permit to work.” 29 U.S.C. § 203(g). “Work” is not defined at all. Berger, 843 F.3d at 290. The U.S. Supreme Court has made clear that “the test of employment” under the FLSA is one of “‘economic reality’ rather than ‘technical concepts.’” Goldberg, 366 U.S. at 33; accord Tony and Susan Alamo Foundation v. Secretary of Labor, 471 U.S. 290, 301, 105 S. Ct. 1953, 85 L. Ed. 2d 278 (1985). Accordingly, Berger turned to a well-established FLSA principle to resolve the issue: “Because status as an ‘employee’ for purposes of the FLSA depends on the totality of circumstances rather than on any technical label, courts must examine the ‘economic reality’ of the working relationship … to decide whether Congress intended the FLSA to apply to that particular relationship.” Id. (quoting Vanskike v. Peters, 974 F.2d 806, 809 [7th Cir. 1992] [emphasis added], cert. denied, 507 U.S. 928, 113 S. Ct. 1303, 122 L. Ed. 2d 692 [1993].) To guide the “economic reality” inquiry, Berger observed that courts have established various “multifactor tests” to determine whether a particular relationship qualifies as -5- Case 2:17-cv-04271-MMB Document 24-1 Filed 12/28/17 Page 14 of 33 “employment” under the FLSA. Berger, 843 F.3d at 290. However, Berger also makes clear that courts should “decline[] to apply multifactor tests in the employment setting when they ‘fail to capture the true nature of the relationship’ between the alleged employee and the alleged employer.’” Id. at 290-91 (quoting Vanskike, 974 F.2d at 809). The Third Circuit is in accord with this principle. See Wilkerson v. Samuels, 524 Fed. Appx. 776, 779 (3rd Cir. 2013) (per curiam) (citing Vanskike with approval); Tourscher v. McCullough, 184 F.3d 236, 243-44 (3d Cir. 1999) (same). See also Enterprise Rent-A-Car Wage & Hour Employment Practices Litigation, 683 F.3d 462, 469 (3rd Cir. 2012) (multi-factor tests for joint employment “cannot be ‘blindly applied’ as the sole considerations.”); Razak, 2016 WL 5874822, at *4 (“Courts applying the Donovan factors are admonished that ‘[n]either the presence nor absence of any particular factor is dispositive,’ . . . .”) (quoting Donovan v. DialAmerica Mktg., Inc., 757 F.2d 1376, 1382 [3d Cir. 1985]). Berger then discussed various cases in which a global approach to the “economic reality” test was more appropriate than adhering formulaically to a particular multi-factor test. In Vanskike, for example, the Seventh Circuit declined to apply the multi-factor test established by the Ninth Circuit in Bonnette v. California Health & Welfare Agency, 704 F.2d 1465, 1465 (9th Cir.1983), abrogated on other grounds by Garcia v. San Antonio Transit Authority, 469 U.S. 528, 539, 105 S. Ct. 1005, 83 L. Ed. 2d 1016 (1985), in deciding whether prisoners performing work assignments were employees under the FLSA. The Bonnette factors, “with their emphasis on control over the terms and structure of the employment,” is “not the most helpful guide in the situation presented here” because “[t]he dispute in this case is a more fundamental one: Can this prisoner plausibly be said to be ‘employed’ in the -6- Case 2:17-cv-04271-MMB Document 24-1 Filed 12/28/17 Page 15 of 33 relevant sense at all?” Vanskike, 974 F.2d at 808-09 (quoted in Berger, 843 F.3d at 290.)4 The Vanskike court thus decided, based on the fundamental “economic reality” of the relationship, that prisoners were not employees of the prison. Id. See also Berger, 843 F.3d at 290, n.3 (collecting other cases where multi-factor tests were rejected in favor of an overarching “economic realities” approach). Just as the Third Circuit agrees with and follows Vanskike, it applies multi-factor tests when appropriate, and departs from them when appropriate. See Enterprise Rent-A-Car, 683 F.3d at 469-70; Martin v. Selker Bros., Inc., 949 F.2d 1286, 1293 (3d Cir. 1991) (“It is a well-established principle that the determination of the employment relationship does not depend on isolated factors but rather upon the ‘circumstances of the whole activity.’”) (quoting Rutherford Food Corp. v. McComb, 331 U.S. 722, 730, 67 S. Ct. 1473, 91 L. Ed. 1772 [1947]). Berger took the same approach as Vanskike, declining to apply any multi-factor test because it would “fail to capture the true nature of the relationship’ between student athletes and their schools and [it] is not a ‘helpful guide.’” Berger, 843 F.3d at 290. Berger instead focused on the fundamental “economic reality” of the relationship between the student-athlete and his or her university. Id. at 291. In this regard, Berger first noted that there “exists a ‘revered tradition of amateurism in college sports.’” Id. (quoting Bd. of Regents of Univ. of Okla., 468 U.S. at 120.) “That long-standing tradition,” rather than a multi-factor test, 4 The Bonnette factors—as well as the similar test formulated by the Third Circuit in Enterprise Rent-A-Car— are irrelevant to whether someone is an “employee” at all, i.e., whether a particular activity constitutes “work.” But they “are properly applied when an individual is clearly employed by one of several entities and the only question is which one.” Morgan v. MacDonald, 41 F.3d 1291, 1293 (9th Cir. 1994) (emphasis added). See also Vanskike, 974 F.2d at 809 (“[t]he Bonnette factors … are particularly appropriate where (as in Bonnette itself) it is clear that some entity is an ‘employer’ and the question is which one,” but are not useful when the issue is whether someone can “plausibly be said to be ‘employed’ in the relevant sense at all.” ) -7- Case 2:17-cv-04271-MMB Document 24-1 Filed 12/28/17 Page 16 of 33 “defines the economic reality of the relationship between student athletes and their schools.” Id. Citing the Ninth Circuit’s decision in O'Bannon, Berger noted that “the NCAA and its member universities and colleges have created an elaborate system of eligibility rules” in order to “maintain this tradition of amateurism.” Berger, 843 F.3d at 291. These rules, Berger held, “‘define what it means to be an amateur or a student-athlete, and are therefore essential to the very existence of collegiate athletics.” Id. (quoting Agnew v. National Collegiate Athletic Ass'n, 683 F.3d 328, 343 [7th Cir. 2012].) Berger accordingly concluded that “[t]he multifactor test proposed by [plaintiffs] simply does not take into account this tradition of amateurism or the reality of the student athlete experience.” Id. Rather than straining to fit the case into a multi-factor test, Berger proceeded to evaluate the fundamental “economic reality” of the relationship between the student athlete and the school, turning first to the extensive past experience of courts and of regulators. “A majority of courts,” Berger noted, “have concluded—albeit in different contexts— that student athletes are not employees.” Id. at 291.5 On the regulatory front, Berger noted, 5 See, e.g., Kavanagh v. Trustees of Boston Univ., 440 Mass. 195, 198, 795 N.E.2d 1170, 1175 (2003) (“a scholarship or other financial assistance does not transform the relationship between the academic institution and the student into any form of employment relationship”); Korellas v. Ohio State Univ., 121 Ohio Misc. 2d 16, 18, 779 N.E.2d 1112, 1114 (Ohio Ct. Cl. 2002) (football student-athlete was not an employee of Ohio State University); Shephard v. Loyola Marymount Univ., 102 Cal.App.4th 837, 844–46, 125 Cal.Rptr.2d 829, 833–35 (2002) (student athlete not an “employee” for purpose of applying state antidiscrimination laws); Waldrep v. Texas Employers Ins. Ass’n, 21 S.W.3d 692, 701 (Tex. App. 2000) (rejecting argument that football student-athlete was an employee of his school); Townsend v. State of California, 191 Cal.App.3d 1530, 1537, 237 Cal.Rptr. 146, 150 (1987) (holding “as a matter of law” that a student-athlete “was not an employee” of his university for purposes of the state Tort Claims Act, Cal. Gov’t Code § 810); Rensing v. Indiana State Univ. Bd. of Trustees, 444 N.E.2d 1170, 1175 (Ind. 1983) (“the appellant shall be considered only as a student athlete and not as an -8- Case 2:17-cv-04271-MMB Document 24-1 Filed 12/28/17 Page 17 of 33 “[t]he Department of Labor . . . has also indicated that student athletes are not employees under the FLSA.” Berger, 843 F.3d at 292. (See pages 12-17, infra.) The Seventh Circuit synthesized its “economic reality” analysis by stating definitively that student-athletes cannot be employees as a matter of law because their participation in sports is voluntary, there is a long tradition of amateurism in college sports, and studentathletes have participated in sports for over a hundred years without any expectation of pay: “Appellants in this case have not, and quite frankly cannot, allege that the activities they pursued as student athletes qualify as ‘work’ sufficient to trigger the minimum wage requirements of the FLSA. Student participation in collegiate athletics is entirely voluntary. Moreover, the long tradition of amateurism in college sports, by definition, shows that student athletes—like all amateur athletes—participate in their sports for reasons wholly unrelated to immediate compensation. “Although we do not doubt that student athletes spend a tremendous amount of time playing for their respective schools, they do so—and have done so for over a hundred years under the NCAA—without any real expectation of earning an income. Simply put, student-athletic ‘play’ is not ‘work,’ at least as the term is used in the FLSA. “We therefore hold, as a matter of law, that student athletes are not employees and are not entitled to a minimum wage under the FLSA.” Id. at 293 (emphasis added). Finally, the Seventh Circuit emphasized the appropriateness of resolving the Berger case at the motion to dismiss stage: employee within the meaning of the Workmen’s Compensation Act”); Coleman v. Western Michigan University, 125 Mich. App. 35, 44, 336 N.W.2d 224, 228 (1983) (“[W]e conclude that the WCAB did not err in finding that our plaintiff was not an ‘employee’ of defendant within the meaning of the act.”); State Comp. Ins. Fund v. Industrial Commission, 135 Colo. 570, 573-74, 314 P.2d 288, 290 (1957) (rejecting workers’ compensation claim on the ground that studentathlete was not an employee). See also Ohio Rev. Code §3345.56 (“a student attending a state university … is not an employee of the state university based on the student’s participation in an athletic program offered by the state university”); Mich. Comp. Laws Ann. § 423.201(1)(e)(iii) (“a student participating in intercollegiate athletics on behalf of a public university in this state … is not a public employee entitled to representation or collective bargaining rights”). -9- Case 2:17-cv-04271-MMB Document 24-1 Filed 12/28/17 Page 18 of 33 “We briefly conclude by addressing Appellants’ argument that employment status is an inherently fact-intensive inquiry and thus should not be decided at the motion-to-dismiss stage. We reject this argument. Because we conclude, as a matter of law, that student athletes are not employees under the FLSA, no discovery or further development of the record could help Appellants. Appellants did not and could not allege facts, even taken as true, that give rise to a cause of action.” Id. at 293. Accord, Martin, 949 F.2d at 1292 (whether a person is an employee is a question of law). Berger’s holding that student-athletes “cannot . . . allege that the activities they pursued as student athletes qualify as ‘work’ sufficient to trigger the minimum wage requirements of the FLSA,” id. at 293, is in accord with this Court’s analysis in Lugo v. Farmer’s Pride Inc., 802 F. Supp. 2d 598 (E.D. Pa. 2011). Reviewing the Supreme Court’s donning and doffing decisions, this Court observed that the Supreme Court in Tennessee Coal, Iron & R. Co. v. Muscoda Local, 321 U.S. 590, 64 S. Ct. 698, 88 L. Ed. 949 (1944), superseded by statute, 29 U.S.C. § 251 et seq., “defined ‘work’ as ‘physical or mental exertion (whether burdensome or not) controlled or required by the employer and pursued necessarily and primarily for the benefit of the employer and his business.’” Lugo, 802 F. Supp. 2d at 602 (emphasis added) (quoting Tennessee Coal, 321 U.S. at 598). This definition “remains operative” today. Lugo, 802 F. Supp. 2d at 602. While it is undeniable that studentathletes exert themselves mentally and physically, they do so for their own reasons, and their own benefit. And their schools—which are in the business of education, research, and community service—offer athletics as a part of their educational mission, not as an end in itself. See Berger, 843 F.3d at 293 (“Student participation in collegiate athletics is entirely voluntary. Moreover, the long tradition of amateurism in college sports, by definition, shows that student athletes—like all amateur athletes—participate in their sports for reasons wholly unrelated to immediate compensation.”) See also Walling v. Portland Terminal Co., 330 U.S. -10- Case 2:17-cv-04271-MMB Document 24-1 Filed 12/28/17 Page 19 of 33 148, 152-53, 67 S. Ct. 639, 91 L. Ed. 809 (1947) (the FLSA “cannot be interpreted so as to make a person whose work serves only his own interest an employee of another person who gives him aid and instruction.”), superseded by statute, 29 C.F.R. § 553.106(a). In Dawson, a former scholarship football player (like Plaintiff) for the University of Southern California sued the NCAA and PAC-12 under the FLSA and state law based on the same theory of relief alleged by Plaintiff, and by the plaintiffs in Berger. As in Berger, the Northern District of California granted defendant’s motion to dismiss under Rule 12(b)(6) without leave to amend, on the ground that the “reasoning” of Berger “is persuasive.” Dawson, 250 F. Supp.3d at 403.6 This Court should follow Berger and Dawson and likewise conclude student-athletes do not become “employees” within the meaning of the FLSA by virtue of the fact that they received a scholarship from, and played sports at, their respective schools. 6 Dawson adopted the reasoning of Berger wholesale and without significant elaboration. The opinion is largely devoted to analyzing and rejecting plaintiff’s arguments that Berger was distinguishable “because it involved track and field athletes at the University of Pennsylvania, while this case involves Division I football players who earn ‘massive revenues’ for their schools.” Dawson, 250 F.Supp.3d at 406. The Dawson court’s reasons for rejecting this distinction are not pertinent here because Plaintiff seeks conditional certification of a collective action on behalf of all scholarship athletes, whether they play one of the ‘big money’ sports or not. (See Complaint, ¶ 27.) Moreover, as noted in Dawson, “the premise that revenue generation is determinative of employment status is not supported by the case law.” Dawson, 250 F.Supp.3d at 407. See also Jochim v. Jean Madeline Educ. Ctr. Of Cosmetology, 98 F.Supp.3d 750, 759 (E.D. Pa. 2015) (“[Defendant's] alleged profit from its clinical program does not change our analysis under the FLSA.”) (cited in Dawson, 250 F.Supp.3d at 407). -11- Case 2:17-cv-04271-MMB Document 24-1 Filed 12/28/17 Page 20 of 33 B. THE DEPARTMENT OF LABOR’S LONGSTANDING VIEW THAT STUDENT-ATHLETES ARE NOT “EMPLOYEES” UNDER THE FLSA FURTHER SUPPORTS THE HOLDINGS OF BERGER AND DAWSON. The published views of the Department of Labor, the agency charged by Congress with interpreting the FLSA, agree with Berger and Dawson that student-athletes fall outside the statute’s reach. In section 10b24(a) of the DOL’s Field Operations Handbook (“FOH”)— “an operations manual that provides [Department] investigators and staff with interpretations of statutory provisions … and general administrative guidance,” Berger, 843 F.3d at 292—the Department states that “[u]niversity or college students who participate in activities generally recognized as extracurricular are generally not considered to be employees within the meaning of the Act.” U.S. Dep’t of Labor, Field Operations Handbook § 10b24(a) (available at https://www.dol.gov/whd/FOH/FOH_Ch10.pdf.) The FOH elaborates: “As part of their overall educational program, public or private schools and institutions of higher learning may permit or require students to engage in activities in connection with dramatics, student publications, glee clubs, bands, choirs, debating teams, radio stations, intramural and interscholastic athletics and other similar endeavors. Activities of students in such programs, conducted primarily for the benefit of the participants as a part of the educational opportunities provided to the students by the school or institution, are not work of the kind contemplated by [the FLSA] and do not result in an employer-employee relationship between the student and the school or institution.” Id. § 10b03(e) (emphasis added). These provisions leave no doubt about the Department’s view that participants in “interscholastic athletics” are not “employees” within the meaning of the FLSA. Indeed, although it was well aware—like the rest of the country—that colleges and universities do not pay student-athletes but do give athletic scholarships, the Department has never initiated enforcement proceedings against the NCAA or any schools for FLSA violations in connection with student athletics. This is significant because, as the Supreme -12- Case 2:17-cv-04271-MMB Document 24-1 Filed 12/28/17 Page 21 of 33 Court has explained in an analogous context, “while it may be ‘possible for an entire industry to be in violation of the [FLSA] for a long time without the Labor Department noticing,’ the ‘more plausible hypothesis’ is that the Department did not think the industry’s practice was unlawful.” Christopher v. SmithKline Beecham Corp., 567 U.S. 142, 158, 132 S. Ct. 2156, 183 L. Ed. 2d 153 (2012) (alteration in original) (quoting Dong Yi v. Sterling Collision Centers, Inc., 480 F.3d 505, 510–511 [7th Cir. 2007].). The unequivocal language in the FOH that “interscholastic athletics . . . [is] not work of the kind contemplated by [the FLSA] and do[es] not result in an employer-employee relationship between the student and the school or institution” (§10b03[e]), establishes a complete defense to Plaintiff’s claim. Congress has provided that “[n]o employer shall be subject to any liability or punishment” under the FLSA if it relies “on any written administrative . . . interpretation, of the . . . Administrator of the Wage and Hour Division of the Department of Labor . . . .” 29 U.S.C. § 259. Section 259 “is designed to protect from liability employers who acted in reliance on an interpretation of the law by a governmental agency, even if the agency's interpretation is subsequently determined to be incorrect.” Mineo v. Port Authority of New York and New Jersey, 779 F.2d 939, 954 n.7 (3d Cir. 1985) (Becker, J., dissenting). The FOH is one such “interpretation.” See Olson v. Superior Pontiac-GMC, Inc., 765 F.2d 1570, 1580, modified, 776 F.2d 265 (11th Cir. 1985) (holding that § 259 good faith defense could be based on FOH, but reversing judgment finding good faith because the employer failed to act “in conformity” with FOH); Marshall v. Baptist Hospital, Inc., 473 F. Supp. 465, 479 (M.D. Tenn. 1979) (“The right to rely on the Wage and Hour Field Operations Handbook is conferred by 29 U.S.C. [§] 259 . . . . The statute contains no limitation on the pronouncements of the Administrator that can be relied on, except that regulations, orders, -13- Case 2:17-cv-04271-MMB Document 24-1 Filed 12/28/17 Page 22 of 33 rulings, approvals, and interpretations must be ‘written.’ Pronouncements of the Administrator in the form of administrative practices or enforcement policies do not even bear this limitation. Thus it is the opinion of this court, albeit dictum, that the Field Operations Handbook may be relied on for purposes of establishing a defense pursuant to 29 U.S.C. [§] 259.”), rev'd, 668 F.2d 234 (6th Cir. 1981) (agreeing that Section 259 good faith defense may be based on FOH, but reversing judgment that defense did not apply under the circumstances).7 In addition to establishing a defense to liability, the unequivocal nature of the DOL’s interpretation as stated in the FOH creates a time bar to Plaintiff’s complaint. The statute of 7 The regulations construing 29 U.S.C. § 259 further demonstrate that the FOH is a basis for this defense. They provide that “the . . . interpretation . . . or enforcement policy relied upon and conformed with must be that of the ‘Administrator of the Wage and Hour Division . . . [and] in writing.’” 29 C.F.R. § 790.13(a). “The term ‘interpretation’ has been used to describe a statement ‘ordinarily of an advisory character, indicating merely the agency’s present belief concerning the meaning of applicable statutory language.’ This would include bulletins, releases, and other statements issued by an agency which indicate its interpretation of the provisions of the statute.” 29 C.F.R. § 790.17(c). “The term[] ‘. . . enforcement policy’ refer[s] to courses of conduct or policies which an agency has determined to follow in the administration and enforcement of a statute, either generally, or with respect to specific classes of situation.” 29 C.F.R. § 790.18(a). There can be no reasonable dispute over the fact that the FOH is both an “interpretation” and an “enforcement policy” “of the Administrator of the Wage And Hour Division . . . in writing.” The FOH is published by the Wage and Hour Division and made available to the public through its web site. The preface to the FOH is printed on the site and states: “The Field Operations Handbook (FOH) is an operations manual that provides Wage and Hour Division (WHD) investigators and staff with interpretations of statutory provisions, procedures for conducting investigations, and general administrative guidance. The FOH was developed by the WHD under the general authority to administer laws that the agency is charged with enforcing. The FOH reflects policies established through changes in legislation, regulations, significant court decisions, and the decisions and opinions of the WHD Administrator.” (emphasis added) (available on the internet at https://www.dol.gov/whd/FOH/). -14- Case 2:17-cv-04271-MMB Document 24-1 Filed 12/28/17 Page 23 of 33 limitations for FLSA claims is two years, “except that a cause of action arising out of a willful violation may be commenced within three years after the cause of action accrued.” 29 U.S.C. § 255(a). The Third Circuit applies a “more rigorous standard” for finding conduct to be “willful” under § 255(a): “a violation of the relevant sections of the FLSA is willful if the employer knew or showed reckless disregard for the matter of whether its conduct was prohibited by the FLSA.” Brock v. Richland Shoe Co., 799 F.2d 80, 81 (3d Cir. 1986) (rejecting negligence-based standard of willfulness), aff'd sub nom. McLaughlin v. Richland Shoe Co., 486 U.S. 128, 108 S. Ct. 1677, 100 L. Ed. 2d 115 (1988). Mere negligence—even if based on an unreasonable interpretation of the FLSA—is not enough. See McLaughlin, 486 U.S. at 124 n.13 (“If an employer acts unreasonably, but not recklessly, in determining its legal obligation . . . it should not be . . . considered [willful] under Thurston or the identical standard we approve today.”). The fact that the DOL takes a position that student-athletes are not “employees” under the FLSA means that Defendants could not ever have known that student-athletes are entitled to minimum wages for playing their respective sports—or shown reckless disregard in believing the contrary. Assuming for the sake of argument that Plaintiff can state a claim, it could only be subject to a two year limitations period. This Court may take judicial notice, pursuant to Fed. R. Evid. 201(b)(2), that Villanova ended its 2014-15 season on December 13, 2014, when it lost its final game against Sam Houston State. (See http://www.villanova.com/sports/m-footbl/sched/nova-m-footblsched.html.) The Complaint was filed on September 26, 2017—two years, nine months after Plaintiff played his last football game. It is accordingly time-barred. Finally, the Supreme Court has held that interpretations contained in “agency manuals” or “enforcement guidelines,” such as the FOH, “are ‘entitled to respect’ under . . . -15- Case 2:17-cv-04271-MMB Document 24-1 Filed 12/28/17 Page 24 of 33 Skidmore v. Swift & Co., 323 U.S. 134, 140[, 65 S. Ct. 161, 89 L. Ed. 124] (1944) . . . to the extent that those interpretations have the ‘power to persuade.’” Christensen v. Harris County, 529 U.S. 576, 587, 120 S. Ct. 1655, 146 L. Ed. 2d 621 (2000). And several circuits, recognizing the DOL’s expertise and experience in construing and administering the FLSA, have regarded the FOH as persuasive authority. See, e.g., Berger, 843 F.3d at 293 (“[w]e find the FOH's interpretation of the student-athlete experience to be persuasive.”); Hill v. Delaware North Companies Sportservice, Inc., 838 F.3d 281, 295 (2d Cir. 2016); Newman v. Advanced Technology Innovation Corp., 749 F.3d 33, 37 (1st Cir. 2014); Fast v. Applebee's Intern., Inc., 638 F.3d 872, 878-79 (8th Cir. 2011); Gagnon v. United Technisource, Inc., 607 F.3d 1036, 1041 n.6 (5th Cir. 2010); cf. Marsh v. J. Alexander’s LLC, 869 F.3d 1108, 1124 n.19 (9th Cir. 2017) (applying Skidmore but finding the handbook unpersuasive on the specific issue in that case). The Third Circuit is among them. See AT & T Corp. v. Core Communications, Inc., 806 F.3d 715, 725 (3d Cir. 2015) (courts should should “defer to an agency's interpretation of its regulations ... unless the interpretation is plainly erroneous or inconsistent with the regulations or there is any other reason to suspect that the interpretation does not reflect the agency's fair and considered judgment on the matter in question.”); Friedrich, et al. v. U.S. Computer Services a/k/a U.S. Computer Systems d/b/a Cable Data, 974 F.2d 409, 417-18 (3rd Cir. 1992) (consulting the FOH for interpretative guidance) (superseded by statute as stated in McMaster v. Eastern Armored Services, Inc., 780 F.3d 167, 171 [3rd Cir. 2015]); Hall v. Guardsmark, LLC, Case No. 11–213, 2013 WL 4855328, at *14, 16-17 (W.D. Pa. 2013) (following FOH).8 8 Defendants concede that since the FOH is an internal operations manual of the DOL, not a formal regulation promulgated through regular notice-and-comment rulemaking, it is not entitled to deference under Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., -16- Case 2:17-cv-04271-MMB Document 24-1 Filed 12/28/17 Page 25 of 33 This Court should do the same here, because the Department’s view that playing intercollegiate sports is not “work” performed by an “employee” warrants significant weight under the Skidmore factors: “the thoroughness evident in [the Department’s] consideration, the validity of its reasoning, its consistency with earlier and later pronouncements.” Skidmore, 323 U.S. at 140. The FOH is an exhaustive, detailed description of how agency personnel are to apply the FLSA to myriad circumstances. Plaintiff will likely attempt to counter the DOL’s views by relying on (1) an opinion by a regional director of the National Labor Relations Board, which concluded that Northwestern University football players who receive athletic scholarships are “employees” under the National Labor Relations Act (“NLRA”), and (2) a memorandum to the same effect by the NRLB’s outgoing general counsel withdrawn by the agency after less than one year. See Northwestern University & College Athletes Players Association, 198 L.R.R.M. (BNA) ¶ 1837 (NLRB Mar. 26, 2014); NLRB Gen’l Counsel Memo No. 17-01 (Jan. 31, 2017), withdrawn, NLRB Gen’l Counsel Memo No. 18-02 (Dec. 1, 2017) (both available at https://www.nlrb.gov/reports-guidance/general-counsel-memos). Even if interpretations of the NLRA could shed light on the meaning of the FLSA, neither the regional director’s decision in Northwestern nor the former general counsel’s opinion in his quickly-withdrawn memorandum to his staff carries the authority of the Board 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). See Helen Mining Company v. Elliott, 859 F.3d 226, 233-34 (3d Cir. 2017) (“In addressing the validity of a regulation promulgated through notice-and-comment procedures, we apply the familiar two-step analysis of Chevron . . . .”); Fast, 638 F.3d at 878 (rejecting Chevron deference for the FOH because “[t]hese types of agency interpretations (opinion letters and handbooks) of its own regulation . . . are not subject to notice and comment rule making procedures.”); Klinedinst v. Swift Investments, Inc., 260 F.3d 1251, 1255 (11th Cir. 2001) (“Although the Field Operations Handbook is not entitled to Chevron deference, we find it persuasive.”). -17- Case 2:17-cv-04271-MMB Document 24-1 Filed 12/28/17 Page 26 of 33 itself. The full Board declined to assert jurisdiction in the Northwestern case (see 362 NLRB No. 167 [Aug. 17, 2015]), so the regional director’s decision and the former general counsel’s memorandum represent only the views of two individuals. And the Supreme Court has held that courts owe no “deference to an agency counsel’s interpretation of a statute where the agency itself has articulated no position on the question.” Bowen v. Georgetown University Hospital, 488 U.S. 204, 212, 109 S. Ct. 468, 102 L. Ed. 2d 493 (1988). While the opinions of one regional director of the NLRB and its former general counsel are entitled to no deference of any kind, the DOL’s longstanding considered views are entitled to Skidmore deference, especially since they accord with holdings of the Seventh Circuit and the Northern District of California. This Court should adopt the DOL’s views. III. PLAINTIFF CANNOT STATE A CLAIM AGAINST THE NON-ATTENDED SCHOOLS UNDER THE FLSA. Berger also held that the NCAA—as well as other Division I schools that the plaintiffs did not attend—should be dismissed because the “connection” student-athletes had “to the other schools and the NCAA is far too tenuous to be considered an employment relationship . . .” Berger, 843 F.3d at 289 (emphasis added). It relied on two propositions: first, Article III standing requires that a plaintiff establish he or she has suffered an “injury . . . fairly traceable to the challenged action of the defendant.” Id. (quoting Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 180–81, 120 S. Ct. 693, 145 L. Ed. 2d 610 [2000)]). Second, “[u]nder the FLSA, alleged employees’ ‘injuries are only traceable to, and redressable by, those who employed them.’” Berger, 843 F.3d at 289 (quoting Roman v. Guapos III, Inc., 970 F. Supp. 2d 407, 412 [D. Md. 2013]). -18- Case 2:17-cv-04271-MMB Document 24-1 Filed 12/28/17 Page 27 of 33 Based on these incontrovertible propositions, the Seventh Circuit also held that the plaintiff student-athletes had Article III standing to allege FLSA claims only against their own university. Since the Third Circuit is in perfect accord with the Seventh on both of these points,9 this Court should apply Berger to dismiss the NCAA and the Non-Attended Schools on the additional ground that he lacks Article III standing to sue them. On a related point, Plaintiff fails to state a claim against the Non-Attended Schools because he does not—and cannot—sufficiently allege that any of the Non-Attended Schools were his employer, unless he is prepared to claim that he played football for the Non-Attending Schools as well as Villanova. See, e.g., Reed v. Friendly's Ice Cream, LLC, Case No. 15-CV0298, 2016 WL 2736049, *3 (M.D. Pa., May 11, 2016) (plaintiffs have Article III standing to sue franchisors under FLSA because they allege joint employment with franchisee/employer). It is axiomatic that, “[f]or a defendant to be liable as an employer under the FLSA, the defendant must be an ‘employer’ as defined under the Act, in that the defendant must be alleged to have had an employer-employee relationship with the plaintiff.” Davis v. Abington Mem'l Hosp., Civil Action No. 09–5520, 2012 WL 3206030, at *3 (E.D. Pa. Aug. 7, 2012), aff'd on other grounds, 765 F.3d 236 (3d Cir. 2014). Plaintiff alleges that “as a Scholarship Athlete on the Football roster of Villanova University during academic year 2014-15, [he] was a covered 9 See, e.g., In re Schering Plough Corp. Intron/Temodar Consumer Class Action, 678 F.3d 235, 244 (3d Cir. 2012) (“The plaintiff bears the burden of meeting the ‘irreducible constitutional minimum’ of Article III standing . . . . ‘First, the plaintiff must have suffered an injury in fact. . . . Second, . . . the injury has to be fairly traceable to the challenged action of the defendant . . . .’”) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–61, 112 S.Ct. 2130, 119 L.Ed.2d 351 [1992]); Moore v. DirectSat USA, LLC, Case No. 2:08-CV-03552, 2009 WL 10687488, *7 (E.D. Pa., Apr. 30, 2009) (“Plaintiffs' claims pursuant to the FLSA are based on sections of those statutes that give employees the right to bring suit against their employers. FLSA, 29 U.S.C. § 216(b). Thus, it necessarily follows that Plaintiffs may only assert their claims against their employers and only for the terms of their employment with those employers.”). -19- Case 2:17-cv-04271-MMB Document 24-1 Filed 12/28/17 Page 28 of 33 employee of the defendants within the meaning of the FLSA, and defendants are jointly liable to [Plaintiff] for unpaid minimum wages for that period.” (Complaint at ¶ 20. See also id. at ¶ 176 [“During academic year 2014-15, [Plaintiff] performed unpaid labor for defendants as a Scholarship Athlete on the Villanova University Football roster.”], ¶ 177 [ “During the practice and playing season, [Plaintiff] worked as a Scholarship Athlete at least 20 hours per week supervised by NCAA athletics supervisory staff.”].) His scant allegations that he “performed unpaid labor for defendants as a Scholarship Athlete on the Villanova University Football roster” and “worked as a Scholarship Athlete […] supervised by NCAA athletics supervisory staff” is insufficient to establish that any of the Non-Attended Schools were his employer. As set forth in greater detail in Section II (see pages 3-18, supra), Plaintiff was not the employee of any defendant when he accepted a scholarship to play college football. But even if he could state a claim that he was an employee of Villanova and/or the NCAA, he has not claimed that he was—and cannot plausibly claim to have been— an employee of any of the Non-Attended Schools. Although it is theoretically possible that a “‘single individual may stand in the relation of an employee to two or more employers at the same time under the [FLSA],’” (Enterprise Rent-A-Car, 683 F.3d at 467 [citing 29 C.F.R. § 791.2(a)], in order to establish that two or more entities are employers under the FLSA, the employee must show that each alleged employer “exercise[d] ‘significant control’” over him or her. Enterprise Rent-A-Car, 683 F.3d at 468 (citing N.L.R.B. v. Browning-Ferris Indus. Of PA, 691 F.2d 1117, 1124 [3rd Cir. 1982]). Thus, “where two or more employers exert significant control over the same employees—from the evidence it can be shown that they share or co-determine those matters -20- Case 2:17-cv-04271-MMB Document 24-1 Filed 12/28/17 Page 29 of 33 governing essential terms and conditions of employment—they constitute ‘joint employers’ under the FLSA.” Enterprise Rent-A-Car, 683 F.3d at 468 (citing Browning-Ferris, 691 F.2d at 1123, and Moldenhauer v. Tazewell-Pekin Consol. Communications Ctr., 536 F.3d 640 [7th Cir. 2008]). In Enterprise Rent-A-Car, the Third Circuit established the following test for joint employment: “When faced with a question requiring examination of a potential joint employment relationship under the FLSA, we conclude that courts should consider: 1) the alleged employer's authority to hire and fire the relevant employees; 2) the alleged employer's authority to promulgate work rules and assignments and to set the employees' conditions of employment: compensation, benefits, and work schedules, including the rate and method of payment; 3) the alleged employer's involvement in day-to-day employee supervision, including employee discipline; and 4) the alleged employer's actual control of employee records, such as payroll, insurance, or taxes.” Enterprise Rent-A-Car, 683 F.3d at 469; see also Richardson v. Bezar, Civ. Action No. 15-0772, 2015 WL 5783685, *1 (E.D. Pa. Oct. 5, 2015) (“In order to determine whether a defendant is a ‘joint employer’ under the FLSA, courts must apply the multifactor Enterprise test.”) Plaintiff’s allegations that the Non-Attended Schools are his joint employers fails this test. He alleges the Non-Attended Schools were his joint employers by virtue of the NCAA bylaws. Specifically, he alleges the “NCAA bylaws define the shared responsibilities and benefits of the joint enterprise of the NCAA and its member schools; are uniformly interpreted and applied by member schools to insure a ‘level playing field’ under threat of competition and financial penalties issued by the NCAA for failure to comply; and restrict unilateral discretion of member schools to set terms and conditions of Scholarship Athlete labor, including: (i) recruitment (incoming freshmen and college transfers); (ii) eligibility for hire or to participate; (iii) hours of participation supervised by full-time coaching and training staff; (iv) compensation; (v) duration of employment or participation; and (vi) discipline. For these reasons […] NCAA member schools jointly employ members of the Scholarship Athlete Collective.” -21- Case 2:17-cv-04271-MMB Document 24-1 Filed 12/28/17 Page 30 of 33 (Complaint at ¶¶ 146-74. See also id. ¶ 30 [“NCAA bylaws that subject all members of the Scholarship Athlete Collective to the same terms and conditions of unpaid labor also establish their joint employment by defendants.”].) However, this District, in accord with Third Circuit precedent, has repeatedly held that “[c]ommon ownership or membership in a common enterprise is insufficient to show that an entity is a joint employer.” Mackereth v. Kooma, Inc., No. 14-4824, 2015 WL 2337273, at *6 (E.D. Pa. 2015) (citing Davis v. Abington Mem'l Hosp., 2012 WL 3206030, at *3 [E.D. Pa. 2012], aff'd on other grounds, 765 F.3d 236 [3d Cir. 2014]); see also Richardson, 2015 WL 5783685, *2. Plaintiff fails plausibly to allege that any of the Non-Attended Schools satisfy any of the Enterprise factors. First, Plaintiff has not—and cannot—allege that any of the Non-Attended Schools had authority to “hire” him to play football for Villanova, or give him a scholarship to attend Villanova. Conversely, he has not—and cannot—allege that any of the Non-Attended Schools had the authority to “fire” him by cutting him from Villanova’s football team or taking away his scholarship to Villanova. Second, Plaintiff has not—and cannot—allege any of the Non-Attended Schools had authority to promulgate the rules, assignments, and conditions of the “work” Plaintiff performed as a member of Villanova’s football team. Third, Plaintiff has not—and cannot—allege any of the Non-Attended Schools were involved in the day-to-day supervision of Plaintiff, including any discipline of Plaintiff, while he played football for Villanova. -22- Case 2:17-cv-04271-MMB Document 24-1 Filed 12/28/17 Page 31 of 33 And fourth, Plaintiff has not—and cannot—allege any of the Non-Attended Schools had actual control over Plaintiff’s tax, insurance, and pay records as a student at Villanova and a member of Villanova’s football team. The only conceivable way Plaintiff could plead facts which on their face satisfy any of the Enterprise factors would be to allege that he received athletic scholarships from each of the Non-Attending Schools, attended each of them, and played football for each them, while at the same time playing football for Villanova. Such an allegation would plainly violate Rule 11.10 Thus, regardless of the principal issue raised in this motion—whether by virtue of being a scholarship athlete, Plaintiff has entered into an employment relationship with Villanova and/or the NCAA—the Complaint still fails to state any claim against the NonAttended Schools, and they should be dismissed without leave to amend on this ground too. IV. CONCLUSION. For the reasons set forth above, the moving defendants11 request that this Court dismiss the Complaint without leave to amend pursuant to Fed. R. Civ. Proc. 12(b)(6). 10 In his Complaint, Plaintiff cites the Fifth Circuit’s decision in North Am. Soccer League v. NLRB, 613 F.2d 1379 (5th Cir.), cert. denied, 449 U.S. 899, 101 S.Ct. 267 (1980), to support his allegation that the Non-Attended Schools were his joint employers. (See Complaint at ¶ 146 n.9.) This decision is clearly distinguishable. Moreover, this allegation amounts to a legal conclusion that must be disregarded on a motion to dismiss. See, e.g., Twombly, 550 U.S. at 555; Iqbal, 556 U.S. at 678; Ethypharm S.A. France v. Abbott Laboratories, 707 F.3d 223, 231, n.14 (3d Cir. 2013). 11 National Collegiate Athletic Association; Duquesne University; Fairleigh Dickinson University; La Salle University; Monmouth University; The Pennsylvania State University; Rider University; Robert Morris University; Rutgers, The State University of New Jersey; Saint Francis University; Saint Joseph’s University; St. Peter’s University; Seton Hall University; Temple University; University of Delaware; University of Pittsburgh; and Villanova University. -23- Case 2:17-cv-04271-MMB Document 24-1 Filed 12/28/17 Page 32 of 33 Dated: December 28, 2017 Respectfully submitted s/ Steven B. Katz . John E. MacDonald CONSTANGY, BROOKS, SMITH & PROPHETE, LLP 989 Lenox Drive Suite 206 (2nd Floor) Lawrenceville, New Jersey 08648 Telephone: (609) 454-0096 Facsimile: (609) 844-1102 L. Julius Turman Philip J. Smith CONSTANGY, BROOKS, SMITH & PROPHETE, LLP 351 California, Suite 200 San Francisco, California 94104 Telephone: (415) 918-3002 Facsimile: (415) 918-3003 Steven B. Katz Sarah Kroll-Rosenbaum CONSTANGY, BROOKS, SMITH & PROPHETE, LLP 2029 Century Park East, Suite 1100 Los Angeles, California 90067 Telephone: (310) 909-7775 Facsimile: (424) 465-6630 Counsel for National Collegiate Athletic Association; Duquesne University; Fairleigh Dickinson University; La Salle University; Monmouth University; The Pennsylvania State University; Rider University; Robert Morris University; Rutgers, The State University of New Jersey; Saint Francis University; Saint Joseph’s University; St. Peter’s University; Seton Hall University; Temple University; University of Delaware; University of Pittsburgh; and Villanova University -24- Case 2:17-cv-04271-MMB Document 24-1 Filed 12/28/17 Page 33 of 33 CERTIFICATE OF SERVICE I hereby certify that on December 28, 2017, the foregoing document was served on counsel by filing via the CM/ECF system, which will send an email notice to registered parties. s/ Steven B. Katz . Steven B. Katz CONSTANGY, BROOKS, SMITH & PROPHETE, LLP -25-