Desmond v. Pngi Charles Town Gaming, L.L.C.

• Decision Date: 30 April 2009
• Docket Number: No. 08-1216.,08-1216.
• Citation: 564 F.3d 688
• Parties: John DESMOND; Dana Witherspoon; M. Larry Sanders, Plaintiffs-Appellants, v. PNGI CHARLES TOWN GAMING, L.L.C., d/b/a Charles Town Races & Slots, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fourth Circuit

564 F.3d 688

John DESMOND; Dana Witherspoon; M. Larry Sanders, Plaintiffs-Appellants, v. PNGI CHARLES TOWN GAMING, L.L.C., d/b/a Charles Town Races & Slots, Defendant-Appellee.

No. 08-1216.

United States Court of Appeals, Fourth Circuit.

Argued: March 24, 2009.

Decided: April 30, 2009.

ARGUED: Paul B. Weiss, Martin & Seibert, LC, Martinsburg, West Virginia, for Appellants. Brian Michael Peterson, Bowles, Rice, McDavid, Graff & Love, PLLC, Martinsburg, West Virginia, for Appellee. ON BRIEF: Charles F. Printz, Jr., Bowles, Rice, McDavid, Graff & Love, PLLC, Martinsburg, West Virginia, for Appellee.

Before DUNCAN and AGEE, Circuit Judges, and DAVID A. FABER, Senior United States District Judge for the Southern District of West Virginia, sitting by designation.

Reversed and remanded by published opinion. Judge AGEE wrote the opinion, in which Judge DUNCAN and Senior Judge FABER joined.

OPINION

AGEE, Circuit Judge:

John Desmond, Dana Witherspoon, and M. Larry Sanders (collectively "the Former Employees") appeal from the award of summary judgment to their former employer, PNGI Charles Town Gaming, L.L.C., d/b/a Charles Town Races & Slots ("Charles Town Gaming"). The district court held the Former Employees were barred as a matter of law from recovering unpaid overtime compensation under the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §§ 201, et seq. (2000), because they held administrative positions and were therefore exempt employees. For the reasons set forth below, we reverse the judgment of the district court.

I.

Charles Town Gaming operates a casino and live horse racing facility in Charles Town, West Virginia. The Former Employees worked for Charles Town Gaming in a non-supervisory position denominated as "Miscellaneous Racing Official," which we will refer to as "Racing Official." In the performance of their work duties, each of the Former Employees assisted in various tasks associated with Charles Town Gaming's staging of live horse races. In the morning and on non-race work days Racing Officials assist with clerical duties in the secretaries' office, including noting rider changes, putting together the next day's racing program, and completing racing entries for the following day. Racing Officials, including the Former Employees, rotated work in four roles: Placing Judge, Paddock Judge, Horse Identifier, and Clerk of Scales during horse races. A Placing Judge "observ[es] races from start to finish and determine[s] the final outcome using a viper computer system and photo finish systems ...."¹ J.A. 69, 149-50, 216; see also W. Va.Code R. § 178-1-13 (2009). The Paddock Judge

observ[es] the horses in the paddock prior to the running of a race, [] ensure[s] the horses are wearing the proper equipment for racing [and that] a responsible trainer or groom is in the paddock to saddle the horse and prepare it for the race. The Paddock Judge is also involved in seeing that a published workout is in the program or announced if [it is] not available by press time.

J.A. 69, 150, 215; see also W. Va.Code R. § 178-1-14 (2009). The Horse Identifier is "responsible for foal papers, Coggins test results, and tattoos insuring the correct horse is running in any given race. The [Horse] Identifier goes to the paddock at race time and checks each horse's tattoo." J.A. 69, 152, 215; see also W. Va. Code R. § 178-1-20 (2009). The Clerk of Scales "works in the jockeys' room prior to and after each horse race and verifies each jockey's presence and licensure, [as well as the jockey's weight] before and after each race...." J.A. 216, 150-52; see also W. Va.Code R. § 178-1-17 (2009).

In September 2006, Charles Town Gaming terminated the Former Employees' employment due to "[g]ross violation of procedures" after they unanimously posted an incorrect order of finish for a horse race. J.A. 254-56. The Former Employees subsequently filed separate complaints in the District Court for the Northern District of West Virginia alleging they "routinely" worked in excess of forty hours per work-week, but were not paid for the overtime part of that work as required by the FLSA. The cases were consolidated and the parties filed cross motions for summary judgment.

The district court granted Charles Town Gaming's motion for summary judgment, holding the position of Racing Official met the requirements for an administrative exemption under the FLSA. Desmond v. PNGI Charles Town Gaming, LLC, 2008 WL 153492, No. 3:06-cv-00128-JPB, slip op. at 1-2 (N.D.W.Va. Jan. 14, 2008). The Court determined that the Racing Official's "primary duty" entailed non-clerical, non-manual work related to Charles Town Gaming's production of live horse races, id. at 9-11, and those duties were "directly related to the management or general business operations of" Charles Town Gaming. Id. at 11-13. In reaching this conclusion, the court relied on the fact that West Virginia law "require[s] and regulate[s]" the Racing Official's position, and therefore is "critical for [Charles Town Gaming] to be able to conduct its business, [as Charles Town Gaming] could not conduct its business legally without them." Id. at 11. In addition, it noted that Racing Officials "are involved in" work functions identified in 29 C.F.R. § 541.201(b) as related to the general business operations of an employer, including quality control, safety and health, public relations, and legal and regulatory compliance. Id. at 12. Lastly, the district court held that the Racing Officials exercised discretion and independent judgment in matters of consequence to Charles Town Gaming. Among the factors identified by the district court were a Racing Official's responsibility to correctly identify the order of finish after comparing and evaluating the merits of any challenges to the initial posting, the authority to commit Charles Town Gaming "in matters that have significant financial impact," and the duty to check and ensure compliance with numerous regulations related to the jockeys and horses participating in the races. Id. at 14-16; cf. 29 C.F.R. § 541.202(b) (2009).

The Former Employees noted a timely appeal, and we have jurisdiction pursuant to 28 U.S.C. § 1291 (2000).

II.

We review an award of summary judgment de novo. Hawkspere Shipping Co. v. Intamex, S.A., 330 F.3d 225, 232 (4th Cir. 2003). Summary judgment is only appropriate "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). We construe the evidence in the light most favorable to the Former Employees, the parties opposing Charles Town Gaming's summary judgment motion, and draw all reasonable inferences in their favor. Hill v. Lockheed Martin Logistics Mgmt., Inc., 354 F.3d 277, 283 (4th Cir.2004) (en banc).

III.

The FLSA requires that certain employees be paid at time and a half for work over forty hours a week. 29 U.S.C. § 207(a)(1) (2009). Among the employees exempt from this overtime pay requirement are persons "employed in a bona fide executive, administrative, or professional capacity" ("the administrative exemption"). § 213(a)(1) (2009). The Secretary of Labor has adopted regulations that set forth a three-part test² for determining whether an employee is subject to the administrative exemption: (1) the employee must be compensated at a salary rate of not less than $455 per week; (2) the employee's primary duty must consist of "the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer's customers"; and (3) the employee's primary duty must "include[ ] the exercise of discretion and independent judgment with respect to matters of significance." 29 C.F.R. § 541.200 (2009).

Charles Town Gaming bore the burden of proving, by clear and convincing evidence, see Shockley v. City of Newport News, 997 F.2d 18, 21 (4th Cir.1993), that the Former Employees' jobs fell within the administrative exemption.³ See Idaho Sheet Metal Works, Inc. v. Wirtz, 383 U.S. 190, 86 S.Ct. 737, 15 L.Ed.2d 694 (1966); Clark v. J.M. Benson Co., 789 F.2d 282, 286 (4th Cir.1986). FLSA exemptions are to be "narrowly construed against the employers seeking to assert them and their application limited to those establishments plainly and unmistakably within [the exemptions'] terms and spirit." Arnold v. Ben Kanowsky, Inc., 361 U.S. 388, 392, 80 S.Ct. 453, 4 L.Ed.2d 393 (1960).

On appeal, the Former Employees contend the district court erred in awarding summary judgment to Charles Town Gaming because the position of Racing Official does not satisfy the second and third parts of the regulatory test.⁴ As to the second requirement, the Former Employees assert the district court erred in relying on the legal "significance or necessity of an employee's position" in determining whether the position is "directly related to the management or general business operations of the employer." Appellants' Br. 15. The Former Employees also contend the district court misapplied the provisions of 29 C.F.R. § 541.201(b) by "parsing [its] literal nuances" to a Racing Official's duties without considering "whether such an application is consistent with the original Congressional intent" of the administrative exemption. Appellants' Br. 16-17. Lastly, they assert the "production/staff" dichotomy analysis contained in 29 C.F.R. § 541.201(a) contradicts the district court's holding because Racing Officials "are entirely involved in staging [the] product [of live horse racing contests and] have nothing to do with the operation of the business itself ...."⁵ Appellants' Br. 17-19.

We agree that the district court erred in holding the position of Racing Official satisfied the requirement that the Former Employees' primary duty was "directly related to [the] general business operations of the employer." In reaching its conclusion, ...