Acosta v. Paragon Contractors Corp.

• Decision Date: 13 March 2018
• Docket Number: No. 17-4025,17-4025
• Citation: 884 F.3d 1225
• Parties: R. Alexander ACOSTA, Secretary of Labor, United States Department of Labor, Plaintiff-Appellee, v. PARAGON CONTRACTORS CORPORATION; Brian Jessop, individually, Defendants-Appellants, and James Jessop, individually, Defendant.
• Court: U.S. Court of Appeals — Tenth Circuit

884 F.3d 1225

R. Alexander ACOSTA, Secretary of Labor, United States Department of Labor,¹ Plaintiff-Appellee,

v.PARAGON CONTRACTORS CORPORATION; Brian Jessop, individually, Defendants-Appellants,andJames Jessop, individually, Defendant.

No. 17-4025

United States Court of Appeals, Tenth Circuit.

FILED March 13, 2018

Rick J. Sutherland (M. Christopher Moon, with him on the briefs), of Jackson Lewis PLLC, Salt Lake City, Utah, for Defendants-Appellants.

Maria Van Buren, Counsel for Child Labor and Special FLSA Projects (Nicholas C. Geale, Acting Solicitor of Labor; Jennifer S. Brand, Associate Solicitor, and Paul L. Frieden, Counsel for Appellate Litigation, with her on the brief), United States Department of Labor, Washington, D.C., for Plaintiff-Appellee.

Before LUCERO, BACHARACH, and MORITZ, Circuit Judges.

BACHARACH, Circuit Judge.

This case arises out of a 2007 injunction, which prohibited Paragon Contractors Corporation and its president (Mr. Brian Jessop) from engaging in oppressive child labor. The Department of Labor procured a contempt citation, with the district court finding that Paragon and Mr. Jessop had violated the injunction by employing children to harvest pecans. For this violation, the district court sanctioned Paragon and Mr. Jessop by

• appointing a special master to monitor Paragon’s ongoing compliance with the injunction and

• ordering Paragon and Mr. Jessop to pay $200,000 into a fund to compensate the children.

Paragon and Mr. Jessop appeal the contempt finding and the sanctions. We conclude that the district court did not err in

• finding that Paragon and Mr. Jessop had violated the injunction by oppressively employing children and

• ordering Paragon and Mr. Jessop to pay $200,000.

But we reverse the district court’s appointment of a special master.

I. The Use of Children to Gather Pecans and the Subsequent Contempt Citation

The Southern Utah Pecan Ranch owned over 100 acres of pecan trees in Utah. Through 2007, the Ranch had an informal arrangement with the Fundamentalist Church of Jesus Christ of Latter-Day Saints. After the Ranch harvested pecans from the trees, the Church could send community members to gather the pecans that had fallen to the ground. The gatherers consisted largely of children, who gave half of the fallen pecans to the Church and half to the Ranch.

In 2008, the Ranch began a series of year-long contracts with Paragon. Under these contracts, Paragon obtained responsibility for operating the pecan grove and harvesting the pecans. Paragon received 70% of the proceeds from the sale of the pecans, and the Ranch received 30%.

Though Paragon was to manage the pecan grove, the Church continued to send children to gather the fallen pecans. Paragon hired Mr. Dale Barlow to fulfill the contract with the Ranch. The Church identified Mr. Barlow as the contact person for the gathering operation, and he participated in organizing and managing the Church’s efforts to gather the fallen pecans.

In 2012, the Department of Labor investigated Paragon and Mr. Jessop, concluding that they had violated the child-labor provisions of the Fair Labor Standards Act, 29 U.S.C. § 212. This conclusion led the Department of Labor to allege a violation of the 2007 injunction. This allegation ultimately led to the finding of contempt.

II. Did Paragon and Mr. Jessop violate the 2007 injunction?

Paragon and Mr. Jessop deny violating the 2007 injunction. On this issue, we review the district court’s ruling for an abuse of discretion. United States v. Ford , 514 F.3d 1047, 1051 (10th Cir. 2008). The court abuses its discretion by relying on an error of law or reaching a clearly erroneous finding of fact. Id.

To prevail, the Department of Labor needed to prove by clear and convincing evidence "[1] that a valid court order existed, [2] that the defendant[s] had knowledge of the order, and [3] that the defendant[s] disobeyed the order." F.T.C. v. Kuykendall , 371 F.3d 745, 756-57 (10th Cir. 2004) (en banc) (quoting Reliance Ins. Co. v. Mast Constr. Co. , 159 F.3d 1311, 1315 (10th Cir. 1998) ) (alterations in original). Paragon and Mr. Jessop do not dispute the first two elements, focusing instead on the third element.

The 2007 injunction prohibited Paragon and Mr. Jessop from employing minors "under conditions constituting oppressive child labor." Appellant’s App’x at 17. Paragon and Mr. Jessop do not question the oppressiveness of the labor. Instead, they make two arguments:

1. The children were not covered by the Fair Labor Standards Act because they were volunteers rather than employees.

2. Even if the children were employees, they were not Paragon’s employees; therefore, Paragon and Mr. Jessop are not responsible for the employment of the children.

We reject both contentions.

A. Were the children volunteers?

The first question is whether the children were volunteers rather than employees. We review de novo the district court’s determination that the children were "employees," which presents an issue of statutory interpretation. Johns v. Stewart , 57 F.3d 1544, 1557 (10th Cir. 1995).

The statutory definition of "employee" is "any individual employed by an employer."

29 U.S.C. § 203(e)(1). And "employ" is defined as "to suffer or permit to work." Id. § 203(g). These definitions are "exceedingly broad." Tony and Susan Alamo Found. v. Sec'y of Labor , 471 U.S. 290, 295, 105 S.Ct. 1953, 85 L.Ed.2d 278 (1985).

Paragon and Mr. Jessop contend that the children are not covered by the Fair Labor Standards Act based on (1) the Supreme Court’s opinion in Tony and Susan Alamo Foundation v. Secretary of Labor , 471 U.S. 290, 105 S.Ct. 1953, 85 L.Ed.2d 278 (1985), and (2) the statutory food-bank exception, 29 U.S.C. § 203(e)(5). We reject both contentions.

1. Are the children covered under the Fair Labor Standards Act based on Alamo Foundation ?

In Alamo Foundation , the Supreme Court discussed the scope of the Fair Labor Standards Act’s coverage of employees. The Court noted that the scope of "employee" is "exceedingly broad" but does contain limits. 471 U.S. at 295, 105 S.Ct. 1953. For example, the definition of an "employee" does not include "[a]n individual who, ‘without promise or expectation of compensation, but solely for his personal purpose or pleasure, worked in activities carried on by other persons[.]’ " Id. (quoting Walling v. Portland Terminal Co. , 330 U.S. 148, 152, 67 S.Ct. 639, 91 L.Ed. 809 (1947) ).

Paragon and Mr. Jessop use this definition, arguing that the children were not "employees" because

• they had no reason to expect compensation and

• they worked "solely for [their] personal purpose or pleasure."

Id. According to Paragon and Mr. Jessop, the children freely chose to gather pecans in order to help the Church and the community. Paragon and Mr. Jessop point to testimony from some of the children that they viewed themselves as volunteers and chose whether to participate in the harvest.

The district court disagreed, relying instead on testimony characterizing the children’s participation as mandatory. Some children and parents testified that

• the children had been ordered to attend the harvest and

• the Church had closed the schools when it was time to harvest the pecans.

In addition, one child stated that if she had not worked, she would have lost her family and been kicked out of the community. Likewise, parents testified that they had sent their children to the harvest because of pressure from the Church, and one father expressed fear that his family would be separated if he had disobeyed. In light of the testimony, the district court’s finding of coercion was not clearly erroneous. Given this finding, we conclude that the children did not choose to work for their own "personal purpose or pleasure"; they worked because of coercion.

Paragon and Mr. Jessop respond that even if the children had been coerced, the coercion had come from the Church rather than Paragon. But the Alamo Foundation standard does not address the source of the coercion.² Alamo Foundation states only that individuals working for their own "personal purpose or pleasure" are not covered by the Fair Labor Standards Act. Id. (quoting Walling v. Portland Terminal Co. , 330 U.S. 148, 152, 67 S.Ct. 639, 91 L.Ed. 809 (1947) ). Under this standard, the children were not gathering pecans solely for their own personal purpose or pleasure. Therefore, Alamo Foundation does not support reversal.³

2. Does the food-bank exception apply?

Paragon and Mr. Jessop also invoke 29 U.S.C. § 203(e)(5), known as the "food-bank exception," which precludes consideration as "employees" when workers "volunteer their services solely for humanitarian purposes to private non-profit food banks and ... receive from the food banks groceries." Based on this statute, Paragon and Mr. Jessop argue that the children gathered pecans for the benefit of the Bishop’s Storehouse of the Church. For this argument, we may assume (without deciding) that the Bishop’s Storehouse constitutes a non-profit food bank. See Susan Harthill, Shining the Spotlight on Unpaid Law-Student Workers , 38 Vt. L. Rev. 555, 582 (2014) ("[I]n amending [the Fair Labor Standards Act] ..., Congress chose to only exempt volunteers at food banks and not any other type of nonprofit volunteer."). Even with this assumption, the argument would fail because the children did not "volunteer" their services.

The Fair Labor Standards Act does not define the term "volunteer." We therefore consider the term’s ordinary meaning. See Conrad v. Phone Directories Co. , 585 F.3d 1376, 1381 (10th Cir. 2009). Dictionaries provide a helpful basis for determining this meaning. Jones v. C.I.R. , 560 F.3d 1196, 1201 (10th Cir. 2009). The term "volunteer" is commonly defined as an offer to work without solicitation, compulsion, constraint, or influence of another. Webster’s Third New International Dictionary 2564 (1993); see also The American Heritage Dictionary of the English Language 1941-42 (5th ed. 2011) (defining "volunteer" as "[t]o give...