Berger v. Nat'l Collegiate Athletic Ass'n

Citation843 F.3d 285
Decision Date05 December 2016
Docket NumberNo. 16-1558,16-1558
Parties Gillian BERGER, et al., Plaintiffs-Appellants, v. NATIONAL COLLEGIATE ATHLETIC ASSOCIATION, et al., Defendants-Appellees.
CourtUnited States Courts of Appeals. United States Court of Appeals (7th Circuit)

Paul McDonald, Attorney, P L McDonald Law LLC, Philadelphia, PA, for Plaintiffs-Appellants.

William F. Allen, Attorney, Littler Mendelson, P.C., Daniel Volchok, Attorney, WilmerHale, Washington, DC, Alan L. McLaughlin, Attorney, Littler Mendelson P.C., Indianapolis, IN, Donald S. Prophete, Attorney, Constangy, Brooks & Smith, LLP, Kansas City, MO, Lisa Ann Schreter, Attorney, Littler Mendelson, Atlanta, GA, for Defendant-Appellee National Collegiate Athletic Association.

William J. Anthony, Attorney, Jackson Lewis P.C., Albany, NY, Gregg E. Clifton, Attorney, Jackson Lewis, P.C., Phoenix, AZ, Paul DeCamp, Attorney, Jackson Lewis P.C., Reston, VA, D. Christopher Lauderdale, Attorney, Jackson Lewis P.C., Greenville, SC, for Defendants-Appellees Abilene Christian University, American University, Bucknell University, Charleston Southern University, Fordham University, Georgetown University, University of Hartford, Howard University, University of San Diego, University of Southern California, and Tulane University.

William F. Allen, Attorney, Littler Mendelson, P.C., Washington, DC, Alan L. McLaughlin, Attorney, Littler Mendelson P.C., Indianapolis, IN, Donald W. Myers, Attorney, Littler Mendelson, Philadelphia, PA, Donald S. Prophete, Attorney, Constangy, Brooks & Smith, LLP, Kansas City, MO, Lisa Ann Schreter, Attorney, Littler Mendelson, Atlanta, GA, for Defendant-Appellee Belmont University.

William F. Allen, Attorney, Littler Mendelson, P.C., Washington, DC, Jim Goh, Attorney, Constangy, Brooks, Smith, & Prophete, LLP, Denver, CO, Alan L. McLaughlin, Attorney, Littler Mendelson P.C., Indianapolis, IN, Donald S. Prophete, Attorney, Constangy, Brooks & Smith, LLP, Kansas City, MO, Lisa Ann Schreter, Attorney, Littler Mendelson, Atlanta, GA, for Defendant-Appellee University of Denver.

Danuta B. Panich, Attorney, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Indianapolis, IN, for Defendant-Appellee Duke University.

Kelly L. DeGance, Attorney, Alexander DeGance Barnett, P.A., Jacksonville, FL, Alan L. McLaughlin, Attorney, Littler Mendelson P.C., Indianapolis, IN, for Defendant-Appellee Jacksonville University

William J. Anthony, Attorney, Jackson Lewis P.C., Albany, NY, Gregg E. Clifton, Attorney, Jackson Lewis, P.C., Phoenix, AZ, Paul DeCamp, Attorney, Jackson Lewis P.C., Reston, VA, Lorna Hebert, Attorney, Northeastern University, Boston, MA, D. Christopher Lauderdale, Attorney, Jackson Lewis P.C., Greenville, SC, for Defendant-Appellee Northeastern University.

William F. Allen, Attorney, Littler Mendelson, P.C., Washington, DC,

Alan L. McLaughlin, Attorney, Littler Mendelson P.C., Indianapolis, IN, Donald S. Prophete, Attorney, Constangy, Brooks & Smith, LLP, Kansas City, MO, Lisa Ann Schreter, Attorney, Littler Mendelson, Atlanta, GA, Terry M. Kollmorgen, Attorney, Moyers Martin, LLP, Tulsa, OK, for Defendant-Appellee Oral Roberts University.

Lawrence D. Peikes, Attorney, Wiggin and Dana LLP, Stamford, CT, Jeffrey Babbin, Attorney, Wiggin & Dana, New Haven, CT, for Defendant-Appellee Quinnipiac University.

Before Kanne, Sykes, and Hamilton, Circuit Judges.

Kanne, Circuit Judge.

Former student athletes at the University of Pennsylvania ("Penn") sued Penn, the National Collegiate Athletic Association ("NCAA"), and more than 120 other NCAA Division I universities and colleges alleging that student athletes are employees who are entitled to a minimum wage under the Fair Labor Standards Act ("FLSA"). The district court disagreed. We agree with the district court and hold that student athletes are not employees and are not covered by the FLSA.

I. BACKGROUND

Gillian Berger and Taylor Hennig ("Appellants") are former students at Penn who participated on Penn's women's track and field team. Like many collegiate athletic teams across the country, Penn's women's track and field team is regulated by the NCAA. The NCAA is a member-driven, unincorporated association of 1121 colleges and universities. It is divided into three divisions—Divisions I, II, and III—based roughly on the size of the schools and their athletic programs. Penn's women's track and field team competes in Division I, which includes the largest colleges and universities in the country.

Appellants sued Penn, the NCAA, and more than 120 other NCAA Division I member schools ("Appellees"), alleging that student athletes are "employees" within the meaning of the FLSA, 29 U.S.C. § 201. Accordingly, Appellants contend that the NCAA and its member schools violated the FLSA by not paying their athletes a minimum wage. Appellees moved to dismiss under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6).

The district court granted Appellees' motions, holding that (1) Appellants lacked standing to sue any of the Appellees other than Penn, and (2) Appellants failed to state a claim against Penn because student athletes are not employees under the FLSA. This appeal followed.

II. ANALYSIS

The district court first dismissed Appellants' suit against all of the Appellees except Penn for lack of standing. We review de novo a district court's dismissal of a complaint for lack of standing. Lewert v. P.F. Chang's China Bistro, Inc. , 819 F.3d 963, 966 (7th Cir. 2016).

In every case, the plaintiff has the burden of establishing the three elements of standing: that "(1) [he or she] has suffered an ‘injury in fact’ that is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the challenged action of the defendant; and (3) it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision." 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) (citing Lujan v. Defs. of Wildlife , 504 U.S. 555, 560–61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) ). To meet this burden and to survive a challenge to standing under Rule 12(b)(1), a plaintiff must plead sufficient factual allegations, taken as true, that "plausibly suggest" each of these elements. Silha v. ACT, Inc. , 807 F.3d 169, 174 (7th Cir. 2015).

Under the FLSA, alleged employees' "injuries are only traceable to, and redressable by, those who employed them." Roman v. Guapos III, Inc. , 970 F.Supp.2d 407, 412 (D. Md. 2013). Appellants attended Penn. Their connection to the other schools and the NCAA is far too tenuous to be considered an employment relationship: "the only fair reading of the Amended Complaint is that [Appellants] are alleging that they are employees of only Penn, not of the other Defendants." (R. 238 at 5.) Thus, Appellants have not plausibly alleged any injury traceable to, or redressable by, any defendant other than Penn. So they lack standing to sue those other defendants.

We now turn to the merits with regard to Penn, over which no one disputes that we have jurisdiction. The district court dismissed Appellants' suit against Penn for failure to state a claim. We review de novo a district court's dismissal of a complaint for failure to state a claim. Jackson v. Blitt & Gaines, P.C. , 833 F.3d 860, 862 (7th Cir. 2016). In evaluating the sufficiency of the complaint, "we construe it in the light most favorable to the nonmoving party, accept well-pleaded facts as true, and draw all inferences in [the nonmoving party's] favor." Bell v. City of Chicago , 835 F.3d 736, 738 (7th Cir. 2016) (quoting Reynolds v. CB Sports Bar, Inc. , 623 F.3d 1143, 1146 (7th Cir. 2010) ). Although a party need not plead "detailed factual allegations" to survive a motion to dismiss, mere "labels and conclusions" or "a formulaic recitation of the elements of a cause of action will not do." Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). Instead, "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Twombly , 550 U.S. at 570, 127 S.Ct. 1955 ).

The FLSA requires "[e]very employer" to pay "his employees" a minimum wage of $7.25 per hour. 29 U.S.C. § 206(a)(1)(c). Section 203(e)(1) defines "employee" in an unhelpful and circular fashion as "any individual employed by an employer." 29 U.S.C. § 203(e)(1). Section 203(g) broadly defines "employ" as "to suffer or permit to work." 29 U.S.C. § 203(g). Thus, to qualify as an employee for purposes of the FLSA, one must perform "work" for an "employer."1 "Work" is not defined by the Act.

Under the FLSA, the plaintiff bears the burden of establishing that he or she performed work for an employer and is therefore entitled to compensation. Melton v. Tippecanoe Cty. , 838 F.3d 814, 818 (7th Cir. 2016). Here, to survive the motions to dismiss, Appellants had to allege facts, which taken as true, establish that they were employees and performed work for Penn.

Although "[t]he Supreme Court has instructed the courts to construe the terms ‘employee’ and ‘employer’ expansively under the FLSA," Vanskike v. Peters , 974 F.2d 806, 807 (7th Cir. 1992) (citing Nationwide Mut. Ins. Co. v. Darden , 503 U.S. 318, 326, 112 S.Ct. 1344, 117 L.Ed.2d 581 (1992) ), the Court has also held that the definition of "employee" "does have its limits." Tony & Susan Alamo Found. v. Sec'y of Labor , 471 U.S. 290, 295, 105 S.Ct. 1953, 85 L.Ed.2d 278 (1985). "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" between the alleged employee and the alleged employer to decide whether C...

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