Doe v. Butler Amusements, Inc.

• Decision Date: 27 October 2014
• Docket Number: Case No. 13–cv–03027–JCS
• Citation: 71 F.Supp.3d 1125
• Court: U.S. District Court — Northern District of California
• Parties: John Doe I, et al., Plaintiffs, v. Butler Amusements, Inc., Defendant.

71 F.Supp.3d 1125

John Doe I, et al., Plaintiffs
v.
Butler Amusements, Inc., Defendant.

Case No. 13–cv–03027–JCS

United States District Court, N.D. California.

Signed October 27, 2014

71 F.Supp.3d 1127

Charlotte Whiton Noss, Denise M. Hulett, Fernando Flores, San Francisco, CA, for Plaintiffs.

ORDER RE CROSS–MOTIONS FOR SUMMARY JUDGMENT

Re: Dkt. Nos. 59, 60

JOSEPH C. SPERO, United States Magistrate Judge

I. INTRODUCTION

Plaintiffs in this action (John Doe I and John Doe II) worked for Defendant Butler Amusements, Inc. as carnival guest workers under the Department of Labor's H–2B Temporary Work Visa Program. They assert wage and hour claims under the Fair Labor Standards Act of 1938 (“FLSA”), 29 U.S.C. §§ 201, et seq., and under California state law. Before the Court are cross-motions for summary judgment addressing whether Defendant is exempt from federal and/or state law wage and hour requirements. A hearing on the motions was held on Friday, September 19, 2014 at 2:00 pm. The parties submitted supplemental briefs following the hearing. For the reasons stated below, the motions are GRANTED in part and DENIED in part.¹

II. BACKGROUND

A. Facts²

1. Defendant's Operations

Defendant Butler Amusements, Inc. owns and operates a traveling carnival, typically operating at 135–140 distinct locations in Arizona, California, Idaho, Nevada, Oregon, and Washington State during its season. Joint Statement of Undisputed Material Facts (“JSUMF”), Nos. 17–18 (citing Butler Amusements, Inc.'s Motion for Partial Summary Judgment (“Defendant's Motion”), Ex. 1 (Affidavit of Mick Brajevich) (“Brajevich Motion Decl.,”), ¶¶ 4, 6). Defendant does not own these locations; rather, it enters into contracts with the landowner (often a fairground) or sponsor. Brajevich Motion Decl., ¶ 22. Under these contracts, Defendant is given the exclusive use of a designated parcel of land to set up and operate its carnival for the duration of its event. JSUMF, No. 27 (citing Brajevich Motion Decl., ¶ 23). These parcels are always unoccupied, grass-covered fields, gravel lots, or parking lots. Id. Other than the parking support provided by the parking lots, each of these properties has no independent or sustained business operation. Id. Further, nearly all of the locations are separated by many miles, and in some cases, hundreds of miles. Id., No. 23 (citing Brajevich Motion Decl., ¶ 12).

Defendant sets up its carnival equipment on each designated parcel without instruction from the landowner or sponsor as to how the carnival should be laid out. Id., No. 27. Typically, a carnival will have one to three entrances or gates where patrons may enter. Id., No. 28 (citing Brajevich Motion Decl., ¶ 24). Once inside, the patron may wander freely throughout the midway, which is a common area bounded externally on all sides by carnival equipment. Id. Using fencing and the arrangement of equipment, Defendant separates the carnival from the surrounding area, making it difficult for the public to enter or leave the carnival except through the designated entrances. Id., No. 29 (citing Brajevich Motion Decl., ¶ 25). At its carnivals, Defendant provides rides (ranging from a single ride to about 65 rides at its largest carnivals), amusement

71 F.Supp.3d 1128

games and food operations. Id., Nos. 24–25 (citing Brajevich Motion Decl., ¶¶ 15–17). At the conclusion of each carnival, Defendant tears down its equipment and moves on to the next location. Id., No. 22 (citing Brajevich Motion Decl., ¶ 11). In Defendant's business, setting up and tearing down carnival rides and equipment is a normal, expected, and characteristic function of amusement ride operators and attendants.Id., No. 31 (citing Brajevich Motion Decl., ¶ 36).

The average length of operation at any particular location is about 9–10 days. Id., Nos. 19–20 (citing Brajevich Motion Decl., ¶¶ 7–8). In 2008–2010, the longest event was a 6–week Christmas event; there were also two events that ran 17 days. Id., No. 21 (citing Brajevich Motion Decl., ¶ 9). Defendant does not dispute, however, that it has operated at multiple, distinct locations for more than seven months out of each calendar year in all relevant years. Declaration of Jessica Stender in Support of Plaintiff's Memorandum of Points and Authorities in Opposition to Defendant's Motion for Partial Summary Judgment (“Stender Opposition Decl.”), Ex. J (Defendant's Interrogatory Responses) No. 8 (“[d]efendant admits that the beginning of its operation seasons from 2003 through 2010 until the end of each such operating season was greater than 7 months”).

Apart from the temporary locations where Defendant's carnivals are held, Defendant maintains several permanent locations. See Butler Amusements, Inc.'s Opposition to Motion for Partial Summary Judgment (“Defendant's Opposition”), Ex. 1 (Affidavit of Mick Brajevich) (“Brajevich Opposition Decl.,”), ¶ 3. Defendant operates an administrative office in Beaverton, Oregon. JSUF, No. 13. The Beaverton address is listed in the California Secretary of State Business Information as the address for Butler Amusements, Inc. Stender Opposition Decl., Ex. K. It was also the address used by Defendant for its 2010 corporation federal income tax return. See Declaration of Fernando Flores in Support of Plaintiff's Reply to Defendant's Opposition of Plaintiff's Motion for Partial Summary Judgment (“Flores Reply Decl.”), Ex. B. According to Defendant, “[a]ccounting for certain financial commitments is handled through the administrative office in Beaverton, Oregon ... [including] purchase payments for certain equipment or paying certain bills, such as workers' compensation.” Brajevich Opposition Decl., ¶ 3. However, the Beaverton office does not handle payroll or paychecks, according to Defendant. Id. It is undisputed that Plaintiffs never performed any work in the Beaverton location and that no amusement activities were conducted there. Defendant also maintains a permanent office in Fairfield, California that handles bookings, promotions and contracts, and a maintenance yard in Santa Nella, California where certain maintenance and trucking functions are handled. Id., ¶ 3. Butler Amusements, Inc. is registered as a California corporation. Stender Opposition Decl., Ex. K.

Butler also maintains between one and six units for handling the operations of the carnivals, each with a mobile unit office. Brajevich Opposition Decl., ¶ 4. According to Defendant, each unit office is the “central operations for the unit” and “controls the employees assigned to that unit.” Id., ¶ 5. The unit office “is responsible for approximately 90% of that unit's bills” and is responsible for “that unit's payroll and paying workers.” Id. Thus, the Plaintiffs in this action were assigned to “individual worksites for an individual unit as soon as they arrived in the country” and were “always paid through the individual office of the unit to which they were assigned.” Id., ¶ 6. Neither Plaintiff was ever assigned to or based in the Beaverton, Oregon office. Id., ¶ 7.

71 F.Supp.3d 1129

According to Defendant, its revenues for amusement rides are “collected and accounted by selling tickets at ticket booths.” Brajevich Motion Decl., ¶ 16. Revenue generated by amusement games and food operations is also collected and accounted at each point of sale. Id., ¶ 18. Defendant's tax and accounting records are maintained by an outside accountant, Steve Nittler, who has standing requests for supporting documentation of revenues and who also issues “special requests for documentation as needed.” Id., ¶ 21; Defendant's Motion, Ex. 2 (Affidavit of Steve Nittler) (“Nittler Motion Deck”). Nittler has reviewed Defendant's corporate tax and accounting records and prepared a chart “identifying each of Defendant's events throughout 2008–2009, the dates of those events, and the revenue from rides, games, food, and the total revenue for each location.” Nittler Motion Decl., ¶ 6. A summary of that chart is offered by Defendant in support of its summary judgment motion. See Defendant's Motion, Ex. 3 (Evidence Summary of Gross Revenue Receipts). Using the method that Nittler understood is used to determine whether the FLSA's amusement exemption applies, Nittler calculated the ratios of Defendant's receipts for 2008 and 2009 as 24.67% and 22.1% respectively. Id. Nittler states that he calculated the ratios using the following method:

When events crossed between months, I used customary practice to allocate the revenue proportionally based upon the number of days of operation in each month. The various revenue figures for rides, games, food, and all sources were then cumulated for the 6 months with the lowest revenue and the 6 months with the highest revenue. These 6–month figures were then averaged, and the averages were converted into a ratio.

Id.

In a supplemental declaration, Nittler explained that because all revenue is received only during the course of individual events, under the circumstances here the terms “revenue” and “receipts” are interchangeable. Butler Amusements, Inc.'s Reply Supporting its Motion for Partial Summary Judgment...