Chen v. Major League Baseball Properties, Inc.
25 Wage & Hour Cas. (BNA) 299, 798 F.3d 72, 25 Wage & Hour Cas.2d (BNA) 299 (2015)
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Rule of Law:
Under the Fair Labor Standards Act (FLSA), the term 'establishment' for the purpose of the seasonal amusement or recreational exemption refers to a distinct, physical place of business. A temporary event held at a location physically separate from the parent organization's main offices is considered a separate establishment, even if it is functionally integrated with the parent organization.
Facts:
- Major League Baseball Properties, Inc. and the Office of the Commissioner of Baseball ('Defendants') maintain corporate offices at 245 Park Avenue in New York City.
- In July 2013, as part of the All-Star Week festivities, Defendants organized a five-day event called FanFest, which they described as an 'interactive baseball theme park'.
- FanFest was held at the Jacob K. Javits Center, a venue physically separate from Defendants' corporate offices.
- Activities at FanFest included batting cages, baseball clinics, memorabilia displays, photo booths, and other interactive baseball-themed attractions.
- John Chen worked three shifts, totaling approximately fourteen hours, at the FanFest event performing various tasks like stamping wrists, handing out bags, and directing attendees.
- Prior to the event, Chen attended three hours of mandatory orientation sessions.
- Chen did not receive wages for his work but was provided with in-kind benefits, including a t-shirt, cap, backpack, water bottle, and a baseball.
Procedural Posture:
- John Chen filed a putative collective action lawsuit against Major League Baseball Properties, Inc. and the Office of the Commissioner of Baseball in the U.S. District Court for the Southern District of New York.
- Chen's complaint alleged violations of the Fair Labor Standards Act (FLSA) and the New York Labor Law (NYLL).
- Defendants filed a motion to dismiss the amended complaint, arguing FanFest was exempt from FLSA's minimum wage requirements.
- The district court granted the Defendants' motion to dismiss the FLSA claims, concluding that FanFest qualified for the seasonal amusement or recreational establishment exemption.
- The district court then declined to exercise supplemental jurisdiction over the state-law NYLL claims.
- Chen, as appellant, appealed the district court's dismissal to the U.S. Court of Appeals for the Second Circuit.
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Issue:
Does a temporary, interactive fan event, located at a distinct physical venue separate from its parent organization's main offices, qualify as an 'establishment' for the purposes of the seasonal amusement or recreational establishment exemption under the Fair Labor Standards Act, 29 U.S.C. § 213(a)(3)?
Opinions:
Majority - Pooler, J.
Yes. A temporary fan event at a distinct physical location qualifies as a separate 'establishment' for the FLSA's seasonal amusement exemption. The term 'establishment' under the FLSA means a 'distinct physical place of business,' not an entire business enterprise. This interpretation is supported by Supreme Court precedent in A.H. Phillips, Inc. v. Walling and Department of Labor (DOL) regulations, which distinguish between a single establishment and a multi-unit enterprise. Because FanFest took place at the Javits Center, a location physically separate from Defendants' main offices, it constitutes its own establishment. The multi-factor test for determining separate establishments argued by Chen only applies to business units operating on the same premises. As FanFest was a physically separate establishment that operated for only five days and was clearly recreational in nature, it 'plainly and unmistakably' falls within the seasonal amusement or recreational establishment exemption of the FLSA.
Analysis:
This decision solidifies the 'distinct physical place of business' test for defining an 'establishment' under the FLSA's amusement exemption within the Second Circuit. It clarifies that functional integration and common ownership are immaterial when business units are geographically separate. The ruling provides a clear legal framework for large, year-round enterprises like sports leagues to operate temporary, seasonal events that are exempt from minimum wage requirements, potentially increasing the use of unpaid 'volunteers' for such events. This narrows the scope of FLSA protections for individuals working at temporary venues that are part of larger corporate operations.
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