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Hill v. Delaware North Companies Sportservice, Inc.

United States Court of Appeals, Second Circuit

October 3, 2016

William A. Hill and Tanica Brown, individually and on behalf of all others similarly situated, Plaintiffs-Appellants,
v.
Delaware North Companies Sportservice, Inc., Defendant-Appellee, Baltimore Orioles Limited Partnership, Intervenor.

          Argued: April 4, 2016

         Appeal from the United States District Court for the Western District of New York. No. 11-cv-753 (WMS) (JJM) ― William M. Skretny, Judge.

         Plaintiffs-Appellants William A. Hill and Tanica Brown appeal from a judgment of the United States District Court for the Western District of New York (William M. Skretny, Judge). The district court granted summary judgment to Defendant-Appellee Delaware North Companies Sportservice, Inc., whose subsidiary owns the concessions at Oriole Park at Camden Yards, as to Hill and Brown's claims for overtime compensation under the Fair Labor Standards Act, on the ground that Appellee is an "amusement or recreational establishment" exempt from the overtime requirement. We hold that an establishment that operates on the premises of an amusement or recreational host, selling goods or services to the host's customers for their consumption or use as they engage in the host's amusement or recreational activities, is a "concessionaire" with an "amusement or recreational" character. We determine that Appellee's subsidiary is such a "concessionaire" and also that its receipts reflect that its business is seasonal, so that it qualifies for the overtime exemption. Accordingly, we AFFIRM the judgment of the district court.

          Gary Lynch, Carlson Lynch Sweet & Kilpela, LLP, Pittsburgh, PA (Jamisen A. Etzel, Carlson Lynch Sweet & Kilpela, LLP, Pittsburgh, PA, Edward David Hoskins, Law Offices of E. David Hoskins, LLC, on the brief) for Plaintiffs-Appellants.

          Robert Pritchard (Brian M. Hentosz, on the brief), Littler Mendelson, P.C., Pittsburgh, PA, Terrence M. Connors, Connors LLP, Buffalo, NY, for Defendant-Appellee.

          Marie Celeste Bruce, Rifkin Livingston Levitan & Silver LLC, Bethesda, MD, James R. Grasso, Phillips Lytle LLP, Buffalo, NY, for Intervenor.

          Before Pooler, Parker, and Livingston, Circuit Judges.

          Barrington D. Parker, Circuit Judge

         The Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et. seq., strives to combat "labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers." Id. § 202. To that end it requires most employers to pay an overtime premium of one and one-half times the regular rate of pay for those hours that an employee works in excess of the standard forty-hour work week. Id. § 207(a)(1). However, any "amusement or recreational establishment" is exempt from paying overtime if its operations or receipts show that its business is seasonal. Id. § 213(a)(3). Plaintiffs- Appellants William A. Hill and Tanica Brown, who worked at the concessions at Oriole Park, the home field of the Baltimore Orioles, seek overtime compensation, which Defendant-Appellee Delaware North Companies Sportservice Inc. ("DNC Sportservice"), the owner of these concessions, chose not to pay on the basis of this exemption. The United States District Court for the Western District of New York (William N. Skretny, Judge), granted summary judgment in favor of DNC Sportservice, reasoning that it was exempt.

         This appeal calls on us to decide whether a concessions operator at a place of amusement or recreation qualifies in its own right as "amusement or recreational, " even though it does not directly provide the amusement or the recreation. We determine that it does qualify. Though FLSA does not define "amusement or recreational, " the legislative history and an interpretative rule from the Department of Labor ("DOL") indicate that "concessionaires" at amusement or recreational establishments are themselves typical examples of such establishments. Using the common understanding and definition of "concessionaire, " we hold that an establishment at an amusement or recreational host that sells goods or services to the host's customer's for their consumption or use during the host's amusement or recreational activities is a concessionaire that qualifies as an "amusement or recreational establishment" under FLSA.

         To qualify for the exemption, DNC Sportservice must also have satisfied at least one of the two tests for seasonality. Under "Test A, " the seasonal operations test, it must "not operate for more than seven months in any calendar year." 29 U.S.C. § 213(a)(3). Under "Test B, " the receipts test, it must be the case that, "during the preceding calendar year, its average receipts for any six months of such year were not more than 33 1/3 per centum of its average receipts for the other six months of such year." Id. We conclude that DNC Sportservice satisfied the receipts test during the relevant period and do not rely on the operations test. For all these reasons, we affirm the judgment of the district court.

         BACKGROUND

         The relevant facts are undisputed. In November 2010, Maryland Sportservice, Inc., a wholly-owned subsidiary of DNC Sportservice, entered into a concession agreement with the Baltimore Orioles Limited Partnership, which has intervened in this case. This agreement grants Maryland Sportservice the right to operate the food, beverage and merchandise sales concessions at Oriole Park. Oriole Park consists of two structures: the baseball stadium itself and part of an old Baltimore & Ohio Railroad warehouse, separated by a pedestrian promenade known as Eutaw Street.

         Maryland Sportservice operates entirely within Oriole Park. On game days Maryland Sportservice operates on every level dozens of stands (which are hard stands with three cinderblock walls and a roll-up shutter, where customers walk up to the stand to make their purchase) throughout the ballpark, selling food and beverages, or souvenirs and merchandise. Television monitors in the concourses show the baseball game live so that baseball fans need not miss any of the action on the field when purchasing concessions at a stand. Maryland Sportservice also operates numerous portable concession carts throughout the ballpark, and its vendors walk through the seating areas of the ballpark, selling food and beverages. These services are available only in connection with home baseball games being played at Oriole Park, and only to ticket holders who are at Oriole Park to watch a Major League Baseball game.

         Other parts of Maryland Sportservice's operations at Oriole Park occur on non-game days. It operates a number of clubs and lounges in the ballpark, which on game days are available only to ticket holders but are also available for rental on other days with food that it caters. In addition, it operates the Orioles Team Store, which sells Orioles apparel and team souvenirs, and Dempsey's Brew Pub and Restaurant. Both of these are in the warehouse section at Oriole Park and are likewise open only to ticket holders on game days. However, they are also open on non-game days and during the off-season, and individuals do not require a game ticket to enter them on these days.

         Though Maryland Sportservice has some operations on non- game days, the parties agree that "the overwhelming majority of its business is conducted exclusively with ticket holders during game baseball games." J.A. 186; see id. at 312. Appellants do not dispute that its average receipts at Oriole Park for the six months of 2011 in which receipts were smallest were not more than 33 1/3% of the average receipts for the other six months when receipts were the largest. Receipts in 2010 yield an even more stark comparison between the busiest six months and the others. Before Maryland Sportservice started operating the concessions at Oriole Park in 2010, ARAMARK operated them under substantially the same conditions. When the 2010 receipts for ARAMARK and Maryland Sportservice are considered together, the result is that the average receipts of these entities during the off-season months of January through March and October through December are a mere 4.86% of the average receipts for the baseball season months of April through September. This disparity between the baseball season and the off- season is consistent with the fact that Maryland Sportservice has around 600 employees working at its operations on game days but as few as 12 employees working at the Team Store and Dempsey's on non-game days. This disparity is also typical of the concessions that DNC Sportservice operates at baseball stadiums through various subsidiaries. Its concession services at the Great American Ball Park in Cincinnati, Ohio, Progressive Field in Cleveland, Ohio, and Metro Bank Park in Harrisburg, Pennsylvania all had average receipts for the six months in 2010 with the smallest receipts that were not more than 33 1/3% of the average receipts for the other six months of 2010. Like Oriole Park, each of these other facilities is a baseball-only ballpark.

         Appellants were employees of Maryland Sportservice's concessions. Hill was employed from March through most of June 2011, and Brown was employed from February to June 2011. individuals worked primarily as retail supervisors primarily at the Orioles Team Store but also did some work at the mini-gift and souvenir stands in Oriole Park. Appellants regularly worked in excess of forty hours, but Maryland Sportservice classified them as exempt from FLSA's overtime provision pursuant to the "amusement or recreational establishment" exemption and paid them only their regular hourly rate for the excess hours. investigated Maryland Sportservice's use of the exemption in 2012, but informed it on January 2, 2013 that DOL had found no violation of FLSA. The DOL provided no further explanation.

         In September 2011, Hill commenced a putative class action, alleging that DNC Sportservice failed to pay him and other similarly-situated employees overtime compensation in violation of FLSA. In the same month, Brown filed a written consent to join this action. In March 2013, the Baltimore Orioles Limited Partnership successfully moved to intervene.

         In separate reports and recommendations on July 28, 2014 and December 15, 2014, the magistrate judge to whom the case was referred recommended that the district court grant DNC Sportservice's motions for summary judgment. The magistrate judge reasoned that DNC Sportservice qualified for the "amusement or recreational establishment" exemption from FLSA's overtime requirement because the concession activities "were an integral part of the amusement and recreational character of Oriole Park." Special App. 6. Turning to seasonality, it decided that DNC Sportservice "satisfied Test A of § 213(a)(3) since it did not operate for more than seven months in 2011" and declined to reach Test B. Id. at 8.

         The district court adopted the respective reports and recommendations, and entered judgment. The Plaintiffs appealed.

         DISCUSSION

         Our review of the district court's grant of summary judgment is de novo. Pippins v. KPMG, LLP, 759 F.3d 235, 239 (2d Cir. 2014). We may affirm summary judgment on any grounds with sufficient support in the record, even if they differ from the ones on which the district court relied. McElwee v. Cty. of Orange, 700 F.3d 635, 640 (2d Cir. 2012). Whereas the district court appeared to suggest a general principle that an establishment can qualify if its operations are an integral part of a host establishment's amusement or recreational character, we adopt a narrower rule that a "concessionaire, " as defined below, has the amusement or recreational character of its ...


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