explaining that DOL opinion letters are not binding but are often relied on for guidance
How later courts described this case
- explaining that DOL opinion letters are not binding but are often relied on for guidance
- “In general, there are two types of rules: legislative rules, which have the force of law, and interpretive rules, which inform the public of the agency's construction of the statutes it administers. . . . Interpretive rules lack the force of law because they need not undergo notice-and-comment rulemaking as legislative rules do. . . . For this reason, we defer to interpretive rules only to the extent that we find them persuasive.”
- “In this initial inquiry, we. seek not a broad or narrow statutory construction, but the one that most accurately reflects congressional intent”
- typically “opinion letters ... do not warrant Chevron-style deference”
Written by the judges who cited it.
The opinion
15‐2109‐cv
Hill v. Delaware North Companies Sportservice, Inc.
In the
United States Court of Appeals
For the Second Circuit
________
August Term, 2015
No. 15‐2109‐cv
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.
________
Appeal from the United States District Court
for the Western District of New York.
No. 11‐cv‐753 (WMS) (JJM) ― William M. Skretny, Judge.
________
Argued: April 4, 2016
Decided: October 3, 2016
________
Before: POOLER, PARKER, and LIVINGSTON, Circuit Judges.
________
No. 15‐2109‐cv
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.
2
No. 15‐2109‐cv
________
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
3
No. 15‐2109‐cv
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
4
No. 15‐2109‐cv
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
5
No. 15‐2109‐cv
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
6
No. 15‐2109‐cv
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
host. Also, whereas the district court reasoned that Maryland
Sportservice satisfied the seasonal operations test, we decide instead
that it satisfied the receipts test.
7
No. 15‐2109‐cv
I. “Amusement or Recreational Establishment”
FLSA does not define either “amusement or recreational
establishment” or any of the individual words in this phrase. See 29
U.S.C. § 203. In Chen v. Major League Baseball Properties, Inc., 798 F.3d
72 (2d Cir. 2015), our first and only case to deal with this exemption,
we interpreted “establishment” to mean “a distinct, physical place of
business as opposed to an integrated multiunit business or
enterprise.” Id. at 79. Though we also discussed the meaning of
“amusement or recreational,” the amusement or recreational
character of the establishment in Chen was not contested as it is for
the establishment here. Id. at 82. Thus, this case requires further
analysis of the “amusement or recreational” aspect of the exemption.
As in Chen, we first “determine, as a threshold matter, the meaning
of the term” at issue and “then turn to the question of whether . . .
the relevant establishment[] is covered by the exemption.” Id. at 76.
A. Meaning of “Amusement or Recreational”
As an initial matter, the meaning of “amusement or
recreational” in this context is ambiguous. See Chao v. Double JJ
Resort Ranch, 375 F.3d 393, 396‐97 (6th Cir. 2004) (“‘[r]ecreational
establishment’ is an ambiguous phrase”). In Chao, the court noted
that “Congress clearly meant for there to be a limitation to the
exemption, and the words used in the statute do not plainly convey
where that boundary lies.” Id. at 397. Though Appellants argue that
it is “evident that Delaware North’s operations, which are limited to
the provision of food and retail services, are not of a recreational or
amusement character,” Appellants’ Opening Br. 25, this proposition
is actually only arguable. The food, drink, and merchandise that
Maryland Sportservice sells at Oriole Park are predominately for
baseball game attendees’ use and consumption as they watch the
game, and they enhance the amusement or recreational value of
watching the game. For this reason, we believe its operations have
8
No. 15‐2109‐cv
an amusement or recreational character because they provide a
measure of amusement or recreation that would otherwise be absent
from the stadium.
Because we are faced with textual ambiguity, we turn to the
legislative history and to statements of the law from DOL, just as we
did in Chen, 798 F.3d at 76–79.1 O u r f i r s t t a s k i s t o i d en ti f y t h e
contours of the exemption. In this initial inquiry, we seek not a
broad or narrow statutory construction, but the one that most
accurately reflects congressional intent. We have said that FLSA
“exemptions ‘are to be narrowly construed against the employers
seeking to assert them and their application limited to those
establishments plainly and unmistakably within their terms and
spirit.’” Id. at 81 (quoting Davis v. J.P. Morgan Chase & Co., 587 F.3d
529, 531 (2d Cir. 2009)). This rule, as stated, applies only after we
have discerned the “terms and spirit” of a given exemption.
Consistent with this approach, we did not especially aim in Chen for
an interpretation of “establishment” that exempted as few workers
as possible; instead, we examined different sources, and it was only
after ascertaining the definition of “establishment” that we
“narrowly construed” the exemption. See 798 F.3d at 76–79, 81–82.
1. Legislative History
We first examine the legislative history. Congress first
specified that certain amusement or recreational establishments
would be exempt in the 1961 amendments to FLSA. See S. Rep. No.
87‐145, at 49, 68 (1961); Chen, 798 F.3d at 77. The relevant part of the
1961 provision exempted from overtime compensation “any
employee employed by any retail or service establishment, . . . if
1
Judge Livingston views § 213(a)(3), when considered in light of its original text and 1966
amendment and the DOL materials referenced herein, to be sufficiently clear as not to
require resort to legislative history. Accordingly, although she joins in all other parts of
this opinion, she does not join in the subsection that follows, to the extent it relies on
legislative history.
9
No. 15‐2109‐cv
such establishment . . . is an amusement or recreational
establishment that operates on a seasonal basis.” Pub. L. 87‐30, 75
Stat. 65, 71 (1961). Consistent with this earlier statutory text, we
observed that, at this time, “employees of an amusement or
recreational establishment operating on a seasonal basis were
exempt only if the establishment was also a ‘retail or service
establishment.’” Chen, 798 F.3d at 77.
With the 1966 amendments to FLSA, the exemption took its
current form. Pub. L. 89‐601, 80 Stat. 830, 833 (1966), (codified as
amended at 29 U.S.C. § 213(a)(3)). As we observed in Chen, the
amended “wording seems to have been intended to establish criteria
for seasonality, and by eliminating the retail and service language to
make plain that employees of seasonal amusement or recreational
companies generally are exempt.” 798 F.3d at 77 (internal quotation
marks omitted) (quoting Marshall v. New Hampshire Jockey Club, Inc.,
562 F.2d 1323, 1329 (1st Cir. 1977)). Thus, any establishment that
would have qualified under the 1961 version of the exemption also
qualifies under the current version.
The committee reports for the 1961 amendments make clear
that concessionaires at places of amusement or recreation had the
amusement or recreational character required for the exemption.
The reports provide that “[a] similar exemption is provided for
employees of amusement and recreational establishments operating on
a seasonal basis. These establishments are typically those operated by
concessionaires at amusement parks and beaches and are in operation
for 6 months or less a year.” H.R. Rep. No. 87‐75, at 10 (1961)
(emphasis added); accord S. Rep. No. 87‐145, at 28. With the word
“at,” Congress distinguished between concessionaires and the
amusement parks and beaches that host them. Thus, the legislative
history treats concessionaires as core examples of amusement or
recreational establishments, even when analyzed separately from the
amusement or recreational sites they serve. This history undermines
Appellants’ suggestion that a concessionaire can only qualify for the
10
No. 15‐2109‐cv
exemption if it is part of the same establishment as the host
amusement or recreational establishment.
That concessionaires are examples of exempt establishments
also defeats Appellants’ contention that Congress cannot have
understood an establishment that sells food and merchandise to
have an amusement or recreational character. Though the
committee reports do not define “concessionaire,” Merriam‐
Webster’s Unabridged Dictionary defines it as “a person or firm that
is the beneficiary of a concession,” and a concession is most
pertinently defined as “a lease of premises or a portion of premises
for a particular purpose, especially for some purpose supplementary
to another activity . . . or for providing entertainment.”
Furthermore, the definition of “concessionaire” gives as examples
“one that owns or operates a stand or booth to sell refreshments or
opportunities for entertainment to patrons of a recreational center
(as a beach, park, or fair),” “one that holds the right to sell a
particular type of product or service in a given location,” and “one
that provides food service in a factory, school, or other
establishment.” Based on this dictionary definition, we are
comfortable in concluding that the essence of serving as a
concessionaire is having a contractual arrangement with a host to
operate on the host’s premises to sell goods to the host’s customers
for them to use or consume, also on the host’s premises, during the
host’s amusement or recreational activities.
Modest additional support that food and retail establishments
can be amusement or recreational for the purpose of the exemption
comes from language in the same committee reports deeming this
exemption “similar” to one for “employees of a retail or service
establishment employed primarily in connection with the
preparation or offering of food for human consumption on the
premises.” S. Rep. No. 87‐145, at 28; accord H.R. Rep. No. 87‐75, at 10.
It seems unlikely that Congress would have intended to exempt
11
No. 15‐2109‐cv
these food service employees but not the ones selling food as part of
the concessions at an amusement or recreational establishment.
Having found no statements in the legislative history or past
versions of the statutory text that contradict the ones we have
highlighted, we conclude that these sources reflect a congressional
understanding that concessionaires that sell food, drink, and
merchandise at amusement or recreational sites have the requisite
amusement or recreational nature to qualify for the exemption.
2. Statements from DOL
Further guidance comes from the DOL. Among such
statements, the most authoritative are the Department’s rules. In
general, there are two types of rules: legislative rules, which have
the force of law, and interpretive rules, which inform the public of
the agency’s construction of the statutes it administers. Perez v.
Mortg. Bankers Ass’n, 135 S. Ct. 1199, 1203‐04 (2015). Interpretive
rules lack the force of law because they need not undergo notice‐
and‐comment rulemaking as legislative rules do. Id. at 1204. For
this reason, we defer to interpretive rules “only to the extent that we
find them persuasive.” Reiseck v. Universal Commc’ns of Miami, Inc.,
591 F.3d 101, 106 (2d Cir. 2010) (citing Skidmore v. Swift, 323 U.S. 134,
140 (1944)).
Here, the potentially relevant regulations are merely
persuasive because they are interpretive. See 29 C.F.R. § 779.0
(describing the rules as “official interpretations . . . by which the
Department of Labor will be guided”); The Fair Labor Standards Act
as Applied to Retailers of Goods or Services, 35 Fed. Reg. 5856 (Apr.
9, 1970) (codified as amended at 29 C.F.R. § 779) (noting that the
notice‐and‐comment rulemaking requirement was “not applicable
because these are interpretive rules”). The rule that discusses the
exemption most extensively is 29 C.F.R. § 779.385, which provides
that:
12
No. 15‐2109‐cv
“Amusement or recreational establishments” as used in [29 U.S.C.
§ 213(a)(3)] are establishments frequented by the public for its
amusement or recreation and which are open for 7 months or less
a year or which meet the seasonal receipts test provided in clause
(B) of the exemption. Typical examples of such are the
concessionaires at amusement parks and beaches.
This passage implies that concessionaires at amusement or
recreational sites can be “establishments frequented by the public for
its amusement or recreation.” Though not binding, this rule adds
persuasive value and reinforces our view of the legislative history.
Though legislative history can risk becoming “an exercise in looking
over a crowd and picking out your friends,” Exxon Mobil Corp. v.
Allapattah Servs., Inc., 545 U.S. 546, 568 (2005) (internal quotation
marks omitted), the fact that DOL’s interpretive rule on the
exemption adopts the sentence about concessionaires gives us
confidence that we have not taken that sentence out of context.
Two other interpretive rules confirm our view of the history of
the exemption; they note that the exemption appeared in the 1961
amendment and was moved to a different section in 1966, without
suggesting in any way that the exemption was narrowed in 1966.
See 29 C.F.R. §§ 779.338, 779.381. No other rules dealing with retail
establishments under FLSA conflict with these. Thus, there is
consistency between the legislative history and DOL’s interpretive
rules in indicating that concessionaires can have an amusement or
recreational character.
We next turn to DOL opinion letters. Though we have often
relied on them, Barfield v. New York City Health & Hospitals Corp., 537
F.3d 132, 149 (2d Cir. 2008), we are not bound by them any more
than we are bound by DOL’s interpretive rules. The Supreme Court
has stated that “opinion letters . . . do not warrant Chevron‐style
deference.” Christensen v. Harris Cty., 529 U.S. 576, 587 (2000).
Instead, the level of deference to “opinions of Administrator under”
FLSA “will depend upon the thoroughness evident in its
consideration, the validity of its reasoning, its consistency with
13
No. 15‐2109‐cv
earlier and later pronouncements, and all those factors which give it
power to persuade.” Skidmore, 323 U.S. at 140.
One letter we find relevant is from 1967, which further
supports our view that the 1966 amendments did not narrow the
exemption. Comparing the 1966 and 1961 versions, the letter states
that “the amended act does not require that the amusement or
recreational establishment be a retail or service establishment as was
required under . . . the prior act.” U.S. Dep’t of Labor Wage & Hr.
Div. Op. Ltr., 1967 DOLWH LEXIS 164, at *3 (June 22, 1967)
[hereinafter 1967 Letter]. If anything, this statement, combined with
the legislative history, suggests that a concessionaire would have
more clearly qualified under the 1961 amendments than the
amusement or recreational establishments that hosted them because
concessionaires are more obviously retail establishments.
However, the core message of the 1967 Letter is in tension
with DOL’s interpretive rule, 29 C.F.R. § 779.385. Whereas the
interpretive rule treats a concessionaire as an exempt establishment
on its own, the 1967 Letter seems to exempt concessionaires only as
part of a combined establishment with their hosts by saying the
exemption applies “provided the operations of the concessionaire
and the host establishment constitute a single establishment which
meets the requirements for the exemption.” 1967 Letter, at *1. Since
the 1967 Letter states that “it is only in rare instances that two or
more business activities on the same premises . . . [will] constitute
more than one establishment for the purpose of the exemption[],” id.
at *2, it generally also indicates that 29 C.F.R. § 779.385 would apply.
Nonetheless, the reasoning of these two statements differ in a
significant way that would affect the application of the seasonality
tests. For example, under 29 C.F.R. § 779.385, the receipts to
measure for Test B would seem to be just the concessionaire’s. In
contrast, the 1967 Letter implies that the relevant receipts would be
the combined receipts of the concessionaire and host establishment.
14
No. 15‐2109‐cv
A different opinion letter from DOL, from 2009, may outright
contradict 29 C.F.R. § 779.385. U.S. Dep’t of Labor Wage & Hr. Div.
Op. Ltr. FLSA2009‐11, 2009 WL 649013 (Jan. 15, 2009) [hereinafter
2009 Letter]. The 2009 Letter dealt with “a concessionaire at a
privately‐owned recreational establishment” that “holds an
exclusive contract with the owner of a recreational establishment to
provide various catering services to the general public and to private
parties who use the facility.” Id. at *1. The DOL determined that
this concessionaire “is not itself an amusement or recreational
establishment, but is a legal entity separate from the recreational
establishment where its employees work.” Id. at *2. It concluded
that this concessionaire “and the recreational establishment with
which it contracts are not a ‘single establishment’” and that it is thus
ineligible for the exemption. Id.
Not only are the 1967 and 2009 Letters in tension with the
legislative history and with 29 C.F.R. § 779.385, but they are also in
tension with DOL’s Field Operations Handbook. This “agency
manual” is on the same level as “opinion letters,” “policy
statements,” and “enforcement guidelines” as an interpretation of
law. See Christensen, 529 U.S. at 587. In discussing the amusement
and recreational exemption, it offers as a qualifying example
establishments that sell food and other goods in national parks and
similar areas when they are “limited by policy of the Interior or
Agriculture Departments to merchandising only those items and
providing only those services appropriate for the public use and
enjoyment of the areas administered by them.” U.S. Dep’t of Labor
Wage & Hr. Div. Field Operations Handbook, § 25j02 (2016). In
these settings, “the activities of these establishments are considered
to have a sufficiently intimate relation to the operation of these
recreational areas to warrant their characterization as amusement or
recreational establishments.” Id. Here, as in 29 C.F.R. § 779.385, the
establishments selling food or merchandise are exempt in their own
15
No. 15‐2109‐cv
right, not because they constitute a single establishment with the
national parks or other government‐administered areas they serve.
Overall, it appears that DOL does not have a consistent
position as to whether or how concessionaires will be deemed to
have an amusement or recreational character. Fortunately, we are
not required to reconcile apparent conflicts among non‐legislative
interpretations of law by DOL. In general, whether a non‐legislative
interpretation deserves deference under Skidmore depends on
whether it is “consisten[t] with earlier and later pronouncements.”
323 U.S. at 140. Instead of attempting to harmonize DOL’s various
pronouncements, we choose to follow the legislative history,
adopted in 29 C.F.R. § 779.385, and hold that concessionaires at
amusement or recreational establishments will qualify on their own
as exempt establishments if they meet at least one of the seasonality
tests in 29 U.S.C. § 213(a)(3). Following this approach, we define
concessionaires as establishments whose purpose is to sell goods
and services on the premises of an amusement or recreational host
facility to the host’s customers for their use or consumption on the
host’s premises as they participate in the host’s amusement or
recreational activities. To the extent that any of DOL’s opinion
letters or other non‐legislative interpretations of FLSA conflict with
this holding, we decline to give them any weight.
Our holding is a narrow one in three senses. First, with
respect to concessionaires as defined above, we are not precluding
the possibility that they might also qualify because their operations
and those of their host establishments constitute a single qualifying
establishment. Second, we do not intend to alter the effect or
interpretation of any statements by DOL as they apply to
establishments other than concessionaires. Third, we have limited
our holding to establishments that are most commonly understood
to be concessionaires. In so doing, we do not determine the outer
limits of this category. Overall, we are merely providing an
alternative path for archetypal concessionaires to qualify as
16
No. 15‐2109‐cv
“amusement or recreational” establishments in their own right for
the purposes of the exemption.
B. Application to Maryland Sportservice
We now consider whether Maryland Sportservice’s operations
at Oriole Park make it a concessionaire. As an initial matter, Oriole
Park, the host facility, clearly has an amusement or recreational
character because of the baseball games it hosts. Next, though
Appellants contend that the concessions are physically separate
from other activities at Oriole Park, they do not contest that
Maryland Sportservice operates entirely within Oriole Park. In any
event, the fact that part of the park complex is a building separated
by Eutaw Street does not mean that any operations in that building
are operating on a different premises from the rest of the
concessions. Finally and most importantly, the parties agree that
Maryland Sportservice’s business is predominantly with ticket
holders during game days. It is clear to us that this establishment
has as its primary purpose selling food, drink, and Orioles
merchandise to customers of Oriole Park for their consumption and
use as they participate in watching the baseball games held there.
For these reasons, Maryland Sportservice possesses the
characteristics of a concessionaire described above.
The only remaining question arises from the small amount of
business Maryland Sportservice does outside of game days with
non‐ticket holders, which are not activities of a concessionaire as
defined above because these activities are not associated with a
particular baseball game. Operations on non‐game days include the
Orioles Team Store, where Appellants primarily worked, Dempsey’s
Brew Pub, and and rental of clubs and lounges at Oriole Park. We
think the disparity in the numbers of employees on game days
compared to non‐game days—as many as 600 versus as few as
12—makes the extent of operations that are not typical of a
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No. 15‐2109‐cv
concessionaire de minimis. We believe that, with our working
definition of concessionaire, a de minimis level of non‐
concessionaire activities does not detract from an establishment’s
overall amusement or recreational character. For these reasons, we
conclude that Maryland Sportservice is an “amusement or
recreational establishment” under FLSA.
II. Seasonality Tests
Operating as an amusement or recreational establishment is
not sufficient to qualify for the exemption from overtime
compensation. Rather, as noted, FLSA exempts such an
establishment only “if (A) it does not operate for more than seven
months in any calendar year, or (B) 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.” 29 U.S.C. § 213(a)(3). Following the district
court, we refer to these tests as “Test A” and “Test B.” Roughly
speaking, Test A is based on when during the year the establishment
is open for business, whereas Test B is based on when it receives
most of its revenue.
A. Test A: Seasonal Operations
The text of Test A might suggest that an establishment must
not engage in any activity at all for five months, even for
maintenance purposes. However, DOL has interpreted “operate” to
mean “operate[] as an amusement or recreational establishment.”
U.S. Dep’t of Labor Wage & Hr. Div. Field Operations Handbook
§ 25j01(b). It has indicated that, “[i]f an establishment engages only
in activities such as maintenance operations or ordering supplies
during the dead season, it is not considered to be operating for the
purposes of the exemption.” Id. For example, it has advised that
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No. 15‐2109‐cv
lifeguards’ off‐season maintenance work would not cause their
establishment to fail Test A:
The fact that some of the lifeguards work more than seven months
in the year maintaining the equipment would not serve to deny
the exemption under [29 U.S.C. § 213(a)(3)], provided the
establishment (the beach) is not open as a recreational facility (i.e.,
protected swimming) for more than seven months in any calendar
year.
U.S. Dep’t of Labor Wage & Hr. Div. Op. Ltr. WH‐309, 1975 WL
40933, at *1 (emphasis removed) (Jan. 24, 1975). One of our sister
Circuits has interpreted the seasonal operations test similarly,
deciding that a baseball franchise satisfied the test even though
“Plaintiff was employed in the off‐season months relative to the
preparation and maintenance of the baseball fields.” Jeffery v.
Sarasota White Sox, Inc., 64 F.3d 590, 596 (11th Cir. 1995). The
Eleventh Circuit reasoned that “[i]t is the revenue‐producing
operation of the . . . franchise which affords it the protection of the
exemption.” Id.
Maryland Sportservice’s operations at Oriole Park do not as
obviously satisfy the seasonal operations test. While most of its
business is tied to baseball games, which occur during a baseball
season lasting no more than seven months, it continues to operate
the Orioles Team Store and Dempsey’s Brew Pub during the off‐
season. Its statement that individuals do not need a ticket to enter
these places during the off‐season strongly suggests that its
employees are not simply performing maintenance or preparation
work in this part of the year. If so, then under Jeffery, the business of
the Team Store and Dempsey’s would be part of Maryland
Sportservice’s “revenue‐producing operation.” Though the revenue
from these operations is almost certainly de minimis, we are hesitant
to hold that such operations are not occurring at all, especially since
Test B deals with receipts and is apparently designed to measure
revenue in different months.
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No. 15‐2109‐cv
We are also uncertain how DOL would decide this question.
Maryland Sportservice cites several opinion letters for the
proposition that a recreational establishment is not operating if it “is
not open as a recreational facility.” DOL Wage & Hour Op. Ltr.
FLSA 2009‐5, 2009 WL 648997 (Jan. 14, 2009); DOL Wage & Hour Op.
Ltr., 1986 WL 1171127 (May 12, 1986); DOL Wage & Hour Op. Ltr.,
1986 WL 1171081 (Jan. 17, 1986); DOL Wage & Hour Op. Ltr. WH‐
309, 1975 WL 40933 (Jan. 24, 1975). However, none of the scenarios
discussed in these letters described involve revenue‐producing
operations, as opposed to maintenance. Also, while the DOL did
investigate Maryland Sportservice’s use of the exemption, it did not
provide any explanation to support its finding of no violation. Thus,
we are reluctant to bind this Court to a rule as to whether and when
revenue‐producing operations that are not for amusement or
recreational purposes should count toward the seasonal operations
test’s seven‐month limit.
B. Test B: Receipts
Fortunately, we need not articulate such a rule in this case
because we readily conclude that DNC Sportservice satisfied the
receipts test. The test is relatively straightforward to apply when the
establishment has operated for the whole of the “preceding calendar
year” but needs to be adapted when it began operating in the middle
of the preceding year. Here, Maryland Sportservice employed
Appellants in 2011 but only began to serve as the concessionaire at
Oriole Park in November 2010. A literal reading of the text of Test B
would yield an unfair advantage to establishments that start
operating midyear because they would have no receipts in the
months before they started operating. Since Maryland Sportservice
started in November of the preceding calendar year, it would seem
automatically to satisfy the receipts test because its receipts from
January through June 2010, which would appear to be zero, would
almost certainly not be more than a third of the average receipts for
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No. 15‐2109‐cv
July through December 2010, as the company conducted business in
November and December.
At any rate, we question whether a literal reading of Test B in
fact comports with § 213(a)(3)’s reasonable construction. See John F.
Manning, The Absurdity Doctrine, 116 HARV. L. REV. 2387, 2486 (2003)
(distinguishing “literal meaning” from “reasonable‐user‐of‐
language” approach to statutory interpretation and noting that latter
approach “eliminates . . . putative absurdities . . . aris[ing] under a
literal meaning framework”). Though we read a statute according to
its plain language, the Supreme Court has cautioned against literal
readings producing absurd results.” See Corley v. United States, 556
U.S. 303, 317 (2009); see also Local Union 36, Intʹl Bhd. of Elec. Workers,
AFL‐CIO v. NLRB, 631 F.3d 23, 27 (2d Cir. 2010). The result we have
described above is absurd because it threatens to provide many
amusement and recreational establishments a way to satisfy Test B
before and during the first full year of operation even when they
would fail the test in subsequent years. Looking beyond this literal
interpretation, we think that, when an establishment was not
operating during the entirety of the “preceding calendar year,” it
must have some functional equivalent of a preceding calendar year’s
record of receipts to satisfy Test B.
The DOL’s Field Operations Handbook has recognized the
need for such an approach, and it has offered establishments two
ways of satisfying the receipts test:
a. If the enterprise of which the new establishment is a part
operates other seasonal amusement or recreational
establishments . . . of the same type in the same general area
under substantially the same conditions and all such
establishments conclusively and clearly meet the condition of
Test B; or
b. If such employer does not have other such establishments but
other employers operating the same type of establishment in
the same general area under substantially the same conditions
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No. 15‐2109‐cv
and manner of operation clearly are entitled to exemption
under Test B.
§ 25j08(a)(2). Though DOL’s application of the receipts test for new
establishments is not binding, we choose to grant it Skidmore
deference because we see the “thoroughness evident in its
consideration,” and “validity of its reasoning,” and because we have
not found any contrary interpretive statements from the DOL. 323
U.S. at 140.
DNC Sportservice claims that Maryland Sportservice’s
concessions at Oriole Park satisfied Test B in 2011 under both criteria
(a) and (b) of DOL’s test for new business, and Appellants do not
dispute these claims. Corresponding to criterion (a), DNC
Sportservice submits that, for its other baseball stadium concessions,
the average receipts of the six months of 2010 with the smallest
receipts were not more than 33 1/3% of the average receipts of the six
months of 2010 with the greatest receipts. Since these other
stadiums were baseball‐only ballparks like Oriole Park, it appears
that DNC Sportservice operated these other concessions “under
substantially the same conditions” as the Oriole Park concessions.
Since all these other establishments conclusively and clearly pass the
receipts test, we conclude that the Oriole Park concessions satisfy
prong (a), as well.
Even if these concessions did not satisfy criterion (a), criterion
(b), which asks an employer to identify “other employers” that are
similarly situated, would be satisfied. Here, DNC Sportservice
identified the most closely analogous employer to Maryland
Sportservice: its immediate predecessor in operating the same
concessions at Oriole Park, ARAMARK. Since ARAMARK operated
these concessions until November 2010, combining ARAMARK’s
receipts in 2010 with Maryland Sportservice’s receipts for the
remainder of that year arguably yields the best estimate of what
Maryland Sportservice’s receipts would have been in 2010 had it
operated the concessions the entire year. The 2010 receipts imply a
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No. 15‐2109‐cv
clear entitlement to exemption under Test B, since the least busy six
months had only 4.86% of the receipts of the other six months.
Though other plaintiffs might have contested whether these
approximations to a preceding calendar year’s receipts are close
enough to show that Maryland Sportservice satisfies Test B,
Appellants here have not done so. Instead, having contended
(unpersuasively) that Maryland Sportservice has to qualify as part of
a single establishment with Oriole Park, they assert that, even if
Maryland Sportservice so qualifies, a genuine issue of material fact
exists as to whether the combined single establishment satisfies
either Test A or Test B. However, because we have decided that
Maryland Sportservice qualifies in its own right as an amusement or
recreational establishment by virtue of its function as a
“concessionaire” operating at an amusement or recreational host, we
need only consider whether Maryland Sportservice meets either of
the seasonality tests. Thus, any issue of fact as to the seasonality of
Oriole Park combined with Maryland Sportservice, even if genuine,
is not material. Since Maryland Sportservice’s statements as to
various receipts are supported by sufficient evidence, we conclude
that it was a seasonal establishment in 2011 under Test B.
CONCLUSION
In sum, Maryland Sportservice is an “amusement or
recreational establishment” because it is a “concessionaire” at an
amusement or recreational facility, which Congress intended to
exempt if it also meets one of the seasonality tests. Because
Maryland Sportservice satisfies the receipts test as applied to new
businesses under DOL’s guidance, Appellants were exempt from
overtime compensation under 29 U.S.C. § 213(a)(3). Accordingly, we
AFFIRM the judgment of the district court.
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