Jacqueline Benjamin v. B & H Education

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

JACQUELINE BENJAMIN, individually No. 15-17147

and on behalf of all others similarly

situated; BRYAN GONZALEZ, D.C. No.

individually and on behalf of all 3:13-cv-04993-

others similarly situated; TAIWO VC

KOYEJO, individually and on behalf

of all others similarly situated,

Plaintiffs-Appellants, OPINION

v.

B & H EDUCATION, INC.

Defendant-Appellee.

Appeal from the United States District Court

for the Northern District of California

Vince Chhabria, District Judge, Presiding

Argued and Submitted September 11, 2017

San Francisco, California

Filed December 19, 2017

Before: Mary M. Schroeder and Richard C. Tallman,

Circuit Judges, and Robert H. Whaley,* District Judge.

Opinion by Judge Schroeder

*

The Honorable Robert H. Whaley, United States District Judge for

the Eastern District of Washington, sitting by designation.

2 BENJAMIN V. B&H EDUCATION

SUMMARY**

Labor Law

The panel affirmed the district court’s summary judgment

in favor of the defendant in an action brought under the Fair

Labor Standards Act by students of cosmetology and hair

design.

The panel held that, under the “economic reality” test, the

students were not employees under the FLSA even though

they alleged that much of their time was spent in menial and

unsupervised work. Agreeing with other circuits, the panel

held that a “primary beneficiary” analysis, rather than a test

formulated by the Department of Labor, applies in the

specific context of student workers. The panel concluded that

the students, not defendant’s schools, were the primary

beneficiaries of their own labors because at the end of their

training they qualified to practice cosmetology.

The panel held that the students also were not employees

entitled to be paid under Nevada or California law.

The panel further held that the district court did not abuse

its discretion by striking declarations as a sanction under

Federal Rule of Civil Procedure 37.

**

This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

BENJAMIN V. B&H EDUCATION 3

COUNSEL

Bryan J. Schwartz (argued) and Logan Talbot, Bryan

Schwartz Law, Oakland, California; Leon Greenberg and

Dana Sniegocki, Law Office of Leon Greenberg, Las Vegas,

Nevada; Chaya M. Mandelbaum and Michelle G. Lee, Rudy

Exelrod Zieff & Lowe LLP, San Francisco, California; for

Plaintiffs-Appellants.

Robert Lane Morris (argued), Soltman Levitt Flaherty &

Wattles LLP, Thousand Oaks, California, for Defendants-

Appellees.

OPINION

SCHROEDER, Circuit Judge:

Plaintiffs are students of cosmetology and hair design at

schools in California and Nevada operated by defendant B&H

Education, Inc., under the name of Marinello Schools of

Beauty. Plaintiffs claim that they are employees within the

meaning of the Fair Labor Standards Act (“FLSA”), and

under California and Nevada state law, on the ground that

much of their time is spent in menial and unsupervised work,

and that they are therefore entitled to compensation. The

District Court granted summary judgment for B&H on the

FLSA claim, holding that under the test applicable to such

claims, the Plaintiffs, not the schools, are the primary

beneficiaries of their own labors because at the end of their

training they qualify to practice cosmetology. Moreover,

state law requires clinical training that includes maintenance

of a clean and sanitary work environment and does not

require that all client work be supervised. The District Court

4 BENJAMIN V. B&H EDUCATION

also granted summary judgment for B&H on Plaintiffs’

claims under California and Nevada state law. We affirm.

Factual and Procedural Background

Marinello Schools of Beauty is a for-profit school that

offers discounted cosmetology services to the public through

salons staffed by vocational students who do not receive

compensation. Marinello is licensed to operate in California

and Nevada, and provides both classroom instruction and

clinical experience for students. Students must complete a

minimum number of instruction hours before participating in

the clinic and working on customers. See Cal. Code Regs.,

tit. 16, § 950.12; Nev. Rev. Stat. § 644.408.

Cosmetologists are required under California and Nevada

law to be individually licensed. Cal. Code Regs., tit. 16,

§ 976; Nev. Rev. Stat. § 644.190(2). State law requires that,

before applicants may take the licensing exam, they must take

part in hundreds of hours of classroom instruction, including

observing demonstrations, and practical training that includes

performing services on a person or mannequin. See Cal.

Code Regs., tit. 16, §§ 950.2, 928(a); Nev. Rev. Stat.

§§ 644.200, 644.204, 644.400(2). The state licensing exam

tests sanitation and cleaning knowledge as well as

cosmetology skills. Cal. Bus. & Prof. Code § 7338; Nev.

Rev. Stat. §§ 644.240, 644.244. Students at Marinello attend

lectures, review course materials, take tests, and practice

cosmetology on customers in the clinic under some instructor

supervision, thereby allowing them to earn academic credit

toward qualifying them to take the state licensing exam. In

the clinic, students not only practice cosmetology itself,

including hair, skin, and nail treatments, but perform selected

duties that include sanitizing their work stations, laundering

BENJAMIN V. B&H EDUCATION 5

linens, dispensing products, greeting customers, making

appointments, and selling products.

Plaintiffs in this case are Jacqueline Benjamin and Taiwo

Koyejo, cosmetology students at Marinello in California, and

Bryan Gonzalez, a hair design student at Marinello in

Nevada. In January 2015, Plaintiffs filed a Second Amended

Collective and Class Action Complaint in the District Court

for the Northern District of California. Plaintiffs claimed

that, rather than properly educate and train them in

cosmetology, B&H exploited the Plaintiffs for their unpaid

labor. B&H did this, Plaintiffs claimed, by not paying them

for their work in Marinello’s salons, by leaving them

unsupervised in the salon, and by requiring them to perform

services that they already could do as opposed to services that

they needed to learn for the licensing exams. Plaintiffs also

claimed B&H unlawfully kept the salon’s profits, Plaintiffs’

tuition fees, the money Plaintiffs spent when required to

purchase Marinello’s salon supplies to service paying

customers, as well as heavy fines that B&H imposed on

Plaintiffs for tardiness and absences during scheduled salon

shifts. Plaintiffs sought payment for minimum and overtime

wages, premium wages for missed meal and rest breaks, civil

penalties for violating wage laws, restitution of fines, and

reimbursement for supply purchases. Plaintiffs also

requested declaratory judgment that B&H’s practices violated

federal and state law.

Plaintiffs moved for summary judgment, asserting that the

students were employees under federal and state law. B&H

filed a cross-motion for summary judgment, contending the

Plaintiffs were students, not employees. In response to

B&H’s cross-motion for summary judgment and to support

the allegations of the complaint, Plaintiffs relied in part on

6 BENJAMIN V. B&H EDUCATION

witness declarations from three individuals who Plaintiffs had

not disclosed to B&H pursuant to Federal Rule of Civil

Procedure 26. The District Court therefore ordered the

declarations stricken pursuant to Rule 37. The District Court

then granted B&H summary judgment and denied Plaintiffs’

motion for summary judgment. Applying the primary

beneficiary test set forth in Glatt v. Fox Searchlight Pictures,

Inc., 791 F.3d 376 (2d Cir. 2015), amended and superseded

by 811 F.3d 528 (2d Cir. 2016), and Schumann v. Collier

Anesthesia, P.A., 803 F.3d 1199 (11th Cir. 2015), the District

Court held that Plaintiffs were not employees under federal

or state law because Plaintiffs were the primary beneficiaries

of the educational program and they had not shown that

Marinello subordinated the educational function of its clinics

to its own profit-making purposes.

Plaintiffs appeal, challenging the District Court’s rulings

under both federal and state law, as well as the Rule 37

ruling.

Discussion

I. Federal law under the FLSA

The essence of Plaintiffs’ claim is that they should be

treated as employees rather than students. Therefore, our

analysis under federal law must begin with the distinction that

has developed between students, or interns, on the one hand

and employees on the other. The seminal case is Walling v.

Portland Terminal Co., 330 U.S. 148 (1947) (Portland

Terminal), involving trainees working alongside railroad

workers, and it has remained the guiding source of the

principles governing cases involving claims of both trainees

and students seeking to be treated as employees.

BENJAMIN V. B&H EDUCATION 7

In Portland Terminal, the Supreme Court had to interpret

bare bones provisions of the FLSA to determine whether

railroad trainees were employees. 330 U.S. at 152–53. The

FLSA defines an employee to be “any individual employed

by an employer”; it defines “employ” as “to suffer or permit

to work.” 29 U.S.C. § 203(e)(1), (g). The United States

Department of Labor (“DOL”) sought an injunction against

a railroad for failing to pay its trainees minimum wages under

the FLSA. Because the trainees were performing work for

the railroad, DOL contended they were required to be paid by

the railroad as employees. See Portland Terminal, 330 U.S.

at 149. The railroad responded that it was providing training

that benefitted the trainees, because the training they were

receiving would qualify them to serve and be compensated as

employees. Id. at 149–50. After reviewing the factors it

deemed relevant, the Court ruled in favor of the railroad. Id.

at 153. It reasoned that the trainees, not the railroad, were the

direct beneficiaries of the system and were therefore not

employees of the railroad. Id.

A number of important factors contributed to that

conclusion. The railroad provided a week-long practical

training course to the trainees, who were all prospective yard

brakemen. Id. at 149–50. At the completion of the training,

the railroad certified the trainees as qualified to be railroad

employees. Id. at 150. The trainees did not displace regular

employees, and the trainees’ work sometimes impeded the

railroad’s business. Id. at 149–50. The railroad’s supervisors

often oversaw the trainees’ work, and the trainees never

expected any remuneration for the training period. Id. at 150.

Once certified, the trainees’ names were placed on a list of

qualified workers from which the railroad could draw for paid

work when needed. Id. In short, the trainees derived a major

benefit by becoming qualified to do paid work, where the

8 BENJAMIN V. B&H EDUCATION

railroad bore some burden and inconvenience in the short run.

In finding that the trainees were not employees under the

FLSA, the Court observed that “the railroads receive no

‘immediate advantage’ from any work done by the trainees

. . . .” Id. at 153. The Court held the trainees were not

employees. Id.

It is important for our purposes that in so holding, the

Court expressly compared the trainees to students in an

educational setting, emphasizing that students are not

employees. The Court noted that the FLSA’s definition

cannot be read so broadly as to include all students as

“employees of the school or college they attend” and that had

the “trainees taken courses in railroading in a public or

private vocational school, wholly disassociated from the

railroad, it could not reasonably be suggested that they were

employees of the school within the meaning of the [FLSA].”

Id. at 152–53.

Since Portland Terminal, the Supreme Court has, in a

handful of cases outside the educational context, further

refined the employment relationship test under the FLSA,

finding that the “test of employment under the [FLSA] is one

of ‘economic reality.’” Tony & Susan Alamo Found. v. Sec’y

of Labor, 471 U.S. 290, 301 (1985) (quoting Goldberg v.

Whitaker House Coop., Inc., 366 U.S. 28, 33 (1961) (holding

that the test of employment under the FLSA is the economic

reality test)) (Alamo); accord Rutherford Food Corp. v.

McComb, 331 U.S. 722, 730 (1947) (noting that whether an

individual is an employee under the FLSA depends not on

“isolated factors but rather upon the circumstances of the

whole activity”).

BENJAMIN V. B&H EDUCATION 9

In Alamo, the Supreme Court’s most recent discussion of

the economic realities test in the employment context, the

DOL sued a non-profit religious foundation for violating the

minimum, overtime, and record-keeping provisions of the

FLSA. 471 U.S. at 291–92. The religious foundation ran

several commercial businesses, including service stations,

clothing and grocery stores, hog farms, a motel, construction

companies, candy companies, and record-keeping companies.

Id. at 292. Staffing the foundation’s businesses were

“volunteers,” who were former drug addicts, derelicts, or

criminals that the foundation had converted and rehabilitated.

Id. In exchange for their services, the volunteers received

food, clothing, shelter, and other benefits from the

foundation, but no cash salaries. Id. The Court held that the

“volunteers” were actually employees under the economic

realities test. Id. at 301, 306. Two factors were particularly

significant. First, the volunteers were entirely dependent

economically upon the foundation for long periods of time,

and in some cases several years. Id. at 301. Second, the

volunteers expected to receive in-kind non-cash benefits in

exchange for their services, which amounted to “wages in

another form.” Id. Because the volunteers “work[ed] in

contemplation of compensation,” they were employees under

the FLSA. Id. at 306. The Court looked to the economic

reality of the situation and held it involved work for

compensation and hence employment.

While our Court has not previously addressed a situation

involving interns or vocational students under the FLSA, we

have followed Alamo and Portland Terminal by applying a

four-part economic reality test looking to the totality of the

circumstances when determining whether individuals are

employees under the FLSA. We have considered situations

involving prison inmates and homeless persons in

10 BENJAMIN V. B&H EDUCATION

rehabilitation programs. See Hale v. Arizona, 993 F.2d 1387,

1389 (9th Cir. 1993) (en banc); see also Williams v.

Strickland, 87 F.3d 1064, 1065 (9th Cir. 1996). In such

cases, we looked to the overall economic realities of the

relationship: “whether the alleged employer has the power to

hire and fire the employees, supervises and controls employee

work schedules or conditions of employment, determines the

rate and method of payment, and maintains employment

records.” Hale, 993 F.2d at 1394 (citing Bonnette v. Cal.

Health & Welfare Agency, 704 F.2d 1465, 1470 (9th Cir.

1983)). We held that neither the prison inmates nor the

rehabilitation participants were employees. Id. at 1395;

Strickland, 87 F.3d at 1067. This is because there was no

bargained-for compensation relationship in either case. The

prisoners worked because they had to work. Hale, 993 F.2d

at 1394. And the rehabilitation participants had no

expectation of compensation other than treatment.

Strickland, 87 F.3d at 1067.

The DOL, the agency that administers and enforces the

FLSA, has struggled with formulating the appropriate test or

guidelines to apply in dealing with issues relating to

interns/employees. On the basis of Portland Terminal, the

DOL issued informal guidance in 2010 as to whether unpaid

interns are employees under the FLSA. See Wage & Hour

Div., U.S. Dep’t of Labor, Fact Sheet #71: Internship

Programs Under The Fair Labor Standards Act (Apr. 2010),

https://www.dol.gov/whd/regs/compliance/whdfs71.pdf.

Under the DOL’s six-factor test, an intern is an employee

unless all of the following factors are met:

1. The internship, even though it includes

actual operation of the facilities of the

BENJAMIN V. B&H EDUCATION 11

employer, is similar to training which would

be given in an educational environment;

2. The internship experience is for the benefit

of the intern;

3. The intern does not displace regular

employees, but works under close supervision

of existing staff;

4. The employer that provides the training

derives no immediate advantage from the

activities of the intern; and on occasion its

operations may actually be impeded;

5. The intern is not necessarily entitled to a

job at the conclusion of the internship; and

6. The employer and the intern understand

that the intern is not entitled to wages for the

time spent in the internship.

Id.

The leading recent Court of Appeals decision to consider

the DOL test however, rejected it as “too rigid” and too

dependent on the particular facts of Portland Terminal.

Glatt, 811 F.3d at 536. The court in Glatt also rejected the

plaintiffs’ main argument, one that essentially turned

Portland Terminal on its head. Portland Terminal had said

that because “the railroads receive no ‘immediate advantage’

from any work done by the trainees, we hold that they are not

employees within the [FLSA’s] meaning.” 330 U.S. at 153.

The plaintiffs in Glatt, however, argued that if the employers

12 BENJAMIN V. B&H EDUCATION

received any economic benefit, the plaintiffs were employees.

811 F.3d at 535. The Second Circuit ruled such a position

was not consistent with Portland Terminal. Id. at 537.

The Second Circuit in Glatt vacated the district court’s

order, that had adopted the DOL test, in favor of a different

test. Id. at 538. The appellate court held that the appropriate

test for determining whether interns should receive

compensation under the FLSA and New York labor law

should be what it termed the “primary beneficiary test.” Id.

at 536. The Second Circuit’s opinion set forth a list of seven

non-exhaustive factors for courts to weigh and balance under

the test. Id. at 536–37. The factors are:

1. The extent to which the intern and the

employer clearly understand that there is no

expectation of compensation. Any promise of

compensation, express or implied, suggests

that the intern is an employee—and vice

versa.

2. The extent to which the internship provides

training that would be similar to that which

would be given in an educational

environment, including the clinical and other

hands-on training provided by educational

institutions.

3. The extent to which the internship is tied to

the intern’s formal education program by

integrated coursework or the receipt of

academic credit.

BENJAMIN V. B&H EDUCATION 13

4. The extent to which the internship

accommodates the intern’s academic

commitments by corresponding to the

academic calendar.

5. The extent to which the internship’s

duration is limited to the period in which the

internship provides the intern with beneficial

learning.

6. The extent to which the intern’s work

complements, rather than displaces, the work

of paid employees while providing significant

educational benefits to the intern.

7. The extent to which the intern and the

employer understand that the internship is

conducted without entitlement to a paid job at

the conclusion of the internship.

Id.

The Second Circuit explained it chose the primary

beneficiary test due to the test’s three important features. Id.

at 536. First, the test “focuses on what the intern receives in

exchange for his [or her] work,” which incorporates Portland

Terminal’s focus on the interest of trainees. Id. Second, the

test allows courts flexibility in examining the economic

reality between the intern and the employer, which follows

the Supreme Court’s economic reality test cases. Id. And

third, the test acknowledges the distinction between intern-

employer relationships, in which interns typically expect to

receive educational or vocational benefits, and employee-

14 BENJAMIN V. B&H EDUCATION

employer relationships, in which employees do not

necessarily expect to receive such benefits. Id.

Other courts have adopted either Glatt’s primary

beneficiary test or have established a similar test in cases

involving interns or trainees. See Schumann, 803 F.3d at

1211–12 (expressly adopting the Glatt primary beneficiary

test); Solis v. Laurelbrook Sanitarium & Sch., Inc., 642 F.3d

518, 529 (6th Cir. 2011) (discussing relevant factors for

courts to consider when analyzing “which party derives the

primary benefit from the relationship”) (Laurelbrook).

The cases have arisen in a variety of contexts. In Glatt,

the plaintiffs were unpaid interns working for a film

production company, and the interns argued that they were

owed compensation as employees under the FLSA and New

York labor law. 811 F.3d at 531–33. During their

internships, one plaintiff was enrolled in a degree program,

and the other two plaintiffs were not. Id. at 532–33. After

adopting the primary beneficiary test, the Second Circuit

remanded the case for the district court to apply it. Id. at 538.

In Schumann, nursing students sought wages under the

FLSA for work performed in the school’s clinic, which was

a prerequisite to obtaining a master’s degree in the students’

program. 803 F.3d at 1202. The Eleventh Circuit adopted

Glatt’s primary beneficiary test and remanded the case to the

district court to determine whether the students were

employees based on the test. Id. at 1211–13.

In Laurelbrook, the DOL had sought an injunction against

a religious school for allegedly violating the FLSA, arguing

that students who were engaged in practical, vocational

training to learn various trades and serve sanitarium patients,

BENJAMIN V. B&H EDUCATION 15

were employees. 642 F.3d at 519–21. The Sixth Circuit

upheld the district court’s conclusion that the students were

not employees, noting that the school benefitted from

receiving payment for students’ services, and that the hours

students worked allowed the sanitarium to satisfy its licensing

requirements, but that the students, not the school, were the

primary beneficiaries. Id. at 530–32. The benefits to the

school were offset by the burdens, because students did not

reduce the number of compensated workers, and instructors

had to spend extra time supervising students at the expense of

performing productive work. Id. at 530–31. The students, on

the other hand, received the important benefits of gaining

hands-on, practical training that allowed them to be

competitive in a variety of vocations upon graduation, to

learn how to operate tools used in the trades they were

studying, to earn credit for courses approved by the state

accrediting agency, and to develop a strong work ethic and

leadership skills. Id. at 531. Therefore, the Sixth Circuit

concluded the students were the primary beneficiaries and

hence were not employees.

The primary beneficiary analysis by our sister circuits in

Glatt, Schumann, and Laurelbrook represent applications of

the Supreme Court’s economic realities test, and the courts

evaluated the totality of the circumstances of each case as the

Supreme Court has directed. See Rutherford Food Corp.,

331 U.S. at 730; Schumann, 803 F.3d at 1210; Glatt, 811 F.3d

at 536; Laurelbrook, 642 F.3d at 522. Glatt in particular

provides a helpful list of factors for courts to consider in the

specific context of student workers. We agree with those

decisions that the primary beneficiary test best captures the

Supreme Court’s economic realities test in the

student/employee context and that it is therefore the most

16 BENJAMIN V. B&H EDUCATION

appropriate test for deciding whether students should be

regarded as employees under the FLSA.

II. Applying the primary beneficiary test

The primary beneficiary test as articulated in Glatt

includes at least seven factors. Applying them to the facts of

this case, most if not all militate toward concluding that

Plaintiffs are students. With respect to the first, there is no

dispute that Marinello students signed on knowing they

would not receive remuneration and did not expect

compensation. Under the second and third factors, Marinello

students received hands-on training in the clinic and academic

credit for the hours they worked. The students’ clinical work

corresponded to their academic commitments under the

fourth factor because clinical work allowed students to clock

the hours they needed to sit for the state licensing exams. See

Cal. Code Regs., tit. 16, §§ 950.2, 928(a); Nev. Rev. Stat.

§§ 644.200, 644.204, 644.400. Fifth, nothing in the record

suggests that Marinello required its students to participate in

their programs for longer than was necessary to complete

their hour requirement for the state exams. Under the sixth

factor, students did not routinely displace the work of paid

employees as the school maintained staff to instruct students,

run clinics, operate front desks, inventory and stock the

dispensary, handle the logistical needs of the clinics, and

perform nighttime janitorial services. Finally, students had

no expectation of employment with Marinello upon

graduation. In summary, application of the Glatt factors

establishes that students were the primary beneficiaries of

their labors. Their participation in Marinello’s clinic

provided them with the hands-on training they needed to sit

for the state licensing exams. Applying the primary

BENJAMIN V. B&H EDUCATION 17

beneficiary test we must conclude they were not employees

under the FLSA.

Plaintiffs nevertheless urge us to apply the DOL test in

determining the employment relationship in this case. We

agree with the Second Circuit in Glatt, however, that the

DOL’s test is not appropriately utilized as a test applicable to

a variety of circumstances, as it is so closely tied to the facts

in Portland Terminal. As the Second Circuit said, the DOL’s

test “is essentially a distillation of the facts discussed in

Portland Terminal,” Glatt, 811 F.3d at 536, and thus “too

rigid” to comport to our case law, which applies a totality of

the circumstances approach to determining the employment

relationship under the FLSA. See, e.g., Hale, 993 F.2d at

1394.

Even if we were to apply the DOL test, however, it would

not in all likelihood materially change the result in this case.

Applying the DOL criteria in this case, we view the training

provided to Plaintiffs to be in an educational environment,

because state law requires students to clock hundreds of hours

of instruction and practical training in order to qualify for

taking the licensing exams. Students benefit because the

students learn skills tested on the licensing exams and are

able to sit for the exams. Students do not displace regular

employees, they are not entitled to a job at the end of their

clinical experience, and they have understood they would not

receive compensation. Under the DOL test as applied to the

facts before us, we would similarly conclude Plaintiffs are not

employees.

18 BENJAMIN V. B&H EDUCATION

III. State law claims

The Plaintiffs argue that even if they are not employees

under the FLSA, they should be paid under Nevada and

California law. With respect to Nevada, however, the parties

agree that the test for determining whether an employment

relationship exists is the same as it is under the FLSA. See

Terry v. Sapphire Gentlemen’s Club, 336 P.3d 951, 957 (Nev.

2014). We therefore apply the primary beneficiary test to the

Nevada law claims as well, and the students’ claim under

Nevada law fails for the same reasons that the FLSA claim

fails.

California law is a little different, since California courts

have distinguished California’s wage law from the FLSA

with respect to the definition of employment. See Martinez

v. Combs, 231 P.3d 259, 274 (Cal. 2010). “Employees” are

entitled to recover unpaid minimum and overtime wages

pursuant to California Labor Code § 1194 under the terms of

the applicable wage order that is issued by the Industrial

Welfare Commission (“IWC”), the body in charge of

regulating California’s minimum wage laws, id. at 271, and

to which the California Supreme Court defers, id. at 275. The

IWC wage orders include a definition of employer as one

who “employs or exercises control over the wages, hours, or

working conditions of any person.” Id. at 274 (quoting Cal.

Code Regs., tit. 8, § 11140(2)(G)).

Plaintiffs rely on Martinez and its deference to the IWC

to argue that they must be employees subject to a wage order.

But Martinez does not help them. In Martinez, the California

Supreme Court held that produce merchants were not liable

to seasonal agricultural workers for minimum wages under

§ 1194. Id. at 282–87. The workers had harvested

BENJAMIN V. B&H EDUCATION 19

strawberries for a farm operator who then sold the

strawberries to the merchants. Id. at 262–63. The workers

sought compensation from the merchants because the farm

operator who hired the workers went bankrupt. Id. at 263. In

reaching its holding, the court defined the employment

relationship under § 1194 by looking to the applicable wage

order. Id. at 278. The California Supreme Court held the

merchants were not the workers’ employer, which required

control over hours and working conditions. Id. at 285–87.

The farm operator was the employer.

Plaintiffs contend that under this definition they are

employees because Marinello controls what they do. See id.

at 278. The control test, however, does not assist us in the

educational context, where the school is in charge. As the

District Court noted in this case, schools typically exercise

significant control over their students, but that does not make

them employers. Moreover, none of the California cases

cited by Plaintiffs involve an educational context. All

involved employees claiming they were being paid less than

minimum wages. See Torres v. Air to Ground Servs., Inc.,

300 F.R.D. 386, 391, 391 (C.D. Cal. 2014) (plaintiffs were

paid by Air to Ground Services to clean FedEx planes);

Betancourt v. Advantage Human Resourcing, Inc., No. 14-cv-

01788-JST, 2014 WL 4365074, at *1 (N.D. Cal. Sept. 3,

2014) (plaintiff was hired by a temporary staffing agency);

Arredondo v. Delano Farms Co., 922 F. Supp. 2d 1071,

1073–74 (E.D. Cal. 2013) (plaintiffs worked for farm labor

contractors plaintiffs claimed violated wage and hour laws);

McDonald v. Ricardo’s on the Beach, Inc., No. CV 11-9366

PSG (MRWx), 2013 WL 153860, at *1 (C.D. Cal. Jan. 15,

2013) (plaintiff was a paid hourly employee at two family

restaurants he claimed were violating wage law); Rodriguez

v. SGLC, Inc., No. 2:08-cv-01971-MCE-KJN, 2012 WL

20 BENJAMIN V. B&H EDUCATION

5704403, at *1–2 (E.D. Cal. Nov. 15, 2012) (plaintiffs were

paid Mexican farm laborers admitted to work in the United

States under temporary visas, and they sued their two

employers for failure to pay sufficient wages); Gonzalez v.

Millard Mall Servs., Inc., No. 09cv2076-AJB(WVG), 2012

WL 727867, at *1 (S.D. Cal. Mar. 6, 2012) (plaintiffs were

janitors claiming they were employees of two affiliated

companies); Castaneda v. Ensign Grp., Inc., 177 Cal. Rptr.

3d 581, 582 (Cal. Ct. App. 2014) (plaintiff was employee of

nursing facility suing the facility’s corporate owner for

unpaid minimum and overtime wages); Guerrero v. Superior

Court, 153 Cal. Rptr. 3d 315, 319 (Cal. Ct. App. 2013)

(plaintiff paid to provide in-home support services sued

employers for wage and hour law violations).

In this case, the California Supreme Court would have no

reason to look to the wage order definition of employer to

determine whether these plaintiffs are students or employees.

The test it establishes for employment is one of “control” that

cannot be usefully applied to a school. As we have seen, the

test is frequently applied to determine which entity is liable

to an employee for minimum wages. A typical plaintiff is an

employee seeking a deeper pocket. See, e.g., Martinez,

supra; Castaneda, supra. Here, Plaintiffs were never hired

by any entity as an employee. They are not entitled to be paid

any wages.

We further conclude that the California Supreme Court

would not apply the DOL factors that the federal courts have

rejected as too rigid, but would instead apply a test more

similar to the FLSA primary beneficiary test. This is because

such a test is better adapted to an occupational training setting

than the DOL factors. See Schumann, 803 F.3d at 1209,

1211–12; Glatt, 811 F.3d at 536–37; Laurelbrook, 642 F.3d

BENJAMIN V. B&H EDUCATION 21

at 528–29. Plaintiffs’ California state law claim thus fails for

the same reasons as the federal law claim fails.

We recognize that Plaintiffs are doubtless unhappy with

the quality of the education they received. The appropriate

remedy, however, is not for courts to order students to be paid

as employees. The state boards in Nevada and California

provide their own mechanisms for disciplining schools for

unsatisfactory performance. In California, for instance, the

State Board of Barbering and Cosmetology may revoke,

suspend, or deny approval of a school for repeated failure to

comply with the Board’s regulations. See Cal. Bus. & Prof.

Code § 7362(c)(3). Similarly, in Nevada, the State Board of

Cosmetology may take disciplinary action against a school of

cosmetology for failure to comply with the Board’s

requirements and regulations. See Nev. Rev. Stat.

§ 644.430(1)(a), (2). There may also be remedies under state

tort or contract law for recovery of improper fees, tuition, or

penalties paid to the schools. Our Court’s role in this appeal

is only to determine under applicable federal or state law

whether Plaintiffs are employees, and they are not.

IV. Federal Rule of Civil Procedure 37

The final matter we must address is a discovery dispute.

Plaintiffs offered three declarations to support their motion

for summary judgment, but they came from witnesses who

had not been listed as witnesses pursuant to Rule 26. The

court struck the declarations as a sanction under Rule

37(c)(1). The District Court’s order was not an abuse of

discretion. See Yeti by Molly, Ltd. v. Deckers Outdoor Corp.,

259 F.3d 1101, 1105–06 (9th Cir. 2001) (reviewing the

imposition of a Rule 37 discovery sanction for abuse of

discretion).

22 BENJAMIN V. B&H EDUCATION

Plaintiffs argue that they identified one of the witnesses

in an interrogatory response’s catchall reference to “other

current and former Student-Employees of Marinello,” but this

does not satisfy the requirements for a Rule 26 disclosure.

See Fed. R. Civ. P. 26(a)(1)(A)(i) (requiring parties to

disclose “the name and, if known, the address and telephone

number of each individual likely to have discoverable

information—along with the subjects of that

information—that the disclosing party may use to support its

claims or defenses, unless the use would be solely for

impeachment”). For the other two witnesses, Plaintiffs

argued that they mentioned the witness names in an

interrogatory response, but this was also insufficient. See

Lujan v. Cabana Mgmt., Inc., 284 F.R.D. 50, 72–73

(E.D.N.Y. 2012) (collecting cases holding that mentioning a

witness’ name in an interrogatory response is insufficient for

Rule 26 purposes).

Plaintiffs have not shown that their failure to disclose was

substantially justified or harmless, as required under Rule

37(c)(1), when they waited until the motion for summary

judgment stage to identify likely witnesses. Luke v. Family

Care & Urgent Med. Clinics, 323 F. App’x 496, 498–99 (9th

Cir. 2009); Yeti by Molly, Ltd., 259 F.3d at 1105–07; see also

Medina v. Multaler, Inc., 547 F. Supp. 2d 1099, 1105 n.8

(C.D. Cal. 2007) (“[F]ailure to disclose . . . a likely witness

before defendants’ summary judgment motion was filed

prejudiced defendants by depriving them of an opportunity to

depose him.”). There was no error in the District Court’s

refusal to consider the declarations.

Finally, however, even if the stricken witness declarations

had been considered, they would in all likelihood have made

no material difference to the District Court’s ruling on the

BENJAMIN V. B&H EDUCATION 23

summary judgment motions. The information contained in

the witness declarations added little more than colorful

illustration to the allegations of the complaint that were

inadequate as a matter of law to make out an employment

relationship.

V. Conclusion

The District Court correctly determined that the Plaintiffs

were not employees of the schools in which they enrolled for

training as cosmetologists. Plaintiffs are not entitled to

recover wages, the only relief they seek here. Further, the

District Court did not err in its handling of discovery issues.

Its judgment must therefore be affirmed.

AFFIRMED.