Claudia Harbourt v. PPE Casino Resorts Maryland , 820 F.3d 655 ( 2016 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 15-1546
CLAUDIA HARBOURT; MICHAEL LUKOSKI; URSULA POCKNETT,
Plaintiffs - Appellants,
v.
PPE CASINO RESORTS MARYLAND, LLC,
Defendant - Appellee.
Appeal from the United States District Court for the District of
Maryland, at Baltimore. Catherine C. Blake, Chief District
Judge. (1:14-cv-03211-CCB)
Argued: March 1, 2016 Decided: April 25, 2016
Before MOTZ, GREGORY, and THACKER, Circuit Judges.
Reversed and remanded by published opinion. Judge Motz wrote
the opinion, in which Judge Gregory and Judge Thacker joined.
ARGUED: Steven Marc Lubar, THE LAW OFFICES OF PETER T. NICHOLL,
Baltimore, Maryland, for Appellants. Todd James Horn, VENABLE
LLP, Baltimore, Maryland, for Appellee. ON BRIEF: James Anthony
Lanier, THE LAW OFFICES OF PETER T. NICHOLL, Baltimore,
Maryland, for Appellants. Lillian L. Reynolds, Baltimore,
Maryland, Robert G. Ames, VENABLE LLP, Washington, D.C., for
Appellee.
DIANA GRIBBON MOTZ, Circuit Judge:
The district court dismissed this action, which alleges
violations of federal and state employment laws, as failing to
state a claim on which relief could be granted. Because the
plaintiffs have alleged sufficient facts to state a claim, we
must reverse and remand for further proceedings.
I.
The account of the facts set forth here quotes and derives
from the allegations in the seventeen-page complaint.
PPE Casino Resorts Maryland, LLC (“the Casino”) owns and
operates Maryland Live!, a casino in Hanover, Maryland.
Beginning in June 2012, in response to the legalization of
gambling in Maryland, the Casino began offering slot machines.
Pursuant to a November 2012 referendum, the State authorized
casinos, beginning on April 11, 2013, to also operate table
games like blackjack, poker, craps, and roulette.
The Casino “did not have dealers for the [anticipated]
approximately one hundred and fifty (150) live table games”
opening at Maryland Live! on April 11. In fact, it needed to
hire approximately 830 dealers by April 11 to begin operating
the planned table games on that date. Because “different
casinos implement different methods concerning how to operate
table games,” the Casino needed “to develop a training course
2
that would ensure” that new employees “would be equipped to
perform duties specific to dealing at Maryland Live!” Thus, the
Casino developed “what [it] labeled . . . a free twelve (12)
week table games ‘dealer school’” to be “held in conjunction
with Anne Arundel County Community College.” In mid-November
2012, the Casino began advertising employment opportunities for
table game dealers. The Casino held information sessions about
the jobs and the required “dealer school.”
Plaintiffs, Claudia Harbourt, Michael Lukoski, and Ursula
Pocknett (collectively “the Trainees”), as well as approximately
10,000 other persons, applied for these advertised positions.
The Casino extensively interviewed applicants, assessing their
congeniality, personality, and ability to perform basic math on
their feet. The Casino asked select applicants, including the
Trainees, “if they would like to attend a course to become a
dealer at Maryland Live!” and explained that the course would be
free, last twelve weeks, and would teach them “how to conduct
table games for Maryland Live!”
The Casino selected approximately 830 of the applicants to
attend the “dealer school.” The “dealer school” consisted of
four hours of daily instruction Monday through Friday, offered
in four time periods. The “school” was thus scheduled to run
for twenty hours per week for twelve weeks, although it consumed
more hours because of “numerous delays” caused by Casino staff.
3
The Casino conducted the “school” from January 7, 2013 to April
1, 2013, 1 ending just ten days before the start of legalized
table games in Maryland.
The “dealer school” training “was specific to the manner in
which” the Casino’s employees were “to perform the[] table games
at Maryland Live!” Although the Casino advertised the “school”
as being held in conjunction with a community college, in fact,
it was run completely by the Casino. The Casino authored all
course materials, Casino employees provided all instruction, and
attendees never interacted with anyone from a community college.
During the “school,” the attendees completed employment forms,
including an income tax withholding form and direct deposit
authorization form. To help the attendees receive a gambling
license by the end of the course, the Casino required them to
submit to a drug test, provide their fingerprints and social
security numbers, and authorize the Casino to obtain their
driving records and perform criminal and financial background
checks on them.
Plaintiff Harbourt attended the “dealer school” for
approximately eight weeks; Plaintiff Pocknett attended it for
1 The complaint alleges that the course ended “on April 14,
2013,” but a twelve-week course beginning on January 7, 2013
would end by April 1, 2013. Like the district court, we
understand the complaint’s reference to April 14 to be a
typographical error.
4
eleven weeks; and Plaintiff Lukoski attended the “school” for
all twelve scheduled weeks and worked as a dealer at the Casino.
The Casino did not pay Harbourt or Pocknett at all, but did pay
Lukoski and others who attended the “school” for the full twelve
weeks the minimum wage, $7.25 per hour, for the final two days
of the “dealer school.”
In 2014, the Trainees filed this putative class action
asserting violations of the Fair Labor Standards Act, 29 U.S.C.
§§ 201-219 (2012) (“FLSA” or “the Act”), the Maryland Wage and
Hour Law, Md. Code, Lab. & Empl. §§ 3-401 to -431 (2015)
(“MWHL”), and the Maryland Wage Payment and Collection Law, Md.
Code, Lab. & Empl. §§ 3-501 to -509 (2015) (“MWPCL”). The
Casino moved to dismiss for failure to state a claim upon which
relief can be granted. See Fed. R. Civ. P. 12(b)(6). The
district court granted the motion to dismiss, holding that the
Trainees “fail[ed] to show that the primary beneficiary of their
attendance at the training was the Casino rather than
themselves.” This timely appeal followed.
II.
We review de novo the grant of a motion to dismiss for
failure to state a claim. Weidman v. Exxon Mobil Corp., 776
F.3d 214, 219 (4th Cir. 2015). In doing so, we accept as true
the well-pled allegations of the complaint and construe the
5
facts and reasonable inferences derived therefrom in the light
most favorable to the plaintiff. See Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009); Brower v. Cty. of Inyo, 489 U.S. 593, 598
(1989). A plaintiff “must allege sufficient facts to establish
th[e] elements” of his claim and “advance [that] claim across
the line from conceivable to plausible.” Walters v. McMahen,
684 F.3d 435, 439 (4th Cir. 2012) (internal quotation marks
omitted). However, “a plaintiff need not ‘forecast’ evidence
sufficient to prove” a claim. Id.The FLSA requires that employers pay employees the minimum
hourly wage “for all hours worked.” Perez v. Mountaire Farms,
Inc., 650 F.3d 350, 363 (4th Cir. 2011) (internal quotation
marks omitted). The Act does not define “work.” See 29 U.S.C.
§§ 201-219. But the Supreme Court has instructed that “in the
absence of a contrary legislative expression” we assume that
Congress was referring to work or employment “as those words are
commonly used -– as meaning physical or mental exertion (whether
burdensome or not) controlled or required by the employer and
pursued necessarily and primarily for the benefit of the
employer and his business.” Tennessee Coal, Iron & R. Co. v.
Muscoda Local No. 123, 321 U.S. 590, 598 (1944), superseded by
statute on other grounds, Portal-to-Portal Act of 1947, Pub. L.
No. 104-188, 110 Stat. 1928.
6
The FLSA does define “employee” and “employ,” but those
definitions do little to advance the inquiry. The statute
defines “employee” as “any individual employed by an employer,”
29 U.S.C. § 203(e)(1), and “employ” as “to suffer or permit to
work,” id. at § 203(g). Courts construe the term “employee”
broadly, but recognize that the term “does have its limits.”
Steelman v. Hirsch, 473 F.3d 124, 128 (4th Cir. 2007) (internal
quotation marks omitted).
More than sixty years ago, the Supreme Court made clear
that a trainee may be an “employee” for purposes of the FLSA.
See Walling v. Portland Terminal Co., 330 U.S. 148, 151 (1947)
(noting that “[w]ithout doubt the Act covers trainees”); see
also Walling v. Nashville, C. & St. L. Ry., 330 U.S. 158, 159
(1947)(companion case). But, in Portland Terminal, relying on
the district court’s factual findings, the Court concluded that
railroad trainees could not claim the benefits of the Act when
the training they received “most greatly benefit[ted] the
trainees” rather than the railroad. 330 U.S. at 153. The
Supreme Court also noted the district court’s unchallenged
findings that the railroad “receive[d] no ‘immediate advantage’”
from the trainees’ efforts during training. Id. The Court thus
affirmed judgment for the railroad. Id. In doing so, however,
the Court expressly noted that the record contained no “findings
[]or charges” that the training was “conceived or carried out in
7
such a way as to violate either the letter or spirit” of the
FLSA and left open the question of whether such “findings or
charges” might require a different result. Id.
Subsequent case law assessing whether a trainee constitutes
an “employee” for FLSA purposes is sparse. The Supreme Court
has never again spoken to the issue and we have addressed the
question only once. In McLaughlin v. Ensley, 877 F.2d 1207,
1208, 1210 (4th Cir. 1989), we held that trainee routemen of a
food distribution company were “employees” for FLSA purposes
when they participated in a five-day, 50-to-60-hour training
program in which they learned how to load trucks and maintain
food vending machines and helped experienced routemen perform
their duties. Relying on Portland Terminal, we identified the
critical legal question as whether the trainee or the company
was the “primary beneficiary” of the training program. Id. at
1209. Whether the employer received an “immediate advantage”
from the training was, we reasoned, also “important to
consider,” but not dispositive. Id. Applying the controlling
legal standard to the facts found by the district court, we held
that the employer food distribution company “received more
advantage” from the program than the trainees and so concluded
8
that the trainees qualified as employees for purposes of the
FLSA. Id. at 1210. 2
With these principles in mind, we turn to the case at hand.
III.
The Casino maintains that the Trainees’ complaint fails
because “it is literally impossible for the Trainees to show
that they provided the Casino with any work or that the Casino
received any benefit during the time they attended table game
dealer’s school because . . . the Casino did not operate table
games at that time.” Appellee’s Br. at 14 (emphasis in
original). The fact that table games were not in operation
during the training well may prove an insurmountable obstacle to
the Trainees’ recovery under the FLSA, but that fact does not,
as a matter of law, bar them from recovery.
As noted above, “work” for FLSA purposes broadly
encompasses “physical or mental exertion (whether burdensome or
2 Our sister circuits have similarly not often grappled with
the employee/trainee question. Indeed, the Casino relies on
only three such cases. In each, the courts affirmed judgments
for the employer, but in each the appellate court relied on
facts (very different facts from those alleged here) which were
established by the summary judgment record or at trial. See
Petroski v. H & R Block Enters., LLC, 750 F.3d 976, 981 (8th
Cir. 2014) (affirming grant of summary judgment); Reich v.
Parker Fire Prot. Dist., 992 F.2d 1023, 1027-29 (10th Cir. 1993)
(same); Donovan v. Am. Airlines, 686 F.2d 267, 271-73 (5th Cir.
1982) (affirming judgment after trial).
9
not) controlled or required by the employer” primarily for its
benefit. Tennessee Coal, 321 U.S. at 598. And “training” can
constitute “work” under the statute. See Portland Terminal, 330
U.S. at 151; Ensley, 877 F.2d at 1209; cf. 29 C.F.R. §§ 785.27-
.31 (2015) (establishing the requirements that mid-employment
training must meet for the training not to count toward work
hours). That the Casino could not operate table games during
the “dealer school” does not necessarily mean that the Trainees
were not working for FLSA purposes in attending the required
“school.”
The Casino seems to believe that because the Trainees could
not interact with paying customers in the Casino during the
“school,” the Trainees automatically fail to qualify as FLSA
employees performing work for the Casino. But the Trainees are
in the very same position as all other persons training for
positions where they cannot yet perform their duties, either
because the service is not yet legal, the person is not yet
licensed, or the employer is not yet operating. Inexperienced
persons required to train to be waiters in a huge about-to-be-
licensed, but not yet open, restaurant, or to train and seek
licensure to be hairdressers in an enormous about-to-be-opened,
but not yet operating, hair salon franchise would be in
precisely the same position as the Trainees here. In each case,
whether the required training would constitute work for FLSA
10
purposes would depend on whether it primarily constituted a
benefit to the employer or the trainee. And, notwithstanding
the Casino’s contention to the contrary, resolution of that
question cannot be determined by examination of the Trainees’
complaint.
For in their complaint, the Trainees allege facts
supporting their claim that the Casino, and not the Trainees,
primarily benefitted from the training. Specifically, the
Trainees allege that the Casino received a very large and
immediate benefit -- an entire workforce of over 800 dealers
trained to operate table games to the Casino’s specifications at
the very moment the table games became legal. And the Trainees
further allege that, in contrast, they received very little from
the twelve weeks of training that did not primarily benefit the
Casino. This is so, they allege, because the training was
unique to the Casino’s specifications and not transferrable to
work in other casinos. 3 In Ensley, we specifically recognized
the importance of the transferability of the training received
when balancing who -- employer or trainee -- benefitted most
3The district court held that the plaintiffs’ allegation
that the course had no transferable usefulness was not plausible
because Maryland’s regulation of table games is “extraordinarily
detailed, leaving little room for casino-specific duties.” The
regulations are numerous but do not, as a matter of law,
foreclose a plausible finding that the bulk of the training was
Casino-specific and thus non-transferrable.
11
from the training. See 877 F.2d at 1210. Our sister circuits,
in the very cases on which the Casino relies, have similarly
recognized the importance of this factor in determining the
primary beneficiary. See Petroski, 750 F.3d at 981; Parker
Fire, 992 F.2d at 1027-29; Am. Airlines, 686 F.2d at 271-73.
And those courts relied on facts established by the summary
judgment record or at trial to resolve this question. Id.Moreover, unlike in Portland Terminal, here there are
“charges” that the training was “either conceived or carried out
in such a way as to violate . . . the spirit of the minimum wage
law.” 330 U.S. at 153. The Trainees allege that the “sole
purpose” of the Casino’s “temporary makeshift ‘school’ was to
hire the exact number of dealers needed to fill the vacant table
games positions.” They further allege that the Casino
“disguised its employee-training course as a school for the
purpose of not paying” the trainees. If true, a fact finder
could conclude that requiring applicants to attend a training
“school” for twenty hours each week for a full twelve weeks,
training advertised to be associated with a community college
course but that allegedly had nothing to do with any college,
demonstrates that the Casino “conceived or carried out” its
“school” to avoid paying the minimum wage. Id. A fact finder
could further conclude that an employer would only take such
actions to avoid paying the minimum wage to persons who were
12
labelled “trainees” but who actually worked for the Casino and
were FLSA employees. 4
Finally, the Trainees allege, and the Casino acknowledges,
that the Casino paid all participants in the “dealer school” the
minimum hourly wage for the last two days of the twelve weeks of
training. This certainly suggests that the Casino regarded the
participants in the “dealer school” as employees doing work for
the Casino for those two days. Of course, it may be that it was
only during those two days that the trainees performed “physical
or mental exertion” that was “pursued necessarily and primarily
for the benefit of the employer and his business.” Tennessee
Coal, 321 U.S. at 598. But the record before us supplies no
basis for such a conclusion. Rather, at present it is unclear
what distinguishes those two days from the rest of the training
period.
4 Further development of the record will also allow the
district court to consider whether the Casino explicitly
informed the trainees that it would (or would not) pay them
during and would (or would not) hire them after the training.
The Trainees allege that the Casino had implicitly promised them
a job because the Casino needed to and did hire all of the
trainees who attended all twelve weeks of the “school” to staff
the table games. This allegation, if proved, might support a
conclusion that the Trainees “should be considered at-will
employees from the beginning.” Ensley, 877 F.2d at 1210.
Similarly, the Trainees allege that the Casino extensively
interviewed all applicants before inviting them to the “school”
and that during the “school” the Trainees completed employment
paperwork, which, if proved, might be held to have created an
“implied compensation agreement.” Portland Terminal, 330 U.S.
at 152.
13
Accordingly, we hold that the Trainees have alleged
sufficient facts to state a claim that the Casino violated the
FLSA and the Maryland wage laws. 5 Although we express no opinion
as to whether attending the “dealer school” did constitute
“work” and whether the Trainees did constitute “employees” for
FLSA purposes, the Trainees have alleged sufficient facts to
survive the Casino’s motion to dismiss.
IV.
For the foregoing reasons, the judgment of the district
court is
REVERSED AND REMANDED.
5Because the Trainees opposed dismissal of their “Maryland
wage law” claims below, and analysis of the existence of an
employment relationship is the same under the MWHL and MWPCL as
under the FLSA, see Campusano v. Lusitano Constr. LLC, 56 A.3d
303, 307-08 (Md. Ct. Spec. App. 2012), we reverse and remand
dismissal of those claims as well.
14