Lamar Dawson v. Ncaa ( 2019 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
LAMAR DAWSON, No. 17-15973
Plaintiff-Appellant,
D.C. No.
v. 3:16-cv-05487-RS
NATIONAL COLLEGIATE ATHLETIC
ASSOCIATION; PAC-12 OPINION
CONFERENCE,
Defendants-Appellees.
Appeal from the United States District Court
for the Northern District of California
Richard Seeborg, District Judge, Presiding
Argued and Submitted October 15, 2018
San Francisco, California
Filed August 12, 2019
Before: Sidney R. Thomas, Chief Judge, Andrew J.
Kleinfeld, Circuit Judge, and George H. Wu,*
District Judge.
Opinion by Chief Judge Thomas
*
The Honorable George H. Wu, United States District Judge for the
Central District of California, sitting by designation.
2 DAWSON V. NCAA
SUMMARY**
Labor Law
The panel affirmed the district court’s dismissal of a
Division I college football player’s claim that he was an
employee of the National Collegiate Athletic Association and
the PAC-12 Conference within the meaning of the Fair Labor
Standards Act and California labor law and thus entitled to
minimum wage and overtime pay.
The panel held that Division I football players were not
employees of the NCAA or PAC-12 as a matter of federal
law because the economic reality of the relationship between
the NCAA/PAC-12 and student-athletes did not reflect an
employment relationship. The panel concluded that NCAA
regulations providing a limitation on scholarships did not
create any expectation of compensation; plaintiff could not
demonstrate that the NCAA or the PAC-12 had the power to
fire or hire him; and there was no evidence that the NCAA
rules were conceived or carried out to evade the law. Further,
the revenue generated by college sports did not convert the
relationship between student-athletes and the NCAA into an
employment relationship. Thus, the NCAA and Pac-12 were
regulatory bodies, not employers of student-athletes under the
Fair Labor Standards Act.
The panel also affirmed the district court’s dismissal for
failure to state a claim of plaintiff’s California law claims.
The panel held that the district court properly relied on a
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
DAWSON V. NCAA 3
legislative exception for student-athletes from workers
compensation benefits and the California courts’
interpretation of this exception. The panel held that, under
the California Labor Code, student-athletes were not
employees of the NCAA/PAC-12.
COUNSEL
Mark C. Rifkin (argued) and Jeffrey G. Smith, Wolf
Haldenstein Adler Freeman & Hertz LLP, New York, New
York; Betsy C. Manifold, Wolf Haldenstein Adler Freeman
& Hertz LLP, San Diego, California; John M. Kelson, The
Law Offices of John M. Kelson, Oakland, California; Jerry K.
Cimmet, San Mateo, California; for Plaintiff-Appellant.
Daniel S. Volchok (argued) and David M. Lehn, Wilmer
Cutler Pickering Hale and Dorr LLP, Washington, D.C.;
Kenneth D. Sulzer, Steven B. Katz, and Sarah Kroll-
Rosenbaum, Constangy Brooks Smith & Prophete LLP, Los
Angeles, California; for Defendant-Appellee National
Collegiate Athletic Association.
Kiran A. Seldon (argued), Jeffrey A. Berman, and Diana
Tabacopoulos, Seyfarth Shaw LLP, Los Angeles, California,
for Defendant-Appellee PAC-12 Conference.
4 DAWSON V. NCAA
OPINION
THOMAS, Chief Judge:
We consider whether Lamar Dawson and Division I
Football Bowl Subdivision (“FBS”) Football Players are
employees of the National Collegiate Athletic Association
(“NCAA”) and PAC-12 Conference (“PAC-12”) within the
meaning of the Fair Labor Standards Act (“FLSA”), 29
U.S.C. §§ 201–219, and California labor law. We have
jurisdiction pursuant to 28 U.S.C. § 1291. Because the claims
fail as a matter of law, we affirm the judgment of the district
court.
I
Dawson played football for the University of Southern
California (“USC”), a Division I FBS member of the
NCAA’s PAC-12 Conference. In this putative class action
case, Dawson does not allege that he was an employee of
USC, so the pure question of employment is not before us,
and we need not consider whether he had employment status
as a football player, nor whether USC was an employer. That
question is left, if at all, for another day. Rather, the only
issue before us is whether the NCAA and PAC-12 were his
employers under federal and state law.
The NCAA is an “unincorporated not-for-profit
educational organization” comprised of more than 1,100
colleges and universities throughout the United States.
NCAA member schools are organized into three Divisions
based on the number and quality of opportunities that the
schools provide to participate in intercollegiate athletics.
Division I consists of approximately 351 schools.
DAWSON V. NCAA 5
Approximately 253 Division I schools have Division I
football programs, of which approximately 128 fall within the
FBS. The PAC-12 is an unincorporated association which
operates a multi-sport collegiate athletic conference, and is a
formal conference member of the NCAA Division I FBS.
NCAA member schools “agree to administer their
athletics programs in accordance with the constitution,
bylaws, and other legislation of the [NCAA].” The NCAA’s
constitution and bylaws establish academic eligibility
requirements, provide guidelines and restrictions for
recruitment, impose limits on the number and size of athletic
scholarships, and regulate the scheduling and conditions of
practice and games.
The NCAA bylaws also govern financial aid and prohibit
compensation for student-athletes. Bylaw 15.1 provides that
student-athletes may receive financial aid on the basis of
athletic ability, but that the amount of aid must not exceed
“the value of his or her cost of attendance.” Student-athletes
receiving aid in excess of the cost of attendance limitation
“shall not be eligible to participate in intercollegiate
athletics.”
NCAA Bylaw 12.1.4 provides that financial aid is “not
considered to be pay or the promise of pay for athletics skill.”
Bylaw 12.1.2 further prohibits any payment to a student-
athlete for athletic services. Student-athletes who accept
payments may be subject to revocation of their amateur status
and eligibility under seven conditions.1
1
Bylaw 12.1.2 revokes amateur status and NCAA eligibility where
a student-athlete: (1) “[u]ses his or her athletics skill (directly or
indirectly) for pay in any form in that sport;” (2) “[a]ccepts a promise of
6 DAWSON V. NCAA
In his complaint, Dawson alleged that the NCAA and the
PAC-12 acted as an employer of the class members by
“prescribing the terms and conditions under which student-
athletes perform services.” Dawson claims that the NCAA
and PAC-12, as joint employers, failed to pay wages,
including overtime pay, to Dawson and to class members in
violation of federal and state labor laws.
The NCAA and the PAC-12 moved to dismiss Dawson’s
complaint for failure to state a claim upon which relief can be
granted. The district court granted the motion, and dismissed
the complaint without leave to amend.
II
The district court properly concluded that Division I FBS
Football Players are not employees of the NCAA or PAC-12
as a matter of federal law.2
pay even if such pay is to be received following completion of
intercollegiate athletics participation;” (3) “[s]igns a contract or
commitment of any kind to play professional athletics, regardless of its
legal enforceability or any consideration received, except as permitted in
Bylaw 12.2.5.1;” (4) “[r]eceives directly or indirectly, a salary,
reimbursement of expenses, or any other form of financial assistance from
a professional sports organization based on athletics skill or participation,
except as permitted by NCAA rules and regulations;” (5) “[c]ompetes on
any professional athletics team per Bylaw 12.02.11, even if no pay or
remuneration for expenses was received, except as permitted in Bylaw
12.2.3.2.1;” (6) “[a]fter initial full-time collegiate enrollment, enters into
a professional draft (see Bylaw 12.2.4);” or 7) “[e]nters into an agreement
with an agent.”
2
The district court below based its decision primarily on the Seventh
Circuit’s opinion in Berger v. Nat’l Collegiate Athletic Ass’n, 843 F.3d
285 (7th Cir. 2016). See Dawson v. Nat’l Collegiate Athletic Ass’n, 250
DAWSON V. NCAA 7
A
The FLSA provides that “employers” must pay their
“employees” a minimum wage and overtime pay for hours
worked in excess of the statutory workweek. 29 U.S.C.
§§ 206(a), 207(a)(1). The statute defines an “employee” as
“any individual employed by an employer.” 29 U.S.C.
§ 203(e)(1). To “employ” means “to suffer or permit to
work.” 29 U.S.C. § 203(g).
The FLSA definition of employee is “exceedingly broad,”
but “does have its limits.” Tony & Susan Alamo Found. v.
Sec’y of Labor, 471 U.S. 290, 295 (1985). “An individual
may work for a covered enterprise and nevertheless not be an
‘employee.’” Id. at 299. For example, an individual “who,
‘without any express or implied compensation agreement,
might work for their own advantage on the premises of
another’” falls outside the FLSA definition of employee. Id.
at 300 (quoting Walling v. Portland Terminal Co., 330 U.S.
148, 150 (1947)).
Ultimately, “[t]he test of employment under the [FLSA]
is one of ‘economic reality.’” Id. at 301 (quoting Goldberg
v. Whitaker House Cooperative, Inc., 366 U.S. 28, 33 (1961)).
Economic reality accounts for “the circumstances of the
whole activity” rather than considering “isolated factors”
determinative. Rutherford Food Corp. v. McComb, 331 U.S.
722, 730 (1947).
The Supreme Court has found a number of circumstances
relevant in evaluating economic reality, including: (1)
F. Supp. 3d 401, 403 (N.D. Cal. 2017). We do not adopt Berger’s
analytical premises nor its rationales.
8 DAWSON V. NCAA
expectation of compensation, Portland Terminal, 330 U.S. at
152; (2) the power to hire and fire, Goldberg, 366 U.S. at 33;
(3) and evidence that an arrangement was “conceived or
carried out” to evade the law, Portland Terminal, 330 U.S. at
153. We apply these guiding principles in our analysis, and
conclude that the economic reality of the relationship between
the NCAA/PAC-12 and student-athletes does not reflect an
employment relationship.
1
We need not address whether Dawson’s scholarship
engendered an “expectation of compensation” or whether his
scholarship amounted to compensation because he did not
receive the scholarship from the NCAA or the PAC-12. The
NCAA Bylaws reveal that member schools themselves award
and distribute the financial aid Dawson alleges constitutes
expected compensation. See 2015–16 NCAA Division I
Manual, NCAA Bylaw 15.01.6 (prohibiting “institutions”
from awarding aid to a student-athlete in excess of cost of
attendance).
Dawson’s theory is that NCAA regulations prohibit
NCAA student-athletes from accepting compensation beyond
scholarships limited to cost of attendance. He does not claim
that the defendants provide scholarships; whether
“compensation” or not, scholarship funding comes from his
school. The limitation on scholarships does not, as a matter
of law, create any expectation of compensation from the
NCAA/PAC-12.
Thus, on the undisputed facts, neither the NCAA nor
PAC-12 provided Dawson with a scholarship or any
expectation of a scholarship.
DAWSON V. NCAA 9
2
Similarly, on this record, Dawson cannot demonstrate that
the NCAA or the PAC-12 had the power to fire or hire him.
Dawson alleges that the NCAA/PAC-12 assert complete
control over the lives of student-athletes, on and off campus,
including a student-athlete’s: “(a) living arrangements; (b)
athletic eligibility; (c) permissible compensation; (d)
allowable behavior; (e) academic performance; (f) use of
alcohol and drugs; and (g) gambling.” Dawson alleges that
the penalties for violating these rules include “loss of
financial aid and eligibility for sports.” Dawson also alleges
that the NCAA/PAC-12 control and regulate student-athletes’
“training and game schedules, academic schedules, and other
collegiate activities.”
The NCAA Bylaws pervasively regulate college athletics.
The complaint, however, does not allege that the
NCAA/PAC-12 “hire and fire,” or exercise any other
analogous control, over student-athletes. The complaint does
not allege, and moreover, the record does not demonstrate,
that the NCAA and PAC-12 choose the players on any
Division I football team, nor that they engage in the actual
supervision of the players’ performance. Rather, the
allegations of the complaint, taken as true, demonstrate that
the NCAA functions as a regulator, and that the NCAA
member schools, for whom the student-athletes allegedly
render services, enforce regulations.
In sum, on this record, Dawson cannot demonstrate that
the NCAA or the PAC-12 had the power to fire or hire him.
10 DAWSON V. NCAA
3
Finally, there is no evidence tendered by Dawson that the
NCAA rules were “conceived or carried out” to evade the
law. The relevant rules were first promulgated in the early
1920’s, and some version of them has “existed for a long
time.” Hale v. State of Ariz., 993 F.2d 1387, 1398 (9th Cir.
1993). In contrast, Congress enacted the FLSA in 1938.
Rutherford, 331 U.S. at 723. Even though “economic reality”
in college sports is much different today, there is no evidence
on this record that the NCAA rules were “conceived or
carried out” to evade the law.
4
The Supreme Court has also considered more specific
factors when helpful to probe the economic reality of a
particular situation. See, e.g., Rutherford, 331 U.S. at 730
(considering whether an employment relationship existed
versus independent contractor status); Goldberg, 366 U.S. at
32–33 (evaluating whether members of a cooperative may
also be employees of the same). In this context, Dawson
argues that the labor of student-athletes generates substantial
revenue for the NCAA and PAC-12, and that this “economic
reality” alters the analysis.
However, precedent demonstrates that revenue does not
automatically engender or foreclose the existence of an
employment relationship under the FLSA. The Supreme
Court has held self-proclaimed volunteers to be employees of
a nonprofit religious organization. Alamo, 471 U.S. at
296–97. Conversely, we recently held that cosmetology
students were not employees entitled to minimum wage
despite the fact that they performed services for paying
DAWSON V. NCAA 11
customers at salons run by their schools. Benjamin v. B&H
Education, Inc., 877 F.3d 1139, 1148 (9th Cir. 2017).
Therefore, in the context of our preceding analysis, the
revenue generated by college sports does not unilaterally
convert the relationship between student-athletes and the
NCAA into an employment relationship.
B
Bonnette v. California Health and Welfare Agency, 704
F.2d 1465, 1470 (9th Cir. 1983), abrogated on other grounds
by Garcia v. San Antonio Metro. Transit Auth., 469 U.S. 528
(1985), does not compel a contrary conclusion, as Dawson
contends. In Bonnette, we applied a four-factor test to probe
the economic reality of the relationship between state
agencies and chore workers hired to perform in-home care for
disabled public service recipients. Id. at 1470.
The Bonnette factors ask “whether the alleged employer
(1) had the power to hire and fire the employees, (2)
supervised and controlled employee work schedules or
conditions of employment, (3) determined the rate and
method of payment, and (4) maintained employment
records.” Id. at 1470. These factors prove “‘particularly
appropriate where (as in Bonnette itself) it is clear that some
entity is an ‘employer’ and the question is which one.” Hale,
993 F.2d at 1394 (quoting Vanskike v. Peters, 974 F.2d 806,
809 (7th Cir. 1992)). Under the Bonnette test, however, the
NCAA and PAC-12 are clearly not Dawson’s employers.
They do not admit him to the school or pick him for the team;
they cannot remove him from the team; they do not supervise
his schedules or activities in practices or games; they do not
maintain his scholastic records; and, although they put caps
12 DAWSON V. NCAA
on what he may receive as a scholarship, they do not
determine whether he gets a scholarship or in what amount.
Similarly, Benjamin does not alter our conclusion. In
Benjamin, we applied a seven-factor “primary beneficiary
test” to evaluate economic reality in the vocational student-
employee context. 877 F.3d at 1147. The primary
beneficiary test looks to “seven non-exhaustive factors for
courts to weigh and balance[.]” Id. at 1146 (discussing Glatt
v. Fox Searchlight Pictures, Inc., 791 F.3d 376 (2d Cir.
2015), amended and superseded by 811 F.3d 528 (2d Cir.
2016)).3
3
The seven factors applied in Benjamin were:
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.
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.
DAWSON V. NCAA 13
Benjamin is not useful in determining whether an
employment relationship exists between Dawson and the
defendants. Benjamin involved vocational students earning
academic credit necessary to take a state licensing exam. Id.
at 1142. In contrast, student-athletes are participating in
highly regulated extra-curricular activities. Thus, Benjamin’s
“primary beneficiary test” fails to “capture the true nature” of
the relationship at issue here. Hale, 993 F.2d at 1394.
C
In sum, the district court correctly held that the NCAA
and the PAC-12 were not Dawson’s employers. Within the
analytical framework established by the Supreme Court, the
NCAA and PAC-12 are regulatory bodies, not employers of
student-athletes under the FLSA. Cf. Berger, 843 F.3d 285
(affirming dismissal for failure to state a claim on former
athletes’ claims against their schools because the athletes
were not employees within the meaning of the FLSA). The
district court properly dismissed the FLSA claims.
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.
14 DAWSON V. NCAA
III
The district court also correctly dismissed Dawson’s
California law claims for failure to state a claim, relying on
the California Legislature’s decision to except student-
athletes from workers compensation benefits and decisions of
the California Courts of Appeal that interpret the student-
athlete exception. Dawson argues that the district court erred
in dismissing his state law claims because the exception does
not apply to the wage and hour provisions at issue here.
The status of student-athletes under California labor law
has a storied history. In 1963, the California Court of Appeal
determined that the estate of a state college football player,
killed with his team in a plane crash while returning from a
football game, was entitled to death benefits from his college
under the state’s Workmen’s Compensation Act. Van Horn
v. Indus. Acc. Comm’n, 219 Cal. App. 2d 457, 465 (1963).
The California Legislature responded in 1965 by amending
the Workmen’s Compensation Act to exclude explicitly
“‘[a]ny person, other than a regular employee, participating
in sports or athletics who receives no compensation for such
participation other than the use of athletic equipment,
uniforms, transportation, travel, meals, lodgings, or other
expenses incidental thereto.’” Graczyk v. Workers’ Comp.
Appeals Bd., 184 Cal. App. 3d 997, 1005 (1986). The
amendment intended to “clarify the position” of athletic
sponsors, and noted the “absence of the usual elements of the
employment relationship.” Id. (citation omitted). The
Legislature again amended the Act in 1981 to “more
specifically clarify the exclusion of athletic participants.” Id.
To be sure, the exclusion of student-athletes from the
Workmen’s Compensation Act at Section 3352(k) of the
DAWSON V. NCAA 15
Labor Code is informed by Section 3350, which provides that
“[u]nless context otherwise requires, the definitions set forth
in this article shall govern the construction and meaning of
the terms and phrases used in this division.” Cal. Labor Code
§ 3350. Dawson emphasizes the Legislature’s use of the
phrase “this division,” and argues that expressio unius est
exclusio alterius—the expression of one thing excludes the
expression of another—“confirms that Section 3352(k) is
confined” to the Worker’s Compensation section of the
Labor Code. However, California’s appellate courts have
interpreted the Legislature’s actions differently.
In Townsend v. State of California, 191 Cal. App. 3d 1530
(1987), Division Two of California’s Second District Court
of Appeal held that a student-athlete who committed a tort on
another student-athlete during a basketball game was not an
employee of his state university, barring the tort victim from
recovering under a theory of respondeat superior. While the
case concerned the California Tort Claims Act, not worker’s
compensation, the court discussed Van Horn and the
Legislature’s responsive amendment to the labor code.
Townsend, 191 Cal. App. 3d at 1535–37. The Townsend
court determined that “the amendment of Labor Code section
3352 . . . evidenced an intent on the part of the Legislature to
prevent the student-athlete from being considered an
employee of an educational institution for any purpose which
could result in financial liability on the part of the university.”
Id. at 1537.
Fifteen years later, Division Five of the Second District
Court of Appeal determined that a former women’s basketball
player could not state a claim against a private university and
its women’s basketball coach for violation of the California
Fair Employment and Housing Act because she was not an
16 DAWSON V. NCAA
employee of her university. Shephard v. Loyola Marymount
Univ., 102 Cal. App. 4th 837, 842–44 (2002). The court re-
stated and elaborated on Townsend’s broad characterization
of the student-athlete exception, describing “the Legislature’s
clear intent. . . . to exclude a student-athlete from the
definition of employee.” Id. at 844 (discussing Townsend,
191 Cal. App. 3d at 1535–37). To hold that the student-
athlete was an employee under the FEHA, the court
determined, would “specifically eschew the application of
Labor Code section 3352, subdivision (k).” Id. at 846.
Dawson argues that reliance on Townsend and Shephard
is misplaced because the cases concerned statutes not at issue
here. However, the Courts of Appeal in those cases
determined that the Legislature intended that the student-
athlete exception extend beyond the Workmen’s
Compensation Act. Townsend, 191 Cal. App. 3d at 1537;
Shephard, 102 Cal. App. 4th at 844. Even if the California
Courts of Appeal had not explicitly outlined the Legislature’s
intent and the broad applicability of the student-athlete
exception, the California courts’ willingness to apply the
exception outside of the worker’s compensation context
contradict Dawson’s threshold argument that the exception
applies narrowly.
Furthermore, other actions of the California Legislature
support that the student-athlete falls outside of California
labor law. Specifically, in 2012, the California Legislature
enacted a Student Athlete Bill of Rights. Cal. Educ. Code
§§ 67450–67453. The statute’s findings recognized that
student-athletes “spend approximately 40 hours per week
participating in their respective sports” and that their efforts
“generate large revenues.” Cal. Educ. Code § 67450(c). The
Education Code then recognized that student-athletes may
DAWSON V. NCAA 17
incur “medical expenses incurred from injuries suffered while
participating in intercollegiate athletics.” Cal. Educ. Code
§ 67450(e). Instead of extending employment-related
protections to student-athletes, however, the Legislature
provided for scholarship compensation and the payment of
insurance deductibles and medical expenses for injured
students, the availability of financial and life skills
workshops, and due process protections for student-athletes
involved in disciplinary actions facing loss of athletic
scholarship funds. Cal. Educ. Code §§ 67452 (a)(1), (b), (c);
67453(a).
Thus, under California law, student-athletes are generally
deemed not to be employees of their schools. Cal. Labor
Code § 3350(k); Graczyk, 184 Cal. App. 3d at 1005;
Townsend, 191 Cal. App. 3d at 1537; Shephard, 102 Cal.
App. 4th at 842–44; see Cal. Educ. Code §§ 67450–67453.
There is no authority that supports an inference that, even
though the student-athletes are not considered to be
employees of their schools under California law, the NCAA
and the PAC-12 can nevertheless be held to be “joint
employers” with the students’ schools. Consequently, we
must hold that student-athletes are not employees of the
NCAA/PAC-12 under the California Labor Code.
IV
For the foregoing reasons, we affirm the district court’s
dismissal of Dawson’s FLSA and California state law claims
against the NCAA and PAC-12. We need not, and do not,
reach any other issue urged by the parties, nor do we express
18 DAWSON V. NCAA
an opinion about student-athletes’ employment status in any
other context.
AFFIRMED.