15

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Hill v. Delaware North Companies Sportservice, Inc.



## In the



# United States Court of Appeals

**For the Second Circuit**

________

August Term, 2015

No. 15

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‐ cv

W ILLIAM A. H ILL and T ANICA B ROWN

, individually and on behalf of all others similarly situated,

Plaintiffs

‐ Appellants

,

v.

D ELAWARE N ORTH C OMPANIES S PORTSERVICE

, I NC

., Defendant

‐ Appellee,

B ALTIMORE O RIOLES L IMITED P ARTNERSHIP

, 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: P OOLER

, P ARKER

, and L IVINGSTON

, Circuit Judges

.

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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.

________

G ARY L YNCH

, 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

.

R OBERT P RITCHARD (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.

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________

B ARRINGTON D. P ARKER

, 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

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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

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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

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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

6No. 15

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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.

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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

8No. 15

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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 Our first task i s to identify the

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.

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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

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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

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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:

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“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

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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.

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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

15No. 15

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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

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“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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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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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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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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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 H ARV

. L. R EV

. 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, Int ʹ l 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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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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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.

23