F OR P UBLICATION



### UNIT E D ST AT E S CO URT O F APPE AL S FO R T H E NINT H CIRCUIT

W I L L I A M W

. C A S T L E ,

Plaintiff-Appellant
,

v

.

E U R O F R E S H , I N C ., AKA Eurofresh F arms; A R

I Z O N A D E P A R T M E N T O F C O R R E C T I O N S , an ag ency of the State of Ariz ona; D O R A B

. S C H R

I R O , W arden, former Director, Ariz o na Department of Corrections; C H A R L E S L

. R Y

A N , Director, Ariz ona Department of Corrections; S T A T E O F A R

I Z O N A , Defendants-Appellees

. N o. 11-17947

D.C. No. 3:09-cv-08114- J W S

OPI NI ON

A ppeal from the United States District Court for the District of Ariz o na J ohn W . Sedwick, District J udg e, Presiding

Arg ued and Submitted April 11, 2013—Pasadena, California

F iled September 24, 2013

B efore: Marsha S. B erz on, Richard C. Tallman, and Milan D. Smith, J r., Circuit J udg es.
Opinion by

J udg e Milan D. Smith, J r.; Concurrence by

J udg e B erz onC A S T L E V

. E U R O F R E S H , I N C

. 2

SUMMARY *

P risoner Civil Rights

The panel affirmed in part and reversed in part the district court’s summar y j udg ment and remanded in an action broug ht b y an A r iz ona state prisoner who a lleg ed that defendants viola ted the Americans w ith Disabilities Act, 42 U

. S

. C

. §§ 12131–12134, a n d the Rehabilitation Act o f 1973, 29 U.S.C. § 794, by failing to reasonably accommodate his disability

at a prison job.

The panel held that plaintiff’s claims a ga i n s t Eurofresh,

a private company that contracted w i t h the A riz o na Correctional I ndustries for a conv ict labor force, were p r o perly d ismissed. The panel held that plaintiff was n o t Eurofresh’s “employ ee” under Title I of the ADA because his labor b elong ed to the State of Ariz ona, which put him to work
at E urofresh in order to comply with its statutory oblig ations. The p anel f

urther held that because Eurofresh did not receive federal financial assistance, either directly or i n d irectly
, it

was not subject to the requirements of the Rehabilitation Act.

The panel r e v e r s ed the judg ment in favor of the State Defendants b ecause it determined that those d efendants could be held liable f

or acts of disability discrimination committed by Eurofr esh, its contractor. The panel stated that the law

was clear—State D e fendants may not contract away their oblig ation to comply with f ederal discrimination law. The

* T h is su m m ary co n stitu

tes n o part o f th e o p in io n o f th e co u rt. It h as b een p rep ared b y

co u rt staf

f f o r th e co n v en i en ce o f

th e read er.C A S T L E V

. E U R O F R E S H , I N C

. 3

panel remanded to the district court to d etermine in the first instance whether any

such discrimination occurred.

Concurring
, J u dg e B e r z on stated t h a t this circuit’s precedent compelled the conclusion that plaintiff was not an employ e e under T itle I of the ADA. J udg e B erz on stated that the notion that prisoners who work for covered employ e rs can

never be “ employ ees” for p urposes of federal employ e eprotective st a t utes undermines those statutes as applied to employ e es g enerally and mi s construes the reach of the “employ ee” desig nation.

COUNSEL

Candace Carroll and certified law s t u d e nts Sara B elvill (arg ued), Austin B e rg er, Allison Capoz z o l i
, and L auren Presser, University of San Dieg o L eg al Clinics, San Dieg o, California, for Plaintiff-Appellant.

J effrey W illis and Melissa A. Marcus (arg ued), Snell & W ilmer L .L

. P., Tuscon, Ariz o na, for Defendant-Appellee Eurofresh I

nc.

J oseph D. Estes, Assistant Attorney G ene r al, and Katherine E. W a tanabe (a rg ued), Ariz o na Attorney General’s Office, Phoenix
, Ariz o n a , f

o r D e f e n d a n t s

- A p p e l lees State o f Ariz ona, Ariz ona Department of C o r r e c t i o n s , D o ra Schriro and Charles Ry an.C A S T L E V

. E U R O F R E S H , I N C

. 4

OP INION

M. SMI TH, Circuit J udg e :

W il liam Castle, formerly an A riz ona state prisoner, 1 appeals the district c ourt’s entry of judg ment in fa v o r o f defendants Eurofresh I nc., the State o f Ariz ona ( t he State), the Ar i z ona Department of Corrections (ADC), and c ertain officials of the ADC. 2 Castle alle ge s that the defendants violated the Americans with Disabilities Act (ADA), 42 U

. S

. C

. §§ 12131–12134, a n d the Rehabilitation Act o f 1973 (RA), 29 U.S.C. § 794, by failing t o r easonably

accom m o d at e his disability

. We conclude that Castle’s claims ag ainst Eurofresh were properly dismissed. Castle

was not E urofresh’s “employ e e ” u n der Title I o f the ADA, and Eurofresh does not receive federal financial assistance, a s it must i n o rder to subject it to the requirements of the RA. However, we reverse the judg ment in favo r of the State Defendants, because those defendants may be held liable for
acts o f disability discrimination commi t t e d b y one of their
contractors. W e therefore remand Castle’s claims ag ainst the State Defendants for further proceeding s r e q uired by this opinion.

BACK G ROUND

Castle was convicted of theft and perpetuating a scheme

or artifice to defraud in violation of Ariz

. R ev. Stat. §§ 13-

1 Castle w as released f

ro m p riso n o n A p ril 2 2 , 2 0 1 3

.

2 T h ro u g h o u t th is o p in io n w e ref er co llectiv ely to th e State, th e A DC,

an d th e in d iv id u al d ef

en d an ts as th e State Def

en d an ts.C A S T L E V

. E U R O F R E S H , I N C

. 5

1 8 0 2
, 13-2310. He was sentenced to a ten-y ear prison ter m and placed in the custody of the ADC.

Ariz ona law requires all a b le-bodied inmates in ADC’s custody to “eng ag e in hard labor for not less than forty hours
per week.” A r i z

. Rev. Stat. § 31-251(A). Most inmates satisfy this requirement by participating in the ADC’s W ork I ncentiv e P ay Prog ram (W I PP). I n mate wag es under the W I PP rang e from ten to fifty cents p er h our, althoug h inmates

can e arn raises for g ood performance. Some inmates, however, receive sig nificantly more r emunerative work assig nments throug h a separate convict labor prog ram run b y Ariz ona Correctional I ndustries (ACI ). 3 See Ariz

. Rev. Stat. §§ 41-1621–1630. ACI

contracts with private companies to provide them w ith a convict labor force. O n e c o mpany that
contracts with ACI is Eurofresh, which des c r i b es itself a s “America’s larg est g reenhouse operation,” capable o f
g rowing 200 million pounds of “hy droponic tomatoes” each
y ear.

Castle beg an picking tomatoes for Eurofresh in J uly 2008
at a g reenhouse located approx imatel y six ty miles f rom the prison where he was incarcerated. The job w a s p hy sically strenuous—Castle was required to be on his feet for his entire

seven h our shift and often had to push a 600 pound tomato

3 A C I is a statu to rily creat e d e n t i t y t h at o p erates u n d er th e

“ org an izatio n a l a u sp ices o f t h e A DC,” b u t is f

u n d ed so lely “ t

h ro u g h its

o w n o p eratio n s .” S

ee Ar i z

. R e v

. Stat. § 4 1- 1 6 2 4

. A CI describ es its

m issio n as creatin g “ o pp o rtu n ities f o r o f f en d ers to d ev elo p m ark etab le j o b sk ills an d g o o d w o rk h ab its th ro u g h en terp rises th at p ro d u ce q u ality
p ro d u cts an d serv ices f

o r [A CI’ s] cu sto m e r s .” T h o se cu s to m ers h av e in clu d ed f

irm s th at p ro d u ce “ clo t

h in g , f ab ricated steel, liv esto ck
, d airy
p ro d u cts, an d h o t el reserv atio n s f o r B est Western m otels.” Ha le v. S ta te

o f Arizo n a , 9 9 3 F.2 d 1 38 7 , 1 3 9 0 (9 th Cir. 1 9 9 3 ) (en b an c).C A S T L E V

. E U R O F R E S H , I N C

. 6

cart. Toward the end o f Aug ust 2008, Castle b eg an

ex p eriencing “intolerable pain and swelling ” in his left ankle after working for two or more hours at Eurofresh. Castle h ad seriously injured his a

nkle decades earlier during a p arachute accident that occurred while Castle attended the United States Army Airborne School. 4

B e cause of his p ain, Castle asked a Eurofresh supervisor if h e c ould take short b reaks during the work day to rest his ankle. According to Castle, the supervisor indi c at ed that Castle would be fired if he insisted on taking breaks. Castle continued working at E u

r o f r e s h, but soug ht medical treatment f or his injury from the ADC. O ne of Castle’s medical providers s u gge s ted that he ask f or a job chang e o r accommodation.

I n October 2008, Castle sent certified letters to both ACI and Eurofresh informing them that he c ould not walk or stand for long periods without ex periencing ex tr e m e pain. He asked to be p rovided with a position at E urofresh “that does
not require walking for long periods of time, as w e l l a s pushing heavy carts.” Castle later met with representatives o f both Eurofresh and ACI to disc u s s his disability

. He ag ain
sug g ested that he be reassi g n ed to a different job, such a s

o p erating box or label machinery in the “pack h ouse.” A Eurofresh manag er responded that the r e were no other positions a vailable to inmate laborers, 5 but that Eurofresh a nd

4 T h e Dep artm en t o f

Veteran s A f

f airs h as assig n ed Castle a 2 0 p ercen t

serv ice- co n n ected d isab ility ratin g as a resu lt o f

th e accid en t.

5 D e fe n d a n t s claim th at Castle co u ld n ot be reassig n ed to an oth er j o b
, su ch as a j o b in t

h e p ack h o u se, b ecau se civ ilian w o rk ers w ere em p lo y ed in th o se p o sitio n s, an d “ th e in m ate- to

- secu rity p erso n n el ratio w as n o tC A S T L E V

. E U R O F R E S H , I N C

. 7

ACI w ould take Castle’s request “under advisement.” Castle claims that h e w as later informed that no accommodation would b e made, an d t h at his only option w as to quit his position at Eurofresh. D efendants claim that Eurofresh offered to promote Castle to a “de-leafer” position, 6 but that Castle r efused the offer. N o party disputes, however, that the ADC eventually reassig ned Castle to a W I PP job in the prison
motor pool. Castle’s new job paid 50 cents per hour. Castle h a d been r eceiving more than $2.25 per hour pi c k i n g tomatoes at Eurofresh.

After p u rs u ing a g rievance w ith the ADC, Castle filed a d i s c r i m i n a

t ion claim w ith the Equal Employ men t O p p o r

t u n i t y Commission ( EEOC). After the EEOC issued Castle a Notice of Suit Rig hts letter, Castle broug ht suit ag ainst Eurofresh a nd the State Defendants.

I n his initial c omplaint, Castle alleg ed that Eurofresh a nd
t h e S t ate Defendants violated h is r ig hts under Titles I and I I of the ADA, Section 504 o f the RA, and the Ar i zona Civil Rig hts Act, by failing to reasona bly accommodate his disability

. Castle also claimed that Eurofresh h a d b reached its contractual oblig ations w ith the State, which required that Eurofresh comply with all ap p l i c a ble federal and state

a d e q u ate” to h av e in m ates w o rk alo n g sid e n o n

- co n v ict lab o rers. Castle d isp u tes t h is claim
, a n d co n ten ds th at in m ates reg u larly w o rk ed am o n g Eu ro f resh ’ s civ ilian

em p lo y ees in th e p ack

h o u s e an d elsew

h ere.

6 Def en d an ts ack

n o w led g e th at th e d e -l e a f er p o sitio n also req u i res

w alk in g an d s tan d in g , b u t claim th e j o b i s l ess p h y sically tax in g th an p ick in g to m ato es b ecau se th e carts u sed f o r th e d e- leaf

in g j o b are lig h ter th an th o se u sed b y

th e to m ato p ick ers.C A S T L E V

. E U R O F R E S H , I N C

. 8

employ ment laws. 7 Castle soug ht money damag es but did not request reinstatement at Eurofresh.

The district court dismissed Castle’s Title I claim ag ainst Eurofresh w ith prejudice. The court found that Castle lacked standing to sue under the ADA because, as a prisoner, he did
not h a v e an employ

ment relationship with Eurofresh. The district court also dismissed Castle’s RA c l a im ag ainst Eurofresh, r e a s o ning that Castle had not adequately alleg ed that E urofresh is the d irect or indirect recipient of fe d e ral financial assistance. Castle was g iven leave to amend his RA claim ag ainst Eurofresh.

I n the s a m e o rder, the d istrict court also dismissed Castle’s ADA and RA claims a gainst the State Defendants. The c ourt c oncluded that Castle c o u ld not state a claim under either statute b ecause “plaintiff’s own evidence shows that he

was g iven a d i f

ferent work assig nment [ in the motor pool] —one that does not require prolong ed standing a nd walking .” Castle was g ranted leave to amend his complaint
ag ainst the State Defendants.

After Castle twice a mended his complaint, E u rofresh a nd the State De fendants filed motions seeking dismissal o f Castle’s remaining claims. The dis t r i ct court g ranted Euro fr es h’s motion with prejudice, ag ain concluding that Castle f ailed to adequately all e ge that Eurofresh received fe d e r a l financial assistance. The d istrict court denied the State Def e ndants’ motion, however, and o rdered them to

answer Castle’s alleg ation s t h a t they violated Title I I of the ADA and Section 504 of the RA.

7 Castle o n ly ap p eals th e d i s trict co u rt’ s d eterm in atio n s reg ard in g h is A DA an d RA

claim s.C A S T L E V

. E U R O F R E S H , I N C

. 9

The State Defendants filed their answer in October 2010. I n J une 2 011, the State Defendants filed a motion for
summary judg ment o n Castle’s remaining claims ag ainst them. The district court g ranted the motion in No vember 2011. The court reasoned t h a t t h e State Defendants did not violate either the ADA or the RA b e c a u s e: (1) the State Defendants lacked the power to reas s i gn or otherwise accommodate Castle withi n Eurofresh; and (2) the State Defendants had accommodated Castle by reassig ning him to a job in the prison motor pool. Castle timely appealed.

JURISDICTION AND STANDARD OF REVIEW

W e have jurisdiction to review the d istrict court’s entry o f judg ment u n der 28 U. S

. C

. § 1291. We review an order
g ranting a motion to dismiss de novo. Cou s i n s v

. Lockyer
, 568 F .3d 1 063, 1067 (9th Cir. 20 0 9 )

. “ All well-pleaded

a l l e g ations of material fact in the complaint are accepted as true and a re c onstrued in the lig ht most favorable to the nonmoving party .” Faulkner v

. ADT Sec. Se r vs ., Inc.
, 706 F .3d 1017, 1019 (9th Cir. 2013) (citation s o m i tted). However, a complaint must a lleg e “enoug h f acts to state a claim to relief that is plausible on its fa c e.” Bell Atl. Corp. v. Twombly
, 550 U.S. 544, 570 (2007). “ A c l aim has facial p lausibility when ‘the plaintiff pleads factual content that allows the court to dr aw t h e r easonable inference that the defendant is liable for the misconduct alleg ed.’” F a u l k n e r , 706 F

. 3 d at 1019 (quoting Ashcroft v. Iqbal
, 556 U.S. 662, 678 (2009)).

W e s i milarly review a g rant of summary judg ment de

novo. Cameron v. Craig
, 7 1 3 F .3d 1012, 1018 (9th Cir. 2013). W e “must deter m i n e whether, viewing the evidence in the lig ht most favorable to the nonmoving p arty , there a re any g enuine issues of material f a c t and whether the districtC A S T L E V

. E U R O F R E S H , I N C

. 10

court correctly a

pplied the r elevant substantive law.” Id. (quoting Lopez v. Smith
, 2 03 F

. 3d 1122, 1131 (9th Cir. 2 000) (en banc)).

D ISCUSSION

I. Castle’s ADA Claim Against Eurof resh

Title I of the A DA prohibits di scrimination “ag a inst a qualified individual o n the basis of d isability in reg ard to

. . . [ the] privileg es of employment .” 42 U.S.C. § 1 2112(a) (emphasis added). T h us the first question we must resolve is whether Castle, an in m ate required to w ork u nder A riz o na law, had an employ

ment relationsh ip with Eurofresh within the meaning of the ADA.

Th e A D A defines an “employ ee” as “an individual employ e d by an employ er.” 4 2 U.S.C. § 12111( 4 )

. All parties ag ree that Eurofresh is an “ employ e r ” under the ADA. 8 B ut the parties vig orously d ispute whether Castle was “employ ed” by

Eurofresh. W h ile this specific issue appears
to be o ne of first impression under the ADA, we do not write

on a wholly blank slate: w e, as well a s a number of our sister circuits, have prev i ously c onsidered whether prisoners should be t r eated as “employ ees” under v arious other federal
statutes. 9

8 S ee 4 2 U.S.C. § 1 2 1 1 1 (5 )(A ).

9 S e e , e .g

. , H

a le
, 9 9 3 F.2 d at 1 3 9 5 (p riso n er is n o t an em p lo y ee u n der th e Fair L ab o r S t a n d a r d s A ct (FL SA )); Mo rg an v. Ma cDo n ald
, 41 F.3 d 1 2 9 1
, 1 2 9 3 (9 th Cir. 1 9 9 4 ) (sam e); Alexa nd er v. S a ra , In c. , 7 2 1 F.2 d 1 4 9
, 1 5 0 (5 th C i r

. 1 9 8 3 ) (p er cu riam ) (sam e); Co u p a r v. Dep ’t o

f La b o r , 1 0 5 F .3 d 1 2 6 3
, 1 2 6 7 (9 th Cir. 1 99 7 ) (p riso n er n o t an em p lo y ee w ith in th e

m ean in g o f th e w

h istleb l o w er p ro v i sio n s o f th e Clea n A ir A ct an d th eC A S T L E V

. E U R O F R E S H , I N C

. 11

The leading

case in our circuit is our en banc decision in Hale
, 993 F

. 2d 1387. T h er e , we addressed whether c ertain Ariz ona state prisoners were “e m ploy ees” within the meaning of the F L SA. Id. a t 1389–90. L ike the plaintiff in this case, the a ppellants in Hale participate d in labor prog rams adminis t e r e d by ACI for the purpose of implementing Ariz ona’s r equirement that all able-bodied prisoners perform hard labor. 1 0 Id. W e concluded that the appellants were not “‘employ ees’ of the prison entitled to be paid a minimum
wag e under the F L SA.” Id. at 1395.

I n reaching our holding in Hale
, we first acknowledg ed the “ge n e r al rule” that we must consider the “economic reality ” of a labor relationship when determining whether it is an employ

ment relationsh i p under federal law. Id. at 1393–94. I n this circuit, w e ty pically evaluate the “economic reality ” of a labor relationship by considering the factors laid
out in Bonnette v. California Health and W elfare Agency
, 704 F .2d 1 4 65 (9th Cir. 1983). 1 1 I n H a l e , however, we determined that the Bonnette factors “are not a useful

T o x ic S u b stan ces Co n tro l A ct); W illia ms v. M

eese , 9 2 6 F

. 2 d 9 9 4
, 9 9 7 (1 0 th Cir. 1 9 91 ) (p riso n er n o t an em p lo y ee u n der T itle VII o r th e A g e Discrim in atio n in Em

p lo y m en t A ct). B u t see Ba ker v. McNeil Isla n d Co rr. Ctr.
, 8 5 9 F.2 d 12 4
, 12 8 (9 t h C i r

. 1 98 8 ) (p riso n er p o ten tially an

em p l o y ee u n d er T itle V II); C a rter v. Du t ch ess C

o mm. Co ll.
, 7 3 5 F.2 d 8
, 1 4 (2 d Cir. 1 9 84 ) (p riso n er m ay b e an em p lo y ee u n d er FL SA ).

10 T h e ap p ellan ts in H

a le w o rk ed f

o r A RCOR En terp rises, A CI’ s p red ecesso r en tity

. S

ee Ha le , 9 9 3 F.3 d at 1 3 8 9

.

11 T h o se f acto rs in clu d e “ w

h eth er th e alleg ed em

p lo y er h as t

h e p ow er to h ire an d f

ire th e em

p lo y ees, su

p erv ises an d c o n t ro ls em p lo y ee w ork sch ed u les o r co n d itio n s o f em p lo y m en t , d eterm in es th e rate an d m e t h o d

o f p ay m en t, an d m ain tain s em

p lo y m en t reco rd s.” Ha le
, 9 9 3 F.3 d at 1 3 9 4 (citin g Bo n nette , 7 0 4 F.2 d at 1 4 7 0).C A S T L E V

. E U R O F R E S H , I N C

. 12

framework in the cas e of prisoners who work for a prisonstructured prog ram because they have to.” Hale
, 9 93 F

. 2 d at 1394; see also Vanskike v. Peters
, 974 F

. 2d 806, 809 ( 7th Cir. 1992) (noting that the Bonnette factors are useful where “it is clear that some entity is a n ‘ e m ploy e r’ and the question is which one,” but not where the question is more basic: can prisoners “plausibly be said to be ‘employ ed’ in the relevant

sense at all”). W e c o n c luded that “[ r] eg ardless of how the Bonnette factors balance

. . . the e c onomic reali t y o f t he relationship b e t ween the worker and the entity for which work was performed lies in the relationship between prison and prisoner. I t i s p enolog ical, not pecuniary .” H ale
, 993 F .2d at 1394–95; see also Gilbreath v. Cutter Biological, Inc.
, 93 1 F. 2 d 1320, 1 331 (9th Cir. 1991) (Ry mer, J

. concurring ) (reasoning that “i n m ate labor belong s to the institution”).

A few y ears after H

ale
, i n C o upar v. Department of Labor
, 1 05 F .3d 1263 (9th Cir. 1997), we once ag ain had the opportunity to consider a prisoner’s employ ment status under federal law. Doug las Coupar w as a federal inmate oblig ated
to work as a condition of h is sen t e n c e

. Id. at 1 264. Coupar filed environmental complaints ag a ins t the g overnment corporation where h e worked, claiming that he subsequently faced discrimination in violation of the whistleblower provisions of the Clean Air Act and the Tox ic SubstancesC A S T L E V

. E U R O F R E S H , I N C

. 13

Control A ct. 1 2 Id. W e found that Coupar w as not protec ted by either statute. Id.

Coupar relied on Baker v

. McNeil I s l a nd Corrections Center
, 859 F .2d 124 ( 9th Cir. 1988), to arg ue that he w as an employ e e for the p urposes of obtaining whistleblower protection. Coupar
, 105 F .3d at 1 266. I n Baker
, we left open the possibility that a prisoner could stat e a c laim for employ ment d iscrimination u nder Title VI I
, and remanded to the district court for further f inding s reg arding the pr ecise labor relat i o nship between the plaintiff and his jailors. See Baker
, 859 F .2d at 128 (holding that it w as not “bey ond doubt that no set of facts could be proven to entitle B aker to r elief”). The plaintiff in Baker
, however, h a d not alleg ed that the position h e soug ht was “one t h a t fulfilled a prison work requirement.” Coupar
, 105 F .3d at 1 266. Coupar, o n the other hand, was oblig ated to work—just like the plaintiffs in Hale

. We found this to be the crucial fact that “dif f e r e ntiate[ d ] Baker from Coupar’s case.” Id. Consequently
, we held that w here an in m a t e is oblig ated to work a t some job pursuant to a prison work prog ram, “[ t] hat fact [ alone] bring s h im within the rule of Hale .” Id. at 1265.

L ike the plaintiff in Coupar
, Castle cites Baker for t he proposition that he should b e treated a s Eurofresh’s employ ee under the A DA. B ut as we did with the plaintiff in Coupar
, we must reject Castle’s claim: Castle “was oblig ated to work

12 T h o se p ro v isio n s s tate th at “ [n ]o em p lo y er m a y d i sch arg e an y

em p l o y ee or o th erw ise discrim in ate ag ain st an y em p lo y ee w ith resp ect to

. . . co m p en s atio n , term s, co n d itio n s, o r p riv ileg es o f em p lo y m en t” b e c a u se th e em

p lo y ee en g ag es in p ro tected activ ities related to th e

en f o rcem en t o f t

h e A cts. 1 5 U.S.C. § 2 6 22 (a) (T o x ic Su b stan ces Co n tro l A ct); 4 2 U.S.C. § 7 62 2 (a) (Clean A ir A ct).C A S T L E V

. E U R O F R E S H , I N C

. 14

at some job pursuant to a prison work prog r am,” id.
, and this fact alone bring s Castle’s cla i ms within the rule of Hale

. 1 3 Baker is inapposite.

W e are e qually unpersuaded b y Castle’s other attempts to disting uish this c ase fro m Hale and Coupar

. F or ex ample, Castle notes that he worked for a private corporation, while the pl a i n t i ffs in Hale and Coupar toiled for g overnmentcontrolled en t i t i e s. Castle further arg ues that one of the supporting rationales for the H ale decision is n ot present h ere, because the p urpose of the A D A is d ifferent than that of the F L SA. 1 4 While these distinctions have some substance, they

are u ltimately irrelevant. Coupar identifies one factor that trig g ers applicat i o n of the Hale rule—an inmate’s leg al oblig ation to w ork. That factor is indisputably present in this

case. The absence of other e l e m e n ts, therefore, has no bearing on Castle’s standing under the AD A

. C a stle is not E u r o fresh’s employ ee u nder the ADA because his labor belong s to the State of Ariz ona, w hich p ut him to work at Eurofresh in order to comply with its stat u t o ry oblig ations. See Hale , 993 F .2d at 1395; Coupar , 105 F .3d at 1267.

13 C astle arg u es th at h e d i d n o t “ w o rk fo r a p riso n

- stru ctu red p ro g ram b ecau se h e h ad to ,” an d n o t es th at h e h ad a ch oice w h eth er o r n o t to w ork f o r Eu ro f resh

. T h is arg u m en t m i sses th e m ark

. W h ile Castle d id n o t h av e to w ork f o r Eu ro f resh sp ecif

ically
, h e w as n ev erth eless o b l ig ated to w ork f o r so m e p r i s o n

- stru ctu red lab or pro g ram

. S ee A riz. Rev

. Stat. § 31

- 2 5 1 (A ). In an y ev en t, w e rej e c t ed t h e sam e arg u m en t in Co u p a r

. S ee Co u pa r , 1 0 5 F .3 d at 1 2 6 5

. (“ A lth o u g h C o u p ar did n ot h av e t o w o rk f or FP I in p articu lar
, a s a n i n m ate h e w as o b lig ated to w o rk at so m e j o b
p u rsu an t to a p riso n

w o rk p ro g ram .”).

14 In Ha le
, w e n o ted th at th e p r i m a r y c o n cern o f th e FL SA —en su rin g lab o rers’ m in i m

u m stan d ard s o f liv in g —“ d oes n o t ap p ly to p riso n ers, f or

w h o m clo t h in g , sh elter, a n d f

o o d are p ro v id ed b y t

h e p riso n .” Ha le
, 9 9 3 F.2 d at 1 39 6

.C A S T L E V

. E U R O F R E S H , I N C

. 15

II. Castle’s RA Claim Against Eurof r esh

“The Rehabilitation Act is materially identical to and the model for the ADA, ex cept that it is limited to prog rams that receive federal financial a ssistance

. . . .” Armstrong v

. Davis
, 275 F .3d 849, 862 n.17 ( 9 t h Cir. 2001) (internal quotations omitted), abrogated o n other grounds by Johnson v

. California
, 543 U.S. 499, 504–05 (2005); see also G ilstrap v

. United Air Lines, Inc.
, 7 09 F .3d 995, 9 99 ( 9th Ci r

. 2013). The district court d ismissed Castle’s R A claim ag ainst Eurofresh because it concluded that Castle could not plausibly a lleg e that Eurofresh received federal financial assistance, ei t h e r d i rectly or indirectly

. W e find no error in the district court’s conclusion.

I n United Stat e

s Department of Transportation v

. Paralyzed Veterans o

f A merica
, the Supreme Court held that Cong r ess intended to strictly limit the scope of the RA solely “to those w ho actually ‘receive’ f ederal f inancial assistance.” 477 U.S. 597, 605 (1986), superseded by st a tute on other grounds
, A ir Carrier A ccess Act of 1986, Pub. L

. No. 99-435 (1986). The Court ex plained that “[ b] y limiting coverag e to recipients
, Cong ress imposes the ob lig ations of § 504 upon t hose who are in a position to accept o r rejec t t h o s e obligations as a p a rt o f the decision whether or n ot to ‘receive’ federal fun d s

. ” I d. at 606 (emphases added); see also Greater L.A. Council on Deafness, Inc.
, v. Z o l in
, 812 F .2d 1 103, 1111 ( 9th Cir. 1987) (recog niz ing that the RA “does not p rohibit discrimination ag ainst the handicapped a s such; it simply b a rs the use of federal funds to support prog r ams or activities that so discriminate”). Consequently
, whi l e t hose who affirmatively choose to receive federal aid
may be held liable under the RA, liability will “not ex tend a s f a r as those who benefit from it,” because applicatio n o fC A S T L E V

. E U R O F R E S H , I N C

. 16

§ 504 to all who benefit economically from federal assistance would y ield almost “limitless coverag e.” Paralyzed Veterans , 477 U.S. at 607–08.

Castle arg ues that Eurofresh is the indirect recipient o f federal f inancial assistance. Specif i c a l l y , Castle c ontends that ACI is a direct recipient of f ederal f inancial a s s i s tance, a

nd that Eurofresh indirectly receives federal financial assistance throug h its contract with ACI , which provides that ACI , and
not Eurofresh, will p ay Social Security and Medicare tax es on the wag es of Eurofresh’s prison laborers. These alleg ations are insufficient to survive a motion to dismiss.

F irst, it is unclear what connection, if any , ex ists b etween ACI ’ s receipt of federal f u nds and its decision to a ssume responsibility for the federal tax l iabilities r e lated to Eurofresh’s use of prison labore r s

. B ut even if such a connection ex ists, it is not enoug h to establish Eur o f r e s h ’s liability under the RA. To state a claim, Castle must do more than simpl y s h ow that E urofresh b enefits from federal monies—he must show that Eurofres h h a s affirmatively chosen to “provid[ e ] employ ment for the handicap p e d a s a quid pro quo for the receipt of f ederal funds.” Id. at 605; see also Nat’l Collegiate Athletic Ass’n v. Smith
, 525 U.S. 459, 468 (1999). This Castle h as not done. I ndeed, Castle has presented no evidence that Eurofresh affirmatively chose to receive federal monies, and in so doing accepte d the

co n c o mitant responsibilities o f comply ing with c ertain federal mandates, such as those contained in the R A

. See Paralyzed Vetera n s , 477 U.S. at 605 (placing substantial emphasis on the “contractual na ture of the r eceipt of federal
money s”). N or has Castle plausibly a lleg ed that Eurofresh is the intended recipient of f e deral funds, and that ACI is a “mere conduit[ ] of the aid to its intended recipient[ ] .” Id. atC A S T L E V

. E U R O F R E S H , I N C

. 17

6 0 7. B ecause Castle has not alleg ed facts which plausibl y demonst r a te that E urofresh r eceives federal financial assistance, Castle’s RA c laim ag ainst Eurofresh w as properly dismissed.

III. Castle’s ADA and RA Claim s Again s t the State Def endants

W e nex t c onsider t h e p o tential liability of the State Defendants. The State Defendants may be liable under Title I I of the ADA even thoug h Eurofresh may not be sued under Title I

. See, e.g. , Disabled Rights Action Comm. v

. Las Vegas Events, Inc.
, 375 F .3d 861, 8 83–84 ( 9th Cir. 2 0 0 4) (noting that plainti ffs often sue multiple defendants under separate titles o f t h e A D A); Johnson v. City of Saline
, 1 51 F .3d 564, 571–72 (6th Cir. 1998) (“Even thoug h the [ p r ivate] businesses may be subject to Title I I I of the A DA

. . . the city is simultaneously subject to Title I I because it is a landlord.”). Moreover, unlike E u rofresh, the State Defe n dants cannot plausibly deny that they receive federal financial ass istance, and thus they

are oblig ated to comply

with the RA.

The State Defendants c oncede, a s they must, that Title I I applies to the ope ration of state p risons. See Penn. Dep’t of Corr. v. Y eskey , 524 U.S. 206, 213 (1998) (“[ T] he plain tex t of Title I I of the ADA u nambig uously ex tends to state prison inmates.”). Consequently
, State Defendants must ensure that di s a b l e d p risoners are not discriminated ag ainst with reg ard
to the provision of “the benefits of [ their] services, prog r a ms,

or activities” on a ccount o f a prisoner’s disability

. 42 U .S.C. § 12132; see also Y

eskey
, 5 2 4 U .S. at 210 (finding that prison vocational p rog rams are “benefits” o f a public entit y ). Nevertheless, the State Defendants contend that Title I I does
not apply in this case, because “[ the State Defendants] had noC A S T L E V

. E U R O F R E S H , I N C

. 18

authority to determine w hich jobs or job duties were available
to inmates at Eurofresh, nor c ould they overturn [ Eurofresh’s] decision to refuse a request for a job modification.” The State Defendants are mistaken.

I n Armstrong v. Schwarzenegger
, 622 F .3d 1058, 1065–67 (9th Cir. 2010), we rejected the State of California’s
arg ument that it c ould not be held liable for ADA violations committed by c o u n t y jails that were housing state prisoners pursuant to contracts with th e s t a t e

. W e f ound it wholly irrelevant that the ADA vio l a t i o ns o ccurred a t county jails, rather than at state prisons un d e r California’s immediate control. Rather, we clarified that Title I I ’s oblig a tions a pply
to public en t i t i es r eg ardless o f h ow those entities chose to provide or operate their prog rams and benefits. S ee i d

. at 1065 (“[ A] public entity
, in providing any aid, ben e fit, o r service
, may not, directly or through c ontractual, licensing,

or other arrangements , discriminate ag ainst individuals with disabilities.” (quoting 28 C.F .R. § 35.130 ( b )(1)) (emphasis added)).

The State Defendants a dmit that A C I contracts with Eurofresh to provide “benefits ” to state inmates, including paid labor and vocational training

. The State Defendants a re free to enter into such c o n t racts, and likely reap numerous benefits from such arr a n ge ments. B ut one benefit State Defendants may not harvest is immunity for A DA violations: State Defendants are o blig ated to ensure that Eurofresh—like all other State contractors—complies with federal laws prohibiting discrimination on the basis of disability

. 1 5 See

1 5 W e n o te w ith in terest th at w h ile State Def

en d an ts d iscla i m t h i s

o b lig atio n o n ap p e a l
, A CI’ s co n tract w ith Eu ro f resh ex p licitly req u i res Eu ro f resh to co m

p ly w ith all f

ed eral an d state em

plo y m en t law s, i n clu d in gC A S T L E V

. E U R O F R E S H , I N C

. 19

Armstrong
, 6 22 F .3d at 1065–67; see a lso Henrietta D. v

. Bloomberg
, 331 F .3d 261, 286 (2d Cir. 2003) (“All
g overnmental activities of public entities are covered, even if they are carried o ut by contractors. Fo r e x a mple, a State is obl i ga ted by [ T] itle I I to ensure that the services, prog r a ms, and activities of a Sta t e p ark inn operated under c ontract b y

a private entity are in compliance w ith [ T] itle I I ’s requir e ments.”) (citation omitted)). The same principle applies to RA violations committed by contractors. Henrietta D.
, 3 31 F

. 3 d a t 2 8 6 (holding that a state is “liable
to g u arante e that those it deleg ates to carry out its prog rams satisfy the terms of its promised performance, including

c o m p liance with the Rehabilitation A ct”). The law is clear—the St ate Defendants may not contract away their oblig ation to comply

with federal discrimination laws.

Nevertheless, we cannot determine on this record whether

a violation actually occurred in thi s case. F ederal law requires public entities to “make reasonable modifications in policies, practices, or procedures when the modifications a re necessary to avoid discrimination on the b a s i s of disability
, unless the public entity can demonstrate that ma k i n g the modifications would fundamentally alter the n a ture of the service, prog ram, o r activity .” 28 C.F .R. § 3 5 .130(b)(7). Determining whether a modification is reason a b l e (or even required) is necessar i l y a f act-specific inquiry
, requiring “analy s is of the disabled individual’s c ircumstances and the accommodations that mig ht a llow him to meet the prog ram’s

th e A DA . In d i strict co u rt, Castle alleg ed th at A CI b reach ed its co n t ract f o r f ailin g to co m

p ly w ith su ch statu tes. T h e co u rt d ism issed t h is claim
, reaso n i n g th at Castle h ad n o t alleg ed elem en ts n ecessary to es t a b l i s h h im self as a th ird -p arty b en ef i ciary

. Castle d o es n o t o b j ect to th at d ism issal o n

ap p eal an d w e ex p ress n o o pin io n o n th e m atter.C A S T L E V

. E U R O F R E S H , I N C

. 20

standards.” W

ong v. Regents o

f Univ. of Cal.
, 192 F .3d 807, 818 (9th Cir

. 1 9 9 9 )

. Specifically in the prison contex t, we have he l d t h at a district court may consider “with deference
to the ex per t v i e ws of facility administrators, a detention o r correctional facility ’s leg itimate interests (namely
, i n maintaining security a

nd order and operating an institution in

a manag eable fash i o n ) w hen determining whether a g iven accommodation is reasonable

. ” Pierce v. Cnty. of Orange
, 526 F .3d 1190
, 1 2 1 7 ( 9 th Cir. 2008) (citations and internal quotation marks omitted).

L ikely b e c ause the district court erroneously concluded that the State D efendants are not liable under either Title I I o r the RA, the c o urt made insufficient finding s reg arding whether a reasonable modification w as made. I nstead, the district c ourt simply concluded without a naly sis that Castle’s reassig nment to a d ifferent job in the W I PP prog ram was reasonable. W hile that may ultimately be correct, where the district c ourt makes no finding s reg arding the reasonableness of a p roposed modifica t i o n or accommodation, w e must remand to the district court to perform the necessary analy sis. S ee M cGary v. City of P ortland
, 386 F .3d 1259, 1 2 7 0 ( 9 t h Cir. 2004) (citing Crowder v. Kitagawa
, 81 F .3d 1 480, 1485 (9th Cir. 1996)).

CONCLUSION

C a s t l e ’ s c l a i ms a g ainst Eurofresh were properly d i s m i s s e d because C a s t le and Eurofresh were n ot in an employ ment relationship, and Eurofresh does not receive f ederal financial assistance. Howeve r , j u dg ment was improperly g ranted to the State Defendants. The S t a t e Defendants are liable for disability discrimination committed by a c ontractor. W eC A S T L E V

. E U R O F R E S H , I N C

. 21

consequently

remand to the district court to determine in the first instance whether such discrimination occurred.

Ea c h p arty shall be r esponsible for its own costs on appeal. F ed. R. App. P. 39(a)(4).

AF F IRMED IN P A RT, REVERSED IN P ART, AND REMANDED.

B ERZ ON, Circuit J udg e , concurring :

I concur in Part I I and Part I I I of the majority opinion, a nd also, reluctantly , in Part I

.

Part I holds Castle not an employ e e under Title I of the Americans with Disabiliti e s A ct (“ADA”). 42 U .S.C. §§ 12111(4), 121 1 2 (a )

. T h e sweep of Hale v. Arizona
, 993 F .2d 1387 (9th Cir. 1 993), and Coupar v. Department of Labor
, 1 05 F .3d 1263 (9th Cir. 1 997), compels that conclusion. B ut t h e n otion that prisoners w ho work for covered employ ers can never be “employ ees” for p u rposes o f federal e mploy ee-protective statutes undermines those
statutes a s applied to employ ees g e n era l l y a nd misconstrues the reach of the “employ

e e ” desig nation.

Castle labored for a private employ er, off prison g rounds, under c ompulsion of a senten ce requiring work. Hale
, b y contras t , c oncerned prison labor that shared only the latter
tw o o f t hese three characteristics, and so did not ex pressly decide the employ e e status of prisoners w orking on behalf o f private e mploy ers. Hale
, 993 F .2d at 1390. That d istinction, I would like t o think, matters: A profit-seeking firm thatC A S T L E V

. E U R O F R E S H , I N C

. 22

hires convicts at its own worksite should not be shielded from the costs of c omplian c e w i t h t he ADA. Those costs can be substantial, as the ADA requires employ ers to m ake “reasonable accommodat ion,” allowing disabled employ ees to complete a job’s “essential functions,” 42 U .S.C. §§ 12111(8), 12112(a), unless su ch accommodation “ would i m pose an undue hardship” on the employ er’s business
, 42 U.S.C. §§ 12112(b)(5)(A). Permitting private employ ers to escape those costs while p rofiting from the use of prison labor markets undermines the e n forcement of the statutory requirements g enerally
, b y creating incentives for c ompeting employ er s t o shirk c ompliance with reg ard to non-prison labor—and thereby economically d i s a d v a n t a g i n g c ompetitors of those employ ers using prison labor.

Precedent, however, forecloses c onsideration of such

concerns when deciding whether prison laborers are covered by federal statutes protecting employ ees. Hale proclaimed broadly that the u sual standard for evalua t i n g employ ee status—the e conomic reality test descri b ed by Bonnette v

. California Health & W

elfare Agency
, 704 F .2d 1 4 65, 1 470 (9th Cir. 1983)—is inapplicable “in the case of prisoners w ho work for a p rison-structured [ labor] prog ram because they have to.” H

ale
, 993 F. 2 d a t 1 394. I n that circumstance, we held, “the economic real i ty of the relationship between the worker and the entity for which w o r k was performed lies in the relationship between prison and prisoner. I t is penolog ical, not pecuniary

. ” Id. at 1 395. I n other words, “the economic reality is that [ pri s o n e r] labor belong [s] to the institution.” Id.

Hale recog niz ed the problem o f u n fair competition throug h the u se of prison labor. B u t i t v i e w e d the AshurstSumners Act, 18 U.S.C. §§ 17 61–1762, as Cong ress’ entireC A S T L E V

. E U R O F R E S H , I N C

. 23

r e sponse to the adverse e ffects of “unfair competition in t h e products market from prison-made g oods.” Ha l e , 9 9 3 F .2d
at 1397. That Act criminaliz es the distribu t i o n o f prisonermade products in interstate commerce, 18 U.S.C. § 1761(a), with e x ceptions for certain c l a s ses of g oods, 1 8 U .S.C. § 1761(b)–(c), including ag ricultural commodities, 18 U .S.C. § 1761(b). B ut it does n o t r e imburse f irms not employ ing prison labor, or the workers at such firms, for the bottom-line impact (throug h intrastate sales and services o r s a les a nd services o f ex cepted products) of the cost-saving s achieved by ig noring federal employ e e p r o tection for prison laborers. Mandatory labor ma y be “penolog ical, not pecuniary ,” for prisoners and their jailers. Hale , 993 F .2d at 1395. B ut it is assuredly a matter o f dollars and cents to firms seeking profit in a competitive market and law-ab i d i n g c itiz ens vy ing to work for them.

Hale ’s broad lang uag e is all the more disturbing because that case c oncerned prisoner wag es under t h e Fa ir L abor Standards Act (“F L SA”), 29 U.S.C. § 201 et s e q

. , not the ADA. The F L SA reg ulates matters that are, on their face,
pe cu n i a ry

. W

illiamson v. Gen. Dynamics Corp.
, 208 F .3d 1144, 1154 (9th Cir. 2000) (“[ T] he Supreme Court and the Ninth Circuit have consistently found that the central purpose of t h e F L SA is to e nact minimum wag e and max imum hour provisions desig ned to protect employ ees.”). T h e ADA, b y contrast, prohibits discrimination, w ith an ey e toward the

“ c o nditions

. . . of employ ment,” 42 U.S.C. § 12112(a) (emphasis added). “[ T] he mere fact of d iscrimination offends the dig nitary

interest that the statute[ is] desig ned to protect,
reg ardless of whether the d i scrimination worked any direct economic harm to the plaintiffs.” S haver v. Indep. Stave Co.
, 350 F .3d 716, 7 24 (8t h C ir. 2003). The non-pecuniary character of prison labor th u s t el ls us little about theC A S T L E V

. E U R O F R E S H , I N C

. 24

applicability of the ADA, whi c h addresses n on-economic harms. I ndeed, habituating pris o n er s to the sort o f discrimination that Cong ress has outlawed elsewhere in the

e c o nomy hardly rehabilitates them to our national norm s o r prepares them to participate in the workforce once released. See Hale
, 993 F .2d at 1 3 9 8 (listing rehabilitative g oals o f hard labor); City o

f S. Tu s c on v. Indus. Comm’n of Ariz.
, 753 P.2d 1199, 1205 (Ariz . Ct. App. 1988) (same).

Yet our p r i m ary case interpreting Hale rejects this

commonsense dis t i n c t i o n b e t w e e n p u r e l

y e c onomic employ ee protections a

nd p rotec tions with a dig nitary a spect. Coupar applied Hale to a prisoner seeking the protection of the antiretaliation p r o visions of the Clean Air Act, 42 U .S.C. § 7622(a), and the Tox ic Substances Control Act, 15 U.S.C. § 2622(a), n otwithstanding the n on-pecuniary policies that animate those Acts. See Coupar
, 1 0 5 F .3d a t 1265. I t reasoned that Cong r ess “ex tend[ e d] whistleblower protection only to ‘employ ees,’” and not “retaliat i o n by a n y violator
ag ainst an

y w histleblower.” Id. at 1266 (emphasis in orig inal). A prisoner “oblig ated to work at some job pursuant to a prison work prog ram” falls “within the r ule of Hale ,” no matter the policies the sta t u t e addresses, when that statute applies to “employ ees.” Id. at 1265.

L ike the whistleblower pr o t e ctions in Coupar
, the protections of the ADA’s Title I run only to “ e m p l oy e es.” 42 U.S.C. §§ 12111(4), 12112(a). Given Coupar ’s g loss on Hale
, I c annot avoid the c o nclusion that Castle i s n o t an “employ ee.” C o n sequently
, althoug h I would support

recons i d e r ation of Hale
, or at least of Coupar ’s reading o f Hale , I concur in the majority ’s application of those cases to this one.C A S T L E V

. E U R O F R E S H , I N C

. 25

As today ’s opinion demonstrates, however, Castle—and the commonsense cong ressional po l i cies he seeks to vindicate—is not without recourse. B ecause his jailers

ca n n o t co ntract a

way their oblig ations under Title I I o f the A D A
, the majority holds them liable for any v iolation o f C a s t l e ’ s rig ht to accommodation under the ADA. See Maj. Op. Part I I I

. To the ex tent the state passes a l o n g a n y such liability —and the costs of avoiding it in t h e f u ture b y

a c c o mmodating disabled e m p l o y e e s

— t o t h e p r i v a t e employ e rs with whom it contracts, today ’s holding will also dampen the competitive advantag e s of hiring convict labor.

Other anti-d iscrimination statutes mig ht be amenable to

a similar solution to the problem our cases have c reated. Many v iolations of Title VI I
, for ex ample, may be actionable
ag ainst the prison authorities under 42 U.S.C. § 19 83. Cf. W illiams v. Meese
, 926 F .2d 994, 9 98 ( 1 0 th Cir. 1 991) (observing that a federal prisoner ma y b e able to b ring a Bivens action if prison officials “discriminate ag ainst him on the b asis of his ag e, race, or handicap, in choosing whether to assig n him a job or in choosing what job to assig n him”).

Thi s observation, along with the majority ’s T itle I I holding
, somewhat reduces my concern about the adverse

c o n s e q uences of today ’s r uling s—but only if the p rison’s ADA responsibilities are fully met. To meet their ADA Title I I oblig ations, pr ison officials cannot simply provide some jo b to disabled prisoners, at w hatever rate o f pay a nd whatever working

conditions. Rather, Title I I requires “that
persons w ith disabilities have the opp o rt u n ity to receive the

same b enefits as non-disabled” people who are s i milarly

s i tuated, Castellano v. City of New Y ork
, 142 F .3d 5 8
, 7 0 ( 2 d Cir. 1998), so long as such opportunity can be provided via “‘reasonable modifications’ that would not fundamentallyC A S T L E V

. E U R O F R E S H , I N C

. 26

alter the nature of the service provided,” Tennessee v. La n e , 541 U.S. 509, 532 (2004). That means, to me, that, if t h e prison is g oing to farm out pri s o n l ab o r to o ffsite private employ e rs, at hig her pay

and a more favorable location than

are available to prisoners within the prison’s w alls, the prison
must ensure that the ADA standards are met w ith reg ard to that opportunity

.

W ith those observations, I concur in the opinion.