Court Opinion

ID: 3197465
Source: CourtListenerOpinion
Date Created: 2016-04-25 19:01:06.218376+00
Date Added: 2024-06-11T07:39:11.400279
License: Public Domain

PUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                            No. 15-1546

CLAUDIA HARBOURT; MICHAEL LUKOSKI; URSULA POCKNETT,

                Plaintiffs - Appellants,

           v.

PPE CASINO RESORTS MARYLAND, LLC,

                Defendant - Appellee.

Appeal from the United States District Court for the District of
Maryland, at Baltimore.     Catherine C. Blake, Chief District
Judge. (1:14-cv-03211-CCB)

Argued:   March 1, 2016                    Decided:   April 25, 2016

Before MOTZ, GREGORY, and THACKER, Circuit Judges.

Reversed and remanded by published opinion.     Judge Motz wrote
the opinion, in which Judge Gregory and Judge Thacker joined.

ARGUED: Steven Marc Lubar, THE LAW OFFICES OF PETER T. NICHOLL,
Baltimore, Maryland, for Appellants.   Todd James Horn, VENABLE
LLP, Baltimore, Maryland, for Appellee. ON BRIEF: James Anthony
Lanier, THE LAW OFFICES OF PETER T. NICHOLL, Baltimore,
Maryland, for Appellants.      Lillian L. Reynolds, Baltimore,
Maryland, Robert G. Ames, VENABLE LLP, Washington, D.C., for
Appellee.
DIANA GRIBBON MOTZ, Circuit Judge:

      The   district      court    dismissed           this    action,      which   alleges

violations of federal and state employment laws, as failing to

state a claim on which relief could be granted.                                Because the

plaintiffs have alleged sufficient facts to state a claim, we

must reverse and remand for further proceedings.

                                              I.

      The account of the facts set forth here quotes and derives

from the allegations in the seventeen-page complaint.

      PPE Casino Resorts Maryland, LLC (“the Casino”) owns and

operates    Maryland       Live!,         a     casino        in     Hanover,    Maryland.

Beginning    in   June    2012,      in       response       to    the   legalization    of

gambling in Maryland, the Casino began offering slot machines.

Pursuant to a November 2012 referendum, the State authorized

casinos,    beginning     on   April          11,    2013,    to     also   operate   table

games like blackjack, poker, craps, and roulette.

      The   Casino   “did      not   have           dealers    for    the   [anticipated]

approximately     one     hundred     and       fifty     (150)      live   table     games”

opening at Maryland Live! on April 11.                            In fact, it needed to

hire approximately 830 dealers by April 11 to begin operating

the   planned     table    games     on       that     date.         Because    “different

casinos implement different methods concerning how to operate

table games,” the Casino needed “to develop a training course

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that   would   ensure”   that   new   employees   “would   be   equipped   to

perform duties specific to dealing at Maryland Live!”             Thus, the

Casino developed “what [it] labeled . . . a free twelve (12)

week table games ‘dealer school’” to be “held in conjunction

with Anne Arundel County Community College.”               In mid-November

2012, the Casino began advertising employment opportunities for

table game dealers.      The Casino held information sessions about

the jobs and the required “dealer school.”

       Plaintiffs, Claudia Harbourt, Michael Lukoski, and Ursula

Pocknett (collectively “the Trainees”), as well as approximately

10,000 other persons, applied for these advertised positions.

The Casino extensively interviewed applicants, assessing their

congeniality, personality, and ability to perform basic math on

their feet.     The Casino asked select applicants, including the

Trainees, “if they would like to attend a course to become a

dealer at Maryland Live!” and explained that the course would be

free, last twelve weeks, and would teach them “how to conduct

table games for Maryland Live!”

       The Casino selected approximately 830 of the applicants to

attend the “dealer school.”           The “dealer school” consisted of

four hours of daily instruction Monday through Friday, offered

in four time periods.       The “school” was thus scheduled to run

for twenty hours per week for twelve weeks, although it consumed

more hours because of “numerous delays” caused by Casino staff.

                                      3
The Casino conducted the “school” from January 7, 2013 to April

1, 2013, 1 ending just ten days before the start of legalized

table games in Maryland.

     The “dealer school” training “was specific to the manner in

which” the Casino’s employees were “to perform the[] table games

at Maryland Live!”        Although the Casino advertised the “school”

as being held in conjunction with a community college, in fact,

it was run completely by the Casino.               The Casino authored all

course materials, Casino employees provided all instruction, and

attendees never interacted with anyone from a community college.

During the “school,” the attendees completed employment forms,

including   an   income    tax   withholding      form   and     direct   deposit

authorization form.        To help the attendees receive a gambling

license by the end of the course, the Casino required them to

submit to a drug test, provide their fingerprints and social

security    numbers,   and    authorize     the   Casino    to    obtain     their

driving records and perform criminal and financial background

checks on them.

     Plaintiff     Harbourt      attended    the     “dealer       school”     for

approximately eight weeks; Plaintiff Pocknett attended it for

     1 The complaint alleges that the course              ended “on April 14,
2013,” but a twelve-week course beginning                on January 7, 2013
would end by April 1, 2013.       Like the               district court, we
understand the complaint’s reference to                  April 14 to be a
typographical error.

                                      4
eleven weeks; and Plaintiff Lukoski attended the “school” for

all twelve scheduled weeks and worked as a dealer at the Casino.

The Casino did not pay Harbourt or Pocknett at all, but did pay

Lukoski and others who attended the “school” for the full twelve

weeks the minimum wage, $7.25 per hour, for the final two days

of the “dealer school.”

       In   2014,    the     Trainees   filed      this   putative     class    action

asserting violations of the Fair Labor Standards Act, 29 U.S.C.

§§ 201-219 (2012) (“FLSA” or “the Act”), the Maryland Wage and

Hour    Law,   Md.    Code,     Lab.    &   Empl.   §§    3-401   to   -431     (2015)

(“MWHL”), and the Maryland Wage Payment and Collection Law, Md.

Code, Lab. & Empl. §§ 3-501 to -509 (2015) (“MWPCL”).                              The

Casino moved to dismiss for failure to state a claim upon which

relief can be granted.             See Fed. R. Civ. P. 12(b)(6).                   The

district court granted the motion to dismiss, holding that the

Trainees “fail[ed] to show that the primary beneficiary of their

attendance     at      the     training      was    the    Casino      rather     than

themselves.”        This timely appeal followed.

                                            II.

       We review de novo the grant of a motion to dismiss for

failure to state a claim.               Weidman v. Exxon Mobil Corp., 776

F.3d 214, 219 (4th Cir. 2015).                  In doing so, we accept as true

the    well-pled     allegations       of   the    complaint   and     construe    the

                                            5
facts and reasonable inferences derived therefrom in the light

most favorable to the plaintiff.                    See Ashcroft v. Iqbal, 556

U.S. 662, 678 (2009); Brower v. Cty. of Inyo, 489 U.S. 593, 598

(1989).      A plaintiff “must allege sufficient facts to establish

th[e] elements” of his claim and “advance [that] claim across

the line from conceivable to plausible.”                     Walters v. McMahen,

684   F.3d    435,    439   (4th    Cir.    2012)    (internal   quotation       marks

omitted).      However, “a plaintiff need not ‘forecast’ evidence

sufficient to prove” a claim.              Id.

      The FLSA requires that employers pay employees the minimum

hourly wage “for all hours worked.”                  Perez v. Mountaire Farms,

Inc.,   650    F.3d    350,   363    (4th    Cir.    2011)   (internal     quotation

marks omitted).        The Act does not define “work.”             See 29 U.S.C.

§§ 201-219.      But the Supreme Court has instructed that “in the

absence of a contrary legislative expression” we assume that

Congress was referring to work or employment “as those words are

commonly used -– as meaning physical or mental exertion (whether

burdensome or not) controlled or required by the employer and

pursued      necessarily      and    primarily       for   the   benefit    of    the

employer and his business.”                Tennessee Coal, Iron & R. Co. v.

Muscoda Local No. 123, 321 U.S. 590, 598 (1944), superseded by

statute on other grounds, Portal-to-Portal Act of 1947, Pub. L.

No. 104-188, 110 Stat. 1928.

                                            6
      The FLSA does define “employee” and “employ,” but those

definitions   do    little   to   advance     the     inquiry.     The   statute

defines “employee” as “any individual employed by an employer,”

29 U.S.C. § 203(e)(1), and “employ” as “to suffer or permit to

work,” id. at § 203(g).           Courts construe the term “employee”

broadly, but recognize that the term “does have its limits.”

Steelman v. Hirsch, 473 F.3d 124, 128 (4th Cir. 2007) (internal

quotation marks omitted).

      More than sixty years ago, the Supreme Court made clear

that a trainee may be an “employee” for purposes of the FLSA.

See Walling v. Portland Terminal Co., 330 U.S. 148, 151 (1947)

(noting that “[w]ithout doubt the Act covers trainees”); see

also Walling v. Nashville, C. & St. L. Ry., 330 U.S. 158, 159

(1947)(companion case).       But, in Portland Terminal, relying on

the district court’s factual findings, the Court concluded that

railroad trainees could not claim the benefits of the Act when

the   training     they   received   “most      greatly     benefit[ted]     the

trainees” rather than the railroad.                 330 U.S. at 153.         The

Supreme   Court    also   noted   the       district    court’s    unchallenged

findings that the railroad “receive[d] no ‘immediate advantage’”

from the trainees’ efforts during training.              Id.     The Court thus

affirmed judgment for the railroad.             Id.    In doing so, however,

the Court expressly noted that the record contained no “findings

[]or charges” that the training was “conceived or carried out in

                                        7
such a way as to violate either the letter or spirit” of the

FLSA and left open the question of whether such “findings or

charges” might require a different result.                 Id.

       Subsequent case law assessing whether a trainee constitutes

an “employee” for FLSA purposes is sparse.                       The Supreme Court

has never again spoken to the issue and we have addressed the

question only once.          In McLaughlin v. Ensley, 877 F.2d 1207,

1208, 1210 (4th Cir. 1989), we held that trainee routemen of a

food    distribution      company      were     “employees”   for    FLSA   purposes

when    they   participated       in   a    five-day,     50-to-60-hour     training

program in which they learned how to load trucks and maintain

food vending machines and helped experienced routemen perform

their duties.       Relying on Portland Terminal, we identified the

critical legal question as whether the trainee or the company

was the “primary beneficiary” of the training program.                       Id. at

1209.     Whether the employer received an “immediate advantage”

from    the    training     was,       we     reasoned,    also     “important    to

consider,” but not dispositive.                 Id.   Applying the controlling

legal standard to the facts found by the district court, we held

that    the    employer    food     distribution        company     “received    more

advantage” from the program than the trainees and so concluded

                                            8
that the trainees qualified as employees for purposes of the

FLSA.     Id. at 1210. 2

     With these principles in mind, we turn to the case at hand.

                                       III.

     The       Casino   maintains    that    the    Trainees’    complaint   fails

because “it is literally impossible for the Trainees to show

that they provided the Casino with any work or that the Casino

received any benefit during the time they attended table game

dealer’s school because . . . the Casino did not operate table

games     at    that    time.”      Appellee’s      Br.   at    14   (emphasis   in

original).        The fact that table games were not in operation

during the training well may prove an insurmountable obstacle to

the Trainees’ recovery under the FLSA, but that fact does not,

as a matter of law, bar them from recovery.

     As        noted    above,   “work”       for     FLSA     purposes    broadly

encompasses “physical or mental exertion (whether burdensome or

     2 Our sister circuits have similarly not often grappled with
the employee/trainee question.     Indeed, the Casino relies on
only three such cases.    In each, the courts affirmed judgments
for the employer, but in each the appellate court relied on
facts (very different facts from those alleged here) which were
established by the summary judgment record or at trial.       See
Petroski v. H & R Block Enters., LLC, 750 F.3d 976, 981 (8th
Cir. 2014) (affirming grant of summary judgment); Reich v.
Parker Fire Prot. Dist., 992 F.2d 1023, 1027-29 (10th Cir. 1993)
(same); Donovan v. Am. Airlines, 686 F.2d 267, 271-73 (5th Cir.
1982) (affirming judgment after trial).

                                         9
not) controlled or required by the employer” primarily for its

benefit.    Tennessee Coal, 321 U.S. at 598.                    And “training” can

constitute “work” under the statute.                  See Portland Terminal, 330

U.S. at 151; Ensley, 877 F.2d at 1209; cf. 29 C.F.R. §§ 785.27-

.31 (2015)    (establishing       the    requirements          that   mid-employment

training must meet for the training not to count toward work

hours).     That the Casino could not operate table games during

the “dealer school” does not necessarily mean that the Trainees

were not working for FLSA purposes in attending the required

“school.”

      The Casino seems to believe that because the Trainees could

not interact      with   paying   customers       in     the    Casino   during    the

“school,” the Trainees automatically fail to qualify as FLSA

employees performing work for the Casino.                  But the Trainees are

in the very same position as all other persons training for

positions where they cannot yet perform their duties, either

because the service is not yet legal, the person is not yet

licensed, or the employer is not yet operating.                        Inexperienced

persons required to train to be waiters in a huge about-to-be-

licensed, but not yet open, restaurant, or to train and seek

licensure to be hairdressers in an enormous about-to-be-opened,

but   not   yet    operating,     hair        salon    franchise      would   be    in

precisely the same position as the Trainees here.                     In each case,

whether the required training would constitute work for FLSA

                                         10
purposes    would    depend      on    whether       it    primarily          constituted   a

benefit to the employer or the trainee.                         And, notwithstanding

the   Casino’s      contention        to    the     contrary,   resolution          of    that

question cannot be determined by examination of the Trainees’

complaint.

      For    in     their     complaint,            the    Trainees           allege     facts

supporting their claim that the Casino, and not the Trainees,

primarily    benefitted         from       the    training.         Specifically,         the

Trainees    allege     that     the        Casino    received       a    very    large    and

immediate benefit -- an entire workforce of over 800 dealers

trained to operate table games to the Casino’s specifications at

the very moment the table games became legal.                            And the Trainees

further allege that, in contrast, they received very little from

the twelve weeks of training that did not primarily benefit the

Casino.      This    is   so,    they       allege,       because       the    training    was

unique to the Casino’s specifications and not transferrable to

work in other casinos. 3              In Ensley, we specifically recognized

the importance of the transferability of the training received

when balancing who -- employer or trainee -- benefitted most

      3The district court held that the plaintiffs’ allegation
that the course had no transferable usefulness was not plausible
because Maryland’s regulation of table games is “extraordinarily
detailed, leaving little room for casino-specific duties.”   The
regulations are numerous but do not, as a matter of law,
foreclose a plausible finding that the bulk of the training was
Casino-specific and thus non-transferrable.

                                             11
from the training.        See 877 F.2d at 1210.              Our sister circuits,

in the very cases on which the Casino relies, have similarly

recognized    the   importance       of    this     factor      in      determining        the

primary    beneficiary.       See       Petroski,    750     F.3d       at     981;    Parker

Fire, 992 F.2d at 1027-29; Am. Airlines, 686 F.2d at 271-73.

And   those   courts    relied     on     facts   established           by     the    summary

judgment record or at trial to resolve this question.                           Id.

      Moreover,     unlike    in     Portland       Terminal,           here    there      are

“charges” that the training was “either conceived or carried out

in such a way as to violate . . . the spirit of the minimum wage

law.”     330 U.S. at 153.           The Trainees allege that the “sole

purpose” of the Casino’s “temporary makeshift ‘school’ was to

hire the exact number of dealers needed to fill the vacant table

games     positions.”         They      further      allege        that        the    Casino

“disguised    its   employee-training           course     as     a     school       for   the

purpose of not paying” the trainees.                   If true, a fact finder

could conclude that requiring applicants to attend a training

“school” for twenty hours each week for a full twelve weeks,

training advertised to be associated with a community college

course but that allegedly had nothing to do with any college,

demonstrates    that    the    Casino      “conceived        or      carried     out”      its

“school” to avoid paying the minimum wage.                        Id.     A fact finder

could further conclude that an employer would only take such

actions to avoid paying the minimum wage to persons who were

                                           12
labelled “trainees” but who actually worked for the Casino and

were FLSA employees. 4

     Finally, the Trainees allege, and the Casino acknowledges,

that the Casino paid all participants in the “dealer school” the

minimum hourly wage for the last two days of the twelve weeks of

training.   This certainly suggests that the Casino regarded the

participants in the “dealer school” as employees doing work for

the Casino for those two days.    Of course, it may be that it was

only during those two days that the trainees performed “physical

or mental exertion” that was “pursued necessarily and primarily

for the benefit of the employer and his business.”       Tennessee

Coal, 321 U.S. at 598.    But the record before us supplies no

basis for such a conclusion.     Rather, at present it is unclear

what distinguishes those two days from the rest of the training

period.

     4  Further development of the record will also allow the
district court to consider whether the Casino explicitly
informed the trainees that it would (or would not) pay them
during and would (or would not) hire them after the training.
The Trainees allege that the Casino had implicitly promised them
a job because the Casino needed to and did hire all of the
trainees who attended all twelve weeks of the “school” to staff
the table games.    This allegation, if proved, might support a
conclusion that the Trainees “should be considered at-will
employees from the beginning.”      Ensley, 877 F.2d at 1210.
Similarly, the Trainees allege that the Casino extensively
interviewed all applicants before inviting them to the “school”
and that during the “school” the Trainees completed employment
paperwork, which, if proved, might be held to have created an
“implied compensation agreement.”    Portland Terminal, 330 U.S.
at 152.

                                 13
      Accordingly,    we   hold   that       the   Trainees    have   alleged

sufficient facts to state a claim that the Casino violated the

FLSA and the Maryland wage laws. 5          Although we express no opinion

as   to   whether   attending   the    “dealer     school”    did   constitute

“work” and whether the Trainees did constitute “employees” for

FLSA purposes, the Trainees have alleged sufficient facts to

survive the Casino’s motion to dismiss.

                                      IV.

      For the foregoing reasons, the judgment of the district

court is

                                                    REVERSED AND REMANDED.

      5Because the Trainees opposed dismissal of their “Maryland
wage law” claims below, and analysis of the existence of an
employment relationship is the same under the MWHL and MWPCL as
under the FLSA, see Campusano v. Lusitano Constr. LLC, 56 A.3d
303, 307-08 (Md. Ct. Spec. App. 2012), we reverse and remand
dismissal of those claims as well.

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