Acosta v. Paragon Contractors Corp.
884 F.3d 1225
10th Cir.2018Background
- Southern Utah Pecan Ranch contracted with Paragon Contractors (Paragon) in 2008 to manage and harvest pecans; Paragon received 70% of proceeds. The Church continued sending community members—largely children—to gather fallen pecans.
- Department of Labor investigated and concluded children were engaged in oppressive child labor in violation of a 2007 injunction that barred Paragon and its president Brian Jessop from employing minors under oppressive conditions.
- District court found Paragon and Jessop violated the injunction by employing children to gather pecans, appointed a special master to monitor compliance, and ordered Paragon and Jessop to pay $200,000 into a fund to compensate the children.
- Paragon and Jessop appealed the contempt finding and sanctions, arguing (1) the children were volunteers (or covered by a food-bank volunteer exception), (2) Paragon did not employ the children (contract excluded ground-gathering and/or Mr. Barlow was an independent contractor), and (3) sanctions were improper.
- The Tenth Circuit affirmed the contempt finding and the $200,000 compensatory sanction, but reversed the appointment of the special master as an improper coercive sanction because no ongoing violation existed at the time.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Were the children "employees" under the FLSA (not volunteers)? | Children were coerced and thus were employees; DOL: definitions broad. | Paragon: children were volunteers acting for Church/community; Alamo/food-bank exception applies. | Held: children were employees — coercion found; neither Alamo nor food-bank exception applied. |
| Who employed the children? (Paragon or Church/Mr. Barlow?) | DOL: Paragon employed them because contract covered fallen pecans and Paragon profited; Mr. Barlow was Paragon’s employee/agent. | Paragon: contract only covered tree-harvest, not ground gathering; Barlow was an independent contractor. | Held: contract covered fallen-pecan gathering; Barlow was an employee of Paragon under economic-realities test, so Paragon employed the children. |
| Was appointment of a special master as a coercive contempt sanction permissible? | DOL: needed to ensure compliance given past concealment and false testimony. | Paragon: sanction improper because there was no ongoing violation to purge; impossible to comply. | Held: reversed — coercive sanction (special master) improper because contemnors had no way to purge when no current noncompliance existed. |
| Was the $200,000 compensatory sanction permissible? | DOL: fund compensates children for uncompensated labor caused by the contempt. | Paragon: sanction punished unpaid-wage claims not directly tied to injunction (child-labor violation vs. wage claims). | Held: affirmed — compensatory sanction permissible; unpaid labor was a but-for result of the child-labor injunction violation. |
Key Cases Cited
- Tony and Susan Alamo Foundation v. Secretary of Labor, 471 U.S. 290 (1985) (limits on "employee" include those working solely for personal pleasure, without expectation of compensation)
- O’Connor v. Midwest Pipe Fabrications, Inc., 972 F.2d 1204 (10th Cir. 1992) (civil contempt sanctions must coerce compliance or compensate victims; amount must reflect actual losses)
- Baker v. Flint Eng’g & Constr. Co., 137 F.3d 1436 (10th Cir. 1998) (economic-realities factors for employee vs. independent-contractor classification)
- Goodyear Tire & Rubber Co. v. Haeger, 137 S. Ct. 1178 (2017) (compensatory sanctions require but-for causation for fees/damages incurred solely because of misconduct)