Morales v. 22nd District Agricultural Ass'n
1 Cal. App. 5th 504
| Cal. Ct. App. | 2016Background
- Plaintiffs (Jose Luis Morales and 177 others) are seasonal "119-day" employees of the 22nd District Agricultural Association (DAA), which operates Del Mar Fairgrounds, Del Mar Horsepark, and leases property to third-party vendors (Recreation Center, satellite wagering, outside promoters who run interim events). Plaintiffs sued for unpaid overtime under the FLSA and California Labor Code § 510.
- The trial was bifurcated: the first phase addressed only the DAA’s affirmative defense that the FLSA overtime requirement was inapplicable under the federal "amusement or recreational establishment" exemption (29 U.S.C. § 213(a)(3)).
- The trial court denied plaintiffs’ nonsuit, instructed a jury on the exemption, and the jury found for the DAA; judgment on the FLSA claim was entered for the DAA and is affirmed on appeal.
- The trial court sustained, without leave to amend, the DAA’s demurrer to the state-law § 510 overtime claim; on appeal the court reversed that portion and directed the trial court to grant leave to amend (limited to potential joint-employer/loaned-employee allegations).
- Appellate holdings: (1) FLSA ruling for DAA affirmed (DAA proved amusement exemption; no reversible trial errors shown); (2) § 510 demurrer sustainment reversed only as to denial of leave to amend—plaintiffs may plead joint-employer or loaned-employee theories.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether eligibility for the FLSA amusement exemption depends on the employee’s work or the employer’s principal activity | Plaintiffs: exemption depends on the character of the employee’s work ("nature of the work") | DAA: exemption depends on the nature/principal activity of the employer/establishment | Court: adoption of employer-principal-activity approach (relying on persuasive federal circuit authority and DOL guidance) |
| Whether the DAA presented sufficient evidence (nonsuit) that it is a single establishment of amusement/recreation and meets the receipts/duration test | Plaintiffs: DAA failed to show single establishment or that majority income derives from amusement/recreation | DAA: properties/departments are economically and functionally integrated (single set of books, shared HR/payroll, interchange of employees), so aggregate receipts satisfy receipts test | Court: nonsuit denial proper—substantial evidence supported single-establishment and recreational/amusement character; jury could find receipts test met |
| Whether trial court committed reversible instructional/verdict-form/exclusion errors affecting the FLSA phase | Plaintiffs: trial court refused several proposed instructions, gave one contested instruction, used a three-question verdict form, and excluded party witnesses—each prejudicial | DAA: many plaintiff instructions were irrelevant, argumentative, or incorrect statements of law; plaintiffs acquiesced to verdict form; witness exclusion within court discretion | Court: no reversible error—rejected plaintiff instruction objections as irrelevant, argumentative, or legally incorrect; plaintiffs forfeited verdict-form challenge; witness exclusion not shown to be prejudicial |
| Whether Labor Code § 510 applies to the DAA (state overtime claim) and whether demurrer should have been sustained without leave to amend | Plaintiffs: § 510 applies; if not, they can amend to allege loaning/joint-employer facts making DAA liable | DAA: as a public entity in the amusement/recreation wage order category, DAA is exempt from § 510; demurrer proper | Court: sustaining demurrer was correct on face of complaint (wage order and statutory scheme exempt public employees in amusement/recreation), but trial court erred by denying leave to amend—plaintiffs may plead joint-employer/loaned-employee theories and proceed |
Key Cases Cited
- Arnold v. Ben Kanowsky, Inc., 361 U.S. 388 (U.S. 1960) (exemptions construed narrowly against employers)
- Brennan v. Six Flags Over Georgia, Ltd., 474 F.2d 18 (5th Cir. 1973) (early view focusing on employee work character)
- Brennan v. Texas City Dike & Marina, Inc., 492 F.2d 1115 (5th Cir. 1974) (later Fifth Circuit view: employer's principal activity controls exemption analysis)
- Marshall v. New Hampshire Jockey Club, Inc., 562 F.2d 1323 (1st Cir. 1977) (adopting principal-activity approach)
- Brock v. Louvers and Dampers, Inc., 817 F.2d 1255 (6th Cir. 1987) (discussion of purpose and seasonal character underlying amusement exemption)
- Chessin v. Keystone Resort Mgmt., Inc., 184 F.3d 1188 (10th Cir. 1999) (totality-of-circumstances approach to recreational character)
- Mitchell v. T. F. Taylor Fertilizer Works, Inc., 233 F.2d 284 (5th Cir. 1956) (multiple premises can constitute a single establishment)
- Donovan v. S & L Development Co., 647 F.2d 14 (9th Cir. 1981) (coverage and exemption analysis under FLSA)
- Vinole v. Countrywide Home Loans, Inc., 571 F.3d 935 (9th Cir. 2009) (fact-specific inquiry for exemptions)
- Bonnette v. California Health & Welfare Agency, 704 F.2d 1465 (9th Cir. 1983) (joint-employer factors for wage-and-hour liability)
- Doe v. Butler Amusements, Inc., 71 F. Supp. 3d 1125 (N.D. Cal. 2014) (carnival/multi-location fact issues on establishment definition)