JOSE AGEO LUNA VANEGAS v. SIGNET BUILDERS, INC.
No. 21-2644
United States Court of Appeals For the Seventh Circuit
ARGUED APRIL 13, 2022 — DECIDED AUGUST 19, 2022
James D. Peterson, Chief Judge.
Appeal from the United States District Court for the Western District of Wisconsin. No. 21-CV-54
Before ROVNER, WOOD, and ST. EVE, Circuit Judges.
The district court dismissed Luna Vanegas‘s complaint, holding that his construction work fell under the FLSA‘s exemption for agricultural work. See
I
Luna Vanegas, a Mexican citizen, was hired by Signet to work in the United States on an H-2A guestworker visa. The H-2A visa program, which is administered by the United States Department of Labor (DOL or Department), authorizes foreign workers to perform “agricultural” work (a term defined by the statute) in the United States on a temporary basis, if the proposed employer can show that there are too few domestic workers willing and able to do the work needed and that the use of guestworkers will not undercut local workers’ wages and working conditions. See
Luna Vanegas alleges that he and his fellow workers were victims of that abuse. Because this case was resolved on a motion to dismiss, we accept all well-pleaded factual allegations in Luna Vanegas‘s complaint as true. See Pavlock v. Holcomb, 35 F.4th 581, 585 (7th Cir. 2022). According to that complaint, Signet was hired as a subcontractor to build livestock structures on farms in Wisconsin and Indiana. Luna Vanegas was assigned to these projects, where his work consisted entirely of construction of buildings that would later house livestock. Although he worked on land belonging to farms, he never had any contact with animals.
Luna Vanegas routinely worked more than 40 hours a week, but Signet did not pay him extra for his overtime hours. See
Before we discuss the merits, the procedure Signet followed deserves a word or two.
It follows from this structure and from the plain language of
The district court thought that the present case was one of the rare ones in which the plaintiff had pleaded himself out of court by including “facts that establish an impenetrable defense to its claims” in the complaint. See Tamayo v. Blagojevich, 526 F.3d 1074, 1086 (7th Cir. 2008). It granted Signet‘s motion to dismiss solely because it thought that the complaint unambiguously showed that Luna Vanegas fell within FLSA‘s exemption for agricultural workers. As we now explain, we conclude that this is not the case.
II
A
Since 1938, the FLSA has required employers to pay eligible workers at least one and a half times their regular rate of pay for time worked beyond the 40-hour workweek. See
[1] farming in all its branches and among other things includes the cultivation and tillage of the soil, dairying, the production, cultivation, growing, and harvesting of any agricultural or horticultural commodities (including commodities defined as agricultural commodities in section 1141j(g) of Title 12), the raising of livestock, bees, fur-bearing animals, or poultry, and [2] any practices (including any forestry or lumbering operations) performed by a farmer or on a farm as an incident to or in conjunction with such farming operations, including preparation for market, delivery to storage or to market or to carriers for transportation to market.
Although this definition does not use formal subsections, it covers two types of agricultural activities, which we have marked as [1] “primary agriculture” and [2] “secondary agriculture.” See Bayside Enterprises, Inc. v. NLRB, 429 U.S. 298, 300 (1977). Primary agriculture (our part 1) refers to activities ranging from “farming in all its branches,” to “the raising of livestock, bees, fur-bearing animals, or poultry.”
B
In approaching that question, we must recall at the outset that Signet bears the burden of proving that the agricultural exemption applies. See
We look for guidance from the Department, which has issued regulations to aid in that inquiry. See
An interpretive rule explains that work falls within the agricultural exemption “only if it [a] constitutes an established part of agriculture, [b] is subordinate to the farming operations involved, and [c] does not amount to an independent business.”
The character of a practice as a part of the agricultural activity or as a distinct business activity must be determined by examination and evaluation of all the relevant facts and circumstances in the light of the pertinent language and intent of the Act. The result will not depend on any mechanical application of isolated factors or tests. Rather, the total situation will control ...
Thus, the general relationship, if any, of the practice to farming as evidenced by common understanding, competitive factors, and the prevalence of its performance by farmers (see § 780.146), and similar pertinent matters should be considered.
Signet has ignored the fact-driven, totality-of-the-circumstances test set forth in section 780.145. Instead, it relies exclusively on
But that very regulation goes on to explain that there is more to the inquiry. The next sentence reads:
Whether such employees [including those erecting silos and granaries] are engaged in “agriculture” depends, of course, on whether the practices are performed as an incident to or in conjunction with the farming operations on the particular farm, as discussed in §§ 780.141 through 780.147; that is, whether they are carried on as a
part of the agricultural function or as a separately organized productive activity (§§ 780.104 through 780.144).
The DOL regulations provide a non-exhaustive list of factors that help resolve that issue. See
Another relevant fact is whether the work the plaintiffs performed is “ordinarily performed” by farmers themselves or by independent businesses hired by those farmers.
At this stage in the litigation, this factor strongly favors Luna Vanegas. Nothing in the complaint addresses whether farmers in the modern agricultural economy ordinarily build their own large livestock enclosures or hire separately organized construction companies to do so—facts relevant only to the affirmative defense. As we explained above, so long as Luna Vanegas‘s complaint does not admit facts that “establish an impenetrable defense to its claims[,]” Hecker, 556 F.3d at 588, the agricultural exemption does not justify dismissal.
Second, courts must ask whether Signet‘s construction contracts are “in competition with agricultural or with industrial operations.”
A third relevant consideration is the division of labor and supervision between a contractor‘s employees and those of the farmer. If a farm‘s employees “do not assist” with work performed by a contractor‘s workers, or if there is “minimal overlap” between a farmer‘s work and a construction crew‘s work, or if a contractor‘s employees “work as a unit” independently from farmers, the logical implication is that the contractor‘s work does not fall within the section 3(f) exemption. See Holly Farms, 517 U.S. at 403–04; see also
As before, nothing in the complaint supports Signet on this point. Luna Vanegas alleges that he was hired by, paid by, and worked exclusively for Signet. The complaint does not even hint that Luna Vanegas was supervised by or worked side-by-side with employees of the farms with which Signet had contracts. If such evidence exists, Signet may develop it later in the case. For now, this factor favors Luna Vanegas.
There is also a hodge podge of other relevant factors:
- the “common understanding” of farming;
- the relative amount of an employer‘s capital “invested in land, buildings and equipment for [] regular farming operations” versus the amount invested
in other commercial enterprises, such as construction or manufacturing; - the “degree of industrialization involved“;
- the “amount of payroll” a particular employer spends on regular farming activity relative to other work; and
- the “amount of revenue” a particular employer receives from regular farming activity relative to other sources of income.
See
We now turn briefly to some court decisions examining the line between activities within and outside the exemption. In Maneja v. Waialua Agricultural Co., 349 U.S. at 270, the Supreme Court held that sugar plantation workers engaged in transporting cane from the fields to the processing plant and workers engaged in repair of the tools used in farming did qualify for the agricultural exemption, but (based on a comprehensive look at the market) those in the sugar processing (“milling“) plant did not. See id. (The Court did find that the latter workers fell under a different exemption, but it was specific to sugar operations and thus irrelevant to our case.) The next year, the Court held that tobacco bulkers are not agricultural workers in part because “tobacco farmers do not ordinarily perform the bulking operation.” Mitchell v. Budd, 350 U.S. 473, 481 (1956). Bulking, the Court explained, is the process of placing dried tobacco leaves into large piles (3,500 to 4,500 pounds apiece) for the fermentation process, after the leaves have been picked and dried. Id. at 475. It thus counts as processing, not agriculture. The Court reiterated this approach in Holly Farms, 517 U.S. at 403; see also Hodgson v. Idaho Trout Processors Co., 497 F.2d 58, 60 (9th Cir. 1974) (holding that workers who clean and process fish are not agricultural workers because they “work exclusively for the processing plant, there is a formal separation and division of function between the plant and the farms, and the farms do not supervise the plant, nor do they hire, fire, or pay [the plant‘s] employees“).
Both the regulations and these decisions convince us that the district court adopted too narrow a focus when it looked only at the work that Luna Vanegas performed as an employee, omitting consideration of questions such as whether his employer was engaged in a productive activity separately organized from farming. Its approach is at odds with the observation in Holly Farms, 517 U.S. at 404, that it would be “sensible” to “home[] in on the status of the [workers‘] employer” in the course of holding that workers who caught free-range chickens to be taken to slaughter were not agricultural employees.
C
In sum, work falls within the FLSA secondary agricultural exemption
All a complaint must do is state a plausible narrative of a legal grievance that, if proved, would entitle the plaintiff to relief. See Swanson v. Citibank, N.A., 614 F.3d 400, 404 (7th Cir. 2010). In the FLSA context, a plaintiff will typically meet this bar by alleging that she was owed wages and that those wages were never paid. That is what Luna Vanegas has done here. A complaint need not anticipate—much less refute—a possible affirmative defense. See U.S. Gypsum Co. v. Indiana Gas Co., Inc., 350 F.3d 623, 626 (7th Cir. 2003). In rare circumstances, a plaintiff may “plead[] himself out of court” by admitting all of the essential elements of an affirmative defense in his complaint, Hecker, 556 F.3d at 588, but Luna Vanegas has not fallen into that trap. The complaint says little about most of the regulatory factors. Nothing in Luna Vanegas‘s complaint concedes that farmers ordinarily build their own livestock structures in the modern economy, that there was significant overlap between the work of Signet‘s construction employees and the work of people employed by the client farms, or that Signet has invested significant portions of its capital in agricultural operations. We do not even know what farms Luna Vanegas worked on. His case, in short, was not a candidate for disposition under
D
We briefly address two more points before we conclude. First, Signet argues that because the Department‘s Office of Foreign Labor Certification approved Luna Vanegas‘s H-2A visa, the Department has already decided that this work is agricultural. Congress has given DOL the task of issuing regulations spelling out what kinds of work qualify for an H-2A guestworker visa. The statute says that those regulations must include, but are not limited to, agricultural workers as defined by FLSA section 3(f). See
Finally, Signet argues that many of Luna Vanegas‘s arguments are forfeited because they were made in a more sophisticated form on appeal than they were before the district court. This is a non-starter. A party has the right to refine its argument on appeal. So long as Luna Vanegas “consistently presented the heart” of his case before the district court, his arguments are not forfeited even if “the nuances” of that argument change on appeal. Fox v. Hayes, 600 F.3d 819, 832 (7th Cir. 2010). Luna Vanegas did all that he needed to do—he consistently made his core argument that he was misclassified as an agricultural worker at every stage in the proceedings. There was no forfeiture here.
III
Employers invoking the agricultural exemption to the Fair Labor Standards Act bear the burden of showing that the affirmative defense applies. This is difficult, at best, using a motion under