Second Circuit: MLB “Fanfest” Properly Treated as Exempt Recreational Establishment

Last year, Judge John G. Koeltl of the Southern District of New York ruled that individuals who served as volunteers at the 2013 Major League Baseball All Star Weekend FanFest, a four-day event centered around the All Star Game, were not entitled to minimum wage because they were “employed by an establishment which is an amusement or recreational establishment . . . [which did] not operate for more than seven months in any calendar year.”  On Friday, the Court of Appeals for the Second Circuit affirmed that decision.  Chen v. Major League Baseball, 2014 U.S. Dist. LEXIS 42078 (S.D.N.Y. Mar. 25, 2014).

The appeals court’s ruling focused on what constituted the operative “establishment” for purposes of applying the exemption: Major League Baseball conceded that if the “establishment” included the league along with FanFest, MLB did not meet the criteria. Citing Supreme Court precedent interpreting the now-repealed “retail or service” exemption, the Court concluded that an establishment for purposes of the seasonal amusement or recreational exemption is a “distinct physical place of business.” Because the Complaint conceded that FanFest took place at New York City’s Javits Center, and not at MLB’s offices or any other physical place controlled by MLB, that “physical separation [wa]s determinative.” Having established FanFest as the operative “establishment”, the Court ruled that Plaintiff’s Complaint itself clearly established the two exemption criteria: FanFest operated for not more than 7 months and was “amusement or recreational nature.” As to the latter, Plaintiff’s characterization of FanFest as a “theme park” established its qualifying nature.

Chen is a highly technical ruling, but instructive to employers having multiple establishments potentially qualifying for the exemption. The opinion, like Judge Koeltl’s below, declined to address Plaintiff’s claim that if the amusement or recreational exemption was inapplicable Plaintiff was entitled to minimum wage for all hours worked and could not be treated as an unpaid volunteer.