Collegiate Football Player That Makes "Revenue Generation" Argument to Support FLSA Claim Fails to Survive Motion to Dismiss

Dawson v. National Collegiate Athletic Association - United States District Court, Northern District of California

Facts:  Lamar Dawson ("Dawson") played college football for the University of Southern California ("USC") from 2011 to 2015.  He subsequently filed a putative class action claim, based upon violations of the Fair Labor Standards Act ("FLSA") and the California Labor Code, against the National Collegiate Athletic Association ("NCAA") and the Pac-12 Conference ("Pac-12") on the grounds that he was denied full pay for all hours worked (playing football), including overtime pay, and was frequently permitted to work without receiving required minimum wage payments.  Dawson also alleged that the NCAA and Pac-12 were joint employers of student athletes because the rules governing student athletes who play football are set by the NCAA and then adopted by the Pac-12.  Dawson's putative class sought to include student athletes in football programs at NCAA member schools in California.  A subsequent motion to dismiss was filed.

Holding:  The District Court began its analysis of the claim with an examination of the language of the FLSA.  Readers might recall that the FLSA defines "employee" as "any individual employed by an employer" and "employ" as including "to suffer or permit to work."   However, the District Court pointed out a Seventh Circuit case from last year which noted "the long tradition of amateurism in college sports, by definition, shows that student athletes - like all amateur athletes - participate in their sports for reasons wholly unrelated to immediate compensation.  While student athletes spend a tremendous amount of time playing their respective sports, there is little question that these student athletes do not expect to earn in income from playing their sport.  Consequently, because athletic "play" is not "work", as defined by the FLSA, Dawson's FLSA claim could not proceed.  Further, the District Court  pointed out that in Section 10b24(a) of the Field Operations Handbook published by the Department of Labor, student athletes are not employees.

One of the more interesting arguments made by Dawson was his claim that this case did not fit within Section 10b24(a) nor the Seventh Circuit case from last year, and therefore should be survive a motion to dismiss, because Division I football players earn "massive revenues" for their schools and these student athletes play college football for the economic benefit of the NCAA.  Dawson attempted to make this revenue generation correlation to establish that student athletes who play football are actually employees and therefore entitled to compensation under the FLSA.  However, the Court disagreed and pointed out that the Department of Labor Handbook did not distinguish between sports that generate revenue and those that do not...nor was Dawson's revenue generation argument supported by any caselaw.

In regard to the California Labor Code portion of Dawson's claim, the District Court pointed to a change in Section 3352(k) of the California Labor Code which carved out an exception to exclude student athletes from being identified as "employees".  A string of recent cases that had applied Section 3352(k), in other contexts, came to the same conclusion.

Judgment:  The District Court dismissed Dawson's FLSA and California Labor Code claims on the grounds that student athletes who play collegiate football are not employees under either the federal or state statutes, regardless of the fact that this sport generates revenue for the school and NCAA.

The Takeaway:  I pointed out the Seventh Circuit case from last year, Berger v. National Collegiate Athletic Association, to give readers a bit of background on the topic.  While this case reached the same conclusion, that collegiate student athletes are not entitled to pay for playing sports, the "revenue generation" argument that Dawson made was worth highlighting.  In Berger, the student athletes were part of the University of Pennsylvania women's track and field team.  In this case, Dawson was part of USC's football team.  I think it is largely undisputed that a collegiate football team (especially one as well known/marketable as USC) would bring in more revenue to the school, league, and NCAA than a collegiate track and field team.  Dawson made a noble, if not broad, attempt to draw a correlation between the fact that because Division I college football players generate revenue (oftentimes massive amounts), that should result in them being compensated.  Unfortunately for him, there was simply no statute or caselaw to support this claim.  

Of course, had the Court agreed with this line of reasoning and held that collegiate football players are entitled to compensation, that could prove to be a slippery slope.  I would imagine it would be difficult to try and delineate between student athletes who generate revenue versus those who do not (in the context of whether they are entitled to compensation for playing collegiate sports), not to mention creating a potential PR nightmare.  With that being said, until the U.S. Congress amends the FLSA (or a state legislature changes state statutes), I think it will continue to be difficult for collegiate student athletes to attempt to make a valid claim for pay under the FLSA or related state employment law statutes.

Majority Opinion Judge:  Judge Seeborg

Date:  April 25, 2017

Opinion:  hr.cch.com/eld/DawsonNCAA042517.pdf