Walker v. Freedom Rain Inc
MEMORANDUM OPINION - For the reasons stated above, the Court finds as a matter of law that the plaintiffs who worked at the Lovelady Center, the thrift store, Blackwells Way, and Haymon Homes were Freedom Rains employees within the meaning of the FLS A. Accordingly, the Court GRANTS the plaintiffs motion for partial summary judgment (Doc. 58) and DENIES Freedom Rains motion for partial summary judgment (Doc. 52). In ruling on the parties motions for partial summary judgment, the Court did not rely on the evidence that is the subject of the parties respective motions to strike. (Docs. 78, 79, 80, 83). Therefore, the Court DENIES the motions to strike as MOOT. Signed by Judge Madeline Hughes Haikala on 3/7/2017. (KEK)
2017 Mar-07 AM 09:20
U.S. DISTRICT COURT
N.D. OF ALABAMA
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ALABAMA
individually and on behalf of
herself and all others similarly
FREEDOM RAIN, INC.,
d/b/a The Lovelady Center,
Case No.: 2:15-cv-00274-MHH
In this putative class action, plaintiff Briana Walker alleges that defendant
Freedom Rain, Inc., d/b/a The Lovelady Center, violated the Fair Labor Standards
Act (FLSA) by failing to pay her and the opt-in plaintiffs the minimum wage
required by the Act and by failing to adequately compensate them for work
performed in excess of forty hours per week. (Doc. 1). Pursuant to Federal Rule
of Civil Procedure 56, each party has asked the Court to enter judgment on the
threshold issue of whether the plaintiffs were Freedom Rain’s “employees” under
the FLSA. (Docs. 52, 58). For the reasons stated below, the Court denies Freedom
Rain’s and grants the plaintiffs’ motion for partial summary judgment.
SUMMARY JUDGMENT STANDARD
“The court shall grant summary judgment if the movant shows that there is
no genuine dispute as to any material fact and the movant is entitled to judgment as
a matter of law.” FED. R. CIV. P. 56(a). To demonstrate that there is a genuine
dispute as to a material fact that precludes summary judgment, a party opposing a
motion for summary judgment must cite “to particular parts of materials in the
record, including depositions, documents, electronically stored information,
affidavits or declarations, stipulations (including those made for purposes of the
motion only), admissions, interrogatory answers, or other materials.” FED. R. CIV.
P. 56(c)(1)(A). “The court need consider only the cited materials, but it may
consider other materials in the record.”
FED. R. CIV. P. 56(c)(3).
considering a summary judgment motion, the Court must view the evidence in the
record in the light most favorable to the non-moving party and draw reasonable
inferences in favor of the non-moving party. White v. Beltram Edge Tool Supply,
Inc., 789 F.3d 1188, 1191 (11th Cir. 2015).
“In practice, cross motions for summary judgment may be probative of the
nonexistence of a factual dispute, but this procedural posture does not
automatically empower the court to dispense with the determination whether
questions of material fact exist.” Ga. State Conference of NAACP v. Fayette Cty.
Bd. of Comm’rs, 775 F.3d 1336, 1345 (11th Cir. 2015) (quoting Lac Courte
Oreilles Band of Lake Superior Chippewa Indians v. Voigt, 700 F.2d 341, 349 (7th
Cir. 1983)) (internal quotation marks and brackets omitted).
“If both parties
proceed on the same legal theory and rely on the same material facts . . . the case is
ripe for summary judgment.” NAACP, 775 F.3d at 1345 (quoting Shook v. United
States, 713 F.2d 662, 665 (11th Cir. 1983)) (internal quotation marks omitted).
Freedom Rain is a 501(c)(3) nonprofit corporation that operates a residential
rehabilitation program at a facility called the Lovelady Center. (Doc. 54, p. 6;
Doc. 58, p. 4). Freedom Rain charges program participants a $500 intake fee to
cover the first month of their enrollment and a $150 weekly fee thereafter.1 (Doc.
54, p. 7). Many of the program’s participants have been convicted of state or
federal crimes, and the participants enter the program to comply with a court order.
(Doc. 54, p. 7). Others enter the program voluntarily to obtain treatment for
substance addiction, assistance managing their lives, or “because they are homeless
and have nowhere else to go.” (Doc. 54, p. 7). Ms. Walker and opt-in plaintiffs
Laketta Mackins, Myoshi Bates, Melissa Saturday, Rhonda Gaddis, and Monica
Stager voluntarily enrolled in the Lovelady Center rehabilitation program between
2010 and 2014. (Doc. 54, pp. 19–20). Opt-in plaintiff Megan Deweber-White
enrolled in 2014 as part of a supervised reentry program for prisoners. (Doc. 54, p.
In the program, the plaintiffs attended classes and church services. (Doc. 54,
p. 9). The plaintiffs also received counseling, housing, food, medical services,
childcare services, and transportation. (Doc. 54, pp. 7, 9). In addition, they
participated in “work therapy.” (Doc. 54, p. 13).
As part of work therapy, the plaintiffs worked at the Lovelady Center in a
department such as the kitchen, daycare, maintenance, or security, or at the
Lovelady Center’s offsite thrift store performing tasks such as sorting, tagging,
cleaning clothes, assisting donation drivers, assisting customers, and operating the
cash register. (Doc. 58, p. 10). Some of the plaintiffs also worked at assistedliving facilities Blackwell’s Way and Haymon Homes, where they assisted
residents with daily activities, prepared meals, performed housework, and
monitored the residents for safety. (Doc. 58, ¶ 15; Doc. 64, ¶ 15). The work
therapy program, according to Freedom Rain, enables participants to learn “to
work effectively and efficiently” and “provides lessons of discipline, self-esteem,
perseverance, and obedience to authority.” (See Doc. 54, p. 13; Doc. 55-4, p. 77;
Doc. 58, p. 9).
When the plaintiffs enrolled in the program, the intake fee was $950. (Doc. 54, p. 7).
In addition to its purported rehabilitative functions, Freedom Rain’s work
therapy program provided the plaintiffs with compensation.
In the “Success
Program,” if a plaintiff worked 32 hours in a week at the Lovelady Center or the
thrift store, Freedom Rain credited her account $150 and considered her fees for
that week paid.2 (Doc. 55-4, p. 69). Freedom Rain also provided these plaintiffs
with an additional stipend of $25 to $100, depending on how long the plaintiff had
been in the program. (Doc. 54, p. 13; Doc. 55-4, p. 69). The plaintiffs knew that
they would be working as part of the rehabilitation program and that they would
use the money they earned in work therapy to pay their program fees. (Doc. 53-2,
p. 16; Doc. 53-17, p. 11; Doc. 64, ¶ 22). Melinda MeGahee, Freedom Rain’s
Executive Vice President, testified that “when a lady signs up for the Success
Program, they . . . know that they’re going to work, that they’re working their fees
off and getting a stipend.” (Doc. 55-4, p. 64).
The plaintiffs who worked at Blackwell’s Way or Haymon Homes did not
receive a $150 weekly credit or a stipend. Instead, Freedom Rain billed the
facilities for the plaintiffs’ work and, after deducting the plaintiffs’ “current
The “Success Program” is a rehabilitative module in which participants perform work therapy
according to a structured schedule. (See Doc. 55-4, p. 69; Doc. 56, p. 6). Under the heading
“opportunity credits,” participants not enrolled in the Success Program earned $7.25 per hour in
account credits for performing substantially the same work as Success Program participants on
an ad hoc basis. (Doc. 55-4, p. 69; Doc. 56, p. 6). According to Melinda MeGahee, Freedom
Rain’s Executive Vice President, “[i]t’s all work therapy.” (Doc. 55-4, p. 76).
program fees, current fines, and any back fees or fines,” paid the plaintiffs an
hourly wage. (Doc. 55-14; Doc. 58, ¶ 24; Doc. 55-2, p. 72; Doc. 55-1, pp. 56–58;
Doc. 55-4, p. 86).
The parties dispute whether work therapy was mandatory. (See Doc. 56, p.
8; Doc. 64, p. 10). Freedom Rain contends that participants were allowed to
remain in the program even if they did not pay their fees. (Doc. 54, p. 7).
According to Ms. MeGahee, participants received housing and food “whether [they
were] working or not.” (Doc. 55-4, p. 80). At the same time, Freedom Rain
encouraged program participants to work and tried to “avoid idle time.” (Doc. 554, p. 79).
The parties seek summary judgment on the issue of whether the plaintiffs
who worked at the Lovelady Center and at its offsite thrift store were Freedom
Rain’s “employees” under the FLSA. (Docs. 52, 58). In addition, the plaintiffs
seek summary judgment on the same issue with respect to their work at
Blackwell’s Way and Haymon Homes.3
The FLSA provides that “[e]very employer shall pay to each of his
employees who in any workweek is engaged in commerce or in the production of
Freedom Rain does not seek summary judgment at this juncture regarding the employment
status of the plaintiffs who worked at Blackwell’s Way or Haymon Homes. (Doc. 54, p. 5 n. 1).
goods for commerce, or is employed in an enterprise engaged in commerce or in
the production of goods for commerce . . . $7.25 an hour,” beginning in July of
2009. See 29 U.S.C. § 206(a). Likewise, no employer shall employ any such
employee “for a workweek longer than forty hours unless such employee receives
compensation for his employment . . . at a rate not less than one and one-half times
the regular rate at which he is employed.” 29 U.S.C. § 207(a).4
The FLSA’s minimum wage and overtime provisions apply only to
“employees.” See 29 U.S.C. §§ 206(a), 207(a); Villareal v. Woodham, 113 F.3d
202, 205 (11th Cir. 1997).
The FLSA broadly defines “employee” as “any
individual employed by an employer.” 29 U.S.C. § 203(e)(1). “Employ” means
“to suffer or permit to work.” 29 U.S.C. § 203(g).
To determine whether an individual is an employee under the FLSA, the
Eleventh Circuit uses an “economic realities” analysis under which a court must, in
part, examine whether the employer derives an economic benefit from the
In its response to the plaintiffs’ motion for summary judgment and in its reply to the plaintiffs’
response to its motion for summary judgment, Freedom Rain argues that the FLSA does not
apply to this case because neither the Lovelady Center nor the thrift store constitutes an
“enterprise engaged in commerce” within the meaning of the FLSA. (Doc. 64, pp. 28–32; Doc.
77, p. 8). This argument exceeds the scope of discovery and of Freedom Rain’s motion for
summary judgment, both of which are limited to the question of whether an employment
relationship existed between the plaintiffs and Freedom Rain. (Doc. 32, ¶ 1; Doc. 32-1, ¶ 7; Doc.
52). The ultimate applicability of the FLSA will require an additional showing that the plaintiffs
engaged in commerce or that the Lovelady Center or thrift store is an enterprise engaged in
commerce. See 29 U.S.C. §§ 206(a), 207(a). Those issues are not properly before the Court on
the parties’ motions for summary judgment.
employee’s work and whether there exists an express or implied agreement for
compensation. See Donovan v. New Floridian Hotel, Inc., 676 F.2d 468, 471 (11th
Cir. 1982); see also Kaplan v. Code Blue Billing & Coding, Inc., 504 Fed. Appx.
831, 834 (11th Cir. 2013); see generally Williams v. Strickland, 87 F.3d 1064,
1066–1068 (9th Cir. 1996).
An individual who works “without promise or
expectation of compensation, but solely for his personal purpose or pleasure,” is
not an employee for FLSA purposes. Walling v. Portland Terminal Co., 330 U.S.
148, 152 (1947) (internal quotation marks omitted).
But “when there is an
expectation of . . . benefits in exchange for services,” there is generally
employment under the FLSA. Villareal, 113 F.3d at 205.
The Lovelady Center and the thrift store
Freedom Rain argues that the Ninth Circuit’s holding in Williams controls
this case. (Doc. 54, pp. 26–28; Doc. 77, p. 7). In Williams, the Ninth Circuit held
that a work therapy program participant was not an employee subject to the
minimum wage and overtime provisions of the FLSA. Williams, 87 F.3d at 1068.
The plaintiff in Williams, Mr. Williams, enrolled in a rehabilitation program run by
the Salvation Army, a nonprofit religious and charitable organization. Id. at 1065.
As part of the program, Mr. Williams “engaged in work therapy on a full-time
basis.” Id. For three months, he restored furniture that the Salvation Army sold in
its thrift stores.
For three months after that, he sorted donations at the
rehabilitation center’s loading dock. Id. While enrolled in the program, Mr.
Williams “received food, clothing, shelter, and a small [weekly] stipend.” Id. The
circuit court concluded that, because Mr. Williams “had neither an express nor an
implied agreement for compensation with the Salvation Army,” and because Mr.
Williams’s “relationship with the Salvation Army was solely rehabilitative,” Mr.
Williams was not an employee. Id. at 1067.
In reaching its decision in Williams, the Ninth Circuit distinguished its facts
from those in Tony and Susan Alamo Found. v. Sec’y of Labor, 471 U.S. 290
(1985), a case that Ms. Walker and the opt-in plaintiffs argue controls here and a
case, unlike Williams, that is binding authority on this Court.
The Court in
Williams’s relationship with the Salvation Army was solely rehabilitative.
This fact . . . distinguishes this case from Alamo where the associates [sic]
work contemplated both rehabilitation and compensation. Williams’s work
therapy was not performed in exchange for in-kind benefits, but rather was
performed to give him a sense of self-worth, accomplishment, and enabled
him to overcome his drinking problems and reenter the economic
Williams, 87 F.3d at 1067. As evidence that Mr. Williams’s relationship with the
Salvation Army “contemplated only rehabilitation,” the Ninth Circuit cited Mr.
Williams’s intake form, on which Mr. Williams indicated his acknowledgment that
he was a “beneficiary and not an employee of [the] Center.” Id. at 1065.
In his dissent in the Williams case, Judge Poole pointed out that rights under
the FLSA cannot be waived. Williams, 87 F.3d at 1069 (Poole, J., dissenting); see
also Barrentine v. Arkansas-Best Freight Sys, Inc., 450 U.S. 728, 740 (1981)
(“[W]e have held that FLSA rights cannot be abridged by contract or otherwise
waived because this would nullify the purposes of the statute and thwart the
legislative policies it was designed to effectuate.”) (internal citation and quotation
marks omitted). Because Mr. Williams explained that he expected compensation
for his work and because his work resulted in economic benefit to the Salvation
Army, Judge Poole concluded that a material dispute of fact existed regarding Mr.
Williams’s employment status. Williams, 87 F.3d at 1069 (Poole, J., dissenting).
As noted above, the plaintiffs argue that Alamo, not Williams, controls here.
(Doc. 58, p. 25). In Alamo, the Supreme Court held that unpaid “associates” at a
transportation, and medical benefits,” were employees, despite the associates’ own
insistence that they expected no compensation for their work. Alamo, 471 U.S. at
292–94, 301–02, 305. The associates, “most of whom were drug addicts, derelicts,
or criminals before their conversion and rehabilitation,” worked at the Tony and
Susan Alamo Foundation’s various commercial businesses, including service
stations, clothing outlets, hog farms, and a motel. Id. at 292. Citing Walling, the
Supreme Court concluded that the extended length of the volunteers’ service and
their dependence on the foundation, combined with the foundation’s provision of
“in-kind benefits,” created an implied agreement for compensation. See id. at 301.
Despite their protestations to the contrary, the associates were employees,
according to the Supreme Court. Id. at 306.
Alamo controls here.
Although the plaintiffs may have come to the
Lovelady Center seeking rehabilitation and support, the plaintiffs have stated that
they expected compensation for their work.5 (Doc. 58, p. 12). Moreover, “a
rehabilitative motive does not preclude an employment relationship.” Williams, 87
F.3d at 1069 (Poole, J., dissenting) (citing Alamo, 471 U.S. at 299). Like the
plaintiffs in Alamo, the Lovelady plaintiffs received benefits in exchange for work.
(Doc. 54, p. 9; Doc. 55-4, p. 69). If a plaintiff worked 32 hours in a week, she
received a $150 credit against her program fees and an additional stipend. (Doc.
54, p. 9; Doc. 55-4, p. 69; Doc. 58, p. 12). If a plaintiff did not work in a week, she
This apparent “quid pro quo arrangement between the parties”
Opt-in plaintiff Myoshi Bates, for example, testified that when she enrolled in the Lovelady
Center’s rehabilitation program, she understood that she “was going to have to work in order to
get the fees paid down.” (Doc. 53-2, p. 16).
demonstrates that the plaintiffs’ relationship to the Lovelady Center was not solely
rehabilitative. Williams, 87 F.3d at 1067, 1069 (Poole, J., dissenting). Rather, just
as in Alamo, the plaintiffs worked “in contemplation of compensation.”
Alamo, 471 U.S. at 306.6
Furthermore, the plaintiffs’ work at the Lovelady Center and the thrift store
conferred a direct economic benefit on Freedom Rain. See (Doc. 58, pp. 14–15;
Doc. 55-1, p. 52); compare Walling, 330 U.S. at 153 (holding that plaintiffs whose
work resulted in “no ‘immediate advantage’” to the employer were not employees
under the FLSA). If not for the plaintiffs, Freedom Rain would have had to hire
W-2 employees, at a statutorily mandated expense of $7.25 an hour, to provide the
work that the plaintiffs performed. See 29 U.S.C. § 206(a); (Doc. 58, p. 15; Doc.
55-1, p. 52).
Thus, although it may be true that work therapy is a “critical
component of rehabilitation” and that the plaintiffs gained therapeutic benefits
In Alamo, the Supreme Court considered the foundation’s provision of food, clothing, shelter,
transportation, and medical services to be “wages in another form.” Tony and Susan Alamo
Found. v. Sec’y of Labor, 471 U.S. 290, 301 (1985). Because it was not clearly erroneous for the
district court to regard these benefits as payment for the associates’ work, the Supreme Court
found an implied agreement for compensation and, consequently, an employment relationship.
Id. Here, the plaintiffs do not argue that the benefits they received in the form of food, clothing,
shelter, transportation, and medical services constitute “wages in another form” that supply the
basis for an implied compensation agreement. Alamo, 471 U.S. at 301. Rather, the plaintiffs
contend that they expected actual wages in the form of account credits and weekly stipends as
compensation for their work at the Lovelady Center and thrift store. (Doc. 58, p. 12). Thus,
Freedom Rain’s argument that the plaintiffs were not required to work to receive food, clothing,
shelter and other benefits of the rehabilitation program is of little moment. (Doc. 54, p. 7; Doc.
64, p. 10).
from working, it cannot be said that the plaintiffs worked “solely for [their]
personal purpose or pleasure.”
Walling, 330 U.S. at 152; (Doc. 64, p. 16).
Freedom Rain’s eleemosynary mission statement notwithstanding, the plaintiffs
performed work that, in economic reality, served both parties’ interests. The Court
therefore finds that the plaintiffs who worked at the Lovelady Center and thrift
store were Freedom Rain’s employees for purposes of the FLSA. See id. at 152
(excluding from the FLSA’s definition of employee an individual “whose work
serves only his own interest”) (emphasis added).
Blackwell’s Way and Haymon Homes
Freedom Rain does not dispute that the plaintiffs who worked at Blackwell’s
Way and Haymon Homes were employed by those facilities within the meaning of
the FLSA. (See Doc. 64, ¶ 31; Doc. 55-8, p. 45). For purposes of the plaintiffs’
motion for summary judgment, the Court must determine whether the plaintiffs
who were employed by Blackwell’s Way and Haymon Homes were also employed
by Freedom Rain.
An “employer” under the FLSA is “any person acting directly or indirectly
in the interest of an employer in relation to an employee. . . .” 29 U.S.C. § 203(d).
“An employee may have more than one employer, and ‘whether the employment
by the employers is to be considered joint employment or separate and distinct
employment for purposes of the [FLSA] depends upon all the facts in the particular
case.’” Layton v. DHL Express (USA), Inc., 686 F.3d 1172, 1175 (11th Cir. 2012)
(quoting 29 C.F.R. § 791.2(a)). Generally, a joint employment relationship exists
where: (1) “there is an arrangement between the employers to share the employee’s
services,” (2) one employer is acting directly or indirectly in the interest of the
other employer . . . in relation to the employee[,]” or (3) “the employers are not
completely disassociated with respect to the employment of a particular employee
and may be deemed to share control of the employee, directly or indirectly, by
reason of the fact that one employer controls, is controlled by, or is under common
control with the other employer.” Layton, 686 F.3d at 1175 (quoting 29 C.F.R. §
In 2014, the Department of Labor (DOL) conducted an investigation into
Freedom Rain’s relationship with Blackwell’s Way and Haymon Homes. (Doc.
75-1, pp. 35–47). Applying the above framework, the DOL concluded that, “an
employment relationship exist[ed] between the [plaintiffs who worked at
Blackwell’s Way and Haymon Homes] and The Lovelady Center as a joint
employer.” (Doc. 75-1, pp. 42–43). Although the DOL investigation does not
demand deference, the Court agrees with its conclusion. Koellhoffer v. PlotkeGiordani, 858 F. Supp. 2d 1181, 1191 (D. Colo. 2012) (finding that a DOL
investigation “does not even rise to the level of an opinion letter or other statement
of agency policy” and “is not entitled to deference”); see also Saglimbene v.
Venture Indus. Corp., 895 F.2d 1414, 1990 WL 10709, at *9 (6th Cir. 1990)
(unpublished opinion) (suggesting that, although DOL interpretations of the FLSA
are due deference, the results of a DOL investigation are not).
It is undisputed that Freedom Rain compensated the plaintiffs for their work
at Blackwell’s Way and Haymon Homes. (Doc. 55-4, p. 86; Doc. 55-6, p. 9; Doc.
55-1, pp. 56–58).
Freedom Rain and the group homes had an arrangement
whereby Freedom Rain would bill the group homes for the plaintiffs’ services and,
once Freedom Rain received payment from the group homes, Freedom Rain would
deduct program fees and fines from the plaintiffs’ accounts and then pay the
plaintiffs an hourly wage. (Doc. 55-1, pp. 56–58; Doc. 55-2, p. 72; Doc. 55-6, p.
9; Doc. 55-14). The record shows that Freedom Rain and the group homes jointly
supervised the plaintiffs. Freedom Rain’s “contact person” for Blackwell’s Way
and Haymon Homes, Amanda Harrison, testified that it was her job to make sure
that the plaintiffs’ time sheets matched those provided by the group homes and that
the plaintiffs “were able to work . . . at Blackwells [sic] or Haymon Homes, and do
their program at the same time.” (Doc. 55-6, p. 7). Ms. Harrison testified that she
also worked “[o]ccasionally” with Blackwell’s Way employee Robin White to
ensure, among other things, that the plaintiffs properly filled out their hiring
paperwork. (Doc. 55-6, p. 12).7
Judy Haymon, shareholder of Blackwell’s Way and president of Haymon
Homes, testified that, prior to the plaintiffs’ employment with the group homes,
she and Freedom Rain’s founder and executive director Brenda Spahn discussed
Freedom Rain’s and Haymon Homes’ overlapping needs: Haymon Homes needed
workers, and Freedom Rain’s program participants needed work. (Doc. 55-8, pp.
These discussions led ultimately to the plaintiffs’ employment at
Blackwell’s Way and Haymon Homes.
These facts demonstrate that Freedom Rain and the group homes had an
arrangement to share the plaintiffs’ services and acted in each other’s interest in
relation to the plaintiffs. The FLSA is a remedial statute, and the Court must
broadly construe its definitions. Antenor v. D&S Farms, 88 F.3d 925, 933 (11th
Accordingly, the Court finds that the plaintiffs who worked at
Blackwell’s Way and Haymon Homes while participating in Freedom Rain’s
rehabilitation program were Freedom Rain’s employees under the FLSA. See
Layton, 686 F.3d at 1175 (quoting 29 C.F.R. § 791.2(b)).
Ms. Harrison testified that Ms. White was employed by Freedom Rain before Ms. White began
her employment with Blackwell’s Way. (Doc. 55-6, pp. 11–12).
For the reasons stated above, the Court finds as a matter of law that the
plaintiffs who worked at the Lovelady Center, the thrift store, Blackwell’s Way,
and Haymon Homes were Freedom Rain’s employees within the meaning of the
Accordingly, the Court GRANTS the plaintiffs’ motion for partial
summary judgment (Doc. 58) and DENIES Freedom Rain’s motion for partial
summary judgment (Doc. 52).
In ruling on the parties’ motions for partial
summary judgment, the Court did not rely on the evidence that is the subject of the
parties’ respective motions to strike. (Docs. 78, 79, 80, 83). Therefore, the Court
DENIES the motions to strike as MOOT.
DONE and ORDERED this March 7, 2017.
MADELINE HUGHES HAIKALA
UNITED STATES DISTRICT JUDGE
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