SACKOS v. NATIONAL COLLEGIATE ATHLETIC ASSOCIATION et al

Filing 238

ENTRY ON MOTIONS TO DISMISS AND RELATED MOTIONS: The Defendants' motions to dismiss (Dkt. Nos. 178, 180, 182) are GRANTED as to all Defendants that have not been dismissed by the Plaintiffs.15 The Plaintiffs' claims against Defendan t the University of Pennsylvania are DISMISSED WITH PREJUDICE, and the Plaintiffs' claims against all remaining Defendants are DISMISSED WITHOUT PREJUDICE for lack of subject matter jurisdiction. The Defendants' motions for oral argum ent (Dkt. Nos. 181 and 191) are DENIED. The Plaintiffs' motion for leave to file a surreply (Dkt. No. 218) is DENIED. The motions to strike filed by Defendants Duke University and Wake Forest University (Dkt. Nos. 173 and 174) are DENIED AS MOOT. In light of these rulings, the Plaintiffs' motion to conditionally certify a class (Dkt. No. 234) is DENIED AS MOOT ***SEE ENTRY FOR ADDITIONAL INFORMATION***. Signed by Judge William T. Lawrence on 2/16/2016. (DW)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
GILLIAN BERGER, et al.,
Plaintiffs,
vs.
NATIONAL COLLEGIATE ATHLETIC
ASSOCIATION, et al.,
Defendants.

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) Cause No. 1:14-cv-1710-WTL-MJD
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ENTRY ON MOTIONS TO DISMISS AND RELATED MOTIONS
The three Plaintiffs in this case are or were at one time1 members of the women’s track
and field team at the University of Pennsylvania (“Penn”). They allege in their Amended
Complaint that, by virtue of their participation on the team, they are employees of Penn for
purposes of the Fair Labor Standards Act, 29 U.S.C. §§ 201 et seq. (“FLSA”). Therefore, they
allege, they are entitled under the wage-and-hour provisions of the FLSA to be paid at least
minimum wage for the work they perform as student athletes. They have named as Defendants
the National Collegiate Athletic Association (“NCAA”) and 123 NCAA member schools2 that
field Division I athletic teams. They have asked the Court to certify this case as a collective
action, proposing a class of “[a]ll current and former NCAA Division I student athletes, on

1

For ease of reading, for the remainder of this Entry the Court will use the present tense
when referring to the Plaintiffs’ participation in student athletics, although at least one of the
Plaintiffs is no longer a student athlete at Penn and the Plaintiffs wish to certify a collective
action that includes both current and former student athletes.
2
The original complaint in this case also named as defendants various public institutions
of higher learning; those defendants were voluntarily dismissed by the Plaintiffs and not included
in the Amended Complaint, presumably because the Plaintiffs determined that they enjoy
immunity under the Eleventh Amendment. A few other defendants have been voluntarily
dismissed since the filing of the Amended Complaint for reasons that do not appear in the record.

NCAA women’s and men’s sports rosters for the [Defendant schools] . . . from academic year
2012-13 to the present,”3 a group which the Plaintiffs define as the “Student Athlete Collective.”4
All of the remaining Defendants in this case now ask the Court to dismiss this case. The various
motions are fully briefed and the Court, being duly advised, rules as follows.
I. PRELIMINARY MATTERS
Some collateral motions pend before the Court. First, some of the Defendants moved for
oral argument; those motions [Dkt. Nos. 181 and 191] are DENIED.
Next, some of the Defendants move to strike certain paragraphs of the Amended
Complaint because they refer to the Plaintiffs’ pre-suit settlement attempts in this case. See
Federal Rule of Civil Procedure 12(f) (court “may strike from a pleading an insufficient defense
or any redundant, immaterial, impertinent, or scandalous matter”). The Court is at a loss to
understand why Plaintiffs’ counsel chose to plead allegations about counsel’s pre-suit
communications with the NCAA. In fact, the Plaintiffs do not allege certain facts in the
Amended Complaint (such as the ways in which NCAA regulated sports are different than other
extracurricular activities) at all, but rather allege only that Plaintiffs’ counsel “elaborated in
response to the NCAA” that such facts existed. It is unclear whether counsel lacked a good faith
basis to actually assert the facts as true or whether counsel had some other reason for drafting the
complaint in such a strange manner. Either way, it is wholly irrelevant what Plaintiffs’ counsel
told the NCAA before filing suit and vice versa, and the motion to strike those allegations (found
in Amended Complaint ¶¶ 1, 59-67) is granted.

3
4

Briefing on the certification issue has not yet been completed.
The Court will use the term “student athletes” to refer to the members of the putative

class.
2

Finally, the Plaintiffs filed a motion for leave to file a surreply [Dkt. No. 218]. That
motion is DENIED. A surreply might well have been appropriate in this case, given (as
discussed below) that the district court’s ruling in one of the cases relied upon by the Plaintiffs
was reversed by the Second Circuit during the course of the briefing of the instant motions.
Unfortunately, however, the Plaintiffs did not seek to file a surreply to address that case, or any
other relevant issue. Instead, the Plaintiffs sought to impeach some of the Defendants’ counsel
by informing the Court that they or members of their law firms have written web postings or
given seminars in which they have taken legal positions that the Plaintiffs characterize as
contrary to positions they take on behalf of their clients in this case. Plaintiffs complain in their
proposed surreply that defense counsel “have not deemed [it] necessary to” disclose this
“contrary guidance” to the Court. Dkt. No. 218-1. Even if the Plaintiffs’ characterization of the
guidance in the publications as “contrary” to the position taken in this case were accurate—and it
is not, for the reasons aptly pointed out by the Defendants in their reply briefs—the Court is
unaware of any rule of law that would make it necessary, or even advisable, for a lawyer to cite
to his or her law firm’s own publications as either authority for, or possible authority against, a
legal principle. There is simply nothing at all improper about the conduct the Plaintiffs complain
about in their proposed surreply; accordingly, the surreply would serve no useful purpose.
II. STANDING TO SUE DEFENDANTS OTHER THAN PENN
The Defendants argue that the Plaintiffs lack standing to sue any Defendant other than
Penn, the school they all attend. Because standing is a matter of subject matter jurisdiction, the
Court must address that argument first.
Article III of the Constitution limits federal judicial power to certain “cases” and
“controversies,” and the irreducible constitutional minimum of standing contains
three elements. To establish Article III standing, a plaintiff must show (1) it has
suffered an “injury in fact” that is (a) concrete and particularized and (b) actual or
3

imminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the
challenged action of the defendant; and (3) it is likely, as opposed to merely
speculative, that the injury will be redressed by a favorable decision. As the party
invoking federal jurisdiction, a plaintiff bears the burden of establishing the
elements of Article III standing.
Silha v. ACT, Inc., 807 F.3d 169, 172-73 (7th Cir. 2015) (internal citations and quotations marks
omitted). Here the Defendants make a facial challenge to standing. “[W]hen evaluating a facial
challenge to subject matter jurisdiction under Rule 12(b)(1), a court should use Twombly–Iqbal’s
‘plausibility’ requirement, which is the same standard used to evaluate facial challenges to
claims under Rule 12(b)(6).” Id. at 174. Thus, the question is whether the well-pleaded factual
allegations in the Amended Complaint “plausibly suggest a claim of subject matter jurisdiction,”
id., with regard to the Defendants other than Penn.
The Plaintiffs assert claims under the FLSA. They wisely do not dispute that they have
standing to assert an FLSA claim against an entity only if that entity is their employer for
purposes of the FLSA. The Plaintiffs do not allege in the Amended Complaint that each of the
Defendants is their employer; rather, they expressly allege that the Defendants employ those
students “participating in their respective NCAA athletics programs.” Dkt. No. 119 at ¶ 84; see
also id. at ¶ 83 (“Plaintiffs and the members of the Student Athlete Collective have been, and
continue to be, employees of their respective Defendant NCAA Division I Member Schools
within the meaning of 29 U.S.C. § 203(e).”).
The Court agrees with the Defendants that the Amended Complaint fails to allege that the
Plaintiffs are employees of any Defendant other than Penn. The Plaintiffs assert in their brief in
response to the Defendants’ motions that all of the Defendants are liable to them under the FLSA
under a joint employer theory. While “nothing prevents a plaintiff opposing dismissal from
elaborating on the complaint or even attaching materials to an opposition brief illustrating the

4

facts the plaintiff expects to be able to prove,” Defender Sec. Co. v. First Mercury Ins. Co., 803
F.3d 327, 335 (7th Cir. 2015), joint employment is not mentioned in the Amended Complaint,
and the only fair reading of the Amended Complaint is that the Plaintiffs are alleging that they
are employees of only Penn, not of the other Defendants. Therefore, the arguments in the
Plaintiffs’ briefs do not elaborate on the facts in the complaint; they contradict them. The wellpleaded facts in the Amended Complaint do not plausibly suggest that the Plaintiffs have
standing to sue any Defendant other than Penn. Accordingly, all of the Defendants other than
Penn are DISMISSED WITHOUT PREJUDICE for lack of jurisdiction.
III. THE PLAINTIFFS’ CLAIMS AGAINST PENN
The Defendants move pursuant to Federal Rule of Civil Procedure 12(b)(6) to dismiss the
Amended Complaint in its entirety, arguing that the Plaintiffs fail to state a claim against any of
them under the FLSA. The Court will consider the Defendants’ arguments as they relate to the
Plaintiffs’ claims against the remaining Defendant, Penn.
As alluded to above, the applicable standard for evaluating a motion to dismiss for failure
to state a claim is as follows:
To survive a motion to dismiss, a complaint must contain sufficient factual matter,
accepted as true, to state a claim to relief that is plausible on its face. A claim has
facial plausibility when the plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable for the misconduct
alleged.
To assess whether a complaint states a plausible claim of relief, the Court
articulated a two-pronged approach in which a court (1) first identifies the wellpleaded factual allegations by discarding the pleadings that are “no more than
conclusions” and (2) then determines whether the remaining well-pleaded factual
allegations “plausibly give rise to an entitlement of relief.”
Silha, 807 F.3d at 173-74 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft
v. Iqbal, 556 U.S. 662 (2009)).

5

The Plaintiffs’ claims hinge on whether they are properly characterized as “employees”
of Penn under the FLSA. The Plaintiffs make what is essentially a fairness argument, accusing
the Defendants of taking the position that “student athletes are less deserving of employee status
and pay, under the FLSA, than work study participants, ‘who work at food service counters or
sell programs at athletic events, or who wait on tables or wash dishes in dormitories,’” all of
whom are designated as employees by the United States Department of Labor. Dkt. No. 212 at 2
(quoting U.S. Department of Labor Field Operations Handbook § 10b24(b) (10/20/93)). But, of
course, the question is not whether the Plaintiffs, as student athletes, are “deserving” of
employee status, but rather whether Congress intended for the FLSA to apply to them.5
A. Employment Under the FLSA Generally
The FLSA “defines ‘employee’ in a circular fashion, as ‘any individual employed by an
employer.’” Vanskike v. Peters, 974 F.2d 806 (7th Cir. 1992) (quoting 29 U.S.C. § 203(e)(1)).
“Employ,” in turn, is defined by the Act as “to suffer or permit to work.” 29 U.S.C. § 203(g).
“Work” is not defined.
“Because status as an ‘employee’ for purposes of the FLSA depends on the totality of
circumstances rather than on any technical label, courts must examine the ‘economic reality’ of
the working relationship.” Vanskike, 974 F.2d at 808 (citations omitted).
For purposes of social welfare legislation, such as the FLSA, employees are those
who as a matter of economic reality are dependent upon the business to which
they render service. In seeking to determine the economic reality of the nature of
the working relationship, courts do not look to a particular isolated factor but to
all the circumstances of the work activity. Certain criteria have been developed to

5

This ruling should not be read as expressing any opinion regarding the broader question
about whether, as a matter of philosophical principle or general fairness, college athletes in
general, or particular groups of college athletes whose teams generate substantial revenue, should
be compensated in some way. This case is not the proper forum for resolving that societal
debate.
6

assist in determining the true nature of the relationship, but no criterion is by
itself, or by its absence, dispositive or controlling.
Secretary of Labor, U.S. Dep’t of Labor v. Lauritzen, 835 F.2d 1529, 1534 (7th Cir. 1987)
(internal citations and quotation marks omitted).
B. The Intern Fact Sheet Test Does Not Apply to This Case
The Plaintiffs argue that the question of whether student athletes are employees under the
FLSA is governed by the test set forth in a 2010 United States Department of Labor “fact sheet”
for determining whether certain internships qualify as employment under the FLSA. See DOL,
Wage & Hour Div., Fact Sheet # 71, Internship Programs Under The Fair Labor Standards Act
(April 2010), http://www.dol.gov/whd/regs/compliance/whdfs71.pdf (hereinafter referred to as
the “Intern Fact Sheet”).6 The stated purpose of the Intern Fact Sheet is to “provide[] general
information to help determine whether interns must be paid the minimum wage and overtime
under the Fair Labor Standards Act for the services they provide to “for-profit,” “private sector

6

The Plaintiffs’ suggestion that defense counsel violated their ethical obligations by not
discussing the Intern Fact Sheet in their opening briefs is entirely without merit. On its face, the
Intern Fact Sheet applies to internships. This case does not involve internships. It is the
Plaintiffs’ legal theory that (1) the criteria set forth in the Intern Fact Sheet should be applied to
student athletes; and (2) the application of those criteria would dictate a finding that student
athletes are employees under the FLSA. Whatever the merits of that legal theory, it is
disingenuous to suggest that it is of such obvious merit that the Defendants were ethically
obligated to address it in their opening briefs. Indeed, while the Plaintiffs assert that “on the face
of the Amended Complaint, DOL Fact Sheet #71 is the clear basis for Plaintiffs’ claim of student
athlete employee status under the FLSA” and “DOL Fact Sheet #71 is referenced as the source of
criteria that establish that both student participants in work study programs, and student athletes,
are employees under the FLSA,” Dkt. 212 at 10, in fact, the Intern Fact Sheet is referenced only
once in the Amended Complaint, in a “see, e.g.” cite in support of the proposition that “work
study participants meet criteria for recognition as temporary employees under the FLSA, and
NCAA Division I Member Schools must, and do, pay work study participants at least the federal
minimum-wage of $7.25 an hour.” The Amended Complaint can best be summarized as arguing
that because students in work-study programs are treated as employees under the FLSA, student
athletes should be as well. Interns—who, again, are the sole focus of the Intern Fact Sheet—are
not mentioned in the Amended Complaint at all.
7

employers.” It provides that such an internship is not subject to the FLSA if all of the following
factors are satisfied:
1. The internship, even though it includes actual operation of the facilities of the
employer, is similar to training which would be given in an educational
environment;
2. The internship experience is for the benefit of the intern;
3. The intern does not displace regular employees, but works under close
supervision of existing staff;
4. The employer that provides the training derives no immediate advantage from
the activities of the intern; and on occasion its operations may actually be
impeded;
5. The intern is not necessarily entitled to a job at the conclusion of the
internship; and
6. The employer and the intern understand that the intern is not entitled to wages
for the time spent in the internship.
Id.
The Plaintiffs frame this case as “a case of first impression . . . applying the criteria set
forth in [the Intern Fact Sheet] to the question of student athlete employee status for the first
time.” Dkt. 212 at 4. The problem with this framework is twofold: the Intern Fact Sheet is not
intended to apply to student athletes and, in any event, courts have refused to apply the test
contained in the Intern Fact Sheet even to interns.
First, the factors set forth in the Intern Fact Sheet were not designed to apply to student
athletes, and there is nothing to suggest that the Department of Labor intended them to be
applied outside of the internship context. The Plaintiffs argue that the criteria set forth in the
Intern Fact Sheet comprise “the relevant standard for determining employee status in an
educational setting,” Dkt. No. 212 at 10, but that argument wholly mischaracterizes the Intern
Fact Sheet, which, on its face, does not purport to address activities that take place “in an
8

educational setting” at all. Rather, it expressly addresses internship programs that take place at
the facilities of for-profit private sector employers.7 Unlike student athletes, the interns in such
programs are working (in the broadest sense of the word) for entities that employ others to do the
same type of work for compensation. Thus, they are in a traditional employment setting, not an
educational setting; in order for them not to be considered employees, there must be some way to
distinguish them from the employees with whom they may be working side-by-side.8
The test set forth in the Intern Fact Sheet has its origin in Walling v. Portland Terminal
Co., 330 U.S. 148 (1947), which involved railroad brakemen trainees who trained by working
side-by-side with experienced brakemen on operating trains. The Court recognized that the
extremely broad definition of “employ” in the FLSA could be read to cover virtually any
situation:
Section 3(g) of the Act defines “employ” as including “to suffer or permit to
work” and § 3(e) defines “employee” as “any individual employed by an
employer.” The definition “suffer or permit to work” was obviously not intended
to stamp all persons as employees who, without any express or implied
compensation agreement, might work for their own advantage on the premises of
another. Otherwise, all students would be employees of the school or college they
attended, and as such entitled to receive minimum wages. So also, such a
construction would sweep under the Act each person who, without promise or
expectation of compensation, but solely for his personal purpose or pleasure,
worked in activities carried on by other persons either for their pleasure or profit.
But there is no indication from the legislation now before us that Congress
intended to outlaw such relationships as these. The Act’s purpose as to wages was
to insure that every person whose employment contemplated compensation
7

Indeed, the first criteria set forth in the Intern Fact Sheet is that the internship “is similar
to training which would be given in an educational environment.”
8
The Plaintiffs argue that “the substance of the employee criteria set forth in DOL Fact
Sheet #71, or in the Second Circuit’s primary beneficiary test, matter far more than if one person
meeting such employee criteria is styled as an intern, work study participant or student athlete.”
Dkt. 236 at 2 n.1. That is true, to the extent that a person is in a position to which the Intern Fact
Sheet criteria are relevant; obviously, an employer could not avoid a rule that applied to interns
by calling all of its interns “student athletes.” But that begs the question of whether the test that
applies to interns at for-profit private sector employers is properly applied to student athletes,
given the many obvious, and material, differences between the two situations.
9

should not be compelled to sell his services for less than the prescribed minimum
wage. The definitions of “employ” and “employee” are broad enough to
accomplish this. But, broad as they are, they cannot be interpreted so as to make a
person whose work serves only his own interest an employee of another person
who gives him aid and instruction.
Portland Terminal, 330 U.S. at 152. In the case of the brakeman trainees, the Court found that
they were not employees of the railroad for FLSA purposes. In so finding, the Court noted
several facts that were relevant to its determination, including (1) the training was necessary
before a person could be hired as a brakeman, and “[a]n applicant for such jobs is never accepted
until he has had this preliminary training”; (2) the trainees did not displace any of the railroad’s
regular employees, “who do most of the work themselves, and must stand immediately by to
supervise whatever the trainees do”; (3) “[t]he applicant’s work does not expedite the company
business, but may, and sometimes does, actually impede and retard it”; (4) the training provided
by the railroad was the type that was provided by a vocational school; and (5) the trainees did not
expect to receive any compensation and would not necessarily be hired by the railroad after
successfully completing the training. Id. at 149-50.
In the Intern Fact Sheet, the DOL unequivocally acknowledges that some interns are
employees and some are not. It endeavors to distill the factors considered relevant by the
Supreme Court in Portland Terminal into a set of criteria to be applied to determine which
category a particular intern falls into. See Glatt v. Fox Searchlight Pictures, Inc., ____ F.3d
____, 2016 WL 284811 (July 2, 2015; amended Jan. 25, 2016) (“As DOL makes clear in its
[amicus] brief, its six-part test is essentially a distillation of the facts discussed in Portland
Terminal.”).9

9

The Plaintiffs inexplicably take certain Defendants to task for making an argument
relating to the Second Circuit’s holding in Glatt for the first time in their reply brief. See Dkt.
No. 218-1 at 3 (“In addition, Defendants Duke University and Wake Forest University,
10

That leads to the second problem with the Plaintiffs’ argument: appellate courts have
long eschewed the test set forth in the Intern Fact Sheet and instead read Portland Terminal to
require a more flexible test. Long before the Intern Fact Sheet was published, the same test was
set forth by the DOL in the Wage and Hour Division’s Field Operations Handbook as the test to
be used to determine whether a “trainee or student” was an employee. See Solis v. Laurelbrook
Sanitarium & School, Inc., 642 F.3d 518, 524 (6th Cir. 2011) (citing Employment Relationship
Under the Fair Labor Standards Act, WH Pub. 1297 (Rev. May 1980)).10 In Solis, the Sixth
Circuit found the test
to be a poor method for determining employee status in a training or educational
setting. For starters, it is overly rigid and inconsistent with a totality-of-thecircumstances approach, where no one factor (or the absence of one factor)
controls. See Rutherford Food [Corp. v. McComb], 331 U.S. [722,] 730 [1947]
(“We think, however, that the determination of the relationship does not depend
on such isolated factors but rather upon the circumstances of the whole activity.”).
Moreover, at least one court has found the test’s all-or-nothing approach
inconsistent with prior [DOL] interpretations and opinions endorsing a flexible
approach, thereby diminishing any persuasive force the test might be entitled to
under Skidmore [v. Swift & Co., 323 U.S. 134 (1944)].11 See [Reich v. Parker
Fire Protection Dist., 992 F.2d [1023,] 1026 [10th Cir. 1993]. Furthermore, the
test is inconsistent with Portland Terminal itself, which, as outlined below,
suggests that the ultimate inquiry in a learning or training situation is whether the

represented by Ogletree Deakins, assert in their Reply Brief, at 2, for the first time, that the
Second Circuit’s recent ruling in [Glatt], referenced in Plaintiffs’ [First] Notice of Supplemental
Authority, forecloses collective certification.”). In light of the fact that the opinion was handed
down by the Second Circuit only twelve days prior to the date the reply brief at issue was filed,
and some two months after the Defendants’ original briefs were filed, it is difficult to see how
the Defendants could have been expected to make the argument any earlier.
10
The same standards for “trainees and student-trainees” is found in the Wage & Hour
Div., U.S. Dep’t of Labor, Field Operations Handbook Ch. 10, ¶ 10b11 (Oct. 20, 1993),
http://www.dol.gov/whd/FOH/FOH_Ch10.pdf.
11
In Skidmore, the Supreme Court established the rule that nonregulatory guidelines of
agencies such as the DOL, “while not controlling upon the courts by reason of their authority, do
constitute a body of experience and informed judgment to which courts and litigants may
properly resort for guidance. The weight of such judgment in a particular case will depend upon
the thoroughness evident in its consideration, the validity of its reasoning, its consistency with
earlier and later pronouncements, and all those factors which give it power to persuade, if
lacking power to control.” 323 U.S. at 140.
11

employee is the primary beneficiary of the work performed. While the Secretary’s
six factors may be helpful in guiding that inquiry, the Secretary’s test on the
whole is not.
Solis, 642 F.3d at 525 (6th Cir. 2011) (footnote added). The Sixth Circuit, like the Tenth Circuit
before it, declined to follow the test established by the DOL. The Sixth Circuit held that
the proper approach for determining whether an employment relationship exists in
the context of a training or learning situation is to ascertain which party derives
the primary benefit from the relationship. Factors such as whether the relationship
displaces paid employees and whether there is educational value derived from the
relationship are relevant considerations that can guide the inquiry. Additional
factors that bear on the inquiry should also be considered insofar as they shed
light on which party primarily benefits from the relationship.
Id. at 529. Other courts have similarly refused to follow the DOL’s test in favor of a more
flexible primary benefit test for determining whether a trainee is an employee under the FLSA.
See Schumann v. Collier Anesthesia, P.A., 803 F.3d 1199 (11th Cir. 2015) (collecting cases).
The Intern Fact Sheet took the trainee test at issue in Solis and applied it—without
material modification—to interns in the for-profit private sector. In Glatt, the Second Circuit,
like the Sixth Circuit in Solis, rejected the DOL’s rigid approach. The court first noted that
“[u]nlike an agency’s interpretation of ambiguous statutory terms or its own regulations, an
agency has no special competence or role in interpreting a judicial decision” and therefore the
DOL’s interpretation of Portland Terminal was entitled to, at most, Skidmore deference “to the
extent we find it persuasive.” Glatt, 2016 WL 284811 at *5 (citation omitted). It then found it
not persuasive because “the DOL test attempts to fit Portland Terminal’s particular facts to all
workplaces, and because the test is too rigid for our precedent to withstand.” Id.
Instead of applying the test set forth in the Intern Fact Sheet, the Second Circuit held that
“the proper question is whether the intern or the employer is the primary beneficiary of the

12

relationship” and set forth the following “set of non-exhaustive factors” to be used to answer that
question:
1. The extent to which the intern and the employer clearly understand that there
is no expectation of compensation. Any promise of compensation, express or
implied, suggests that the intern is an employee—and vice versa.
2. The extent to which the internship provides training that would be similar to
that which would be given in an educational environment, including the
clinical and other hands-on training provided by educational institutions.
3. The extent to which the internship is tied to the intern’s formal education
program by integrated coursework or the receipt of academic credit.
4. The extent to which the internship accommodates the intern’s academic
commitments by corresponding to the academic calendar.
5. The extent to which the internship’s duration is limited to the period in which
the internship provides the intern with beneficial learning.
6. The extent to which the intern’s work complements, rather than displaces, the
work of paid employees while providing significant educational benefits to the
intern.
7. The extent to which the intern and the employer understand that the internship
is conducted without entitlement to a paid job at the conclusion of the
internship.
Glatt, 2016 WL 284811 at *6-7.
Even more recently than Glatt, and, indeed, after the briefing of the instant motions was
complete, the Eleventh Circuit examined the application of the DOL’s test for trainees in
Schumann, 803 F.3d 1199. Like the courts before it, the Eleventh Circuit
[did] not defer to this test because, with all due respect to the DOL and the
important work that it does, we do not find it persuasive. First, “an agency has no
special competence or role in interpreting a judicial decision.” Glatt
v. Fox Searchlight Pictures, Inc., 791 F.3d 376, 383 (2d Cir.2015) (citation
omitted). Second, as the Second Circuit has observed, the test “attempts to fit
Portland Terminal’s particular facts to all workplaces, and ... is too rigid....” Id.
Third, while some circuits have given some deference to the test, no circuit has
adopted it wholesale and has deferred to the test’s requirement that “all” factors
be met for a trainee not to qualify as an “employee” under the FLSA. In short,
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we prefer to take our guidance on this issue directly from Portland Terminal and
not from the DOL’s interpretation of it.
Schumann, 803 F.3d at 1209. Schumann involved a clinical program for student registered nurse
anesthetists that fulfilled a requirement under Florida law for the students to eventually become
certified registered nurse anesthetists. Both the court in Glatt and the court in Schumann
recognized that the facts of Portland Terminal—a 68-year-old case—“do not necessarily reflect
the role of internships in today’s economy,” the latter a bit more colorfully:
We add to these points the significant fact that the training involved in Portland
Terminal was not a universal requirement for a particular type of educational
degree or for professional certification or professional licensure in the
field. Instead, the Portland Terminal training was offered by a company for its
own, specific purposes, to create a ready labor pool for itself. So trying to
evaluate the program at issue here by comparing it to all of the facts from
Portland Terminal that were relevant and helpful to assessing the training
program at issue in that case, is like trying to use a fork to eat soup. Like the fork
and the spoon, the training at issue in Portland Terminal and in the case under
review have similarities and may be in the same general category (eating
utensils and training programs). But comparison to the facts from Portland
Terminal alone can cover the gamut of relevant considerations in a case like the
one before us no better than a fork can do a spoon’s job in ladling soup.
Schumann, 803 F.3d at 1210-11. The court then went on to adopt the factors set forth by the
Second Circuit in Glatt, which it found “effectively tweak the Supreme Court’s considerations in
evaluating the training program in Portland Terminal to make them applicable to modern-day
internships like the type at issue here” and noting that
[u]nder the Second Circuit’s approach, “no one factor is dispositive and every
factor need not point in the same direction for the court to conclude that the intern
is not an employee....” Rather, courts must engage in a “weighing and balancing
[of] all of the circumstances,” including, where appropriate, other considerations
not expressed in the seven factors.
Id. at 1212 (quoting Glatt, 791 F.3d at 384).
Although there does not appear to be any Seventh Circuit case on this precise issue, the
consistent holdings of other circuits convince the Court that the Plaintiffs’ position in this case is
14

untenable. The Intern Fact Sheet test is not a proper distillation of Portland Terminal; rather,
that case requires a flexible approach that considers the totality of the circumstances.
Accordingly, there is not even one set of immutable factors that applies to all interns in all
situations, and there is certainly not one test that applies equally to interns and student athletes.
C. The Proper Inquiry
The Seventh Circuit’s general approach to determining who is an employee under the
FLSA is also a flexible one. In Vanskike, 974 F.2d at 808, for example, the Seventh Circuit held
that the four-factor test that had been applied by other courts to determine if prisoners working
for outside employers were employees for FLSA purposes was not appropriate in the context of
work done by prisoners within the prison because the two situations were “quite different.”
Those factors, the court said, “primarily shed light on just one boundary of the definition of
‘employee,’ and we are concerned with a different boundary.” Id. at 809. Accordingly, the
Seventh Circuit examined the economic reality of the situation at hand and determined that
prisoners working within a prison as part of their sentences are simply not employees under the
FLSA. The fact that a literal application of the four-factor test would point to a different result
was not relevant because those factors “fail to capture the true nature of the relationship”
between a prison and prisoners who work in it.
So, too, do the factors used in the trainee and private-sector intern context fail to capture
the nature of the relationship between the Plaintiffs, as student athletes, and Penn. The Supreme
Court has recognized that there exists in this country a “revered tradition of amateurism in
college sports,” National Collegiate Athletic Ass’n v. Board of Regents of Univ. of Okla., 468
U.S. 85, 120 (1984), a fact that cannot reasonably be disputed. That tradition is an essential part
of the “economic reality” of the relationship between the Plaintiffs and Penn. So, too, is the fact

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that generations of Penn students have vied for the opportunity to be part of that revered tradition
with no thought of any compensation.12 This demonstrates unequivocally that the students at
Penn who choose to participate in sports—whether NCAA sports, club sports, or intramural
sports—as part of their educational experience do so because they view it as beneficial to them.
Indeed, millions of Americans participate in amateur sports in countless contexts; they do so for
myriad reasons, none of them, by definition, involving monetary compensation, but all of them,
it is fair to assume, involving benefit of some sort to the participants—enough benefit to justify
the amount of effort the participants choose to put into it.
Also supporting a finding that student athletes are not employees for FLSA purposes is
the fact that the existence of thousands of unpaid college athletes on college campuses each year
is not a secret, and yet the Department of Labor has not taken any action to apply the FLSA to
them. Cf. Yi v. Sterling Collision Ctrs., Inc., 480 F.3d 505, 510-11 (7th Cir. 2007) (“The system
of compensation used by Sterling is industry-wide, and of long standing. . . . It is possible for an
entire industry to be in violation of the Fair Labor Standards Act for a long time without the
Labor Department noticing. But a more plausible hypothesis is that the auto repair industry has
been left alone because the character of its compensation system has been recognized for what it
is—a bona fide commission system.”). To the contrary, the DOL has expressly taken the
position that
[a]s part of their overall educational program, public or private schools and
institutions of higher learning may permit or require students to engage in
activities in connection with dramatics, student publications, glee clubs, bands,
choirs, debating teams, radio stations, intramural and interscholastic athletics and
other similar endeavors. Activities of students in such programs, conducted
12

In addition to not being paid wages, students at Penn and other Ivy League schools do
not receive athletic scholarships. See http://www.sfs.upenn.edu/paying/paying-grantsscholarships.htm (“Like other Ivy League schools, Penn does not award scholarships based on
academic or athletic merit.”) (last visited Feb. 16, 2016).
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primarily for the benefit of the participants as part of the educational opportunities
provided to the students by the school or institution, are not “work” [under the
FLSA] and do not result in an employee-employer relationship between the
student and the school or institution. Also, the fact that a student may receive
minimal payment for participation in such activities would not necessarily create
an employment relationship.
U.S. Department of Labor, Wage and Hour Division, Field Operations Handbook § 10b03(e)
(Oct. 20, 1993) (“§ 10b03(e)”). The Plaintiffs argue that the DOL did not intend for this to apply
to NCAA regulated sports:
[O]n its face, [§ 10b03(e)] neither mentions NCAA regulated sports in name, nor
by example, although NCAA regulated sports were inarguably sufficiently
popular, and well-recognized, in 1993 to bear such mentioning if intended. In
fact, deductive reasoning suggests that NCAA regulated sports were clearly not
intended to be covered by [§ 10b03(e)] and Defendants have offered no
evidence13 to contradict that fact as alleged in the Amended Complaint.
Dkt. No. 212 at 5-6 (emphasis in original).14 While § 10b03(e) is not dispositive of the issue, the
Court disagrees with the Plaintiffs’ “deductive reasoning.” “Interscholastic” means “existing or
done between schools.” Merriam-Webster (2016) http://www.merriam-webster.com/
dictionary/interscholastic. NCAA regulated sports fall squarely within that definition. Given the
popularity of NCAA regulated sports, the DOL could not have contemplated the issue of
students engaging in sports on college campuses without being aware that many of the students
engaged in “interscholastic sports” are NCAA athletes. Therefore, it is logical to infer that if the

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It is not clear why the Plaintiffs believe the Defendants had an obligation—or indeed an
opportunity—to offer evidence in conjunction with their motion to dismiss for failure to state a
claim.
14
The Plaintiffs discuss many ways in which they believe things like choirs and
intramural sports are different from NCAA sports. The activities listed in § 10b03(e) are all
different from one another, and all of them—including sports—can be pursued on college
campuses with widely varying degrees of structure, commitment, and oversight by and support
of the schools themselves. The DOL undoubtedly knew this when it determined that participants
in all such extra-curricular activities were not employees under the FLSA. If variables like staff
oversight, the availability of credit, and compulsory attendance were relevant to the inquiry, it is
reasonable to assume that the DOL would have said so.
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DOL did not mean to include those athletes, but was speaking only of athletes engaged in other
types of interscholastic sports, it would have said so.
The economic reality of the situation and the DOL’s position on the issue both point to
one conclusion: the fact that the Plaintiffs participate in an NCAA athletic team at Penn does not
make them employees of Penn for FLSA purposes. Because the Court has made this
determination as a matter of law, rather than on the basis of a deficiency in the facts pled by the
Plaintiffs, it would be futile to permit the Plaintiffs to amend their complaint to assert additional
facts. Accordingly, the Court will enter judgment in favor of Penn.
IV. CONCLUSION
The Defendants’ motions to dismiss (Dkt. Nos. 178, 180, 182) are GRANTED as to all
Defendants that have not been dismissed by the Plaintiffs.15 The Plaintiffs’ claims against
Defendant the University of Pennsylvania are DISMISSED WITH PREJUDICE, and the
Plaintiffs’ claims against all remaining Defendants are DISMISSED WITHOUT PREJUDICE
for lack of subject matter jurisdiction. The Defendants’ motions for oral argument (Dkt. Nos.
181 and 191) are DENIED. The Plaintiffs’ motion for leave to file a surreply (Dkt. No. 218) is
DENIED. The motions to strike filed by Defendants Duke University and Wake Forest
University (Dkt. Nos. 173 and 174) are DENIED AS MOOT. In light of these rulings, the
Plaintiffs’ motion to conditionally certify a class (Dkt. No. 234) is DENIED AS MOOT.

15

All of the remaining Defendants have either filed a motion to dismiss or joined in the
motions filed by other Defendants.
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SO ORDERED: 2/16/16
_______________________________
Hon. William T. Lawrence, Judge
United States District Court
Southern District of Indiana

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