New Orleans Hornets on Losing End of Overtime Lawsuit

Oct 10, 2008

A federal judge has granted summary judgment to a group of former employees of the New Orleans Hornets, finding that they were entitled to compensation for unpaid overtime under the Fair Labor Standards Act (FLSA).
The team had argued that it was not liable to the plaintiffs because it is exempt under the Seasonal Amusement and Recreation Exemption of the FLSA. There were two ways for the Hornets to secure that exemption: “if (A) it does not operate for more than seven months in any calendar year, or (B) during the preceding calendar year, its average receipts for any six months of such year were not more than 33 1/3 per centum of its average receipts for the other six months of such year.”
In its analysis, the court noted that the FLSA exempts “amusement or recreational establishments that operate for fewer than eight months per year from its requirements. Bridewell v. The Cincinnati Reds, 68 F.3d 136 (6th Cir. 1995), cert. denied, 516 U.S. 1172, 116 S. Ct. 1263, 134 L. Ed. 2d 211 (1996).
“In Bridewell,” however, “the Sixth Circuit found that a major league baseball team was a year-round operation, despite the fact that they did not provide ‘amusement and recreation’ year-round. Id. at 138-139. Additionally, the court opined that ‘the fact that the Reds employ 120 year-round workers compels the conclusion that they operate year-round. Id.’
“The Hornets admit that they employ over 100 personnel in year round positions. (Exhibit 2, Declaration of Pat McKinney). In addition, the NBA regular season typically begins in October and ends in April; in combination with pre-season and post-season games, the Hornets have the opportunity to participate in games for nine months each year. Finally, the NBA draft occurs each June; thus, the Hornets operate in the summer even when they do not make the playoffs … . Consequently, the Court finds that the Hornets are a year-round operation, and thus, cannot qualify for the exemption under 29 U.S.C. § 213 (a)(3)(A).”
Turning to the “average receipts” test in § 213(a)(3)(B), the court found that “under a plain reading of the statutory language, accrual-based financial information could not be used to satisfy the ‘average receipts’ test; thus, the employer did not qualify for the exemption because its average receipts for its lowest six months were greater than 33 1/3 percent of its average receipts for the other six months. The employer also failed to show that it was an exempt retail or service establishment under 29 U.S.C.S. § 207(i), as interpreted by § 213(a)(2), because the franchise ‘manufactured’ the product it sold, sports entertainment, and was not at the end of the stream of distribution.”
Eugene Liger, et al v. New Orleans Hornets NBA Limited Partnership; E.D. La.; Civil Action No. 05-1969; 2008 U.S. Dist. LEXIS 52585; 7/10/08
Attorneys of record: (for plaintiffs) Daniel Edwin Buras, Jr., LEAD ATTORNEY, Elvige Cassard Richards, Howard J. Daigle, Jr., Michael David Fisse, Daigle Fisse & Kessenich, Covington, LA; Karen M. Fontana, Niles, Bourque & Fontana, LLC, New Orleans, LA. (for defendant) Jennifer Lynn Anderson, LEAD ATTORNEY, Jones Walker (Baton Rouge), Baton Rouge, LA; Jane Henican Heidingsfelder, Robert B. Worley, Jr., Jones Walker (New Orleans), New Orleans, LA.


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