Over the past month the legal world and the endurance sports world have been on quite the collision course (a prime example being Ironman’s settlement with the Department of Justice over the Kona lottery). It appears that there will be more legal scuffles in the future, especially given the recent decision in the case of Liebesman v. Competitor Group Inc., E.D. Mo. 4:14-cv-01653-RLW.
To provide some short background (you can find more in depth background here, here and here ), on September 23, 2014, Yvette Liebesman, a “volunteer” at St. Louis Rock ‘n’ Roll Half Marathon, filed a collective and class action in the Eastern District of Missouri against Competitor Group, the for-profit corporation that owns and operates the Rock ‘n’ Roll marathon series.
Liebesman’s Complaint alleges the following:
- She “volunteered” as a bicycle escort for the 2012 St. Louis Rock ‘n’ Roll Marathon;
- As a bicycle escort she was required to stay with her selected runner throughout the race, to report problems and the progress to race officials and to “provide a layer of safety to prevent pedestrians from crossing directly in front of runners;”
- While “volunteers” designated a charity for which they were volunteering, these charities paid Competitor Group for the privilege of being an official race charity and that Competitor Group “employs the Official Charities to create an impression in individuals who might provide it labor and the public that its events are not-for-profit and that it is a not-for-profit organization. Instead the Official Charities are both a revenue stream and a veneer for recruiting free labor for Defendant;” and
- These practices violate both the Fair Labor Standards Act (“FLSA”) and various states’ minimum wage laws including Arizona, Colorado, Florida, Illinois, Missouri, Nevada, Oregon, Rhode Island, Washington and the District of Columbia.
In response to the Complaint, Competitor Group filed a motion to dismiss. The purpose of a motion to dismiss is to have the court dismiss the case “as a matter of law” — motions to dismiss are granted when, even if all the facts in the Complaint are true, those alleged facts are not sufficient to support a lawsuit. Competitor Group had two arguments in support of their motion to dismiss:
- Because each Rock ‘n’ Roll marathon event takes place on a single day, in separate locations, the entire collection of events fall into the “amusement or recreational” exception to the FLSA. To qualify for this exception Competitor Group must show that, based on the allegations in Liebesman’s Complaint, Rock ‘n’ Roll marathon events are: (1) amusement or recreational; (2) separate establishments; and (3) operate for seven or less months per year; and
- Liebesman and her fellow “volunteers” are not employees for the purposes of the FLSA because they had no expectation of compensation.
After briefing by both Liebesman and Competitor Group, on May 11, 2015 Judge Ronnie L. White rejected both of Competitor Group’s arguments, denied Competitor Group’s motion to dismiss and ordered that the case proceed to discovery. Judge White found that both that “amusement or recreational” exception and whether “volunteers” are employees are fact intensive inquires and “that discovery and development of the factual record is necessary.” This essentially means that the Judge agreed that it is possible for “volunteers,” such as Liebesman, to file lawsuits against for-profit race directing companies — whether or not she will ultimately succeed, is a different question (it should also be noted that this decision applies to for-profit races; it does not apply to not-for-profit races).
Judge White’s decision is non-appealable and Competitor Group now has the choice of either proceeding forward with discovery (an expensive process where Liebesman’s attorneys will be able to request a wide variety of documents from Competitor Group and take the depositions of Competitor Group executives and employees) or trying to settle the case to avoid disclosure of potentially problematic records and the creation of additional case law that can be used against other for-profit race management companies.
What does this mean for other for-profit race directing companies such as Ironman, Challenge and Ragnar? First and foremost that “as a matter of law” so-called volunteers can bring viable law suits against for-profit race management companies (at least in the Eastern District of Missouri – only time will tell what may happen in other districts or circuits). It also means that for-profit race management companies should take a hard look at their current practices to determine if they have potential liability under both federal and state wage and hour laws and whether there is anything they can do to help limit that liability.