R. Alexander Acosta v. Cathedral Buffet
Opinion of the Court
SILER, J., delivered the opinion of the court in which KETHLEDGE and THAPAR, JJ., joined. KETHLEDGE, J. (pp. 768-70), delivered a separate concurring opinion.
*763The Grace Cathedral church operates a restaurant on its Cuyahoga Falls, Ohio, campus called Cathedral Buffet. For many years, Cathedral Buffet was open to the public and was partially staffed by unpaid church members. Following a Department of Labor (DOL) suit and a bench trial, the district court found that the restaurant's use of unpaid labor violated the minimum wage requirement of the Fair Labor Standards Act (FLSA).
However, to be considered an employee within the meaning of the FLSA, a worker must first expect to receive compensation. Tony & Susan Alamo Found. v. Sec'y of Labor ,
I.
Cathedral Buffet is organized as an Ohio for-profit corporation. The restaurant's sole shareholder is Grace Cathedral, Inc., a 501(c)(3) non-profit religious organization. Despite its for-profit status, Cathedral Buffet does not generate a profit, and Grace Cathedral subsidizes the restaurant.
The DOL's Wage and Hour Division began investigating Cathedral Buffet in 2014, reviewing the restaurant's employment practices for a period stretching back two years.
Reverend Angley recruited volunteers from the church pulpit on Sundays. Sonya Neale, the restaurant's manager, would tell Angley when the restaurant was shorthanded, and before his sermon, Angley would announce to the congregation that more volunteers were needed. Angley said the restaurant was "the Lord's buffet," and "[e]very time you say no, you are closing the door on God." He suggested that church members who repeatedly refused to volunteer at the restaurant were at risk of "blaspheming against the Holy *764Ghost," which was an unforgivable sin in the church's doctrine. Ushers would pass around slips of paper, and parishioners interested in volunteering would write down their phone number and hand it in.
Church members would then receive calls from Cathedral Buffet managers, and sometimes Angley himself, asking them to volunteer. The managers would work around the volunteers' schedules, ensuring they were free during their assigned shifts. Managers were instructed to tell prospective volunteers that Angley would find out if they refused to work. According to church member Alishea Gay, on one occasion when she did not return a phone call, Angley called her directly and asked her to work. Gay agreed to work because she "feared failing God."
The DOL filed suit after concluding Cathedral Buffet violated the FLSA by using unpaid volunteers and by failing to keep records of the hours they worked. After a three-day bench trial, the district court issued its Findings of Fact and Conclusions of Law. Hugler v. Cathedral Buffet , No. 5:15-CV-1577,
Because Cathedral Buffet failed to keep accurate records, the district court adopted the DOL's estimate of the volunteers' back wages, $194,253.95. Id. at *15. The district court also awarded the DOL an equal amount of liquidated damages, for a total of $388,507.90, because Cathedral Buffet failed to demonstrate a good faith effort to comply with the FLSA. Id. at *15-16. Finally, the court enjoined Cathedral Buffet and Angley from further violations of the FLSA and ordered that they "shall not solicit or coerce ... any employee-including those workers classified as 'volunteers'-to return or to offer to return to the Defendants or to someone else on behalf of the Defendants any money" awarded to the employee by the judgment. This appeal followed.
II.
Following a bench trial, "we review a district court's factual findings for clear error and its legal conclusions de novo." Muniz-Muniz v. United States Border Patrol ,
*765(citations and internal quotation marks omitted).
III.
A.
The FLSA mandates that "[e]very employer shall pay to each of his employees who ... is employed in an enterprise engaged in commerce or in the production of goods for commerce" a minimum wage set by Congress.
The FLSA defines an "employee" as "any individual employed by an employer,"
To determine whether a worker is an FLSA employee, we typically look to the economic realities of the business relationship in light of all the relevant factors. See, e.g. , Ellington v. City of East Cleveland ,
There, the Tony and Susan Alamo Foundation, a non-profit religious organization, operated a number of commercial businesses to support its ministry.
The Supreme Court held that the associates were entitled to minimum wage under the FLSA. First, the Court found that the Foundation was a covered enterprise under the Act because its "businesses serve[d] the general public in competition with ordinary commercial enterprises."
The Alamo Court also concluded that the Foundation's associates were employees within the meaning of the FLSA.
Important for our purposes, the Alamo Court rejected the Foundation's argument that requiring it to pay the associates would chill other volunteer activities normally associated with religious organizations. The Court wrote that "[t]he Act reaches only the 'ordinary commercial activities' of religious organizations, and only those who engage in those activities in expectation of compensation."
In this case, although Cathedral Buffet stresses its religious nature, it does not contest the district court's determination that the restaurant is an FLSA "enterprise" because it engages in competitive commercial activity. Instead, Cathedral Buffet argues that its volunteers are distinguishable from the associates in Alamo because they did not expect to receive any type of compensation. Under Cathedral Buffet's reading of Alamo , to find that its volunteers are FLSA employees, we must first find that they worked "in expectation of compensation."
We agree that a volunteer's expectation of compensation is a threshold inquiry that must be satisfied before we assess the economic realities of the working relationship. The Supreme Court held as much in Portland Terminal when it defined a volunteer as a "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." Portland Terminal ,
In the past, we have stressed that "[t]he issue of the employment relationship does not lend itself to a precise test, but is to be determined on a case-by-case basis upon the circumstances of the whole business activity." Mendel ,
They did not. It is undisputed that the volunteers were not economically dependent upon Cathedral Buffet in any way; the parties stipulated as much before trial. The volunteers neither expected nor received any wages or in-kind benefits in exchange for their service. They were not even allowed to accept tips from customers. Put simply, there was no economic relationship between the restaurant and the church member volunteers. Because the volunteers did not work in expectation of compensation, the threshold remuneration requirement fails.
B.
Cathedral Buffet says this should be the end of the story-because the volunteers did not expect to be compensated, they cannot be FLSA employees. The DOL contends, however, that a showing of coercion can satisfy the expectation-of-remuneration requirement. And because the district court found that the volunteers were coerced, it argues, the volunteers are employees, despite their lack of actual or expected compensation.
The DOL's argument finds some support in the Alamo decision. The Court expressed concern that allowing workers to opt out of FLSA protection would open the door to coercion: "If an exception to the Act were carved out for employees willing to testify that they performed work 'voluntarily,' " the Court said, "employers might be able to use superior bargaining power to coerce employees to make such assertions, or to waive their protections under the Act." Alamo ,
We agree that in some circumstances, a showing of coercion might be sufficient to overcome a volunteer's lack of expected compensation and bring her within the protections of the FLSA. But those circumstances are not present in this case. The type of coercion with which the FLSA is concerned is economic in nature, not societal or spiritual.
Congress's primary goal in enacting the FLSA "was to eliminate, as rapidly as practicable, substandard labor conditions throughout the nation." Powell v. U.S. Cartridge Co. ,
The Tenth Circuit's recent decision in Acosta v. Paragon Contractors Corp. ,
Because we hold that spiritual coercion cannot stand in for the economic coercion that the FLSA and the Alamo decision require, we need not decide whether the district court erred by finding that the Cathedral Buffet volunteers were actually coerced.
C.
The DOL suggests that allowing Cathedral Buffet to rely on unpaid labor gives it an unfair advantage over other restaurants in the Cuyahoga Falls area. That may very well be the case. But the Alamo decision also counsels us to accommodate the "ordinary volunteerism" in which many organizations like Grace Cathedral engage. Alamo ,
IV.
Because the district court erred by finding that the church member volunteers were FLSA employees, its judgment must be reversed on that basis. We need not reach Cathedral Buffet's arguments regarding the Free Exercise Clause, see Bond v. United States , --- U.S. ----,
REVERSED and REMANDED.
Prior to Cathedral Buffet's incorporation in 2013, Winston Broadcasting Network, Inc. owned Cathedral Buffet. Grace Cathedral is also the sole shareholder of Winston Broadcasting Network. The district court found that, despite this change in ownership, "[m]any aspects of the Buffet have remained constant for the past nineteen years," and imposed liability upon Cathedral Buffet, Inc. as Winston Broadcasting's successor-in-interest. Cathedral Buffet does not raise successor liability as an issue on appeal.
The 2014 investigation was not Cathedral Buffet's first encounter with the DOL. In 1999, the agency alleged the restaurant had committed many of the same FLSA violations. The parties settled the 1999 case, and Cathedral Buffet agreed to pay $37,037.28 in back wages and not to violate the FLSA in the future. For a time following the 1999 investigation, volunteers were issued checks for their work at the restaurant. However, several volunteers testified that they were required to endorse and return the checks to Grace Cathedral's secretary. DOL investigators returned to Cathedral Buffet in 2003 as part of the agency's recidivism initiative and found no violations.
Concurring Opinion
One hopes that the Department of Labor simply failed to think through its position *769in this case. Since initiating this litigation in 2015, the Department has argued, and the district court held, that volunteers at the Cathedral Buffet were in fact employees under the Fair Labor Standards Act-because, the Department says, their pastor spiritually "coerced" them to work there. That argument's premise-namely, that the Labor Act authorizes the Department to regulate the spiritual dialogue between pastor and congregation-assumes a power whose use would violate the Free Exercise Clause of the First Amendment.
By way of background, the Grace Cathedral Church operated the Cathedral Buffet, a nominally for-profit corporation that in fact never turned a profit, and that the church heavily subsidized (by more than $1 million between 2012-16). Instead, the record makes clear, the Buffet's purpose was to allow the church's members to proselytize among local residents who dined there. Although the Buffet had 35 full-time paid employees-all of whom, incidentally, have lost their jobs as a result of this lawsuit, see Gov't Br. at 36 & n.13-much of its work was performed by volunteers from the congregation.
In the district court, the Department obtained injunctive relief and about $388,000 in damages on the theory that these congregants were employees (rather than volunteers) under the Act. Normally that determination is governed by economic criteria: whether the workers are economically dependent upon the defendant, whether the defendant can hire or fire them, whether the defendant substantially controls the terms and conditions of the work. See Ellington v. City of East Cleveland ,
One can agree that the Reverend's comments were in poor taste, and yet see that the Department has no business regulating them. For the power that the Department purports to exercise here is out of bounds even under Employment Div. v. Smith ,
*770Church of the Lukumi Babalu Aye, Inc. v. City of Hialeah ,
Nor is the Department even competent to make the spiritual judgment it purported to make here. "It is not within the judicial ken to question the centrality of particular beliefs or practices to a faith, or the validity of particular litigants' interpretations of those creeds." Hernandez v. Comm'r of Internal Revenue ,
Thus, the coercion that matters is not anything that Rev. Angley said to his congregation on a Sunday morning. What matters, rather, is the Department's own attempt to coerce religious leaders-of any faith-not to exhort their followers on spiritual grounds to engage in conduct that is otherwise legal. For "the Free Exercise Clause protects against indirect coercion or penalties on the free exercise of religion, not just outright prohibitions." Trinity Lutheran Church of Columbia, Inc. v. Comer , --- U.S. ----,
What is perhaps most troubling about the Department's position in this case, however, is the conceit of unlimited agency power that lies behind it. The power of a federal agency is no more than worldly. The Department should tend to what is Caesar's, and leave the rest alone.
Reference
- Full Case Name
- R. Alexander ACOSTA, Secretary of Labor, Plaintiff-Appellee, v. CATHEDRAL BUFFET, INC.; Ernest Angley, Defendants-Appellants.
- Cited By
- 14 cases
- Status
- Published