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Berger v. National Collegiate Athletic Association

United States Court of Appeals, Seventh Circuit

December 5, 2016

Gillian Berger, et al., Plaintiffs-Appellants,
v.
National Collegiate Athletic Association, et al., Defendants-Appellees.

          Argued September 28, 2016

         Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. 14-cv-1710 - William T. Lawrence, Judge.

          Before Kanne, Sykes, and Hamilton, Circuit Judges.

          Kanne, Circuit Judge.

         Former student athletes at the University of Pennsylvania ("Penn") sued Penn, the National Collegiate Athletic Association ("NCAA"), and more than 120 other NCAA Division I universities and colleges alleging that student athletes are employees who are entitled to a minimum wage under the Fair Labor Standards Act ("FLSA"). The district court disagreed. We agree with the district court and hold that student athletes are not employees and are not covered by the FLSA.

         I. Background

         Gillian Berger and Taylor Hennig ("Appellants") are former students at Perm who participated on Penn's women's track and field team. Like many collegiate athletic teams across the country, Penn's women's track and field team is regulated by the NCAA. The NCAA is a member-driven, unincorporated association of 1121 colleges and universities. It is divided into three divisions-Divisions I, II, and III- based roughly on the size of the schools and their athletic programs. Penn's women's track and field team competes in Division I, which includes the largest colleges and universities in the country.

         Appellants sued Penn, the NCAA, and more than 120 other NCAA Division I member schools ("Appellees"), alleging that student athletes are "employees" within the meaning of the FLSA, 29 U.S.C. § 201. Accordingly, Appellants contend that the NCAA and its member schools violated the FLSA by not paying their athletes a minimum wage. Appellees moved to dismiss under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6).

         The district court granted Appellees' motions, holding that (1) Appellants lacked standing to sue any of the Appellees other than Penn, and (2) Appellants failed to state a claim against Penn because student athletes are not employees under the FLSA. This appeal followed.

         II. Analysis

         The district court first dismissed Appellants' suit against all of the Appellees except Penn for lack of standing. We review de novo a district court's dismissal of a complaint for lack of standing. Lewert v. P.F. Chang's China Bistro, Inc., 819 F.3d 963, 966 (7th Cir. 2016).

         In every case, the plaintiff has the burden of establishing the three elements of standing: that "(1) [he or she] has suffered an 'injury in fact' that is (a) concrete and particularized and (b) actual or 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." Friends of the Earth, Inc. v. Laidlaw Envtl. Sews. (TOO, Inc., 528 U.S. 167, 180-81 (2000) (citing Lujan v. Defs. of Wildlife, 504 U.S. 555, 560-61 (1992)). To meet this burden and to survive a challenge to standing under Rule 12(b)(1), a plaintiff must plead sufficient factual allegations, taken as true, that "plausibly suggest" each of these elements. Silha v. ACT, Inc., 807 F.3d 169, 174 (7th Cir. 2015).

         Under the FLSA, alleged employees' "injuries are only traceable to, and redressable by, those who employed them." Roman v. Guapos III, Inc., 970 F.Supp.2d 407, 412 (D. Md. 2013). Appellants attended Penn. Their connection to the other schools and the NCAA is far too tenuous to be considered an employment relationship: "the only fair reading of the Amended Complaint is that [Appellants] are alleging that they are employees of only Penn, not of the other Defendants." (R. 238 at 5.) Thus, Appellants have not plausibly alleged any injury traceable to, or redressable by, any defendant other than Penn. So they lack standing to sue those other defendants.

         We now turn to the merits with regard to Penn, over which no one disputes that we have jurisdiction. The district court dismissed Appellants' suit against Penn for failure to state a claim. We review de novo a district court's dismissal of a complaint for failure to state a claim. Jackson v. Blitt & Gaines, P.C., 833 F.3d 860, 862 (7th Cir. 2016). In evaluating the sufficiency of the complaint, "we construe it in the light most favorable to the nonmoving party, accept well-pleaded facts as true, and draw all inferences in [the nonmoving party's] favor." Bell v. City of Chicago,835 F.3d 736, 738 (7th Cir. 2016) (quoting Reynolds v. CB Sports Bar, Inc.,623 F.3d 1143, 1146 (7th Cir. 2010)). Although a party need not plead "detailed factual allegations" to survive a motion to dismiss, mere "labels and conclusions" or "a formulaic recitation of the elements of a cause of action will not do." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). Instead, "To survive a motion to dismiss, a ...


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