UNIVERSITY CITY, Mo. (BRAIN) — A Missouri woman has filed a lawsuit against Competitor Group Inc. (CGI) and its series of Rock ’n’ Roll marathons and half-marathons that could upend how the company does business.
Yvette Joy Liebesman claims that organizers of the St. Louis Rock ’n’ Roll Marathon recruited her and others to volunteer as race supporters under the notion they were providing a community service for a variety of charity groups.
In an 18-page lawsuit filed Sept. 23 in U.S. District Court for the Eastern District of Missouri, Liebesman claims CGI, using the veneer of community service, exploited volunteer labor and avoided paying minimum wages to upwards of 1,000 volunteers who have worked at least 24 such events over the past two years.
Liebesman claims that for-profit companies like CGI must pay volunteers a minimum wage, and in her federal lawsuit points out that “volunteering is merely a pretext for obtaining free labor.”
The Fair Labor Standards Act (FLSA) makes a distinction between free labor for nonprofits as compared with for-profit enterprises, the suit notes. It also cites state minimum-wage laws, adding that Rock ‘n’ Roll events have been held in 10 states and the District of Columbia.
The suit seeks class-action status by the court, that Liebesman and other volunteers receive unpaid wages, and that CGI pay unspecified damages and attorney fees.
CGI plans to fight the lawsuit. In a statement released Tuesday, company spokesperson Maya Pogoda said, “Competitor Group believes that the allegations in the lawsuit are completely baseless and we are confident that once the facts are analyzed it will be resolved quickly.
“The company could not be more proud of the work it has done with over 100 charities nationwide, including St. Louis’ Team Activities for Special Kids, and of the millions of dollars it has helped those organizations raise for a wide variety of important causes.”
CGI has organized the St. Louis event for four years, working with some 100 charities. Team Activities for Special Kids has raised more than $2.5 million through the events and has built a facility with the money raised.
CGI is owned by Calera Capital, a middle-market private equity firm with more than $2.8 billion of capital under its management. It has offices in San Francisco and Boston.
Calera acquired CGI in 2012. CGI currently operates 83 events, publishes a number of magazines—Competitor, Velo, Women’s Running and Triathlete—and owns a digital race registration platform, Raceit.com, as well as a number of websites.
According to the lawsuit, the San Diego company routinely solicits charities to help sponsor its events. The charities then pay for the right to call themselves an “Official Charity” of the Rock ’n’ Roll Marathon, depending upon the city where it’s being held.
The participating charity can then use the phrase “Official Charity” in its own recruiting, fundraising and marketing campaigns. The charity can also use the event’s logo, and the organizer will include the charity’s link on its website. Typically, participants pledge to raise a certain amount of money for the charity.
Charities must tell CGI what it estimates its planned net fundraising will be one month prior to the race, and then again one week prior to the event, the lawsuit states.
For example, the suit notes that there are four levels of charity participation within the CGI program, with “Official Charity” being the lowest level.
An “Official Charity” must provide at least 10 race participants paying $165 each, guaranteeing CGI $1,650 in revenue, the lawsuit claims. Whatever the participant raises over and above that amount goes to the charity.
Charities can bring a branded tent or rent one for the Charity Village in the finish area. The tent’s size is dictated by how many people register for a particular charity.
CGI uses various participating charities to create “an impression in individuals who might provide it labor, and the public, that its events are not-for-profit” and that the organizer is a not-for-profit business.
“Instead, the official charities are both a revenue stream and a veneer for recruiting free labor for the defendant,” Liebesman claims.
“Through the use of charity groups and its own volunteer recruitment efforts, Competitor Group, a for-profit corporation, has been able to market its events, increase participation rates, and staff its events with necessary labor without providing that labor the federal or state minimum wage,” she added.
Liebesman served as a bicycle escort for lead runners in the Oct. 21, 2012, St. Louis event. CGI officials required that she bring her bike, a cellphone and a hands-free device so she could use her phone while riding. She was also given an event vest and credentials.
As an escort, Liebesman began the race in front of the lead vehicles. As faster runners broke away from the pack, each bicycle escort chose a runner and remained with the runner until near the finish line. The escorts provided a layer of safety for runners by keeping pedestrians away as well as phoning in with times, she claims in her suit.
