California law requires two (2) hours of sexual harassment prevention training for all supervisors and one (1) hour of training for non-supervisory employees to be completed before January 1, 2020. Training is required within six (6) months of hire or promotion every two (2) years. Any supervisor or non-supervisor who took the training prior to 2019, will have to retake the training before January 1, 2020 to comply with the SB 1343 requirements. Contact our office to schedule training sessions for your staff. (310) 556-3800 or email us at firstname.lastname@example.org.
Fresno Superior Court v. PERB (CA5 F075363 12/14/18)
PERB Authority/Court Personnel Rules.
Upholding broad restrictions on employee clothing, ban on solicitation during working hours and ban on displaying images in areas visible to the public, but finding regulations prohibiting distribution of literature in working areas were ambiguous.
Gerard v. Orange Coast Mem. Med. Ctr. (SC S241655A 12/10/18)
Meal Periods/Health Care Employees.
IWC wage order permitting health care employees to waive second meal period for shifts greater than 12 hours does not violate the Labor Code.
Moreno v. Visser Ranch, Inc. (CA5 F075822 12/20/18)
Respondeat Superior/Use of Company Vehicle.
Driver’s use of company truck for personal travel after work, where he was on call 24 hours a day and may have been required to use the truck at all times, can give rise to respondeat superior liability. http://www.courts.ca.gov/opinions/documents/F075822.PDF
MOHAJERIAN LAWYERS REPRESENT EMPLOYERS THROUGHOUT CALIFORNIA
The new law affecting employers’ policies and practices is Senate Bill 1343, which changes the requirements around sexual harassment prevention training as of January 1, 2019. All employers with five or more employees are now required to provide 2 hours of sexual harassment prevention training to supervisors and 1 hour to administrative employees within 6 months of hire or promotion, and every 2 years thereafter. In addition, all employees must complete their training before January 1, 2020. The Department of Fair Employment and Housing determined that the training must be done during the 2019 calendar year. Even supervisors trained in 2018 must be retained. Temporary and seasonal employees must be trained within 30 days of hire or within the first 100 hours of their work, whichever is earlier. Temporary service employers will be responsible for training their employees who are placed with client-employers.
(a) The Interstate Commerce Commission consistently maintained that transportation with a State of consumable goods (such as food, coal, and ice) to railroad, docks, etc., for use of trains and steamships is not such transportation as is subject to its jurisdiction. (New Pittsburgh Coal Co. v. Hocking Valley Ry. Co., 24 I.C.C. 244; Corona Coal Co. v. Secretary of War, 69 I.C.C. 389; Bunker Coal from Alabama to Gulf Ports, 227 I.C.C. 485.) The intrastate delivery of chandleries, including cordage, canvas, repair parts, wire rope, etc., to ocean-going vessels for use and consumption aboard such vessels which move in interstate or foreign commerce falls within this category. Employees of carriers so engaged are considered to be engaged in commerce, as that term is used in the Fair Labor Standards Act. These employees may also be engaged in the “production of goods for commerce” within the meaning of section 3(j) of the Fair Labor Standards Act. See cases cited in § 782.7(c), and see Mitchell v. Independent Ice Co., 294 F. 2d 186 (C.A. 5), certiorari denied 368 U.S. 952, and part 776 of this chapter. Since the Commission has disclaimed jurisdiction over this type of operation (see, in this connection § 782.7(b)), it is the Division’s opinion that drivers, driver’s helpers, loaders, and mechanics employed by companies engaged in such activities are covered by the wage and hours provisions of the Fair Labor Standards Act, and are not within the exemption contained in section 13(b)(1). (See Hansen v. Salinas Valley Ice Co. (Cal. App.), 144 P. (2d) 896.)
(b) Prior to June 14, 1972, when the Department of Transportation published a notice in the FEDERAL REGISTER (37 FR 11781) asserting its power to establish qualifications and maximum hours of service of employees of contract mail haulers, thereby reversing the long-standing position of the Interstate Commerce Commission, the Administrator of the Wage and Hour Division had taken the position that employees engaged in the transportation of mail under contract with the Postal Service were not within the exemption provided by section 13(b)(1) of the Fair Labor Standards Act. As the result of the notice of June 14, 1972, the Administrator will no longer assert that employees of contract mail carriers are not within the 13(b)(1) exemption for overtime work performed after June 14, 1972, pending authoritative court decisions to the contrary. This position is adopted without prejudice to the rights of individual employees under section 16(b) of the Fair Labor Standards Act.
(c) Section 202(c)(2) of the Motor Carrier Act, as amended on May 16, 1942, makes section 204 of that act “relative to qualifications and maximum hours of service of employees and safety of operations and equipment,” applicable “to transportation by motor vehicle by any person (whether as agent or under a contractual arrangement) for a * * * railroad * * * express company * * * motor carrier * * * water carrier * * * or a freight forwarder * * * in the performance within terminal areas of transfer, collection, or delivery service.” Thus, drivers, drivers’ helpers, loaders, and mechanics of a motor carrier performing pickup and delivery service for a railroad, express company, or water carrier are to be regarded as within the 13(b)(1) exemption. (See Levinson v. Spector Motor Service, 330 U.S. 649 (footnote 10); cf. Cedarblade v. Parmelee Transp. Co. (C.A. 7), 166 F. (2d) 554, 14 Labor Cases, par. 64,340.) The same is true of drivers, drivers’ helpers, loaders, and mechanics employed directly by a railroad, a water carrier or a freight forwarder in pickup and delivery service. Section 202(c)(1) of the Motor Carrier Act, as amended on May 16, 1942, includes employees employed by railroads, water carriers, and freight forwarders, in transfer, collection, and delivery service in terminal areas by motor vehicles within the Interstate Commerce Commission’s regulatory power under section 204 of the same act. See Morris v. McComb, 332 U.S. 422 and § 782.2(a). (Such employees of a carrier subject to part I of the Interstate Commerce Act may come within the exemption from the overtime requirements provided by section 13(b)(2). Cf. Cedarblade v. Parmelee Transp. Co. (C.A. 7), 166 F. (2d) 554, 14 Labor Cases, par. 64,340. Thus, only employees of a railroad, water carrier, or freight forwarder outside of the scope of part I of the Interstate Commerce Act and of the 13(b)(2) exemption are affected by the above on and after the date of the amendment.) Both before and after the amendments referred to, it has been the Division’s position that the 13(b)(1) exemption is applicable to drivers, drivers’ helpers, loaders, and mechanics employed in pickup and delivery service to line-haul motor carrier depots or under contract with forwarding companies, since the Interstate Commerce Commission had determined that its regulatory power under section 204 of the Motor Carrier Act extended to such employees.
(d) The determinations of the Interstate Commerce Commission discussed in paragraphs (a), (b), and (c) of this section have not been amended or revoked by the Secretary of Transportation. These determinations will continue to guide the Administrator of the Wage and Hour Division in his enforcement of section 13(b)(1) of the Fair Labor Standards Act.
(29 C.F.R. § 782.8 (Lexis Advance through the August 23, 2017 issue of the Federal Register. Pursuant to 82 FR 8346 (“Regulatory Freeze Pending Review”), certain regulations will be delayed pending further review. See Publisher’s Note under affected rules. Title 3 is current through August 4, 2017).)
(b) Supporting Transfer Operations
Defendant also claims that Plaintiffs participate in the flow of interstate and/or foreign commerce by supporting the transfer operations of imported petroleum products in and out of the FTZ. Examples of support provided by RTFC to refineries in FTZ122, in addition to responding to emergencies, include standing by, ready to address hazardous or unsafe situations during liquid transfers; providing a cooling spray when fuel, oil, or chemical products are being transferred from one tank to another or from storage to tankers for further transport; supervising and providing input into the transfer process; and operating an “18-wheeler” and a shuttle bus which are used for training and to transport [*14] material and personnel to locations within FTZ122 (Decl. of Paul Swetish, Ex. B to Resp. to Pl’s MSJ; D.E. 167-4 at 3-5).
Defendant has offered no authority to support its allegation that because Plaintiffs are present at petroleum transfer operations or respond to emergencies in the FTZ, they are engaged in interstate or foreign commerce or both. While it is clear that they have a role in keeping operations safe for those who are engaged in interstate or foreign commerce, Plaintiffs are not transporting passengers, property, or both, as described in the exemption.
Defendant also argues that the transfer of goods such as firefighting equipment and supplies as well as food and fuel to firefighters in FTZ122 constitutes foreign commerce. However, the Secretary of Transportation has consistently maintained that transportation within a State of consumable goods (such as food, coal, and ice) to railroad, docks, et cetera, for use of trains and steamships is not subject to its jurisdiction. 29 C.F.R. § 782.8(a). Similarly, the delivery of equipment and supplies to ocean-going [*15] vessels for use and consumption aboard the vessels which move in interstate or foreign commerce does not exempt the carriers from the overtime provisions of the FLSA. Id.
The activities described by Defendant appear to fall into the same category as the items described above. Although RTFC carriers moved items that may have assisted the refineries and the Port of Corpus Christi in their respective businesses, the goods and supplies themselves did not continue to flow in interstate commerce.
The regulations further explain:
[E]mployees of construction contractors are, within the meaning of the Fair Labor Standards Act, engaged in commerce where they operate or repair motor vehicles used in the maintenance, repair, or reconstruction of instrumentalities of interstate commerce (for example, highways over which goods and persons regularly move in interstate commerce). . . . Employees so engaged are not however, brought within the [MCA] exemption merely by reason of that fact. In order for the exemption to apply, their activities, so far as interstate commerce is concerned, must relate directly to the transportation of materials moving in interstate or foreign commerce within the meaning of [*16] the Motor Carrier Act. Asphalt distributor-operators, although not exempt by reason of their work in applying the asphalt to the highways, are within the exemption where they transport to the road site asphalt moving in interstate commerce.
29 C.F.R. § 782.7(a) (internal citations omitted) (emphasis added). Similarly, in order for RTFC to be entitled to the exemption, its drivers’ activities must relate directly to the transportation of material moving in interstate or foreign commerce within the meaning of the MCA. Defendant has not shown that Plaintiffs have engaged in such activities. See, also, 29 C.F.R. § 782.7(c) (Drivers transporting goods in and about a plant producing goods for commerce and chauffeurs or drivers of company cars or buses transporting officers or employees from place to place in the course of their employment in an establishment which produces goods for commerce do not fall within the MCA exemption.) Accordingly, Defendant has not shown that it is entitled to summary judgment on this issue.
(Martinez v. Refinery Terminal Fire Co. (S.D.Tex. Dec. 27, 2013, No. 2:11-CV-295) 2013 U.S.Dist.LEXIS 180827, at *13-16.)
2. Interstate Commerce
Defendant also argues that Plaintiffs participated in interstate commerce because they were expected to drive out of state. To be engaged in interstate [*17] commerce requires either the actual transport of goods across state lines, or the intrastate transport of goods in the flow of interstate commerce. Barefoot v. Mid-America Dairymen, Inc., 826 F.Supp. 1046, 1049 (N.D. Tex. 1993). “[I]t is the character of the activities rather than the proportion of either the employee’s time or of his activities that determines the actual need for the [Secretary’s] power to establish reasonable requirements with respect to qualifications, maximum hours of service, safety of operation and equipment.” Morris, 332 U.S. at 431-432 (internal citations and quotations omitted). When interstate trips are a “natural, integral and apparently inseparable part of the common carrier service of the employer and his drivers,” and where, in the normal course of business, interstate commerce trips are “distributed generally throughout the year and their performance [is] shared indiscriminately by the drivers and [is] mingled with the performance of other like driving services,” employees are subject to the MCA exemption even where not all drivers drive in interstate commerce. Id., 332 U.S. at 433.
However, an employee’s minor involvement in interstate commerce does [*18] not necessarily subject that employee to the Secretary of Transportation’s jurisdiction for an unlimited period of time. Reich v. American Driver Service, Inc., 33 F.3d 1153, 1155-1156 (9th Cir. 1994) (citing Baird v. Wagoner Transp. Co., 425 F.2d 407, 412-413 (6th Cir. 1970)). The Federal Highway Administration (FHWA), a division of the DOT, issued an interpretation of its jurisdiction to regulate the qualifications and maximum hours of service of commercial motor vehicle drivers engaged in interstate or foreign commerce. According to the FHWA, in order to establish jurisdiction over a carrier, the carrier must have been engaged in interstate commerce within a reasonable period of time prior to the time at which jurisdiction is in question. 46 Fed. Reg. 37902-02, 1981 WL 115508 (F.R.), July 23, 1981.
The carrier’s involvement in interstate commerce must be established by some concrete evidence such as an actual trip in interstate commerce or proof, in the case of a “for hire carrier,” that interstate business had been solicited. If jurisdiction is claimed over a driver who has not driven in interstate commerce, evidence must be presented that the carrier has engaged in interstate commerce [*19] and that the driver could reasonably have been expected to make one of the carrier’s interstate runs. Satisfactory evidence would be statements from drivers and carriers, and any employment agreements.
Evidence of driving in interstate commerce or being subject to being used in interstate commerce should be accepted as proof that the driver is subject to [DOT jurisdiction] for a 4-month period from the date of the proof. The FHWA believes that the 4-month period is reasonable because it avoids both the too strict week-by-week approach and the situation where a driver could be used or be subject to being used once and remain subject to jurisdiction [of the DOT] for an unlimited time.
(Martinez v. Refinery Terminal Fire Co. (S.D.Tex. Dec. 27, 2013, No. 2:11-CV-295) 2013 U.S.Dist.LEXIS 180827, at *16-19.)
MOHAJERIAN LAWYERS REPRESENT EMPLOYERS THROUGHOUT CALIFORNIA
EMPLOYER ATTORNEY – MOHAJERIAN LAWYERS REPRESENT EMPLOYERS THROUGHOUT CALIFORNIA
Baird v. Wagoner Transp. Co., 425 F.2d 407 critics:
“For certain types of shipments, the interstate nature of the transportation [for the purposes of the motor-carrier exemption] can become blurred as products are temporarily warehoused or moved by various carriers—some of whom may only [**3] complete intrastate portions of the journey.” Deherrera v. Decker Truck Line, Inc., 820 F.3d 1147, 1155 (10th Cir. 2016). In Baird, for example, petroleum products were transported across state lines from Indiana to a storage facility in Michigan and then from that storage facility to other locations in Michigan; the issue was whether the intrastate transportation from the storage facility was the last leg of a continuous interstate journey or a new intrastate journey. See 425 F.2d at 408-12. To answer that question, the Sixth Circuit had to determine whether the products had “come to rest” at the storage facility. Id. at 412. And to make that determination, it had to decide whether the shipper had a “fixed and persisting transportation intent” to move the products beyond the storage facility at the time of shipment. Id.at 410 (quoting 29 C.F.R. § 782.7(b)(2)). If the shipper had such a fixed and persisting intent, the goods would not have come to rest at the facility; otherwise they would have come to rest. The Sixth Circuit concluded, based on a now outdated test, see, e.g., Roberts v. Levine, 921 F.2d 804, 811-12 (8th Cir. 1990), that the products had come to rest at the storage facility. See Baird, 425 F.2d at 410-12. And HN4 because the drivers at issue in Baird transported products only from that storage facility to other points in the same state, the Sixth Circuit concluded that the drivers [**4] were engaged in purely intrastate transportation. See id. at 412. In sum, Baird addressed how courts must determine when the warehousing of products terminates their journey; it did not address what makes a product’s journey interstate in the first place.
Here, Kennedy shuttled trailers of products from a Pepsi bottling plant in Latham, New York, to a parking lot at Exit 24 of the New York State Thruway. After arriving at the Exit 24 lot, Kennedy would unhitch his trailer, and a different driver would take that trailer in tandem with another trailer to Pepsi warehouses in New York and surrounding states. The district court noted that HN5 “[e]ven if a carrier’s transportation does not cross state lines, the interstate commerce requirement is satisfied if the goods being transported within the borders of one State are involved in a ‘practical continuity of movement’ in the flow of interstate commerce.” Kennedy v. Equity Transp. Co., No. 1:14-CV-0864 (DEP), 2015 U.S. Dist. LEXIS 143565, 2015 WL 6392755, at *6 (N.D.N.Y. Oct. 22, 2015) (quoting Bilyou v. Dutchess Beer Distribs., Inc., 300 F.3d 217, 223 (2d Cir. 2002)). It further noted correctly that “[t]hough [Kennedy] may never have personally transported a trailer across state lines, when he relayed filled trailers to the Exit 24 compound, he was essentially ‘one leg of a route to an out of state destination.'” 2015 U.S. Dist. LEXIS 143565, [WL] at *7 (quoting [**5] Bilyou, 300 F.3d at 224). Thus, the motor-carrier exemption to the FLSA applies. See Bilyou, 300 F.3d at 224.
(Kennedy v. Equity Transp. Co. (2d Cir. 2016) 663 F.App’x 38, 40.)
In other cases, HN21 courts have found the motor carrier exemption inapplicable where the carrier’s involvement in interstate commerce was too remote, unlikely or simply not proven. In Baird v. Wagoner Transportation Co., 425 F.2d 407 (6th Cir. 1970), a carrier’s mere possession of a certification allowing it to ship petroleum interstate, which had not been used since 1959, was insufficient to bring it within the motor carrier exemption. In Goldberg v. Faber Indus., Inc., 291 F.2d 232 (7th Cir. 1961), the court found the exemption inapplicable to certain employees because the parties had stipulated that the subject employees had never been used in interstate commerce and could not reasonably be expected to handle interstate runs in the normal course of their duties. In Coast Van Lines v. Armstrong, 167 F.2d 705 (9th Cir. 1948), the carrier failed to prove its entitlement to the exemption [**38] during the time period in question because the employer had presented evidence of interstate transportation during one month only.
As our Circuit Court of Appeals has observed, HN22 “[a] number of courts have held that drivers should seldom, if ever, fall within the de minimis exception.” Friedrich,974 F.2d at 417 n. 10 (citing Levinson, supra; at 677-78; Crooker v. Sexton Motors, Inc., 469 F.2d 206, 210 (1s Cir. 1972); Sinclair, 447 F. Supp. at 11). In Levinson,supra, the Supreme Court, in comparing the responsibilities of drivers and loaders, observed that a “driver’s work more obviously and dramatically affects the safety of operation of the carrier during every moment that he is driving…” 330 U.S. at 678. In Crooker, the First Circuit Court of Appeals noted that the de minimis rule “has been applied … where the employee’s connection with anything affecting interstate motor carrier operations was so indirect and casual as to be trivial…. The activities of one who drives in interstate commerce, however frequently or infrequently, are not trivial.” 469 F.2d at 210. [**39] And in Sinclair, supra, at 11, the court concluded that “the de minimis rule should seldom, if ever, be applied to one who drives a motor vehicle carrying property of a private carrier in interstate commerce.”
In any event, however, we conclude Plaintiffs are exempt from the FLSA’s maximum hours and overtime requirements [*657] regardless of the number of interstate/intrastate trips they actually made because, [**40] at all relevant times, they could have been called upon in the regular course of their employment to make trips affecting interstate commerce. The relevancy of this consideration has been clearly articulated by both the Department of Transportation and the Department of Labor. HN23 The latter agency has stated that the motor carrier exemption will apply if the bona fide duties of the job performed by the employee are in fact such that he is — or “is likely to be” — called upon in the ordinary course of his work to perform, “either regularly or from time to time,” the requisite safety-affecting activities. See 29 C.F.R. § 782.2(b)(3). See also DOL Wage and Hour Division’s Field Operations Handbook, § 24e01(b) (May 13, 1982) (Ex. F. to Def.’s Append. in Supp. of Mot. for Summ. Judg. [Doc. No. 18]) (where driver has not made an actual interstate trip, he/she may still be subject to DOT’s jurisdiction if: (1) the carrier is shown to have an involvement in interstate commerce and, (2) it can be established that the driver “could have, in the regular course of his/her employment, been reasonably expected to make one the carrier’s interstate runs.”). The DOT has stated in an [**41] interpretive ruling that “if, in the regular course of employment a driver is, or could be, called upon to transport a shipment in interstate commerce the driver would be subject to the [Federal Highway Administration’s] jurisdiction.” RULES AND REGULATIONS OF THE DEPARTMENT OF TRANSPORTATION, FEDERAL HIGHWAY ADMINISTRATION, supra, 46 FR 37902-02, 1981 WL 115508 at *37902.
(Badgett v. Rent-Way, Inc. (W.D.Pa. 2004) 350 F.Supp.2d 642, 656-657.)
The Sixth Circuit applied a three-part test to determine whether the shipments from the Muskegon terminal to the Michigan customers constituted intrastate or interstate commerce. It borrowed this test from the Interstate Commerce Commission’s (ICC) decision in Ex Parte No. MC-48, 71 M.C.C. 17 (1957). The Baird court stated that in Ex Parte No. MC-48, the ICC
specifically indicated that truck drivers are not engaged in “interstate commerce” . . . and not subject to the jurisdiction of the Commission where the following three factors are present: (1) “specific orders” of a “specific quantity” are not moved from one state through the terminal storage of a second [**23] state to a specific customer; (2) the use of the terminal storage as a “local marketing facility” from which products are “sold or allocated;” and (3) transportation in furtherance of such “distribution within a single state is specifically arranged only after sale or allocation from storage.”
Baird, 425 F.2d at 411. The Sixth Circuit found these factors present in the case before it. Even though Standard knew the identities of its customers, the specific quantity of petroleum products to be shipped to a certain destination was not known at the time the petroleum was shipped to Muskegon. Id. The court found that although the terminal did not process petroleum or make retail sales, it was a “local marketing facility” because its through-put rate was only six times its storage capacity and the products at the terminal were “inventory-in-store” for orders to be placed later. Id. The court also determined that no final shipping arrangements were made until after the petroleum products were stored at Muskegon because the forecasts the terminal received were not specific orders, only estimates. Id. at 411-12. Based on the presence of the three factors, the Baird court [**24] held that Standard’s intrastate shipments constituted intrastate commerce.
It is not possible to distinguish Baird from the case before us. Were Baird the only mark on an otherwise blank slate, we might have adopted its analysis, but because two recent circuit court decisions have made it clear that the test used in Baird is outmoded, we decline to adopt its three-part test. These decisions are California Trucking Ass’n v. I.C.C., 900 F.2d 208 (9th Cir. 1990), aff’g The Quaker Oats Co., 4 I.C.C.2d 1033 (1987), and Central Freight Lines v. I.C.C., 899 F.2d 413 (5th Cir. 1990), aff’g Victoria Terminal Enters., Inc., No. MC-C-30002 [1989 ICC LEXIS 25] (1989). In both cases, parties [*812] disgruntled by ICC orders in interstate-intrastate controversies challenged the orders as arbitrary and capricious deviations from prior standards. In California Trucking, a trucking association contended that the standard the ICC applied in its Quaker Oats decision was not consistent with controlling precedent. 900 F.2d at 211. It specifically argued that “in cases involving out-of-state shipper warehousing and distribution operations, the ICC and the courts [**25] have employed [the Ex Parte No. MC-48] three-part test to determine the essential nature of the commerce.” Id. The trucking association urged that abandoning the test was unreasonable as a matter of law, and that failing to apply or explain it was arbitrary and capricious. Id. at 212. Similarly, in Central Freight, a shipper challenged the ICC’s order in Victoria Terminal on the ground that the ICC did not use the Ex Parte No. MC-48 test. 899 F.2d at 421.
In both cases, the circuit courts held that the ICC did not act arbitrarily or capriciously in failing to use the Ex Parte No. MC-48 test. California Trucking, 900 F.2d at 213; Central Freight, 899 F.2d at 423. About the current validity of the test, the Ninth Circuit specifically stated: “Even though the ICC has never explicitly stated that it was abandoning the more structured Ex Parte No. MC-48 test, it appears that its use of that standard has been refined, if not phased out.” California Trucking, 900 F.2d at 213. The Fifth Circuit reached the same conclusion, stating that the ICC “appears to have implicitly recharacterized the applicable test.” Central Freight, 899 F.2d at 421. [**26]
The current test the ICC uses to determine whether intrastate transportation constitutes interstate commerce dates back to its 1986 decision in Armstrong World Indus., Inc., 2 I.C.C.2d 63, 69 (1986), aff’d, Texas v. United States, 866 F.2d 1546 (5th Cir. 1989). See Middlewest Motor Freight Bureau v. I.C.C., 867 F.2d 458, 460 (8th Cir.), cert. denied sub nom. Missouri Div. of Transp. v. I.C.C., 493 U.S. 890, 107 L. Ed. 2d 185, 110 S. Ct. 234 (1989). A recent ICC decision, The May Dep’t Stores Co. & Volume Shoe Corp., 1990 MCC LEXIS 103, No. MC-C-30146 (I.C.C. June 7, 1990), 3 Fed. Carr. Cas. (CCH) P 37,823, contains the current test’s standard formulation:
It is well settled that HN1 the determination of whether transportation between two points in [a] State is interstate (or foreign) or intrastate in nature depends on the “essential character” of the shipment. . . . Crucial to this determination is the shipper’s fixed and persisting intent at the time of shipment. . . . Intent is ascertained from all the facts and circumstances surrounding the transportation.
Id. at 47,204 (citations omitted); accord Pittsburgh-Johnstown-Altoona Express, Inc., No. MC-C-30129 (I.C.C. Feb. 6, 1990) [1990 MCC LEXIS 24], 3 Fed. [**27] Carr. Cas. (CCH) P 37,795, at 47,110; Ottawa Strong & Strong, Inc., No. MC-C-30076 (I.C.C. March 1, 1989) [1989 MCC LEXIS 137]] 3 Fed. Carr. Cas. (CCH) P 37,656, at 47,779; Bigbee Transp., Inc., No. MC-C-30065 (I.C.C. Oct. 26, 1988), [1988 MCC LEXIS 452] 3 Fed. Carr. Cas. (CCH) P 37,573, at 47,575; James River Corp., No. MC-C-30044 (I.C.C. July 6, 1988) [1988 MCC LEXIS 344] 3 Fed. Carr. Cas. (CCH) P 37,506, at 47,380. Both the Ninth and the Fifth Circuits have approved the ICC’s use of the current test, finding it to be reasonable and consistent with the rationale of older cases. See California Trucking, 900 F.2d at 213; Central Freight, 899 F.2d at 421.
[**28] The ICC has primary responsibility over issues such as the ones presented in this case. See Service Storage & Transfer Co. v. Virginia, 359 U.S. 171, 173, 3 L. Ed. 2d 717, 79 S. Ct. 714 (1959); Middlewest [*813] Motor Freight, 867 F.2d at 459. “Because the ICC is the agency invested with responsibility for making determinations about the essential nature of commerce and should have some latitude in evolving standards that keep up with the times,” California Trucking, 900 F.2d at 213, we decline to apply the three-part test from Ex Parte No. MC-48, and adopt for purposes of this appeal the current ICC test to determine whether Roberts’ intrastate transportation of urea constituted interstate commerce.
(Roberts v. Levine (8th Cir. 1990) 921 F.2d 804, 811-813.)
Plaintiffs base their assertion that the Sales managers are not operating in interstate commerce on an interpretative Bulletin of the Wage and Hour Division, United States Department of Labor (“DOL Bulletin”), that states:
The Commission has specifically found that there is no fixed and persisting intent where (i) at the time of shipment there is no specific order being filled for a specific quantity of a given product to be moved through to a specific destination beyond the terminal storage, and (ii) the terminal storage is a distribution point or local marketing facility from which specific amounts of the product are sold or allocated, and (iii) transportation in the furtherance of this distribution within the single State is specifically arranged only after sale or allocation [*13] from storage.
Ex Parte No. MC – 48, 71 M.C.C. 17 (1957).
The DOL Bulletin relied on by the Plaintiffs also references Baird v. Wagoner Transp. Co., 425 F.2d 407 (6th Cir. 1970). In Baird, the Sixth Circuit considered the factors set out in the DOL Bulletin and found that a petroleum company that shipped its product to an in-state distribution center based on forecasts and not actual orders was engaged only in intra-state commerce when it subsequently distributed its products in-state. See id. The Sixth Circuit held that each of the factors found in the DOL Bulletin was present in the shipper’s operation, and as such, the drivers transporting the product from the in-state storage facility to the customers were not engaged in interstate commerce. See id.
Defendants urge the Court to reject the intent test outlined in the DOL Bulletin and instead to accept the intent test currently utilized by the Interstate Commerce Commission (“ICC”). The ICC employs a test that determines a shipper’s intent by examining “all the facts and circumstances surrounding the transportation.” Roberts,921 F.2d at 812 (quoting Armstrong World Indus., Inc., 2 I.C.C.2d 63, 69 (1986)). [*14] In Roberts, the Eighth Circuit declined to adopt the three-part test outlined in the DOL Bulletin, and Baird. Relying on two recent circuit court cases that found the DOL Bulletin/Baird test to be “outmoded,” the Eighth Circuit applied the ICC test to the facts of the case before it to resolve the matter. Roberts, 921 F.2d at 811 (citing California Trucking Ass’n v. I.C.C., 900 F.2d 208 (9th Cir. 1990) and Central Freight Lines v. I.C.C., 899 F.2d 413 (5th Cir. 1990)).
In Roberts, the Eighth Circuit was asked to consider whether the intra-state distribution of products that had previously been transported across state lines and stored in an in-state storage facility was interstate commerce. See id. at 813. In Roberts, the shipper controlled the production, shipment, and subsequent sale of the products. See id. at 814. The product was transported to in-state storage facilities based on past demand and estimated future need. See id. The product was stored only temporarily at the shipper’s storage facility and then distributed in-state based on customer orders. See id. The Eighth Circuit considered [*15] all of these facts under the ICC test and determined that the shipper had the “fixed and persisting intent” to ship the product beyond the in-state storage facility. Id.Therefore, the Eighth Circuit held that the shipper was engaged in interstate commerce. See id.
Here, the Court finds that the test adopted by the ICC is appropriate for determining whether Schwan’s sales managers engaged in interstate commerce. The Court bases this finding on the explicit language of Roberts which the Court accepts as binding precedent in this circuit. In applying the “all facts and circumstances” test to this case, the Court finds that the similarities between the shipper’s operation and distribution network in Roberts are strikingly similar to Schwan’s operation and distribution network. In both cases, the shipper controlled the production, shipment, and subsequent sale of the product, the shipments were made to in-state storage facilities based on forecasts and past demand, and the storage of the product at the storage facility was for a relatively limited period of time. Based on the facts of this case and the law of this circuit, the Court finds that Schwan had the fixed and [*16] persisting intent to ship its products beyond its in-state depots. Thus, the Court finds that Schwan’s sales managers’ intrastate transport of Schwan food products is one leg of an interstate journey.
(Guyton v. Schwan Food Co. (D.Minn. Mar. 16, 2004, No. 03-5523 (DWF/SRN)) 2004 U.S.Dist.LEXIS 4174, at *12-16.)
Defendants argue that Plaintiff (along with other RSRs) engages in interstate transportation because (1) he transports products that were manufactured out of state from the DC to retailers, and (2) he transports empty containers from the retailers to the DC that are later shipped out of [**9] state. Plaintiff argues that the RSRs do not continue shipments that originate out of state, but that the shipment from the DC to the retailers is an entirely new shipment wholly within the state.
Plaintiff essentially argues that deliveries from the DCs to retailers are not part of a continuous movement because the shipments from the manufacturing facilities to the DCs are based on the projected demands of the DCs, not the individual retailers. In support of this argument, Plaintiff cites Baird v. Wagoner Transportation Co., 425 F.2d 407 (6th Cir. 1970). The distribution scheme in Bairdis indeed similar to that employed by Frito-Lay. See id. at 410-11. However, the test employed by the Sixth Circuit in Baird has been expressly called into question by the Department of Transportation, the Department of Labor, and at least three Circuit Courts. See Central Freight Lines v. I.C.C., 899 F.2d 413 (5th Cir. 1990); California Trucking Ass’n v. I.C.C., 900 F.2d 208 (9th Cir. 1990); Roberts v. Levine, 921 F.2d 804 (8th Cir. 1990); Opinion Letter-Fair Labor Standards Act, 2005 WL 330602 [**10] (Dep’t of Labor Jan. 11, 2005); Motor Carrier Interstate Transportation-From Out-of-State Through Warehouses to Points in Same State, 56 Fed. Reg. 19,812 (May 8, 1992).
The current and accepted “totality of the circumstances” test is best summarized in the Department of Transportation’s Policy Statement of 1992. See id. HN8 The Policy Statement lays out the following indicia of the “fixed and persisting intent” that is necessary for a determination that a trip from a warehouse to end user is merely the final leg of an interstate journey. See id.
1. Although the shipper does not know in advance the ultimate destination of specific shipments, it bases its determination of the total volume shipped through the warehouse on projections of customer demand that have some factual basis, rather than a mere plan to solicit future sales within the State. The factual basis for projecting customer demand may include, but is not limited to, historic sales in the State, actual present orders, relevant market surveys of need.
2. No processing or substantial product modification of substance occurs at the warehouse or distribution center. However, repackaging (secondary [**11] packaging) may be performed.
3. While in the warehouse, the merchandise is subject to the shipper’s control and direction as to the subsequent transportation.
4. Modern systems allow tracking and documentation of most, if not all, of the [*822] shipments coming in and going out of the warehouse or distribution center.
5. The shipper or consignee must bear the ultimate payment for transportation charges even if the warehouse or distribution center directly pays the transportation charges to the carrier.
6. The warehouse utilized is owned by the shipper.
7. “The shipments move through the warehouse pursuant to a storage in transit tariff provision.”
(Billings v. Rolling Frito-Lay Sales, LP (S.D.Tex. 2006) 413 F.Supp.2d 817, 821-822.)
Congress reacted by an amendment conferring the present discretion on the courts to limit or deny liquidated damages if the employer could meet the “substantial [*465] burden” of proving that his failure to comply was in good faith and also was predicated on reasonable grounds for a belief that he was in compliance. [**101] If the employer cannot convince [**100] the court in these respects, an award of liquidated damages remains mandatory; and even if the employer’s presentation is persuasive the court may still exercise its discretion to grant liquidated damages totally or partially.
(Laffey v. Northwest Airlines, Inc. (1976) 185 U.S.App.D.C. 322 [567 F.2d 429, 464-465].)
FLSA Overtime Claim
Under the FLSA, an employer must pay an employee overtime compensation if he works more than forty hours per week. The FLSA exempts from this requirement, though, “any employee with respect to whom the Secretary of Transportation has power to establish qualifications and maximum hours of service pursuant to the provisions of section 31502 of Title 49,” otherwise known as the Motor Carrier Act (“MCA”) exemption. The employer has the burden of showing that the exemption applies, and the exemption is construed narrowly against it. According to the Department of Labor (“DOL”) regulations enforcing the FLSA, the applicability of the MCA exemption “depends both on the class to which [the employee’s employer] belongs and on the class of work involved in the employee’s job.” Thus, to qualify for the exemption, the employer must show three things: (1) that it is a carrier whose transportation of passengers or property by motor vehicle is subject to the Secretary of Transportation’s jurisdiction, i.e., its transportation of passengers or property takes place in interstate commerce; [*7] (2) the employee is a driver, driver’s helper, loader, or mechanic; and (3) the employee engages in activity that affects the safety of operation of motor vehicles in the transportation of passengers or property in interstate or foreign commerce. Plaintiff contends that Defendant cannot satisfy any of the aforementioned elements.
Plaintiff argues that the first element cannot be met because Defendant was not subject to the Secretary’s jurisdiction. The Court disagrees. Defendant is subject to inspections and audits by the DOT’s FMCSA, its residential trash truck drivers comply with the DOT’s pre- and post-trip inspection requirements and hours-of-service limitations, its residential trash trucks are [*8] registered with the DOT and have been assigned a DOT registration number, and its residential trash trucks cross state lines on a daily basis. The combination of these facts eliminates any question as to whether Defendant was subject to the Secretary’s jurisdiction. Plaintiff’s reliance on Baird v. Wagner Transportation Co. a case where the Sixth Circuit found that the defendant’s drivers were not exempt from the FLSA’s overtime provisions despite the fact that the employer had interstate certificates, is misplaced. Unlike in Baird, it is uncontroverted here that the defendant’s trucks cross state lines. Therefore, the Court finds that Plaintiff’s first argument fails, and does not provide a basis for denying Defendant’s motion.
With regard to the second element, Plaintiff argues that Defendant has failed to show that he is a driver’s helper or a loader. Because the Court finds that no genuine issue of material fact exists as to whether Plaintiff was a loader, it does not address the issue of whether Plaintiff could possibly be considered a driver’s helper. A loader is defined as an employee “whose duties include, among other things, the proper loading of his employer’s motor vehicles so that they may be safely operated on the highways of the country.” Stated another way, a loader is a person who, as the vehicle is being loaded, exercises “judgment and discretion in planning and building a balanced load or in placing, distributing, or securing the pieces of freight in such a manner that the safe operation of the vehicles on the highways in interstate or foreign commerce will not be jeopardized.” Plaintiff contends that he was not a loader because he exercised no discretion in determinating what trash to load into the truck, [*10] as his decision of whether to load a particular piece of trash was based solely on Defendant’s guidelines. Plaintiff’s argument is not persuasive. This is not a case where Plaintiff’s driver or some other supervisor was walking next to him telling him that this piece of trash is acceptable, but this one is not; rather, Plaintiff was having to determine if the trash he encountered at each stop met Deffenbaugh’s standards and could be safely loaded. Thus, while it is true that Plaintiff was not free to determine what categories of trash would or would not be collected, he was nevertheless exercising his judgment and discretion when loading the truck. Furthermore, it is uncontroverted that Plaintiff’s failure to properly apply the Deffenbaugh loading standards could result in damage to the truck or injury to himself and others. Therefore, Plaintiff’s second argument also does not provide a basis for denying Defendant’s summary judgment motion.
Plaintiff’s last contention is that Defendant cannot meet the third element because the trash he loaded was not property, as it was non-nuclear and non-recyclable. Title 49 does not define property. “In cases of Congressional silence such as this, the authorized agency . . . possesses broad discretion in administering the law. [The Court] will defer to the agency’s interpretation of an ambiguous statute if it is reasonable in light of the text, the structure, and the underlying [*12] purpose.” The Interstate Commerce Commission (“ICC”), which was the agency initially tasked with the responsibility of enforcing Title 49, appears to have taken the position that non-nuclear, non-recyclable trash was not property. Since Congress transferred the power to enforce Title 49 to the DOT, the DOT has not issued any regulations or formal guidance on the issue of whether trash is property. As a result, the Court must look to see if the DOT has demonstrated through its actions that trash is property for purposes of Title 49. Here, it is uncontroverted that all of Defendant’s residential trash trucks are registered with the DOT, that Defendant’s residential trash truck drivers comply with the DOT’s pre- and post-trip inspection requirements and hours-of-service limitations, and that Defendant is subject to audits and inspections by the FMCSA. The Court finds that the combination of these facts show that the DOT is exercising jurisdiction over Defendant’s residential trash hauling business. Because the DOT is exercising such jurisdiction, it must necessarily have adopted the position that trash is property, otherwise it would have no basis for regulating Defendant’s [*13] residential trash hauling business. Therefore, in light of this exercise of authority, the Court concludes that the DOT treats trash as being property.
Due to the above conclusion, the Court must now move on to the second question: whether the DOT’s position with regard to trash is consistent with the text, structure, and underlying purposes of Title 49. Beginning with the text first, the Court finds that there is no language in Title 49 that indicates that Congress intended for the regulating agency to give property a narrow meaning. In fact, as pointed out by the ICC, the language suggests quite the opposite. The Court also finds that the structure of Title 49 supports the position that trash is property. Section 13506 of Title 49 sets forth a list of items that are exempt from the Secretary of Transportation’s authority – e.g., wood chips, broken, crushed, or powered glass, natural, crushed, vesicular rock, and newspapers – but does not include trash, which, under the legal maxim of expressio unius est exclusio alterius, implies that Congress intended for the DOT to have jurisdiction over the interstate transportation of trash. Lastly, one of the main purposes for regulating transportation that takes place on this Country’s public roads and highways is safety. [*16] As noted by other courts, this purpose is implicated whenever a truck carries any item, regardless of “‘whether [it] is . . . twenty tons of garbage or twenty tons of caviar.'” Therefore, for the above reasons, the Court finds that interpreting property to include trash is consistent with the text, structure, and purpose of Title 49. Thus, the Court will interpret the term property to include trash.
Viewing the evidence as a whole, the Court finds that there is no genuine issue of material fact as to whether Plaintiff’s employment was subject to the Motor Carrier Act exemption. The uncontroverted evidence shows that the DOT has jurisdiction over Defendant, that Plaintiff acted as a loader during his employment with Defendant, and that the trucks that Plaintiff worked on carried property. Accordingly, the Court grants Defendant’s motion for summary judgment on Plaintiff’s FLSA overtime claim.
(Vanartsdalen v. Deffenbaugh Indus. (D.Kan. Mar. 18, 2011, No. 09-2030-EFM) 2011 U.S.Dist.LEXIS 28279, at *6-16.)
I. THE STATUTORY SCHEME
[**3] Klitzke’s claim is for unpaid overtime during 1993 and 1994. Steiner does not dispute the overtime hours but contends that it was not subject to the requirements of the FLSA. HN2 The FLSA requires employers to pay overtime wages (1.5 times the regular hourly wage) to any employee who works more than forty hours in a week. 29 U.S.C. § 207(a). HN3 Section 213(b)(1) provides, however, that employees whose qualifications and maximum hours of driving are subject to regulation by the Secretary of Transportation (the “Secretary”) under the Motor Carrier Safety chapter of the Interstate Commerce Act are exempt from the overtime provisions of § 207(a):
(b) The provisions of section 207 of this title shall not apply with respect to
(1) any employee with respect to whom the Secretary of Transportation has power to establish qualifications and maximum hours of service pursuant to the provisions of section 3102 of title 49;
[*1468] 29 U.S.C. § 213(b)(1)(1992) (emphasis added); Baird v. Wagoner Trans. Co., 425 F.2d 407, 410 (6th Cir.), cert. denied, 400 U.S. 829, 27 L. Ed. 2d 59, 91 S. Ct. 58 (1970); see Levinson v. Spector Motor Serv., 330 U.S. 649, 661-62, 91 L. Ed. 1158, 67 S. Ct. 931 (1947); Reich v. American [**4] Driver Serv., Inc., 33 F.3d 1153, 1155 (9th Cir. 1994) (stating that “a motor carrier cannot be subject to the jurisdiction of both the Secretary of Labor and the Secretary of Transportation”). HN4 The § 213(b)(1) exemption is construed narrowly, see Arnold v. Ben Kanowsky, Inc., 361 U.S. 388, 392, 4 L. Ed. 2d 393, 80 S. Ct. 453 (1960), and the employer seeking the exemption has the burden of proving entitlement. Idaho Sheet Metal Works, Inc. v. Wirtz, 383 U.S. 190, 209, 15 L. Ed. 2d 694, 86 S. Ct. 737 (1966); Donovan v. Nekton, Inc., 703 F.2d 1148, 1151 (9th Cir. 1983).
[**5] HN5 For the statutory exemption under § 213(b)(1) to apply, the Secretary need not actually regulate the driver or his employer; it applies whenever the Secretary has the authority to regulate a driver’s hours and safety. Southland Gas. Co. v. Bayley, 319 U.S. 44, 47-48, 87 L. Ed. 1244, 63 S. Ct. 917 (1943); Martin v. Coyne Int’l Enter., Corp., 966 F.2d 61, 63 (2d Cir. 1992). HN6 The Motor Carrier Safety chapter authorizes the Secretary to:
prescribe requirements for –
(1) qualifications and maximum hours of service of employees of . . . a motor carrier; and
(2) qualifications and maximum hours of service of employees of . . . a motor private carrier, when needed to promote safety of operation.
49 U.S.C. § 3102(b). Subsection (2) applies to Klitzke because he is an employee of a motor private carrier, i.e., one who transports “property . . . for sale, lease, rent, or bailment.” 49 U.S.C. § 10102(13)(C).
[**6] II. KLITZKE’S CONTENTIONS TO AVOID THE EXEMPTION
Section 3102(b)(2) therefore removes Klitzke from coverage under the FLSA unless the exemption is limited either by some other statutory provision or by specific regulatory exclusions. See Jones v. Giles, 741 F.2d 245, 249 (9th Cir. 1984). Klitzke claims that he falls within a number of such exceptions.
A. 49 U.S.C. § 10524
Klitzke contends that 49 U.S.C. § 10524 exempts him from regulation by the Secretary. That section, located in the subchapter defining the regulatory jurisdiction of the Interstate Commerce Commission (“ICC”) over motor carriers, provides:
The Interstate Commerce Commission does not have jurisdiction under this subchapter [49 U.S.C. §§ 10521- 10562] over the transportation of property by motor vehicle when –
(1) the property is transported by a person engaged in a business other than transportation; and
(2) the transportation is within [**7] the scope of, and furthers a primary business (other than transportation) of the person.
49 U.S.C. § 10524. The provision exempted carriers such as Steiner, who was not in the transportation business, from regulation by the ICC; it did not provide an exemption from regulation by the Secretary of Transportation. The subchapter to which it refers deals only with regulation by the ICC. See 49 U.S.C. § 10521. Thus, “the section [§ 10524] merely exempts motor private carriers from the licensing, permit, and certificate requirements imposed upon motor carriers by the ICC pursuant to 49 U.S.C. §§ 10921-10935; it does not serve to deprive the [Department of Transportation] of its power to regulate the qualifications and maximum hours of service of employees of motor private carriers pursuant to 49 U.S.C. § 3102(b)(2).” Friedrich v. U.S. Computer Serv., 974 F.2d 409, 413 (3d Cir. 1992).
While it is true that § 3102(a), the source of the Secretary of Transportation’s regulatory authority, defines the transportation to which it applies by cross-reference to [*1469] § 10521, see 49 U.S.C. § 3102(a) (stating that § 3102 “applies to transportation . . . described in section[ [**8] ] 10521 . . . of this title”), it incorporates no limitations on the Secretary’s power to prescribe safety requirements for employees of motor private carriers.
B. Regulatory Exemption Pursuant to 49 C.F.R. § 395.1
49 C.F.R. § 395.1 specifies the types of carriers and drivers to whom the Secretary’s hours of work regulations apply. Klitzke contends that the Secretary’s failure to include his job category in section 395.1 frees him from the Secretary’s jurisdiction and thereby preserves FLSA coverage. This claim is meritless – HN7 the Secretary’s decision not to exercise his regulatory authority over a category of carriers does not exempt them from his authority. See Southland Gasoline Co. v. Bayley, 319 U.S. 44, 47-48, 87 L. Ed. 1244, 63 S. Ct. 917 (1943); Martin v. Coyne Int’l Enter. Corp., 966 F.2d 61, 64 (2d Cir. 1992). FLSA coverage is preserved only when the Secretary grants a specific exemption from regulation or acknowledges his lack of authority to regulate. Jones v. Giles, 741 F.2d 245, 249 (9th Cir. 1984); Newhouse v. Robert’s Ilima Tours, Inc., 708 F.2d 436, 439-40 (9th Cir. 1983); Brock v. Pacific Vacuum Truck Co., 27 Wage & Hour Cas. (BNA) 1617, 106 Lab. Cas. (CCH) P34892, 1987 WL 13666, at *14 (C.D. Cal. 1987) (stating that “when [**9] employees are placed by affirmative action of the DOT . . . beyond the scope of the regulations promulgated under the relevant power, the employees are no longer subject to the relevant power”). This is not such a case: the statutory provisions pursuant to which the Secretary promulgated section 395.1, see 49 U.S.C. §§ 3102, 31133, 31136, do not bar the Secretary from regulating Klitzke, and the Secretary has never renounced his authority. Thus, the power to regulate Klitzke existed, even if it were unexercised.
C. The Secretary’s Authority over Intrastate Transportation of Items Originating Out of State
Finally, Klitzke contends that because his route is entirely within the state of Oregon, his hours of work are not subject to regulation by the Secretary. HN8 To fall within the Secretary’s regulatory authority, transportation must be
(1) between a place in –
(A) a State and a place in another State;
(B) a State and another place in the same State through another State . . . .
49 U.S.C. § 10521(a)(1)(A), (B); see Walling v. Jacksonville Paper Co., 317 U.S. 564, 570, 87 L. Ed. 460, 63 S. Ct. 332 (1943) (stating that, in writing the act, “Congress did not exercise . . . the full [**10] scope of the commerce power”); Walling v. American Stores Co., 133 F.2d 840, 845 (3d Cir. 1943); see 28 C.F.R. § 782.7(a). But this jurisdiction necessarily extends to transportation within a state that “is a practical continuity of movement from the manufacturers or suppliers without the state, through [a] warehouse and on to customers whose prior orders or contracts are being filled . . . .” Walling v. Jacksonville Paper Co., 317 U.S. at 569; IBT v. ICC, 921 F.2d 904, 907 (9th Cir. 1990) (citing Texas & N.O. R.R. v. Sabine Tram Co., 227 U.S. 111, 122, 57 L. Ed. 442, 33 S. Ct. 229 (1913)). Whether any particular shipment is interstate is determined on an ad hoc basis:
HN9 Whether transportation is interstate or intrastate is determined by the essential character of the commerce, manifested by shipper’s fixed and persisting transportation intent at the time of the shipment, and is ascertained from all of the facts and circumstances surrounding the transportation.
Southern Pac. Trans. Co. v. ICC, 565 F.2d 615, 617 (9th Cir. 1977) (citation omitted) (emphasis in original).
[**11] In this case, Steiner receives its customers’ orders and immediately places them with the out-of-state vendors. The orders are placed for specific customers, but it is Steiner, rather than its customers, which is the customer of the out-of-state vendors. The vendors ship the goods to Steiner by common carrier. Once Steiner receives its shipments, it unloads, catalogs, relabels, and distributes them – usually within two days.
In Jacksonville Paper the Supreme Court held:
HN10 [*1470] A temporary pause [in a warehouse] does not mean that they [the goods] are no longer “in commerce” within the meaning of the [motor carrier act]. . . .
. . . The contract or understanding pursuant to which goods are ordered, like a special order, indicates where it was intended that the interstate movement should terminate.
317 U.S. at 568-69. In that case, the company placed special orders with out-of-state vendors for its own customers. The vendors used common carriage to deliver the goods to the carrier’s terminal, where Jacksonville Paper’s trucks would pick up the ordered items. The trucks would then take them to JacIvanks Ivan doesn’t meetonville Paper’s own warehouse, where they were “unloaded from [**12] the trucks, brought into the warehouse, checked, reloaded, and sent on to the customer during the day or as early as convenient.” Id. at 567. The Supreme Court concluded that “there [was] a practical continuity of movement of the goods until they reached the customers for whom they [were] intended,” id. at 568, and that Jacksonville Paper employees engaged in the final stages of distribution were therefore covered by the motor carrier act.
The rule of Jacksonville Paper governs here: even though the shippers did not know the goods’ ultimate destinations, the orders were placed and the goods were shipped to satisfy contracts between Steiner and its customers that specified a final place of delivery within Oregon other than the Steiner warehouse. The goods were therefore in “continuous transportation” until delivered to Steiner’s customers. See Reich v. American Driver Serv., Inc., 33 F.3d 1153, 1155 n.3 (9th Cir. 1994); see also Shew v. Southland Corp., 370 F.2d 376, 380 (5th Cir. 1966) (holding that Southland’s HN11 intrastate shipment to its retail outlets of goods that it had ordered from out-of-state vendors and had received by common carriage was subject [**13] to regulation by the Secretary of Transportation).
(Klitzke v. Steiner Corp. (9th Cir. 1997) 110 F.3d 1465, 1467-1470.)
Top of Form
B. Motor Carrier Exemption to the Fair Labor Standards [*11] Act
Plaintiffs assert that they are entitled to overtime payment under HN4 the FLSA, which requires employers to pay overtime wages to employees who work more than forty hours in a week. 29 U.S.C. § 207(a)(1) (2004). Employees who operate vehicles in interstate activities that require them to transport property essential to their job duties, however, are exempt from the overtime compensation requirements of the FLSA. Friedrich v. U.S. Computer Servs., 974 F.2d 409, 419 (3d Cir. 1992). The burden is on the employer to prove the applicability of this exemption. Id. at 412 (“It is the employer’s burden to affirmatively prove that its employees come within the scope of the overtime exemption and any exemption from the Act must be proven plainly and unmistakably.” (citations omitted)).
HN5 The motor carrier exemption applies to employees for whom the Secretary of Transportation may prescribe requirements for qualifications and maximum hours of service under the Motor Carrier Act, 49 U.S.C. § 31502. 29 U.S.C. § 213(b)(1) (2004). Under § 31502, the Secretary of Transportation is permitted [*12] to set maximum hours for employees of (1) motor carriers and (2) motor private carriers when needed to promote safety of operation. 49 U.S.C. § 31502(b) (2004). A “motor carrier” is defined as “a person providing motor vehicle transportation for compensation.” 49 U.S.C. § 13102(12). A “motor private carrier” is defined as a person, other than a motor carrier, transporting property by motor vehicle when:
(A) the transportation is as provided in section 13501 of this title;
(B) the person is the owner, lessee, or bailee of the property being transported; and
(C) the property is being transported for sale, lease, rent, or bailment or to further a commercial enterprise.
49 U.S.C. § 13102(13) (2004). Section 13501 HN6 gives the Secretary of Transportation jurisdiction over transportation by motor carrier if, inter alia, passengers or property are transported by motor carrier:
(1) between any place in –
(A) a State and any place in another State . . .
(B) a State and another place in the same State through another State;
49 U.S.C. § 13501 (2004); [*13] see also 29 C.F.R. § 782.2 (2004). In the present case, the dispute between the parties concerns whether the transportation provided is within § 13501 and, as such, exempts Plaintiffs from the FLSA overtime requirements under the motor carrier exemption.
Although the transportation provided by the drivers in the present case does not cross state lines, HN7 the interstate commerce requirement can be satisfied if the products being transported within the borders of one State are involved in a “‘practical continuity of movement’ in the flow of interstate commerce.” Friedrich, 974 F.2d at 413 n.6; Bilyou v. Dutchess Beer Distribs., Inc., 300 F.3d 217, 223 (2d Cir. 2002) (quoting Walling v. Jacksonville Paper Co., 317 U.S. 564, 568, 87 L. Ed. 460, 63 S. Ct. 332 (1943)); see also 29 C.F.R. § 782.7 (2004). “The characterization of such transportation as interstate or intrastate depends upon the ‘essential character’ of the shipment.” Foxworthy v. Hiland Dairy Co., 997 F.2d 670, 673 (10th Cir. 1997). “Crucial to a determination of the essential character of a shipment is the shipper’s [*14] fixed and persisting intent at the time of shipment.” Id. at 673; see also Project Hope v. M/V Ibn Sina, 250 F.3d 67 (2d Cir. 2001) (holding whether transportation is of interstate nature can be “determined by reference to intended final destination” of transportation when that ultimate destination was envisaged at time transportation commenced); Intn’l Bhd. of Teamsters v. ICC, 921 F.2d 904, 908 (9th Cir. 1990) (holding that essential character of shipment is determined by focusing on “the shipper’s fixed and persisting intent at the time of shipment”).
In the present case, the parties dispute the appropriate test for the Court to employ in order to determine the shipper’s intent. Plaintiffs assert that the Court should use the test developed by the Interstate Commerce Commission (“ICC”) in 1957, whereas Defendants advocate the use of an alternate test developed by the ICC in 1992.
In 1957, the ICC formulated a three-prong test to aid in the determination of a shipper’s “fixed and persisting intent at the time of shipment,” where “the transportation was confined to points in a single State from a storage terminal ofcommodities [*15] which have had a prior movement by rail, pipeline, motor, or water from an origin in a different State.” 29 C.F.R. § 782.7 (citing Ex Parte No. MC-48 (71 M.C.C. 17, 29)); Baird v. Wagoner Transp. Co., 425 F.2d 407, 409 (6th Cir. 1970) (same); Foxworthy v. Hiland Dairy Co., 997 F.2d 670, 672-73 (10th Cir. 1993)(same). This test, which is set out in 29 C.F.R. 782.7(b)(2), provides that:
There is not fixed and persisting intent [to ship via interstate commerce] where: (I) At the time of shipment there is no specific order being filled for a specific quantity of a given product to be moved through to a specific destination beyond the terminalstorage, and (ii) the terminal storage is a distribution point or local marketing facility from which specific amounts of the product are sold or allocated, and (iii) transportation in the furtherance of this distribution within the single State is specifically arranged only after sale or allocation from storage.
29 C.F.R. 782.7(b)(2).
In Baird v. Wagoner Transp. Co., 425 F.2d 407 (6th Cir. 1970), the Sixth Circuit adopted the [*16] ICC’s 1957 test. 425 F.2d at 411. In Baird, the defendant, Standard Oil, shipped petroleum products from out-of-state to a terminal in Muekegon, Michigan, based upon the “sophisticated” forecasts of its Michigan customers’ needs. Id. at 409, 411. Customers placed their orders with Standard’s sales department either by means of requirements contracts or by placing single orders either regularly or irregularly. Id. These orders informed the terminal’s manager and the shipper of the quantities and destinations of the deliveries. Id.Even though Standard knew the identities of its Michigan customers, it did not know exactly the amount of petroleum products each customer would order when it shipped the products to Muskegon. Id. at 411. Using the ICC’s three-part test, the Sixth Circuit found the transportation was via intrastate commerce because the terminal where the products were shipped was essentially a “local marketing facility” as: (1) final delivery arrangements were not made until after the product was stored at the terminal; (2) the forecasts were not specific orders, but merely estimates; and (3) the terminal’s “through-put [*17] rate” was only six times its capacity. As the product at the terminal in Baird was “inventory-in-store,” the court found that the transportation provided intrastate was not part of a flow of the product in interstate commerce. Id.
In subsequent years, courts determined that other factors were relevant to the determination of whether there is a fixed and persisting intent to ship products in interstate commerce including:
the length of time movement of the product is interrupted by storage; whether the product distribution center has a low ‘through-put’ compared to its storage capability; whether the products are shipped on a ‘predetermined’ ordering cycle; whether the carrier is in continuous possession of the product until delivery; whether the product is processed or commingled in any way at the storage location; whether the final destination is designated by the out-of-state shipper or by an instate intermediator; whether the goods were intended for particular customers; and whether temporary storage simply provides an efficient opportunity to convert the means of delivery from one form of transportation to another.
Foxworthy, 997 F.2d at 673 [*18] (citing Middlewest Motor Freight Bureau v. ICC, 867 F.2d 458 (8th Cir. 1988); Texas v. United States, 866 F.2d 1546, 1556-57 (5th Cir. 1989); Baird, 425 F.2d at 412; Galbreath v. Gulf Oil Corp., 413 F.2d 941, 947 (5th Cir. 1969)).
HN8 In 1990, the Fifth and Ninth Circuits noted that the 1957 test has been phased out, and the Eighth Circuit specifically declined to adopt it, reasoning that it was “outmoded.” Roberts v. Levine, 921 F.2d 804, 812 (8th Cir. 1990) (noting test used in Baird is “outmoded” and declining to adopt it); California Trucking Ass’n v. ICC, 900 F.2d 208, 213 (9thCir. 1990) (“Eventhough the ICC has never explicitly stated that it was abandoning the more structured  test, it appears that its use of that standard has been refined, if not phased out.”); Central Freight v. ICC, 899 F.2d 413, 421 (5th Cir. 1990) (stating that ICC “appears to have implicitly recharacterized the applicable test”). These circuit courts approved the more recent test developed by the ICC in its 1986 decision in Armstrong World, Inc. v. ICC, 2 I.C.C.2d 63, 69 (1986), [*19] affirmed by the Fifth Circuit in Texas v. United States, 866 F.2d 1546 (5th Cir. 1989). Roberts, 921 F.2d at 812; California Trucking, 900 F.2d at 212-13; Central Freight, 899 F.2d at 421. In Armstrong, the ICC broadened the relevant inquiry, holding that:
The determination of whether transportation between two points in [a] State is interstate (or foreign) or intrastate in nature depends on the “essential character” ofthe shipment . . . Crucial to this determination is the shipper’s fixed and persisting intent at the time of shipment. . . .[and] is ascertained from all the facts and circumstances surrounding the transportation.
Roberts, 921 F.2d at 812 (quoting Armstrong test).
Most recently, HN9 in a 1992 Policy Statement and a subsequent 1994 administrative decision involving delivery of petroleum products, the ICC established guidelines to determine the intent of the shipper from the facts and surrounding circumstances. Policy Statement, No. MC-207, 8 I.C.C.2d 470, 1992 MCC LEXIS 50 (Apr. 27, 1992); Advantage Tank Lines, Inc., No. MC-C-30198, 10 I.C.C.2d 64 [*20] (Mar. 2, 1994). The Policy Statement was derived from cases decided by the ICC, federal courts, and the Supreme Court that explained the differences between interstate and intrastate trucking services provided within a single state. HN10 The ICC outlined the following factors to be “considered in establishing that the in-State for-hire motor transportation component is part of a continuing movement in interstate commerce.” 1992 MCC LEXIS 50, at *4. First, the ICC explained that interstate intent may be found where:
Although the shipper does not know in advance the ultimate destination of specific shipments, it bases its determination of the total volume to be shipped through the warehouse on projections of customer demand that have some factual basis, rather than a mere plan to solicit future sales within the State. The factual basis for projecting customer demand may include, but is not limited to, historic sales in the State, actual present orders, relevant market surveys of need.
Id. Additionally, HN11 the Commission stated that the following was also indicative of interstate intent: (1) “no processing or substantial modification of substance occurs at the [*21] warehouse or distribution facility”; (2) “while in the warehouse, the merchandise is subject to the shipper’s control and direction as to the subsequent transportation”; (3) “modern systems allow tracking and documentation of most, if not all, of the shipments coming in and going out of the warehouse or distribution center”; (4) “the shipper or consignee must bear the ultimate payment for transportation charges even if the warehouse or distribution center directly pays the transportation charges to the carrier”; (5) “the warehouse utilized is owned by the shipper”; (6) “the shipments move through the warehouse pursuant to a storage in transit tariff provision.” Id.
In their motions for summary judgment, Plaintiffs argue that the 1957 test should be applied whereas Defendants advocate the 1992 test. HN12 Many reasons compel the application of the more recent test delineated by the ICC. First and foremost, the determination regarding whether the commerce at issue is interstate or intrastate has always been determined by a totality of circumstances. Atlantic Coast Line R.R. v. Standard Oil Co., 275 U.S. 257, 268, 269, 72 L. Ed. 270, 48 S. Ct. 107 (1927)(holding that in order to determine [*22] whether commerce is inter-or intra states, courts must analyze “the essential character of the commerce” by examining the facts). Moreover, since its inception, many courts, including the Baird court that first adopted the 1957 test, have treated the test merely as starting point from which to look at the totality of circumstances and have looked to factors outside the three-part test in order to determine a shipper’s intent. See, e.g., Baird, 425 F.2d at 412; Galbreath, 413 F.2d at 947; Middlewest, 867 F.2d at 458; Foxworthy, 997 F.2d at 673. Additionally, before the ICC revised its older test, three circuit courts noted that the 1957 test was outmoded. Roberts, 921 F.2d at 804; California Trucking, 900 F.2d at 208; Central Freight, 899 F.2d at 413. Finally, the ICC is now using the flexible multi-factor test in its own decisions. See, e.g., Advantage Tank Lines, Inc., No. MC-C-30198, 10 I.C.C.2d 64 (Mar. 2, 1994). Therefore, I will apply the 1992 test and consider the seven factors to determine from the totality of the circumstances whether [*23] there is a fixed and persistent intent to ship the product in a practical continuity of movement in the flow of interstate commerce.
Considering these factors, it is clear that Defendant has met its burden to demonstrate that it has a fixed and persistent intent to ship its product via interstate commerce. The record demonstrates that Defendant determines how much product to ship via pipeline and when to ship it based on customer demand projections, which takes into consideration historical need and anticipated weather conditions, rather than solicitation of future sales. (Russell Aff. PP 5, 7; Russell Dep. at 33-38, 47; Fioretto Dep. at 11-13; Fioretto Aff. PP 5-7.) Additionally, Mohawk takes title to the product once it enters the pipeline out-of-state and no processing occurs from the time it enters the pipeline to the time it reaches Mohawk’s customers. (Russell Aff. P 8; Russell Dep. at 30-33.) Moreover, Mohawk retains title to the product while it is in storage, which during the winter months is a short period of time, and keeps detailed records of each leg of the trip the product takes from origin to destination. (Russell Aff. P 8; Fioretto Dep. at 15; Russell Dep. at 39-40.) [*24] Detailed documentation is generated when the product enters the pipeline, when product enters and leaves the terminal, and, in cases where product goes to a bulk plant, when product enters and leaves the bulk plant. (Russell Dep. at 51-53.) All of these factors indicate that Defendant employs Plaintiffs to complete the shipment of its product from an out-of-state location in a continuity of movement to its ultimate destination. Therefore, because the transportation provided by Plaintiffs is part ofinterstate commerce, the motor carrier exemption to the FLSA applies and summary judgment is granted in Defendant’s favor.
(Atl. Indep. Union v. Sunoco, Inc. (E.D.Pa. June 16, 2004, No. 03-4389) 2004 U.S.Dist.LEXIS 11223, at *10-24.)