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11th Cir.: Intrastate Travel Of SuperShuttle Drivers Satisfied Motor Carrier Act Exemption, Because Many Customers Were “Through Ticketed” Based On Internet Travel Packages
Abel v. Southern Shuttle Services, Inc.
This case was before the Eleventh Circuit for the second time. Plaintiff, a former driver of Defendant Southern Shuttle Services, Inc.’s airport shuttle vans, filed the action under the FLSA seeking unpaid overtime pay. In the first appeal, the Eleventh Circuit vacated the district court’s entry of summary judgment in Southern Shuttle’s favor because Southern Shuttle’s airport shuttle service did not fall within the “taxicab exemption” to the FLSA’s overtime provisions. See Abel v. S. Shuttle Servs., Inc., 301 F. App’x 856 (11th Cir.2008). After remand, Southern Shuttle filed a second motion for summary judgment, arguing that its airport shuttle van drivers fall under the Motor Carrier Act exemption in 29 U.S.C. § 213(b)(1). The district court agreed and granted Southern Shuttle summary judgment. On appeal, the Eleventh Circuit affirmed.
The Court outlined the following facts pertinent to its inquiry:
“Southern Shuttle operates a shared-ride airport shuttle, known as “SuperShuttle,” that transports passengers to and from three South Florida airports (Miami International Airport, Palm Beach International Airport and Fort Lauderdale-Hollywood International Airport). From December 19, 2005 to June 24, 2007, Abel worked for Defendant Southern Shuttle as a shuttle driver, driving passengers to and from airports. Abel, like all shuttle drivers, was paid commission and tips, but not overtime compensation. Abel’s employment ended after he refused to transport a passenger with a payment voucher and made the passenger exit the shuttle van, in violation of Southern Shuttle’s policy.
The shuttles are large nine- and ten-person passenger vans. The shuttles pick up passengers at one of the airports and take them to any location in the area (such as a residence, office or hotel), or pick them up at any location in the area and take them to one of the airports. Shuttle drivers do not transport passengers to or from locations outside of Florida. Some shuttle passengers are transported to the airports so they can travel via air carrier to other states or countries. Other shuttle passengers are transported from the airports after having flown from other states or countries.
Many shuttle passengers arrange for shuttle transportation by contacting Southern Shuttle directly. Passengers traveling to the airport make reservations ahead of time and schedule a trip to the airport. Similarly, passengers traveling from the airport check in at a SuperShuttle airport kiosk or counter or with a curbside representative to be assigned to the next available shuttle.
Southern Shuttle’s president, Mark Levitt averred that: (1) “[a] large portion of the reservations made with Southern Shuttle are through internet package deals wherein a traveler buys a package deal from a third party company that includes airfare, hotel accommodations and transportation to and from the airport”; (2) “the traveler receives a voucher for free transportation to and from the airport and provides the voucher to Southern Shuttle in lieu of payment”; and (3) “Southern Shuttle then prepares an invoice to the third party company for payment.” These third party companies include internet travel web sites such as Expedia.com, Travelocity, Orbitz, CheapTickets, a German company called Viator, a company in the United Kingdom called Get a Bed, and American Express, among others.”
Affirming the lower court’s decision, the Eleventh Circuit reasoned:
“[T]he Supreme Court’s Morris decision involved a general cartage business that primarily transported steel around the Detroit area either within local steel plants or to and from local steel plants. 332 U.S. at 427, 68 S.Ct. at 133. A small percentage of the employer’s trips, roughly four percent, involved transporting miscellaneous freight to and from Detroit boat docks, railroad depots and freight terminals. Id. at 427 & n. 7, 68 S.Ct. at 133 & n. 7. Although these trips did not cross state lines, they nonetheless met the de minimus interstate commerce requirement because they transported freight “in interstate commerce, either as part of continuous interstate movements or of interstate movements begun or terminated in metropolitan Detroit.” Id. at 427, 432-33, 68 S.Ct. at 133, 136.
Other cases make clear that trips within a single state are made in interstate commerce when they are part of “a practical continuity of movement of the goods” in interstate commerce. Walling v. Jacksonville Paper Co., 317 U.S. at 568, 63 S.Ct. at 335 (involving wholesale distributor of paper products made outside the state but transported only to customers within the state); see also Baez, 938 F.2d at 181-82 (involving armored trucks delivering to Florida banks checks and other instruments bound for banks outside Florida); Galbreath v. Gulf Oil Corp., 413 F.2d 941 (5th Cir.1969) (involving oil company’s transport within Georgia of petroleum products originating from refineries in Texas and Mississippi); Opelika Royal Crown Bottling Co. v. Goldberg, 299 F.2d 37 (5th Cir.1962) (involving wholesale soft drink distributor transporting drinks bottled in Georgia from Alabama warehouse to Alabama customers and returning empty bottles to Alabama warehouse, where other trucks took them back to Georgia).
The Third Circuit distinguished the transportation of passengers from goods. See Packard v. Pittsburgh Transp. Co., 418 F.3d 246 (3d Cir.2005). The employer in Packard provided transportation to the elderly and disabled in Allegheny County, which included trips to train and bus stations and to the airport. Id. at 248-49. The Third Circuit concluded that this transportation service did not fall within the Secretary’s jurisdiction because it was not “in practical continuity with a larger interstate journey.” Id. at 258. Because Morris involved transportation of goods not passengers, the Third Circuit looked at cases arising in other contexts that defined interstate transportation of passengers, including United States v. Yellow Cab Co., 332 U.S. 218, 67 S.Ct. 1560, 91 L.Ed. 2010 (1947), overruled on other grounds by Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 104 S.Ct. 2731, 81 L.Ed.2d 628 (1984), a Sherman Act case.
In Yellow Cab, the Supreme Court described interstate commerce as “an intensely practical concept drawn from the normal and accepted course of business.” Id. at 231, 67 S.Ct. at 1567. Because “the limits of an interstate shipment of goods” may be different than “the commonly accepted limits of an individual’s interstate journey,” courts must “mark the beginning and end of a particular kind of interstate commerce by its own practical considerations.” Id. In light of these practical considerations, the Supreme Court concluded that, “in the absence of some special arrangement,” a taxi ride to or from a railroad station at the beginning or end of an interstate journey ordinarily is a local trip that is not within interstate commerce. Id. at 231-32, 67 S.Ct. at 1567. However, where the railroad “contract[s] with the passengers to supply between-station transportation in Chicago,” the taxi ride “is clearly a part of the stream of interstate commerce.” Id. at 228, 67 S.Ct. at 1565-66. The Supreme Court explained that “[w]hen persons or goods move from a point of origin in one state to a point of destination in another, the fact that a part of that journey consists of transportation by an independent agency solely within the boundaries of one state does not make that portion of the trip any less interstate in character.” Id. at 228, 67 S.Ct. at 1566.
Relying on the distinctions drawn in Yellow Cab, the Third Circuit noted that the transportation of the elderly and disabled in Packard “involves no joint fare or ticketing arrangement, and no prior arrangement of any kind, contractual or otherwise, with the railroads, airlines, or other companies.” Packard, 418 F.3d at 258. The Third Circuit cited “through ticketing” as “one example of a common arrangement involving both intra and interstate portions of passenger transport” but concluded that it was “not the only means of establishing that passenger transport operating intrastate is in practical continuity with a larger interstate journey.” Id. (emphasis omitted). Highlighting the “lack of coordination with other transportation,” such as through “a prepackaged tour,” the Third Circuit concluded that the transportation service in Packard was “purely intrastate.” Id.
4. Southern Shuttle
Guided by the interstate commerce principles in Walters, Morris and Yellow Cab, we conclude that the purely intrastate transport of passengers to and from an airport may, under certain circumstances, constitute interstate commerce and thus bring the transportation company within the jurisdiction of the Secretary of Transportation. Those circumstances are present here.
Many of Southern Shuttle’s passengers to and from the airport have either just flown from, or are about to fly to, places outside the state of Florida. A large portion of Southern Shuttle’s reservations are made via travel websites on the internet. Travelers buy package deals from these internet travel companies that include hotel accommodations and airfare in addition to transportation to and from the airport. The internet travel companies provide their package-deal customers with a voucher for free airport transportation, which the customers use to board Southern Shuttle’s airport shuttles. Southern Shuttle then uses the collected vouchers to invoice the internet travel company for payment. In other words, Southern Shuttle’s local transport of these package-deal travelers has a “practical continuity of movement” with the overall interstate journey.
Furthermore, Southern Shuttle’s arrangement with internet travel companies to provide airport shuttle service for their package-deal customers meets the “common arrangement” requirement discussed in Walters. Indeed, Southern Shuttle’s voucher system resembles in many respects the voucher system the bus company used for cruise ship passengers in Walters. In sum, we conclude that Southern Shuttle has shown that it is subject to the Secretary of Transportation’s jurisdiction under the MCA.
C. Secretary’s MCA Jurisdiction over Abel’s Work-Related Activities
We next address the second requirement: whether the Secretary’s jurisdiction extends to Abel’s work-related activities at Southern Shuttle. To satisfy this requirement, Southern Shuttle must show that Abel “engage[d] in activities of a character directly affecting the safety of operation of motor vehicles in the transportation on the public highways of passengers or property in interstate or foreign commerce within the meaning of the Motor Carrier Act.” 29 C.F.R. § 782.2(a). Abel does not dispute that, as an airport shuttle driver, he engaged in activities that directly affected the safety of operation of motor vehicles in the transportation of passengers on the public highways. Thus, the only issue presented is whether Abel’s activities as an airport shuttle driver constituted “interstate commerce” within the meaning of the MCA. Here, the issue is easily resolved because Abel performed Southern Shuttle’s core airport shuttle transport activity. Having already concluded that Southern Shuttle’s airport shuttle service was transportation of passengers in interstate commerce that subjected it to the Secretary’s jurisdiction, we conclude that Abel’s activities in driving the airport shuttle also constitute interstate commerce.”
To read the entire decision, click here.
N.D.Ga.: “Yard Hostler” Not Exempt Under The Motor Carrier Act; Defendant Failed To Show That He “Affected The Safety Or Operation Of Motor Vehicles In Transporting Property In Interstate Or Foreign Commerce On The Public Highways”
Billingslea v. Southern Freight, Inc.
The case was before the Court on Defendant’s motion for summary judgment. Defendants’ sought summary judgment finding that Plaintiff, a “yard hostler,” was exempt from the overtime provisions of the FLSA. Although it was not disputed that Defendant was/is a Motor Carrier, subject to the MCA, the Court determined that Defendant had failed to demonstrate that Plaintiff was individually exempt, because there was no showing that as a “yard hostler” he “affected the safety of operation of motor vehicles in transporting property in interstate or foreign commerce on the public highways.” Therefore, Defendant’s motion was denied.
The Court highlighted the following applicable facts:
“Defendant employed Plaintiff as a “yard hostler” at the Nestle distribution facility from August 2008 until November 2008, when he voluntarily resigned [Doc. 22-2, ¶ 20]. Prior to his employment, Defendant required Plaintiff to undergo a drug test and satisfy various physical requirements, consistent with standards set by the Department of Transportation [Doc. 22-2, ¶ 9]. Plaintiff satisfactorily completed the drug test and met the physical requirements [Doc. 22-2, ¶ 10]. Also, prior to his employment, Plaintiff was trained in relevant safety procedures and protocols for his position and acknowledged in writing that he received training on those procedures [Doc. 22-2, ¶ 11].
As a yard hostler at the Nestle distribution facility, Plaintiff drove a “hostler tractor,” which he connected to freight trailers in order to transport the trailers from a staging area to loading docks at the facility [Doc. 22-2, ¶ 12]. Once Plaintiff moved a given trailer to the distribution facility loading dock, the freight in that trailer would be unloaded into the facility; afterwards, Plaintiff would use a hostler tractor to return emptied trailers to the staging area [Doc. 22-2, ¶ 13]. Nothing in the record indicates that Plaintiff ever drove a hostler tractor or any trucks on a public roadway or interstate highway, or that Defendant ever assigned Plaintiff the duty of driving any vehicles on a public roadway or interstate highway. Instead, the record indicates that Plaintiff performed all of his duties as a yard hostler on private property at the distribution facility.
In addition to his core duties, Plaintiff performed various additional tasks designed to promote safety at the distribution facility. At the start of each of his shifts, Plaintiff inspected his assigned hostler tractor for any noticeable maintenance or damage issues [Doc. 22-2, ¶ 14]. If any such issues existed, he reported them to an on-site administrator and made a written report detailing the issues [Doc. 22-2, ¶ 14].
Plaintiff also inspected trucks, trailers, and freight that arrived at the distribution facility. When Plaintiff received refrigerated trucks that he was assigned to transfer, he ensured that the fuel and temperature levels of the truck remained satisfactory during the transfer [Doc. 22-2, ¶ 15]. When Plaintiff received a sealed freight trailer, he often used a bolt cutter to break the trailer’s seal and opened one of the trailer’s back doors before backing the trailer onto the loading dock [Doc. 22-2, ¶ 16]. After opening the back door of a given trailer, Plaintiff would assess whether the freight inside the trailer had shifted during transport or posed any danger to unloaders [Doc. 22-2, ¶ 16]. Plaintiff also inspected trailers that he transported for any noticeable damage, such as broken taillights or flat tires [Doc. 22-2, ¶ 19]. Plaintiff reported such damage to the administrative office and would then move the trailer to the maintenance area of the distribution facility yard [Doc. 22-2, ¶ 19].
When other yard hostlers backed trailers up to the distribution facility’s loading dock, Plaintiff helped “spot” those trailers [Doc. 22-2, ¶ 17]. When Plaintiff backed trailers up to the loading dock, he often chocked the trailer tires to ensure that the trailer did not slide or roll unintentionally after being parked at the loading dock [Doc. 22-2, ¶ 18].
Defendant compensated Plaintiff on an hourly basis and internally classified him as exempt from the overtime compensation requirements of the FLSA, based on its interpretation of an exemption provision in the MCA [Doc. 22-2, ¶ 23].
Defendant and SFI clearly fall into the class of employers whose motor-vehicle transportation the Secretary of Transportation could, and did, regulate. In viewing the evidence in the light most favorable to Plaintiff, however, the Court concludes that Defendant has not borne its burden of showing that Plaintiff, through the actual work that he performed as a yard hostler, “plainly and unmistakably” fell within the terms of the motor carrier exemption to the overtime compensation requirement found in the FLSA. Hodgson, 472 F.2d at 47.”
After discussing the application of the MCA to drivers, driver’s helpers, loaders and/or mechanics, the Court held that Defendant had failed to show Plaintiff, a “yard hostler,” was individually covered by the MCA, because Defendant’s had failed to show that his work affected the safety of operations of motor vehicles in transporting property in interstate or foreign commerce on the public highways. In doing so, the Court drew a clear line between simply safety involved internally at Defendant’s facility, and the safety involved in operating the vehicles outside, on public roadways, in interstate commerce.
“Defendant emphasizes the numerous safety-related activities that Plaintiff undisputedly undertook as a yard hostler and stresses the effect that those activities arguably had on the safe operation of trucks and trailers used to transport property through interstate commerce. But the second prong of the motor carrier exemption test contains two wholly independent parts. To bear its burden of showing that Plaintiff fell within the motor carrier exemption, Defendant was required to show that Plaintiff performed the work of either a driver, driver’s helper, loader, or mechanic, and that such work directly affected the safety of operation of motor vehicles in transporting property in interstate or foreign commerce on the public highways. Though the record reflects that some of Plaintiff’s activities as a yard hostler promoted the safe operation of trucks and trailers transporting property through interstate commerce, nothing in the record indicates that those activities were those of a driver, driver’s helper, loader, or mechanic as defined by the FLSA regulations. Without more, the Court finds summary judgment in Defendant’s favor on the basis of the motor carrier exemption inappropriate.”
S.D.Fla.: Enterprise Coverage Properly Asserted Where Employer Grossed $500K And 2 Or More Employees Handled Goods Which Had Traveled In Interstate Commerce; “Ultimate Consumer” Not Applicable To This Prong Of Enterprise Coverage
Diaz v. Jaguar Restaurant Group, LLC
This case was before the Court on Defendants’ Motion for Summary Judgment, based on an asserted lack of enterprise coverage under the FLSA. The Court denied Defendants’ Motion, based on the fact that Plaintiff demonstrated that 2 or more employees handled goods which had traveled in interstate commerce. While, this appears to be an unquestionable correct reading of the statute, it is significant, because several courts within the Southern District of Florida, have inexplicably failed to read the statute on its face to allow for coverage under similar circumstances.
After considering the historical perspective (and changes) to the FLSA, the Court stated, “in a case where materials are at issue under the second prong of the definition of an enterprise, the “ultimate consumer” limitation has no application. See also Exime, 591 F.Supp.2d at 1371 (Court should “give effect, if possible, to every word and clause” contained in a statute, citing Lowery v. Ala. Power Co., 483 F.3d 1184, 1204-05 (11th Cir.2007)).
Finally, if we step back to ask what the Congress meant in the original 1938 statute with its “goods” limitation found in section 203(i), as opposed to what a very different Congress meant in 1974 by adding “materials” to the enterprise coverage provision in question, the answer is evident from the quite disparate contexts in which these provisions were adopted. The original definition of goods was adopted in a FLSA statute that was purposefully limited to only those individual employees who were themselves participating in interstate commerce. The context of the 1974 amendments was precisely the opposite. A far more liberal Congress was certainly seeking to expand enterprise coverage even further than it did in 1961 and 1966, for employees who were not directly engaged in interstate commerce.”
Addressing recent 11th Circuit case law related to coverage (and distinguishing same), the Court stated, “Fast forward then to 2006 and beyond. We recognize that the cases relied upon by Defendant (including several recent Southern District cases interpreting language found in two Eleventh Circuit cases) ostensibly support a far different construction of enterprise coverage that takes us back to where we were prior to 1974. See, e.g., Thorne v. All Restoration Servs., Inc., 448 F.3d 1264, 1267 (11th Cir.2006) (citing Dunlop in part for the proposition that “[w]hen goods reach the customer for whom they were intended, the interstate journey ends and employees engaged in any further intra state movement of the goods are not covered under the Act.”) (emphasis in original) (citations omitted); Lamonica, 578 F.Supp.2d at 1367 (“[A] customer who purchases an item from Home Depot is not engaged in commerce even if Home Depot previously purchased it from out-of-state wholesalers.”); Navarro, 533 F.Supp.2d at 1226 (“[T]he out-of-state shippers send the parts to the local dealer, where they are kept until they are purchased in the local market. Therefore, the interstate journey stops when the parts reached [sic] the local dealer.”).
To the extent these district court were applying the second prong of enterprise coverage under section 203(s)(1)(A)(i), which is at issue here, they may be over-relying on distinguishable, but more recent, Eleventh Circuit cases, and overlooking the analysis of the question in Dunlop following the 1974 amendments to the FLSA.
So where did the confusion originate? It seems to have begun with the Eleventh Circuit panel decision’s summary discussion of Dunlop in Thorne v. All Restoration Services, which was a case decided entirely under the individual coverage provisions of the FLSA. A worker, Thorne, who was employed by a small mold restoration company sued for overtime compensation under the FLSA. Thorne claimed that the company was covered by the enterprise coverage as well as the individual coverage provisions of the statute. At trial, however, only Thorne testified in his case in chief. The trial court, Judge Cohn from our district, entered Rule 50 judgment as a matter of law on both the enterprise coverage and individual coverage components of the case. SeeCase No. 04-60095, D.E. 46 (S.D. Fla. Feb 1, 2005).
On appeal to the Eleventh Circuit, Thorne did not challenge Judge Cohn’s finding that enterprise coverage had not been established as a matter of law. Apparently there was no testimony in the record at that point in the trial that even the $500,000 sales threshold had been met. See Brief for Appellant, 2005 WL 4814060, at *3-7 (11th Cir. May 31, 2005). The Court’s opinion expressly acknowledged that enterprise coverage was no longer at issue on appeal. 448 F.3d at 1265 n. 1.
The Court then examined whether Judge Cohn’s determination as to individual coverage should be upheld. The individual coverage issue, as the Court pointed out, turned on whether Thorne was “directly participating in the actual movement of persons or things in interstate commerce by (i) working for an instrumentality of interstate commerce, e.g., transportation or communication industry employees, or (ii) by regularly using the instrumentalities of interstate commerce in his work, e.g., regular and recurrent use of interstate telephone, telegraph, mails, or travel.” Id. at 1266.That is undoubtedly the test for individual coverage under 29 U.S.C. § 207(a)(1) and the regulations thereunder, 29 C.F.R. §§ 776.23(d)(2), 776.24 (2005).
The statutory definition for enterprise coverage, by contrast, does not only apply to employees with “direct participation” in the “actual movement” of things in interstate commerce. That is a far narrower test found in the first prong of the statute, which is precisely why the 1961, 1966 and 1974 amendments created and expanded enterprise coverage under the statute. See29 U.S.C. § 203(s)(1)(A)(i) (“has employees engaged in commerce or in the production of goods for commerce, or that has employees handling, selling, or otherwise working on goods or materials that have been moved in or produced for commerce by any person”) (emphasis added).
It is telling, for instance, that many of the primary decisions cited by the Eleventh Circuit’s decision in Thorne were from the 1940’s. 448 F.3d at 1266-68 (citing McLeod v. Threlkeld, 319 U.S. 491, 496-97 (1943) (finding that plaintiff’s activities were purely local, and he was not individually engaged in commerce when he merely cooked and cleaned for railroad workers); Kirschbaum v. Walling, 316 U.S. 517, 518-526 (1942)).
The outcome in Thorne is thus entirely expected and non-controversial. The same cannot be said, as it turns out, of the Court’s citation and reliance on the Fifth Circuit’s decision in Dunlop as follows:
Courts distinguish between merchants who bring commerce across state lines for sale and the ultimate consumer, who merely purchases goods that previously moved in interstate commerce for intrastate use. Therefore, a customer who purchases an item from Home Depot is not engaged in commerce even if Home Depot previously purchased it from out-of-state wholesalers.
In Dunlop v. Industrial America Corporation, 516 F.2d 498, 499 (5th Cir.1975), the court was faced with the question of whether a business which consumes gasoline and oil in the process of providing services to its customers is the “ultimate consumer” of those goods, and therefore not subject to FLSA coverage. The defendant corporation operated a wholly intrastate garbage removal service, and its only tie to interstate commerce was that its employees used gasoline and oil products which had moved in interstate commerce in operating and maintaining the company’s trucks. The court held that the defendant was not covered because it was an “ultimate consumer” of the goods. Id. at 499-502.
448 F.3d at 1267-68.
From this discussion, one is left with two important impressions. One is that Dunlop stands for that proposition today. And, two, is that this proposition applies equally to individual coverage cases like Thorne, as well as enterprise coverage cases like Dunlop.Both impressions are flatly incorrect. First, Dunlop does not stand for the proposition that, even after the 1974 amendments, enterprise coverage under the second prong of subsection s(1)(A)(i) fails when an entity is the ultimate consumer of “materials” as well as goods that have moved in interstate commerce in the past. The Thorne decision never explained that the holding in Dunlop was out-dated by the Court’s own admission after 1974. That omission was not critical, of course, to the outcome in Thorne.Frankly, the entire citation and reference to Dunlop was indeed dicta because the holding in Thorne was expressly not applicable to enterprise coverage.
Second, Dunlop also does not apply to individual coverage analysis.Dunlop was focused on the second prong of the enterprise definition. Unlike the first prong of that definition, individual coverage analysis is entirely distinct from the “goods or materials” prong of the statute. Dunlop thus has no relevance to a case limited to individual coverage. Similarly, Dunlop has no application to an enterprise coverage case that is based on the first prong of the statute. And, for the same reason, Thorne has no relevance to a case governed by the broader second prong of subsection s(1)(A)(i). Yet, Thorne’s reliance on Dunlop seems to suggest quite the opposite.
That is also evident from a later Eleventh Circuit case, Scott v. K.W. Max Invs., Inc., 256 Fed.Appx. 244 (11th Cir.2007). That case, at first blush, appears to have relied on Thorne’s individual coverage analysis and the “ultimate consumer” limitation to decide an enterprise coverage claim. And it has been cited as such by some district court opinions, infra.Yet that opinion did not once mention Dunlop or distinguish its analysis of the expansion of enterprise coverage via the “materials” prong added in 1974. It did not need to do so, in fact, because it was deciding the enterprise coverage issue primarily on the “first prong” of the statute. The court’s holding as to enterprise coverage claim was focused on whether there was any evidence in the record of any “actual movement” of goods in commerce. None was presented except for a single isolated purchase of lumber in interstate commerce that did not qualify as a regular and recurrent practice. With respect to the second prong of enterprise coverage, “goods or materials” that had been moved in commerce in the past, the Court’s discussion was quite limited. “Scott offers no specific argument or any evidence that any of the goods purchased from Home Depot had been moved in or produced for interstate commerce.” Id. at 248.Therefore, we do not read Scott as holding in any way that the ultimate consumer limitation applies to “materials” under the second prong of the statute.
Unlike Judge Seitz’s opinion in Exime, however, several Southern District cases rely on the conclusion that Scott permits the use of individual coverage case definitions to decide enterprise coverage cases as a general matter. This is simply too broad a proposition. With respect to the “goods or materials” prong of the statute, as discussed earlier, the 1974 amendments significantly broadened that definition of enterprise coverage, extinguishing the “ultimate consumer” issue altogether from that prong of the statute. This significant change to the text of the statute did not apply to individual coverage cases governed by 29 U.S.C. § 207(a)(1), nor did it apply to the first prong of the definition of an enterprise under 29 U.S.C. § 203(s)(1)(A)(i).
Like Judge Seitz, we do not choose to follow those cases that read more into the holding in Scott and the dicta in Thorne, and overlook the significance of the holding and analysis found in Dunlop. See, e.g., Lamonica, 578 F.Supp.2d at 1366; Ben-Aime, 572 F.Supp.2d at 1317; Polycarpe, 572 F.Supp.2d at 1321. We certainly do not question the outcome of these decisions to the extent they were based, as several seem to be, on the first prong of the enterprise coverage provision. The ultimate consumer doctrine certainly continues to apply, as it does for individual coverage, to enterprise coverage cases that are so limited. If, on the other hand, the “goods or materials” prong of the statute applies, then there is no longer any need to address the ultimate consumer or “come to rest” doctrine. The dispositive question simply asks whether two or more employees are handling materials, that have traveled in interstate commerce at some point in the past, for an enterprise with at least $500,000 in sales. And while it is true, as Defendants contend, that fulfillment of the statutory business volume requirement is not itself sufficient to create enterprise coverage, “[m] ost, if not every, Circuit Court that has spoken on this issue [including the 11th Circuit, as well as some lower federal courts] ha[ve] … construed the 1974 amendment as expanding enterprise coverage to virtually all employers, so long as that employer satisfies the $500,000 gross sales requirement.”Exime, 372 F.Supp.2d at 1370. “Thus the enterprise commerce test, quite simply, embraces all businesses whose employees regularly handle materials previously moved across inter-state lines.”Id. at 1372.
Having determined, under the current version of the FLSA, Defendants’ employees handled materials that are still “in commerce,” the Court then found that Plaintiff had produced sufficient evidence that they did so on a “regular and recurrent” basis. Therefore, the Court denied Defendants Motion for Summary Judgment.
Although not mentioned by the Court, many of the cases holding contra are up on a consolidated appeal at the 11th Circuit. Therefore, this case, which appears to correctly annunciate the scope of enterprise coverage under the circumstances, will stand if the 11th Circuit similarly reverses the prior contra holdings of several the Florida district courts distinguished by this Court.
N.D.Ill.: Motor Carrier Act (MCA) Inapplicable Where Carrier/Employer Based Orders On Quarterly Forecasts And Items Did Not Have Specific Destination When Came In State
Sedrick v. All Pro Logistics, LLC
Plaintiff sued his employers, alleging that they failed to pay him time and a half for overtime hours worked, as required by the Fair Labor Standards Act (“FLSA”). Plaintiff had previously intended for this to be a representative action, but now sought to pursue relief only on his own behalf. The only question before the Court was whether Defendants are exempted from being required to pay overtime under the FLSA because of the Motor Carrier Act (“MCA”) exemption. Both parties moved for summary judgment on the issue of liability. The Court granted Plaintiff’s Motion denied Defendants’ Motion.
“APL provided transportation services to Bay Valley Foods (“BVF”). BVF produced a coffee creamer (“the product”) which APL transported for BVF. BVF produced the product at a facility in Pecatonica, Illinois. After being manufactured and placed into packaging, the product was assigned to particular customers, and a label was placed on the product to indicate the intended customer. The product was then transported to BVF’s warehouse facility in South Beloit, Illinois, one of several warehouse facilities BVF has throughout the country.
The product was allocated to customers pursuant to quarterly “forecasts” given to BVF by the customers, reflecting the customer’s likely future demand. However, because many BVF customers were large companies with multiple stores-some outside of Illinois and some within Illinois-the specific geographic destination of the product was unknown at the time it was packaged at the Pecatonica facility. The specific quantity a customer would actually receive was not known; a customer’s product allocation remained at the South Beloit facility until the customer contacted BVF and requested that part of its allocation be sent to a particular store, or stores, of the customer. Allocations of the product could remain at the South Beloit warehouse for as little as a day before being sent on to a customer, or as long as a year, after which time the product was recalled and would not be shipped to customers. Depending on the need of the customers, the product would sometimes be delivered within Illinois, and would sometimes be delivered outside of Illinois.”
In finding the MCA inapplicable to the case at bar, the Court explained,
“Applying section 782.7(b)(2) to this case, there was no fixed and persisting intent to move the product interstate at the time Sedrick transported it from Pecatonica to South Beloit. The product transported by Sedrick was assigned to particular customers, but that allocation were based on quarterly forecasts; it was not based on a specific order for a specific quantity to be moved to a specific destination beyond the South Beloit warehouse. § 782.7(b) (2)(i). The South Beloit facility served as a distribution point or local marketing facility from which specific amounts of the product were sold or allocated; the product was held in South Beloit until a customer contacted BVF and requested a specific quantity to be sent to a specific location, at which time BVF either permitted the customer to pick the product up itself, or arranged for the product to be shipped to the customer’s final destination. § 782.7(b)(2)(ii). Finally, transportation of the product from beyond the South Beloit warehouse was not arranged until after the product had arrived at South Beloit. The product remained in the warehouse from as little as one day to as long as a year before shipping arrangements were made. § 782.7(b)(2)(iii). Any product that remained over one year was recycled by BVF.
The Sixth Circuit in Baird v. Wagoner Transportation Co., 425 F.2d 407 (6th Cir.1970) reached the same conclusion based on similar facts. There, petroleum product was moved to a storage facility based on forecasts for particular customers, but was not delivered until a subsequent time when an actual order was made. Id. at 411-12. In that case, the record showed that the final location of the product was known, but the specific quantity to be delivered was unknown until after it arrived at the storage facility, as the original shipments were based on forecasts. Id. The court concluded from this that there was not a fixed and persistent intent to ship goods in interstate commerce. Id. In the case at bar, neither the quantity nor the destination is known. The quantity is unknown because, as in Wagoner Transportation Co., BVF’s production is based on forecasts, but the actual amount delivered may vary and at least some of the product will be recycled by BVF because it will remain at the South Beloit facility for over one year. Second, though the product is allocated by customer, it is not allocated to any customer’s specific destination, and many customers have several destinations where the product can be delivered.”
Thus, the Court concluded, “[b]ecause the product’s final destination was not known when Sedrick moved it from Pecatonica to South Beloit, this movement was not yet part of in an interstate journey, and the provisions of the MCA did not apply. Accordingly, the FLSA exemption for the MCA also did not apply, and Sedrick was entitled to the overtime provisions of the FLSA.”
S.D.Fla.: Telephone Calls, Faxes, Mailings And Other Regular Communications With Out Of State Vendors And Customers Does Not Constitute “Engaging In Interstate Commerce”
Dent v. Giaimo
Plaintiff filed this lawsuit under the Fair Labor Standards Act (FLSA). Starting on July 8, 2006, plaintiff worked as a medical assistant for defendant. Her duties included checking patients in and out of their appointments, verifying insurance coverage, answering the phone, filing, faxing and other clerical duties. She alleges that she often worked over forty hours per week. She also alleges that defendant’s annual gross sales volume exceeds $500,000.00. At issue in this case is whether defendant engaged in interstate commerce.
In another bewildering decision, the District Courts of Florida continue to narrow the scope of the FLSA’s coverage, contra to the Department of Labor’s enforcement policies and virtually all other Circuit and District Courts.
Discussing Enterprise Coverage first, the Court stated:
“As an initial matter, plaintiff cites cases that hold that the second prong of the enterprise coverage test is determinative. She argues that since defendant conceded that his business grossed at least $500,000 per year that this Court should simply deny the motion in its entirety and rely exclusively on the second prong of the test. This Court disagrees. Simply because some judges have recognized that business with annual gross sales volume exceeding $500,000 often also engage in interstate commerce, does not mean that all such business are engaged in interstate commerce. The statute requires that a business meet both prongs of the test before jurisdiction rests in the federal courts.
This Court now turns to the first prong of the test and holds that plaintiff failed to show that defendant had two or more employees regularly and recurrently engaged in commerce, or had two or more employees regularly and recurrently handling, selling, or otherwise working on goods or materials that were moved in or produced for commerce by any person. Plaintiff averred that she was engaged in interstate commerce through long distance phone calls and facsimiles as well as processing patient’s credit card payments. She says that while employed, defendant and an office manager, Ms. Erb, were also employed. Plaintiff, however, did not state that defendant or Ms. Erb engaged in the same type of alleged interstate activity. Plaintiff then states that the company periodically hired other full time employees who engaged in the same activity as plaintiff. Plaintiff, however, failed to provide the frequency with which defendant employed others to engage in the same type of office work that plaintiff alleges she preformed. Moreover, plaintiff failed to allege what percentage of that employee’s time was spent performing the alleged interstate activity.”
Next the Court turned to the issue of whether the Plaintiff was subject to the Individual Coverage of the FLSA:
“In support of a possible claim for individual coverage, plaintiff averred that about 70% of defendant’s patients are not Florida residents, that she regularly used the telephone, internet and facsimile machine to contact out of state insurance companies, and that she processed patients’ credit card payments.
In regards to the fact that some of defendant’s patients were not full time Florida residents, this Court finds the ultimate-consumer doctrine instructive. That doctrine states that goods are no longer in the stream of commerce once obtained by the ultimate consumer thereof. 29 U.S.C. § 203(I); Thorne, at 1267. This Court holds that although some patients may have been residents of other states, defendant was not engaged in interstate commerce if his contact with those patients was primarily local. Defendant averred that he only works within Florida. Defendant is licensed in Florida and other states but his license is “inactive” everywhere except Florida. There is no evidence to suggest that defendant solicited business from patients while they were out of state or that any contact with out of state patients was regular or recurrent.
This Court also holds that plaintiff’s use of the telephone or facsimile machines to make long distance phone calls or use of the internet and credit cards is insufficient to establish jurisdiction. To be considered “engaged in interstate commerce” a business must use a credit card specifically to transact business in interstate commerce. Here, defendant has submitted sufficient evidence to show that his practice is a local enterprise “and the items used in the business proliferated this goal of local service.” Polycarpe v. E & S Landscaping Servs, Inc., 572 F.Supp.2d 1318, 1321-22 (S.D.Fla.2008). This also appears to be the case in regards to internet usage. Pierre C. Bien-Aime v. Nanak’s Landscaping, Inc., 2008 WL 3892160 (S.D.Fla. August 12, 2008). “The fact that the Defendant Company provided services of an exclusively local nature is dispositive. Polycarpe at 1322.
In regards to telephone and facsimile usage, although plaintiff averred that her job duties included contacting out of state insurance companies she did not allege how much of her time was spent conducting these activities. It could be that defendant or Ms. Erb conducted the majority of those activities and that plaintiff only occasionally contacted out of state insurance companies.”
The Court held that Plaintiff failed to show that she regularly and recurrently engaged in interstate commerce.
Defense and Plaintiff attorney’s alike, who regularly handle FLSA cases are scratching their heads with this decision, which, on its face, found issues of fact which should have led to a denial of Defendant’s Summary Judgment Motion. Nonetheless, the Court, pointing out all the factual issues, seemingly applied both an incorrect Summary Judgment standard, and an incorrect reading of the FLSA’s coverage provisions (both Enterprise and Individual) and dismissed what appears to be a perfectly valid case, at least at the Summary Judgment stage.
Of additional concern, a review of the docket reveals that the Court ignored well-settled law and refused to allow the Plaintiff (non-movant) time to conduct limited discovery on the issue of coverage, prior to ruling on Defendant’s Motion, which was filed at the inception of the lawsuit and prior to any discovery.