Marshall v. Union Pacific Motor Freight Co., 79-3273

Citation650 F.2d 1085
Decision Date13 July 1981
Docket NumberNo. 79-3273,79-3273
Parties25 Wage & Hour Cas. (BN 1, 92 Lab.Cas. P 34,057 Ray MARSHALL, Secretary of Labor, United States Department of Labor, Plaintiff- Appellant, v. UNION PACIFIC MOTOR FREIGHT COMPANY, a Corporation, Defendant-Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)

Kerry L. Adams, Dept. of Labor, Washington, D. C., argued, Daniel W. Teehan, San Francisco, Cal., Lois G. Williams, Washington, D. C., on brief, for plaintiff-appellant.

Robert M. White, Vorkink, White, Bishop & Asay, Los Angeles, Cal., for defendant-appellee.

Appeal from the United States District Court for the Central District of California.

Before SCHROEDER, PREGERSON, and REINHARDT, Circuit Judges.

REINHARDT, Circuit Judge:

The Secretary of Labor seeks to enjoin Union Pacific Motor Freight Company from failing to pay past and future overtime compensation to its dispatchers. The Secretary contends that Union Pacific's failure to pay overtime violates section 7 of the Fair Labor Standards Act, 29 U.S.C. § 207(a)(1). He also contends that the violation was "willful" and that the three year statute of limitations applies. 29 U.S.C. § 255(a). Union Pacific argues that its dispatchers' duties affect the safety of operation of vehicles used in interstate commerce and that its dispatchers are subject to regulation by the Secretary of Transportation under section 4 of the Motor Carrier Act, 49 U.S.C. § 304, and therefore exempt from the overtime provisions of the Fair Labor Standards Act under 29 U.S.C. § 213(b)(1). Union Pacific also contends that even if its dispatchers are not exempt from the overtime provision of the Fair Labor Standards Act, the failure to pay overtime compensation was not "willful" and any recovery should be subject to the two rather than the three year statute of limitations.

The district court found that Union Pacific's dispatchers are exempt from the overtime provisions of the Fair Labor Standards Act. The court concluded that their duties affect the safety of operation of defendant's business and that the power to regulate their qualifications and hours of service is vested in the Secretary of Transportation. The court also found, alternatively, that the defendant's failure to pay overtime compensation was not "willful" within the meaning of the Act's limitations provision. Therefore, the district court held that any claim for unpaid compensation would be subject to the two year statute of limitations.

Background

The defendant, Union Pacific Motor Freight Company, operates as a motor common carrier and is engaged in the movement of goods in interstate commerce. Union Pacific operates under the authority of the Interstate Commerce Commission (hereinafter ICC). Pursuant to this authority, Union Pacific handles freight that moves in part by rail on rail bills of lading at rail rates. There is no dispute that Union Pacific is a covered employer within the meaning of the Fair Labor Standards Act.

The facts regarding the nature of the dispatchers' duties are not in dispute. During the period in question, Union Pacific's dispatchers performed both as inside dispatchers and outside, or gate, dispatchers. Inside dispatchers schedule and direct the pickup and delivery of trailers and containers that move over the railroad. They transmit the alignment schedule for train loading and unloading as established by the railroad foremen. Further, on certain limited occasions inside dispatchers have performed other duties, including the loading and unloading of trailers from flatcars.

The job of outside, or gate, dispatcher was created to control unsafe and congested conditions inside the terminal that inside dispatchers could not effectively handle when Union Pacific's business expanded. Outside dispatchers stand at the gate to the rail yard to check trailers in and out when they are brought to the terminal for loading onto, or are leaving the terminal after being unloaded from, rail flatcars.

Union Pacific's dispatchers inspect the company's trailers and containers for defects and damage. Thus, they carry out, in part, Federal Highway Administration inspection, repair, and maintenance regulations. 49 C.F.R. § 396 (1980). They have received some instruction from Union Pacific in the application and enforcement of Federal Highway Administration regulations on the transportation of hazardous materials, and review shipping documents to assure proper notations regarding hazardous materials. 49 C.F.R. § 397 (1980). They inspect shipments of hazardous materials to ensure that the containers and vehicles are properly placarded. Inspection of such shipments is required by Department of Transportation regulation, 49 C.F.R. § 177.823 (1979).

In 1966 the Department of Labor conducted an investigation of defendant's failure to pay overtime compensation to dispatchers. At the completion of the investigation, representatives of the Department and the company met and discussed the requirements of the Fair Labor Standards Act and their applicability to the company. The record is far from complete with respect to the ultimate position taken by the parties at that time; however, as a result of the discussion, Union Pacific raised the dispatchers' monthly salary and the Department took no further action. Union Pacific contends that "no significance" should be attached to "this event" and does not urge that the Department acquiesced in the company's actions, misled it in any way, or proferred any erroneous advice, either tacitly or expressly.

The Secretary of Labor has charged Union Pacific with failure to pay overtime compensation to dispatchers for the period since December 1, 1974. During this period Union Pacific paid its dispatchers a straight monthly salary for all hours worked, with no overtime compensation for hours in excess of forty per week.

The Section 7 Violation

Section 7 of the Fair Labor Standards Act requires the payment of overtime compensation to employees covered by that section. 1 Overtime compensation must be paid at not less than one and one half times the regular hourly rate for hours worked in excess of 40 hours per week. Section 7, however, does not cover all employees who are subject to the Act generally. Section 13(b)(1) of the Act 2 exempts from the overtime compensation provision those employees who are subject to the jurisdiction of the Secretary of Transportation under section 4 of the Motor Carrier Act, 49 U.S.C § 304. 3 There is no concurrent coverage of section 7 of the Fair Labor Standards Act and section 4 of the Motor Carrier Act. Levinson v. Spector Motor Service, 330 U.S. 649, 661, 67 S.Ct. 931, 938, 91 L.Ed. 1158 (1947).

The jurisdiction of the Secretary of Transportation under the Motor Carrier Act is "limited to those employees (of common carriers) whose activities affect the safety of operation. The (Secretary of Transportation) has no jurisdiction to regulate the qualifications or hours of service of any others." United States v. American Trucking Ass'ns, Inc., 310 U.S. 534, 553, 60 S.Ct. 1059, 1069, 84 L.Ed. 1345 (1940). 4 For purposes of the section 13(b)(1) exemption of the Fair Labor Standards Act, the Secretary of Transportation need only possess the power to regulate the employees in question. He need not have exercised that power. Levinson, 330 U.S. at 678, 67 S.Ct. at 946; Southland Gasoline Co. v. Bayley, 319 U.S. 44, 46-50, 63 S.Ct. 917, 918-920, 87 L.Ed. 1244 (1943). Thus, if Union Pacific's dispatchers' activities affect the safety of operation of motor vehicles, they are exempt from the Act's overtime compensation requirement under section 13(b)(1). Levinson, 330 U.S. at 671, 67 S.Ct. at 942; American Trucking Ass'ns, Inc., 310 U.S. at 553, 60 S.Ct. at 1068; Crooker v. Sexton Motors, Inc., 469 F.2d 206, 209 (1st Cir. 1972).

Following American Trucking Ass'ns, Inc., the ICC issued a report defining, both affirmatively and negatively, the extent of its jurisdiction to prescribe regulations under the Motor Carrier Act. 28 M.C.C. 125, Ex parte Nos. MC-2 and MC-3 (March 3, 1941). Limiting its jurisdiction to "those employees who devote a substantial part of their time to activities which directly affect the safety of operation of motor vehicles" in interstate commerce, id. at 139, the ICC concluded that drivers, mechanics, loaders and helpers employed by common carriers fall into that category. The Commission excluded from its jurisdiction all other classifications of employees, expressly listing dispatchers as among those employees whose activities do not directly affect safety of operation. 5 The Supreme Court in Levinson, 330 U.S. at 669, 67 S.Ct. at 941, and a companion case, Pyramid Motor Freight Corp. v. Ispass, 330 U.S. 695, 706-707, 67 S.Ct. 954, 959-960, 91 L.Ed. 1184 (1947), approved both the affirmative and negative elements of the ICC's definition of its jurisdiction.

Union Pacific contends that the duties of its dispatchers present a situation not addressed by the ICC or by the Supreme Court in the earlier era of Levinson and Pyramid Motor. Union Pacific notes that since Levinson the jurisdiction of the ICC over employees whose activities affect safety of operation has been transferred to the Secretary of Transportation. 49 U.S.C. § 1655(e)(6)(C). 6 The company points out that the Secretary of Transportation has adopted regulations regarding (1) placarding of hazardous materials, 49 C.F.R. § 177.823 (1979), (2) inspection and maintenance, 49 C.F.R. § 396 (1980), and (3) identification on the bill of lading, of hazardous materials, 49 C.F.R. § 397.19 (1980), all of which impose duties on motor carriers. 7 Union Pacific's dispatchers perform certain limited inspection and enforcement duties pursuant to these regulations, such as reviewing documents to see that they contain the necessary information and ensuring proper placarding of vehicles carrying hazardous materials. Union Pacific...

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