Baird v. Wagoner Transportation Company

• Decision Date: 17 April 1970
• Docket Number: No. 19570-1.,19570-1.
• Citation: 425 F.2d 407
• Parties: Archie BAIRD et al., Plaintiffs-Appellees and Cross-Appellants, v. WAGONER TRANSPORTATION COMPANY et al., Defendants-Appellants and Cross-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

425 F.2d 407 (1970)

Archie BAIRD et al., Plaintiffs-Appellees and Cross-Appellants, v. WAGONER TRANSPORTATION COMPANY et al., Defendants-Appellants and Cross-Appellees.

Nos. 19570-1.

United States Court of Appeals, Sixth Circuit.

April 17, 1970.

John P. Boeschenstein, Muskegon, Mich., for defendants-appellants and cross-appellees; Schoener, Collinge. Boeschenstein & Barlow, Muskegon, Mich., H. William Butler, Arthur P. Boynton, Clark, Klein, Winter, Parsons & Prewitt, Detroit, Mich., on the brief.

Stephen C. Bransdorfer, Grand Rapids, Mich., for plaintiffs-appellees and cross-appellants; Miller, Johnson, Snell & Cummiskey, James L. Stokes, Grand Rapids, Mich., on the brief.

Laurence H. Silberman, Solicitor of Labor, Bessie Margolin, Associate Solicitor, Carin Ann Clauss, Betty Jo Christian, Attys., U. S. Dept. of Labor, Washington, D. C., Aaron A. Caghan, Regional Atty., on brief as amicus curiae, for George P. Shultz, Secretary of Labor.

Before CELEBREZZE and McCREE, Circuit Judges, and WILSON^*, District Judge.

CELEBREZZE, Circuit Judge.

This is an appeal from the United States District Court for the Western District of Michigan in an action by 19 Wagoner Transportation truck drivers against Wagoner, pursuant to the Fair Labor Standards Act of 1938, as amended in 1961, 29 U.S.C. § 201 et seq. (1964) hereinafter sometimes referred to as "FLSA". The case was tried without a jury and the facts were generally uncontested. The parties stipulated that Wagoner was an "enterprise engaged in commerce within the meaning of Section 3(s) of the Act," 29 U.S.C. § 203(s); and that Wagoner had not paid for and would be liable under the FLSA for certain overtime work which the drivers had done over several years, unless Wagoner was exempted from the maximum hours provisions of the FLSA, 29 U.S.C. §§ 213(b) (1), 216(b). The District Court held that the 19 Wagoner truck drivers were not exempted from the maximum hours provision of the FLSA and awarded them overtime back pay, counsel fees and costs, but denied their claim for liquidated damages. Wagoner appeals and its 19 truck drivers cross-appeal for liquidated damages. 29 U.S.C. §§ 216(b), 260.

Appellant is a motor carrier for hire engaged in the transportation of petroleum products, in bulk, in tank vehicles. At all times herein relevant, Appellant transported petroleum products for a wholly-owned subsidiary of Standard Oil of Indiana hereinafter "Standard". For the past ten years, including the period involved, none of Appellant's drivers ever transported petroleum products outside the State of Michigan, although Appellant did have a dormant Certificate of Public Convenience and Necessity authorizing it to transport petroleum and petroleum products from Granger, Indiana to points in Michigan.

Standard ships its oil to its Muskegon terminal on the basis of highly sophisticated forecasts of its customers' needs. Statistical projections never being precisely accurate, if Standard mis-estimates its customers' actual needs, Standard borrows or buys petroleum from its nearby competitors to fill the orders.

All customer orders are placed with Standard's sales department, which informs the terminal manager and Wagoner of the quantities and destinations of the various petroleum products which are to be delivered to points within Michigan from the Muskegon terminal. Standard gives copies of its forecasts to Wagoner so that Wagoner will have equipment available to handle actual orders. While the evidence did not reveal the average amount of time the petroleum products are in "inventory" pending the receipt of actual orders, Standard acknowledges that the "through-put" of the Muskegon terminal in any given year is about six times its tank capacity. If the terminal tanks were, on the average, one-half full, then petroleum products in the Muskegon terminal would be inventoried for an average length of one month.

Standard has more than 200 customers in the Michigan area served by the Muskegon terminal and Wagoner, under a variety of financial arrangements. Direct shipments to industrial plants and schools compose about 25 to 30 per cent of the shipments from the Muskegon terminal. Sales to some 77 service stations and 70 Standard bulk plants comprise the remaining 70 to 75 per cent of the shipments. The actual method of ordering varies: some customers have requirements contracts; others call each time they want an order; some are regular customers (including its own bulk plants) whose supply is maintained at a level by Standard; while a few customers order on an infrequent and irregular basis. Although Standard knows the identities of all its customers at the time it makes shipments to Muskegon, it does not know precisely the amount of petroleum each customer will actually order.

The sole issue on this appeal is whether the Appellants, who otherwise admit they are covered by the Fair Labor Standards Act, are excluded from its maximum hours provision by Section 13(b) (1) of the Act, 29 U.S.C. § 213(b) (1) (1964).

The FLSA provides that any employee who "is engaged in commerce or in the production of goods for commerce" shall be paid a minimum of "one and one-half times the regular rate at which he is employed" for every hour over 40 hours he works in a workweek. However, an employee is exempted from the benefits of this provision of he is

"(b)

* * * *

(1) Any employee with respect to whom the Interstate Commerce Commission has power to establish qualifications and maximum hours of service pursuant to the provisions of Section 304 of Title 49 (The Motor Carriers Act of 1935)." 29 U.S.C. § 213(b) (1).

The Motor Carriers Act of 1935, 49 U.S.C. § 301 et seq. hereinafter sometimes referred to as MCA extends the power of the Commission to "motor carriers engaged in interstate * * * commerce." 49 U.S.C. § 302(a). "Interstate commerce" is defined under the MCA as

"(10) * * * commerce between any place in a State and any place in another State or between places in the same State through another State, whether such commerce moves wholly by motor vehicle, or partly by motor vehicle and partly by rail, express, or water." 49 U.S.C. § 303(a) (10).

Thus, the Interstate Commerce Commission has the "power to establish qualifications and maximum hours of service" for truck drivers only if they are engaged in "interstate commerce" for purposes of the MCA.

While the parties have stipulated that they are engaged in "interstate commerce" for the purposes of the FLSA, such stipulation does not necessarily require a conclusion that their activities were in "interstate commerce" for the purposes of the MCA. The scope and meaning of "interstate commerce" in each Congressional Act presents a "unique problem in which words derive vitality from the aim and nature of the specific legislation." Federal Trade Commission v. Bunte Brothers, 312 U.S. 349, 351, 61 S.Ct. 580, 85 L.Ed. 881 (1940). Whereas the FLSA covers employees "engaged in commerce or in the production of goods for commerce" 29 U.S.C. §§ 203, 207(a) (1), the MCA only covers employees actually "part of a continuous movement in interstate commerce." Shew v. Southland Corporation (Cabell's Dairy Div.), 370 F.2d 376, 380 (5th Cir. 1966). Whereas the former Act would apply to employees "in the production of goods for commerce" even though such employees handled or sold such goods prior to or after their actual "continuous movement" in interstate commerce, the MCA would not. Galbreath v. Gulf Oil Corporation, 413 F.2d 941 (5th Cir. 1969), 29 U.S.C. § 203(s).

This Court must determine whether the Appellees are employees over whom the Interstate Commerce Commission has power under the MCA. Morris v. McComb, 332 U.S. 422, 68 S. Ct. 131, 92 L.Ed. 44 (1947). If Appellees are within the Commission's power, as defined in the MCA, they are exempted from the maximum hours provisions of the FLSA and not entitled to recovery for overtime. Levinson v. Spector Motor Service, 330 U.S. 649, 67 S.Ct. 931, 91 L.Ed. 1158 (1947).

The Interstate Commerce Commission, after years of extensive hearings (1955-1957), issued industry-wide guidelines to indicate when the transportation of petroleum and petroleum products by motor carriers within a single state is interstate commerce. See Ex Parte No. MC-48, 71 MCC 17 (1957). The criteria used in Ex Parte No. MC-48, were incorporated into an interpretive Bulletin of the Wage and Hour Division, United States Department of Labor outlining the scope of the 13(b) (1) exemption to the FLSA. Code of Federal Regulations § 782.7(b) (2) provides:

"(2) The Interstate Commerce Commission has held that transportation confined to points in a single State from a storage terminal of commodities which have had a prior movement by rail, pipeline, motor or water from an origin in a different State is not in interstate or foreign commerce within the meaning of Part II of the Interstate Commerce Act if the shipper has no fixed and persisting transportation intent beyond the terminal storage point at the time of shipment. See Ex parte No. MC-48 (71 M.C.C. 17, 29). 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 from storage. While Ex parte No. MC-48 deals with petroleum and petroleum products, the determination indicates that the same reasoning applies to general commodities moving interstate into a warehouse for distribution (71 M.C.C. at 27). Accordingly, employees engaged in such transportation are not subject to the Motor

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