Brennan v. Schwerman Trucking Co. of Virginia, Inc., 75-1279

• Decision Date: 12 May 1976
• Docket Number: No. 75-1279,75-1279
• Citation: 540 F.2d 1200
• Parties: 22 Wage & Hour Cas. (BN 983, 78 Lab.Cas. P 33,382 Peter J. BRENNAN, Secretary of Labor, United States Department of Labor, Appellee, v. SCHWERMAN TRUCKING COMPANY OF VIRGINIA, INC., a corporation, Appellant.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 1200

540 F.2d 1200

22 Wage & Hour Cas. (BN 983, 78 Lab.Cas. P 33,382

Peter J. BRENNAN, Secretary of Labor, United States Department of Labor, Appellee, v. SCHWERMAN TRUCKING COMPANY OF VIRGINIA, INC., a corporation Appellant.

No. 75-1279.

United States Court of Appeals Fourth Circuit.

Argued Oct. 9, 1975.

Decided May 12, 1976.

John J. McAleese, Jr., Bala Cynwyd, Pa. (Roger D. Susanin, Palmerton, Pa., Cunniff Bray & McAleese, Bala Cynwyd, Pa., Goddin, Major, Schubert & Hyman, Richmond, Va., on brief), for appellant.

Jacob I. Karro, Atty., U. S. Dept. of Labor, Washington, D. C. (Marvin Tincher, Regional Atty., Nashville, Tenn., William J. Kilberg, Sol. Labor, Carin Ann Clauss, Associate Sol., and Paul D. Brenner, Atty., U. S. Dept. of Labor, Washington, D. C., on brief), for appellee.

Before RUSSELL and WIDENER, Circuit Judges, and WATKINS, District Judge. ^*

WIDENER, Circuit Judge:

This action was instituted by the Secretary of Labor against Schwerman Trucking Company of Virginia, Inc., ¹ a common carrier by motor vehicle engaged in the transportation of fertilizer, gasoline, jet fuel, diesel fuel, and other petroleum type products, to enjoin it from committing certain alleged violations of the Fair Labor Standards Act ² (FLSA). Specifically, the Secretary contends that Schwerman is obliged under 29 U.S.C. §§ 215(a)(2) and 215(a)(5) ³ to compensate its drivers and mechanics in accordance with the maximum hours provisions of the FLSA. ⁴

Schwerman claims that its drivers and mechanics are exempt from the maximum hours provisions by virtue of 29 U.S.C. § 213(b)(1) which provides in part:

"(b) The provisions of section 207 of this title (maximum hours) shall not apply with respect to

(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 . . . ."

49 U.S.C. § 304(a) states in pertinent part that it "shall be the duty of the (Secretary) . . . to regulate common carriers by motor vehicle . . . and to that end (he) may establish . . . qualifications and maximum hours of service of employees, and safety of operation and equipment."

Pursuant to this authority, the Secretary has issued safety regulations governing the qualifications of drivers ⁵ as well as the management, maintenance and operation of motor vehicles employed by such common carriers. ⁶ In addition, the Secretary has made these regulations specifically applicable to motor carriers engaged in the transportation of hazardous materials. ⁷ As a common carrier by motor vehicle, ⁸ Schwerman contends that its drivers and mechanics are subject to the control of the Secretary of Transportation to the exclusion of the Secretary of Labor.

While the district court agreed that Schwerman's drivers and mechanics were subject to the regulations of the Secretary of Transportation issued pursuant to his authority under 49 U.S.C. § 304, it was nevertheless of opinion that they were not exempt from the maximum hours provision of the FLSA. This determination was based upon the assumption that while Schwerman was engaged in some interstate cartage, that cartage was insufficient to bring it within the provisions of 29 U.S.C. § 213. Moreover, the district court was of the view that the fact that Schwerman held a Certificate of Convenience and Necessity issued by the Interstate Commerce Commission and maintained certain records required by the Department of Transportation was not sufficient to relieve the company of its obligations under the FLSA.

We do not agree with the holding of the district court. Based upon a review of the relevant statutory provisions involved, as well as the record, we are of opinion that the district court failed to give controlling weight to the power of the Secretary of Transportation to regulate Schwerman's employees and instead erroneously focused on the extent to which the firm engaged in interstate cartage. This does not give effect to the plain language of § 213. Consequently, the judgment of the district court is reversed.

Schwerman was formed in 1967, when its parent firm purchased the assets and operating authority of Petroleum Transit Corporation, a Virginia firm. Schwerman is a wholly owned subsidiary of Schwerman Trucking Company, a Wisconsin corporation with principal offices in Milwaukee, Wisconsin. Like its subsidiary, the parent corporation is a common carrier by motor vehicle engaged in the transportation of liquid and dry bulk products by tank truck. As of 1974, the parent had authority to operate in approximately 45 states and actually maintained 55 terminals in some 30 states located primarily in the eastern half of the United States. The ICC subsequently approved the purchase and granted temporary operating authority to Schwerman. On January 12, 1970, the ICC awarded Schwerman permanent operating authority and issued it a Certificate of Public Convenience and Necessity. That certificate authorized Schwerman to engage in transportation in interstate or foreign commerce from points in Virginia to points in North Carolina, West Virginia, the District of Columbia, Delaware, Maryland, Georgia, South Carolina and Tennessee.

Schwerman presently operates but one terminal facility, that being located at Norfolk, Virginia. Approximately one-half of Schwerman's drivers operate out of the Norfolk facility. The remainder of its drivers operate from Richmond, Virginia. Despite the fact that the company's drivers work from two separate locations, all of the firm's equipment is serviced in Norfolk. It is intermittently interchanged between the terminal and Richmond based upon the maintenance schedule and business needs.

In addition to its Norfolk facility, Schwerman maintained and operated a second terminal at Montvale, Virginia up through July 1969. From that location, it transported petroleum products to points in West Virginia. This cartage was authorized by the firm's interstate operating authority and was undertaken pursuant to an agreement with the American Oil Company.

In 1969, American Oil terminated its relationship with Schwerman. This, in turn, precipitated the closing of the Montvale terminal. Despite the fact that the terminal has not since been operated, the company has retained ownership of the facility in hopes of reacquiring the American Oil account. In addition, Schwerman has refused throughout to sell its Montvale operating authority.

In order to preserve the validity of its interstate operating authority and in order to be in a position to utilize it whenever possible, Schwerman has regularly published, updated and filed a tariff booklet with the ICC setting forth the rates, rules and regulations applying to its transportation of products in interstate commerce. In addition, Schwerman has marked all of its equipment with decals showing the proper ICC authority identification numbers; it has filed its ICC operating authority with each State where its authority authorizes cartage; and it has filed the necessary fuel tax and motor vehicle registration with those States in which it was authorized to operate.

Thus, despite the curtailment of its interstate cartage occasioned by the loss of its American Oil account, ⁹ Schwerman has continued to maintain itself as legally qualified to carry products in interstate commerce and at all times relevant to this action has held itself out to the general public as available to engage in such cartage. Also, throughout this period, Schwerman has continuously solicited interstate business, although its efforts have met with no great success. We are nevertheless mindful of the fact that it is not simply those carriers who actually obtain interstate business that are subject to the jurisdiction of the Secretary of Transportation. Starrett v. Bruce, 391 F.2d 320, 323 (10th Cir. 1968), cert. den. 393 U.S. 971, 89 S.Ct. 404, 21 L.Ed.2d 384 (1968).

The success or failure of Schwerman's efforts to solicit interstate business is not the critical factor in determining whether the company is exempt from the provisions of the FLSA. Rather, the focus of inquiry must be upon whether the Secretary of Transportation has the "power to establish qualification and maximum hours of service" for Schwerman's employees. 29 U.S.C. § 213(b)(1). It is the existence of that power as opposed to its exercise which Congress has said is determinative as to the applicability of the FLSA. Morris v. McComb, 332 U.S. 422, 434, 68 S.Ct. 131, 92 L.Ed. 44 (1947); Starrett at 323. Based upon the facts presented here, as well as the applicable law, we are of opinion that such power was vested in the Secretary of Transportation.

As has been noted, 49 U.S.C. § 304 states that it is the duty of the Secretary to regulate common carriers by motor vehicle. Section 303(a)(14) of that same title defines such a carrier as "any person (corporation) which holds itself out to the general public to engage in the transportation by motor vehicle in interstate or foreign commerce of passengers or property . . .." Thus, it is not what a corporation does but what it holds itself out to do that determines its status as a common carrier. Starrett at 323. In the instant case, Schwerman at all times relevant hereto held itself out as available for interstate cartage, solicited interstate business and handled any interstate shipments received. It was required to accept interstate freight offered at its going rates. As such, Schwerman falls squarely within the definition of a common carrier and is subject to regulation by the Secretary of Transportation. We are reinforced as to the soundness of this conclusion by the fact that the Secretary has already exercised this power by setting the qualifications and maximum hours of service of Schwerman's drivers. We are thus of opinion that the company is, by virtue of § 213(b)(1), exempt from the maximum hours provisions of the FLSA. A carrier...