Galbreath v. Gulf Oil Corporation

• Decision Date: 17 June 1969
• Docket Number: No. 27057.,27057.
• Citation: 413 F.2d 941
• Parties: Albert GALBREATH et al., Plaintiffs-Appellants, v. GULF OIL CORPORATION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

413 F.2d 941 (1969)

Albert GALBREATH et al., Plaintiffs-Appellants, v. GULF OIL CORPORATION, Defendant-Appellee.

No. 27057.

United States Court of Appeals Fifth Circuit.

June 17, 1969.

David H. Fink, Bullock, Yancey & Mitchell, Atlanta, Ga., for plaintiffs-appellants.

A. G. Cleveland, Jr., George B. Haley, Jr., Albert C. Tate, Jr., Gene F. Presley, John C. Bracy, Atlanta, Ga., for defendant-appellee; Kilpatrick, Cody, Rogers, McClatchey & Regenstein, Atlanta, Ga., of counsel.

Before COLEMAN and SIMPSON, Circuit Judges, and MEHRTENS, District Judge.

MEHRTENS, District Judge:

This was an action for overtime compensation under the Fair Labor Standards Act of 1938, 29 U.S.C. § 201 et seq., (hereinafter FLSA) by Gulf Oil Corporation truck drivers against Gulf. The case was heard without a jury on a stipulation of facts, the briefs, and oral arguments of counsel. The District Court entered judgment for the defendant Gulf and dismissed the action on the ground that the plaintiffs were exempt from the overtime provisions of the FLSA by virtue of § 13(b) (1) thereof because the transportation performed by plaintiffs for Gulf was a part of a "continuously moving" shipment of goods in interstate commerce, and the plaintiffs were therefore employees with respect to whom the Interstate Commerce Commission had the power to establish qualifications and maximum hours of service under § 204 of the Motor Carrier Act, 1935, 49 U.S.C. § 304. Plaintiffs appealed. We affirm.

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 his hourly wage for every hour over 40 hours he works in any workweek. 29 U. S.C. § 207 (a) (1). (It was stipulated by the parties that plaintiffs are covered by this section and that they were not paid for time worked in excess of forty hours.) Title 29 U.S.C. § 213(b) (1), however, exempts from these overtime provisions

"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 * * *."

It is the applicability of this exemption to the facts of this case which is questioned on this appeal. Section 304 of Title 49 referred to in the § 213(b) (1) FLSA exemption is contained in the Motor Carrier Act, 1935, 49 U.S.C. § 301 et seq. (hereinafter MCA). This Act provides in part that the Interstate Commerce Commission shall, if need therefor is found, establish for private motor vehicle carriers¹ reasonable requirements to promote safety including maximum hours of employees' service. 49 U.S.C. § 304(a) (3). The I.C.C. power under the MCA extends to "motor carriers engaged in interstate or foreign commerce." 49 U. S.C. § 302(a). "Interstate commerce" is defined in the Act as

"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 or partly by motor vehicle and partly by rail, express, or water." 49 U.S.C. § 303(a) (10).

During the period in issue in this case² plaintiffs were employed by Gulf at its Atlanta, Georgia Bulk Plant. Petroleum products are distributed from this bulk plant primarily to Gulf retail service stations and consuming accounts. The plaintiffs' duties consisted mainly of driving transport trucks or tank wagon trucks from the Atlanta Bulk Plant to various locations within the area served by the plant. Their duties were performed solely within Georgia; they did not cross state lines.

All of the products ultimately transported by plaintiffs were shipped by Gulf to the Chattahoochee Terminal, located across from Gulf's Bulk Plant, via the 36-inch pipeline of Colonial Pipeline Company from Gulf's refinery at Port Arthur, Texas, or Gulf's Black Creek refinery at Collins, Mississippi, to Colonial's break-out facilities at Powder Springs, Georgia, and from Powder Springs via Colonial's 8-inch stub line approximately 12 miles to the Chattahoochee Terminal. Colonial Pipeline is a corporation owned by nine major oil companies with Gulf owning 14%. The products transported by plaintiffs were loaded into trucks driven by plaintiffs at the Chattahoochee Terminal loading rack of Southeast Terminals, Inc., a corporation jointly owned by Gulf and by Pure Oil Corporation.

The transported products are the identical products tendered to and shipped via Colonial Pipeline Company lines from Gulf's refineries; there is no commingling of product in transit. Gulf withdraws at the Chattahooche Terminal the same Gulf products tendered at the refinery for shipment through Colonial's pipelines. The products diverted through the Powder Springs, Georgia stub line from the main 36-inch line consist of an amount of transported product determined prior to tender to Colonial. This product is "bled off" at Powder Springs from a much larger "slug" of Gulf products tendered at one of its refineries and moving along the main pipeline destined for Gulf delivery points at Atlanta and other locations on the main line. The amount to be moved to the Chattahoochee Terminal, as well as to all other points along the Colonial line (which terminates in Linden, N. J.) is determined by Gulf prior to the initial tender of product for movement at the refinery. With the exception of a de-icer added to Gulf A-1 Jet Fuel delivered to one customer served by Gulf's Atlanta Bulk Plant, no processing or alteration of the transported products occurs at the Chattahoochee Terminal or at any location after the product leaves the refinery, nor does the introduction of additives occur at any time after the products leave the refinery.³

68% of the total gallonage in the Atlanta Bulk Plant was delivered by plaintiffs pursuant to an AUTOMOTIVE GASOLINE AGREEMENT which Gulf has with retail gasoline dealers. Under the agreement Gulf may deliver its products "in such quantities and at such times as Gulf sees fit" as long as Gulf maintains "sufficient volumes of such grades of gasoline to always provide each Dealer an adequate supply to meet the requirements of his trade for such automotive gasolines." The station equipment in all of these retail stations, including tanks, pumps, lifts and air compressors, is owned by Gulf. Sometimes it is obtained on loan from Gulf by the dealer under a Memorandum of Agreement to lease. Title to the gasoline remains in Gulf under the AUTOMOTIVE GASOLINE AGREEMENT until the gas is actually pumped by the dealer in the course of a retail sale. The requirements of the retail stations are computed and projected with reasonable certainty by Gulf sales representatives.

29% of the total gallonage in the Atlanta Bulk Plant was delivered by plaintiffs to Gulf's "consuming accounts." These accounts are committed to Gulf by contracts of at least one year duration providing for the purchase of either a specified gallonage or of the Gulf petroleum requirements of such consuming account. Because of these contracts 99.9% of the requirements of such consuming accounts are known to Gulf before tender at the refinery for shipment to Atlanta. During the period in issue, unanticipated local sales at the terminal accounted for an average of only 0.1% of the total terminal volume. Except for such unanticipated sales, Gulf does not sell at wholesale from the Atlanta Plant.

The remaining 3% was sold to heating oil jobbers. During the period in question, of the approximately 84% of the total gallonage of product shipped by Gulf from the Chattahoochee Terminal which was shipped by means of Gulf trucks driven by plaintiffs and other Gulf drivers, approximately 93% was delivered directly from the terminal to retail service stations and consuming accounts, while the remaining 7% was delivered to bulk plants of distributor-consignees.

The demand for the products delivered by plaintiffs from the Atlanta Bulk Plant is computed by evaluation of the contractual commitments referred to above and prior sales experience. The "terminal demand" for product at the Atlanta Bulk Plant arising from the contractual obligations is consolidated in the form of a monthly forecast by grade of product for twelve months and is forwarded to Gulf's Product Supply Division of its Manufacturing Department in Houston, Texas. These terminal demands are further consolidated in Houston into refinery demands for refined product, which dictate the movement of crude oil from the well-head. The terminal forecast is updated monthly. Sixty days prior to receipt of product at Atlanta a projected shipping schedule showing quantity and grades of product is prepared and forwarded from Atlanta to Houston. On the average this schedule contains projections of required supply of product which are within 2% of the amount which subsequently is actually delivered in the month for which the projection is made. Thirty days prior to expected receipt, a firm shipping schedule is forwarded from Atlanta to Gulf's Houston Products Supply Division.

With the exception of one heating oil, all transported products are tendered by Gulf to Colonial for shipment on a ten-day cycle. That is, Gulf tenders to Colonial a "slug" of its products, predetermined amounts of which are to be "bled off" the "slug" at Gulf delivery points along the line. Product destined for the Chattahoochee Terminal requires ten days in transit, and each "slug" tendered for the Chattahoochee Terminal constitutes approximately a ten-day supply. Gulf's refinery facilities, viewed in the light of demand for its products, were and are such that the refined product is in short supply. In addition, good business practices dictate that a minimum of funds be tied up in inventory. For these reasons there customarily is in supply at the Chattahoochee Terminal an average of less than five days' supply of the transported products at the time of arrival of a "slug" of products, and an average of between twelve...