Reich v. American Driver Service, Inc.

Decision Date30 August 1994
Docket NumberNo. 92-35369,92-35369
Parties128 Lab.Cas. P 33,135, 2 Wage & Hour Cas.2d (BNA) 417 Robert B. REICH, * Secretary of Labor; U.S. Department of Labor, Plaintiffs-Appellants, v. AMERICAN DRIVER SERVICE, INC., a corporation; James I. Roberts, individually, Defendants-Appellees.
CourtU.S. Court of Appeals — Ninth Circuit

Anne P. Fugett, U.S. Dept. of Labor, Washington, DC, for plaintiffs-appellants.

Thomas F. Dowd, Omaha, NE, for defendants-appellees.

Appeal from the United States District Court for the District of Montana.

Before: TANG, FARRIS and RYMER, Circuit Judges.

Opinion by Judge TANG; Dissent by Judge FARRIS.

TANG, Senior Circuit Judge:

The Secretary of Labor appeals the district court's decision to include within the Secretary of Transportation's jurisdiction, the drivers, fuelers and utility workers of American Driver Services, Inc. ("ADS"), a motor contract carrier. The district court's decision exempts ADS from the maximum hours provisions of the Fair Labor Standards Act ("FLSA"). The Secretary of Labor argues that the Secretary of Transportation's own interpretation of the extent of his jurisdiction requires that a motor contract carrier actually engage in interstate commerce before it is exempt from the maximum hours provisions of the FLSA. The Secretary of Labor also argues that the district court erred in concluding that the liability of ADS's owner was a moot issue. We reverse and remand.

BACKGROUND

ADS provided motor carrier services to various businesses throughout the United States. On June 1, 1985, ADS entered into a contract with the Western Sugar Company ("Western") to transport sugar beets by truck from various receiving stations in Montana and Wyoming, to Western's processing plant in Billings, Montana. The contract and subsequent addendum covered the sugar beet harvesting seasons from 1985-86 to 1990-91. Those harvesting seasons took place from September to January or February of the following year.

Although ADS engaged in some interstate commerce during each harvesting season in question, it engaged in wholly intrastate commerce for the first months of each season. 1 ADS indiscriminately assigned any interstate travel to its drivers using a "first in, first out" method, and therefore, all of its drivers reasonably could have been expected to engage in interstate commerce. Additionally, the parties have stipulated that the duties of ADS's fuelers and utility workers affected the safety of the vehicles engaged in interstate commerce, and that for purposes of an exemption from the maximum hours provisions of the FLSA, they should be treated in the same manner as ADS's drivers.

The Secretary of Labor brought this action under Sec. 16(c) and Sec. 17 of the FLSA, seeking to enjoin ADS and its president and principal shareholder, James Roberts, from violating overtime and record keeping requirements, and to recover unpaid overtime compensation for ADS's drivers, fuelers and utility workers.

Both ADS and Roberts filed motions for summary judgment, ADS arguing that its drivers, fuelers and utility workers were exempt from the maximum hours provisions of the FLSA, and Roberts arguing that he could not be found personally liable for violations of the maximum hours provisions of the FLSA because he was not an "employer" under 29 U.S.C. Sec. 203(d). The Secretary of Labor filed a cross-motion for partial summary judgment on the issue of Roberts' status as an "employer."

The case was referred to a magistrate judge who determined that ADS's drivers were exempt from the maximum hours provisions of the FLSA, and that as a consequence, the issue of Roberts' liability was moot. The Secretary of Labor objected to the magistrate judge's findings and recommendations. The district court undertook a de novo review as required under 28 U.S.C. Sec. 636(b)(1)(C), and adopted the magistrate judge's findings and recommendations. The Secretary of Labor timely appeals.

STANDARD OF REVIEW

A grant of summary judgment is reviewed de novo. Jones v. Union Pacific R.R. Co., 968 F.2d 937, 940 (9th Cir.1992). Whether ADS's drivers, fuelers and utility workers were exempt from the maximum hours provisions of the FLSA is a question of law that is reviewed de novo. Jones v. Giles, 741 F.2d 245, 248 (9th Cir.1984).

DISCUSSION
I.

Any motor carrier that engages in interstate commerce is subject to the Secretary of Transportation's jurisdiction, see 49 U.S.C. Sec. 10521, and is thus exempt from the maximum hours provisions of the FLSA, see 29 U.S.C. Sec. 213(b)(1). Upon engaging in such interstate commerce, the Secretary of Transportation may prescribe the requirements for the "qualifications and maximum hours of service of employees of, and safety of operation and equipment of, [the] motor carrier...." 49 U.S.C. Sec. 3102(b)(1). 2 Any motor carrier that engages in wholly intrastate commerce, however, is subject to the Secretary of Labor's jurisdiction, and consequently, to the maximum hours provisions of the FLSA. 3

Although many motor carriers engage in both interstate and intrastate commerce, a motor carrier cannot be subject to the jurisdiction of both the Secretary of Labor and the Secretary of Transportation. Giles, 741 F.2d at 249. When determining to which Secretary's jurisdiction such a motor carrier's employees are subject, courts have consistently looked to the Supreme Court's decision in Morris v. McComb, 332 U.S. 422, 68 S.Ct. 131, 92 L.Ed. 44 (1947). See e.g. Brennan v. Schwerman Trucking Co. of Virginia, Inc., 540 F.2d 1200 (4th Cir.1976); Crooker v. Sexton Motors, Inc., 469 F.2d 206 (1st Cir.1972); Starrett v. Bruce, 391 F.2d 320 (10th Cir.), cert. denied, 393 U.S. 971, 89 S.Ct. 404, 21 L.Ed.2d 384 (1968). Under Morris, even a minor involvement in interstate commerce as a regular part of an employee's duties can subject that employee to the Secretary of Transportation's jurisdiction. Morris, 332 U.S. at 432-35, 68 S.Ct. at 136-38. Nevertheless, an employee's minor involvement in interstate commerce does not necessarily subject that employee to the Secretary of Transportation's jurisdiction for an unlimited period of time, see Baird v. Wagoner Transp. Co., 425 F.2d 407, 412-13 (6th Cir.), cert. denied, 400 U.S. 829, 91 S.Ct. 58 27 L.Ed.2d 59 (1970), and if the employee's minor involvement can be characterized as de minimis, that employee may not be subject to the Secretary of Transportation's jurisdiction at all, see Coleman v. Jiffy June Farms, Inc., 324 F.Supp. 664, 669-70 (S.D.Ala.1970), aff'd by, 458 F.2d 1139 (5th Cir.1971), cert. denied, 409 U.S. 948, 93 S.Ct. 292, 34 L.Ed.2d 219 (1972).

Recognizing the need for clarification of the extent of his jurisdiction over motor carriers, the Secretary of Transportation, through the Federal Highway Administration ("FHWA"), promulgated a notice of interpretation. That interpretation provides, in relevant part, that:

The FHWA view is that in order to establish jurisdiction under 49 U.S.C. 304 the carrier must be shown to have engaged in interstate commerce within a reasonable period of time prior to the time at which jurisdiction is in question. The carrier's involvement in interstate commerce must be established by some concrete evidence such as an actual trip in interstate commerce or proof, in the case of a "for hire" carrier, that interstate business had been solicited. If jurisdiction is claimed over a driver who has not driven in interstate commerce, evidence must be presented that the carrier has engaged in interstate commerce and that the driver could reasonably have been expected to make one of the carrier's interstate runs. Satisfactory evidence would be statements from drivers and carriers, and any employment agreements.

Evidence of driving in interstate commerce or being subject to being used in interstate commerce should be accepted as proof that the driver is subject to 49 U.S.C. 304 for a 4-month period from the date of the proof. The FHWA believes that the 4-month period is reasonable because it avoids both the too strict week-by-week approach and the situation where a driver could be used or be subject to being used once and remain subject to jurisdiction under 49 U.S.C. 304 for an unlimited time.

46 Fed.Reg. 37,902, 37,903 (1981).

The district court determined that under this interpretation, a motor carrier's reasonable expectation of engaging in interstate commerce is sufficient to trigger the interpretation's four month exemption. It further determined that once the exemption is triggered, interstate commerce must in fact occur within a four month period. Because the district court found that ADS had a reasonable expectation of engaging in interstate commerce at the beginning of each sugar beet harvesting season in question and that it actually engaged in interstate commerce within four months of the beginning of each of those seasons, the district court concluded that ADS was under the Secretary of Transportation's jurisdiction and thereby exempt from the maximum hours provisions of the FLSA. We agree with the Secretary of Labor that this construction is erroneous.

"An employer who claims an exemption from the FLSA has the burden of showing that the exemption applies...." Donovan v. Nekton, Inc., 703 F.2d 1148, 1151 (9th Cir.1983). Any exemption must "be narrowly construed, giving due regard to the plain meaning of statutory language and the intent of Congress." Id. (quoting A.H. Phillips, Inc. v. Walling, 324 U.S. 490, 493, 65 S.Ct. 807, 808, 89 L.Ed. 1095 (1945)); accord Giles, 741 F.2d at 250. "To extend an exemption to other than those plainly and unmistakably within its terms and spirit is to abuse the interpretive process and to frustrate the announced will of the people." Donovan, 703 F.2d at 1151 (quoting Walling, 324 U.S. at 493, 65 S.Ct. at 808). 4

In this case, at the beginning of each sugar beet harvesting season, ADS engaged in wholly...

To continue reading

Request your trial
43 cases
  • Bilyou v. Dutchess Beer Distributors, Inc.
    • United States
    • U.S. Court of Appeals — Second Circuit
    • 7 Agosto 2002
    ...movement' across state lines from the point of origin to the point of destination.") (citation omitted); Reich v. American Driver Serv., Inc., 33 F.3d 1153, 1155 n. 3 (9th Cir.1994) (wholly intrastate commerce satisfies interstate requirement when part of "continuing transportation"); 29 C.......
  • Badgett v. Rent-Way, Inc.
    • United States
    • U.S. District Court — Western District of Pennsylvania
    • 30 Septiembre 2004
    ...the goods were in "continuous transportation" until delivered to the defendant's customers. Id. (citing Reich v. American Driver Serv., Inc., 33 F.3d 1153, 1155 n. 3 (9th Cir.1994) and Shew v. Southland Corp., 370 F.2d 376, 380 (5th Cir.1966)). See also Jones v. Centurion Investment Assoc.,......
  • Walters v. American Coach Lines of Miami, Inc.
    • United States
    • U.S. District Court — Southern District of Florida
    • 29 Julio 2008
    ...prospect of obtaining such business is poor and some of its drivers never drive in interstate commerce." (citing Reich v. Am. Driver Serv., Inc., 33 F.3d 1153 (9th Cir.1994); Morris v. McComb, 332 U.S. 422, 68 S.Ct. 131, 92 L.Ed. 44 In reaching its determination that Defendant has met its b......
  • Vidinliev v. Carey Intern., Inc.
    • United States
    • U.S. District Court — Northern District of Georgia
    • 3 Octubre 2008
    ...the plaintiff did make, or could have reasonably have been expected to make, one of those interstate trips. See Reich v. American Driver Serv., 33 F.3d 1153, 1156 (9th Cir. 1994); Morrison v. Quality Transports Servs., Inc., 474 F.Supp.2d 1303, 1310 (S.D.Fla.2007); U.S. Department of Labor,......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT