In the

United States Court of Appeals

For the Seventh Circuit

No. 09-1181

ANTHONY COLLINS, et al.,

Plaintiffs-Appellants,

v.

HERITAGE WINE CELLARS, LTD. and STEVEN HIRSCH,

Defendants-Appellees.

Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 07 C 1246—Robert M. Dow, Jr., Judge.

ARGUED SEPTEMBER 24, 2009—DECIDED DECEMBER 21, 2009

Before POSNER, MANION, and TINDER, Circuit Judges.

POSNER, Circuit Judge. Collins and his fellow plaintiffs—truck drivers employed by Heritage Wine Cellars,

a wholesale importer and distributor of wine—sued

Heritage and its chief executive officer under the Fair

Labor Standards Act, 29 U.S.C. §§ 201 et seq. The Act

requires employers to pay overtime (one-and-a-half times

the hourly wage) to employees who work more than

40 hours a week, 29 U.S.C. § 207(a)(1), which the plain-
2 No. 09-1181

tiffs sometimes did; yet until 2007 they were not paid

overtime.

The plaintiffs transport wine from a warehouse in the

Chicago area, owned by Heritage, to retail stores in

Chicago and elsewhere in Illinois. To get the wine to the

warehouse from the states and foreign countries in

which it’s produced (none of it is produced in Illinois),

Heritage hires truck companies and other carriers. They

are independent contractors. Neither they nor their employees are employed by Heritage, unlike the plaintiffs.

But Heritage controls the wine and directs its movements on the entire journey from the state or country of

origin of the wine to the retail stores in Illinois to which

the plaintiffs transport the wine from the warehouse. 

The principal question is whether the portion of the

transportation that is entirely within Illinois is nevertheless interstate commerce within the meaning of the

Motor Carrier Act, 49 U.S.C. §§ 502-07, 522-23, 525-26,

31502-04. The district court ruled that it was. The significance of the ruling is that the Fair Labor Standards Act

exempts from its overtime provisions “any employee

with respect to whom the Secretary of Transportation

has power to establish qualifications and maximum

hours of service pursuant to the provisions of section

31502 of title 49.” 29 U.S.C. § 213(b)(1). The reference is

to a section of the Motor Carrier Act that authorizes the

Secretary to establish qualifications and maximum

hours of service for employees of a motor carrier if “property . . . [is] transported by [the] motor carrier between

a place in a State and a place in another State,” 49 U.S.C.
No. 09-1181 3

§§ 13501(1)(A), 31502(b), provided that the employees

“engage in activities of a character directly affecting

the safety of operation of motor vehicles in the transportation on the public highways of passengers or

property in interstate or foreign commerce within the

meaning of the Motor Carrier Act.” 29 C.F.R. §§ 782.2(a);

Levinson v. Spector Motor Service, 330 U.S. 649, 670-72 (1947);

Walters v. American Coach Lines of Miami, Inc., 575 F.3d

1221, 1227-28 (11th Cir. 2009) (per curiam).

An employer subject to the Secretary’s jurisdiction is

required to register with the Department of Transportation.

49 C.F.R. § 385.301. Heritage, for reasons unexplained—for

it claims to be subject to that jurisdiction, as otherwise

it could not claim the exemption for truckers engaged in

interstate commerce—has not registered. But it points

out that the exemption depends on the Secretary’s

“power to establish qualifications and maximum hours

of service” (emphasis added) and not on whether the

power has been exercised. See Bilyou v. Dutchess Beer

Distributors, Inc., 300 F.3d 217, 229 (2d Cir. 2002), and

cases cited there.

If Heritage bought wine from a vineyard in Indiana,

made a contract to sell it to a retail store in Chicago,

shipped the wine by rail to a freight yard in Chicago,

and from there truck drivers employed by it just to transport wine from the freight yard to the store did so, it

would be subject to the exemption even though the

drivers had not crossed a state line themselves. E.g., id. at

224-25; Klitzke v. Steiner Corp., 110 F.3d 1465, 1469-70

(9th Cir. 1997); Foxworthy v. Hiland Dairy Co., 997 F.2d 670
4 No. 09-1181

(10th Cir. 1993); Galbreath v. Gulf Oil Corp., 413 F.2d 941 (5th

Cir. 1969); see also Walling v. Jacksonville Paper Co., 317

U.S. 564, 567-69 (1943). The entire shipment would be

deemed a single interstate shipment. The fact that in the

course of its journey the wine had been unloaded from

one carrier and loaded onto another would be as inconsequential as the fact that en route to the store the

truck had stopped for a red light.

But suppose instead that Heritage shipped its wine to

a wholesale distributor in a Chicago suburb, title passed

to the distributor when the wine arrived at the distributor’s warehouse, and the distributor contracted to

sell the wine to retail stores and delivered it to them in

his own trucks. The carriage of the wine from the warehouse to the stores would be classified as an intrastate

shipment under the Motor Carrier Act even though the

property shipped had originated outside the state. See

McLeod v. Threlkeld, 319 U.S. 491, 494 (1943); Higgins v.

Carr Bros. Co., 317 U.S. 572, 573-74 (1943); Atlantic Coast

Line R.R. v. Standard Oil Co., 275 U.S. 257, 262-63, 267-70

(1927); Missouri ex rel. Barrett v. Kansas Natural Gas Co.,

265 U.S. 298, 306, 308 (1924); Chicago, Milwaukee & St.

Paul Ry. v. Iowa, 233 U.S. 334, 342-43 (1914); Schultz v.

National Electric Co., 414 F.2d 1225, 1226-28 (10th Cir. 1969).

Congress could still regulate such a shipment if it

wanted to. Such intrastate shipments have a cumulatively substantial effect on interstate commerce. North

Alabama Express, Inc. v. ICC, 971 F.2d 661, 666-67 (11th

Cir. 1992); see also Gonzales v. Raich, 545 U.S. 1, 15-22

(2005); United States v. Blum, 534 F.3d 608, 610-12 (7th Cir.
No. 09-1181 5

2008). They substitute for uninterrupted interstate shipments to the destination of the intrastate shipments, and

they use the same highways and other transportation

facilities. But the language of the Motor Carrier

Act—“transported . . . between a place in a State and a

place in another State”—does not indicate a congressional intention of regulating a purely intrastate

shipment merely because of its effect on interstate commerce. The shipment itself must be in some sense

interstate commerce (transportation between a place in

a state and a place in another state).

This case falls in between our two examples but closer

to the first. About a fourth of the wine that Heritage

ships to its warehouse in Illinois has been ordered in

advance by the retail stores. That wine stays in the warehouse only briefly because Heritage has an order in

hand. The fact that the wine pauses in its Heritage-controlled journey to the retail outlet is of no greater consequence than the unloading and reloading of the shipped

goods in our first example. The other three-fourths of the

wine sits in the warehouse until Heritage has found a

buyer. But it appears that most of that wine turns over

approximately every month, having been purchased and

shipped by Heritage on the basis of its estimates of customer demand. And none of the wine undergoes any

alteration on its trip from the vineyard to a retail store

in Illinois. So far as appears, there is no processing (or

even any deliberate aging of the wine in the warehouse),

no addition of additives, no incorporation into another

product, not even relabeling as a private-label (housebrand) product. When the wine arrives at the warehouse,
6 No. 09-1181

it is taken off the shrink-wrapped pallets on which it

is delivered and shelved in the warehouse, period.

It seems to us that when a shipper transports his

product across state lines for sale by him to customers in

the destination state, and the product undergoes no

alteration during its journey to the shipper’s customer,

and interruptions in the journey that occur in the destination state are no more than the normal stops or stages

that are common in interstate sales, such as temporary

warehousing, the entire journey should be regarded as

having taken place in interstate commerce within the

meaning of the Motor Carrier Act’s exemption from the

Fair Labor Standards Act. We’ll defend this conclusion,

but we first note that although it is consistent with the

results in most cases, see Merchants Fast Motor Lines, Inc. v.

ICC, 5 F.3d 911, 916-19 (5th Cir. 1993); Central Freight

Lines v. ICC, 899 F.2d 413, 420-23 (5th Cir. 1990); Roberts

v. Levine, 921 F.2d 804, 810-14 (8th Cir. 1990); Walling

v. American Stores Co., 133 F.2d 840, 845-46 (3d Cir. 1943);

but see Baird v. Wagoner Transportation Co., 425 F.2d

407, 410-12 (6th Cir. 1970), many courts, influenced by a

regulation promulgated by the Department of Labor and

policy statements and decisions of the Department of

Transportation (and its predecessor as enforcer of the

Motor Carrier Act, the now-defunct Interstate Commerce Commission), would reach the result by a more

complicated analysis than we.

The regulation, which codifies a ruling that the Interstate

Commerce Commission had made in 1957, states that

intrastate transportation from a storage terminal is not
No. 09-1181 7

interstate commerce “if the shipper has no fixed and

persisting transportation intent beyond the terminal

storage point at the time of shipment,” 29 C.F.R.

§ 782.7(b)(2) (1971), and that there is no “fixed and persisting intent” if “(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.” The applicability of clauses (i) and (iii) to this

case is unclear. Some intrastate shipments were arranged

after a sale was made, while others occurred pursuant to

orders received by Heritage before the wine had been

shipped from its place of origin far from Illinois. But it

would be odd to conclude that Heritage had “no fixed and

persisting transportation intent beyond the terminal

storage point at the time of shipment” even with respect

to those wines for which it had no order in hand. It intended that they would remain in its warehouse only

as long as it took to find a customer, and it compressed

the time to find one by basing deliveries to the warehouse on projections of demand calculated from customers’ purchase histories.

The Interstate Commerce Commission had offered an

alternative elaboration of “fixed and persisting intent”

in a 1992 policy statement, ICC Policy Statement, Motor

Carrier Interstate Transportation—From Out-of-State Through
8 No. 09-1181

Warehouses to Points in Same State, 57 Fed. Reg. 19812

(May 8, 1992). The statement lists seven criteria that

the Commission thought favored characterizing an intrastate journey as part of interstate commerce and ten

more criteria that it believed did not detract from that

characterization. So for example the fact that the warehouse was owned by the shipper was said to support

characterizing the intrastate journey as part of interstate

commerce but the fact that the warehouse was not

owned by the shipper was said not to detract from

that characterization. Are those two criteria or one?

We don’t know; and we can’t see the relevance of

whether the warehouse is owned, leased, shared, or for

that matter stolen, given that the object of the statutory

exemption is to shift regulation of truckers’ hours from

the Labor Department to the Department of Transportation if the truckers participate in interstate transportation, and what has that to do with where title to

the warehouse resides? And no weighting of the criteria

is suggested.

At least four of the criteria listed, however, make

sense, and they are sufficient to enable us to dispose of

this case without getting deeper into the regulation and

the policy statement. The four are that (1) the shipper,

although it doesn’t have to have lined up its ultimate

customers when the product arrives at the warehouse,

“bases its determination of the total volume to be

shipped through the warehouse on projections of

customer demand that have some factual basis”; (2) “no

processing or substantial product modification of substance occurs at the warehouse”; (3) “while in the ware-
No. 09-1181 9

house, the merchandise is subject to the shipper’s control

and direction as to the subsequent transportation”; and

(4) “the shipper or consignee must bear the ultimate

payment for transportation charges even if the warehouse or distribution center directly pays the transportation charges to the carrier” (this goes to the shipper’s

responsibility for the original interstate journey). If

these conditions are satisfied, the intrastate leg at the

end of the shipment should be deemed part of an interstate shipment.

Antiquarians will note at least a faint resemblance

between our suggested approach and the “original package” doctrine of Low v. Austin, 80 U.S. (13 Wall.) 29 (1872),

overruled by Michelin Tire Corp. v. Wages, 423 U.S. 276

(1976). Article I, § 10, cl. 2 of the Constitution forbids a

state to tax imports or exports, and the Supreme Court

had held in Low that until an imported good was

removed from the package in which it had been shipped

to the United States it could not be taxed. Removal

from the original package, which the Court thought

ended the importation phase of the good’s journey from

foreign origin to ultimate U.S. destination, would correspond in the present case to processing wine at

Heritage’s warehouse. Both events are interruptions

usable to demarcate foreign (or in this case foreign and

interstate) commerce from domestic (in this case intrastate) commerce. The particular demarcation in Low was

rejected in Michelin, which held that a state ad valorem

property tax (a tax based on the assessed value of property) that did not discriminate against imported

goods—the tax applied to goods inventoried in the
10 No. 09-1181

state regardless of their origin—did not offend against

the policy of the import-export clause.

The Court had earlier rejected the use of the “original

package” doctrine to decide whether shipments are in

interstate commerce, Sonneborn Bros. v. Cureton, 262 U.S.

506 (1923), because, as in Michelin, the challenged state

tax did not discriminate against goods from out of state.

But in our case, as in other cases in which the question

is not whether a transaction burdens or otherwise

affects interstate commerce but whether it is “in”

interstate commerce, there is no alternative to deciding

at what point a good should no longer be said to have

been transported from a point in one state to a point in

another. A point must be chosen at which the good may

be said to “come to rest”—to have ceased to be “in practical continuity with a larger interstate journey,” Packard v.

Pittsburgh Transportation Co., 418 F.3d 246, 258 (3d Cir.

2005)—to have left the “stream of interstate [or foreign]

commerce,” United States v. Yellow Cab Co., 332 U.S. 218,

228-29 (1947), overruled on other grounds by Copperweld

Corp. v. Independence Tube Corp., 467 U.S. 752 (1984); see

also Western Oil Refining Co. v. Lipscomb, 244 U.S. 346, 349

(1917)—so that its further journey is outside the scope

of the Motor Carrier Act. The point must be chosen,

however inescapably arbitrary the process of choice, in

order to decide the case, because before that point is

reached the journey is subject to the Motor Carrier Act

and after it is not.

Attempting to base decision on seventeen unweighted

technical criteria to be applied by generalist judges who
No. 09-1181 11

are not told what the relevance of any of the criteria is

but have to figure it out for themselves is unlikely to

improve the prospects for objectively deciding whether

a particular intrastate shipment should be deemed to be

“in commerce.” The multicriteria approach is likely to

condemn the judges to wander forlornly in the

untracked wilderness named “the totality of the circumstances,” a phrase found in many of the cases involving

the Motor Carrier Act’s exemption for interstate transportation. The present case can be decided by using an approach that is simpler to apply than the multicriteria test

yet maintains consistency with most of the cases and

official texts. Other cases may require a more complex

approach, and if so, fine; this case does not.

We end with the plaintiffs’ back-up argument for reversal. Between 2005 and 2008 the Motor Carrier Act

limited the definition of “motor carriers” to carriers that

provide transportation by (so far as bears on this case) a

truck that weighs at least 10,001 pounds. 49 U.S.C.

§ 31132(1)(A). Some of the plaintiffs occasionally drove

lighter trucks, and they argue that when they were

doing that they were covered by the Fair Labor

Standards Act. But to divide jurisdiction in this way

would be contrary to the Supreme Court’s sensible

decision in Morris v. McComb, 332 U.S. 422 (1947),

which held that the employer of a driver who may sometimes be required to deliver goods in interstate commerce is subject to the Motor Carrier Act even if most of

his driving is intrastate. Cf. Levinson v. Spector Motor

Service, supra; 29 C.F.R. § 782.2(b)(3). Dividing jurisdiction over the same drivers, with the result that their
12 No. 09-1181

employer would be regulated under the Motor Carrier

Act when they were driving the big trucks and under

the Fair Labor Standards Act when they were driving

trucks that might weigh only a pound less, would require

burdensome record-keeping, create confusion, and give

rise to mistakes and disputes.

AFFIRMED.

12-21-09