Court Opinion

ID: 34758
Source: CourtListenerOpinion
Date Created: 2010-04-25 19:19:57+00
Date Added: 2024-06-11T14:56:58.436192
License: Public Domain

UNITED STATES COURT OF APPEALS
                       For the Fifth Circuit
                    ___________________________

                           No. 96-40549
                         Summary Calendar
                    __________________________

                  AVELINO SILLER, JR., ET AL.,

                                                    Plaintiffs-Appellants,

                               VERSUS

                    L & F DISTRIBUTORS, LTD.,

                                             Defendant-Appellee.
           ___________________________________________

          Appeal from the United States District Court
                for the Southern District of Texas
                           (B-94-CV-56)
            __________________________________________

                           February 18, 1997
Before REYNALDO G. GARZA, HIGGINBOTHAM, and DeMOSS, Circuit Judges.

PER CURIAM:*

     This is an appeal from the granting of a summary judgment in

favor of L&F Distributors (“L&F”), defendant-appellee, on an action

for unpaid overtime wages pursuant to the Fair Labor Standards Act

(“FLSA”) 29 U.S.C. § 201, et seq.              Plaintiffs-appellants are

nineteen former and current long-haul truck drivers employed by

L&F, a beer wholesaler of Anheuser-Busch (“AB”) products operating

exclusively in South Texas.   Plaintiffs drove these products from

     *
      Local Rule 47.5 provides: “The publication of opinions that
have no precedential value and merely decide particular cases on
the basis of well-settled principles of law imposes needless
expense on the public and burdens on the legal profession.”
Pursuant to this Rule, the Court has determined that this opinion
should not be published.
the AB warehouse in Houston to L&F’s warehouses in Harlingen,

Alice, McAllen, and Laredo, Texas.             They allege that they are

entitled to overtime pay for all of their hours of driving in

excess of 40 hours per week under the FLSA.

     The FLSA requires employers to pay qualified employees engaged

in commerce at a rate of time and a half for hours worked in excess

of 40 in any week.     29 U.S.C. § 207(a)(1).           L&F claims that it is

exempt from the overtime requirements of the FLSA by virtue of 29

U.S.C. 213(b)(1).      This particular section of the FLSA exempts

employees with respect to whom the Secretary of Transportation has

power to establish qualifications and maximum hours of service.

According to the regulations promulgated by the FLSA, the Secretary

of Transportation has power to establish qualifications and maximum

hours of service if employees are: (1) employed by carriers whose

transportation    of   property   or       passengers    is   subject    to   the

Secretary of Transportation’s jurisdiction under the Motor Carrier

Act (“MCA”); and (2) engage in activities of a character directly

affecting   the   safety   of   operation      of   motor     vehicles   in   the

transportation on the public highways or passengers or property in

interstate or foreign commerce withing the meaning of the MCA.                 29

C.F.R. § 782.2(a).      The magistrate judge to whom this case was

referred granted summary judgment in favor of L&F and expressly

held that the defendant was subject to the jurisdiction of the

Secretary of Transportation and engaged in “interstate commerce.”

Thus, it was exempted from the overtime requirements of the FLSA.

Both sides concede that the only issue on appeal is whether the

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lower court was correct in finding that the plaintiffs were engaged

in interstate commerce.

Discussion

     To   be   subject    to   the       Secretary   of   Transportation’s

jurisdiction pursuant to the MCA, a motor carrier must be engaged

in interstate commerce.        Although the MCA defines interstate

commerce as commerce “between a place in a state and a place in

another state,” it has not been applied literally by the courts. In

fact, we have defined it as the actual transport of goods across

state lines or the intrastate transport of goods in the flow of

interstate commerce.     Merchants Fast Motor Lines, Inc. v. I.C.C.,

528 F.2d 1042, 1044 (5th Cir. 1976). More specifically, a “carrier

is engaged in interstate commerce when transporting goods either

originating in transit from beyond Texas or ultimately bound for

destinations beyond Texas, even though the route of a particular

carrier is wholly within one state.          Traffic need not physically

cross state lines to be in interstate commerce, if the goods

carried are in the course of through transit.”            Id. at 1044.

     In the present case, AB manufactured some of its products in

its Houston facility and it imported some of its products from out-

of-state facilities.     Products brewed out-of-state were shipped to

its Houston warehouse based on its’ distributors’, such as L&F’s,

sales projections.   AB Houston ordered its products based on these

projections under the assumption that these products would be

shipped where needed. Once in the warehouse, regardless of whether

it was manufactured in Houston or out-of-state, AB maintained a 6-

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28 day inventory for purposes of “freshness.”              L&F entered the

picture when it communicated with AB in determining the amount of

beer needed by L&F warehouses. Once an amount was ascertained, L&F

would send up its trucks to return “dunnage” (wooden pallets and

cardboard separators used in shipping) from the last shipment and

to pick up a new shipment of beer.       Plaintiffs readily admit that

approximately 39% of the truckloads driven by them contained some

out-of-state products, while the other 61% consisted of beer

entirely brewed in Houston.

      Although all the beer transported by L&F was actually moved

from one point in Texas to another point in Texas, a portion (up to

39%) of the beer began its journey in another state.             This is the

portion with which we are concerned because even if the hauls

contain only slight amounts of goods traveling in interstate

commerce, they will be deemed interstate commerce in its entirety.

See Morris v. McComb, 332 U.S. 422, 433 (1947); Barefoot v. Mid-

America Dairymen, Inc., 826 F. Supp. 1046, 1049 n.2 (N.D. Tex. 1993,

aff’d, 16 F.3d 1216 (5th Cir. 1994).

      All out-of-state beer delivered to the AB warehouse sat in the

warehouse anywhere from 6 to 28 days.       However, placing goods in a

warehouse interrupts, but does not necessarily terminate the goods’

interstate journey.     Walling v. Jacksonville Paper Co., 317 U.S.
564, 568 (1943).       If the halt in goods is simply a convenient

intermediate step in the process of delivering them to their final

destination, they remain interstate commerce.             Id.   Yet, whether

the   transportation    between   two   points   in   a   single   state   is

                                    4
interstate or intrastate depends on the shipment’s “essential

character.”   Merchants Fast Motor Lines, Inc. v. I.C.C., 5 F.3d
911, 917 (5th Cir. 1993).      Crucial to determining the shipment’s

essential character is the shipper’s fixed and persisting intent at

the time of shipment.     Id. at 917.

     The I.C.C. has developed a number of factors which are used to

determine the shipper’s intent in deciding whether the traffic

remains interstate commerce on its in-state leg of the journey.

However, we have held that the totality of all the facts and

circumstances eventually determines whether a shipper has the

requisite intent to move goods continuously in interstate commerce.

Texas v. United States, 866 F.2d 1546, 1560 (5th Cir. 1989).

Although there is no set formula in determining intent, we have

used some of these factors as guides to establish the interstate or

intrastate characteristic of a product.       Some of the more relevant

factors include: (1) whether a single shipper has control over both

the inbound and outbound movements to and from the warehouse (See

Merchants Fast Motor Lines, 5 F.3d at 915); (2) whether the

shipments   are   made   pursuant   to   specific   orders   or   customer

estimates of need which predict how much product will eventually be

delivered to each customer (Central Freight Lines v. I.C.C., 899
F.2d 413, 420; See Merchants Fast Motor Lines, 5 F.3d at 915); (3)

how many customers the storage facility serves (See Central Freight

Lines, 899 F.2d at 420); (4) how rapidly the product moves through

the storage facility (Central Freight Lines, 899 F.2d at 420; See

Merchants Fast Motor Lines, 5 F.3d at 915); (5) whether the

                                    5
shipment is made pursuant to a storage-in-transit provision in an

appropriate tariff (Central Freight Lines, 899 F.2d at 420); and

(6) whether the product goes through additional processing or

manufacture at the storage facility (See Merchants Fast Motor

Lines, 5 F.3d at 915).

     This particular situation involved two separate carriers, AB

and L&F.    AB ordered products based on L&F’s sales projections

knowing that at least some of that beer would eventually reach

South Texas.   AB inaugurated the initial shipment of out-of-state

beer to its Houston warehouse with a fixed and persisting intent

that it would be shipped to South Texas and eventually customers.

This intent was fixed at the shipment’s origin and persisted as the

shipment crossed     state   lines.       This   intent   persevered   as   AB

continued its products in motion after a brief (6-28 day) stop at

its warehouse in Houston.     Many of these products were not altered

or modified at the Houston facility.         Although AB did not ship its

goods from Houston, it arranged with L&F, as it did with the 46

other warehouses it supplied in Texas, both the inbound “dunnage”

and outbound products to be shipped from the AB warehouse down to

its distributor in South Texas, L&F.         Moreover, once on board L&F

trucks, AB still maintained control over its’ products.           The goods

remained   subject   to   temperature      and   timeliness   requirements,

marketing methods and disposition of products, geographic sales

area determinations, and decisions concerning what products would

move where and when in L&F’s territory. It performed these actions

because it had an interest in making sure that its’ products

                                      6
reached South Texas in premium condition.

     Essentially, we find that this was a case which involved a

shipper whose intent was to move its products continuously from its

out-of-state breweries to its in-state retailer-customers, via a

distributor,   with   a   temporary       stop   at   its   own   warehouse   to

facilitate the interstate movement.              Therefore, plaintiffs, as

drivers for L&F, were engaged in interstate commerce.

     AFFIRMED.

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