Court Opinion

ID: 9955703
Source: CourtListenerOpinion
Date Created: 2024-03-29 00:00:39.847157+00
Date Added: 2024-06-11T08:15:15.979316
License: Public Domain

Case: 23-30356           Document: 89-1         Page: 1      Date Filed: 03/28/2024

          United States Court of Appeals
                                                                                  United States Court of Appeals

               for the Fifth Circuit                                                       Fifth Circuit

                                                                                         FILED
                                  ____________                                     March 28, 2024

                                    No. 23-30356                                    Lyle W. Cayce
                                                                                         Clerk
                                  ____________

Joseph Ash; Justin Bolton; Matthew Crawford,

                                                               Plaintiffs—Appellants,

                                         versus

Flowers Foods, Incorporated; Flowers Baking Company
of Baton Rouge, L.L.C.,

                                           Defendants—Appellees.
                  ______________________________

                  Appeal from the United States District Court
                     for the Western District of Louisiana
                           USDC No. 1:21-CV-3566
                  ______________________________

Before Wiener, Haynes, and Higginson, Circuit Judges.
Wiener, Circuit Judge:*
      Plaintiffs-Appellants Joseph Ash, Justin Bolton, and Matthew
Crawford (“Plaintiffs”) appeal the district court’s grant of summary
judgment in favor of Defendants-Appellees Flowers Foods, Incorporated and
Flowers Baking Company of Baton Rouge, L.L.C. (collectively, “Flowers”).
For the following reasons, we AFFIRM.

      _____________________
      *
          This opinion is not designated for publication. See 5th Cir. R. 47.5.
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                                 No. 23-30356

                               I. Background
        Flowers manufactures and markets baked goods using a “direct store
delivery” system. Under this business model, Flowers divides its market into
geographic territories and sells the distribution rights to stores within those
territories to independent distributors. Distributors order, purchase, and
deliver products directly to customers. Because of the limited shelf life of
bread products, distributors determine the necessary quantity of products for
each of their customers only one week before the date of delivery. The
products are then manufactured at Flowers’ bakeries, some of which are
located outside of Louisiana, before being shipped nightly to warehouses in
Alexandria and Natchitoches. Six to twelve hours after arrival at the
warehouses, the products are picked up by the distributor that ordered them
and are then delivered to customers. Distributors typically drive company
trucks, but occasionally use their personal vehicles for “pull-up” restocking.
        Distributors are paid on a commission basis. Pursuant to a Distributor
Agreement signed by each employee, Flowers deducts warehouse rent,
administrative fees, and “shrink” and “stale” costs from employees’ wages.
“Shrink costs” refers to lost sales for bread that is never scanned out of
inventory. “Stale costs” are profits lost when bread is unsold by a certain
date.
        Plaintiffs are three former Flowers distributors. They contend that
Flowers intentionally misclassified them as independent contractors to avoid
paying them overtime, in violation of the Fair Labor Standards Act
(“FLSA”), 29 U.S.C. § 201, et seq., and the Louisiana Wage Payment Act
(“LWPA”), La. R.S. 23:631, et seq. They also assert that Flowers took illegal
deductions from their paychecks in violation of the LWPA. The district court

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granted summary judgment to Flowers on all of Plaintiffs’ claims. Plaintiffs
appeal.1
                              II. Standard of Review
         On appeal, we review a district court’s grant of summary judgment de
novo. United States ex rel. Schweizer v. Canon, Inc., 9 F.4th 269, 273 (5th Cir.
2021). Summary judgment is proper when the record shows that “there is no
genuine dispute as to any material fact and that the movant is entitled to
judgment as a matter of law.” Fed. R. Civ. P. 56(a). A genuine dispute of
material fact exists when “the evidence is such that a reasonable jury could
return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 248 (1986). All facts and reasonable inferences are construed in
favor of the nonmovant. Deville v. Marcantel, 567 F.3d 156, 163–64 (5th Cir.
2009).
                                   III. Discussion
                                    A. The FLSA
         The FLSA requires that employers pay employees who work in excess
of forty hours per week one-and-a-half times their regular hourly rate. 29
U.S.C. § 207(a)(1). There are, however, several exceptions to this rule. See
29 U.S.C. § 213. Exemptions to the FLSA are affirmative defenses that
employers must demonstrate by a preponderance of the evidence. Meza v.
Intelligent Mexican Mktg., Inc., 720 F.3d 577, 580–81 (5th Cir. 2013).
         The Motor Carrier Act (“MCA”) is one such exemption. The right
to overtime does not apply to “any employee with respect to whom the
Secretary of Transportation has power to establish qualifications and

         _____________________
         1
          Plaintiffs do not appeal the district court’s grant of summary judgment on their
claim for overtime violations under the LWPA.

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maximum hours of service pursuant to section 31502 of title 49.” 29 U.S.C.
§ 213(b)(1). That section, in turn, provides that the Secretary may only
regulate “motor carriers” that participate in interstate transportation. 49
U.S.C. §§ 31501(1), 31502(b); 29 C.F.R. § 782.2(a). The MCA defines
interstate transportation as, inter alia, movement “between a place in . . . a
State and a place in another State; [or] a State and another place in the same
State through another State.” 49 U.S.C. § 13501(1). Transportation, in turn,
includes “services related to that movement, including arranging for, receipt,
delivery, elevation, transfer in transit, refrigeration, icing, ventilation,
storage, handling, packing, unpacking, and interchange of passengers and
property.” 49 U.S.C. § 13102(23)(B).
       In this case the district court held that the MCA precluded Plaintiffs’
claim for overtime under the FLSA. On appeal, Plaintiffs complain that they
did not engage in transportation “in interstate or foreign commerce within
the meaning of the Motor Carrier Act.” 29 C.F.R. § 782.2(a). Plaintiffs
picked up products at warehouses in Louisiana and delivered them to
customers in Louisiana. They contend that they only engaged in intrastate
transportation, putting them outside of the MCA’s purview.
       However, this circuit has applied the MCA not only to the “actual
transport of goods across state lines” but also to the “intrastate transport of
goods in the flow of interstate commerce.” Siller v. L & F Distribs., Ltd., 109
F.3d 765, 1997 WL 114907, at *1 (5th Cir. 1997) (per curiam). A “carrier is
engaged in interstate commerce when transporting goods . . . originating in
transit from beyond [the state in question] . . . even though the route of a
particular carrier is wholly within one state.” Id. (quoting Merchants Fast
Motor Lines, Inc. v. I.C.C., 528 F.2d 1042, 1044 (5th Cir. 1976) (calling this
rule “elemental”)). Whether transportation “between two points in a single
state is interstate or intrastate depends on the shipment’s ‘essential
character.’” Id. at *2 (quoting Merchants Fast Motor Lines, Inc. v. I.C.C., 5

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F.3d 911, 917 (5th Cir. 1993)). Essential character, in turn, refers to “the
shipper’s fixed and persisting intent at the time of shipment.” Id. The
“totality of all of the facts and circumstances eventually determines whether
a shipper has the requisite intent to move goods continuously in interstate
commerce.” Id. (citing Texas v. United States, 866 F.2d 1546, 1560 (5th Cir.
1989)).
        Flowers had such an intent here. Plaintiffs ordered products based on
sales history and projections for particular stores. The bread products were
baked accordingly, before being shipped into Louisiana. Within hours of the
products’ arrival at the warehouses in Louisiana, they were picked up by
Plaintiffs and transported to the customers. Even if Flowers did not know at
the time of production which customers would ultimately receive which
goods, it knew that the products were shipped into Louisiana for distribution
to Louisiana customers.2 It is clear that Flowers had the intention, when it
shipped the specially-ordered products from its out-of-state facilities, that
the products would reach Louisiana customers.
        Plaintiffs contend that the flow of interstate commerce was severed
once the products arrived at the warehouses, where Plaintiffs had to arrange
for delivery by sorting and loading inventory onto their trucks. But the MCA
expressly includes “arranging for . . . delivery” as part of its definition of
“transportation,” along with “storage, handling, packing, [and] unpacking.”
29 U.S.C. § 13102(23)(B). The Interstate Commerce Commission

        _____________________
        2
           “[T]he shipper need not know the exact identity of particular consumers in order
to intend that the goods move continuously in interstate commerce.” Central Freight Lines
v. I.C.C., 899 F.2d 413, 421 (5th Cir. 1990); see also Policy Statement, 8 I.C.C.2d 470, 473–
74, 1992 WL 122949, at *2 (Apr. 27, 1992) (explaining that a shipper’s “lack of knowledge
of the specific, ultimate destination . . . at the time the shipment leaves its out-of-State
origin” is insufficient to “establish a break in that continuity that would change the
interstate character of the subsequent transportation”).

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(“I.C.C.”)3 has noted that when, as here, a “warehouse serves only as
temporary storage to permit orderly and convenient transfer of goods in the
course of what the shipper intends to be a continuous movement to
destination, the continuity of the movement is not broken at the warehouse.”
Policy Statement, 8 I.C.C.2d at 472–73. That Plaintiffs sorted and loaded
their ordered products does not sever the causal chain of intent. See Siller,
109 F.3d at *2. Plaintiffs did not engage in the type of processing that might
do so. See Central Freight Lines, 899 F.2d at 415 n.1, 422 (suggesting that
combining in-state and out-of-state products to create something new would
sever chain); Kline v. Wirtz, 373 F.2d 281, 282 (5th Cir. 1967) (per curiam)
(holding that because a “substantial part of the . . . meat was boned, trimmed,
and cut to order,” the “District Court had ample basis to conclude that the
‘interstate’ movement ceased when the meat was delivered to Employer’s
storage and processing area”). The temporary stop at the warehouse was
merely intended to “facilitate the interstate movement.” See Siller, 109 F.3d
at *3.
         More broadly, Plaintiffs contend that the district court was wrong to
apply the “totality of the circumstances” shipper-intent test, but instead
should have used a three-part test devised by the I.C.C. in the 1950s to
determine whether their role constituted interstate transportation. The
factors under that framework which could preclude intrastate transportation
from being considered interstate are “(1) that there is no specific order
destined for a specific destination; (2) that the terminal storage is a
distribution point or local marketing facility; and (3) that transportation from

         _____________________
         3
          The I.C.C. regulated motor carrier safety prior to the Secretary of
Transportation. See I.C.C. Termination Act of 1995, Pub. L. No. 104–88, 109 Stat. 803,
804 (1995).

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hub to spoke is arranged only after sale or allocation from storage.” Central
Freight Lines, 899 F.2d at 421. However, this argument is unavailing.
        First, this court has already rejected that test under similar facts. See
id. Second, while the three-factor test is incorporated into Department of
Labor (“DOL”) regulations, see 29 C.F.R. § 782.7(b)(2), the DOL
recognizes that the Department of Transportation (“DOT”) has
“supplemented” the specific criteria in situations such as this involving
“motor traffic moving from warehouses or similar facilities to points in the
same State after or preceding a movement from another State.” U.S. Dep’t
of Labor, Wage & Hour Div., Opinion Letter on Fair Labor Standards Act,
2005 WL 330602, at *2 (Jan. 11, 2005) (citation omitted). In those
circumstances, the DOT now uses the “fixed and persisting transportation
intent” test. Id.4
        Plaintiffs advocate a “textualist” reading of the statute, when
employees who do not enter other states simply do not travel in interstate
commerce. They point to Encino Motorcars, LLC v. Navarro, in which the
Supreme Court held that exemptions under the FLSA must be given a “fair
reading.” 138 S. Ct. 1134, 1142 (2018). We have characterized this “fair
reading” requirement as contrasting with the “narrow interpretation
previously espoused by this and other circuits.” Carley v. Crest Pumping
Techs., L.L.C., 890 F.3d 575, 579 (5th Cir. 2018). Plaintiffs fail to explain why
the “totality of the circumstances” analysis is not a “fair reading.” See
Encino, 138 S. Ct. at 1142. The district court’s analysis of the FLSA and the
MCA faithfully centers the statutes’ texts in determining their applicability.

        _____________________
        4
           “Because DOT is the final administrative authority for the MCA, its
interpretation of its jurisdiction is controlling.” Opinion Letter, 2005 WL 330602, at *2 n.5
(citing Martin v. Coyne Int’l Enters., Inc., 966 F.2d 61, 63–64 (2d Cir. 1992)).

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       Further, even if the three-part test were applicable, Plaintiffs would
still be out of luck because there was a specific customer order being filled at
the time of shipment. See Central Freight Lines, 899 F.2d at 421. Plaintiffs
placed orders for particular stores before the bread was baked and delivered
to the warehouses. Additionally, transportation of the products from the
“hub” of the warehouses to the “spokes” of the stores was arranged before
the items arrived at the storage facility. See id. Plaintiffs were notified when
their ordered products arrived at the warehouse and picked up their ordered
products five days per week. In sum, the three-part test has been all but
abandoned in situations such as this, and, even if it were to apply, it would
not cut in favor of Plaintiffs. See Mena v. McArthur Dairy, LLC, 352 F. App’x
303, 306 n.2 (11th Cir. 2009) (per curiam) (“We are . . . in accord with other
circuits that have held that this standard has been refined, if not phased out,
in favor of the more general consideration that draws a fixed and persisting
intent from all of the facts and circumstances surrounding the
transportation.” (internal quotation marks and citation omitted)). Any way
you slice it, the MCA exempts Plaintiffs from the FLSA.
       Plaintiffs alternatively assert that the Technical Corrections Act
(“TCA”) spares them from the MCA’s exemption. The TCA recognizes
that drivers working with “motor vehicles weighing 10,000 pounds or less”
are not covered by the MCA. Technical Corrections Act of 2008, Pub. L. No.
110–244, 122 Stat. 1572, 1620 (June 6, 2008). Flowers distributors do the
majority of their work with company trucks weighing more than 10,000
pounds. Although Plaintiffs occasionally used their personal vehicles, they
submitted no evidence as to those cars’ weights. Although Plaintiffs insist
that their personal cars were “at least inferentially” less than 10,000 pounds,
they cannot create an issue of fact without evidence of the “actual [weight
of] the vehicles the plaintiffs drove.” See Rychorewicz v. Welltec, Inc., 768 F.
App’x 252, 256 (5th Cir. 2019) (per curiam) (finding that website links stating

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the weight of particular makes and models of vehicles were insufficient
evidence of weight within the context of the TCA without the cars’ VIN
numbers). It might be the employer’s burden to establish the applicability of
the MCA exemption, but it is the employee’s burden to show the weight of
the vehicles under the TCA. Carley, 890 F.3d at 580; Rychorewicz, 768 F.
App’x at 257. Plaintiffs failed to meet this burden and establish a dispute of
fact that would preclude summary judgment.
        The MCA applies to exempt Plaintiffs from the FLSA’s overtime
requirements, even though they only drive goods within Louisiana, because
they play a part in achieving the shipper’s fixed intent to move goods between
states. The district court did not err in granting summary judgment in favor
of Flowers on this claim.
                                   B. The LWPA5
        Flowers regularly deducted warehouse rent, administrative fees, and
shrink and stale costs from Plaintiffs’ wages. Plaintiffs claim that these are
illegal fines under the LWPA, which states that an employer may not “assess
any fines against his employees or deduct any sum as fines from their wages.”
La. Stat. Ann. § 23:635. “A fine, within the meaning of [section] 23:635,
is a pecuniary penalty imposed for the violation of some law, rule or
regulation.” Samson v. Apollo Res., Inc., 242 F.3d 629, 637 (5th Cir. 2001)
(quoting Brown v. Navarre Chevrolet, Inc., 610 So.2d 165, 170 (La. Ct. App.
1992)). The deductions taken by Flowers were not penalties associated with
violating any sort of rule, but were instead a policy related to wage payment—
one which was expressly authorized by Plaintiffs through their Distribution

        _____________________
        5
          Flowers contends that Plaintiffs’ LWPA claim is untimely. Because we dispose of
that claim on its merits, we decline to reach the issue of timeliness.

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Agreements. See Samson, 242 F.3d at 637–38. As the district correctly court
held, those deductions do not violate the LWPA.
                        C. Supplemental Jurisdiction
       Finally, Plaintiffs assert that the district court improperly retained
supplemental jurisdiction over their LWPA claim after dismissing their
FLSA claim. According to Plaintiffs, the district court should have declined
to exercise supplemental jurisdiction under 28 U.S.C. § 1367(c) and
dismissed the LWPA claims without prejudice instead of with prejudice. The
statute provides that a district court “may decline to exercise supplemental
jurisdiction” if, inter alia, (a) “the claim raises a novel or complex issue of
State law,” (b) “the district court has dismissed all claims over which it has
original jurisdiction,” or (c) “in exceptional circumstances, there are other
compelling reasons for declining jurisdiction.” 28 U.S.C. § 1367(c)
(emphasis added). This circuit also considers the common law factors of
“judicial economy, convenience, fairness, and comity.” Enochs v. Lampasas
County, 641 F.3d 155, 159 (5th Cir. 2011) (citing Carnegie-Mellon Univ. v.
Cohill, 484 U.S. 343, 350 (1988)). We review a district court’s decision to
retain jurisdiction over a state law claim for abuse of discretion. Batiste v.
Island Records Inc., 179 F.3d 217, 226 (5th Cir. 1999); see also Guzzino v.
Felterman, 191 F.3d 588, 595 (5th Cir. 1999) (describing the district court’s
“wide discretion” in this arena).
       The district court did not abuse its discretion in exercising
supplemental jurisdiction over Plaintiffs’ LWPA claim. The issue was “fully
developed and ripe for disposition on summary judgment.” See Mendoza v.
Murphy, 532 F.3d 342, 347 (5th Cir. 2008). The district court was familiar
with the merits of the case, which had been pending for more than two years.
See id. Discovery had closed, and the case was less than three months away
from trial. See id. Further, the LWPA claim presented “no novel or especially

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unusual questions.” See Brookshire Bros. Holding, Inc. v. Dayco Prods., Inc.,
554 F.3d 595, 602 (5th Cir. 2009) (citation omitted). Finally—and most
importantly—Plaintiffs failed to request a remand from the district court in
the event that it ruled for Flowers on the federal claim. That failure renders
Plaintiffs’ instant challenge waived. See Powers v. United States, 783 F.3d 570,
576–77 (5th Cir. 2015) (quoting Acri v. Varian Assoc., Inc., 114 F.3d 999,
1000–01 (9th Cir. 1997) (en banc) (“[W]hile Article III jurisdiction must be
considered sua sponte, review of the discretionary aspect to supplemental
jurisdiction under § 1367(c) is waived unless raised in the district court.”)).
                               IV. Conclusion
       The district court did not err in granting summary judgment in favor
of Flowers, nor in retaining jurisdiction over Plaintiffs’ state law claim. That
judgment is AFFIRMED.

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