Court Opinion

ID: 1015294
Source: CourtListenerOpinion
Date Created: 2013-07-04 21:30:40.430935+00
Date Added: 2024-06-11T15:12:38.522290
License: Public Domain

UNPUBLISHED

                    UNITED STATES COURT OF APPEALS
                        FOR THE FOURTH CIRCUIT

                             No. 04-1652

JAMES TALTON, JR.,

                                               Plaintiff - Appellant,

           versus

I.H. CAFFEY DISTRIBUTING COMPANY,
INCORPORATED; CHRISTOPHER CAFFEY,

                                              Defendants - Appellees.

Appeal from the United States District Court for the Middle
District of North Carolina, at Durham. William L. Osteen, District
Judge. (CA-02-1048)

Argued:   December 2, 2004                 Decided:   January 18, 2005

Before KING and SHEDD, Circuit Judges, and Henry F. FLOYD, United
States District Judge for the District of South Carolina, sitting
by designation.

Affirmed by unpublished per curiam opinion.

Robert James Willis, Raleigh, North Carolina, for Appellant. Carl
Ray Grantham, Jr., ROBINSON & LAWING, Winston-Salem, North
Carolina, for Appellees.
PER CURIAM:

            James Talton, Jr., a former delivery route driver for

North Carolina malt beverages and wine wholesaler and distributor

I.H. Caffey Distributing Co., Inc., and principal Christopher

Caffey (collectively “Caffey”), appeals the district court’s ruling

on summary judgment that he is not entitled to overtime benefits

pursuant to the Fair Labor Standards Act (the “FLSA”), 29 U.S.C. §§

201-219.    See Order and Judgment at 1 (April 16, 2004), adopting

Order and Recommendation of United States Magistrate Judge (March

11, 2004) (the “Opinion”).       The district court agreed with Caffey

that Talton transported goods in interstate commerce, implicating

the Motor Carrier Act exception to the FLSA, 29 U.S.C. § 213(b)(1),

and precluding his claim for benefits.            Opinion at 14.     For the

reasons that follow, we affirm.

                                     I.

            Caffey   is   headquartered     in    Guilford     County,   North

Carolina, and licensed by the North Carolina Alcoholic Beverage

Control Commission (“ABCC”) as the exclusive distributor of certain

beer products, including those manufactured by Miller, Coors,

Heineken,   Guinness,     St.   Pauli,    and   Pabst,   for   several   North

Carolina counties.        During the relevant time period, Caffey’s

warehouse in Greensboro sold approximately 3,400,000 cases and

18,000 kegs of beer per year.       Approximately fifty percent of that

volume was either produced at the Miller plant in Eden, North

                                     2
Carolina, or produced by Miller outside the state and transshipped

at the Eden plant.       Approximately ten percent was produced at and

shipped directly from the Miller plant in Albany, Georgia; twenty

percent was produced at or transshipped from the Coors plant in

Elkton, Virginia; and the remaining twenty percent was produced at

and   shipped     from   various    manufacturers’       plants      outside      North

Carolina or outside the United States.

            Wholesalers like Caffey are prohibited by the North

Carolina Administrative Code from requiring a retailer to purchase

their beer pursuant to a contractual purchase agreement.                          N.C.

Admin. Code tit. 4, r. 2T.0706.                However, by virtue of its ABCC

license, Caffey and other wholesalers are nonetheless required to

meet the orders of retailers in their assigned distribution areas,

regardless of account size or distance from the warehouse.                     Id. at

r.    02T.0610.      Caffey’s      sales       representatives    must     therefore

estimate   how    much   product     a     retailer   will    need    on   the    next

delivery, sometimes by talking to retailer managers, and, if the

manager    is     unavailable,      through       analyzing      sales     data    and

determining, based on a retailer’s current inventory and sales

history, how much beer should be ordered.                    The representatives

promptly enter the estimated quantity for those retailers into

handheld devices that transmit orders electronically to Caffey's

warehouse in Greensboro.

                                           3
            Turnover      among         licensed              retailers     in    Caffey’s

geographical area is less than five percent per year, so Caffey’s

customers are a stable group.                Talton testified by affidavit that

each retailer to which he delivered typically had a certain amount

of display space allocated to Caffey products, and that this space

allocation “did not change.”                 Talton Second Aff. at ¶ 9.                 The

frequency of deliveries and amount of product in each delivery

fluctuated.      Id. at ¶ 19.

            Talton      began       working       for    Caffey     as a “driver/sales

representative” on September 15, 1998.                        On February 25, 2000, he

was assigned to a “swing-route driver” position.                          As a swing-route

driver, Talton did not have any pre-assigned routes, but instead

filled in as needed on any route that was missing a driver.                          All of

Talton's routes were in North Carolina, though he once crossed into

Virginia briefly while en route to a North Carolina distributor

situated near the North Carolina/Virginia state line.

            At   each    of     the    retailer         locations,        Talton’s   duties

included printing an invoice for the beer delivered, obtaining the

retailer’s    approval        for     the    beer,      unloading     it,     pricing   it,

stocking it, and securing payment.                      Drivers such as Talton also

sometimes     returned    kegs        used    by        the    retailers     to   Caffey’s

warehouse, which Caffey returned to the manufacturers for credit,

reuse, and recycling. After suffering an on-the-job injury, Talton

                                              4
ceased performing the duties of a swing-route driver for Caffey on

June 11, 2002.

              On November 29, 2002, Talton filed a complaint against

Caffey in the Middle District of North Carolina, alleging that

Caffey had failed to pay him all regular and overtime wages when

due, in contravention of the FLSA and the North Carolina Wage and

Hour Act (“NCWHA”), N.C. Gen. Stat. §§ 95-25.1 et seq.              He sought

a   declaratory     judgment,   compensatory    damages,     and   liquidated

damages, plus interest, attorney’s fees, and costs. In its Answer,

Caffey contended that it was exempt from both the FLSA and NCWHA as

to Talton because of the interstate nature of Talton’s duties, see

Amended Answer at 4-5, and that in the event that it was not

exempt, its actions were in good faith.          Id. at 6.

              After discovery was conducted, both parties moved for

summary judgment on Talton’s FLSA claim for unpaid overtime wages

under § 207(a)(1).       On April 16, 2004, in adopting the magistrate

judge’s recommendations, the district court denied Talton’s motion

for summary judgment and granted Caffey’s.            Order and Judgment at

1-2.       The court reasoned that though Talton’s delivery was solely

intrastate, the beer itself was an article travelling in interstate

commerce,      making   the   Motor   Carrier   Act   applicable    and   thus

exempting Caffey from the FLSA’s overtime requirements.1                   See

       1
       Caffey also moved for summary judgment on Talton’s NCWHA
claim for unpaid wages, arguing that Talton was not entitled to the
unpaid wages under the NCWHA, and that his employment was not

                                       5
Opinion at 10-13.       Talton filed a timely notice of appeal, and we

possess jurisdiction pursuant to 28 U.S.C. § 1291.

                                      II.

          On appeal, Talton contends that the Opinion utilized and

applied incorrect legal principles, impermissibly resolved issues

of disputed fact, and applied the legal standard to the facts

incorrectly.       We   review   a   district   court’s   award   of   summary

judgment de novo, viewing the facts and drawing all inferences in

the light most favorable to the non-moving party.                 See Seabulk

Offshore, Ltd. v. Am. Home Assurance Co., 377 F.3d 408, 418 (4th

Cir. 2004).    An award of summary judgment is appropriate only “if

the   pleadings,    depositions,      answers   to   interrogatories,     and

admissions on file, together with the affidavits, if any, show that

there is no genuine issue as to any material fact and that the

moving party is entitled to a judgment as a matter of law.”              Fed.

R. Civ. P. 56(c).       A genuine issue of material fact is one “that

might affect the outcome of the suit under the governing law.”

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Because

we find no error in the judgment, we affirm.

covered by the NCWHA. The district court granted this motion as
well, adopting the magistrate judge’s assessment that “evidence
before the Court demonstrates that Defendants’ deduction of cash
shortages from Plaintiff’s paychecks met all of the NCWHA’s
statutory and regulatory requirements.”    Opinion at 16.    The
magistrate judge also recommended that the district court deny a
number of motions from both sides as moot. Opinion at 18. Talton
has appealed the FLSA ruling only.

                                       6
                                A.

          The FLSA establishes a forty-hour workweek for covered

employees and provides for compensation at time-and-a-half for

those weekly hours in excess of forty.   Section 207(a)(1) provides

as follows:

     [N]o employer shall employ any of his employees who in
     any workweek is engaged in commerce or in the production
     of goods for commerce, or is employed in an enterprise
     engaged in commerce or in the production of goods for
     commerce, for a workweek longer than forty hours unless
     such employee receives compensation for his employment in
     excess of the hours above specified at a rate not less
     than one and one-half times the regular rate at which he
     is employed.

29 U.S.C. § 207(a)(1).   To establish a claim for unpaid overtime

wages, Talton must establish by a preponderance of the evidence (1)

that he worked overtime hours without compensation, (2) the “amount

and extent” of the work “as a matter of just and reasonable

inference,” and (3) that Caffey knew of the uncompensated overtime.

See Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 687 (1946);

see also Davis v. Food Lion, 792 F.2d 1274, 1276 (4th Cir. 1986).

Talton must also show that Caffey was an enterprise engaged in

interstate commerce.   29 U.S.C. § 207(a)(1).

          In his motion for summary judgment as to liability,

Talton maintained that the undisputed facts established each of

these elements.   Caffey admits that it is engaged in interstate

commerce, that Talton worked overtime during the relevant period,

and that he was not paid overtime wages during that time.        The

                                 7
Opinion accordingly concluded that Talton had made a prima facie

showing of his entitlement to overtime compensation. Opinion at 7.

          Caffey maintained, however, that Talton’s employment was

exempt from the FLSA under the Motor Carrier Act exemption, set

forth at 29 U.S.C. § 213(b)(1).     That exemption provides that the

FLSA overtime requirements do not apply to “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 [the Motor Carrier

Act].”   Id.     The   Motor   Carrier   Act   gives   the    Secretary   of

Transportation   jurisdiction,      inter      alia,   over     interstate

transportation by a motor carrier, 49 U.S.C. § 13501, and authority

to establish qualifications and maximum hours of service for

covered employees.     49 U.S.C. § 31502.       Courts have interpreted

this authority to extend not just to carriers who actually cross

state lines while transporting goods, but also to carriers whose

cargo originates from outside the state or is ultimately bound for

a destination outside the state, even where the carrier’s route is

entirely intrastate.    See, e.g., Bilyou v. Dutchess Beer Distrib.,

300 F.3d 217, 223 (2d Cir. 2002); Merch. Fast Motor Lines, Inc., v.

I.C.C., 528 F.2d 1042, 1044 (5th Cir. 1993).

          Caffey contends that Talton is covered by the Motor

Carrier Act, and thus exempt from the provisions of the FLSA,

because the beer Talton carried and delivered was an item in

                                   8
interstate commerce.      Talton counters that the beer he carried and

delivered on his intrastate delivery routes had ceased to be an

item in interstate commerce, and for that reason he does not fall

within the Motor Carrier Act exemption. Thus, Talton argues, he is

covered by the FLSA and entitled to overtime pay.

          The question, then, is simple:           whether the beer’s pause

in Caffey’s Greensboro warehouse was of such a character as to

bring its interstate journey to an end. In Walling v. Jacksonville

Paper Co., 317 U.S. 564 (1943), the Supreme Court analyzed whether

goods imported from outside the state by a wholesaler for in-state

sale, and temporarily stored in a warehouse before subsequent

movement to their in-state destination, are nevertheless still

items in interstate commerce during the second, in-state leg of

their journey.   The Court identified and discussed three possible

fact   patterns for assessing the interstate commerce issue:                (1)

where items were ordered pursuant to a pre-existing contract with

a specific customer; (2) where items were ordered pursuant to a

pre-existing understanding with a customer, though not pursuant to

a   written   contract;    and   (3)       where   items   were   ordered   in

anticipation of the needs of customers.            317 U.S. at 335-36; see

also Galbreath v. Gulf Oil Corp., 413 F.2d 941, 945 (5th Cir. 1969)

(listing three Jacksonville Paper fact patterns); Allesandro v.

C.F. Smith Co., 136 F.2d 75, 77 (6th Cir. 1943) (same).

                                       9
            Talton maintains that our Circuit has interpreted and

applied the principles of Jacksonville Paper narrowly, such that

“interstate” movement will continue after temporary stoppage at a

warehouse only if a specific customer has “ordered the goods.”

Appellant's Br. at 11 (quoting Schroepfer v. A.S. Abell Co., 138

F.2d 111, 114 (4th Cir. 1943)).         Talton contends that, because of

this narrow interpretation, the district court used the incorrect

legal standard when it relied on authorities from the Fifth and

Sixth Circuits, embodied in the Galbreath and Allesandro decisions.

Opinion at 10.

             On careful analysis, we see Talton’s contention on this

point as without merit.      First, contrary to what Talton maintains,

we did not broadly conclude in Schroepfer that the in-state leg of

a shipment of goods from outside the state is not in interstate

commerce unless in-state customers have previously “ordered the

goods.”    Rather, Schroepfer merely used the phrase “ordered the

goods” to characterize how the facts of Jacksonville Paper differed

from a companion case, Higgins v. Carr Bros. Co., 317 U.S. 572

(1943).    See Schroepfer, 138 F.2d at 114.       Nor was the fact that no

customer   had   “ordered   the   goods”    in   Schroepfer    deemed   to   be

dispositive.     Rather, in Schroepfer, the product at issue was a

newspaper,    and   two   employees,    whose    jobs   were   to   distribute

newspapers to racks and vendors, sued the publishing company for

minimum wages and overtime, on the theory that their employment was

                                       10
in interstate commerce because the newspaper gathered out-of-state

news and used it to produce the newspaper.               We simply determined

that the defendant’s newspaper business was not the sale of the

interstate news, as would be the business of a “telegraph company

or a news service,” because the company took the interstate news

and used it as it saw fit to create a new product, a newspaper,

which the plaintiffs distributed. Id. As a result, the intrastate

distribution of locally produced newspapers was not “so closely

related to the movement of the [interstate] commerce” as to cause

the distribution of the papers to constitute interstate activity.

Id. at 113-14.    Put simply, we neither discarded nor narrowed the

Jacksonville Paper categories.          As a result, the decisions of the

Fifth and Sixth Circuits in Galbreath and Allesandro, relied on in

the   Opinion,   are   not,   as   maintained       by   Talton,   “materially

different” from the applicable principles in this Circuit.

           Further, Talton’s contention that the products that he

carried could not remain in interstate commerce because they were

not   specifically     ordered     by    Caffey’s    customers     contravenes

Jacksonville Paper itself.         There, the Supreme Court recognized

that goods could be ordered pursuant to an “understanding,” though

not part of a specific order.           317 U.S. at 568.      The Court also

explicitly left open the possibility that shipments purchased in

anticipation of the needs of certain customers might remain in

interstate commerce when delivered in-state, observing that “a

                                        11
wholesaler’s course of business based on anticipation of needs of

specific customers, rather than on prior orders or contracts,”

might    “at    times    be   sufficient      to     establish   that    practical

continuity in transit necessary to keep a movement of goods ‘in

commerce.’”     Id. at 570.     Here, the district court recognized that

the products delivered by Talton were ordered by Caffey pursuant to

an “understanding” implied by law, were ordered to meet the needs

of   “specific      customers,”    and     thus      were   within     the   second

Jacksonville Paper fact pattern.               See Opinion at 10-13.           This

analysis correctly utilized the applicable legal standard.                   Id.

                                         B.

            Next,    Talton    contends       that    the   district    court,   in

rendering      summary   judgment,   impermissibly          resolved    issues   of

disputed fact.       Though the Opinion relied on what the magistrate

judge repeatedly characterized as “undisputed facts,” see, e.g.,

Opinion at 8, 11, 12 n.7, Talton maintains that the “undisputed

facts” were in fact disputed.

            This contention, while less clear than the legal standard

issue, is also without merit.        Though the Opinion did recite some

facts that Talton, on appeal,2 characterizes as disputed, the

     2
       Talton’s disputed issues of fact contention on the Motor
Carrier Act exemption is new. He did not assert to the magistrate
judge that the facts underlying the application of the exemption
were disputed, though he did maintain that facts related to other
issues were in dispute.    With regard to the Motor Carrier Act
exemption, Talton argued solely that the application of the
Jacksonville Paper doctrine to the facts showed that his employment

                                         12
pivotal point for the court was the very nature of the ABCC

statutes   and   the   exclusive   relationship   that   those   statutes

establish between a beer wholesaler and a beer retailer.         The fact

of the ABCC statutes’ existence and their terms were not in

dispute, and thus the court did not improperly resolve disputed

issues of fact when it granted summary judgment.         See Griffin v.

Consol. Foods Corp., 771 F.2d 826, 828 (4th Cir. 1985) (affirming

determination of applicability of Motor Carrier Act exemption based

on undisputed facts).

                                    C.

           Finally, the district court correctly determined that the

products handled and distributed by Talton continued to be in

interstate commerce even though they had temporarily paused at the

Greensboro warehouse.     The Opinion observed that the relationship

detailed in the first category of Jacksonville Paper, delivery

pursuant to written contract, was unavailable to Caffey because the

ABCC statutes prohibit a beer wholesaler from entering into a

written contract with a beer retailer.     Opinion at 13.    The Opinion

then concluded, as to the second category of Jacksonville Paper,

that, “[c]learly, by operation of North Carolina’s ABC law, the

was not in interstate commerce.     Pl.’s Mem. of Law in Opp. to
Def.'s Mot. for Summ. J. at 5-9. Moreover, he did not assert to
the district court that the magistrate judge had erroneously based
his recommended ruling on disputed issues of fact.      See Pl.’s
Objections to Magistrate Judge’s Order and Recommendation at 3-4.

                                    13
licensed   retailers   had   an    ‘understanding’   with      [Caffey]   that

[Caffey] was required to provide them with enough beer to meet

their sales needs.” Opinion at 12.            The Opinion reached this

conclusion despite the fact that Caffey ordered quantities of beer

without specific orders from its retailers because Caffey, as the

holder of a state-established monopoly for the wholesaling of beer

products, was required to keep its retailers stocked with beer, and

“if   [Caffey]   breached    its   legal   obligations    to   the   licensed

retailers, not only would it face potential contract damages, but

also the revocation of its business license.”            Opinion at 13.     As

a result, the district court properly concluded that the “implied

requirements contracts arising out of ABC law in this case are an

even stronger legal relationship than most express requirements

contracts.” Id. The beer products carried in-state by Talton were

“different from goods acquired and held by a local merchant for

local disposition.” Jacksonville Paper, 317 U.S. at 570. We agree

with the reasoning of the district court on this point, see Opinion

at 8-14, and we are content to adopt it.

                                    III.

      Pursuant to the foregoing, the summary judgment award of the

district court is affirmed.

                                                                     AFFIRMED

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