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April 22 — Commercial truck drivers who participated in an intrastate leg of a multistate shipping process engaged in interstate commerce and are exempt from overtime pay under the Fair Labor Standards Act and the Colorado Minimum Wage Order, the U.S. Court of Appeals for the Tenth Circuit ruled.
The Decker Truck Line Inc. drivers fell within the scope of the Motor Carrier Act exemption from the FLSA and the “interstate driver” exemption from the state wage order, the Tenth Circuit said April 21 in affirming summary judgment for the company on the drivers' collective and class action claims.
The drivers backhauled customer shipments of empty kegs, pallets and other material from a temporary warehouse in Colorado to a brewery also located in the state. But the distributors returning these items were located outside of Colorado and the materials were bound for the brewery from the moment of their initial departure from the out-of-state locations, the appeals court said.
In reaching its decision, the appeals court examined more factors than those addressed in the Interstate Commerce Commission's guidelines known as the “MC-48 test.” Both the Labor Department and the Department of Transportation have looked to circumstances beyond those identified in the three-factor MC-48 test when interpreting the meaning of interstate commerce, the court said.
“The Court’s recognition of the experts on these issues”—the DOL and the DOT—“and their movement away from the MC-48 test, rendered a decision not in conflict with precedent and in concert with many other Circuits that have more recently analyzed the question of interstate commerce for purposes of the MCA exemption,” Decker's attorney, Emily Keimig of Sherman and Howard LLC in Denver, told Bloomberg BNA in an April 22 e-mail.
But an attorney for the drivers, David H. Miller of Sawaya Law Firm, said the court seemed to look at the intent of the brewery to have items returned to it, whereas it should have looked to the out-of-state shippers' intent.
“In the business world, a person only intends to have items delivered to the place it paid to have them shipped,” Miller said. The shippers in this case only paid to have the materials delivered to the warehouse, not to the brewery, he told Bloomberg BNA April 22.
Keimig said: “It is the intent to get the hops to the location where they will be used that controls, not the notion that ‘intent' should be defined by the dividing up of the shipping costs from Point A to Point B and then to Point C.”
Decker contracted with New Belgium brewery in Fort Collins, Colo., to transport outbound beer shipments to its warehouse, which was also located in Fort Collins.
Under the contract, Decker drivers additionally transported backhaul shipments of hops, empty kegs and other materials from the warehouse to the brewery.
The backhaul shipments were mostly sent from out-of-state beer distributors to the warehouse.
On Sept. 18, 2013, the drivers filed their initial complaint against Decker, asserting class and collective claims for unpaid overtime wages under federal and state wage laws.
Decker argued that the drivers engaged in interstate commerce and were therefore exempt from the overtime provisions of the FLSA and the Colorado Minimum Wage Order.
The drivers contended that they didn't engage in interstate commerce because they only transported the materials within Colorado from New Belgium's warehouse to its brewery. They argued that the interstate transaction ended when the out-of-state shippers sent the materials to the warehouse.
But the U.S. District Court for the District of Colorado dismissed the claims at the summary judgment stage.
“It is clear from the practical realities of the business at hand and the character of the materials—kegs to be refilled, pallets to be reloaded and hops to be used to make the beer—that the out-of-state shippers intended the various materials to be returned to the brewery,” the district court said.
The drivers' backhauling of materials from the warehouse to the brewery “took place as part of those backhauled items' journey in interstate commerce,” the Tenth Circuit said in affirming summary judgment to Decker.
The appeals court relied on its decision in Foxworthy v. Hiland Dairy Co., 997 F.2d 670, 1 WH Cases2d 869 (10th Cir. 1993).
In Foxworthy, the court held that a dairy delivery driver engaged in interstate commerce even though he transported empty milk crates solely within Oklahoma from customers to a temporary storage place.
The driver picked up the empty crates on a daily basis, and they were immediately shipped from the storage place to the dairy company's processing plant in Arkansas, the court said.
The crates were indispensable to the company's processing procedures at the Arkansas plant, the court had found.
In the present case, Tenth Circuit said “there can be no serious dispute that the final destination for these materials at the time of shipment was the brewery because all of these materials, and in particular, the hops, are ‘indispensable to the processing procedures' at New Belgium’s brewery.”
Judge Carolyn B. McHugh wrote the opinion, joined by Judges Harris L. Hartz and Gregory A. Phillips.
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Text of the opinion is available at http://www.bloomberglaw.com/public/document/JOE_DEHERRERA_aka_Joe_JR_Deherrera_JOE_GRIEGO_JENNIFER_JOHNSON_SC.
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