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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 18-12195
Non-Argument Calendar
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D.C. Docket No. 8:16-cv-03532-SCB-TGW
SCOTT EHRLICH,
o/b/o themselves and others similarly situated in the state of Florida,
SALVATORE REALE,
o/b/o themselves and others similarly situated in the state of Florida,
GARY PRUSINSKI,
o/b/o themselves and others similarly situated in the state of Florida,
Plaintiffs - Appellants,
versus
RICH PRODUCTS CORPORATION,
a foreign profit corporation,
Defendant - Appellee,
PETER J. GRILLI,
Defendant.
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Appeal from the United States District Court
for the Middle District of Florida
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(April 4, 2019)
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Before JORDAN, JILL PRYOR and HULL, Circuit Judges.
PER CURIAM:
Appellants Scott Ehrlich, Salvatore Reale, and Gary Prusinski are Route
Sales Representatives (“RSRs”) employed by appellee Rich Products Corporation
(“Rich”). The RSRs seek unpaid overtime compensation under the Fair Labor
Standards Act, 29 U.S.C. §§ 201-19 (the “FLSA”). Rich argues that the RSRs are
not entitled to overtime compensation because they fall within an exemption to the
FLSA’s overtime requirements: the Motor Carrier Act (the “MCA”) exemption set
forth in 29 U.S.C. § 213(b)(1). Whether the MCA exemption applies turns on
whether the RSRs transported items in interstate commerce. We agree with the
district court that the RSRs transported items in interstate commerce and therefore
affirm its decision granting summary judgment to Rich.
I. BACKGROUND
Rich employs RSRs to order, sell, and deliver Carvel® ice cream cakes and
other frozen desserts (the “products”). The plaintiff RSRs, who were paid weekly
salaries, allege that they worked far more than 40 hours a week to fulfill their
duties.
Rich manufactures the products in Connecticut and other states outside of
Florida. The products are perishable, with a shelf life of approximately six
months. The products make a long journey from their place of manufacture to the
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ultimate consumer. First, Rich ships the products from manufacturing facilities via
refrigerated tractor-trailer trucks. Rich instructs the trucking company when and
where to pick up the products. Second, Rich instructs the trucking company to
deliver the products to an Orlando, Florida storage warehouse facility owned by
Burris Logistics, Inc. (“Burris”). Third, shuttle trucks transport the products from
Burris’s warehouse to delivery trucks. Fourth, the delivery trucks, driven by the
RSRs, deliver the products to retail stores in Florida.
Rich manufactures and ships its products based on sales forecasts. Rich
forecasts long term (two-year) future sales, then adjusts its forecasts monthly. In
making these forecasts, Rich considers the following factors, among others:
historical customer demand, weather events, and store promotions, losses, and
closings.
In deciding how much of the products to ship to the Burris warehouse, Rich
tries to minimize the risk of shipping too much and thus losing products to
spoilage. Once products arrive at the Burris warehouse, Rich instructs that they be
shipped on a “first-in, first-out” basis. Doc. 45-8 at 6. 1 The products completely
turn over—in terms of dollar value—more than once a month. Some products do
not sell, however; when this occurs, Rich either disposes of them as “out of date”
or sells them to prisons or food banks.
Id. at 5-6.
1
All citations in the form “Doc. #” refer to numbered entries on the district court docket.
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Rich has a contract with Burris that allows Rich to oversee and control the
products at the Burris warehouse so that Rich’s orders are filled and its inventory is
adjusted. The products arrive packaged and are not altered before transfer by
shuttle trucks out of the warehouse for delivery.
On behalf of themselves and others similarly situated, the RSRs sued Rich,
seeking overtime wages under the FLSA. They contended that, from 2013 through
2016, they worked more than the overtime threshold of 40 hours per week but were
“misclassified” as exempt from the FLSA overtime requirements. Doc. 1 at 2.
Rich moved for summary judgment based on the argument that the RSRs were
exempt from the overtime pay provisions of the FLSA because they were engaged
in interstate commerce when making their deliveries to retail stores. In response,
the RSRs submitted, among other evidence, a PowerPoint presentation in which
Rich’s management advised the RSRs that due to the Department of Labor’s new
rules relating to minimum salary requirements under the FLSA, Rich would begin
paying them overtime.
The district court granted Rich’s motion for summary judgment. The court
determined that there were no genuine disputes of material fact that the RSRs were
engaged in interstate commerce when delivering the products. The court therefore
concluded that the RSRs were exempt from receiving overtime under the MCA
exemption.
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This is the RSRs’ appeal.
II. STANDARD OF REVIEW
We review the district court’s decision to grant summary judgment de novo,
“viewing all facts in the light most favorable to the nonmoving party and drawing
all reasonable inferences in favor of that party.” McCullum v. Orlando Reg’l
Healthcare Sys., Inc.,
768 F.3d 1135, 1141 (11th Cir. 2014). Summary judgment
is appropriate when “there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a).
III. LEGAL ANALYSIS
The FLSA requires employers to compensate covered employees at an
overtime rate if they work more than 40 hours in a week. 29 U.S.C. § 207(a)(1).
Congress enacted the FLSA “with the goal of protecting all covered workers from
substandard wages and oppressive working hours.” Christopher v. SmithKline
Beecham Corp.,
567 U.S. 142, 147 (2012) (alteration adopted) (internal quotation
marks omitted). But the FLSA’s overtime compensation requirement “does not
apply with respect to all employees.”
Id. Under the MCA exemption, workers are
exempt from the FLSA’s overtime requirement if the United States Secretary of
Transportation is authorized to set their maximum hours. See 29 U.S.C.
§ 213(b)(1). We construe the FLSA exemptions, including the MCA exemption,
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narrowly against employers. See Walters v. Am. Coach Lines of Miami, Inc.,
575
F.3d 1221, 1226 (11th Cir. 2009).
In the MCA, Congress authorized the Secretary of Transportation to set
maximum hours of service for certain employees of a “motor carrier.” See
49 U.S.C. § 31502(b). The Secretary’s authority to set maximum hours extends to
all “transportation . . . described in section[] 13501 . . . of this title.”
Id.
§ 31502(a)(1). Section 13501, in turn, covers transportation between places in
different states, between places in the same state if the transportation passes
through another state, and between the United States and a foreign country to the
extent that the transportation occurs in the United States.
Id. § 13501(1).
From these statutory provisions, we have distilled two requirements for the
Secretary to have jurisdiction to set an employee’s maximum hours, considering
both the nature of the employer’s business generally and the nature of the work
involved in the employee’s job. First, the “employer’s business must be subject to
the Secretary of Transportation’s jurisdiction under the MCA.”
Walters, 575 F.3d
at 1227. Second, “the employee’s business-related activities must directly affect
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 [MCA].”
Id. (alteration adopted) (internal quotation marks
omitted). Even purely intrastate transportation can constitute part of interstate
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commerce if “it is part of a continuous stream of interstate travel,” meaning there is
“a practical continuity of movement between the intrastate segment and the overall
interstate flow.” See
id. at 1229 (internal quotation marks omitted). Here, the
RSRs do not dispute that the first requirement is satisfied because Rich is subject
to the jurisdiction of the Secretary of Transportation, so we focus our analysis on
whether the RSRs were engaged in interstate commerce when driving their
delivery trucks.
We conclude that the evidence, viewed in the light most favorable to the
RSRs, shows that the RSRs were engaged in interstate commerce when making
their deliveries. Although the RSRs transported the products only in Florida, their
deliveries were a part of a continuous stream of interstate commerce because there
was a practical continuity of movement between the RSRs’ deliveries to the retail
stores and the overall interstate flow.
A critical factor in determining whether there is a practical continuity of
movement depends on the shipper’s “fixed and persisting intent . . . at the time of
shipment.” 29 C.F.R. § 782.7(b)(2). Put differently, we look at whether, at the
time of shipping, the shipper intended to maintain the flow of the products through
the facility, rather than allowing the products to languish at the facility. We
ascertain this intent “from all the facts and circumstances surrounding the
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transportation.” Roberts v. Levine,
921 F.2d 804, 812 (8th Cir. 1990) (internal
quotation marks omitted).
Here, the uncontroverted evidence establishes that Rich intended a
continuity of movement of the products through the Burris warehouse because it
intended for the products to be stored at the warehouse on only a temporary basis.
Rich set the quantity of products that it shipped based on its internal projections for
demand for its products. It created long term forecasts, projecting demand over the
next two years, and adjusted these forecasts each month with review of the
projections every day in order to ensure that the forecasts were accurate and
reflected real-time projections for demand of the products. The forecasts were
based not only on historical customer demand but also on weather events and store
promotions, store losses, store closings, and other factors. With these projections,
Rich sought to ensure that it shipped enough products to meet customer demands
but not so much that it would incur a loss due to product spoilage.
Using these real-time projections of customer demand, Rich generally
dispatched two shipments of products to the Burris warehouse each week but never
completely filled its space at the warehouse. Rich would release the products
stored at the warehouse on a “first-in, first-out” basis. Doc. 45-8 at 6. Under this
rotation, Rich experienced at the Burris warehouse, in terms of the dollar value, a
complete turnover of its products more than once a month. This is not to say that
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Rich necessarily turned over every item each month; sometimes products remained
at the Burris warehouse for a longer period of time, most often due to store
closings. From the uncontroverted evidence, though, we can infer that when Rich
shipped the products, it intended for them to be stored at the Burris warehouse on
only a temporary basis.
The RSRs argue that the evidence demands a conclusion that Rich’s intent at
the time of shipping the products was to send them only to the Burris warehouse
and not to the ultimate customers because Rich had not yet received specific orders
from specific customers for the products that it shipped. But no such strict
requirement applies. As a policy statement from the Interstate Commerce
Commission advises, a shipper may have a “fixed and persisting intent” that
products travel in interstate commerce, even though they are stored in a warehouse
before delivery to customers in the same state, when the shipper bases its total
volume of products to ship on “projections of customer demand that have some
factual basis, rather than a mere plan to solicit future sales within the State,” which
can include “historic sales in the State, actual present orders, [and] relevant market
surveys of need.” Motor Carrier Interstate Transportation—From Out-of-State
Through Warehouses to Points in Same State, 57 FR 19812-01,
1992 WL 93608
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(May 2, 1992) (“1992 ICC Policy Statement”). 2 This policy statement, then,
makes clear that Rich had a fixed and persisting intent for the products to travel
interstate, given the fact-based forecasting used to decide the volume of products to
ship.
The only support that the RSRs marshal for their position is a recent district
court decision in Avila v. CWC Transportation, LLC, No. 17-60041-CIV-
O’SULLIVAN,
2018 WL 572025 (S.D. Fla. Jan 26, 2018). There, the district
court determined that genuine issues of material fact about the shipper’s fixed,
persisting intent at the time of shipment precluded summary judgment, including
whether the shippers delivered products to fulfill specific orders.
Id. at *10. We
are unpersuaded by Avila because the district court failed to consider the 1992 ICC
Policy Statement’s guidance that a shipper has a fixed and persisting intent when it
bases the total volume of products to ship on “projections of customer demand that
have some factual basis.” See 1992 ICC Policy Statement.
In a related argument, the RSRs contend that because some products
remained at the Burris warehouse for several months, at the time of shipment Rich
2
We note that other courts have relied on this policy statement when considering whether
a shipper had a fixed and persisting intent. See, e.g., Harris v. Performance Transp., LLC, No.
8:14-CV-2913-T-23 AAS,
2016 WL 7666177, at *3 (M.D. Fla. July 11, 2016); Williams v.
Kenco Logistic Servs., Inc., No. 8:09-CV-709-T-26MAP,
2010 WL 2670852, at *4-5 (M.D. Fla.
July 2, 2010). Rich does not argue that the 1992 ICC Policy Statement is inapplicable or should
not be followed here.
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intended only to ship the products to the warehouse, not to the ultimate retailers.
We accept that the RSRs’ evidence is sufficient to show that some of Rich’s
products actually remained at the warehouse for a period of several months. But
the Eighth Circuit’s decision in Roberts is illustrative. See
921 F.2d 804. There,
the court held that storage for up to six months did not defeat intent when the
shipper set quantities based on “past demand and estimated future need.”
Id. at
814. The same is true here. Given the evidence about how Rich determined the
volume of products to ship, we cannot infer that at the time Rich shipped the
products it lacked a fixed and persisting intent to ship the products to retailers. See
Williams v. Kenco Logistic Servs., Inc., No. 8:09-CV-709-T-26MAP,
2010 WL
2670852, at *7 (M.D. Fla. July 2, 2010) (“The fact that a few [products] may have
remained in the [warehouse], even perhaps for years, does not vitiate [the seller’s]
intent.”).
The RSRs also argue that a jury could find that Rich intended to send the
products only to the warehouse at the time that it shipped them based on the degree
of control that Burris exercised over the products while they were stored at the
warehouse. After the products were delivered to Burris’s warehouse, Burris placed
the items into its inventory and Rich had to submit a purchase order to retrieve
them. It is true that Burris handled, released, and transferred the products Rich
temporarily stored in the warehouse. But in its contract with Burris, Rich reserved
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the right to oversee and control the storage, ensure that inventory was correct, and
guarantee that products were pulled for shipment. No processing or modification
of the products occurred at the Burris warehouse. We cannot agree with the RSRs
that Rich’s use of a warehouse owned by Burris established that at the time of
shipment Rich intended only to transport the goods to the warehouse and no
further.
Viewing the record evidence in the light most favorable to the RSRs, the
RSRs were engaged in interstate commerce when driving their delivery trucks.
Because the RSRs were engaged in interstate commerce, they were subject to the
MCA exemption and not entitled to overtime under the FLSA. 3
3
In a final argument, the RSRs argue that a jury could infer that they are entitled to
overtime because Rich’s decision to begin paying its drivers overtime created a material fact
precluding summary judgment. Not so. Rich’s 2016 decision to reclassify the RSRs and pay
them overtime forms no basis, as a matter of law, for determining whether the RSRs fell within
the MCA exemption. A business’s reclassification of employees “is not materially relevant to
the determination of whether [the employees] fall within” the exemption claimed by the
employer. Clarke v. JPMorgan Chase Bank, N.A., No. 08 Civ. 2400(CM)(DCF),
2010 WL
1379778, at *22 (S.D.N.Y. Mar. 26, 2010). The court in Clarke reasoned that an employee’s
exemption from overtime depends only upon that employee’s job duties.
Id. We agree.
Because Rich’s decision to reclassify the RSRs says nothing about the RSRs’ duties, we do not
infer from reclassification that the MCA exemption did not apply to the RSRs.
Nor does Rich’s decision to pay the RSRs overtime render them non-exempt. An
employer may pay additional compensation to an exempt employee without jeopardizing that
exemption. 29 C.F.R. § 541.604.
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IV. CONCLUSION
For the reasons set forth above, we affirm the district court’s grant of
summary judgment to Rich.
AFFIRMED.
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