Ronald Schilling, Jr. v. Schmidt Baking Company, Inc. ( 2017 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 16-2213
RONALD J. SCHILLING, JR.; RUSSELL E. DOLAN; JONATHAN A.
HECKER, Individually and On Behalf of Other Similarly Situated Employees,
Plaintiffs - Appellants,
v.
SCHMIDT BAKING COMPANY, INC.,
Defendant - Appellee.
Appeal from the United States District Court for the District of Maryland, at Baltimore.
J. Frederick Motz, Senior District Judge. (1:16-cv-02498-JFM)
Argued: September 13, 2017 Decided: November 17, 2017
Before AGEE, KEENAN, and HARRIS, Circuit Judges.
Affirmed in part, vacated in part, and remanded by published opinion. Judge Keenan
wrote the opinion, in which Judge Agee and Judge Harris joined.
ARGUED: Benjamin Leon Davis, III, LAW OFFICES OF PETER T. NICHOLL,
Baltimore, Maryland, for Appellants. Anthony Walter Kraus, MILES &
STOCKBRIDGE P.C., Baltimore, Maryland, for Appellee. ON BRIEF: James A.
Lanier, LAW OFFICES OF PETER T. NICHOLL, Baltimore, Maryland, for Appellants.
Kathleen A. Pontone, Amber Jackson, MILES & STOCKBRIDGE P.C., Baltimore,
Maryland, for Appellee.
BARBARA MILANO KEENAN, Circuit Judge:
In this appeal, we consider whether the district court erred in dismissing a
complaint filed by three individuals against their former employer, Schmidt Baking
Company, Inc., under the Fair Labor Standards Act (the FLSA), 29 U.S.C. § 201 et seq.,
the Maryland Wage and Hour Law, Md. Code Ann., Lab. & Empl. Art. § 3-401 et seq.,
and the Maryland Wage Payment and Collection Law, Md. Code Ann., Lab. & Empl.
Art. § 3-501 et seq. Professional motor carriers, like Schmidt Baking Company,
generally are exempt from the FLSA’s requirement that employers pay “overtime” wages
for hours worked in excess of 40 hours per week. However, Congress recently waived
this exemption for motor carrier employees whose work, in whole or in part, affects the
safety of vehicles weighing 10,000 pounds or less. Upon our review, we conclude that
the plaintiffs fall within the group of employees protected by the above waiver and, thus,
are entitled to overtime wages for hours worked in excess of 40 hours per week. We
therefore reverse the district court’s dismissal of the plaintiffs’ FLSA claims, but affirm
the court’s dismissal of the plaintiffs’ separate claims brought under Maryland law.
I.
The plaintiffs, Ronald Schilling, Russell Dolan, and Jonathan Hecker (collectively,
the plaintiffs), worked as district sales managers for the defendant, Schmidt Baking
Company, Inc. (Schmidt), for a period of time after 2008. The plaintiffs were nonexempt
salaried employees and frequently worked more than 40 hours in a given week. For all
2
hours worked, the plaintiffs were paid at the regular wage rate, and were not paid
overtime wages for hours worked in excess of 40 hours per week.
During the plaintiffs’ employment, Schmidt provided baked goods to restaurants,
grocery stores, and other small businesses across several states in the Mid-Atlantic
region. Schmidt entered into contracts with independent operators who executed some of
these deliveries. Those contract operators owned or leased “box trucks,” which weighed
over 10,000 pounds, to move the goods throughout the delivery network. Schmidt also
maintained a limited number of company vehicles at each of its depots. This fleet
included trucks of a variety of sizes, some weighing less and some weighing more than
10,000 pounds.
When the various operators were unable to complete their deliveries, the plaintiffs
often were required to perform those deliveries. Because of the quantity of deliveries and
the limited number of drivers, the plaintiffs spent between 65% and 85% of their time
each week making deliveries. The type of vehicles the plaintiffs used to make the
deliveries varied according to the delivery requirements of a given day, but the plaintiffs
used their personal vehicles for between 70% and 90% of the deliveries they made. Each
of the plaintiffs’ personal vehicles weighed less than 10,000 pounds.
The plaintiffs filed the present federal action under the FLSA, the Maryland Wage
and Hour Law (the MWHL), and the Maryland Wage Payment and Collection Law (the
MWPCL). The plaintiffs allege that they were entitled to payment of overtime wages for
hours worked in excess of 40 hours per week. Schmidt moved to dismiss the complaint
under Federal Rule of Civil Procedure 12(b)(6), or in the alternative, for summary
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judgment under Rule 56. The district court treated Schmidt’s motion as a motion to
dismiss and granted the motion without a hearing. This appeal followed.
II.
We review de novo the district court’s dismissal of the complaint under Rule
12(b)(6), accepting the plaintiffs’ well-pleaded allegations as true and drawing all
reasonable inferences in the plaintiffs’ favor. Mason v. Machine Zone, Inc., 851 F.3d
315, 319 (4th Cir. 2017). To survive a motion to dismiss, a complaint must “state a claim
to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(quotation marks omitted).
A.
We begin with an overview of the statutory scheme at issue in this case. In the
midst of the Great Depression, Congress enacted the FLSA to combat the “evils and
dangers resulting from wages too low to buy the bare necessities of life and from long
hours of work injurious to health.” S. Rep. No. 75–884, at 4 (1937). Congress intended
that the FLSA “protect ‘the rights of those who toil.’” Benhoff v. City of Va. Beach, 180
F.3d 136, 140 (4th Cir. 1999) (quoting Tenn. Coal, Iron & R.R. Co. v. Muscoda Local
No. 123, 321 U.S. 590 (1944), superseded in part by statute, 29 U.S.C. § 254(a) (1947)).
To that end, the FLSA establishes a federal minimum wage and requires employers to
pay “a rate not less than one and one-half times the regular rate” to employees who work
more than 40 hours in a single workweek. 29 U.S.C. §§ 206(a), 207(a)(1).
4
The FLSA, however, exempts certain classes of employees from its overtime
protections. See 29 U.S.C. § 213. One such exemption is the Motor Carrier Act (MCA)
Exemption, the scope of which is defined by reference to the MCA. The MCA grants the
Department of Transportation (the DOT) regulatory authority over the maximum hours of
service for employees of “a motor private carrier.” 49 U.S.C. § 31502(b)(2). The MCA
Exemption provides that the FLSA’s overtime-wage requirements do not apply to “any
employee with respect to whom the Secretary of Transportation [DOT] has the power to
establish qualifications and maximum hours of service,” meaning, any employee subject
to the MCA. See 29 U.S.C. § 213(b)(1); see also 49 U.S.C. §§ 31502(b), 13102 (defining
the scope of the Secretary of Transportation’s regulatory authority).
In 2005, Congress passed an amendment to the MCA called the Safe,
Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users
(SAFETEA-LU). 1 The SAFETEA-LU amended the MCA to apply only to carriers using
“commercial motor vehicles,” that is, vehicles weighing at least 10,001 pounds. See
SAFETEA-LU § 4142(a), 119 Stat. at 1747. Consequently, for those persons or entities
who operated vehicles weighing 10,000 pounds or less, the DOT had no regulatory
authority and the MCA Exemption in the FLSA would not apply. These carriers thus
were subject to the FLSA’s overtime requirements.
1
The Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy
for Users (SAFETEA-LU), Pub. L. No. 109–59, 119 Stat. 1144 (2005).
5
In June 2008, however, Congress enacted the SAFETEA–LU Technical
Corrections Act of 2008 (TCA). 2 As relevant here, Section 305 of the TCA reinstated
the pre-SAFETEA-LU definition of “motor carrier.” This correction restored the
Secretary of Transportation’s authority to regulate motor carriers, regardless of the
weight of the vehicle driven. See 49 U.S.C. § 13102(16) (2008) (defining “motor
vehicle”).
Despite this broadening of the DOT’s regulatory authority, the TCA also amended
the FLSA to narrow the class of employees covered by the MCA Exemption. Section
306(a) of the TCA provides that “[S]ection 7 of the Fair Labor Standards Act [imposing
overtime compensation requirements] . . . shall apply to a covered employee
notwithstanding section 13(b)(1) of that Act [the MCA Exemption].” Tech. Corrections
Act, § 306(a). Thus, even if an employer is subject to the jurisdiction of the Secretary of
Transportation, that employer still may be obligated to pay its employees overtime wages
if the employees meet the TCA’s definition of a “covered employee.” In relevant part,
the TCA defines a “covered employee” as “an individual”:
(1) who is employed by a motor carrier or motor private carrier . . . ;
(2) whose work, in whole or in part, is defined—
(A) as that of a driver, driver’s helper, loader, or mechanic; and
(B) as affecting the safety of operation of motor vehicles weighing
10,000 pounds or less in transportation on public highways in
interstate or foreign commerce . . . ; and
2
SAFETEA–LU Technical Corrections Act of 2008, Pub. L. No. 110-244, 122
Stat. 1572.
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(3) who performs duties on motor vehicles weighing 10,000 pounds or less.
Id. § 306(c), 122 Stat. at 1621 (emphasis added).
B.
The central issue on appeal is whether the plaintiffs are “covered employees”
under the TCA, entitling them to overtime compensation under the FLSA. Schmidt
argues that because the plaintiffs worked on a mixed fleet, or a fleet consisting of
vehicles weighing both more and less than 10,000 pounds, the plaintiffs were subject to
the MCA Exemption and, therefore, were not entitled to overtime compensation. In
Schmidt’s view, if an employee spends more than a de minimis amount of time operating
large vehicles, the TCA exception does not apply.
In response, the plaintiffs contend that they qualified for the TCA exception to the
MCA Exemption. The plaintiffs argue that because a “covered employee” is an
employee who drives small vehicles “in whole or in part,” and because the plaintiffs
spent 70% to 90% of the time they spent making deliveries driving small vehicles, the
plaintiffs plainly satisfied the statutory definition. Therefore, the plaintiffs claim, they
were entitled to overtime wages for hours worked in excess of 40 hours per week. We
agree with the plaintiffs’ arguments.
The precise issue before us already has been considered by one of our sister
circuits, which held in favor of the plaintiff litigant. In McMasters v. Eastern Armored
Services, Inc., 780 F.3d 167 (3d Cir. 2015), the Third Circuit held that a driver employed
by a motor carrier was entitled to overtime compensation under the FLSA because she
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spent part of her work week driving a vehicle weighing less than 10,000 pounds. In
McMasters, the plaintiff’s duties consisted of driving armored vehicles of varying
weights within the defendant’s mixed fleet. Id. at 168. The Third Circuit reasoned that
because the plaintiff spent 51% of her work days working on vehicles weighing 10,001
pounds or more, and 49% of her work days working on vehicles weighing 10,000 pounds
or less, her job placed her “squarely within” the TCA’s requirement of working “in whole
or in part” on smaller vehicles. Id. at 168–70. The Third Circuit declined to establish a
strict definition of the phrase “in part,” noting that, whatever the term “in part” means,
the plaintiff “certainly satisfied” that standard because she spent nearly half of her day
driving vehicles weighing less than 10,000 pounds. Id. at 170 n.4.
We agree with the Third Circuit’s reasoning. The issue whether the plaintiffs
before us were “covered employees” within the meaning of the TCA presents a question
of statutory interpretation. When interpreting a statute, we first consider the plain
meaning of the statutory language. United States v. Abdelshafi, 592 F.3d 602, 607 (4th
Cir. 2010). In examining a statute’s plain meaning, we consider all the words employed
and do not review isolated phrases. United States v. Mitchell, 518 F.3d 230, 233–34 (4th
Cir. 2008). Our analysis of particular statutory language also is informed by “‘the
specific context in which that language is used, and the broader context of the statute as a
whole.’” Yi v. Fed. Bureau of Prisons, 412 F.3d 526, 530 (4th Cir. 2005) (quoting
Robinson v. Shell Oil Co., 519 U.S. 337, 341 (1997)).
The text of the TCA plainly provides that employees working on mixed fleet
vehicles are covered by the TCA exception. Section 306 of the TCA expressly amended
8
the FLSA by providing that overtime compensation would be available to “covered
employee[s]” even when the MCA Exemption ordinarily would exempt those employees
from the FLSA’s overtime requirements. By stating in section 306(a) of the TCA that the
TCA “shall” apply to covered employees, Congress mandated that even if the MCA
Exemption applied to certain drivers, those drivers nevertheless would be entitled to
overtime compensation. 3
The structure of the TCA exception also makes clear that an employee need only
work on smaller vehicles “in part” to qualify for overtime compensation, thereby placing
drivers of mixed fleets within the FLSA’s requirements. Sections 306(c)(1), (2), and (3)
of the TCA collectively list requirements that an employee must meet in order to be
excepted from the MCA Exemption and entitled to overtime wages. The language of
Section 306(c)(2), which modifies the two subsections that follow, refers to individuals
“whose work, in whole or in part” meets the requirements of those subsections.
Subsection 306(c)(2)(A) describes the nature of the covered employee’s job, as an
employee “whose work, in whole or in part, is defined [] as that of a driver, driver’s
helper, loader, or mechanic[.]” Thus, by using the phrase “in part,” the statute does not
require that an employee perform one of the listed jobs during all working hours.
3
Schmidt argues that this interpretation of the text would conflict with Congress’s
past efforts to prevent dual jurisdiction of both the Departments of Labor and
Transportation over drivers employed by motor carriers. However, insofar as the TCA
conflicts with that policy consideration, we are bound by the language Congress used. In
the TCA, Congress expressly and clearly provided that covered employees are entitled to
overtime compensation notwithstanding the fact that such employees may also be subject
to regulation by the DOT.
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Instead, an employee satisfies subsection 306(c)(2)(A) if she works as a driver, driver’s
helper, loader, or mechanic for a portion of her working hours.
Similarly, subsection 306(c)(2)(B) describes the effect of an employee’s work,
meaning that a covered employee is one “whose work, in whole or in part, is defined [] as
affecting the safety of operation of motor vehicles weighing 10,000 pounds or less in
transportation on public highways in interstate or foreign commerce . . . .” A covered
employee’s work must therefore, entirely or partially, affect the operational safety of
vehicles weighing less than 10,000 pounds.
There is nothing in the language or structure of the statute indicating that Congress
intended to limit the reach of the TCA to exclude employees working on mixed fleets of
vehicles. For example, if Congress had intended for employees working on mixed fleets
to be exempt from overtime compensation requirements, Congress could have made the
current content of subsection 306(c)(2)(B) its own separate section, with the effect that
the term “in whole or in part” would not modify the phrase “motor vehicles weighing
10,000 pounds or less.” But Congress did not do so. Likewise, if Congress had intended
to exclude mixed fleet employees from the FLSA’s overtime compensation requirements,
it could have made that intent explicit in Section 306(c)(3), by defining a “covered
employee” as an employee “who exclusively performs duties on motor vehicles weighing
10,000 pounds or less.” But, again, Congress did not do so.
We also observe that the purpose of the FLSA is “remedial” in nature. Tenn.
Coal, 321 U.S. at 597; Purdham v. Fairfax Cty. Sch. Bd., 637 F.3d 421, 427 (4th Cir.
2011). Consistent with that purpose, we construe the FLSA liberally, “recognizing that
10
broad coverage is essential” to accomplish the statute’s goals. Tony & Susan Alamo
Found. v. Sec’y of Labor, 471 U.S. 290, 296 (1985); see Purdham, 637 F.3d at 427(“[T]he Supreme Court has cautioned that the FLSA ‘must not be interpreted or applied
in a narrow, grudging manner.’” (quoting Tenn. Coal, 321 U.S. at 597)). Exemptions to
the FLSA “are to be narrowly construed against the employers seeking to assert them and
their application limited to those establishments plainly and unmistakably within their
terms and spirit.” 4 Arnold v. Ben Kanowsky, Inc., 361 U.S. 388, 392 (1960).
We therefore hold that the plaintiffs were entitled to FLSA overtime wages for
hours worked in excess of 40 hours per week. The plaintiffs easily satisfied the
requirements of Section 306(c)(2). The plaintiffs spent the majority of their working
hours making deliveries, and between 70% and 90% of their delivery trips were made on
vehicles indisputably weighing less than 10,000 pounds. The plaintiffs’ delivery routes
included interstate trips on public highways, and none of the vehicles were designed to
transport eight or more passengers or were used to transport hazardous materials. 5
4
We acknowledge that the MCA also is a remedial statute intended to promote
public safety. See Levinson v. Spector Motor Serv., 330 U.S. 649, 661–62 (1947). As in
the TCA, however, Congress can alter the scope of the MCA Exemption through later
legislation. Id. Here, aware of the MCA’s remedial purpose, Congress calibrated the
balance between the FLSA and the MCA by allowing “covered employees” to receive
overtime compensation under the FLSA while also being subject to the jurisdiction of the
DOT.
5
In light of the substantial percentage of time the plaintiffs spent driving small
vehicles, we follow the Third Circuit’s approach and elect not to define the phrase “in
part.” See McMasters, 780 F.3d at 170 n.4.
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Therefore, the plaintiffs were “covered employees” under the FLSA during their
employment with Schmidt. 6
III.
The plaintiffs also appeal the district court’s dismissal of their claims for overtime
wages under Maryland law. The FLSA and the Maryland statutory schemes are largely
congruent, and ordinarily claims brought pursuant to the MWHL succeed or fail together
with claims brought under the FLSA. See Hall v. DIRECTV, LLC, 846 F.3d 757, 775
n.10 (4th Cir. 2017). The present case, however, presents an exception to this general
principle.
The MWHL, tracking the MCA Exemption in the FLSA, also contains an
exemption that excludes from overtime protection employees for whom the DOT sets
qualifications and maximum hours of service. See Md. Code Ann., Lab. & Empl. § 3–
415(c)(1). However, the MWHL does not contain an exception to the exemption similar
to that created by the TCA.
At oral argument, the plaintiffs conceded that were it not for the TCA’s exception
to the MCA Exemption, the plaintiffs would be excluded from the FLSA’s overtime
compensation requirements. And we will not read into Maryland’s statutory scheme an
exception similar to the TCA exception when one does not exist. Accordingly, we
6
At this stage in the proceedings, we do not express an opinion regarding the
proper calculation of overtime wages owing to the plaintiffs based on the term of their
employment with Schmidt.
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conclude that the district court properly dismissed the plaintiffs’ claims for overtime
wages brought under Maryland law. 7
IV.
For these reasons, we vacate the district court’s order dismissing the plaintiffs’
claims for overtime wages under the FLSA, affirm the dismissal of the plaintiffs’ state-
law claims, and remand for further proceedings consistent with this opinion.
AFFIRMED IN PART,
VACATED IN PART,
AND REMANDED
7
The plaintiffs’ claim under the MWPCL likewise fails. It is well established that
the MWPCL “does not concern the amount of wages payable but rather the duty to pay
whatever wages are due on a regular basis and to pay all that is due following termination
of the employment.” Friolo v. Frankel, 819 A.2d 354, 362 (Md. 2003). It is the MWHL,
and not the MWPCL, that is the state’s equivalent of the FLSA and shares the FLSA’s
purpose to provide a minimum wage and maximum hours for employees. Here, the
plaintiffs claim entitlement to an increased amount of wages during their entire
employment with Schmidt and do not allege that Schmidt failed to pay them wages upon
their termination. Therefore, because the substance of the plaintiffs’ claim invokes the
protection of the MWHL, not the MWPCL, we affirm the district court’s dismissal of the
entirety of the plaintiffs’ claims asserted under Maryland law.
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