Kimball v. Goodyear Tire & Rubber Co.

Citations: 504 F. Supp. 544; 24 Wage & Hour Cas. (BNA) 1269; 1980 U.S. Dist. LEXIS 9575Docket: Civ. A. B-79-73-CA

Court: District Court, E.D. Texas; December 23, 1980; Federal District Court

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The case involves thirty-nine truck drivers employed by Goodyear Tire and Rubber Company, who are suing for unpaid overtime under the Fair Labor Standards Act (FLSA). The plaintiffs claim entitlement to time-and-a-half pay for hours worked over forty per week, as mandated by 29 U.S.C. 207(a)(1). Goodyear contends it is exempt from these overtime requirements under the Motor Carrier Act Exemption outlined in 29 U.S.C. 213(b)(1), which applies to employees for whom the Secretary of Transportation has authority to set qualifications and maximum service hours.

The court acknowledges that Goodyear qualifies as a 'private carrier by motor vehicle' under 49 U.S.C. 10102(13) and recognizes the dispute centers on whether Goodyear's operations constitute interstate transportation. Goodyear's Beaumont plant produces polyisoprene and requires crude isoprene sourced from nearby petrochemical companies. These companies, processing both foreign and domestic crude oil, supply Goodyear under contractual agreements that also involve the return transportation of raffinates for further processing.

The plaintiffs, hired to operate rented tank trucks maintained by Ryder, were initially compensated for overtime until Goodyear changed its policy in June 1975, ceasing such payments based on advice from other truck lines and legal counsel. Goodyear defends its exemption status by asserting its involvement in interstate commerce and oversight by multiple federal agencies.

Goodyear drivers primarily transported crude isoprene and raffinates within Texas, with less than one percent of hauls (71 out of 49,329) involving Louisiana terminals. The interstate trips accounted for only 0.1437% of total hauls, with a mere seventeen trips to the Stans-Trans terminal in Texas City destined for France. Goodyear asserts that all deliveries are interstate due to the origin and destination of the products; however, the court finds that the purely intrastate segments do not qualify as interstate commerce because the products come to rest within Texas after processing. The crude isoprene did not exist until processed at the refineries, and the raffinates were blended into gasoline before any potential interstate movement. The minimal interstate transportation percentage does not subject Goodyear to the jurisdiction of the Secretary of Transportation. The court distinguishes Goodyear’s situation from other cases where temporary storage involved continuous interstate movement. Finally, among 39 plaintiffs, only 71 out of 49,392 trips were made out of state, indicating limited interstate transport activity.

Seventeen trips were made to the Stans-Trans terminal for the export of isoprene to France, increasing the total number of 'interstate' trips to eighty-eight out of 49,329, or 0.17%. This results in an average interstate travel percentage of 0.004% for each of the thirty-nine plaintiffs. Goodyear cites *Morris v. McComb* to argue that the Secretary of Transportation has the authority to set qualifications and maximum hours for drivers, despite 99.83% of the trips being confined to Texas. However, the court disagrees, noting that in *Morris v. McComb*, 4% of trips were interstate, and those were distributed regularly among drivers, making them integral to the common carrier service. In contrast, less than 1% of Goodyear's trips were interstate, and most drivers did not engage in any interstate travel. Additionally, while the carrier in *Morris* was mandated to handle interstate business, Goodyear assigns routes based on seniority. The case aligns more closely with *Coleman v. Jiffy-June Farms, Inc.*, where only 0.23% of deliveries were interstate, leading the court to determine that such a negligible portion did not exempt the employer from FLSA requirements. In Goodyear's case, the percentage is even lower at 0.17%, with trips occurring far less frequently than in *Jiffy-June Farms*. Therefore, Goodyear does not qualify for exemption under 29 U.S.C. § 213(b)(1). 

Regarding the statute of limitations, Section 255 of Title 29 allows for FLSA actions for unpaid overtime to be initiated within two years, or three years for willful violations. The Fifth Circuit defines a 'willful' violation as one where there is substantial evidence that the employer knew or suspected their actions might breach the FLSA, as established in *Coleman v. Jiffy-June Farms, Inc.*.

The test for determining willfulness under the Fair Labor Standards Act (FLSA) hinges on whether the employer was aware of the FLSA's applicability; actual knowledge of the law is not required, as knowledge can be imputed. The Fifth Circuit's precedent indicates that violations can be considered willful even if the employer consulted legal counsel or industry peers. In this case, Goodyear's management deliberately decided not to pay overtime, leading to a three-year statute of limitations for claims. 

Under Section 216(b) of the FLSA, employees can recover unpaid overtime plus an equal amount as liquidated damages unless the employer can demonstrate good faith and reasonable grounds for believing they did not violate the FLSA. The Fifth Circuit has established a substantial burden on employers seeking to avoid liquidated damages. Goodyear was found to have acted in good faith, relying on legal advice and local industry practices, and the court determined that Goodyear should not be penalized for its mistaken belief regarding the applicability of the exemption related to motor carriers transporting hazardous materials. The court clarified that the Secretary of Transportation's regulatory authority does not exempt Goodyear from FLSA requirements. Additionally, the nature of the Secretary's visits to Goodyear's plant was not clearly defined, which is relevant to the case.