Marvin Klitzke v. Steiner Corporation, Dba American Linen

Citations: 110 F.3d 1465; 97 Cal. Daily Op. Serv. 2666; 97 Daily Journal DAR 4769; 1997 U.S. App. LEXIS 6663; 1997 WL 169691Docket: 95-36084

Court: Court of Appeals for the Ninth Circuit; April 11, 1997; Federal Appellate Court

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Marvin Klitzke, a route salesman for Steiner Corporation (dba American Linen), appealed the district court's summary judgment that he was exempt from the Fair Labor Standards Act (FLSA) overtime pay requirements. Klitzke sought unpaid overtime for 1993 and 1994, claiming he worked over 40 hours per week. Steiner acknowledged the hours but argued that Klitzke fell under the FLSA exemption in 29 U.S.C. § 213(b)(1), which applies to employees whose driving qualifications and hours are regulated by the Secretary of Transportation.

Klitzke's deliveries, while entirely intrastate in Oregon, included over half of the items being special-ordered from out-of-state vendors, which were shipped to Steiner's warehouse and then delivered to customers. The court noted that to qualify for the exemption, Steiner must demonstrate that Klitzke's work was subject to the Secretary's regulation, as established by the Motor Carrier Safety chapter of the Interstate Commerce Act.

The court clarified that the exemption is narrowly construed and places the burden on the employer to prove entitlement. The appeal falls under 28 U.S.C. § 1291 and 29 U.S.C. § 216(b), with the appellate review of summary judgment conducted de novo. The decision references several key legal precedents that outline the limitations and interpretations of the FLSA exemptions.

For the statutory exemption under 49 U.S.C. 213(b)(1) to be applicable, the Secretary does not need to actively regulate the driver or employer; it suffices that the Secretary possesses the authority to regulate the driver’s hours and safety. The Motor Carrier Safety chapter empowers the Secretary to establish qualifications and maximum hours for employees of both motor carriers and motor private carriers to enhance operational safety. Klitzke, as an employee of a motor private carrier, is subject to these regulations unless exempted by other statutory provisions or specific regulatory exclusions.

Klitzke argues that he falls under exemptions, specifically citing 49 U.S.C. 10524, which he claims removes him from the Secretary's regulatory authority. This section, pertaining to the regulatory jurisdiction of the Interstate Commerce Commission (ICC), states that ICC does not have jurisdiction over property transported by non-transportation businesses if the transportation supports a primary non-transportation business. However, this provision only exempts carriers like Steiner from ICC regulation and does not affect the Secretary of Transportation's regulatory power. The exemption applies solely to licensing and certificate requirements under ICC regulations and does not limit the Department of Transportation's ability to regulate qualifications and maximum hours for motor private carrier employees. Thus, the Secretary retains authority to impose safety requirements as per 49 U.S.C. 3102(b)(2).

Regulatory exemptions under 49 C.F.R. 395.1 apply specifically to certain carriers and drivers, excluding Klitzke's job category from the Secretary's jurisdiction does not exempt him from regulation. The Secretary's authority remains intact unless a specific exemption is granted or acknowledged, as established in cases like Southland Gasoline Co. v. Bayley and Jones v. Giles. Klitzke's claim that his intrastate route in Oregon removes him from the Secretary's oversight lacks merit; the Secretary's regulatory authority includes intrastate transportation that is part of a continuous interstate movement. This is supported by legal precedents which indicate that the determination of whether transportation is interstate or intrastate relies on the shipper's intent and the specifics of the shipment. In this instance, Steiner's operations—placing orders with out-of-state vendors for specific customers and handling the goods upon arrival—demonstrate that the transportation involved is effectively interstate, thus falling under the Secretary's regulatory purview.

The Supreme Court in Jacksonville Paper determined that a temporary pause in a warehouse does not disqualify goods from being considered 'in commerce' under the motor carrier act. The ruling emphasized that the intent of the contract dictates the endpoint of interstate movement. In the case, Jacksonville Paper ordered goods from out-of-state vendors, which were delivered to a terminal via common carriage. The company's trucks then transported the goods to Jacksonville Paper's warehouse, where they were processed for delivery to customers. The Court found a "practical continuity of movement" until the goods reached their final destinations, thus covering the company’s employees under the motor carrier act.

Applying this precedent, the current case involved Steiner, which ordered goods intended for delivery within Oregon. Despite shippers not knowing the final destinations, the goods were deemed to be in continuous transportation to satisfy contracts with Steiner's customers. Consequently, the Secretary of Transportation had the authority to set qualifications and service hours for Steiner's employees, leading to the conclusion that Klitzke was not covered by the Fair Labor Standards Act (FLSA). The judgment was affirmed, noting recent reorganizations of the Interstate Commerce Act did not impact the case's outcome. Statutory provisions relevant to the case were acknowledged with their prior section numbers provided for clarity, as they were applicable during the time Klitzke's rights accrued.