DALE S. FISCHER, District Judge.
Defendant's affirmative defense to its alleged failure to pay weekly overtime compensation to the class of employees came on for trial before the Court sitting without a jury on May 9-10, 2017. The Court, having heard live testimony and having duly considered the evidence, the credibility of the witnesses, and the contentions and arguments of counsel, makes the following findings of fact and conclusions of law in accordance with Rule 52(a) of the Federal Rules of Civil Procedure.
1. Estenson Logistics, LLC (Estenson) provides logistic transportation services for its customers (such as Home Depot), transporting merchandize from vendors to customers' distribution centers, and from the distribution centers on to customers' retail stores. Tr. 94:1-5, 196:20-197:2.
2. Estenson employs both "route drivers" and "yard hostlers." Tr. 18:5-17, 94:18-95:1, 197:3-7.
3. Route drivers primarily transport freight from a customer's facility to a final destination. Tr. 94:18-22. During the relevant time period, route drivers were paid based on activity. Tr. 108:10-13.
4. Yard hostlers primarily shuttle empty and loaded trailers within the confines of a distribution center. Tr. 18:15-17, 94:23-95:1, 197:3-7. Yard hostlers are paid by the hour. Tr. 106:8-11.
5. The certified class includes 103 yard hostlers employed by Estenson in California from May 30, 2010 through the present.
6. Plaintiff Clodoaldo Antemate worked as a yard hostler for Estenson from November 27, 2009 through May 31, 2013, primarily at Estenson's Home Depot Rapid Deployment Center (RDC) in Tracy, California (the Tracy RDC). Tr. 235:18-23, 241:6-15.
7. The merchandise that customers ship to Estenson's California distribution centers comes from all over the world, arriving through California's seaports, rail lines, and highways. Tr. 10:23-11:3; 12:15-13:17, 201:10-202:1, 255:6-256:14; 257:9-259:21.
8. Shipping containers arriving at the Tracy RDC from a seaport primarily contain products coming from China. Tr. 257:12-258:12. Shipping containers arriving at the Tracy RDC by rail mostly contain merchandise from the east coast of the United States. Tr. 258:6-16. Estenson also transports freight from Nevada to the Tracy RDC. Tr. 10:23-11:3.
9. Estenson's customers ship their merchandise to Estenson's distribution centers with the understanding that the merchandise will be transported to a final destination outside the distribution center, such as a customer's retail location. Tr. 125:24-126:6, 217:19-218:3, 218:21-219:25.
10. When a trailer full of products is brought to a distribution center, Estenson's customers unload the products and consolidate them with products from other incoming shipments for distribution to retail locations.
11. Merchandise remains in the Tracy RDC for processing for approximately three days before being sent to its final destination. Tr. 17:20-22.
12. The offer letter Estenson issues to each yard hostler at the time of hiring states that "[t]his position is classified as a non-exempt position; therefore, it is eligible for overtime." Tr. 268:14-269:4; Ex. 9.
13. Estenson tells yard hostlers that they are non-exempt. Tr. 66:21-22.
14. Estenson's employee manual states: "The non-exempt status of our drivers is intended to be an additional benefit to the total rewards package offered through employment with [Estenson]." Tr. 135:2-7; Ex. 590 at 31. It further states that "[n]on-exempt employees . . . are paid an overtime rate based on the state location." Tr. 136:2-7; Ex. 590 at 23.
15. Estenson pays its yard hostlers
16. Estenson does
17. Plaintiff understood the yard hostler position to be non-exempt and that he would be entitled to overtime compensation. Tr. at 266:14-23, 267:20-21; Ex. 9.
18. The job description for the "Yard Jockey/Spotter Position" states that the "Duties and Responsibilities" of yard hostlers include "[o]ccasional local delivery." Tr. 116:3-22, 146:13-147:1, 166:14-23; Ex. 556.
19. Estenson informs yard hostlers that they may be called on to perform local deliveries, which include driving on highways. Tr. 56:6-15, Tr. 58:4-18.
20. Local deliveries are deliveries that can be completed in one work shift so that the driver does not have to be away from home overnight. Tr. 56:16-17.
21. Plaintiff understood that yard hostlers could be pulled from their yard hostling work to perform local deliveries. Tr. 261:16-22. Plaintiff also signed several form documents during his employment that reference route driving work.
22. When Estenson hired Plaintiff, Estenson gave him a fuel card to fill up the truck he was using to bring trailers into the Tracy yard facility. Tr. 242:3-16. Estenson told Plaintiff to keep the fuel card because there were instances when yard hostlers needed to do "emergency runs." Tr. 244:3-7.
23. The trucks that Estenson's yard hostlers use in the distribution center, called "yard goats," are not licensed for highway use. Tr. 41:20-23.
24. Nevertheless, Estenson requires that its yard hostlers hold a valid commercial driver's license (CDL) because yard hostlers may in certain circumstances be asked to take tractor-trailers on the highway, and CDLs are required for that activity. Tr. 18:18-21, 19:6-11 20:10-11.
25. For example, yard hostlers may be asked to take tractor-trailers on the highway for a "backhaul," which involves driving an empty trailer from the distribution center to a vendor, exchanging the empty trailer for a loaded trailer, and driving the loaded trailer back to the distribution center. Tr. 19:10-20:3. Yard hostlers also may be asked to step in for route drivers if, for example, a route driver is ill, and yard hostlers may be asked to drive a route if Home Depot requests a "hot shipment to a store." Tr. 20:3-9.
26. If a yard hostler or a route driver loses his or her CDL for any reason, the employee may not work at Estenson until the CDL is renewed or replaced; if the yard hostler or route driver is unable to renew or replace his or her CDL, the employee will no longer have a job with Estenson. Tr. 104:3-14; Ex. 590.
27. Estenson also requires both route drivers and yard hostlers to be qualified— meaning that they have passed background checks, drug tests, and physical and medical examinations—under rules established by the Department of Transportation (DOT). Tr. 94:11-13, 97:10-103:121, 204:17-23, 260:6-8. Estenson does not distinguish between route drivers and yard hostlers for purposes of compliance with DOT regulations. Tr. 95:25-96:4; 97:10-23; Ex. 590.
28. Route drivers are required to take ten hours off between road driving shifts, pursuant to rules promulgated by the DOT. Tr. at 42:11-22. Yard hostlers are not required to take ten hours off in between yard goat driving shifts within the distribution center; however, if a yard hostler drives a tractor-trailer on the road, the yard hostler is required to have taken ten hours off before doing so. Tr. 75:15-17, 76:5-8.
29. Estenson tracks its drivers' service hours through the company's People Net timekeeping system, a log-in computer installed in Estenson's tractor-trailers. Tr. 69:3-5. When yard hostlers are performing yard work, their hours are recorded by swiping their employee cards at a kiosk. Tr. 42:7-44:20. When yard hostlers drive on public roads, they must log into the tractor-trailers' People Net system, which imports the yard hostlers' hours from their employee card kiosk swipes. Tr. 68:13-69:5, 261:3-15; 265:11-266:4.
30. When Estenson needs a yard hostler to perform route driving work, Estenson can assign the drive to a yard hostler whose service hours on that particular day allow the yard hostler to drive on the highway, i.e., if there has been at least ten hours since the yard hostler's last shift ended. Tr. 20:17-21:5, 58:14-59:9; 71:3-22.
31. The People Net system will not let a yard hostler, or any driver, clock in for a road driving shift unless the employee has been off duty for at least ten hours. Tr. 241:18-242:2.
32. Which yard hostlers have sufficient hours of service to perform route driving varies day to day. Tr. 71:17-22. No yard hostlers who have sufficient hours are exempt from receiving road driving assignments, and yard hostlers do not have discretion to decline route driving assignments. Tr. 20:17-21:5, 58:19-59:2, 206:25-207:3.
33. Plaintiff understands that his hours of service are governed by the DOT's hours of service regulations. Tr. 239:9-12; Ex. 554 at EST000120 (Driver Data Sheet form signed by Plaintiff specifying the number of hours he worked in the seven days prior to his date of hire to "ensure duty hours are available as required by FMCSA Hours of Service.");
34. Estenson sometimes requires yard hostlers to perform route driving work, and will pull them from their yard hostling work to deliver freight over public highways. Tr. 151:3-11, 58:4-11, 244:3-16, 262:9-16, 278:17-279:10.
35. When yard hostlers perform route driving work, they drive tractor-trailer units, called day cabs, with up to gross vehicle maximum weight ratings of 80,000 pounds. Tr. 260:9-19.
36. When yard hostlers are called on to transport freight, they transport the same freight as route drivers. Tr. 209:14-18.
37. Plaintiff made road trips seven or eight times in four years. Tr. 278:17-20.
38. At least 49 other class members completed route driving trips between 2011 and 2015. Dkt. 235-1; Ex. 587.
California law requires employers to pay both daily and weekly overtime to employees for "[a]ny work in excess of eight hours in one workday and any work in excess of 40 hours in any one workweek at the rate of no less than one and one-half times the regular rate of pay for an employee." Cal. Lab. Code § 510(a). California's overtime laws do not apply, however, to employees who are subject to DOT regulations governing the hours of service of drivers, 49 C.F.R. § 395.1 to § 395.13 (the "motor carrier exemption"). Cal. Code Regs. tit. 8 § 11070(3)(K);
Ensuring the safety of public highways lies at the heart of the DOT's jurisdiction over a motor carrier's employees.
The motor carrier exemption applies where trips in interstate commerce are part of the company's normal business operations, are distributed throughout the year, and are shared indiscriminately by the employees in question, even though they are mingled with other services not in interstate commerce.
"`An employer who claims an exemption from [overtime requirements] has the burden of showing that the exemption applies. . . .'"
The DOT has jurisdiction to govern the hours of (a) "drivers" of "commercial motor vehicles," for (b) "motor carriers," (c) in interstate commerce. 49 C.F.R. §§ 390.5, 395.1
A "driver" is "any person who operates any commercial motor vehicle." 49 C.F.R. § 390.5. A commercial motor vehicle (CMV) is "any self-propelled or towed motor vehicle used on a highway in interstate commerce to transport passengers or property" that has a "gross vehicle weight rating or gross vehicle weight or gross combination weight" of 10,001 pounds or more.
A "motor carrier" is "a for-hire motor carrier or a private motor carrier." 49 C.F.R. § 390.5. A "for-hire motor carrier" is "a person [including "any individual, partnership, association, corporation, business trust, or any other organized group of individuals"] engaged in the transportation of goods or passengers for compensation."
Interstate commerce means transportation "(1) [b]etween a place in a State and a place outside of such State (including a place outside of the United States); (2) [b]etween two places in a State through another State or a place outside of the United States; or (3) [b]etween two places in a State as part of trade, traffic, or transportation originating or terminating outside the State or the United States." 49 C.F.R. § 390.5. The employer's involvement in interstate commerce must be established by concrete evidence.
Defendant presented testimony that it operates in interstate commerce because its route drivers transport items from another state into California and transport items between two places in California that originated outside California or the United States. 49 C.F.R. § 390.5;
That products may be held in a distribution center for a short period does not take them out of interstate commerce:
The Supreme Court has instructed that in considering whether an employee is subject to the DOT's jurisdiction, "it is `the character of the activities rather than the proportion of either the employee's time or of his activities that determines the actual need for the [Interstate Commerce] Commission's power to establish reasonable requirements with respect to qualifications, maximum hours of service, safety of operation and equipment."
In 1981, the DOT, through the Federal Highway Administration, promulgated a Notice of Interpretation, in which it stated that according to case law, if there is no evidence that individual employees actually engaged in interstate commerce, the DOT still would have jurisdiction if the
Determination of whether a driver had a reasonable expectation of interstate driving assignments does not require proof that driving assignments were evenly or proportionally distributed, but the driving assignments must be "indiscriminately assigned."
Defendant therefore had the burden to demonstrate either that each yard hostler in the class actually made "interstate runs" during the relevant time period, or, for any class members for whom there is no such evidence, that those class members nevertheless reasonably could have expected to receive interstate run assignments.
As noted above, the Court finds that Defendant operates in interstate commerce because its route drivers transport items from outside of California and also transport items within California that originated from outside California. When yard hostlers perform route driving work, they perform the same work as route drivers. Defendant submitted evidence in the form of a summary of certain trip sheets, setting out the route driving work of fifty yard hostlers, including Plaintiff, between 2011 and 2015.
Whether an employee has a reasonable expectation of being assigned to perform work in interstate commerce is an objective determination.
The evidence shows that Defendant hired only yard hostlers who held valid CDLs and who otherwise were qualified (including passing physical, medical, and drug tests, as well as background checks) to drive on public roads under the DOT rules, even though the yard goats hostlers used for yard hostling work were not licensed for road use.
Defendant also presented evidence sufficient to demonstrate that when it assigned route driving work to yard hostlers, the assignment was indiscriminate.
Estenson has met its burden of establishing that, during the class period, the class members were subject to the jurisdiction of the DOT under the motor carrier exemption, Cal. Code Regs. tit. 8 § 11070(3)(K), and Defendant therefore was not required by Section 510(a) of the California Labor Code to pay overtime to the class members.
IT IS SO ORDERED.
