              Case: 18-12195     Date Filed: 04/04/2019   Page: 1 of 13


                                                            [DO NOT PUBLISH]

                IN THE UNITED STATES COURT OF APPEALS

                         FOR THE ELEVENTH CIRCUIT
                           ________________________

                                 No. 18-12195
                             Non-Argument Calendar
                           ________________________

                    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.

                           ________________________

                    Appeal from the United States District Court
                        for the Middle District of Florida
                          ________________________
                                  (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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