A BakerHostetler team including Partners Matthew Kane, Sylvia Kim and Richard Raile, Counsel Amy Beverlin and Associates Caleb Acker and Kerri Sakaue secured a victory for client McLane Foodservice in a putative nationwide collective action alleging unpaid overtime and related claims. The U.S. Court of Appeals for the Ninth Circuit held that the two former California-based delivery drivers attempting to bring the claims were exempt under the Motor Carrier Act from the Fair Labor Standards Act’s (FLSA) overtime requirements because they participated in the interstate movement of goods – even though they allegedly drove only within California.
In the district court, BakerHostetler lawyers secured a summary judgment victory for McLane on this issue of the named plaintiffs’ MCA overtime exemption status. They argued that the drivers fell under the MCA exemption to the FLSA's overtime rules — a matter that the Ninth Circuit said hinged on whether the drivers were involved in interstate commerce.
In the district court and on appeal, the drivers argued that they were not involved in interstate commerce because they only delivered products from a warehouse in Riverside, California, to McLane customers in other parts of the same state. The drivers contended that any interstate transportation was performed only by separate carriers that shipped the goods from out-of-state suppliers to McLane's California warehouse before the drivers’ intrastate deliveries began. But the Ninth Circuit affirmed McLane’s summary judgment win, concluding that the drivers were engaged in interstate commerce because they transported goods moving in a continuous interstate stream, even if their routes were entirely within California.
According to the Ninth Circuit panel, McLane’s predictive supply model demonstrated that the shipments transported by its drivers were part of a “practical continuity of movement” from out-of-state suppliers to the customers for whom the goods were ultimately intended. As a result, even if the drivers’ routes were entirely within California, their transportation constituted interstate commerce because the goods originated outside the state and were moving through a continuous interstate distribution chain.
After winning summary judgment for McLane in the district court, BakerHostetler lawyers also secured dismissal of the plaintiffs’ class action claims under California law, leaving only the plaintiffs’ individual state law claims. However, the district court then concluded sua sponte that it lacked subject matter jurisdiction over those individual claims and dismissed the action, leaving the plaintiffs free to refile their class action claims in state court. McLane appealed that dismissal ruling. The Ninth Circuit agreed with McLane and reversed that ruling, holding that the district court erred in that diversity jurisdiction over the plaintiffs’ individual claims remained intact, requiring the court to resume proceedings on the plaintiffs' remaining individual state law claims.
