Sleeper v. URS Midwest, Inc., 347 F. Supp. 3d 408 (2018)

Sept. 28, 2018 · United States District Court for the District of Alaska · Case No. 3:17-cv-00071-SLG
347 F. Supp. 3d 408

William SLEEPER, Plaintiff,
v.
URS MIDWEST, INC., Defendant.

Case No. 3:17-cv-00071-SLG

United States District Court, D. Alaska.

Signed September 28, 2018

Isaac D. Zorea, Law Office of Isaac Derek Zorea, Anchorage, AK, William D. Cook, Law Office of William Dennie Cook P.C., Eagle River, AK, for Plaintiff.

Christopher Robert Kazanowski, Russell S. Linden, Honigman Miller Schwartz and Cohn LLP, Detroit, MI, Karin D. Jones, Stoel Rives LLP, Seattle, WA, Kevin M. Cuddy, Stoel Rives LLP, Anchorage, AK, for Defendant.

ORDER RE MOTION FOR SUMMARY JUDGMENT AND SCHEDULING ORDER

Sharon L. Gleason, UNITED STATES DISTRICT JUDGE

*409Before the Court at Docket 35 is Defendant URS Midwest, Inc.'s ("URS") Motion for Summary Judgment. Plaintiff William Sleeper opposed at Docket 40. URS replied at Docket 44. Oral argument was held on April 30, 2018, at Anchorage, Alaska, before Judge Sharon L. Gleason.1

BACKGROUND

URS provides vehicle transportation services for customers in the United States and Canada.2 Its Alaska drivers continue the transportation of vehicles that have been shipped to Alaska, delivering them to customers in Fairbanks, Prudhoe Bay, and other locations within the state.3

William Sleeper worked as a truck driver for URS from February 21, 2012, until October 26, 2016.4 During his employment for URS, Mr. Sleeper's primary route was between Anchorage and Prudhoe Bay.5 As compensation, URS paid Mr. Sleeper on a commission basis of 23 or 24% of the net revenue generated per line trip.6 Mr. Sleeper could also receive an amount of up to 3% of net revenue through the Quality Fund Bonus Program.7 Payment of these funds depended on Mr. Sleeper's successfully completing each trip without the vehicles he was transporting sustaining any damage.8 Mr. Sleeper was also paid $15 per hour for light maintenance and a flat fee of $100 for washing the truck and trailer assigned to him.9 Mr. Sleeper states that his job duties included a number of tasks in addition to driving and that he was not paid overtime despite regularly working over 8 hours per day and over 40 hours per week.10

On February 8, 2017, Mr. Sleeper filed a Complaint in the Superior Court for the State of Alaska, Third Judicial District at Anchorage.11 On March 31, 2017, URS removed the case to this Court pursuant to 28 U.S.C. § 1441.12 Mr. Sleeper asserts in the Complaint that "[d]uring the course of his employment, URS Midwest, Inc. required Mr. Sleeper to perform job duties *410other than truck driving, and for these additional duties, URS Midwest, Inc. did not pay any overtime payments for these duties, even if these required hours of work exceeded 40 per week."13 Mr. Sleeper also asserts that he was never paid "for those hours that he worked that exceeded 40 hours a week, or exceeded 8 hours a day, even though Mr. Sleeper worked overtime hours pursuing the clear expectations of his employer."14 Mr. Sleeper also asserts that URS "illegally withheld, and deducted, compensation he had earned as part of his commission pay ...."15 Based on these allegations, Mr. Sleeper brings claims against URS for violations of the Fair Labor Standards Act of 1938, 29 U.S.C. § 201, et seq. ("FLSA"), and the Alaska Wage and Hour Act, AS 23.10.050, et seq. ("AWHA").

On February 19, 2018, URS filed the instant Motion for Summary Judgment.16

LEGAL STANDARD

I. Jurisdiction and Applicable Law

The Court has jurisdiction pursuant to 28 U.S.C. § 1331 because this is a civil action with certain claims arising under federal law, 29 U.S.C. § 201, et seq. The Court has supplemental jurisdiction over Plaintiff's related state law claims.17 The Court also has diversity jurisdiction pursuant to 28 U.S.C. § 1332 because this is a civil action between citizens of different states, and the amount in controversy exceeds $75,000.00, exclusive of interest and costs.18

The Court applies federal procedural law; Alaska substantive law applies to the state law claims.19 Whether federal law preempts state law claims is a question of federal law.20

II. Standard for Summary Judgment

Federal Rule of Civil Procedure 56(a) directs a court to grant summary judgment if the movant "shows that there is no genuine dispute as to any material fact and the movant is entitled to a judgment as a matter of law." When considering a motion for summary judgment, "[t]he evidence of the nonmovant is to be believed, and all justifiable inferences are to be drawn in his [or her] favor."21 To reach the level of a genuine dispute, the evidence must be such "that a reasonable jury could return a verdict for the non-moving party."22 If the evidence provided by the non-moving party is "merely colorable" or "not significantly *411probative," summary judgment is appropriate.23

DISCUSSION

The FLSA requires employers to pay overtime wages to employees who work more than 40 hours per week.24 Pursuant to the Motor Carrier Act ("MCA") exemption under the FLSA, this requirement does not apply to employees who drive a motor vehicle "in interstate or foreign commerce."25

The AWHA, like the FLSA, requires employers to pay overtime wages. AS 23.10.060 provides:

An employer who employs employees engaged in commerce or other business, or in the production of goods or materials in the state, may not employ an employee for a workweek longer than 40 hours or for more than eight hours a day.... If an employer finds it necessary to employ an employee for hours in excess of the[se] limits ... overtime compensation for the overtime at the rate of one and one-half times the regular rate of pay shall be paid.26

AS 23.10.060(d) exempts several categories of employees from the overtime requirement, including:

[A]n individual employed as a line haul truck driver for a trip that exceeds 100 road miles one way if the compensation system under which the truck driver is paid includes overtime pay for work in excess of 40 hours a week or for more than eight hours a day and the compensation system requires a rate of pay comparable to the rate of pay required by this section.27

Mr. Sleeper contends that URS did not fulfill its requirements under the FLSA and AWHA and that he is entitled to damages as a result.28 In response, URS

*412makes a number of assertions to support its motion for summary judgment. Each is discussed in turn below.

1. Motor Carrier Act Exemption

URS asserts that Mr. Sleeper was exempt from FLSA overtime wage requirements, pursuant to the MCA exemption. The FLSA exempts "any employee with respect to whom the Secretary of Transportation has power to establish qualifications and maximum hours of service pursuant to the provisions of section 31502 of Title 49."29 Section 31502(b) permits the Secretary to establish:

(1) qualifications and maximum hours of service of employees of, and safety of operation and equipment of, a motor carrier;30 and
(2) qualifications and maximum hours of service of employees of, and standards of equipment of, a motor private carrier,31 when needed to promote safety of operation.

The Secretary of Transportation's power "extends to those classes of employees and those only who: (1) Are employed by carriers whose transportation of passengers or property by motor vehicle is subject to his jurisdiction under section 204 of the Motor Carrier Act ... and (2) engage in activities of a character directly affecting the safety of operation of motor vehicles in the transportation on the public highways of passengers or property in interstate or foreign commerce with the meaning of the Motor Carrier Act."32

URS asserts that Mr. Sleeper was exempt from the FLSA overtime wage provision under the MCA exemption pursuant to 29 C.F.R. § 782.3 because he drove a motor vehicle in interstate or foreign commerce.33 Mr. Sleeper maintains *413that the MCA exemption does not apply to him because he "never traveled outside of Alaska" for URS during the timeframe at issue.34

A truck driver may engage in interstate commerce so as to fall under the MCA even if he does not travel out of state. "Transportation within a single State is in interstate commerce within the meaning of the Fair Labor Standards Act where it forms a part of a 'practical continuity of movement' across State lines from the point of origin to the point of destination."35

Mr. Sleeper's circumstances mirror those of the plaintiff in Klitzke v. Steiner Corp. , a salesman who "contend[ed] that because his route [was] entirely within the state of Oregon, his hours of work [were] not subject to regulation by the Secretary."36 There, the plaintiff delivered products that had been shipped to his company's Oregon warehouse from out of state vendors. As the Ninth Circuit explained, the plaintiff's "route is entirely within Oregon, but over half of his deliveries are items received from out of state."37 The Circuit held that the goods from out of state that the plaintiff delivered entirely intrastate were in "continuous transportation" until delivered to customers. Therefore, the plaintiff's intrastate deliveries constituted engaging in interstate commerce.38 Similarly, the vehicles Mr. Sleeper delivered within Alaska had originated from out of state. As Mr. Sleeper explained during his deposition:

Counsel for URS: "[W]here would you typically start your routes for United Road?"
Mr. Sleeper: "At-at our yard."
Counsel: "At the yards in Anchorage?"
Mr. Sleeper: "At our yard in Anchorage, yes, because most of the vehicles that I hauled had special outfitting requirements. So they were shipped up here ... to our yard in Anchorage, and that's where I would load them."
Counsel: I see. So to be clear, the automobiles you were transporting would first come from a ship into Anchorage, correct?
Mr. Sleeper: Right.
Counsel: Do you know where those ships were originating from?
Mr. Sleeper: Well, Tacoma, I think.
Counsel: Washington?
Mr. Sleeper: Seattle-Tacoma, Washington, yeah.39

Based on the foregoing, it is clear that Mr. Sleeper's deliveries were part of the "continuous transportation" of vehicles that originated in other states, such that the MCA exemption applies. Viewing the evidence in the light most favorable to Mr. Sleeper, he has not shown there are disputed material facts on this issue and URS is entitled to judgment as a matter of law as to the FLSA overtime wage claim.40

*414To the extent that Mr. Sleeper relies on the FLSA for his claim that URS unlawfully withheld or deducted wages by not paying him the Quality Fund bonus, this claim fails. While the FLSA guarantees employees a minimum wage and overtime pay, Mr. Sleeper's contentions regarding illegal withholdings and deductions are based on an agreed-upon bonus system and are unrelated to the FLSA's requirements.41

At oral argument, counsel for Mr. Sleeper argued that URS had violated the FLSA by failing to pay him the minimum wage for sleeper berth hours. Counsel relied on Ridgeway v. Wal-Mart Stores, Inc. , which held that under California law, employers must pay truck drivers at least the minimum hourly wage during mandatory layover periods.42 Mr. Sleeper's Complaint does not assert that URS violated the FLSA by failing to pay minimum wage, and the parties did not brief this issue.43 Furthermore, during his deposition Mr. Sleeper affirmed that he was "not claiming ... [to be] owed compensation for time in the sleeper berth."44 At oral argument, the Court advised Mr. Sleeper that he could file a motion seeking to amend his complaint; he has not done so. Accordingly, the Court declines to further address this argument.45

For the foregoing reasons, summary judgment is granted to URS on Mr. Sleeper's claims under the FLSA.

2. Preemption of AWHA Claim46

URS asserts that Mr. Sleeper's AWHA claim also fails because it is preempted by federal law.47 As the United States Supreme Court has explained,

A fundamental principle of the Constitution is that Congress has the power to preempt state law. Even without an express provision for preemption, we have found that state law must yield to a congressional Act in at least two circumstances. When Congress intends federal law to "occupy the field," state law in that area is preempted. And even if Congress has not occupied the field, state law is naturally preempted to the extent of any conflict with a federal statute. We will find preemption where it is impossible for a private party to comply with both state and federal law ... and where under the circumstances of a particular case, the challenged state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress. What is a *415sufficient obstacle is a matter of judgment, to be informed by examining the federal statute as a whole and identifying its purpose and intended effects ....48

URS contends that the Court should find Mr. Sleeper's AWHA claim is conflict preempted because "[c]ompliance with the AWHA as it concerns line haul truck drivers subject to the authority of the Secretary of Transportation completely undermines the loosening of overtime and recordkeeping requirements provided by the MCA exemption to the FLSA."49

Mr. Sleeper counters that federal law does not preempt the AWHA.50 In support of this assertion, he cites several decisions in which the FLSA was held not to preempt state law.51 He also cites Agsalud v. Pony Express Courier Corp. of America , a case that directly addresses the MCA.52 In Agsalud , the Ninth Circuit rejected an employer's argument "that the Motor Carrier Act preempts Hawaii Revised Stat. § 387-3(a) requiring employers to pay time-and-one-half of work in excess of 40 hours per week."53 In lieu of its own analysis, the Circuit held that "[t]hree circuits have considered this contention and have rejected it.... We agree for the reasons adequately stated in these opinions."54 In its Reply, URS states that "the *416AWHA's overtime requirements, as applied to a driver covered by the MCA exemption, inevitably conflict with federal law by reinstating the very 40-hour workweek standard, and further imposing an eight-hour workday standard, that the MCA exemption was intended to remove."55 But this argument is clearly precluded by Agsalud , controlling Ninth Circuit precedent that this Court must follow.

URS contends that in Agsalud , the Ninth Circuit "did not consider the question of whether applying an overtime premium system to employees subject to MCA hours-of-service rules would frustrate the purpose of the MCA and related FLSA exemption through mandating duplicative recordkeeping."56 But given that the Circuit Court relied on the rulings of other Circuits regarding other state overtime statutes, the Court reads Agsalud broadly to hold that state overtime statutes are not preempted by the MCA. This Court will not create an exception to a Ninth Circuit holding simply because the decision articulating that holding did not address a relevant policy consideration.

Agsalud does not directly address whether a state's recordkeeping requirements are preempted.57 Yet the reasoning in the cases relied upon in Agsalud would foreclose that argument. Pettis Moving Co. and the Central Delivery Service district court each noted that the purpose of regulations promulgated pursuant to the MCA is to promote highway safety.58 A state statute imposing certain recordkeeping requirements on employers is not "inconsistent with the safety program" the MCA

*417aims to advance.59 Accordingly, the AWHA's recordkeeping requirement "does not interfere with" the purpose of the MCA or the MCA exemption and is not preempted.60

Lastly, URS argues that the Agsalud court "did not consider the question of whether applying an overtime premium system to employees subject to MCA hours-of-service rules would ... incentiviz[e] dangerously long hours for interstate drivers to earn overtime."61 As explained above, this Court cannot reject Ninth Circuit precedent on this basis. Furthermore, the out of Circuit opinions relied upon in Agsalud concluded that there "is no necessary inconsistency between a[ ] ... regulation limiting maximum hours for safety reasons, and a state statute, passed as an economic regulation, for overtime pay within those limitations."62 Any argument that Alaska's overtime scheme conflicts with MCA safety goals is particularly unconvincing in light of the fact that truck drivers who receive overtime pay under the AWHA are also subject to the maximum hour regulations promulgated pursuant to the MCA. Given that Alaska's requirements do not directly conflict with any provisions of the MCA or the FLSA, URS has not shown that the AWHA provisions at issue constitute an "obstacle to the accomplishment and execution of the full purposes and objectives of Congress."63 Accordingly, URS has not shown that the AWHA is preempted by federal law.64

3. AWHA Requirements

URS asserts that "even if [Mr. Sleeper's] AWHA overtime claim is not preempted, ... URS paid [Mr. Sleeper] in accordance with the AWHA pursuant to an agreed upon commissions and bonus system."65 Under Alaska law, if an employee works in excess of 40 hours per week or eight hours per day, "overtime compensation *418for the overtime at the rate of one and one-half times the regular rate of pay shall be paid."66 Employers of long haul truck drivers are permitted to establish an alternate compensation system.67 The alternate system, however, must "include[ ] overtime pay for work in excess of 40 hours a week or for more than eight hours a day" and must "require[ ] a rate of pay comparable to the rate of pay" for employees not covered by the exception.68

URS contends that Mr. Sleeper "was paid in accordance with the AWHA" because its "commissions and bonus system considered all of [Mr. Sleeper's] work hours" and Mr. Sleeper's pay "far exceeded what [he] would have earned had URS elected to pay minimum wage and 1.5x the minimum wage for daily and weekly overtime hours."69 But the current record does not establish that Mr. Sleeper was paid in accordance with the AWHA. During his relevant time at URS, Mr. Sleeper was paid a commission of 23 or 24% of net revenue for each trip. He was also eligible for a 3% Quality Fund bonus.70 It is possible that URS complied with the statutory requirements when calculating this rate.71 But while the record contains some information about the factors URS took into account,72 it is silent as to whether the rate "includes overtime pay for work in excess of 40 hours a week or for more than eight hours a day" at a rate "comparable" to the rate in AS 23.10.060(b). Therefore, viewing the evidence in the light most favorable to Mr. Sleeper, URS has not shown that there are no genuine disputes of material fact as to whether it fulfilled the AWHA's alternate compensation system requirements.

The Court finds, however, that summary judgment to URS is warranted with regard to Mr. Sleeper's AWHA claim that URS "illegally withheld, and deducted, compensation he had earned as part of his commission pay."73 First, there are no genuine disputes of material fact concerning this issue. Mr. Sleeper contends that "URS deducted payments from his guaranteed Quality Fund payment," and that the deductions "were for damage and breakage costs that URS suffered."74 URS does not dispute these assertions; rather, it acknowledges that the Quality Fund balance "would be reduced to account for damage to vehicles being transported," regardless of whether the driver was at fault.75 Mr. Sleeper also contends that URS unlawfully deducted from his wages, and he notes that URS "alleges that it never made unlawful deductions."76 Whether the deductions were "lawful," however, does not present a dispute of material fact.

Second, viewing the evidence in the light most favorable to Mr. Sleeper, the AWHA

*419does not support Mr. Sleeper's claim. Mr. Sleeper does not cite to any portion of the AWHA that prohibits employers from making deductions from an employee's wages. However, 8 AAC 15.160, which was promulgated pursuant to the AWHA, does prohibit employers from "requir[ing] an employee to reimburse the employer for ... lost, missing, or stolen property, unless the employee admits willingly and in writing, to having personally taken the specific property alleged to be lost, missing, or stolen; or ... damage or breakage costs unless clearly due to willful conduct of the employee."77 The regulation also prohibits employers from "[r]equiring or inducing an employee to return or give up any part of the compensation [to which] the employee is entitled."78 However, as noted above, Mr. Sleeper's Complaint alleges only statutory violations.79

Even if the Court were to conclude that the question whether URS has complied with 8 AAC 15.160 is properly before it, URS would be entitled to summary judgment on this issue. Mr. Sleeper acknowledges his regular commission was never reduced for vehicle damage.80 In Dias v. Silver Bay Logging, Inc. , the Alaska Supreme Court concluded that "[t]he concept of entitlement must refer to an employee's contractual or statutory and regulatory rights."81 It thus held that an employment contract may include a lodging and board deduction, because that deduction did not require the employee to "give up ... the compensation to which he is entitled."82 Here, Mr. Sleeper asserts in his affidavit that "[a]t no time during the period that these deductions occurred did I sign any written document stating that I intentionally caused damages to the cargo I transported or to the vehicle I drove. Nonetheless, URS took deductions from my paychecks based on the claim that damage occurred to the vehicle I drove or the cargo I transported."83 But Mr. Sleeper was not entitled to a Quality Bonus fund payment unless the vehicles he transported were not damaged for any reason. As such, when he did not receive the Qualify Bonus fund payment, he did not give up compensation to which he was otherwise entitled.84 Accordingly, URS is entitled to judgment as a matter of law on the state law Quality Fund claim.85

CONCLUSION

In light of the foregoing, Defendant's Motion for Summary Judgment at Docket 35 is GRANTED as to Mr. Sleeper's FLSA claim and as to his AWHA claim as it relates to the Quality Fund bonus; the motion is DENIED as it relates to the remaining aspects of Mr. Sleeper's AWHA claim.86

*420IT IS FURTHER ORDERED that a Trial Setting Conference will be held on October 12, 2018 at 9:30 AM in Anchorage Courtroom 3 before Judge Sharon L. Gleason.