The opinion of the court was delivered by: Judge Algenon Marbley
This matter comes before the Court on the parties' cross-motions for partial summary judgment.*fn1 On February 24, 2006, Plaintiffs moved this Court for partial summary judgment as to the applicability of the Motor Carrier Exemption to Plaintiffs. On the same day, Defendant, Digital Dish, moved for summary judgment on the same issue. For the reasons set forth herein, the Court DENIES Plaintiffs' Motion for Partial Summary Judgment and GRANTS Defendant's Motion for Partial Summary Judgment.
Defendant Digital Dish ("Defendant" or "Digital Dish") is a privately-held, family-owned corporation whose primary purpose is to act as the Ohio Regional Service Provider ("RSP") for its parent company, DISH Network.*fn2 Digital Dish possesses an exclusive license to deliver and install DISH Network equipment, which consists primarily of satellite dishes and receivers, in an area encompassing Ohio, and portions of Kentucky, Indiana, and West Virginia.
Each of the three named plaintiffs, Dominic Musarra ("Musarra"), Kevin Klug ("Klug") and Charles Everett, Jr. ("Everett") (collectively "Plaintiffs"), worked for Digital Dish as a "satellite technician"*fn3 (hereinafter "technician") during the time period between June 2003 through December 2004. During that time period, Digital Dish employed approximately 300 such delivery and installation technicians. Technicians have a myriad of duties, and their primary responsibilities consist of building, installing, repairing, and removing digital satellite equipment for DISH Network customers.
Digital Dish receives all of the goods that its technicians deliver, install, and service from out of state. DISH Network ships the goods via freight primarily from its facilities in Illinois, to pass onto its customers.*fn4 DISH Network sends Digital Dish at least one or two tractor trailers of equipment each day. All incoming equipment goes to the Digital Dish distribution center in Millersburg, Ohio, and from there, is distributed to one of Digital Dish's thirteen Ohio warehouses. To determine the amount of product to ship to Digital Dish each day, DISH Network uses a formula based on the current needs of DISH Network customers in Digital Dish's geographic area. DISH Network extends a "credit limit" reflecting the amount of equipment that Digital Dish may receive per week, based on the number of customer jobs in queue -- in other words, on the number of customers in Digital Dish's area of coverage who actually ordered product, made trouble calls, or requested changes and/or upgrades.
Digital Dish earns the most "credit" for each new connection currently in the job queue, and these "new connects" account for the largest part of the "credit limit" of shipped goods. Digital Dish receives a lesser "credit" for each pending trouble call in its area and for each pending customer "change or upgrade." To translate these "credits" into projected inventory requirements, DISH Network adds the above three "credit" categories together, doubles the result to account for inventory still in transit, and then multiplies by eighty percent. DISH Network then compares this "total credit" to Digital Dish's current credit balance, re-evaluating the need for a higher credit limit when and if the numbers reveal an increase in customer installation or service activity. The amount of "credit" DISH Network extends to Digital Dish changes constantly, rising and falling according to customer demand.
After the DISH Network equipment arrives at Digital Dish's Millersburg distribution center, Digital Dish employees break it down and sort it by warehouse. Receivers and dishes arrive on pallets. Receivers come in their own individual box on pallets that contain 50 to 70 boxes, depending on the model size. Each pallet is wrapped entirely in plastic, which must be removed when the warehouse workers break the pallets down. The warehouse workers scan each piece of equipment and determine which of the Digital Dish warehouses will receive it. Digital Dish maintains three tractor-trailers to deliver equipment from the Millersburg, Ohio distribution facility to its other Ohio warehouses.*fn5
DISH Network maintains tight control over the equipment it ships to Digital Dish, shipping only on a consignment basis, and retaining title to its equipment until it is delivered to customers. In order to determine how long an individual piece of equipment sits in Digital Dish's warehouse, DISH Network also uses a tracking system based on the serial numbers of its equipment. Although DISH Network attaches a serial number to each piece of equipment it sends to Digital Dish, Digital Dish has its own tracking system as well. Pursuant to the Digital Dish system, Digital Dish assigns a second serial number to all incoming equipment before preparing it for distribution. DISH Network requires that Digital Dish retain equipment in its distribution centers for fewer than ten days before passing it onto DISH Network customers, and the equipment is usually transported to customers within three to four days.
In general, a DISH Network customer who wants to purchase DISH Network equipment contacts DISH Network directly either by phone or through the Internet. Digital Dish concedes, however, that approximately 0.5% of its monthly installations arise from Digital Dish referrals rather than from customers' direct contact with DISH Network.
Digital Dish employs one "salesperson" at its Millersburg, Ohio distribution center.
Customers can contact that salesperson by phone or by walking into the Millersburg facility.*fn6 There is no counter service for walk-in customers, but there are signs erected in the Digital Dish office that read, "Ask About Dish Network Service." If a person inquires about DISH Network, he or she is not guaranteed to become a DISH Network customer. If a person makes an inquiry, the Digital Dish salesperson contacts DISH Network who subsequently processes the person's information through its system to determine whether to "accept" him as a new customer.*fn7 If DISH Network approves the customer, the customer's referral is processed as a standard DISH Network order.
After installation on a sales referral is complete, DISH Network considers the referral "successful" and the referring salesperson receives a $5.00 commission. Technicians can also make sales referrals. If a technician refers a new customer to Digital Dish to purchase DISH Network equipment, once that customer has been approved and the DISH Network equipment has been successfully installed, the technician receives a $30.00 commission on the sale. Aside from these commissions, all money from Digital Dish sales referrals goes directly to DISH Network.
3. DISH Network's Distribution of Work Orders to Digital Dish
DISH Network distributes work orders to Digital Dish based on the application of a complex formula which works on a "point system." Essentially, each Digital Dish technician who works in a particular geographic area represents a number of available "work points," depending on his background, experience, skill set, and availability. Digital Dish maintains a computer system to which DISH Network has access, which allows DISH Network to assess the amount of "points" Digital Dish has available in any give geographic area within its assigned region. When DISH Network receives a customer order, it examines the number of "points" available in that customer's geographic region, and if Digital Dish has sufficient points, DISH Network will forward the customer's order to Digital Dish, which will then assign the order to a specific Digital Dish technician. Each day, Digital Dish e-mails the upcoming DISH Network orders to its technicians, assigning orders based on each technician's geographic proximity to the customers.
4. Daily Tasks of a Technician
Technicians typically receive their next day's work orders in the evening and pre-call customers to schedule service appointments in advance. The Digital Dish warehouses open at approximately 7:00 a.m each day. When a technician arrives at one of Digital Dish's warehouses in the morning,*fn8 he picks up the DISH Network equipment necessary to complete his day's assigned work orders. Technicians also pick up consumable supplies from the warehouses, such as nuts, bolts, cable, and poles, much of which are shipped to Digital Dish by DISH Network.*fn9 Prior to leaving the Digital Dish warehouse, technicians generally attach the mounting structure, arms, and certain low-noise block feedhorns*fn10 to satellite dishes to make more space in their trucks. Further, technicians often spend fifteen to twenty minutes downloading the necessary programs onto the receivers set for delivery, so they can save time once they arrive at a customer's home.*fn11
The warehouse worker scans all outgoing receivers and dishes, noting the DISH Network and Digital Dish serial numbers and the corresponding technician who took possession of the equipment. The worker also collects signed paperwork indicating that the technician actually received the equipment. The individual receivers and dishes are not assigned to a technician based on any specifically identified customer; each technician decides what receivers he needs based on his day's work orders. Technicians also pull equipment in advance, and store it in their truck to use in subsequent service calls or, on occasion, to trade with other technicians.*fn12
With the equipment in hand, each technician then sets out to complete his day's schedule. In general, a technician's primary task is the delivery and installation of DISH Network equipment, but technicians also do repairs, upgrades, and returns. Each technician completes approximately two to three installations per day. When installing satellites and receivers, a technician must mount a dish on the outside of the customer's home and then activate the customer's satellite service. The process depends on the serial number on the customer's receiver which validates his or her satellite service, confirms his or her account with DISH Network, and acts as a tracking number so that DISH Network can establish that the customer is in good standing. Once the equipment is installed, the DISH Network serial number is linked to the particular customer and can only be changed by a call from a technician to DISH Network reporting a problem.
After the technician completes a service call, he secures the customer's approval on a DISH Network Customer Service Agreement and (in the case of satellite receiver equipment installations) activates the customer's satellite subscription by contacting DISH Network. Only DISH Network can activate service.
Returns, exchanges, and other servicing of DISH Network products are typically initiated by customers who call DISH Network to report equipment problems and/or a desire to secure an equipment upgrade. Returns can occur in a number of situations, including faulty receivers, upgraded receivers, and incorrectly installed receivers. After a customer makes his initial request for a return to DISH Network, a Digital Dish technician travels to the customer's home to determine what is wrong with the system.*fn13 If there is an equipment-related problem, Digital Dish notifies DISH Network, who then draws up a work order which Digital Dish subsequently assigns to a technician within the closest geographic area. Throughout each day, technicians intersperse their installations and deliveries with any assigned returns and/or exchanges.
If a customer's equipment is broken, technicians retrieve it and return it to their home Digital Dish facility.*fn14 If, however, a customer requests a dish upgrade, technicians often use that customer's old dish for a new customer.*fn15 Warehouse employees then package and label some of the returns for shipping to DISH Network's out-of-state facilities.*fn16 For each such return, Digital Dish receives an addition to its "credit limit" from DISH Network.
On June 3, 2005, Plaintiffs filed a complaint against Digital Dish (the "Complaint") alleging that the company's system of compensation violated 29 U.S.C. §§ 206(a) and 207(a) of the Fair Labor Standards Act ("FLSA"), as well as various provisions of the Ohio Minimum Fair Wages Standards Act ("OMFWSA"), Ohio Rev Code. §§ 4111, et seq. Complaint ¶¶ 80-87. Plaintiffs seek declaratory, injunctive and monetary relief in connection with Digital Dish's alleged wrongful denial of overtime compensation for technicians. Id. at 15.
On October 18, 2005, the parties agreed to limit initial discovery and proceedings to the issue of whether the Motor Carrier Act ("MCA") exemption, 29 U.S.C. § 213(b)(1), applies to liability for overtime compensation under the FLSA. On February 17, 2006, the Court entered a stipulated protective order to protect certain knowledge obtained during discovery that contained confidential or proprietary information concerning Defendant or other businesses or customer information. The parties completed discovery and, on February 24, 2006, filed cross motions for summary judgment limited to the issue of the applicability of the MCA exemption.
Summary judgment is appropriate "[i]f the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law." FED. R. CIV. P. 56(c). The movant has the burden of establishing that there are no genuine issues of material fact, which may be accomplished by demonstrating that the non-moving party lacks evidence to support an essential element of its case. Celotex Corp. v. Catrett, 477 U.S. 317, 322--23 (1986); Barnhart v. Pickrel, Schaeffer & Ebeling Co.,12 F.3d 1382, 1388--89 (6th Cir. 1993). In response, the non-moving party must then present "significant probative evidence" to show that "there is [more than] some metaphysical doubt as to the material facts." Moore v. Philip Morris Cos.,8 F.3d 335, 339-40 (6th Cir. 1993) (citations omitted).
In evaluating a motion for summary judgment, the evidence must be viewed in the light most favorable to the non-moving party. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970). The Court also must interpret all reasonable inferences in the non-movant's favor. United States v. Diebold, Inc., 369 U.S. 654, 655 (1962); see also Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000) (stating that the court must draw all reasonable inferences in favor of the non-moving party and must refrain from making credibility determinations or weighing the evidence). The existence of a mere scintilla of evidence in support of the non-moving party's position will not be sufficient; however, there must be evidence from which the jury reasonably could find for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251 (1986); Copeland v. Machulis, 57 F.3d 476, 479 (6th Cir. 1995); see also Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (finding summary judgment appropriate when "the record taken as a whole could not lead a rational trier of fact to find for the non-moving party").
Finally, when parties file cross-motions for summary judgment, "the making of such inherently contradictory claims does not constitute an agreement that if one is rejected the other is necessarily justified or that the losing party waives judicial consideration and determination whether genuine issues of material fact exist." Parks v. LaFace Records, 329 F.3d 437, 444-45 (6th Cir. 2003) (quoting B.F. Goodrich Co. v. United States Filter Corp., 245 F.3d 587, 593 (6th Cir. 2001)).
A. Background - the FLSA and the MCA
The FLSA provides that any employee who "is engaged in commerce or in the production of goods for commerce" shall be paid a minimum of "one and one-half times the regular rate at which he is employed for every hour over forty hours he works in a workweek. 29 U.S.C. § 207. But, under the MCA exemption, the FLSA exempts from its overtime pay requirement any employee subject to the Secretary of Transportation's power to establish qualifications and maximum hours of service "pursuant to the provisions of § 204 of the [MCA] of 1934." Id. § 213(b)(1).*fn17 *fn18
The MCA exemption applies to employees for whom the Secretary of Transportation may prescribe requirements for qualifications and maximum hours of service under the Motor Carrier Act, 49 U.S.C. § 31502. 29 U.S.C. § 213(b)(1) (2004). According to 49 U.S.C. § 31502, the MCA exemption applies to transportation set forth in 49 U.S.C. §§ 13501 and 13502, which provide that the Secretary of Transportation may prescribe requirements for qualifications and maximum hours of service for "motor carriers" and for "motor private carriers," "when needed to promote the safety of operations." See 49 U.S.C. § 31502(b). A "motor carrier" is a "person providing commercial motor vehicle (as defined in section 31132) transportation for compensation." 49 U.S.C. § 13102(14). A "commercial motor vehicle" is: a self-propelled or towed vehicle used on the highways in interstate commerce to transport passengers or property, if the vehicle --
(A) has a gross vehicle weight of at least 10,001 pounds, whichever is greater;
(B) is designed or used to transport more than 8 passengers (including the driver) for compensation;
(C) is designed or used to transport more than 15 passengers, including the driver, and is not used to transport passengers for compensation; or
(D) is used in transporting material found by the Secretary of Transportation to be hazardous under section 5103 of this title and transported in a quantity requiring placarding under regulations prescribed by the Secretary under section 5103.
See 49 U.S.C. § 31132(1). It is undisputed that the trucks driven by Digital Dish technicians are not "commercial motor vehicles." Accordingly, Plaintiffs are not "motor carriers."
Therefore, the question becomes whether Plaintiffs are "motor private carriers." A "motor private carrier" is: a person, other than a motor carrier, transporting property by commercial motor vehicle*fn19 (as defined in section 31122) when:
(A) the transportation is as provided in section 13501 of this title;
(B) the person is the owner, lessee, or bailee of the property being transported; and
(C) the property is being transported for sale, lease, rent, or bailment or to further a commercial enterprise.
49 U.S.C. § 13102(15) (emphasis added). 49 U.S.C. § 13501(1), which governs the Secretary of Transportation's jurisdiction under the MCA, provides:
The Secretary and the Board have jurisdiction, as specified in this part, over transportation by motor carrier and the procurement of that transportation, to the extent that passengers, property, or both, are transported by motor carrier --
(A) a State and a place in another State;
(B) a State and another place in the same State ...