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Collins v. Heritage Wine Cellars

December 29, 2008


The opinion of the court was delivered by: Robert M. Dow, Jr. United States District Judge


Currently pending before the Court are cross-motions for summary judgment by the collective Plaintiffs and Defendants. For the reasons set forth below, Plaintiffs' motion for summary judgment [31] is denied and Defendants' cross-motion for summary judgment [46] is granted in part and denied in part as moot.

I. Background

Plaintiffs filed a one-count complaint [1] initiating this action against Defendants on March 5, 2007. In their complaint, Plaintiffs allege that Defendants are "employers" engaged in interstate "commerce" and/or the production of "goods" for "commerce" within the meaning of the Fair Labor Standards Act (the "FLSA"), 29 U.S.C. § 203. Compl. ¶ 14. Plaintiffs allege that Defendants, in contravention of the FLSA, "had a policy and practice of failing and refusing to pay Plaintiffs overtime compensation for hours worked in excess of forty (40) hours per week." Compl. ¶¶ 17, 18. Plaintiffs seek recovery for overtime compensation and attorneys fees under the FLSA. Compl. ¶¶ 20, 21. Defendants' primary defense to Plaintiffs' allegations rests on the motor carrier exemption ("MCA exemption"), 29 U.S.C. § 213(b)(1).

II. Facts

A. Local Summary Judgment Standards

The Court takes the relevant facts from the parties' respective Local Rule ("L.R.") 56.1 statements.*fn1 The Court takes no position on whose version of disputed factual matters is correct. Local Rule ("L.R.") 56.1 requires that statements of facts contain allegations of material fact, and that the factual allegations be supported by admissible record evidence. See L.R. 56.1; Malec v. Sanford, 191 F.R.D. 581, 583-85 (N.D. Ill. 2000). The Seventh Circuit teaches that a district court has broad discretion to require strict compliance with L.R. 56.1. See, e.g., Koszola v. Bd. of Educ. of the City of Chicago, 385 F.3d 1104, 1109 (7th Cir. 2004); Curran v. Kwon, 153 F.3d 481, 486 (7th Cir. 1998) (citing Midwest Imports, Ltd. v. Coval, 71 F.3d 1311, 1317 (7th Cir. 1995) (collecting cases)).

Where a party has offered a legal conclusion or a statement of fact without offering proper evidentiary support, the Court will not consider that statement. See, e.g., Malec, 191 F.R.D. at 583. Additionally, where a party improperly denies a statement of fact by failing to provide adequate or proper record support for the denial, the Court deems admitted that statement of fact. See L.R. 56.1(a), (b)(3)(B); see also Malec, 191 F.R.D. at 584. The requirements for a response under Local Rule 56.1 are "not satisfied by evasive denials that do not fairly meet the substance of the material facts asserted." Bordelon v. Chicago Sch. Reform Bd. of Trs., 233 F.3d 524, 528 (7th Cir. 2000). In addition, the Court disregards any additional statements of fact contained in a party's response rather than in its statement of additional facts. See, e.g., Malec, 191 F.R.D. at 584 (citing Midwest Imports, 71 F.3d at 1317).

B. Pertinent Facts for Purposes of Cross-Motions for Summary Judgment*fn2

1. Plaintiffs and Defendants

All of the Plaintiffs are residents of Illinois. Defs. SOF ¶ 1. Defendant Hirsch also is a resident of Illinois. Id. ¶ 3. Defendant Heritage does business within the Northern District of Illinois and maintains its corporate headquarters in Niles, Illinois. Id. ¶ 2. Since at least March 1, 2004, Heritage has operated a warehouse in Niles, Illinois. Id.

Hirsch is Heritage's President and Chief Executive Officer. Pls. SOF ¶ 34, Ex. 2, Gonzalez Dep. at 89:19-20. He is responsible for overseeing the day-to-day operations of Heritage, including, among other things, reviewing the finances of the company, exercising authority to set employees' rates of pay, reprimanding employees, and participating in the employee hiring and firing process. Pls. SOF ¶ 35. Hirsch also is responsible for Heritage's marketing, purchasing, sales, and operational activities. Defs. SOF, Ex. L, Hirsch Aff. ¶ 1.

Heritage is, among other things, a wholesale wine importer and distributor in the Chicago area, servicing Illinois since 1981. Pls. SOF ¶ 1, Exs. 1-2; Defs. Resp. ¶ 1. During the relevant period, Heritage grossed more than $500,000.00 per year and engaged in interstate commerce activities. Pls. SOF ¶ 2.

Plaintiff Wayne Evans, Sr. has worked as a driver and has made deliveries for Heritage from approximately November, 2001 through the present. Pls. SOF ¶ 7, Ex. 10 Evans Dep. at 5:8-11; Defs. SOF ¶ 15. Evans, Sr. also spent between one and two hours a day loading trucks. Defs. SOF ¶ 15; Pls. Resp. ¶ 15. Since March 2004, Evans, Sr.'s regular route has been the far southwest suburbs of Chicago, including Downers Grove, Wheaton, Glen Ellyn, Naperville, Batavia, Schaumburg, and Des Plaines. Defs. SOF ¶ 17. Evans, Sr. made deliveries at least once a week in these locations to customers such as Binny's, Trader Joe's (through early 2005), Whole Foods, Costco and Sam's Club. Id.

Plaintiff Antoine Lacy worked for Heritage as a driver delivering products from July, 1997 until April 14, 2007. Pls. SOF ¶ 8, Ex. 12, Lacy Dep. at 4:13-14, 4:18-19; Defs. Resp. ¶ 8; Defs. SOF ¶ 9. Lacy's job responsibilities included the delivery of product, occasional oversight of other drivers, and passing out routes to other drivers. Defs. SOF ¶ 9. At times, Lacy also loaded trucks. Id. Lacy drove a twenty-four foot truck that weighed more than 10,000 pounds. Defs. SOF ¶ 9. Lacy had a permanent route from March, 2004 through April, 2007 in the Chicago Gold Coast area, which included deliveries to Trader Joe's, Whole Foods, Sam's Club, and Costco. Id. ¶ 11. Lacy made deliveries to Trader Joe's two to four times a week. Id.

Plaintiff Jimmy Washington worked as a driver and made deliveries for Heritage from September 26, 1994 until July, 2007. Pls. SOF ¶ 9, Ex. 16, Washington Dep. at 4:16-22; Defs. SOF ¶ 26. Washington drove a fourteen-foot truck that weighed approximately 26,000 pounds. Defs. SOF ¶ 26. Washington was assigned to a route in the Northeast suburbs, and made deliveries to Binny's in Skokie, Highland Park, and Glencoe, Wine Discount in Highland Park, and Trader Joe's (through early 2005) in Highland Park and Night Bridge. Id. ¶ 28.

Plaintiff Nathaniel Thompson has worked as a driver and has made deliveries for Heritage since approximately January, 2001 through the present. Pls. SOF ¶ 10, Ex. 9, Thompson Dep. at 5:22-6:1. Thompson spends approximately an hour each day loading his truck. Id. Thompson is regularly assigned the same fourteen-to-sixteen foot truck that weighs approximately 14,500 pounds. Defs. SOF ¶ 18. Between March, 2004 and March, 2007, Thompson drove an assigned route in the Northwest suburbs, including customer locations in Buffalo Grove, Niles, Des Plaines, Schaumburg, Deerfield, Glenview, Northbrook, and Park Ridge. Id. ¶ 19. Thompson made deliveries at least once a week to those locations, including to large customers such as Binny's, Whole Foods, and Trader Joe's (until 2005). Id. Approximately three to four years ago, Plaintiff Thompson made one pick-up and two deliveries of wine to a location in New Berlin, Wisconsin. Pls. SOF ¶ 10. Plaintiff Thompson did not travel outside of Illinois for any other deliveries or pick-ups. Id.

Plaintiff Anthony Collins worked as a driver delivering product for Heritage from April, 2003 until March, 2007. Pls. SOF ¶ 11, Ex. 13, Collins Dep. at 7-8; Defs. SOF ¶ 6. Collins also spent at least thirty minutes each day loading trucks. Defs. SOF ¶ 6. Collins drove a van and a fifteen-foot truck that weighed more than 10,000 pounds. Defs. SOF ¶ 6. Collins generally had the same downtown route every day and delivered product to the same customers weekly. Id. ¶ 8. Those customers included Whole Foods and Trader Joe's. Id. Collins also made deliveries to Costco once or twice a week. Id.

Plaintiff Javier Murcio has worked as a driver and has made deliveries for Heritage from June, 2001 to the present. Pls. SOF ¶ 12, Ex. 14, Murcio Dep. at 5:22-6:1; Defs. SOF ¶ 20. Murcio drives an eighteen-foot truck that weighs over 10,000 pounds. Defs. SOF ¶ 20. Murcio spends approximately an hour and a half each day loading his truck. Defs. SOF ¶ 20. Since March, 2004, Murcio has driven a Northwest route which includes deliveries at least once a week to large customers, including three different Costco stores, Whole Foods, four different Trader Joe's stores (through early 2005), and three different Binny's locations. Id. ¶ 22.

Plaintiff Thomas Bennett has worked as a driver and has made deliveries for Heritage since approximately August, 1998 through the present. Pls. SOF ¶ 13, Ex. 11, Bennett Dep. at 5:23-6:3; Defs. SOF ¶ 12. Bennett spends approximately one and one half to two hours a day loading trucks. Defs. SOF ¶ 12. Since March, 2004, Bennett has driven a twenty-four-foot truck that weighs approximately 33,000 pounds. Defs. SOF ¶ 12. Bennett had an assigned route for the last few years which included Lombard, Downers Grove, Oak Brook, and Oak Park, and made deliveries on that route to customers such as Binny's, Trader Joe's (at least through 2005), Costco, and Whole Foods. Id. ¶ 14. Pls. Resp. ¶ 14. In 2006, Bennett made occasional pick-ups from New Berlin, Wisconsin, and Indianapolis, Indiana in a van that weighed less than 10,001 pounds. Pls. SOF ¶ 13, Ex.11, Bennett Dep. at 45:22-49:7; Defs. Resp. ¶ 13.

Plaintiff James Neal worked as a truck driver and delivered product for Heritage from February, 2002 until February 21, 2005. Pls. SOF ¶ 14, Ex. 8, Neal Dep. at 5:10-14; Defs. Resp. ¶ 14; Defs. SOF ¶ 23. Neal drove an eighteen-foot truck that weighed less than 26,000 pounds. Defs. SOF ¶ 23. Neal also was responsible for loading his truck each morning. Id. Between March, 2004 and February 21, 2005, Neal was assigned to the downtown Chicago Loop route, and made deliveries to a Sam's Club, Trader Joe's, and Binny's in that area. Defs. SOF ¶ 25.

Heritage pays (or paid) all Plaintiffs on an hourly basis. Id. ¶¶ 7-14; Defs. Resp. ¶¶ 7-14. None of the Plaintiffs has knowledge of Heritage's volume of shipments, sales projections, volume of customer purchases, customer demand, sales plans, supplier goods, projections of customer demand, historical sales figures, actual present orders, or relevant market surveys. Defs. SOF ¶¶ 7, 11, 13, 16, 21, 24, 27. Based upon a review of route sheets covering their deliveries, however, each Plaintiff is aware of the quantities and types of wines that he delivered for particular customers on a day-to-day basis. Pls. Resp. ¶¶ 7, 11, 13, 16, 21, 24, 27, Evans, Sr. Decl. ¶¶ 6-7, Lacy Decl. ¶¶ 6-7, Washington Decl. ¶¶ 6-7, Thompson Decl. ¶¶ 6-7, Collins Decl. ¶¶ 6-7Murcio Decl. ¶¶ 6-7, Bennett Decl. ¶¶ 6-7, Neal Decl. ¶¶ 6-7.

As explained above, on limited occasions, Plaintiffs Thompson and Bennett made interstate deliveries and/or pick-ups outside of Illinois, and drove vans on those trips. Pls. SOF ¶ 6; Defs. Resp. ¶ 6. Heritage acknowledges that Plaintiffs Evans, Sr., Lacy, Washington, Collins, Murcio, and Neal never made or were asked to make pick-ups or deliveries outside of Illinois. Pls. SOF ¶¶ 7-9, 11-12, 14; Defs. Resp. ¶¶ 7-9, 11-12, 14. Consistent with that acknowledgement, Heritage's Chief Financial Officer ("CFO") J.R. Gonzalez has no recollection of any Plaintiff other than Thompson and Bennett driving outside of Illinois, nor does he believe that an expectation was established that Plaintiffs would be required to make such out-of-state trips. Pls. SOF Ex. 2, Gonzalez Dep. at 44:12-19.

The parties' relationship during the relevant period was governed by a collective bargain agreement. On August 20, 2004, Heritage entered into a "Labor Contract and Working Agreement" (the "Agreement") with its employees which governed, among other things, the payment of overtime wages. Pls. SOF ¶ 15. Pursuant to the express terms of the Agreement, Heritage agreed that "[t]ime and one-half rate shall be paid after eight (8) hours in one day and after forty any hours in any one week." Id. ¶ 16; Defs. SOF ¶ 79. Heritage's CFO J.R. Gonzalez indicated that even though the Agreement stated that Heritage's union employees would be paid overtime, Heritage never intended to honor the contract. Pls. SOF ¶ 17, Ex. 2, Gonzalez Dep. at 21:8-11, 22:2-6. Consistent with that position and notwithstanding the Agreement, prior to January, 2007 Heritage did not pay overtime to Plaintiffs for hours worked over forty (40) hours per week. Pls. SOF ¶ 17. At least one Plaintiff, Thompson, for example, has no recollection of Heritage posting any information about minimum wage rights or overtime rights. Id. ¶ 19, Ex. 9, Thompson Dep. at 45:19-46:2.

Additionally, although Heritage was required to maintain a time clock to track employees' hours worked pursuant to the terms of the Agreement, Heritage failed to do so. Pls. SOF ¶ 18. Heritage maintained no accurate records identifying the actual hours worked by Plaintiffs during the relevant period. Id.

2. Heritage's Operations

Heritage imports wines from all over the world, including from Italy, Germany, Spain, and France. Pls. SOF ¶ 20; Defs. Resp. ¶ 20. Since at least March 1, 2004,*fn3 100% of Heritage's revenues have resulted from out-of-state shipments of wine merchandise into Heritage's warehouse located in Niles, Illinois. Defs. SOF ¶ 29. Heritage's customers have included restaurants, hotels, chain stores, and independent retail merchants such as Trader Joe's (through early 2005), Binny's, Cost Plus World Market, Whole Foods, Schafer's, Costco, Wine Discount Centers, and Sam's Wine and Spirits. Id. ¶ 30; Pls. Resp. ¶ 30. These customers accounted for 69.4% of the cases of wine delivered in 2004, 35.0% of the cases of wine delivered in 2005, and 36.6% of the cases of wine delivered in 2006. Defs. SOF ¶ 31. For example, in 2004, these eight customers accounted for 49.1% of the dollar sales of wine to Heritage's customers. Id. In 2004, Heritage made approximately $45,700,000 in total sales, $23,000,000 (or approximately 51%) of which were derived from sales to Heritage's largest customers and represented 70% of the total cases shipped by Heritage. Id. ¶ 32. In 2005, Heritage did approximately $32,500,000 in total sales, $11,500,000 (or approximately 35%) of which were derived from sales to Heritage's largest customers, representing 38% of all cases shipped by Heritage. Id. ¶ 33. In 2006, Heritage did approximately $38,000,000 in total sales, $13,500,000 (or approximately 35%) of which were derived from sales to Heritage's largest customers, representing 38% of all cases shipped by Heritage. Id. ¶ 34.

Heritage buys wines from vineyards or wineries, all of which are located outside Illinois. Id. ¶ 35. All product that comes into Heritage's warehouse is purchased by Heritage. Id. ¶ 29. Bills of lading for wine purchased by Heritage designate Heritage as the purchaser and list Heritage as the customer to whom the wine is delivered. Pls. SOF, Ex. 3, Hirsh Dep. at 16:19-22. Heritage's Warehouse Manager, David O'Connell, confirmed that at the time that wine comes into Heritage's Chicago warehouse, Heritage generally is identified as the customer or the purchaser of the wine. Pls. SOF ¶ 20, Ex.6, O'Connell Dep. at 11:21-12:1. David O'Connell testified that 99% of the orders for Heritage's customers are picked and pulled in the warehouse in Chicago rather than being sent directly to a customer. Pls. SOF ¶ 20; O'Connell Dep. at 11:16-20. The paperwork associated with most, if not all, of Heritage's transactions with the out-of-state wineries or vineyards, identifies only Heritage (and no other entity) as the shipper. Pls. Resp. ¶ 42; Gonzalez Dep. at 52:24-53:14, O'Connell Dep. at 11:21-12:1.

Heritage has arranged for the transportation of the wine from those vineyards or wineries to its warehouse in Illinois by paying for all of the transportation charges, both out-of-state (by engaging drivers to bring the wine to Illinois) and locally (by employing Plaintiffs to make deliveries within Illinois). Defs. SOF ¶ 35; Pls. SOF ¶ 35. Specifically, Heritage covers transportation costs by (i) paying for the taxes, (ii) paying for the freight, (iii) paying for the insurance, (iv) paying for all custom fees, (v) transporting the wine freight on board (F.O.B.), (vi) hiring and paying the freight forwarder that arranged for the transportation, (vii) determining the type of shipping container, including whether temperature is controlled or refrigerated or insulated, and (viii) acting as its own custom broker. Defs. SOF ¶ 36. In 2004, Heritage spent a total of $2,247,207.83 on these latter shipping costs; in 2005, $1,790,162.02; and in 2006, $2,162,274.62. Id. ¶ 37.

Once the wine left the winery or vineyard, Heritage was responsible for it. Id. Upon tender to the over-the-road trucker for domestic shipments coming from the East or West Coast, Heritage took title to and control of the wine, which then was transported to Heritage's warehouse in Niles, Illinois. Defs. SOF ¶ 38. With overseas shipments, Heritage took possession of the shipping container at the point of origin. Id. ¶ 39. With domestic shipments transported by over-the-road trucks, Heritage took possession of the wine at the winery or vineyard, or the location where the winery or vineyard stored its wines for transportation purposes. Id. For overseas shipments, Heritage has used a freight forwarder that has acted as Heritage's agent in arranging the transportation for which Heritage has paid. Id. ¶ 40. In short, the product that Heritage arranges to transport is Heritage's responsibility from the time that it leaves its point of origin or the location where the wine was stored (for example, a winery). Id.

Hirsch attests that pre-orders or pre-arrival orders, which involved standing orders, pre-arrival offering, clearing of merchandise, and wine sold as futures, have accounted for approximately 25% of the cases of wine Heritage ships. Defs. Resp. ¶ 20; Defs. SOF ¶ 41, Hirsch Aff. ¶ 6.*fn4 In those instances, Heritage arranged the transportation of that wine from out- of-state and overseas wineries to Heritage's warehouse in Niles, Illinois, and then Heritage's drivers delivered that wine from Heritage's warehouse to the customers from whom it received pre-orders within a few days of the wine's arrival to its warehouse. Id. For example Binny's, whose purchases accounted for approximately 10% of Heritage's total business, used standing orders to order wine. Defs. Resp. ¶ 20, Ex. M, Hirsch Aff. ¶ 6; Defs. SOF ¶ 42, Hirsch Aff. ¶ 8. Binny's would detail what wine it wanted to purchase and ship, a certain quantity, and the date on which it should be delivered. Defs. SOF ¶ 42, Hirsch Aff. ¶ 8. Approximately 20% of the business that Binny's did with Heritage came from standing orders. Id. Other customers with similar arrangements with Heritage included Sam's, the Wine Discount Center Stores, and Costco. Id. These types of orders accounted for approximately 5% of Heritage's gross sales, and 5% of the deliveries made by Heritage locally (by Plaintiffs). Id.

Of the more than $13 million in sales that Heritage did with Trader Joe's in 2004, approximately $12 million, or 92.3% sales volume, involved sales where Trader Joe's selected and ordered wine in advance of Heritage placing the order with the winery or vineyard. Defs. SOF ¶ 43, Hirsch Aff. ¶ 16. Hirsch attests that approximately 90% of the deliveries that Heritage's drivers made to Trader's Joes locations in 2004 involved wine that Trader Joe's had ordered in advance. Id.

In the years 2004-2007, Heritage also arranged certain "private label wine" orders where the Heritage's customer requested that particular wine be "expressly designated" for that customer. Defs. SOF ¶ 44, Hirsch Aff. ¶ 9. For example, the wine brands Painted Horse and Riven Rock from California and Vida Organica from Argentina, respectively, were transported by Heritage exclusively for, and sold to, Whole Foods. Id. Heritage agreed to purchase, transport and deliver the wine to Whole Foods from the wineries or vineyards in California and Argentina. Id. Approximately 5% of Heritage's total wines sales and approximately 5% of its deliveries made by its drivers involved private label wines or similar arrangements with Heritage's customers. Id.

Heritage also used pre-buy sheets for certain limited-offering wines, allowing for pre-arrival ordering. Defs. SOF ¶ 45, Hirsch Dep. at 36-17-23, 37-18; Hirsch Aff. ¶ 11. For pre-arrival offerings, Heritage required customers to take immediate delivery of the wine upon arrival at Heritage's warehouse. Defs. SOF ¶ 45, Hirsch Aff. ¶ 11. For example, in the years 2004-2007, Heritage ordered a selection of expensive wines from the Burgundy region in France. Id. Heritage took orders from customers by a required date, placed an order with the winery, and transported the wine to Heritage's warehouse. Id. Heritage's drivers then delivered the wine to the customers. Id. Heritage delivered approximately 1,000 cases of wine from the ...

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