Perrin v. Papa John's Int'l, Inc., 4:09–CV–01335–AGF.
| Decision Date | 08 July 2015 |
| Docket Number | No. 4:09–CV–01335–AGF.,4:09–CV–01335–AGF. |
| Citation | 114 F.Supp.3d 707 |
| Parties | William Timothy PERRIN, et al., Plaintiffs, v. PAPA JOHN'S INTERNATIONAL, INC., et al., Defendants. |
| Court | U.S. District Court — Eastern District of Missouri |
Barrett J. Vahle, Bradley T. Wilders, George A. Hanson, Lauren A. Wolf, Stueve and Siegel, LLP, Kansas City, MO, Lee R. Anderson, Civil Justice Law Firm LLC, Kansas City, MO, Mark A. Potashnick, Weinhaus and Potashnick, St. Louis, MO, for Plaintiffs.
Jennifer Kate Oldvader, L. Gray Geddie, Jr., Patrick F. Hulla, Ogletree and Deakins, P.C., Kansas City, MO, Rodney A. Harrison, Sarah J. Kuehnel, David L. Schenberg, Eric A. Todd, Ogletree and Deakins, St. Louis, MO, for Defendants.
Plaintiff William Timothy Perrin filed this action on August 19, 2009, on behalf of himself and other similarly situated delivery drivers employed by Defendants. Plaintiffs claim that Defendants violated the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 206, and the minimum wage laws of five states (Missouri, Arizona, Florida, Illinois, and Maryland) that mandate a higher minimum wage than that under federal law, by failing reasonably to approximate the delivery drivers' automotive expenses for reimbursement purposes, and consequently, effectively failing to pay the minimum wage. The Court has conditionally certified an FLSA collective action and has also certified Federal Rule of Civil Procedure 23(b)(3) class actions with respect to Plaintiffs' state law claims.1
The parties have filed several motions for partial summary judgment. Plaintiffs move for summary judgment regarding Defendants' alleged failure to use reasonable vehicle expense reimbursement rates.
(Doc. No. 364.) Plaintiffs also move for summary judgment on several of Defendants' affirmative defenses. (Doc. No. 360.) The parties have filed cross motions for summary judgment regarding Defendants' application of a tip credit. (Doc. Nos. 367 & 371.) And Defendants move for summary judgment regarding the exclusion of fixed costs from any calculation of minimum wage liability. (Doc. No. 368.) Finally, Plaintiffs move to strike the declaration of Bradford K. Matthiesen, submitted in support of Defendants' summary judgment briefs. (Doc. No. 388.)
For the reasons set forth below, the Court will GRANT Plaintiffs' motion for summary judgment regarding Defendants' application of a tip credit; GRANT in part and DENY in part Plaintiffs' motion for summary judgment on Defendants' affirmative defenses; and DENY Plaintiffs' motion for summary judgment regarding Defendants' reimbursement rates and Defendants' motions for summary judgment regarding the tip credit and the exclusion of fixed costs. The Court will also DENY as moot Plaintiffs' motion to strike Matthiesen's declaration.
Unless otherwise indicated, the facts set forth below are undisputed. Plaintiffs in this case are current or former pizza delivery drivers employed as hourly, non-exempt, employees by Defendants, who are certified members of five Rule 23 class actions asserting minimum wage claims under state laws of Missouri, Maryland, Florida, Illinois, and Arizona, and a collective of 3,840 opt-in Plaintiffs under 29 U.S.C. § 216(b), asserting claims under the FLSA.
Defendants require delivery drivers, as a condition of their employment, to maintain safe, legally operable, insured vehicles for making deliveries. During the relevant time period, Defendants compensated delivery drivers using three types of payments: hourly wages, delivery-related vehicle expense payments, and, in some locations, "box bonuses."
Defendants reimbursed drivers a flat rate for vehicle expenses to compensate them for costs associated with the use of their personal vehicles to make deliveries. Under Defendants' vehicle expense reimbursement policy, all drivers were paid a flat rate per delivery, regardless of the actual number of miles driven or actual expenses incurred. Defendants' per-delivery reimbursement rate for delivery-related vehicle expenses was at all relevant times less than the standard business mileage rate established by the IRS.2 However, for non-delivery-related vehicle expenses, including corporate employee travel for purposes other than customer deliveries, Defendants at least at one point reimbursed employees at the IRS standard business mileage rate.3
Defendants' reimbursement rate for vehicle expenses included amounts for both "fixed costs" and "operating costs." "Fixed costs" included items such as automotive insurance, registration, state taxes, and depreciation. Defendants' formula approximated these amounts and reimbursed drivers for a portion of them, in recognition of drivers' non-employment-related uses of their vehicles, which account for some of these costs. Defendants also reimbursed drivers a sum for "operating costs," such as fuel costs and vehicle maintenance. Defendants similarly based this reimbursement on a formula which approximated drivers' costs rather than on the actual expenses of its drivers. Defendants did not track or maintain records of delivery drivers' actual expenses, and also did not require delivery drivers to track their actual expenses.
Prior to 2008, Defendants paid delivery drivers a single hourly wage, which was the minimum hourly wage under the FLSA or state law (if higher than the FLSA). However, in 2008, Defendants implemented a "split wage" system, which took advantage of "tip credits" allowed under the FLSA and state law. Under the split wage system, drivers received two hourly wages: an "in store" rate, equal to or greater than minimum wage under the FLSA or state law (if higher than the FLSA), and an "on the road" rate, equal to an hourly cash wage of $4.25, plus tips. The parties dispute whether the "on the road" rate, including tips, was at or above minimum wage.
Plaintiffs' minimum wage claims are based on the Department of Labor ("DOL") regulations applicable to the FLSA, which state that "the wage requirements of [the FLSA] will not be met where the employee ‘kicks-back’ directly or indirectly to the employer ... the whole or part of the wage delivered to the employee." 29 C.F.R. § 531.35. A kickback occurs when the cost to the employee of tools specifically required for the performance of the employee's work "cuts into the minimum or overtime wages required to be paid him under [the FLSA]." Id. As this Court has previously held, although the regulations allow an employer to reasonably approximate the amount of an employee's vehicle expenses without affecting the amount of the employee's wages for purposes of minimum wage compliance, if the employer's approximation is unreasonable, the employee may have a claim that his wage rate was reduced below the minimum as a result of the under-reimbursement. See Doc. No. 299 at 14–15 (). Thus, Plaintiffs claim that Defendants' reimbursement of their vehicle expenses was an unreasonable approximation and that their wages were reduced below the minimum as a result of the under-reimbursement.
Plaintiffs move for partial summary judgment ordering that Defendants have failed to reasonably approximate vehicle expenses for purposes of minimum wage compliance. Plaintiffs argue that, under the FLSA,4 Defendants must either reimburse Plaintiffs' actual vehicle expenses or a reasonable approximation of these expenses.
Although the FLSA and accompanying regulations do not specify what constitutes a reasonable approximation, Plaintiffs argue that the DOL Wage and Hour Division's Field Operations Handbook ("DOL Handbook") mandates that if employers do not track and reimburse actual vehicle expenses, they must reimburse employees at the IRS standard business mileage rate. Plaintiffs contend that requiring employers to use the IRS standard business mileage rate, in lieu of tracking actual expenses, makes sense because the IRS standard business mileage rate is the most widely recognized estimate of business vehicle expenses and was used by Defendants themselves for all business travel purposes except customer deliveries.
In response, Defendants argue that they are not required to reimburse vehicle expenses at all. Instead, Defendants argue that they are only required to pay weekly wages equal to or above minimum wage, and they may reimburse actual vehicle expenses or a reasonable approximation of these expenses merely to prevent these expenses from cutting into minimum wage. Defendants assert that although the DOL Handbook provides a safe harbor for employers who use the IRS standard business mileage reimbursement rate, it does not mandate the use of that rate or state that the failure to use that rate automatically constitutes a minimum wage violation. Defendants argue that such a mandate would be inconsistent with the FLSA and the DOL's own regulations. Defendants also note that Plaintiffs' own expert, Paul Lauria, calculated a purportedly reasonable reimbursement rate for purposes of this litigation that was lower than the IRS standard business mileage rate. Finally, Defendants note that the IRS itself recognizes and allows alternative reimbursement rates, including fixed and variable rate allowances, which Defendants argue are reflected in their own reimbursement methodology.
Plaintiffs next move for summary judgment on Defendants' affirmative defenses numbered 2, 5, 16, 19, 20, 22–24,5 and 25–33.
Defendants' 2nd affirmative defense states that the complaint is "barred in whole, or in part, by all applicable statutes of limitation." (Doc. No. 137 at 36.) Plaintiffs argue generally that Defendants have failed to identify which class or class members' claims they believe to be outside of a statute of limitations. Plaintiffs assert that Defendants have only—indirectly, through the rebuttal report of their expert, Dr. Christopher Pflaum—provided evidence...
To continue reading
Request your trial