Rodriguez v. Gc Pizza LLC

• Decision Date: 21 September 2022
• Docket Number: 4:20-CV-3106
• Parties: VINCENT RODRIGUEZ, Individually and on behalf of all others similarly situated, Plaintiff, v. GC PIZZA LLC d/b/a "Domino's Pizza", Defendant.
• Court: U.S. District Court — District of Nebraska

VINCENT RODRIGUEZ, Individually and on behalf of all others similarly situated, Plaintiff,
v.
GC PIZZA LLC d/b/a "Domino's Pizza", Defendant.

No. 4:20-CV-3106

United States District Court, D. Nebraska

September 21, 2022

MEMORANDUM AND ORDER

JOHN M. GERRARD, UNITED STATES DISTRICT JUDGE

In this class and collective action, the plaintiff, Vincent Rodriguez, represents himself and other similarly situated delivery drivers employed by defendant GC Pizza, LLC between December 2018 and December 2021. The defendant is the owner of several Domino's Pizza restaurants in Nebraska. The plaintiff's operative complaint, filing 42, alleges that the defendant failed to properly reimburse drivers for costs expended for the benefit of the employer, causing drivers' wages to drop below the minimum wage in violation of 29 U.S.C. § 206 and Neb. Rev. Stat. § 48-1203.

This matter is before the Court on the defendant's motion for partial declaratory summary judgment (filing 106), the plaintiff's cross-motion for partial summary judgment (filing 116), the plaintiff's motion to strike (filing 114), and the defendant's motion to strike (filing 125). The stated purpose of the defendant's motion for partial declaratory summary judgment is to determine the scope of discovery so that the case can proceed efficiently. Filing

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108 at 3. Discovery has been stayed pending the resolution of the motions in this order. Filing 132.

I. BACKGROUND

The defendant owns and operates Domino's franchise restaurants in Nebraska, and it hires drivers to use their personal vehicles to deliver pizzas and other products. Filing 42 at 1; filing 43 at 1. The plaintiff represents a conditionally certified class under 29 U.S.C. § 216(b), containing delivery drivers employed by the defendant between December 14, 2018, and December 14, 2021. Filing 73. The plaintiff also represents the same class in a Fed.R.Civ.P. 23 class action for the NWHA claims. Filing 42.

The defendant paid drivers $7.25 per hour and claimed a tip credit of $1.75 to meet the $9.00 per hour minimum wage pursuant to Neb. Rev. Stat. § 48-1203(2). Filing 108 at 4. If drivers engaged in non-tipped work, drivers were paid $9.00 per hour without any tip credit. See filing 108 at 4. The defendant requires drivers to use and maintain safe, legally operable, and insured vehicles. Filing 42 at 4; filing 43 at 2. The defendant does not maintain its own vehicles and drivers are reimbursed at a rate of $2.00 per delivery to "compensate drivers for the business use of their personal vehicles." Filing 108 at 4.

The plaintiff asserts the defendant violated the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201 et seq., and the Nebraska Wage and Hour Act (NWHA), Neb. Rev. Stat. § 48-1201 et seq., in two ways: (1) the $2.00-per-delivery reimbursement rate unreasonably under-approximated the costs of using a personal vehicle for the benefit of the defendant, and (2) the defendant required employees to pay for their own uniforms. Filing 42 at 13-20. Both policies, according to the plaintiff, resulted in a kickback to the defendant that

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unlawfully dropped delivery driver wages below the minimum wage. Filing 46 at 13-19.

The plaintiff alleges the defendant's vehicle cost reimbursement policy resulted in an effective wage of $6.46 per hour, below both the federal and Nebraska minimum wages. Filing 42 at 6; filing 108 at 5. To arrive at this figure, the plaintiff estimates that each delivery averaged at least 6 miles, thus drivers were reimbursed at approximately $0.333 per mile ($2.00 per delivery divided by 6 miles). Filing 42 at 6. But the plaintiff alleges the Internal Revenue Service standard business mileage rate ("IRS rate") is a reasonable approximation for the value an employee's personal vehicle provides to an employer. Filing 42 at 6. The IRS rate was $0.535 and $0.58 per mile between 2018 and 2021. Filing 42 at 6. Plaintiff compared the IRS rate to the rate paid by the defendant and alleged the defendant under-reimbursed its delivery drivers by at least $0.21 per mile, or by $1.27 per delivery. Filing 42 at 6; filing 108 at 5. Using the approximation of two deliveries per hour, the plaintiff calculated this disparity caused delivery drivers' wages to drop below the minimum wage ($9.00 per hour) by $2.54 per hour, for an effective wage of $6.46 per hour. Filing 42 at 6; filing 108 at 5.

The issues now before the Court are the defendant's motion for partial declaratory summary judgment on limited issues of law (Filing 108) and the plaintiff's cross-motion for summary judgment on a similar issue (Filing 113). The parties primarily ask the Court to pick a side on a district court split regarding how to interpret 29 C.F.R. §§ 531.35 and 778.217, which generally require an employer's reimbursement of employee expenses incurred on the employer's behalf to "reasonably approximate" the expense incurred. The defendant asks the Court to declare an employer may comply with the antikickback regulation by using any reasonable approximation of employee

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expenses (Filing 108 at 2), while the plaintiff would have this Court declare that employers must either (a) track and reimburse actual vehicle costs or (b) reimburse expenses at the IRS rate (Filing 113 at 40).

II. STANDARD OF REVIEW

Summary judgment is proper if the movant shows that there is no genuine dispute as to any material fact and that the movant is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(a). The movant bears the initial responsibility of informing the Court of the basis for the motion, and must identify those portions of the record which the movant believes demonstrate the absence of a genuine issue of material fact. Torgerson v. Cityof Rochester, 643 F.3d 1031, 1042 (8th Cir. 2011) (en banc). If the movant does so, the nonmovant must respond by submitting evidentiary materials that set out specific facts showing that there is a genuine issue for trial. Id. Rule 56 also allows the Court to grant summary judgment as to some issues but not as to others. See Fed.R.Civ.P. 56(a).

III. DISCUSSION

The defendant has asked the Court to take the following actions:

• Declare that the Reasonable Approximation Standard applies to determine whether the defendant complied with the anti-kickback regulation and the minimum wage requirement, 29 C.F.R. § 531.35

• Declare that compliance with anti-kickback regulation is measured by an individual employee's actual employment-related vehicle expense, not by the IRS rate;

• Declare that in order to prevail in this case, any plaintiff must prove, by a preponderance of evidence standard: (a) the defendant failed to

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reimburse actual expenses, or its policy failed to reasonably approximate expenses, and (b) the resulting under-reimbursement caused the employee's cash wage to fall below the federal minimum wage;

• Declare that the defendant will be entitled to costs if the plaintiff fails to meet the burden of proof; and

• Declare that under both the FLSA and the NWHA, employers may apply a tip credit to any alleged under-reimbursement.

Filing 108, Filing 127. The plaintiff, on the other hand, has asked the Court to adopt the IRS rate as the proper method to reasonably approximate employee expenses when an employee uses a personal vehicle for an employer's benefit. Filing 116. The plaintiff also moved to strike certain evidence contained in the defendant's motion for partial declaratory summary judgment. Filing 114. Finally, the defendant moved to strike certain arguments in the plaintiff's brief. Filing 119.

The Court finds the "Reasonable Approximation" standard applies; the IRS rate is probative of whether the defendant reasonably approximated employees' vehicle expenses; the plaintiffs are allowed to provide their own approximations of expenses and do not need to prove actual unreimbursed expenses; the defendant may be entitled to costs, but the Court will make no declaration at this time; and the defendant may not apply a tip credit to any alleged under-reimbursement under either the FLSA or the NWHA. The motions to strike will be taken up as they are relevant to the discussion, and both will be denied.

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1. "REASONABLE APPROXIMATION" OR "IRS RATE"

Both parties seek the Court's resolution on the legal standard that will determine whether the defendant appropriately reimbursed its delivery drivers for expenses incurred while using their personal vehicles for the benefit of their employer. Filing 108 at 30; Filing 113 at 40. Such a resolution depends on if the regulations are ambiguous, and if any agency interpretation helps to resolve ambiguity. SeeVoigt v. Coyote Creek Mining Company, LLC, 999 F.3d 555, 561 (8th Cir. 2021). A court can defer to an agency's interpretation of a regulation if the regulation is genuinely ambiguous, and if the interpretation is a reasonable, fair, and official interpretation based on the agency's substantive expertise. Id.; see also Kisor v. Wilkie, 139 S.Ct. 2400, 2415 (2019); Auer v. Robbins, 519 U.S. 452, 455 (1997). Auer deference is not appropriate for issues which are in a judge's "bailiwick." Kisor, 139 S.Ct. at 2417.

The defendant wants this Court to declare, as a matter of law, that the regulations (specifically 29 C.F.R. §§ 531.35 and 778.217) unambiguously allow employers to reimburse delivery drivers either for actual expenses or for any reasonable approximation of expenses. Filing 108 at 30. Alternatively, the defendant argues that if the regulations are genuinely ambiguous, the Court should defer to an opinion letter from the Department of Labor to resolve any ambiguity. Filing 108 at 30. The plaintiff asks this Court to find the regulations are genuinely ambiguous, but instead wants the Court to defer to an agency interpretation in the Department of Labor Field Operations Handbook ("the Handbook"), Chapter 30c15, which the plaintiff says...